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"Our financial results for the first nine months of 2008 have positionedus to meet the earnings targets we set for this year. We expect continuedimprovement in our financial results due to the implementation of a generalrate increase in Idaho that was effective October 1," said Avista Chairman,President and Chief Executive Officer Scott L. Morris. "As we continue toinvest in the growth and upgrade of our company's generation, transmission anddistribution infrastructure, we will continue the timely filing of generalrate cases to recover our costs of doing business and to more closely alignour rates of return with those allowed by regulators. At the same time, we arediligently managing our operating costs and finding additional efficiencies tohelp reduce costs."

Results for the third quarter of 2008 and the nine months ended September30, 2008 (YTD), as compared to the respective periods of 2007:

($ in thousands, Q3 2008 Q3 2007 YTD 2008 YTD 2007 except per-share data) Operating Revenues $382,685 $267,662 $1,229,302 $1,030,854 Income from Operations $25,332 $15,736 $140,883 $94,891 Net Income (loss) $7,359 $(3,875) $56,135 $24,402 Net Income (Loss) by Business Segment: Avista Utilities $6,451 $(5,574) $51,791 $31,610 Advantage IQ $1,340 $2,077 $4,685 $4,971 Other $(432) $(378) $(341) $(12,179)* Contribution to earnings (loss) per diluted share by Business Segment: Avista Utilities $0.12 $(0.10) $0.96 $0.59 Advantage IQ $0.02 $0.04 $0.09 $0.09 Other $(0.01) $(0.01) $(0.01) $(0.23)* Total earnings per diluted share $0.13 $(0.07) $1.04 $0.45 * Results for YTD 2007 include a net loss from Avista Energy of $11.8 million, or $0.22 per diluted share. Third Quarter and Year-to-date 2008 Highlights Avista Utilities: The increase in utility net income for both the quarterand year-to-date periods was primarily due to an increase in gross margin(operating revenues less resource costs). The increase in gross margin wasprimarily due to the implementation of the general rate increase in Washingtoneffective Jan. 1, 2008. On a quarterly basis, the increase in gross marginwas also due to lower electric resource costs as compared to the amountincluded in base rates. The lower electric resource costs were primarily dueto higher than normal hydroelectric generation (primarily in July) and theresetting of the base level of power supply costs in the general rate case.As a result, we recognized a benefit of $0.1 million under the Energy RecoveryMechanism (ERM) for the third quarter of 2008 compared to an expense of $5.2million for the third quarter of 2007.

The increase in utility net income for both the quarter and year-to-datewas also partially due to a decrease in interest expense as well as animpairment and regulatory disallowance taken in the third quarter of 2007.

Avista absorbed $7.3 million of costs for the first nine months of 2008under the ERM. Despite a good winter snowpack, the late spring runoffresulted in excess water being spilled, which yielded lower-than-normalhydroelectric generation for the first nine months of 2008. Purchased powercosts were higher than expected due in part to colder than normal temperaturesduring the heating season and an increase in the price of wholesale power. Itis important to note that the amounts recognized under the ERM can varysignificantly from quarter to quarter due to a variety of factors includingthe level of hydroelectric generation, as well as changes in purchased powerand fuel costs.

Partially offsetting the negative effect of the year-to-date costsabsorbed under the ERM were higher than expected retail natural gas loads dueto colder than normal weather during the heating season earlier in the year.

Also contributing to the increase in net income was $5.7 million (pre-tax)of interest income, partially offset by $1.4 million (pre-tax) of interestexpense, related to income tax settlements reached during the third quarter of2008.

As approved by the Idaho Public Utilities Commission, electric rates forour Idaho customers increased by 12.0 percent (designed to increase annualrevenues by $23.2 million), and natural gas rates increased by 4.7 percent(designed to increase annual revenues by $3.9 million) effective Oct. 1, 2008.

