COEUR d'ALENE - Avista Corp. said it had $87.1 million in net income for last year, which was up from $73.6 million in 2008.

"Overall, we are pleased with our results for 2009, which showed considerable improvement over 2008," said Scott Morris, Avista chairman, president and chief executive officer.

Avista's board of directors increased the common stock dividend to 25 cents a share, a jump of 19 percent, he said. It had been at 21 cents a share.

For the fourth quarter, Avista had net income of $22.1 million, compared with $17.5 million for the year-earlier quarter.

"In 2009, we made progress in the recovery of our costs and capital investments in our generation, transmission and distribution infrastructure," Morris said Thursday.

Paul Latta, an analyst for McAdams Wright Ragen Inc., in Seattle, said Avista did a good job controlling expenses in 2009.

"It was a pretty good year for the company, when you look historically over the last 15 years or so," said Latta, who has been following Avista off and on during that time.

Utilities are capital intensive operations and can be difficult to manage, especially in this kind of economic environment, Latta said.

Avista had the good fortune to avoid any unforeseen problems. "There were not bolts out of the blue, which do occasionally happen in the utility sector," Latta said.

He also said retail electricity sales for the year declined by less than 1 percent, which was a mild drop compared to drops in other regions of the U.S.

"Some regions are definitely doing better than others," Latta said.

Avista's total number of retail customers, about 485,000 in three western states, grew with net additions of more than 2,000 natural gas customers and 1,800 electric customers, said Jessie Wuerst, a spokeswoman for the investor-owned utility based in Spokane.

"That's a good increase considering the economy," said Wuerst.

Avista's power costs were less than the amount it included in its retail rates to customers, primarily because of lower than expected wholesale prices for electricity and natural gas, Morris said.

That was partially offset by below normal hydroelectric generation, because of low precipitation, cutting into Avista's income, as did an extended outage at the Colstrip Plant in Montana. The precipitation levels and outage led to Avista buying more power on the wholesale market, which subjected it to market fluctuations, said Wuerst.

Avista in November lowered natural gas rates for Idaho and Washington customers, ranging from 22 percent to 26 percent, as wholesale prices have declined. That was the third reduction in natural gas rates in 2009 for those customers.

Avista improved its financial results in part due to lower interest costs it paid, a result of financing transactions and decisions the company made in 2008 and 2009.

"That saves our customers quite a bit of money in the long run," Wuerst said.

Morris said Avista in September further strengthened its financial position when it issued $250 million of long-term debt with an interest rate of just more than 5 percent.

The utility funded a significant portion of its capital expenditures, such as renovation of its transmission infrastructure, with cash flows from its operations.

Avista now is working to replace distribution infrastructure, the poles, wires and substations closer to the end user with capital investments totaling about $210 million.

Efforts by Avista's customers to use less energy and be more efficient might also be contributing to the utility's solid performance in 2009, as energy conservation cuts down on the amount of energy that needs to be generated or purchased on the open market.

Gene and Dianne Ansbaugh, two of the owners of Idaho Lights in Coeur d'Alene and Sandpoint, which sells home lighting and light fixtures, said energy use and efficiency are definitely on their mind as business operators.

"It's a significant overhead expense," said Gene Ansbaugh. "We follow it closely."

It's on their customers' minds, too, they said. They also have a store in Spokane Valley, Evergreen Lighting.

They said the switch to compact fluorescent (CFL) bulbs in the lights and fixtures in their showrooms have cut down electricity use by 15 percent. The use of CFLs versus traditional incandescent bulbs also reduces the amount of energy consumed controlling temperatures in their buildings, they said.

Meanwhile, customers are demanding energy efficient lighting. Avista is making efforts of its own to give customers incentives to be more energy efficient.