Slide 1: Avista Corp. Business Update
Avista Corp. Business Update March 2008 NYSE: AVA www.avistacorp.com
Slide 2: Company Overview
Company Overview Headquartered in Spokane, Wash. Core business is the utility Generates, transmits and distributes electricity and distributes natural gas Has one of the smallest carbon footprints in the United States Non-regulated Subsidiary Advantage IQ Provides utility, telecom and waste bill pro
Slide 3: 2007 was a year of repositioning our Company
2007 was a year of repositioning our Company … ? Washington General Rate Case Settlement on October 30, 2007 ? New rates effective January 1, 2008 ? Electric rate increase of $30.2 million ? Natural gas rate increase of $3.3 million ? 46.0% equity ratio and 10.2% ROE ? On June 30, 2007, sold substan
Slide 4: We expect significant improvement in 2008
We expect significant improvement in 2008 ? New rates effective January 1, 2008 ? Reset the authorized power supply costs ? Hydro generation expected to be slightly above normal ? Moody’s and S&P recently upgraded our corporate credit rating to investment grade ? Decrease in interest expense ?? 273
Slide 5: The economy in our service territory is well diversified and continues to grow
The economy in our service territory is well diversified and continues to grow Healthcare, education, finance and tourism provide an important balance Strong commodity prices for wheat and metals have led to a resurgence in agriculture and mining Employment Growth 12 months ending December 2007 (ove
Slide 6: Responsible Resources
Responsible Resources
Slide 7: Avista is Long Resources through 2010
Avista is Long Resources through 2010* 2008-2017 Annual Available Resource Capability (in aMW) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Peakers Gas Dispatch Contracts Base Thermal Hydro Load * Excludes new resources from the 2007 Integrated Re
Slide 8: 2007 Integrated Resource Plan
2007 Integrated Resource Plan ? Preferred Resource Strategy by 2017 ? 350 MW of natural gas-fired plants ? 300 MW of wind ? 87 MW of conservation ? 38 MW of hydro plant upgrades ? 34 MW of other renewables Timing of Preferred Resource Strategy in MW 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 9: What Has Changed?
What Has Changed? ? Citizens Initiative 937 ?Renewables Mandate ? 3% Washington energy by 2012 ? 9% Washington energy by 2016 ? 15% Washington energy by 2020 ? Western governors sign agreement to reduce greenhouse gases (Washington, California, Oregon, Arizona, New Mexico) ? Washington HB 6001 limit
Slide 10: 2008 Budgeted Utility Capital Expenditures
2008 Budgeted Utility Capital Expenditures $200 million Electric T&D $46.4 Other $22.7 IS/IT $12.6 Growth $43.0 Generation $26.4 Gas $20.9 Environmental $8.5 AMR $5.0 JP Gas Storage Expansion $14.5
Slide 11: 2009-2010 Forecasted Utility Capital Expenditures
11 2009-2010 Forecasted Utility Capital Expenditures $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 Environmental Generation IS/IT Electric T&D Gas Growth Other 2009 2010 (in millions)
Slide 12: Avista Utilities Regulatory Update
Avista Utilities Regulatory Update Rate Base* Washington Idaho Oregon Electric Gas Electric Gas Gas $890 million $151 million $502 million $73 million $89 million Jurisdiction and Service Rate of Return Authorized Return on Equity Common Equity Level Washington Electric and Natural Gas 8.20% 10.20%
Slide 13: Oregon Gas General Rate Case
Oregon Gas General Rate Case ? Filed October 12, 2007 ? All-party settlement agreement reached on February 22, 2008 ? Increase will be implemented in two steps resulting in a total of $2.28 million ?? 866,000 in April 2008 ? Approximately $1.42 million in November 2008 based on completion of certain
Slide 14: Washington Electric and Gas General Rate Case
Washington Electric and Gas General Rate Case Filed March 4, 2008 Electric Natural Gas Amount $36.6 m $6.6 m % Increase 9.2% 3.3% Rate of Return 8.4% 8.4% Return on Equity 10.8% 10.8% Common Equity Ratio 46.3% 46.3% Primary Electric Revenue Requirement Factors Production & Transmission Expense 21% I
Slide 15: Advantage IQ
Advantage IQ ‘am
Slide 16: Advantage IQ
Advantage IQ Analyzes utility usage and provides cost-management services for national, multi-site customers Management services include electricity, natural gas, water/sewer, waste and telecom expenses Manage over $12.0B in expenses for 400+ clients Currently process and pay 620,000 bills per month
Slide 17: Financial Information
Financial Information Net Income $7,000 $6,000 $5,000 thousands) $4,000 $3,000 $ ($ 2,000 $1,000 $0 2004 2005 2006 2007 Revenue $50,000 $45,000 $40,000 $35,000 thousands) $30,000 $25,000 $20,000 $ ($ 15,000 $10,000 $5,000 $0 2004 2005 2006 2007
Slide 18: Financial
Financial 7
Slide 19: Investment Grade Credit Rating
Investment Grade Credit Rating Standard & Poor’s Moody’s Fitch, Inc. Corporate/Issuer Rating BBB- Baa3 BB+ Senior Secured Debt BBB+ Baa2 BBB Senior Unsecured Debt BBB- Baa3 BBB- ? Standard & Poor’s upgraded corporate credit rating and senior unsecured debt from BB+ to BBB- on February 7, 2008 ? Upgr
Slide 20: Financing Summary
Financing Summary Debt Maturity Profile $450 $273 million of 9.75% $400 notes mature June 2008 $350 $300 $250 $200 $150 $100 $50 $0 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
Slide 21: AVA Dividend Payment History
AVA Dividend Payment History $0.170 $0.165 $0.160 $0.12 per share $0.150 $0.150 dividend initially paid Dec. 15, 1998 $0.145 $0.140 $0.140 $0.135 $0.130 $0.130 $0.125 $0.12 $0.120 $0.110 $0.100 Dividend Increase Occurred Dividend Payment Trend Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 Q1 2005
Slide 22: Consolidated Earnings
Consolidated Earnings $1.75 $1.35-$1.55 $1.55 $1.46 $1.35 $1.15 $0.92 $0.95 $0.72 $0.72 $0.75 $0.55 $0.35 $0.15 -$ 0.05 2004 2005 2006 2007 2008 Guidance
Slide 23: 2008 Earnings Guidance
2008 Earnings Guidance Consolidated $1.35-$1.55 Avista Utilities $1.20-$1.40 Advantage IQ $0.10-$0.12 Other $(0.03)-$0.00
Slide 24: In Summary
In Summary … ? 2007 was a transition year and we expect significant improvement in 2008 ? Washington General Rate Case settled – rates effective January 1, 2008 ? Significant capital spend ? Continued growth at Advantage IQ ?? 273 million of 9.75% notes will be refinanced by June 2008 ? Room to incr
Slide 25: Forward-looking statements
This presentation contains forward-looking statements, including statements regarding our current expectations for future financial performance and cash flows, capital expenditures, our current plans or objectives for future operations, future hydroelectric generation projections and other factors,
Slide 26: Avista Corp.
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