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Avista Corp. Reports Operating Results (10-Q)

August 05, 2011 | About:
10qk

10qk

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Avista Corp. (AVA) filed Quarterly Report for the period ended 2011-06-30.

Avista Corp. has a market cap of $1.36 billion; its shares were traded at around $23.67 with a P/E ratio of 12.7 and P/S ratio of 0.9. The dividend yield of Avista Corp. stocks is 4.7%. Avista Corp. had an annual average earning growth of 1.7% over the past 10 years.

Highlight of Business Operations:

Advantage IQ had net income attributable to Avista Corp. of $1.8 million for the three months ended June 30, 2011, an increase from $1.5 million for the three months ended June 30, 2010. Advantage IQ had net income attributable to Avista Corp. of $3.5 million for the six months ended June 30, 2011, an increase from $3.0 million for the six months ended June 30, 2010. The increase for both periods of 2011 as compared to 2010 was primarily due to strong growth in energy management services, moderate growth from expense management, as well as the acquisition of The Loyalton Group (Loyalton) effective December 31, 2010. The acquisition of Loyalton was funded primarily through available cash at Advantage IQ plus contingent consideration based on revenue targets over the next three years. Advantage IQs earnings potential continues to be moderated by low short-term interest rates, which limits interest revenue on funds held for customers.

Net income attributable to Avista Corp. for these operations was $0.1 million for the three months ended June 30, 2011 compared to a net loss of less than $0.1 million for the three months ended June 30, 2010. Net income attributable to Avista Corp. for these operations was $0.2 million for the six months ended June 30, 2011 compared to a net loss of $0.5 million for the six months ended June 30, 2010. The improvement in results for both periods of 2011 as compared to 2010 was due in part to increased earnings at METALfx. On a year-to-date basis, a decrease in the net loss on investments also contributed to the improvement in results.

In February 2011, we entered into a new committed line of credit with various financial institutions in the total amount of $400.0 million with an expiration date of February 2015 that replaced our $320.0 million and $75.0 million committed lines of credit that had expiration dates in April 2011. As of June 30, 2011, there were $75.0 million of cash borrowings and $19.0 million in letters of credit outstanding. As of June 30, 2011, we had $306.0 million of available liquidity under our committed line of credit.

Under the ERM, we absorb the cost or receive the benefit from the initial amount of power supply costs in excess of or below the level in retail rates, which is referred to as the deadband. The annual (calendar year) deadband amount is currently $4.0 million. We incur the cost of, or receive the benefit from, 100 percent of this initial power supply cost variance. We share annual power supply cost variances between $4.0 million and $10.0 million with customers. There is a 50 percent customers/50 percent Company sharing when actual power supply expenses are higher (surcharge to customers) than the amount included in base retail rates within this band. There is a 75 percent customers/25 percent Company sharing when actual power supply expenses are lower (rebate to customers) than the amount included in base retail rates within this band. To the extent that the annual power supply cost variance from the amount included in base rates exceeds $10.0 million, 90 percent of the cost variance is deferred for future surcharge or rebate. We absorb into power supply costs the remaining 10 percent of the annual variance beyond $10.0 million. The following is a summary of the ERM:

Utility revenues decreased $5.7 million, after elimination of intracompany revenues of $23.8 million. Including intracompany revenues, electric revenues increased $3.9 million and natural gas revenues increased $14.1 million. Retail electric revenues increased $12.9 million due to general rate increases and an increase in volumes caused by colder weather. In addition, sales of fuel increased $13.0 million (reflecting lower usage of our thermal generating plants and sales of natural gas fuel not used in generation). These increases in electric revenues were partially offset by a decrease in wholesale electric revenues of $22.9 million (due to a decrease in wholesale prices and volumes). Retail natural gas revenues increased $7.5 million due to an increase in volumes caused by colder weather and prices from rate increases, while wholesale natural gas revenues increased $7.6 million (due to increased volumes and wholesale prices).

Utility revenues increased $8.4 million, after elimination of intracompany revenues of $40.8 million. Including intracompany revenues, electric revenues increased $23.6 million and natural gas revenues increased $25.6 million. Retail electric revenues increased $38.1 million due to general rate increases and an increase in volumes caused by colder weather. In addition, sales of fuel increased $35.3 million (reflecting lower usage of our thermal generating plants and sales of natural gas fuel not used in generation). These increases in electric revenues were partially offset by a decrease in wholesale electric revenues of $50.5 million (due to a decrease in wholesale prices and volumes). Retail natural gas revenues increased $35.6 million due to an increase in volumes caused by colder weather and prices from rate increases, while wholesale natural gas revenues decreased $9.5 million (primarily due to decreased wholesale prices).

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