Business person of the year: Avista’s homegrown CEO

SPOKANE — Avista Corp.’s incoming CEO, Heather Rosentrater, understood she needed help — and a lot of it — the instant she saw that more than 36,000 customers were without natural gas after the rupture of a high pressure transmission line last year near Pullman.

Early on, Rosentrater, who was Avista’s president and chief operating officer at the time, put out a call for mutual aid to other utilities and began to identify Avista employees with skills to assist who could be temporarily reassigned.

“We knew we needed to start reaching out at that moment to alert our peers we were going to be asking for that,” she said.

The decisiveness of Rosentrater and Avista’s team in the crisis minimized the impact of the outage that hit in November 2023, one of the coldest months of the year.

In about a week, natural gas service had been restored to most homes and businesses. With natural gas flowing again, people resumed normal activities such as heating their homes and businesses and taking hot showers.

As impressive as Avista’s response was, the impact of the outage is still lingering. Avista estimates it spent $9.2 million on the emergency. One of the largest expenses was purging the system, repressurizing it and relighting gas appliances for each customer. The process involved long hours of overtime for its own staff and thousands of out-of-state contractors of other utilities.

How much Avista will be reimbursed is an open question. The utility has filed a claim with the insurance provider of the individual who Avista believes hit the line doing work in his field, Rosentrater said.

That challenge is among those Rosentrater is facing as she becomes Avista’s top executive. On Jan. 1, she is replacing CEO Dennis Vermillion, who is retiring from Avista.

The utility is the primary provider of natural gas and electricity in a territory that encompasses almost all of eastern Washington, north central Idaho and northern Idaho, including towns like Lewiston, Clarkston, Moscow, Pullman, Orofino and Grangeville.

In Rosentrater’s new role, she’ll be drawing on the comprehensive understanding she’s developed of the technical and financial sides of the business in a 28-year career that she began as an engineer at an Avista subsidiary.

Her rise within Avista and her support of causes like the YWCA are reasons the Lewiston Tribune named Rosentrater its Business Person of the Year.

The selection committee has used the same criteria for the honor since it was first bestowed in 2000, basing it on the talents and principles individuals possess. (See sidebar.)

I talked with Rosentrater about the outage, ongoing issues Avista faces, what she learned in the early part of her career and the future of Avista.

The edited highlights of our conversation are as follows:

Elaine Williams: What has Avista learned about potential solutions to mitigate the disruption if a similar rupture of a natural gas transmission line were to happen in the future?

Heather Rosentrater: We had a whole group look at the issue. We’ve looked at whether it is possible to have a parallel line. The costs are just so significant that it’s unlikely we’d be able to do that. We’ve looked at other options such as compressed natural gas tankers and liquid natural gas tankers and having locations on the system for injection points. It’s challenging because you might be able to support some customers with that kind of solution, but not an entire community. We don’t have a silver bullet.

EW: The threat of wildfires is another concern for Avista, especially because of the remote areas your lines traverse. What are some steps Avista is taking to make its infrastructure less susceptible to wildfires?

HR: We’re replacing some of our wood transmission poles with steel ones. We have a fireproof material we can wrap around the base of wood poles in areas with low grass. In new construction, we generally build the electrical infrastructure underground, including circuits that turn power off and on and help limit the scope of outages. In a high-risk area in southern Spokane County, we’ve moved an existing circuit underground to learn about the costs, process and logistics of doing that. There’s a number of variables like the vegetation and if the soil type is sand or basalt.

EW: In addition to service interruptions because of the natural gas transmission line rupture, wildfires and other reasons, Avista customers have seen rates rise significantly in recent years. Could you talk a little about that?

HR: Equipment prices have risen dramatically. One distribution transformer, for example, serves one to five homes. We have seen the price for those rise by as much as 300% in the last few years. For a single-phase pad mount transformer, the cost in 2020 was $1,711. In 2024, it was $5,562.

EW: Demand for power is growing. What can you share about that?

HR: A ChatGPT search, which is the default on some of our devices, takes 10 times as much energy as a normal Google search. That statistic alone makes it evident why there’s so much more demand for electricity and that going forward there will be significantly more demand.

EW: How could the energy-intensive environment benefit Avista’s customers?

HR: We’re had an increase in inbound inquiries for large load customers, like data centers, as many utilities across the country have. We have a team right now focused on if there would be a way to serve one of those customers and structure it in a way that could actually provide rate relief for existing customers. There’s fixed costs associated with how we run the business and we’re looking at if there are ways to spread those fixed costs over more usage.

EW: Keeping rates as low as possible for customers isn’t the only financial pressure Avista is encountering. Standard & Poor’s, one of two credit rating agencies that rates you, has you on a negative watch. What are some of the reasons?

HR: One metric they look at is funds from operations over debt. That’s the metric we’re specifically focused on improving. A lot of it is high inflation. But also there were just more costs on the business than were included in our previous rates. So what we were able to recover was less than what things actually cost. We have a path that is reasonable to get there, but if other headwinds come our way, it could put that at risk.

EW: What impact does Avista’s credit rating have on customers?