In September 2008, we reached a settlement agreement with certain partieswith respect to our general electric and natural gas rate case that was filedwith the Washington Utilities and Transportation Commission (WUTC) in March2008 to recover increased costs of providing service to our Washingtoncustomers. Other parties to the settlement agreement are the Staff of theWUTC, Northwest Industrial Gas Users, and the Energy Project. Therecommendations of these parties to approve the settlement are not binding onthe WUTC. The Industrial Customers of Northwest Utilities joined in portionsof the settlement. The Public Counsel Section of the Washington AttorneyGeneral's Office did not join in the settlement.

Pursuant to the settlement agreement, base electric rates for Washingtoncustomers would increase by an average of 9.1 percent (designed to increaseannual revenues by $32.5 million) and base natural gas rates would increase byan average of 2.4 percent (designed to increase annual revenues by $4.8million). If approved by the WUTC, the new electric and natural gas rateswould become effective on Jan. 1, 2009.

Advantage IQ: As previously reported, Advantage IQ acquired CadenceNetwork, Inc. (Cadence Network), a Cincinnati-based energy and expensemanagement company, effective July 2, 2008. As consideration, the previousowners of Cadence Network received a 25 percent ownership interest inAdvantage IQ. While we anticipate an increase in annual revenues as a resultof the acquisition, the transaction is expected to be slightly dilutive toAvista Corp.'s consolidated earnings in 2008 by one to two cents per share dueto the decrease in Avista Corp.'s ownership of the subsidiary and amortizationof intangible assets resulting from the transaction. The results ofoperations of Cadence Network are included in Advantage IQ's results beginningin the third quarter of 2008.

Advantage IQ's revenues for the nine months ended Sept. 30, 2008,increased 20.6 percent as compared to the prior year and totaled $41.7million. On a year-to-date basis through September 30, Advantage IQ processedbills totaling$12.2 billion, an increase of 31 percent, as compared to the first nine monthsof 2007.

Net income from Advantage IQ for the third quarter and year-to-date 2008decreased as compared to the third quarter and year-to-date 2007 primarily dueto our reduced ownership percentage in the business and amortization ofintangible assets resulting from the transaction.

Other Businesses: Results from our other businesses improved as comparedto the year-to-date 2007 primarily due to the net loss at Avista Energy in2007. The remaining activities of Avista Energy are no longer a reportablebusiness segment and are included in "Other" for segment reporting purposes.

Liquidity and Capital Resources: The recent events in the financialmarkets have resulted in companies having limited access to capital onreasonable terms and have resulted in a significant increase in borrowingrates for corporations. We are exploring various alternatives that wouldenable us to continue to obtain funding at a reasonable cost. As of Nov. 3,2008, we had received commitments from three banks totaling $130 million for anew 364-day bank facility at a reasonable cost. We are continuing to seekadditional commitments from other banks. Closing, subject to completion ofthe necessary documentation, is expected by the end of November 2008. We arecommitted to maintaining adequate liquidity and will continue to utilize cashflows from operations, long-term debt and common stock issuances to fund ourcapital expenditures and maturing debt, and use short-term debt for thesepurposes on an interim basis. As of Sept. 30, 2008, we had $203 million ofavailable liquidity under our $320 million committed line of credit and $85million revolving accounts receivable sales facility.

In April 2008, we issued $250 million of 5.95 percent First MortgageBonds due in 2018. The net proceeds from the issuance, together with otheravailable funds, were used to fund debt maturities of $295 million (themajority being the $273 million of 9.75 percent Unsecured Senior Notes thatmatured on June 1, 2008).

Avista has a sales agency agreement to issue up to 2 million shares ofcommon stock from time to time. We began issuing common stock under thissales agency agreement during the third quarter of 2008. We issued 750,000shares and received net proceeds of $16.6 million. We will continue toevaluate issuing common stock and may issue common stock under this salesagency agreement in future periods.

Utility capital expenditures were $150 million for the nine months endedSept. 30, 2008. We expect utility capital expenditures to be approximately$200 million for the full year of 2008 and to be over $200 million in each of2009 and 2010. These estimates do not include any costs associated with windgeneration projects.

