September 16, 2008

Avista Reaches Multi-Party Settlement in Washington Electric and Natural Gas General Rate Cases

SPOKANE, Wash., Sept. 16 /PRNewswire-FirstCall/ -- Avista and other parties have reached a settlement agreement in the electric and natural gas general rate cases filed with the Washington Utilities and Transportation Commission (WUTC) on March 4, 2008, to recover increased costs of providing service to Washington customers. The agreement calls for electric base rates for Washington customers to increase by an average of 9.1 percent and natural gas base rates to increase by an average of 2.4 percent.


The parties to the agreement include Avista, the WUTC Staff, the Northwest Industrial Gas Users (NWIGU) and The Energy Project. The recommendations of these parties to approve the settlement are not binding on the Commission. The Industrial Customers of Northwest Utilities (ICNU) also joined in portions of the settlement. The Public Counsel Section of the Washington Attorney General's Office did not join the agreement.

The agreement will be presented to the WUTC for its consideration. If approved, the new electric and natural gas rates would become effective on Jan. 1, 2009. A residential electric customer using an average of 1,000 kilowatt hours per month would see a $5.86 increase, for a revised monthly electric bill of $73.72. A residential natural gas customer using an average of 70 therms per month would see a $2.18 increase, for a revised monthly bill of $87.33.

"We are pleased that a number of parties were able to achieve a reasonable resolution of all issues," said Scott Morris, Avista Corp. chairman, president and chief executive officer. "In addition to providing additional recovery of costs to serve our Washington customers, the agreement would provide additional support to help mitigate the impact of rising energy prices on our low income and most vulnerable customers."

The agreement calls for an increase in low income energy payment assistance of $500,000 per year through the Low Income Rate Assistance Program (LIRAP), from $3.9 million to $4.4 million annually. In addition, energy efficiency and conservation funding for low income customers will increase by $350,000, for a total of almost $1.5 million earmarked for these activities.

The settlement is based on a rate of return of 8.22 percent, with a common equity ratio of 46.3 percent and a 10.2 percent return on equity. It is intended to increase annual electric revenues by $32.5 million and to increase annual natural gas revenues by $4.8 million. Also in the settlement, the parties agreed to accumulate for later recovery the expenses, including a carrying charge, related to relicensing the five hydroelectric projects on the Spokane River.

Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities is our operating division that provides service to 352,000 electric and 311,000 natural gas customers in three Western states. Avista's primary, non-regulated subsidiary is Advantage IQ. Our stock is traded under the ticker symbol "AVA." For more information about Avista, please visit

This news release contains forward-looking statements regarding the company's current expectations. Forward-looking statements are all statements other than historical facts. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the expectations. These risks and uncertainties include, in addition to those discussed herein, all of the factors discussed in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2007, and the Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

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CONTACT: Avista 24|7 Media Access, +1-509-495-4174, or Media, DebbieSimock, +1-509-495-8031, [email protected], or Investors, JasonLang, +1-509-495-2930, [email protected], all of Avista

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