Avista Corp. Reports First Quarter 2009 Results

SPOKANE, Wash., April 29 /PRNewswire-FirstCall/ -- Avista Corp. (NYSE: AVA)
today reported net income of $31.0 million, or $0.57 per diluted share, for
the first quarter of 2009, compared to net income of $25.2 million, or $0.47
per diluted share, for the first quarter of 2008.

"We had a strong first quarter and are off to a great start in 2009," said
Avista Chairman, President and Chief Executive Officer Scott L. Morris. "Even
with the decline in the economy, we saw approximately one percent growth in
both electric and natural gas customers during the first quarter of 2009 as
compared to the first quarter of 2008. During the first quarter of 2009, our
subsidiary, Advantage IQ, signed new contracts that should add over $2 million
in new revenues annually.

"Hydroelectric generation during the first quarter of 2009 was significantly
better as compared to the first quarter of 2008. Based upon current snowpack
conditions and projected stream flows, we expect hydroelectric generation to
be near normal for 2009. We are also experiencing lower purchased power and
fuel prices, as well as a decrease in natural gas costs. We plan to file
requests in the coming weeks to pass along to our Washington and Idaho natural
gas customers a benefit resulting from lower natural gas prices that we have
experienced since our last price decrease to customers in January of this
year. These Purchased Gas Adjustments are designed to pass through changes in
natural gas costs to our customers with no change in gross margin or net
income.

"In addition, we remain focused on diligently managing our operating costs,
finding additional operating efficiencies, and providing reliable energy to
our customers. Such measures include aggressively managing our employee
headcount through attrition and restrictions on hiring.

"Further, we are actively pursuing the identification of projects that could
be funded under the American Recovery and Reinvestment Act. Our focus is to
identify opportunities that will match the goals of the stimulus funding and
benefit our stakeholders.

"During these challenging economic times, we reflect on our 120-year history
and remain committed to being innovative, achieving operational targets, and
delivering the reliable service and value that both our customers and
shareholders expect," Morris said.

First Quarter of 2009 Highlights

Avista Utilities: Avista Utilities contributed net income of $30.6 million,
or $0.56 per diluted share, for the first quarter of 2009 compared to $23.3
million or $0.44, for the first quarter of 2008. This was primarily the
result of increased gross margin (operating revenues less resource costs) from
the implementation of new rates in Washington and Idaho. These rate
increases, determined to be reasonable and fair by the respective state
regulatory commissions, were implemented following a full review and approval
of our costs.

Also contributing to the increase in gross margin was a benefit of $2.7
million in the first quarter of 2009 under the Energy Recovery Mechanism as
compared to the $3.4 million Avista Utilities absorbed in the first quarter of
2008. The lower electric resource costs during the first quarter of 2009 were
a result of better hydroelectric generation than expected, as well as lower
purchased power and fuel prices.

Avista Utilities' operating revenues decreased by $11.4 million in the first
quarter of 2009 as compared to the first quarter of 2008, as a result of
decreases in natural gas revenues of $25.6 million, partially offset by
increased electric revenues of $14.2 million. The decrease in natural gas
revenues was primarily a result of decreased wholesale natural gas revenues,
which was a result of lower wholesale natural gas prices. The increase in
electric revenues was primarily due to increased retail electric revenues
related to the implementation of new rates in Washington and Idaho.

Additionally, the improved results reflect a decrease in interest expense of
$3.4 million that was achieved by refinancing maturing higher cost debt with
lower cost long-term debt, as well as lower interest rates on borrowings under
Avista's $320 million committed line of credit.

Other utility operating expenses increased $6.0 million for the first quarter
of 2009 as compared to the first quarter of 2008, primarily due to an increase
of $2.8 million in operating and maintenance expenses at our generation
facilities, as well as a $2.5 million increase in pension and other
postretirement benefit costs.

Advantage IQ: Advantage IQ's net income attributable to Avista Corporation
was $1.2 million, or $0.02 per diluted share, for the first quarter of 2009
compared to $1.8 million or $0.03 per diluted share, for the first quarter of
2008. This was primarily a result of a decrease in interest earnings on funds
held for customers (due to lower interest rates), our reduced ownership
percentage in the business and amortization of intangible assets resulting
from the Cadence Network, Inc. (Cadence Network) transaction. As previously
reported, Advantage IQ acquired Cadence Network, a Cincinnati-based energy and
expense management company, effective July 2, 2008. As consideration, the
previous owners of Cadence Network received a 25 percent ownership interest in
Advantage IQ.

