With significantly reduced profits for 4Q2012 and all of last year, Spokane, WA-based Avista Corp. senior management pledged Wednesday to better manage costs at its utility and related operations, and to push for more growth initiatives this year, including the spread of natural gas for use in transportation.
“We have been recovering slower than the nation as a whole, and we expect this trend to continue in 2013,” said CEO Scott Morris. “We are focused on discovering new ways to accelerate growth within or adjacent to our core utility business. And we plan to spend $2-3 million in 2013 exploring opportunities to develop new markets for customers to use natural gas and electricity for commercial productivity and transportation.”
While noting that the economic growth in its three-state service territory (Idaho, Oregon and Washington) lagged behind national averages, Morris reported 4Q2012 and full-year 2012 net income of $15.8 million and $72.8 million, respectively, compared with $24.6 million in 4Q2011 and $100.2 million in full year 2011.
Morris said the results represented an “under-performance across all of our business units,” some due to weather-related factors, some due to not reining in costs and others due to the generally sluggish economy. Even with the latter factor continuing this year, he said there should be modest 1% growth in both the natural gas and electric utility businesses and his team is focused on finding more growth areas.
“In our utility service territory we don’t see a lot of growth because of the economy right now; we’re lagging,” Morris said. “So instead of sitting back and waiting for the economy to grow, we’re looking at some other opportunities that are close to our core businesses.
“In transportation, we feel there are some great opportunities for compressed natural gas (CNG). Other fleets around the country, such as Waste Management, have been converting a lot of their trucks to CNG. We have been able do that in our own service territories, so because of that, we are looking at other opportunities for large and small fleets.”
One opportunity Avista has its eye on is liquefied natural gas (LNG) in transportation. Morris said the company “will continue to explore the LNG markets in the Pacific Northwest,” along with gas and electric opportunities with larger customers. “We’re going to continue to mine those opportunities.”
Avista’s non utility businesses in the energy management and related fields under its Ecova unit had “a very difficult year” last year due to rising costs and less-than-expected revenues, but Morris said the expectation is for that to be turned around this year.
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