Merrill Lynch has been hired to serve as Avista Labs’ investmentbank and strategic adviser to evaluate the best ways to maximizethe shareholder value of its fuel cell technology. Avista Corp. ofSpokane, WA made the announcement yesterday, and said that MerrillLynch will “consider all possible options, including financialrestructuring and an initial public offering.” Avista Labs recentlyreceived a comprehensive patent securing the exclusive modulardesign of its PEM fuel cell system, a “plug and play” feature thatallows fuel cell cartridges to be easily removed and replacedwithout interrupting power. The Labs arm of Avista Corp. is a jointdevelopment agreement with UOP to integrate its fuel cell with thenatural gas and propane fuel processor systems of UOP. Later thisyear, field testing will begin for the integrated units of UOP.Currently, Avista Labs is testing its fuel cell subracks in severallocations across the country, including Arizona Public Service inPhoenix, the Fuel Cell Test and Evaluation Center in Johnstown,PA., Tyndall Air Force Base in Panama City, FL, and as back-uppower within the Avista Utilities service territory in the PacificNorthwest.

Southwest Gas Corp. has requested a $37.1 million general rateincrease with the Arizona Corp. Commission. General rateapplications deal with the company’s costs of operating itsdistribution system. If approved as requested, the rates wouldincrease average monthly residential bills about $3.63, with anaverage bill increasing to $30.10. Roger Montgomery, Southwest’svice president/pricing, said the proposed monthly bill would becomparable to a bill paid by customers in the early-to-mid 1980s.Later this year, he said that Southwest plans to remove a one-timegas cost surcharge which would then reduce the average residentialmonthly bill proposed in the application by $1.84. Southwest statedin its application that even though it has had success incontrolling costs and increasing productivity, it has been unableto earn the rate of return authorized by the commission because ofseveral factors: inflation, declining average residential use andfinancing costs to meet the growth demands of the Arizona’s growingresidential sector. Southwest also wants to shift more of itsday-to-day operating costs to the basic service charge to reducethe impact of weather on monthly bills.

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