Advantage IQ's revenues for the first quarter of 2009 increased 38 percent as
compared to the first quarter of 2008 and totaled $17.3 million. The increase
in revenues was due to an increase in service revenues of 57 percent,
partially offset by a 74 percent decrease in interest revenue. In the first
quarter of 2009, Advantage IQ managed bills totaling $4.6 billion, an increase
of $1.2 billion, or 35 percent, as compared to the first quarter of 2008. The
acquisition of Cadence Network added $1.0 billion in managed bills for the
first quarter of 2009.

Other Businesses: For the first quarter of 2009, the net loss attributable to
Avista Corporation of one cent per diluted share from our other businesses was
primarily due to losses on venture fund investments.

Summary Results: Results for the first quarter of 2009 as compared to the
first quarter of 2008:

($in thousands, except per-share data) Q1 2009 Q1 2008

Operating Revenues $487,470 $496,307
Income from Operations $65,845 $59,061
Net Income attributable to Avista Corporation $31,026 $25,231
Net Income (Loss) attributable to Avista
Corporation by Business Segment:
Avista Utilities $30,583 $23,314
Advantage IQ $1,167 $1,766
Other $(724) $151
Contribution to earnings per diluted share by
Business Segment:
Avista Utilities $0.56 $0.44
Advantage IQ $0.02 $0.03
Other $(0.01) $-
Total earnings per diluted share Attributable
to Avista Corporation $0.57 $0.47

Liquidity and Capital Resources: As of March 31, 2009, we had a combined
$354.1 million of available liquidity under our $320 million committed line of
credit, $200 million committed line of credit and $85 million revolving
accounts receivable sales facility. We anticipate issuing long-term debt
during the second half of 2009 to reduce the balances outstanding under our
committed line of credit agreements. Additionally, during 2009 we are
currently planning to remarket or refund the $66.7 million of Pollution
Control Bonds that we repurchased in 2008.

On April 1, 2009, we redeemed the total amount outstanding ($61.9 million) of
our Junior Subordinated Debt Securities held by AVA Capital Trust III.
Concurrently, AVA Capital Trust III redeemed all of the Preferred Trust
Securities issued to third parties ($60.0 million) and all of the Common Trust
Securities issued to us ($1.9 million). The net redemption of $60.0 million
was funded by borrowings under our $320.0 million committed line of credit
agreement.

Avista has a sales agency agreement to issue up to 2 million shares of common
stock from time to time. We issued 750,000 common shares under this agreement
in 2008. We will continue to evaluate issuing common stock in future periods;
however, we are not currently planning to issue common stock in 2009.

Utility capital expenditures were $42 million for the first quarter of 2009.
We expect utility capital expenditures to be approximately $210 million for
each of the full years of 2009 and 2010, reflecting our continued investment
in upgrading the aging utility infrastructure to increase reliability. Actual
capital expenditures may vary from our estimates due to factors such as
changes in business conditions, construction schedules and environmental
requirements.

Earnings Guidance and Outlook

We are confirming our 2009 guidance for consolidated earnings to be in the
range of $1.40 to $1.60 per diluted share. We expect Avista Utilities to
contribute in the range of $1.30 to $1.45 per diluted share for 2009. Our
outlook for Avista Utilities assumes, among other variables, normal
precipitation, temperatures and hydroelectric generation for the remainder of
the year. We expect Advantage IQ to contribute in the range of $0.12 to $0.14
per diluted share and the other businesses to be between a loss of $0.02 and a
contribution of $0.01 per diluted share.

NOTE: We will host a conference call with financial analysts and investors on
April 29, 2009, at 10:30 a.m. ET to discuss this news release. The call is
available at (800) 706-7741, passcode: 45742134. A simultaneous webcast of
the call is available on our website, www.avistacorp.com. A replay of the
conference call will be available through Monday, May 4, 2009. Call (888)
286-8010, passcode 88776149 to listen to the replay.

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 355,000 electric
and 315,000 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
www.avistacorp.com.

Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation.

The attached condensed consolidated statements of income, condensed
consolidated balance sheets, and financial and operating highlights are
integral parts of this earnings release.

This news release contains forward-looking statements, including statements
regarding our current expectations for future financial performance and cash
flows, capital expenditures, financing plans, our current plans or objectives
for future operations and other factors, which may affect the company in the
future. Such statements are subject to a variety of risks, uncertainties and
other factors, most of which are beyond our control and many of which could
have significant impact on our operations, results of operations, financial
condition or cash flows and could cause actual results to differ materially
from those anticipated in such statements.

