A DIRECT APPROACH Business Update and Progress Report West Coast Seminar Las Vegas Feb. 19, 2004 www.avistacorp.com NYSE: AVA All statements in this presentation other than historical facts are forward-looking statements which involve risks and uncertainties and which are subject to change at any time. Such statements are based on management's expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors set forth in the company's latest Form 10-K and Form 10-Q filed with the Securities and Exchange Commission, among others, and available on the company’s website at www.avistacorp.com, could cause actual results to differ materially from those contemplated.
A DIRECT APPROACH � Corporate Overview � Avista Utilities � Unregulated Subsidiaries � Financial Outlook 2
A DIRECT APPROACH Profile: Avista Corp. � Headquarters: Spokane, Wash. � Regulated utility: Primarily Washington and Idaho plus Oregon, California and Montana � Unregulated subsidiaries: Avista Energy Avista Advantage � Employees: 1,900 � FY 2003 revenue: $1.1 billion � Market capitalization: $870 million � Dividend: 50¢ share/year (2.8% yield) � 2003 Payout Ratio: 55% 3
A DIRECT APPROACH Corporate Structure Avista Corp. Regulated, vertically integrated electric and natural gas utility (Not a holding company) Avista Utilities Parent company for unregulated business units Avista Capital Avista Avista Energy Advantage Energy Marketing and Business Process Resource Management Outsourcer 4
A DIRECT APPROACH Key Strengths � Regulatory support − 90/10 cost-sharing mechanisms in Washington and Idaho − Recoverability of and earnings on electric deferrals − 100% PGA tracker in all gas jurisdictions � Balanced electric resource profile � Efficient, low-cost asset base � Disciplined, regional resource management strategy at Avista Energy − $110 million committed line of credit � Positive trend in longer-term financial health − August 2003, Avista Corp.’s board of directors declared a 4.2% increase in the common stock dividend reflecting progress toward the company’s financial targets 5
A DIRECT APPROACH Business Strategy On Track � Add company-owned generation to be “long” � production capacity � � Continue strengthening regulatory relationships � � Resolve FERC overhang � Maintain efficient, low-cost asset base and balanced � electric resource profile � � Continue improving cash flow position � � Sustain positive trend in longer-term financial health � Uphold disciplined, regional resource management � strategy at Avista Energy � Increase focus on leadership and management � development 6
AVISTA UTILITIES Cabinet Gorge - 246 MW A DIRECT APPROACH
8 A DIRECT APPROACH
A DIRECT APPROACH Utility Resource Mix Current Capability 2 Biomass 3% Nuclear 0% Coal 13% 1 Natural Gas 25% Hydro 59% 1 Natural gas includes: Boulder Park, Kettle Falls combustion turbine (CT), Northeast CT, Rathdrum CT and Coyote Springs 2. 2 Biomass represents Avista’s Kettle Falls wood-waste generating station. 9
A DIRECT APPROACH Avista Utilities Customers 325,000 Electric Customers 298,000 Natural Gas Customers Projected Customer Growth New Gas Customers: 3% New Electric Customers: 2% 10
Douglas Co. PUD Source information from published tariffs compared as of July 1, 2003 A DIRECT APPROACH $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 $0.00 Chelan Co. PUD Pacificorp - WA Residential Use for 1,000 kWh Grant Co. PUD Electric Rates Comparison Vera Water & Power Avista WA Inland Power & Light Idaho Power Company Puget Sound Energy Kootenai Electric Coop Avista ID City of Cheney Light Dept Tacoma Power PacifiCorp OR Seattle City Light Pacificorp ID Snohomish PUD Portland General Northern Lights 11
A DIRECT APPROACH Natural Gas Rates Comparison $80.00 Residential Use for 70 Therms $70.55 $67.15 $70.00 $66.28 $66.02 $64.37 $61.94 $60.85 $57.68 $60.00 $57.12 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 R D A A R A D A R O I W W W O W I O - - - - - s - - - - a e e a l y l a t a d a a d G s g r t t r a i a s u s r v u c n e c i t i A t v v s a n a s i A a A a N N a E t C C n W d W u n o N N u m o r S e t t n e I g u P 12 Source information from published tariffs compared as of October 2003