Earnings Guidance and Outlook

At this time, we are narrowing our guidance for 2008 consolidated earningsto a range of $1.35 to $1.45 per diluted share, primarily as a result of costsabsorbed under the ERM. Our guidance for Avista Utilities is being narrowedto a range of $1.20 to $1.35 per diluted share for 2008. Our outlook forAvista Utilities assumes, among other variables, normal precipitation,temperatures and hydroelectric generation for the fourth quarter. Ourguidance for Advantage IQ continues to be a range of $0.10 to $0.12 perdiluted share. We expect the other businesses to be between a loss of $0.02and break-even per diluted share.

Avista is initiating its 2009 guidance for consolidated earnings to be inthe range of $1.40 to $1.60 per diluted share. We expect Avista Utilities tocontribute in the range of $1.30 to $1.45 per diluted share for 2009. Ouroutlook for Avista Utilities assumes, among other variables, normalprecipitation, temperatures and hydroelectric generation. Our outlook alsoassumes the approval and implementation of the Washington general rate case onJan. 1, 2009, as designed in the September 2008 settlement agreement withcertain parties. Additionally, our outlook reflects estimated 2009 pensionplan expenses based upon estimated pension valuations as of Sept. 30, 2008.The actual pension plan expense for 2009 is subject to multiple variables,most of which are beyond our control, including further changes to the fairvalue of pension plan assets and the discount rate. We expect Advantage IQ tocontribute in the range of $0.12 to $0.14 per diluted share and the otherbusinesses to be between a loss of $0.02 and a contribution of $0.01 perdiluted share.

Although the recent settlement agreement in Idaho and the pendingmulti-party agreement in Washington provide incremental progress in recoveryof utility costs, the company will still experience regulatory lag in 2009,especially related to the recent higher escalation in operation andmaintenance costs and utility capital investments in 2009, which will not beincluded in 2009 retail rates. Avista plans to file new general rate cases inall three states prior to the end of the first quarter of 2009 to more closelyalign earned returns with those authorized by regulators.

NOTE: We will host a conference call with financial analysts and investorson Nov. 4, 2008, at 10:30 a.m. ET to discuss this news release. The call isavailable at (866) 825.3209, passcode: 67690267. A simultaneous webcast of thecall is available on our website, http://www.avistacorp.com. A replay of theconference call will be available through Tuesday, Nov. 11, 2008. Call(888) 286-8010, passcode 50196077 to listen to the replay.

Avista Corp. is an energy company involved in the production, transmissionand distribution of energy as well as other energy-related businesses. AvistaUtilities is our operating division that provides service to 352,000 electricand 310,000 natural gas customers in three Western states. Avista's primary,non-regulated subsidiary is Advantage IQ. Our stock is traded under theticker symbol "AVA." For more information about Avista, please visithttp://www.avistacorp.com.

