Avista Corp. (AVA)
Q2 2010 Earnings Call Transcript
August 05, 2010 10:30 am
Jason Lang - IR Manager
Scott Morris - Chairman, President & CEO
Mark Thies - SVP & CFO
Dennis Vermillion - Sr. VP, Avista Corp & President, Avista Utilities
Brian Russo - Ladenburg Thalmann
Jennifer Sireklove - McAdams Wright Ragen
Jim Bellessa - D.A. Davidson
Previous Statements by AVA
» Avista Corporation Q1 2010 Earnings Call Transcript
» Avista Corp. Q3 2009 Earnings Call Transcript
» Avista Corp. Q4 2008 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the second quarter 2010 Avista Corporation earnings conference call. My name is Novella and I will your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator instructions) As a reminder this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today’s call, Mr. Jason Lang, Investor Relations Manager. Please proceed.
Thank you, Novella. Good morning everyone. Welcome to Avista’s second quarter 2010 earnings conference call. Our earnings were released pre-market this morning and the release is available on our website at avistacorp.com.
Joining me this morning are Avista Corp. Chairman of the Board, President and CEO, Scott Morris; Senior Vice President and CFO, Mark Thies; Senior Vice President and the President of Avista Utilities, Dennis Vermillion; Vice President of Finance Jason Thackston; and the Vice President and Controller and Principal Accounting Officer, Christy Burmeister-Smith.
Some of the statements that will be made today are forward-looking statements that involve risks and uncertainties, which are subject to change. For a reference to the various factors, which could cause actual results to differ materially from those discussed in today’s call, please refer to our Form 10-K for 2009 and Form 10-Q for the first quarter of 2010 which are available on our website.
To begin this presentation, I’d like to recap the financial results presented in today’s press release. For the second quarter of 2010, our consolidated earnings were $0.46 per diluted share compared to $0.47 per diluted share for the second quarter of 2009. On a year-to-date basis our consolidated earnings were $0.98 per diluted share for 2010 compared to $1.04 for 2009.
Now I’ll turn the discussion over to Scott Morris.
Thanks, Jason, and good morning everyone. We had a good second quarter, our outlook improved for the full year of 2010 particularly with respect to our utility earnings. Cooler and wetter than normal weather this spring resulted in improved hydro-electric generation conditions. However we still expect below normal generation for 2010 due to low snow pack and precipitation last winter.
Given the improved hydro-electric generation we expect lower power supply costs and an increased benefit under the Washington Energy Recovery Mechanism for 2010. The improvement in the second quarter has partially offset a challenging first quarter due to one of warmest January to March periods on record. As such, we are confirming our 2010 earnings guidance with the expectation that we will be in the lower half of our consolidated guidance range.
Because of the warmer weather in the first quarter, residential electric use per customer was down 7% and residential natural gas use per customers was down 12% as compared to the first half of 2009. Commercial use per customers decreased 5% for electric and 16% for natural gas over the same period last year. We will continue to execute on our regulatory strategy to recover costs and capital investments in our utility business.
We reset general rates in each of our jurisdictions in the past year. In March we filed general rate cases in Washington and Idaho. In Washington, the commission has established a procedural schedule for staff and intervener testimony due in early September, our rebuttal due in early October and hearing is the first week of November. The commission has up to 11 months from our initial filing to review the case and issue a decision.
As you know in July, we reached the settlement in the Idaho general rate case. The Idaho settlement is designed to increase annual base electric revenues by $21.2 million and increase annual base natural gas revenues by $1.8 million. If approved by the Idaho commission new rates would become effective this October. And we are planning to file a natural gas general rate case in Oregon by the end of the third quarter.
Employment remains suppressed in most of our service area after cut backs in the construction and forest products, mining and manufacturing sectors although the pace of decline has slowed in the last twelve months. The job market in Spokane and Coeur d'Alene slowed later in the cycle than in the United States as a whole, while Medford has been more in line with the nation on average.
However both Spokane and Coeur d'Alene are coming out of the cycle a little later which is typical of these areas and national recessions although this is an atypical recession. Unemployment rates in June were 8.5% in Spokane, 9.6% in Coeur d’Alene and 12.2% in Medford, Oregon compared to the national average of 9.6%. The housing markets in Coeur d’Alene and Medford have had a little bit of a higher foreclosure rates than the national average.
The housing market in Spokane had a foreclosure rate well below the national average. We are committed to continuing our investment in utility infrastructure with a focus on increasing capacity and maintaining or/and improving our reliability. Utility capital expenditures were $80 million for the first half of the year. We expect capital expenditures to be $210 million for 2010 excluding the cost for our projects associated with stimulus funding.