HR: We have a lot of infrastructure that needs a lot of investment. All utilities borrow money to cover those upgrades. The way we’re designed, about half of our investment every year is through debt. Our credit ratings impact our ability to access capital from both our shareholders and lenders. Our debt becomes harder to obtain and more expensive as the fees and interest charged for our debt financing increase when we do not maintain investment-grade credit ratings. Currently, Avista has investment-grade credit ratings from both Standard & Poor’s (S&P) and Moody’s. S&P has issued a negative outlook on Avista. It’s important for us to mitigate their concerns in order to avoid a credit rating downgrade so that we can continue to affordably access the funding we need to serve our customers.

EW: Changing gears a little, you have been involved in the power industry your entire career. What did you do in your first position?

HR: I was an electrical engineer at Avista Labs, a fuel cell company that was a subsidiary of Avista Corp. The fuel cells we designed had a proton exchange membrane. Our type took in hydrogen and created electricity. I was designing the circuit boards that were control systems for the fuel cells. I designed the user interfaces so we could visually see what was going on electrically and the communication systems between the systems and the user interfaces. Some fuel cells are stacked so if one membrane goes bad, it deteriorates the performance of the whole stack. Ours were modular. If one membrane went bad, you could pull it out and replace it with a new membrane. It was pretty amazing and exciting to be involved in the thinking about our need for clean energy in the future. This technology has no greenhouse gas emissions. Hydrogen is the input and the output is heat, electricity and water.

EW: What other broad takeaway do you carry from that position?

HR: The vision was that there was the potential for these fuel cells to be the energy sources in many places, at telecom sites, perhaps every family would have one in their home. In 1996, we thought it was maybe five years away. If it works, it’s going to be maybe another 20 years and we still don’t know if it’s going to pencil out. It was a good learning (experience) for me to really understand the timeline of some of these technologies and how long it really takes to advance and develop them and get to the economics that make sense on a large, large scale.

EW: Something else you learned in that role was related to management, not the nuts and bolts of electricity. What can you share about that?

HR: They laid off about half of the workforce because of the energy crisis and the burst of the dot-com bubble. That impacted the culture a lot in terms of morale. Even those of us that did keep our jobs, we were concerned about our job security. I took that experience to heart. I want to make sure the decisions I’m making as a leader protect us from that. We might not staff up as quickly in the high times so that we don’t have layoffs. Sometimes that can be frustrating to employees, feeling like we’re not moving as fast as they want us to, but it’s really intentional in terms of supporting security for our employees.

EW: You’re sharing the philosophy you just described as you work toward a goal of meeting every employee in the company. Talk about how that is going.

HR: We have 130 departments. My plan is to have breakfast with every one of those 130 groups by the end of next year. I started that in September and I’ve done about 30. That helps open the lines of communication and learn what the employees like about what they do and what we can do better. We also have onboarding sessions for employees every two weeks. I try to go to those and welcome employees. It’s nice to hear the different reasons why people come to work for Avista. I hold that dear.

EW: What will Avista’s focus for customers be in upcoming years?

HR: Like most businesses, Avista is facing high interest rates and high inflation. We’re trying to find ways to offset that cost and minimize the impact to customers through cost-conscious budget management.

Williams may be contacted at [email protected] or (208) 848-2261.

Heather Rosentrater

Job title: President, chief operating officer and incoming CEO of Avista Corp.

Age: 47.

Education: Graduate of West Valley High School in Spokane; bachelor’s degree in electrical engineering from Gonzaga University in Spokane.

Career history: Spent her entire professional career at Avista, beginning in 1996 as a student engineering technician for Avista Labs. This fuel cell subsidiary business was later sold and became ReliOn. In 1999, Rosentrater joined Avista Corp. as an electrical engineer and was promoted to leadership roles that built her expertise across Avista’s electric and natural gas businesses. She managed departments and projects in electric transmission and distribution, system operations, natural gas supply and business process improvement before being named vice president of energy delivery in 2015. In 2019, Rosentrater was named senior vice president of energy delivery and shared services. In August 2022, her responsibilities expanded to senior vice president and COO. In October 2023, she became president and COO.

Family: Married with four children in a blended family.

Community involvement: 2nd Harvest board member; member of Gonzaga University School of Engineering and Applied Science Executive Council; past board member of YWCA, Vanessa Behan Crisis Nursery, West Valley Education Foundation and Spokane Parks Foundation.

Hobbies: Cheering on her last child at home in basketball, track and field, and cross country; baking; and skiing.

Business Person of the Year Selection Process:

Heather Rosentrater is the Lewiston Tribune’s Business Person of the Year for 2024. She is the incoming CEO of Avista Corp. and its president and COO.

The selection committee followed the same criteria that has always been used for the honor: “This person should be successful in business or management, with his or her success not necessarily measured by annual income, but by the principles demonstrated in the business and civic arenas. This person should be a role model for others and someone who is thought of as a leader in our region.”

The selection committee included A.L. “Butch” Alford, president of TPC Holdings, the parent company of the Lewiston Tribune and the Moscow-Pullman Daily News; Nathan Alford, editor and publisher of the Tribune and Daily News; Joanna Alford, chief marketing officer; Matt Baney, managing editor of the Tribune and Daily News; and Elaine Williams, business editor of the Tribune.