Good day ladies and gentlemen and welcome to the first quarter 2008 Avista Corporation earnings conference call. (Operator Instructions) I will now like to turn the presentation over to the host of today’s conference Mr. Jason Lang, Investor Relations Manager, please proceed.

Thank you Gracie, good morning everyone and welcome to Avista’s first quarter 2008 earnings conference call. Our earnings were released pre-market this morning and the release is available on our website at avistacorp.com. Joining me this morning are Avista Corporation Chairman of the Board, President and CEO Scott Morris, Executive Vice President and CFO Malyn Malquist, Vice President of Finance & Treasurer, Ann Wilson and Vice President, Controller and Principal Accounting Officer, Chris D, Bermeister Smith. Before we begin, I would like to remind you that some of the statements that will be made today are forward-looking statements that involve risk and uncertainties which are subject to change. For reference to the various factors, which could cause actual results to differ materially from those discussed in today’s call, I would direct you to our form 10K for 2007, which is available on our website. To begin this presentation, I would like to briefly recap the financial results presented to today’s press release. Our consolidated results for the first quarter of 2008 were net income of $0.47 per diluted share compared with earnings of $0.26 per diluted share for the first quarter of 2007. I will turn the discussion over to Avista’s Chairman of the Board, President and Chief Executive Officer, Scott Morris.

Thank you Jason and good morning everyone. Overall, we are pleased with our results for the first quarter of 2008. Our quarterly results represented significant improvement over results for the first quarter of 2007. In Washington, we received some much needed rate relief effective at the beginning of 2008. This was the primary driver for the improvement in our utility result. In addition to our improved utility result, the primary reason for the improvement in our consolidated results was the $7.6 million net loss that Avista Energy in the first quarter of 2007. With the sale of that business behind us, we now have greater stability in our earnings and although our earnings were slight less than we originally planned, we are confident that we will meet our earnings forecast for the year. Despite shortfall in earnings, relative to our expectations for the first quarter 2008, was largely due to higher than expected electric resource cost and the absorption of $3.4 million of costs under the energy recovery mechanism in Washington. This is primarily due to colder than normal weather and as a result is partially offset by higher than anticipated natural gas margins. While we have good snow pack conditions, the temperatures remained cool so that run off during the first quarter was well below normal. As such, we needed to purchase power and fuel for generation to meet higher than expected retail demand. Based on the current snowpack conditions, we are hopeful that we will have favorable hydroelectric generation conditions during the current period May through July. In terms of snow water equivalent, which is what we focus on, the Spokane River Basin is about 150% of normal for this time of year. The Clark Park River Basin was about 125% of normal snow water equivalent. However, I…

Thanks Scott and good morning everyone. Avista Utilities contributed $0.44 per diluted share for the first quarter of 2008 compared to $0.37 per diluted share for the first quarter of last year. As Scott mentioned, the improvement in results was primarily due to the Washington General Rate Case implementation. Also contributing to the improvement in utility results was a decrease in interest expense primarily due to our redemption of preferred stock and the maturity of long term debt in 2007. The positive effects of the general rate increase and the decrease in interest expense were partially offset by expected increases in other operating expenses, depreciation and amortization and taxes other than income taxes. Turning to Advantage IQ, Company’s net income for the first quarter of 2008 was slightly higher than the first quarter of 2007, due to an increase in operating revenues as a result of customer growth partially offset by a decrease in interest revenue on funds held for customers and increased operating costs. Total revenues increased 14% driven by service revenues that increased 23% partially offset by a 22% decrease in interest revenue. Results were very good for the first quarter at Advantage and we fully expect its service revenue to continue to grow; but, if we see lower Fed funds rates, this will further dampen our solid growth in this subsidiary that is why we have guidance at $0.10 to $0.12 per share for this segment instead of what looks to be more positive results based upon annualizing first quarter numbers. The business is solid; it’s showing excellent and profitable customer growth and at some point one would expect an increase in interest rate levels, which would provide further upside of this business. In our Other businesses, our results improved over the prior year primarily because of…

Thanks Malyn and now we will open this call for questions.

