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Avista Files for Natural Gas Price Adjustments in Washington and Idaho
Deferred wholesale gas balance of $65 million prompts Avista to file Purchase Gas Adjustment

Spokane, Wash., July 6// -- With its wholesale natural gas deferrals reaching $65 million, Avista Corp. (NYSE: AVA) today filed requests for natural gas price adjustments with state utility commissions in Washington and Idaho.

Known as a Purchase Gas Cost Adjustment (PGA), these filings primarily reflect increases during the past year from Avista's suppliers in the cost of gas purchased for use by the company's customers. As a natural gas distribution company, Avista is only passing on the higher costs of acquiring gas from suppliers for its customers. The company does not mark up or make additional profits from PGA filings—any increase in revenues is offset by the cost of gas purchased in the marketplace by Avista on behalf of its customers.

The PGA filing requests an overall increase in gas revenues of 12.2 percent in Washington and 11.5 percent in Idaho to reflect changes in the cost of gas Avista has purchased to serve its customers. If the proposed increase is approved by the state utility commissions, total company revenue will increase by approximately $6.9 million per year in Idaho and $17.7 million in Washington. Avista has asked that the filings become effective in both states on Aug. 9, 2001. Avista Utilities serves about 170,000 natural gas customers in eastern Washington and northern Idaho.

In Washington, a residential customer using an average of 80 therms of natural gas per month will see an average increase of about $7.51 per month, or about 11 percent. The total bill for 80 therms including the increase is $75.88. In Idaho, a residential customer using an average of 80 therms of gas will see an average increase of about $6.91 per month, or about 10.1 percent. The total bill including the increase is $75.08.

During this past winter, natural gas commodity prices rose to their highest levels in more than a decade, and prices from Avista's domestic and Canadian suppliers followed this upward trend. Despite increases in retail rates, Avista continued to defer gas costs that were well above what the company was recovering in customer rates.

Avista Utilities President Scott Morris said, "While wholesale natural gas prices are now coming down slightly, we still must deal with the costs we deferred when prices were at record highs. At this time, that balance is $65 million. Of course, once these deferred costs have been reduced, and if natural gas prices continue to go down, we would, as we have in the past, lower natural gas rates."

Natural gas is still the best value for home space and water heating. For example, to heat a 1,500 square-foot home on a cold winter day with natural gas under the new prices, it would cost about $2.64 per day. To heat the same home with straight resistance electric heat would cost $3.50; with oil about $3.38; or with propane about $4.00. How your home compares depends on a number of factors including insulation, amount of window space, etc.

"We recognize that energy price increases create a hardship for our customers, particularly those on a limited or fixed income," Morris said. "To help ease the burden of higher energy bills, Avista has contributed over $500,000 to energy assistance programs throughout our service territory since the beginning of the year."

Morris encouraged customers to visit the company's website at www.avistautilities.com for a free home energy audit, energy saving tips and a full listing of energy efficiency programs. He also noted that Avista offers its customers a range of convenient payment options, including Comfort Level Billing, which averages the customer's bill into equal monthly payments. For more information, customers may call Avista Utilities at 1-800-659-4427.

Avista Corp. is an energy, information and technology company whose utility and subsidiary operations focus on delivering superior products and providing innovative solutions to business and residential customers throughout North America.

Avista Corp.'s affiliate companies include Avista Utilities, which operates the company's electric and natural gas generation, transmission and distribution business. Avista's non-regulated businesses include Avista Advantage, Avista Labs, Avista Communications, Avista Energy and Avista Power. Avista Corp.'s stock is traded under the ticker symbol "AVA." For more information about

Avista Corp. and its affiliate businesses, visit the corporate website at www.avistacorp.com.

Avista Corp. and the Avista Corp. logo are trademarks of Avista Corporation. All other trademarks mentioned in this document are the property of their respective owners.

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, 2000, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.


CONTACTS:

Media: Catherine Parochetti

509-495-2916

catherine.parochetti@avistacorp.com

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