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Avista Reaches Partial Settlement in Washington Rate Case

The Remaining Elements of Original Filing Will Be Addressed as the Case Progresses

SPOKANE, WA--(Marketwired - May 04, 2015) - Avista (NYSE: AVA) and multiple parties to the Company's electric and natural gas general rate case filings have reached agreement on certain issues, and a partial settlement agreement has been filed with the Washington Utilities and Transportation Commission (Commission or UTC) for its consideration.

The partial settlement agreement includes agreement among the parties on the cost of capital, net power supply costs and the spread of any resulting revenue increase among customer classes at the conclusion of the case. The agreed-upon rate of return (ROR) on rate base is 7.29 percent, with a common equity ratio of 48.5 percent and a 9.5 percent return on equity (ROE).

The partial settlement includes adjustments to the originally-filed net power supply costs, including a recent change in the Company's power supply model, updated lower contract costs associated with a recently signed purchase of power from Chelan PUD, and an agreed-upon additional reduction to power supply costs. The overall decrease in net power supply costs under the settlement is $12.4 million. The parties also agreed that power supply costs would be updated with the most current information two months prior to new retail rates going into effect from this case. The updated power supply costs (higher or lower) would also be used to reset the base for the Energy Recovery Mechanism (ERM) calculations for 2016.

The agreement on the elements in the partial settlement results in a reduction in the Company's originally filed revenue increase requests. Avista's original electric revenue increase request is reduced from $33.2 million to $17.0 million, and its original natural gas revenue increase request is reduced from $12.0 million to $11.3 million. Both original requests were based on a proposed ROR on rate base of 7.46 percent with a common equity ratio of 48 percent and a 9.9 percent ROE.

The remaining issues to be resolved in the case include, among other things, capital investments in infrastructure improvements, as well as the recovery of increased utility operating costs.

"The proposed partial settlement agreement moves us one step closer to arriving at new electric and natural gas rates in Washington that are fair and reasonable for our customers, the Company and our shareholders," said Dennis Vermillion, Avista Corp. senior vice president and president of Avista Utilities. "It supports Avista's efforts to continue to make key capital investments in our utility infrastructure and system so we can continue to provide the reliable energy our customers expect."

In addition to Avista, the parties to the partial settlement agreement include the Staff of the UTC, the Public Counsel Unit of the Washington Office of Attorney General, the Northwest Industrial Gas Users, and the Industrial Customers of Northwest Utilities. The Energy Project did not sign the agreement. A recommendation to the Commission by the UTC Staff to approve the partial settlement is not binding on the Commission itself.

About Avista Corp.
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 electric service to 365,000 customers and natural gas to 325,000 customers. Its service territory covers 30,000 square miles in eastern Washington, northern Idaho and parts of southern and eastern Oregon, with a population of 1.5 million. Alaska Energy and Resources Company is an Avista subsidiary that provides retail electric service in the city and borough of Juneau, Alaska, through its subsidiary Alaska Electric Light and Power Company. Avista stock is traded under the ticker symbol "AVA." For more information about Avista, please visit www.avistacorp.com.

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, 2014.

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