(Operator Instructions) Your first call is from the line of James Bellessa of D.A. Davidson & Company. James Bellessa – D.A. Davidson & Company: Good morning, on the balance sheet, it says that the current portion of long term debt is $179.7 million; but you are telling us that $273 million is maturing on June 1. How come that 273 is not in the third potion of long term debt?

I am going to ask Kristie Bermeister Smith, our controller, to answer that question.

Hi Jim, I really hate to say this but it is tricky accounting. Due to the fact that we have already financed that debt, we were allowed to put it into long-term. The refinancing is already in place. James Bellessa – D.A. Davidson & Company: The 273 has been taken off your balance sheet and the new financing for 250 million is on your balance sheet?

No, the old financing is there, but it is in long term. The new financing is not there yet because it occurred in April. James Bellessa – D.A. Davidson & Company: I see. In your release today, you indicated favorable hydro generation conditions during the period of May through July. Do I have to assume that April was not normal hydro generation, herein?

Jim, that is correct; we continue to see our spring flow, our temperatures were colder than normal. I would expect, we haven’t closed books on April, but I would expect that we would see gas margins up; but, I also would expect to see that we would eat further into the ERM balance because our hydro conditions were well below normal for the month. James Bellessa – D.A. Davidson & Company: In your guidance statement, you say that you are assuming, among other things, normal hydroelectric generation, heretofore, you’ve been assuming slightly above. What happened?

I think what is happened is that we have seen the first four months of the year be below average and now even though the snowpack looks very good and we do expect to have a bit longer runoff period, we are not sure that will fully make up for the below normal that we had. In other words, we think that it is going to be pretty close to normal by the end of the year. We don’t think we will necessarily be above normal now because we will end up spilling some of that hydro and not be able to generate power with it.

Jim, as you know, it is just hard to predict how the shape of the hydro is going to come off and you know we are sitting in great shape from snow-water equivalent perspective, but you and I both can’t predict the weather so we don’t know how warm it is going to get, how fast. If it comes off perfectly, we will be in great shape; if it doesn’t come off perfectly then you know, we can’t predict the shape. James Bellessa – D.A. Davidson & Company: I am assuming that in your previous guidance up to today, you were telling us that you were going to get a slight ERM benefit this year. Has that now changed?

Yes, it has. We were making that prediction today, but I think we see a negative balance in there by the end of the year that will be at least partially offset by better than expected gas margins for the first four months of the year. James Bellessa – D.A. Davidson & Company: Advantage IQ from time to time, you tell us the number of build sites and how much and how they have increased and the total build sites, what can you tell us there?

We are going to look that up. It will take us just a minute to find that.

Jim, Advantage IQ had an excellent Q4 of last year; a lot of those new accounts came into billing during the first quarter of 2008. James Bellessa – D.A. Davidson & Company: Are you saying the build sites then for the quarter didn’t grow much?

I actually believe that they did, but I am having a hard time putting my hands on the number. We signed a significant account that came online largely in the first quarter that was seven eleven and I am sure that the sites increased. I just can’t put my hands on the number right away.

Can Jason call you with that number? James Bellessa – D.A. Davidson & Company: Jason can do that, thanks.

It will be in the 10Q too, that number. James Bellessa – D.A. Davidson & Company: That won’t be filed for a few days is that right?

Correct. James Bellessa – D.A. Davidson & Company: Can you tell us some more about the 50 megawatt wind project that you are talking about?