The following are among the important factors that could cause actual results
to differ materially from the forward-looking statements: weather conditions
and their effect on energy demand and generation, including the effect of
precipitation and temperatures on the availability of hydroelectric resources
and the effect of temperatures on customer demand; global financial and
economic conditions (including the availability of credit) and their effect on
our ability to obtain funding for working capital and long-term capital
requirements on acceptable terms; economic conditions in our service areas,
including the effect on the demand for, and customers' ability to pay for, our
utility services; our ability to obtain financing through the issuance of debt
and/or equity securities, which can be affected by various factors including
our credit ratings, interest rates and other capital market conditions; the
effect of any change in our credit ratings; changes in actuarial assumptions,
the interest rate environment and the actual return on plan assets for our
pension plan, which can affect future funding obligations, costs and pension
plan liabilities; changes in wholesale energy prices that can affect, among
other things, the cash requirements to purchase electricity and natural gas
for retail customers or wholesale obligations and the market value of
derivative assets and liabilities; volatility and illiquidity in wholesale
energy markets, including the availability of willing buyers and sellers and
prices of purchased energy and demand for energy sales; the effect of state
and federal regulatory decisions affecting our ability to recover costs and/or
earn a reasonable return including, but not limited to, the disallowance of
costs that we have deferred and the willingness of regulators to grant
necessary rate increases; the potential effects of legislation or
administrative rulemaking, including the possible adoption of national or
state laws requiring resources to meet certain standards and placing
restrictions on greenhouse gas emissions to mitigate concerns over global
climate changes; the outcome of legal proceedings and other contingencies;
changes in, and compliance with, environmental and endangered species laws,
regulations, decisions and policies, including present and potential
environmental remediation costs; wholesale and retail competition including,
but not limited to, electric retail wheeling and transmission costs; the
ability to relicense and maintain licenses for our hydroelectric generating
facilities at cost-effective levels with reasonable terms and conditions;
unplanned outages at any of our generating facilities or the inability of
facilities to operate as intended; unanticipated delays or changes in
construction costs, as well as our ability to obtain required operating
permits for present or prospective facilities; natural disasters that can
disrupt energy production or delivery, as well as the availability and costs
of materials and supplies and support services; blackouts or disruptions of
interconnected transmission systems; the potential for terrorist attacks or
other malicious acts, particularly with respect to our utility assets; changes
in the long-term climate of the Pacific Northwest, which can affect, among
other things, customer demand patterns and the volume and timing of
streamflows to our hydroelectric resources; changes in industrial, commercial
and residential growth and demographic patterns in our service territory; the
loss of significant customers and/or suppliers; default or nonperformance on
the part of any parties from which we purchase and/or sell capacity or energy;
deterioration in the creditworthiness of our customers and counterparties; the
effect of any potential decline in our credit ratings; increasing health care
costs and the resulting effect on health insurance provided to our employees
and retirees; increasing costs of insurance, changes in coverage terms and our
ability to obtain insurance; employee issues, including changes in collective
bargaining unit agreements, strikes, work stoppages or the loss of key
executives, as well as our ability to recruit and retain employees; the
potential effects of negative publicity regarding business practices, whether
true or not, which could result in, among other things, costly litigation and
a decline in our common stock price; changes in technologies, possibly making
some of the current technology obsolete; changes in tax rates and/or policies;
and changes in our strategic business plans, which may be affected by any or
all of the foregoing, including the entry into new businesses and/or the exit
from existing businesses.

For a further discussion of these factors and other important factors, please
refer to our Annual Report on Form 10-K for the year ended Dec. 31, 2008. The
forward-looking statements contained in this news release speak only as of the
date hereof. We undertake no obligation to update any forward-looking
statement or statements to reflect events or circumstances that occur after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors, nor can it assess the
impact of each such factor on our business or the extent to which any such
factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statement.

