Avista Corp., of Spokane, is considering moving its non-regulated businesses out of Spokane and expects to decide whether it will do so within the next six to 12 months.


Tom Matthews, Avistas chairman, president, and CEO, declines to disclose what other locations Avista is eyeing, but says the company has reached the next phase in its development, which is to ramp up the size of those businesses. He says Avista wont be able to do that here unless significant changes are made.


Our technology businesses are our growth businesses, and we have to ask ourselves, Can we grow them in Spokane? Matthews told a group of businesspeople, government leaders, and educators at a morning lecture at Gonzaga University last week.


Avista is considering relocating its non-regulated businesses partially because it also has had difficulty recruiting to Spokane qualified employees from elsewhere in the U.S., and because it has had difficulty attracting potential business partners here because of their apprehension over Spokanes growth-management issues and infrastructure problems, Matthews told the gathering.


Avista recently interviewed a pool of about 100 people for jobs at the company that would pay between $80,000 and $100,000 a year, but none of the applicants would agree to relocate to Spokane, Matthews said. He said that some of the applicantsmost of whom were minorities and womenwerent interested in coming here for a variety of reasons, such as that they couldnt find a social support network here or didnt think it would be easy for their spouse to find a good-paying job here, too.


Its easy to find one good job here, but not two, Matthews said.


The outcome of this falls city election, including the vote on city bond proposals, also will be a deciding factor in whether Avistas non-regulated businesses will be moved elsewhere, he said. In a phone interview early this week, Matthews said the company is watching to see who is elected to the City Council this fall and whether the council members will be pro business.


From a bond standpoint, were waiting to see if the city and county are committed to tourism rather than business, Matthews said. He wants to see money put toward roads rather than the convention center expansion and parks.


Avistas non-regulated businesses include Avista Advantage, which provides Internet-based specialty billing and information services; Avista Fiber, which builds and manages fiber-optic networks; Avista Communications, which provides dial-tone and data services to commercial accounts; Avista Labs, which has developed a fuel cell that generates electricity; Avista Power, which builds or buys electric-generation and natural-gas storage facilities; Avista Energy, which markets electricity, natural gas, and coal commodities; and Pentzer Corp., a private investment firm.


Matthews said Avista, which is working to become a national technology and energy company rather than a regional gas and electric utility, would continue to grow the utility side of its business, likely by acquiring other companies in the Northwest, and its utility business still would be headquartered here. Still, he added, the utility business is Avistas core business, but not our growth vehicle.


Overall, Avista Corp. is expected to increase its annual earnings by 8 percent to 10 percent a year, starting this year, and to have a stock market capitalization of $4 billion to $5 billion within five years, up from its current market cap of about $1 billion, Matthews said. He said he also is committed to growing Avistas stock value by 15 percent a year.


Matthews said that theres a strong likelihood that Avista would become a likely acquisition target within the next two years. He says that Avista isnt a target right now only because it operates in more than one state, and federal regulations currently restrict the acquisition of multistate utility companies.


The following business units hold important growth potential for Avista:


Avista Advantage is predicted to be worth between $200 million to $300 million within the next couple of years, and Matthews said companies such as Microsoft have expressed an interest in investing in the business.


The development of fiber-optic networks both in Spokane and elsewhere through Avista Fiber is expected to be a big growth area for Avista. Likewise, Avista Communications is a growing unit that within the next three years Avista hopes to monetize, which would mean either selling the business or conducting an initial public offering to be able to cash in on its worth. Matthews said telecommunications companies, such as Avista Communications, are valued at about $200 million right now.


Avista also plans to monetize Avista Labs, although a timeline hasnt been set yet to do that. Avista Labs has been estimated to be worth $1 billion to $2 billion. Avista Labs hopes to begin marketing the fuel cell to commercial businesses in the spring of next year, and to residential customers in the spring of 2001.


Challenges here


Matthews said that if Avista is to keep its non-regulated businesses here, Spokane must solve its infrastructure problems. He said hes looking to build new facilities for backroom operations for some of Avistas businesses and possibly a call center, but the difficulty that companies such as BFGoodrich have had securing necessary permits has caused him some concern.


Likewise, potential business partners have expressed a concern about the stories theyve heard of how hard it is to obtain permits, Matthews said. He said potential partners equally are concerned that if they team up with Avista, they might be called on to help support the needed road improvements here financially.


Matthews also expressed a concern about the difficulty of flying into and out of Spokane. He said that flights from Spokane to major hubs such as New York are expensive and can take half a day because there arent any direct flights.


Mobility definitely becomes a problem as were trying to grow nationally, Matthews said.


Matthews also addressed the need for better cooperation between the various government agencies hereand on the part of naysaying residents. He said that before coming to Spokane, he had never been to a place where everyone was so against everything and nobody was ever for anything. His comment brought a big round of applause from the audience.


We need to get people with can-do attitudes and we need can-do people on the (Spokane City) council here, Matthews continued.