20090123Press Release.pdf

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10n9 JAN 23 PH 12: 29Contact: iDA
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Investors: Jason Lang [phone], jason.langßîavistacorp.com
Avista 24/7 Media Line [phone]
Avista Requests Recovery for Costs in Washington and Idaho to
Upgrade System and Meet Growing Energy Demand
Company also requests reduction in power cost surcharges
SPOKANE, Wash. - Jan 23, 2009, 1:05 p.m. PST: Avista (NYSE: AVA) has today filed requests
with the Washington Utilities and Transportation Commission (WUTC) and the Idaho Public Utilities
Commission (IPUC) to increase electric and natural gas rates to recover costs for generating and
purchasing electricity to serve growing energy needs, for investments made to continue upgrading
the company's aging infrastructure, and to comply with environmental and legal requirements. At
the same time, the company is proposing a reduction in the existing power cost surcharges in both
states, which would offset a portion of the proposed rate increases.
The WUTC has up to 11 months and the IPUC has up to seven months to review the respective
filings, which are discussed in sections below.
Included in the filings are costs for generating and purchasing power which have increased over
last year due in part to the need to replace expiring low-cost power contracts and to acquire new
resources to serve customer energy needs.
Customer growth along with aging infrastructure, such as generation plants, power lines and poles,
and substations, requires Avista to continue investing about $200 million a year in system
upgrades to ensure the ongoing safe and reliable delivery of energy. Some of Avista's equipment
is over 70 years old.
Also included in the filings are costs associated with relicensing the Spokane River hydróelectric
facilities, which annually generate a combined 105 average megawatts of renewable energy. Both
the relicensing costs and compensation to the Coeur d'Alene Tribe for the recently announced
Settlement Agreement were reviewed by the WUTC and the IPUC in Avista's prior rate filings, but
recovery was deferred until the present filngs.
The requested natural gas increase in both states is driven primarily by increased operating costs
and upgrades in the distribution system which delivers natural gas directly to customers.
"We are continuing to aggressively manage our costs, while at the same time ensuring that we
meet growing customer demand with energy that is reliable and brings with it a high level of
customer satisfaction," said Scott Morris, Avista chairman of the board, president and chief
executive officer.
To reduce costs and realize efficiencies, Avista has delayed until 2013 the construction of its 50
megawatt Reardan Wind Project, projected to cost over $125 million. The delay is partly because
of the company's ability to meet its renewable resource requirements and growing customer
demand with ongoing upgrades at the company's hydroelectric facilities and renewable energy
credits. Other cost savings measures include, but are not limited to, officers foregoing salary
increases in 2009 and cancelling plans to construct additional office space, instead purchasing an
existing office building for a savings of over $9 million in capital construction costs.
"We know that price increases will result in energy bills that may be more difficult for some of our
customers to manage," Morris said. "That's why we are, among other cost-saving actions,
continuing to work toward a resolution with the Bonneville Power Administration (BPA) on the
Residential Exchange Program, which would restore to Avista customers their fair share of the
benefits of the federal hydropower system through a monthly credit on electric bills for our
residential and small-farm customers. We also recently received approval to reduce natural gas
prices through the purchase gas cost adjustments, which reduced the natural gas costs for our
customers in Washington by 3 percent and by 4.7 percent in Idaho. These lower prices were
effective earlier in January 2009."
Also to lessen the impact of rising energy prices to customers, Avista has increased funding for
popular energy efficiency programs offered by Avista. The programs provide rebates and
incentives to residential, commercial, industrial and limited-income customers for implementing
qualifying energy efficiency and cost-saving measures in their home or business. In 2008, Avista
provided over 18,000 rebates and incentives totaling over $15 million to customers in both
Washington and Idaho.
Avista continues to offer services for customers in both states such as comfort level biling,
payment arrangements and Customer Assistance Referral and Evaluation Services (CARES)
which provides assistance to special-needs customers through referrals to area agencies and
churches for help with housing, utilities, medical assistance and other needs. Avista continues its
support to Project Share, which provides energy assistance to qualifying residents regardless of
the heating source, with a $280,000 donation in 2008.
Washington Filngs
In Washington Avista is requesting a net electric rate increase of 8.6 percent. The net electric
increase is based on a requested 16.0 percent increase in billed rates with an offsetting 7.4
percent reduction in the current Energy Recovery Mechanism surcharge. The company is also
requesting a 2.4 percent increase in natural gas rates.
The requested increases are designed to produce $69.8 million in base revenue for electric service
and $4.9 million in revenue for natural gas service. This request is based on a proposed rate of
return on rate base of 8.68 percent, with a common equity ratio of 47.5 percent and an 11 percent
return on equity.
If the requests are approved, a residential customer using an average 1,000 kilowatt hours of
electricity per month would see a $6.99 per month increase, or 9.2 percent, for a revised monthly
bill of $82.93. A natural gas customer using an average of 70 therms per month would see a $2.11
increase, or 2.5 percent, for a revised monthly bill of $87.51.
Avista serves over 231,000 electric and 144,000 natural gas customers in Washington.
Idaho Filngs
In Idaho Avista is requesting a net electric rate increase of 7.8 percent. The net electric increase is
based on a requested 12.8 percent increase in billed rates with an offsettng 5.0 percent reduction
in the current Power Cost Adjustment surcharge. The company is also requesting a 3.0 percent
increase in natural gas rates.
The requested increases are designed to produce $31.2 milion in base revenue for electric service
and $2.7 million in revenue for natural gas service. This request is based on a proposed rate of
return on rate base of 8.8 percent, with a common equity ratio of 50 percent and an 11 percent
return on equity.
