Avista second quarter earnings down

Avista Corp. on Thursday reported lower net income in the second quarter of this year, while income for the first six months beat last year.

It took in $23.0 million, or 39 cents per diluted share, for the second quarter, compared with $25.5 million, or 46 cents per diluted share, for the year-earlier quarter.

For the six months ended June 30, net income was $64.9 million, or $1.12 per diluted share, compared with $54.4 million, or 98 cents per diluted share for the year-earlier period.

Avista chairman, president and chief executive officer Scott L. Morris said the second quarter results were slightly below the company's expectations due to higher than anticipated operating costs.

However, it continues to be on track to have a good year, he said.

"Weather conditions in 2011 have been cooler than average with precipitation, streamflows and resulting hydroelectric generation well above average," Morris said. "Although we are having one of the best hydroelectric generation years on record, the impact on our results is mitigated by low prices in wholesale power markets."

In addition, the incremental benefit from improved hydroelectric generation is largely passed on to customers as purchased power and fuel prices are below the amount included in base rates.

The increased operating costs include spending on maintenance at Avista's generation plants, as well as pensions and other post-retirement benefits.

"We continue to make significant capital investments in our generation, transmission and distribution systems to replace aging infrastructure, preserve reliability and gain efficiency," Morris said. "We also continue to experience significant increases in operating costs to serve our customers."

In addition to generation plant maintenance, pension and other post-retirement benefit costs, the increase in other operating expenses was due to an increase in labor costs and outside services.

He said general rate cases were filed in Washington in May 2011 and in Idaho in July 2011 to improve the recovery of Avista's capital investments and costs.

Net income from Advantage IQ increased 20 percent in the first half of 2011 as compared with last year, totaling $59 million.

"Advantage IQ will continue to execute on its strategy to extend the business from a focus on expense management to delivery of energy management services," Morris said.