Avista Reaches Settlement in Idaho Electric and Natural Gas Rate Requests

If approved, overall electric rates for residential customers could increase
by less than 2 percent with no net change in natural gas rates

SPOKANE, Wash., June 16 /PRNewswire-FirstCall/ -- Avista (NYSE: AVA) and all
other parties involved in the company's electric and natural gas rate filing
have reached a settlement agreement that, if approved by the Idaho Public
Utilities Commission (IPUC), would result in a residential rate increase of
less than two percent for electric customers and no net rate increase for
natural gas customers. The new rates would take effect Aug. 1, 2009.

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"The cost of natural gas is a major driver in the price customers pay on their
bill," said Dennis Vermillion, president of Avista Utilities. "Natural gas
prices have decreased substantially since we filed for rate adjustments this
past January. Just as customers have seen a decrease in the cost of natural
gas that they use in their homes, we've experienced a decrease in the cost of
natural gas used to generate electricity. We're pleased that the settlement
reflects these decreased costs for the benefit of our customers.

"We also believe the components of the settlement, when taken as a whole,
represent a fair resolution of the issues in the case, will provide recovery
of the company's costs, and will also provide an opportunity to earn a fair
return for shareholders," Vermillion said.

The settlement agreement sets Avista's rate of return on rate base at 8.55
percent, with a common equity ratio of 50 percent and a 10.5 percent return on
equity.

Lower natural gas prices related to electric generation are one of the major
reasons that the electric rate increase in the agreement is lower than the
company's original request. Additional factors include the exclusion of the
costs associated with short-term power supply contracts that will be recovered
through the existing power cost adjustment (PCA) mechanism. The agreement also
provides 100 percent recovery of the fixed costs associated with the Lancaster
Project through the PCA when Avista begins receiving power from the project in
January 2010.

Under the terms of the settlement agreement, electric revenues could increase
by an overall 5.7 percent, or $12.5 million. Offsetting the electric increase
will be an overall 4.2 percent decrease in the current PCA surcharge. As a
result of the two adjustments, a residential customer using an average of 982
kilowatt hours per month would see a 1.9 percent, or $1.50, increase per month
for a revised monthly bill of $79.97.

Included in the rate proposal are relicensing costs for the company's Spokane
River hydropower projects. The parties have agreed that if Avista receives
approval from the Federal Energy Regulatory Commission (FERC) for the
relicensing of its Spokane River hydropower projects before July 22, the
relicensing costs will be included in the electric rate increase. Avista's
relicensing application is currently on FERC's meeting agenda for June 18,
2009.

If Avista does not receive a new FERC license before July 22, under the terms
of the settlement the relicensing costs would continue to be deferred with a
carrying charge. The resulting increase in revenues would be 4.3 percent, or
$9.4 million. With the offsetting PCA decrease, a residential customer using
an average of 982 kilowatt hours per month would see a 0.6 percent, or $0.48,
increase per month for a revised monthly bill of $78.95.

For natural gas service, rates under the terms of the settlement agreement
would increase by 2.11 percent for $1.9 million in additional revenue.
Offsetting the natural gas rate increase for residential customers will be an
equivalent purchased gas adjustment (PGA) decrease. As a result, a residential
customer using an average of 65 therms per month would see no change in their
$78.23 per month bill.

"The offsetting PGA decrease in the settlement agreement, the third natural
gas decrease for our residential customers since January, means natural gas
rates will have decreased by about 13 percent this year. If prices continue at
current levels, we still plan to request a significant PGA reduction this
fall," Vermillion said.

To help customers most impacted by rising energy prices, Avista will continue
to support legislation in Idaho during the next legislative session to
establish a new energy assistance program similar to the Low-Income Rate
Assistance Program (LIRAP) for Avista's Washington customers. Avista will also
continue to support low-income energy efficiency programs.

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. Avista 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.

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, 2008, and the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

SOURCE Avista Corp.

Debbie Simock, +1-509-495-8031, debbie.simock@avistacorp.com, or Investors,
Jason Lang, +1-509-495-2930, jason.lang@avistacorp.com, or Avista 24/7 Media
Line, +1-509-495-4174