If the requests are approved, a residential customer using an average 982 kilowatt hours of
electricity per month would see a $6.71 per month increase, or 8.6 percent, for a revised monthly
bill of $85.18. A natural gas customer using an average of 66 therms per month would see a $2.56
increase, or 3.2 percent, for a revised monthly bill of $81.94.
Avista is actively participating with other Idaho utilities in energy affordability workshops conducted
by the IPUC. The focus of the workshops is to explore ways to address energy affordability and the
ability of customers to pay energy bils, including possible legislation to authorize additional
programs designed to assist low-income customers.
Avista serves 121,000 electric and over 93,000 natural gas customers in Idaho.
Avista Corp. is an energy company involved in the production, transmission and distribution of
energy as well as other energy-related businesses. Avista Utilities is our operating division that
provides service to 352,000 electric and 311,000 natural gas customers in three Western states.
Avista's primary, non-regulated subsidiary is Advantage ia. Avista stock is traded under the ticker
symbol "AVA." For more information about Avista, please visit ww.avistacorp.com.
Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.
This news release contains forward-looking statements, including statements regarding our current
expectations for future financial performance and cash flows, capital expenditures, financing plans,
our current plans or objectives for future operations and other factors, which may affect the
company in the future. Such statements are subject to a variety of risks, uncertainties and other
factors, most of which are beyond our control and many of which could have significant impact on
our operations, results of operations, financial conditon or cash flows and could cause actual
results to differ materially from those anticipated in such statements.
The following are among the important factors that could cause actual results to differ materially
from the forward-looking statements: global financial and economic conditions (including the
availabilty of credit) and their effect on the Company's abilty to obtain funding for working capital
and long-term capital requirements on acceptable terms and on economic conditions in the
Company's service areas, including the effect on the demand for, and customers' abilty to pay for,
the Company's utiliy services; our abilty to obtain financing through the issuance of debt and/or
equity securities, which can be affected by various factors including our credit ratings, interest rates
and other capital market conditons; the effect of any change in our credit ratings; changes in
actuarial assumptions, the interest rate environment and the actual return on plan assets for our
pension plan, which can affect future funding obligations, costs and pension plan liabilties; weather
conditions and their effect on energy demand and generation, including the effect of precipitation
and temperatures on the availabiliy of hydroelectric resources and the effect of temperatures on
customer demand; changes in wholesale energy prices that can affect, among other things, cash
needed to purchase electricity, natural gas for our retail customers and natural gas fuel for electric
generation, and the value of surplus energy sold; volatiliy and iliquidity in wholesale energy
markets, including the availabilty of willng buyers and sellers and prices of purchased energy and
demand for energy sales; the effect of state and federal regulatory decisions affecting our abilty to
recover costs and/or earn a reasonable return including, but not limited to, the disallowance of
costs that we have deferred; and the possible reluctance of regulators to grant timely and adequate
rate increases in an economic slowdown; the potential effects of legislation or administrative
rulemaking, including the possible adoption of national or state laws requiring resources to meet
certain standards and placing restrictions on greenhouse gas emissions to mitigate concerns over
global climate changes; the outcome of pending regulatory and legal proceedings arising out of the
"western energy crisis" of 2000 and 2001, and including possible retroactive price caps and
resulting refunds; the outcome of legal proceedings and other contingencies; changes in, and
compliance with, environmental and endangered species laws, regulations, decisions and policies,
including present and potential environmental remediation costs; wholesale and retail competition
including, but not limited to, electric retail wheeling and transmission costs; the abiliy to relicense
and maintain licenses for our hydroelectric generating facilties at cost-effective levels with
reasonable terms and conditions; unplanned outages at any of our generating facilties or the
inabiliy of facilties to operate as intended; unanticipated delays or changes in construction costs,
as well as our abilty to obtain required operating permits for present or prospective facilties;
natural disasters that can disrupt energy production or delivery, as well as the availabilty and costs
of materials and supplies and support services; blackouts or disruptions of interconnected
transmission systems; the pòtential for future terrorist attacks or other malicious acts, particularly
with respect to our utilty assets; changes in the long-term climate of the Pacific Northwest, which
can affect, among other things, customer demand patterns and the volume and timing of
stream flows to our hydroelectric resources; changes in economic conditions in our service territory
and the United States in general, including inflation or deflation; changes in industrial, commercial
and residential growth and demographic patterns in our service territory; the loss of significant
customers and/or suppliers; default or nonperformance on the part of any parties from which we
purchase and/or sell capacity or energy; deterioration in the creditworthiness of our customers and
counterparties; increasing health care costs and the resultng effect on health insurance provided
to our employees and retirees; increasing costs of insurance, changes in coverage terms and our
abilty to obtain insurance; employee issues, including changes in collective bargaining unit
agreements, strikes, work stoppages or the loss of key executives, as well as our abiliy to recruit
and retain employees; the potential effects of negative publicity regarding business practices,
whether true or not, which could result in, among other things, costly liigation and a decline in our
common stock price; changes in technologies, possibly making some of the current technology
obsolete; changes in tax rates and/or policies; and changes in our strategic business plans, which
may be affected by any or all of the foregoing, including the entry into new businesses and/or the
exit from existing businesses.
For a further discussion of these factors and other important factors, please refer to our Annual
Report on Form 10-K for the year ended Dec. 31, 2007 and Quarterly Report on Form 10-Q for the
quarter ended September 30, 2008. The forward-looking statements contained in this news release
speak only as of the date hereof. We undertake no obligation to update any forward-looking
statement or statements to reflect events or circumstances that occur after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New factors emerge from
time to time, and it is not possible for management to predict all of such factors, nor can it assess
the impact of each such factor on our business or the extent to which any such factor, or
combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statement.
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