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

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

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

The following are among the important factors that could cause actualresults to differ materially from the forward-looking statements: globalfinancial and economic conditions (including the availability of credit) andtheir effect on the Company's ability to obtain funding for working capitaland long-term capital requirements on acceptable terms and on economicconditions in the Company's service areas, including the effect on the demandfor, and customers' ability to pay for, the Company's utility services; ourability to obtain financing through the issuance of debt and/or equitysecurities, which can be affected by various factors including our creditratings, interest rates and other capital market conditions; the effect of anychange in our credit ratings; changes in actuarial assumptions, the interestrate environment and the actual return on plan assets for our pension plan,which can affect future funding obligations, costs and pension planliabilities; weather conditions and their effect on energy demand andgeneration, including the effect of precipitation and temperatures on theavailability of hydroelectric resources and the effect of temperatures oncustomer demand; changes in wholesale energy prices that can affect, amongother things, cash needed to purchase electricity, natural gas for our retailcustomers and natural gas fuel for electric generation, and the value ofsurplus energy sold; volatility and illiquidity in wholesale energy markets,including the availability of willing buyers and sellers and prices ofpurchased energy and demand for energy sales; the effect of state and federalregulatory decisions affecting our ability to recover costs and/or earn areasonable return including, but not limited to, the disallowance of coststhat we have deferred; and the possible reluctance of regulators to granttimely and adequate rate increases in an economic slowdown; the potentialeffects of legislation or administrative rulemaking, including the possibleadoption of national or state laws requiring resources to meet certainstandards and placing restrictions on greenhouse gas emissions to mitigateconcerns over global climate changes; the outcome of pending regulatory andlegal proceedings arising out of the "western energy crisis" of 2000 and 2001,and including possible retroactive price caps and resulting refunds; theoutcome of legal proceedings and other contingencies; changes in, andcompliance with, environmental and endangered species laws, regulations,decisions and policies, including present and potential environmentalremediation costs; wholesale and retail competition including, but not limitedto, electric retail wheeling and transmission costs; the ability to relicenseand maintain licenses for our hydroelectric generating facilities atcost-effective levels with reasonable terms and conditions; unplanned outagesat any of our generating facilities or the inability of facilities to operateas intended; unanticipated delays or changes in construction costs, as well asour ability to obtain required operating permits for present or prospectivefacilities; natural disasters that can disrupt energy production or delivery,as well as the availability and costs of materials and supplies and supportservices; blackouts or disruptions of interconnected transmission systems; thepotential for future terrorist attacks or other malicious acts, particularlywith respect to our utility assets; changes in the long-term climate of thePacific Northwest, which can affect, among other things, customer demandpatterns and the volume and timing of streamflows to our hydroelectricresources; changes in economic conditions in our service territory and theUnited States in general, including inflation or deflation; changes inindustrial, commercial and residential growth and demographic patterns in ourservice territory; the loss of significant customers and/or suppliers; defaultor nonperformance on the part of any parties from which we purchase and/orsell capacity or energy; deterioration in the creditworthiness of ourcustomers and counterparties; increasing health care costs and the resultingeffect on health insurance provided to our employees and retirees; increasingcosts of insurance, changes in coverage terms and our ability to obtaininsurance; employee issues, including changes in collective bargaining unitagreements, strikes, work stoppages or the loss of key executives, as well asour ability to recruit and retain employees; the potential effects of negativepublicity regarding business practices, whether true or not, which couldresult in, among other things, costly litigation and a decline in our commonstock price; changes in technologies, possibly making some of the currenttechnology obsolete; changes in tax rates and/or policies; and changes in ourstrategic business plans, which may be affected by any or all of theforegoing, including the entry into new businesses and/or the exit fromexisting 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. 31,2007 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.The forward-looking statements contained in this news release speak only as ofthe date hereof. We undertake no obligation to update any forward-lookingstatement or statements to reflect events or circumstances that occur afterthe date on which such statement is made or to reflect the occurrence ofunanticipated events. New factors emerge from time to time, and it is notpossible for management to predict all of such factors, nor can it assess theimpact of each such factor on our business or the extent to which any suchfactor, or combination of factors, may cause actual results to differmaterially from those contained in any forward-looking statement.