AVISTA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in Thousands except Per Share Amounts)

First Quarter
-------------
2009 2008
---- ----

Operating revenues $487,470 $496,307
-------- --------

Operating expenses:
Resource costs 295,420 324,146
Other operating expenses 75,025 65,564
Depreciation and amortization 24,285 22,451
Utility taxes other than income taxes 26,895 25,085
------ ------
Total operating expenses 421,625 437,246
------- -------

Income from operations 65,845 59,061
------ ------

Other income (expense):
Interest expense, net of capitalized interest (16,398) (19,784)
Other income (expense) - net (560) 1,176
---- -----
Total other income (expense) - net (16,958) (18,608)
------- -------

Income before income taxes 48,887 40,453

Income taxes 17,468 15,089
------ ------

Net income 31,419 25,364
Less: Net income attributable to noncontrolling
interest (393) (133)
---- ----

Net income attributable to Avista Corporation $31,026 $25,231
======= =======

Weighted-average common shares outstanding
(thousands), basic 54,616 53,020

Weighted-average common shares outstanding
(thousands), diluted 54,722 53,382

Earnings per common share attributable to
Avista Corporation:

Basic $0.57 $0.48
===== =====
Diluted $0.57 $0.47
===== =====

Dividends paid per common share $0.180 $0.165
====== ======

Issued April 29, 2009

AVISTA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in Thousands)

March 31, December 31,
2009 2008
---- ----

Assets

Cash and cash equivalents $35,654 $24,313
Accounts and notes receivable 215,542 218,846
Other current assets 178,787 239,068
Total net utility property 2,503,986 2,492,191
Total other property and investments 135,524 138,876
Regulatory assets for deferred income taxes 101,705 115,005
Regulatory assets for pensions and other
postretirement benefits 169,396 172,278
Other regulatory assets 83,927 85,112
Non-current utility energy commodity
derivative assets 35,322 49,313
Power cost deferrals 44,867 57,607
Unamortized debt expense 31,862 33,004
Other deferred charges 7,130 5,134
----- -----

Total Assets $3,543,702 $3,630,747
========== ==========

Liabilities and Stockholders' Equity

Accounts payable $136,648 $176,116
Current portion of long-term debt 17,132 17,207
Short-term borrowings 226,100 252,200
Other current liabilities 243,706 243,021
Long-term debt 809,686 809,258
Long-term debt to affiliated trusts 113,403 113,403
Regulatory liability for utility plant
retirement costs 214,770 213,747
Pensions and other postretirement benefits 170,739 184,588
Deferred income taxes 470,913 488,940
Other non-current liabilities and deferred
credits 110,285 124,178
------- -------

Total Liabilities 2,513,382 2,622,658
--------- ---------

Stockholders' Equity
Avista Corporation Stockholders' Equity:
Common stock - net (54,643,215 and 54,487,574
outstanding shares) 775,813 774,986
Retained earnings and accumulated other
comprehensive loss 243,407 221,897
------- -------
Total Avista Corporation Stockholders' Equity 1,019,220 996,883
Noncontrolling interest 11,100 11,206
------ ------

Total Stockholders' Equity 1,030,320 1,008,089
--------- ---------

Total Liabilities and Stockholders' Equity $3,543,702 $3,630,747
========== ==========

Issued April 29, 2009

AVISTA CORPORATION
FINANCIAL AND OPERATING HIGHLIGHTS (UNAUDITED)
(Dollars in Thousands)

First Quarter
-------------
2009 2008
---- ----

Avista Utilities
Retail electric revenues $195,516 $177,687
Retail kWh sales (in millions) 2,450 2,497
Retail electric customers at end of period 355,370 352,361

Wholesale electric revenues $29,201 $30,676
Wholesale kWh sales (in millions) 597 311

Sales of fuel $11,972 $14,578
Other electric revenues $3,778 $3,296

Retail natural gas revenues $180,586 $184,333
Wholesale natural gas revenues $36,505 $58,861
Transportation and other natural gas revenues $3,306 $2,841
Total therms delivered (in thousands) 264,489 263,663
Retail natural gas customers at end of period 314,798 311,495

Income from operations (pre-tax) $63,622 $55,800
Net income attributable to Avista Corporation $30,583 $23,314

Advantage IQ
Revenues $17,340 $12,520
Income from operations (pre-tax) $2,624 $3,005
Net income attributable to Avista Corporation $1,167 $1,766

Other
Revenues $9,266 $11,515
Income (loss) from operations (pre-tax) $(401) $256
Net income (loss) attributable to Avista
Corporation $(724) $151

Issued April 29, 2009

SOURCE Avista Corp.

Media, Jessie Wuerst, +1-509-495-8578, jessie.wuerst@avistacorp.com, or
Investors, Jason Lang, +1-509-495-2930, jason.lang@avistacorp.com, both of
Avista Corporation, or Avista 24/7 Media Access, +1-509-495-4174