Avista Corp.’s outgoing CEO is resigned to the fact that 2007 will be a “repositioning” year for the company, which sold its money-losing energy marketing/trading unit and saw its utility operations hindered by a combination of adverse weather and regulatory lag impacts. Nevertheless, the Spokane, WA-based company reported profits for the second quarter of $14.2 million, or 26 cents/diluted share, compared with $13.5 million, or 27 cents/diluted share, for the same period last year.
“This is a year of repositioning for our company, with a focus on the future of our utility operations,” said CEO Gary Ely, who previously announced that he will retire at the end of this year. Scott Morris, currently Avista’s COO, will become CEO on Jan. 1, 2008.
One day earlier (on Tuesday), Avista Utilities filed with the Idaho Public Utilities Commission (PUC) seeking an increase in its electric power cost adjustment (PCA) surcharge by about 2.2%, effective Oct. 1. Avista said the rate change is to recover the difference between Avista’s actual generating and purchased power costs needed to serve its 118,000 customers in Idaho.
The surcharge attempts to recover the power costs for the 12-month period ended June 30, 2007, and it is expected to replace the current surcharge when it expires Sept. 30.
In reporting decreased year-over-year six-month earnings results ($28.3 million, or 53 cents/diluted share, vs. $45 million, or 91 cents/diluted share, for the first half of 2006) and a decrease in the overall earnings estimate for this year, Avista’s CEO Ely said the most “significant event” so far this year is Avista’s sale of its energy trading/marketing business to Coral Energy Holding LP. “It lowers our corporate risk profile and should increase the stability of our earnings,” he said.
Avista Utilities increased earnings slightly in the second quarter, compared to the same period last year ($17.2 million vs. $16.8 million), but most of that was attributed by the company to “decreases in interest expenses and taxes,” while there was a decrease in gross margins as some key power generation units were out of service for most of the quarter.
While the third quarter is historically a loss-generating period for the company, Avista senior officials expect things to look up financially and operationally as additional hydroelectric power supplies to kick in for the fourth quarter.
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