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Avista Gets Rate-Hike Approval

AVA

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Avista Corporation (AVA - Snapshot Report) has received approval for its electric and natural gas rate-hike appeal from the Washington Utilities and Transportation Commission (“UTC”). The new rates will be applicable from the first day of 2013 and 2014. Per the agreement, the company has agreed not to file a general rate case in the UTC till January 1, 2015.

This agreed electricity rate, effective from January 1, 2013 and January 1, 2014, will be increased overall by 3% in both years. However, due to the existing Energy Recovery Mechanism (“ERM”), the net average electricity rate will increase by 2% in 2013 and 2014. A Washington-based residential electricity customer, using an average of 989 kilowatt hours (“KWh”) per month, will pay an extra of $1.20 per month with a total of $78.69 in 2013, and $1.60 per month with a total of $80.29 in 2014. Overall, this rate revision will provide an additional $13.65 million and $14 million in 2013 and 2014.

This approved natural gas rate, effective from January 1, 2013 and January 1, 2014, will be increased by 3.6% and 0.9%, respectively. A Washington-based customer’s bill, using an average of 68 therms per month, will decrease 38 cents to $60.37 in 2013 and increase of 57 cents to $60.94 in 2014. Overall, this rate revision will provide an additional $5.3 million in 2013 and $1.4 million in 2014.

Initially, the company filed for an electric and natural gas rate increase with the UTC on April 2, 2012. If the new rates are approved by the commission, a Washington-based residential electric customer, consuming an average of 989 KWh per month, will have to pay an extra of $4.94 to $83.91. The natural gas customers, using an average of 68 therms per month, will have to pay an extra of $4.23 to $65.78. In October 2012, Avista made another filling to the UTC to revise its initial rate-hike appeal.

It is a normal practice for regulated utility providers to recover their invested funds on infrastructural development through rate hikes. Avista’s previous electric and natural gas rate hike was implemented in December 2011, to continue its infrastructure development plans and the Low Income Rate Assistance Program (“LIRAP”).

We expect the company’s future earnings growth to be backed by high quality utility services, continued investments in infrastructure-upgrade program and strong customer service.

Spokane, Washington-based Avista Corporation is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. It currently has a short-term Zacks #2 Rank (Buy rating).

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