A DIRECT APPROACH Regulatory Activities Completed � Resolved Oregon general rate case � Order: ROR 8.88%; ROE 10.25%; Resulted in an annual revenue increase of $6.3 million effective Oct. 1, 2003 � Received purchased gas rate adjustments in all jurisdictions, effective in October 2003 � WUTC approved and adopted Washington ERM settlement agreement on Feb. 3, 2004 � WUTC Natural Gas Benchmark Mechanism Pending � Filed an Idaho electric and natural gas general rate case on Feb. 6, 2004 � Final approval by Federal Energy Regulatory Commission of settlement in connection with section 206 proceeding 13
A DIRECT APPROACH Idaho Rate Case � Filed an Idaho electric and natural gas general rate case on Feb. 6, 2004 � More than $200 million invested in electric/gas system since last general rate increases � Request: ROR 9.82%; ROE 11.5%; Equity ratio 44.3%; Designed to increase electric revenues by $18.9 million annually and natural gas revenues by $4.8 million annually � Idaho PCA – deferral of certain costs to be reviewed in the general rate case 30% 11% Increase over current rates 20% Base Rates 24% $35 million (annualized) 10% Existing PCA New PCA $11.5 million (annualized) 0% 2003 2004 2005 2006 Fall 2004 14
A DIRECT APPROACH Regional Transmission and Generation Solutions � Transmission Infrastructure Development � West of Hatwai Project – Avista and Bonneville Power Administration � RTO Development � RTO West � Generation Resource Development � Coyote Springs 2 – 140 MW - July 2003 15
A DIRECT APPROACH Adding generation to meet customer needs Coyote Springs 2 � 280 MW near Boardman, Ore. � Sold 50% interest to Mirant in November 2001 � Obtained approval to include in rate base in Washington � Unit off line until summer of 2004 due to recent internal arching problem in transformer 16
A DIRECT APPROACH Industry Restructuring Northwest Perspective � Northwest power system is unique � Hydro-based resource � Prevalence of public power entities not under FERC jurisdiction: Co-ops, Public Utility Districts � Breadth of Bonneville Power Administration transmission system � Vertically integrated electric utility model 17
A DIRECT APPROACH � Corporate Overview � Avista Utilities � Unregulated Subsidiaries � Financial Outlook 18
A DIRECT APPROACH Avista Energy Energy Marketing and Resource Management Chelan Adding value through innovative arrangements that meet customer needs using our experience and knowledge of the integrated gas and electric systems of the Pacific Northwest. Cominco 19
A DIRECT APPROACH Avista Energy Energy Marketing and Resource Management � 55 employees headquartered in Spokane, Wash. − Extensive experience across natural gas and electric markets � Long-term contract rights to physical assets in the West − Generation, transmission, pipelines and storage Energy Marketing and Resource Management Business Segment 2000 2001 2002 Dec. 31, 2003 Total margin ( $ millions) $308 $134 $54 $60 Earnings per share $3.51 $1.33 $0.47 $0.49* Assist in managing 2,000 MW 2,750 MW 3,000 MW 3,000 MW * Excludes Avista Power asset impairment write-down of $<0.06> per share. 20
A DIRECT APPROACH Avista Energy Key Strengths � Focused on resource management � Managing the assets of others: minimizes risk and facilitates sharing in profits � Contractual transmission and pipeline access � Proven results in established niche � Strong track record of positive earnings contributions � Renewals and extensions of existing resource management contracts � Multi-layered risk management � Internal controls (VAR, stress testing, position limits, stop loss, audits) � Banks’ risk management parameters and audits � Takes positions on future price movements under disciplined risk management approach � One-year committed line of credit $110 million � Employees with substantial Pacific Northwest experience and knowledge � BPA; Northwest Power Pool; Regional utilities 21
A DIRECT APPROACH Avista Energy - Firm Electric and Natural Gas Resources British Columbia AECO Sumas Teck Cominco Kingsgate Saskatchewan Alberta Washington Chelan Mid-Columbia Spokane Montana Lancaster (270mw) Jackson Prairie Storage ) (6.1 BCF) w m Clark Co. 0 5 1 PUD ( Stanfield Gas Electricity John Location Transmission Pipeline transport Day BPA Spread NEGT PGE NW Pipeline (200 mw) Time Hydro facilities Natural gas storage Spread Chelan Co PUD Oregon Jackson Prairie Teck Cominco To Rockies Inter-commodity Spread Idaho Medford Natural gas-fired generation COB Malin * Lancaster Project * Clark County PUD 22
Recommend
More recommend