As you know Jim, we are looking at adding some renewables to our portfolio. If you look at our integrated resource plan, we have some wind and some other renewables that we had planned on adding throughout the next ten years. What we are looking at, we are looking at some wind sites that are in our service territory close to our transmission. There has been such a rush on wind sites in the Pacific Northwest; we didn’t feel comfortable waiting until the latter part of the next decade to make wind investments. We have moved up some of those investments and have had the opportunity to purchase the site in the middle of our service territory with our transmission and will make that announcement soon. There will be 50 megawatts and it will cost about $120 million. We will continue to look at sites in our service territory; we are hopeful we can find a couple more sites, at least, to develop that are close to our current transmission system. James Bellessa – D.A. Davidson & Company: What is your best guess to when you will go operational with this project?

2012.

Jim, I am going to come back to the Advantage question. The number of sites bills at the end of the first quarter was 214,000 sites versus 199,000 sites at year end. Remember, sites versus builds processed can be very different. For most of those sites we do electric and gas. For some of them, we do telecom and they may have multiple meters at each site. I think the number of bills processed is much higher than this number that I just gave you and I don’t have that number right in hand. You can see 15,000 sites was the growth for the quarter. That is good solid growth. James Bellessa – D.A. Davidson & Company: You don’t have the year ago figure, do you?

I don’t have the year ago figure; I just have the year end versus the quarter end. James Bellessa – D.A. Davidson & Company: Thank you very much.

Your next call is from the line of Brian Russo of Ladenburg Thalmann. Brian Russo – Ladenburg Thalmann: Good morning, can you just remind us of the mechanics of the ERM? How much has the total debt been?

Sure, the first $4 million of additional cost or benefit is 100% absorbed or kept by the Company. The next $4 million is shared 50/50 and then anything beyond that is 90/10 sharing. So 90% picked up by the customers and 10% by the Company. Brian Russo – Ladenburg Thalmann: Okay and I am just curious; I would imagine a favorable hydro year may have created an earnings profile up near the top end of your range and a weak hydro year toward the bottom end of the range. I think you are assuming normal hydro; does that imply kind of a middle of the range, just curious why there was no revision in the range of earnings.

Brian, I want to go back to my previous answer. I am sorry I misspoke myself. My colleagues here caught me. It is $4 million, 100% and then it is $6 million on top of that it is 50/50. I apologize for that. Basically there is 10 million before you hit the 90/10 sharing.

We are not revising our guidance because as I mentioned in my response to Jim, we have actually seen some improvement in gas margin as a result of colder than normal weather for the first three plus months of the year. There was an offset there and I do believe we are going to eat some of the ERM. That is my best guess at this point versus capturing some benefit from the ERM as we put into our guidance. We are still very comfortable with the guidance and I think with normal hydro, one would expect that we would be fairly close to the middle of the range that really can vary as we go through the year. Brian Russo – Ladenburg Thalmann: Which should we be looking for in terms of weather patterns in the Northwest to keep close track of the runoff? Is it just going three days above normal?

Brian, I guess a couple of things I would look at is precipitation patterns in the Northwest that is always the key for us and also temperature and right now prediction is for the spring to continue to be normal precipitation and kind of normal temperatures, nothing out of the ordinary. Once we get into the summer, we expect probably be warmer and a little dryer than normal once we get into the July, August range. That is the latest long term forecast; but I wouldn’t go to the bank on that either. It is just a forecast. I think if you were to see a period of well above normal temperatures that would be a bad thing for us. If you continue to see below normal temperatures, which we have had for the last couple of months and if that pattern were to continue that actually would be a pretty good thing for us because, it would help the snow melt come off over a longer period of time. Brian Russo – Ladenburg Thalmann: I read recently that PERC approved a transmission line by Pacific Gas & Electric. I think it runs through your service territory or you may have an opportunity to get involved in that project and can you just comment on that, please?

Sure, we continue to look at transmission opportunities in and around our service territory in the Pacific Gas & Electric line is one that its preferred route is right through the heart of our service territory so we are continuing to work with Pacific Gas & Electric and other partners to study the feasibility of that line and our investment opportunity. In a very preliminary process, it is really a phase one study, we call it, and we’ll continue to look at it and if we have opportunities to invest in it and we think it is in our best interest, we will do that. Brian Russo – Ladenburg Thalmann: Any timeline in terms of when it could possibly be commercially available?

