Dive Brief:
- Avista Corp. earnings were $100.9 million for Q2 2014, up from earnings of $25.7 million for Q2 2013, on revenues of $312.6 million, up from Q2 2013 revenues of $307.5 million.
- The big gain in earnings was due primarily to $68 million earned from the sale of the Ecova energy management subsidiary and secondarily to a $15 million settlement of 2001 energy crisis legal claims against California utilities.
- Avista’s acquisition of Alaska Energy and Resources Company (AERC) will allow the company to expand its energy customer base and find “other market opportunities in Alaska,” Avista CEO/President/Chair Scott Morris said, adding that operating earnings also grew from increased hydroelectric generation and 2013 rate increases.
Dive Insight:
Avista raised its projected 2014 earnings to the upper end of the $3.00 to $3.20 per share range, despite the issue of 4.5 million shares of common stock to fund the AERC acquisition, with Avista Utilities’ lower operating costs contributing $1.79 to $1.94 per share of that projection, and AERC expected to contribute $0.03 to $0.04 per share in 2H 2014. Ecova's year-to-date earnings and its sale, other Avista businesses, and the legal settlement also bolstered the increased projection for 2014.
Avista got 2013 rate increases for electric and natural gas customers in Washington, Idaho and Oregon, but Washington electric customers have requested a rate decrease from the now profitable company. Staffs from both the Washington Utilities and Transportation Commission and the Attorney General’s office have recommended small electric rate decreases. Both staffs noted “changing business conditions” and Avista’s access to lower interest capital for infrastructure projects as justification for their recommendations, which the Utilities and Transportation Commission will decide on in December.