AVISTA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands except Per Share Amounts) Nine Months Ended Third Quarter September 30, 2008 2007 2008 2007 Operating revenues $382,685 $267,662 $1,229,302 $1,030,854 Operating expenses: Resource costs 251,333 150,318 764,089 611,937 Other operating expenses 67,195 63,991 199,779 202,531 Depreciation and amortization 23,502 22,605 68,920 67,438 Utility taxes other than income taxes 15,323 15,012 55,631 54,057 Total operating expenses 357,353 251,926 1,088,419 935,963 Income from operations 25,332 15,736 140,883 94,891 Other income (expense): Interest expense, net of capitalized interest (17,927) (20,057) (59,072) (61,917) Regulatory disallowance of unamortized debt repurchase costs - (3,850) - (3,850) Other income - net 7,104 2,156 9,868 9,414 Total other income (expense) - net (10,823) (21,751) (49,204) (56,353) Income (loss) before income taxes 14,509 (6,015) 91,679 38,538 Income taxes 7,150 (2,140) 35,544 14,136 Net income (loss) $7,359 $(3,875) $56,135 $24,402 Weighted-average common shares outstanding (thousands), basic 53,773 52,834 53,366 52,769 Weighted-average common shares outstanding (thousands), diluted 54,205 52,834 53,765 53,267 Total earnings (loss) per common share, basic $0.14 $(0.07) $1.05 $0.46 Total earnings (loss) per common share, diluted $0.13 $(0.07) $1.04 $0.45 Dividends paid per common share $0.180 $0.150 $0.510 $0.445 Issued November 4, 2008 AVISTA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in Thousands) September 30, December 31, 2008 2007 Assets Cash and cash equivalents $15,030 $11,839 Accounts and notes receivable 93,332 105,440 Current utility energy commodity derivative assets 13,455 12,078 Funds held for customers 92,429 89,885 Other current assets 177,923 112,943 Total net utility property 2,438,917 2,351,342 Other property and investments 146,019 116,157 Regulatory assets for deferred income taxes 112,087 117,461 Regulatory assets for pensions and other postretirement benefits 48,151 51,006 Other regulatory assets 41,215 43,004 Non-current utility energy commodity derivative assets 100,927 55,313 Power and natural gas deferrals 66,858 85,885 Unamortized debt expense 31,491 32,542 Other deferred charges 7,250 4,902 Total Assets $3,385,084 $3,189,797 Liabilities and Stockholders' Equity Accounts payable $102,917 $117,546 Current portion of long-term debt 108,916 427,344 Short-term borrowings 86,500 - Customer fund obligations 92,429 89,885 Deposits from counterparties 16,920 12,510 Other current liabilities 187,445 116,364 Long-term debt 778,913 521,489 Long-term debt to affiliated trusts 113,403 113,403 Regulatory liability for utility plant retirement costs 213,610 209,357 Pensions and other postretirement benefits 67,193 90,555 Deferred income taxes 464,888 440,918 Non-current regulatory liability for utility derivatives 93,982 53,414 Other non-current liabilities and deferred credits 79,316 83,046 Total Liabilities 2,406,432 2,275,831 Common stock - net (54,422,099 and 52,909,013 outstanding shares) 773,198 726,933 Retained earnings and accumulated other comprehensive loss 205,454 187,033 Total Stockholders' Equity 978,652 913,966 Total Liabilities and Stockholders' Equity $3,385,084 $3,189,797 Issued November 4, 2008 AVISTA CORPORATION FINANCIAL AND OPERATING HIGHLIGHTS (Dollars in Thousands) Nine Months Ended Third Quarter September 30, 2008 2007 2008 2007 Avista Utilities Retail electric revenues $145,649 $140,491 $461,520 $418,963 Retail kWh sales (in millions) 2,134 2,162 6,658 6,538 Retail electric customers at end of period 352,348 347,717 352,348 347,717 Wholesale electric revenues $42,063 $23,664 $110,958 $82,762 Wholesale kWh sales (in millions) 495 303 1,506 1,322 Sales of fuel $25,510 $3,459 $40,498 $11,608 Other electric revenues $4,773 $4,429 $11,928 $12,687 Retail natural gas revenues $37,076 $39,487 $296,712 $280,624 Wholesale natural gas revenues $95,965 $29,941 $222,259 $111,232 Transportation and other natural gas revenues $2,788 $2,327 $8,866 $8,185 Total therms delivered (in thousands) 178,680 114,456 598,767 498,247 Retail natural gas customers at end of period 309,766 305,155 309,766 305,155 Income from operations (pre-tax) $22,237 $13,050 $131,950 $109,142 Net income (loss) $6,451 $(5,574) $51,791 $31,610 Advantage IQ Revenues $16,822 $12,193 $41,743 $34,607 Income from operations (pre-tax) $2,872 $3,439 $8,440 $8,201 Net income $1,340 $2,077 $4,685 $4,971 Other Revenues $12,039 $11,671 $34,818 $70,186 Income (loss) from operations (pre-tax) $223 $(753) $493 $(22,452) Net loss $(432) $(378) $(341) $(12,179) Issued November 4, 2008SOURCE Avista Corp.