I think the best case scenario was sometime in the middle of the next decade. It is a very long term project. Brian Russo – Ladenburg Thalmann: I also noticed on the balance sheet, accounts and notes receivable were up quite a bit and if you could just comment on that.

This is Suzanne (inaudible) the last year at this time, we had outstanding borrowings on our accounts receivable line, which nets against the accounts receivable. This year because we didn’t have any borrowings on our accounts receivable line, the accounts receivable is higher. Let me check on the exact amounts that were outstanding at the end of last year at this time. Brian Russo – Ladenburg Thalmann: Okay, thank you very much.

Your next call is from the line of Paul Ridzon of Keybanc Capital Market.

Good morning, how big could the wind get and what would you need to do to get to where Washington wants you?

In our integrated resource plan, we have 300 megawatts of wind over the next ten years plus if you look at our IRP that we shared, there is a category called Other Renewables and right now some of those Other Renewables just aren’t cost effective. They might be Other Renewables they might turn into wind. We are looking at that overall renewable package. We had predicted that the wind would come in later in the next decade, but what we have been seeing is again the cost of those sites really has made us think that we might want to move some of that construction up a little closer and that is why we are going to make some very targeted investments, probably earlier rather than later. To meet the renewable portfolio standard law that was passed in Washington, by 2012 we need roughly between 8 and 10 megawatts of energy. As you know, most wind sites are about one third of what you build; 50 megawatts would be a little over what we need but not that much.

Do you have options on these turbines for the 50 megawatts?

We haven’t finalized those; but we are confident we will be able to have them here and be able to construct and have them serve us by 2012.

I know it is a hard question to answer because there are so many moving pieces; but was cold weather a hurt or help in the first quarter?

Paul, this is Malyn. It was a bit of a hurt; as Scott mentioned, we were slightly below where we thought we would be at the end of the first quarter and that was entirely weather driven. Fortunately, there was an offset in improved gas sales to the negative ERM balance. But, it cost us $0.02 to $0.03 per share.

Simply put Paul, the snow just didn’t melt; it just stayed in the mountains. We just had below normal stream flow and we weren’t getting the hydro that we would normally expect.

Then having to burn more expensive gas, what gas is embedded in rates?

It is a little bit less than eight and today it is a little over ten that was the other kind of negative factor that impacted that ERM balance.

Thank you.

Your next call is from the line of Paul Latta of McAdams Wright Ragen. Paul Latta – McAdams Wright Ragen: Good morning, thanks for taking my questions. Scott, you talked a little about CapEx 200 million and perhaps greater in subsequent years. Can you give a breakdown or a little more colour? Are there any big lumps in the capital budget for this year or the next year or any particular areas that are drawing marginal dollars within that budget?

Probably the largest portion for this year is our continued expansion and at our Jackson Prairie Natural Gas Storage Facility in Washington. That is going to be roughly $15 million this year. We continue to invest in Knocks and Rapids which those numbers are in the 4 to $6 million range depending on how we upgrade those turbans and then after that the numbers are just a lot of smaller projects. There is nothing really huge that we are planning on. Probably the largest investment that is not included is that wind investment we plan on making. We will have to start making some capital expenditures maybe by the end of this year or early next as we put auctions on the turbines that Paul Ridzon was talking about and we will have to start making some payments on those as we take out those options, but that is about it. Paul Latta – McAdams Wright Ragen: Is there any way that you could give a qualitative statement about within the capital budget, the plans that you would regard as sort of upgrades to the system versus perhaps growth oriented upgrades.

Replacements? Paul Latta – McAdams Wright Ragen: Yes, replacing aging equipment versus…

Sure, in our CapEx budget, we have about $40 million set aside for growth and then we have the rest is really upgrades to the liability and safety and capacity. That is really the break down. Paul Latta – McAdams Wright Ragen: Okay, great, thanks for taking my questions.

(Operator Instructions) Your next call is from the line of John Alley of Zimmer Lucas. John Alley – Zimmer Lucas: Good morning, just a quick question regarding the wind (inaudible). When do you think the timing would be to pick up the site this year and then build in another year or two or would it kind of be rolled in all at once?

The one we are speaking of we will finalize purchasing the site this year; we will have finalized permitting for it soon and then the idea would be that we would start the construction development of that, auction the turbines and then start the construction to have in service late 2011 early 2012. In the meantime, we are going to continue to search for other wind sites in our service territory that we can auction and be able to make sure that the wind speeds are correct, there wouldn’t be an permitting problems, it is close to our transmission and if we continue to invest in some of those sites with the idea that after this first 50 megawatt site, we would have some other investments moving past 2011, 2012. John Alley – Zimmer Lucas: This would only be in Washington in this project?

Yes, the current project is in the state of Washington, in the middle of our service territory. John Alley – Zimmer Lucas: This is around $2400 of kw? Approximately, how much of that is land; how much is turbines?

It’s land, it’s turbines and it’s the lease cost as part of the remittance to the land owner. I don’t have the breakdown but a large majority of it is in the turbine and the site. John Alley – Zimmer Lucas: Kind of a ball park in terms of the planning and when the cash is coming in and out, is there anyway you can just make a guess, you know 400 and 2400 is land and the other 2,000 is turbines? Is that a good way to think about it?

We can get back to you on the turbine cost; I don’t have it off the top of my head. I can have Jason give you a call; but, we know that the turbine cost is expensive, but I had just better not guess. I would like to give you a call back and we can give you that number. That is an easy number to give you. John Alley – Zimmer Lucas: I would appreciate that, thank you.

Your next call is a follow up call from the line of Brian Russo of Ladenburg Thalmann.

Hi, could you just update us on the hydro relicensing progress.

We are pleased with the progress we are making; we’ve continue to work, I think, with our stake holders. We currently have made some good progress in the state of Idaho and our are going to the State of Washington process, so what I can say is that we are optimistic and we continue to reach settlement with different interest group and are hopeful that we could have it licensed by the end of this year or some time early next.

Great, also lastly on the capital IQ, have you identified any opportunities that the demand side management marketplace.

On Advantage IQ, absolutely, we have a business segment that is really focused on helping our customers with those kinds of activities. It is a fairly small piece of our business. I think last year that was somewhere between 2 and $3 million of total revenue come from consulting services is what we put that under. We do think that is going to expand very greatly as we see the whole green footprint carbon issues that our customers are struggling to deal with. We have great tools to help them. I think we are going to see that business grow pretty significantly over the next couple of years. Before we lose you, Ann has the answer to your earlier question.

Brian, the reason that increase in the accounts receivable balance that I was talking about, our borrowings on our accounts receivable facility at the end of March were 15 million versus 85 million at the end of December. That is the 70 million of that delta is just due to the outstanding borrowing under the accounts receivable program.

Okay, thank you.

What are you thinking from a regulatory stand point of investment in the wind, certainly on the land piece before it is operational and the ability to get a return on that?

We would have to ask for an order to do that, Paul. We do believe that we are really following state regulation here and I would like to think that we have a fairly high probability of getting that; but we do have to ask for it. I think that the initial cost of acquiring the site is going to be fairly minimal as a percentage of that $120 million. It is not a real significant amount for us to need to earn a return but we think it is justified. I do think we will start spending some dollars quickly on the development itself and that would earn allowance for funds used during construction on it. The land component is a small component, frankly.

Have you gotten your accounting order on the Montana River Beds?

Yes.

That was favorable?

Yes, it was.

Okay, thank you again.

You have no questions as this time; I would now like to turn the call back over to management for closing remarks.

I want to thank you for joining us today; we certainly appreciate your interest in our Company. Have a great day.

Thank you for your participation in today’s conference. This concludes the presentation; you may now disconnect.