Good day, ladies and gentlemen, and welcome to the first quarter 2010 Avista Corporation earnings conference call. My name is Stacey and I will your conference moderator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of the conference. (Operator instructions) As a reminder this conference is being recorded for replay purpose. I would now like to turn the presentation over to you host for today’s call, Mr. Jason Lang, Investor Relations Manager. Please proceed.

Thank you, Stacey. Good morning everyone. Welcome to Avista’s first quarter 2010 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 Corp. Chairman of the Board, President and CEO, Scott Morris; Senior Vice President and CFO, Mark Thies; Senior Vice President and the President of Avista Utilities, Dennis Vermillion; Vice President of Finance, Jason Thackston; Vice President, State and Federal Regulations, Kelly Norwood; and the Vice President and Controller and Principal Accounting Officer, Christy Burmeister-Smith. Some of the statements that will be made today are forward-looking statements that involve risks and uncertainties, which are subject to change. For a reference to the various factors, which could cause actual results to differ materially from those discussed in today’s call, please refer to our Form 10-K for 2009 which is available on our website. To begin this presentation I’d like to recap the financial results presented in today’s press release. For the first quarter of 2010, our consolidated earnings was $0.52 per diluted share compared to $0.57 per diluted share for the first quarter of 2009. Now I’ll turn the discussion over to Scott Morris.

Thanks, Jason, and good morning everyone. We had a challenging first quarter because our region experienced one of the warmest January to March periods on record combined with low precipitation and snowpack. This weather pattern reduced our retails loads, hydroelectric generation, and net income largely due to warmer than normal weather, residential electric use per customer was down 11% and residential natural gas use per customer was down 21% as compared to the first quarter of 2009. Commercial use per customer decreased 8% for electric and 23% for natural gas. Even with normal precipitation for the remainder of the year, current conditions lead us to expect below normal hydrogenation for 2010. However, we are expecting a benefit under the Washington Energy Recovery Mechanism for 2010 due to lower wholesale electric and natural gas fuel prices and the amount included in base retail rates. And while we can't control the weather, we will continue to aggressively manage our business and we are still confident about our future. We continue to execute on our regulatory strategy to recover cost and capital investments in or generation, transmission, and distribution infrastructure. We’ve reset general rates in each of our jurisdictions since last August, and in March we filed new general rate cases in Washington and Idaho. The Washington filing is designed to increase annual base electric revenues by $55.3 million and increase annual base natural gas revenues by $8.5 million. The Idaho filing is designed to increase annual electric revenues by $32.1 million and increase annual natural gas revenues by $2.6 million. We requested a return on equity of 10.9% in both states. We are planning to file a natural gas general rate case in Oregon by the end of the third quarter. As I’ve done in previous quarterly reports, I’d like to provide…

Thank you, Scott, and good morning everyone. For the first quarter of 2010 Avista Utilities contributed $0.50 per share compared to $0.56 per share in the first quarter of 2009. The decline in our utility results was partially the result of decreased gross margin, primarily due to warmer weather, and below normal hydroelectric generation, partially offset by the implementation of new retail rates in all three of our jurisdictions. Our power supply costs were higher than the amount included in retail rates due to below normal hydroelectric generation and higher reliance on power purchases and thermal generation, partially offset by lower wholesale electric and natural gas fuel prices. The decrease in gross margin was partially offset by decreases in other operating expenses and taxes other than income tax. In addition to the weather, the decrease in net income was also due to an increase in interest expense. During the first quarter of 2009, we carried higher average balances under our committed credit facility at relatively low interest rates. And we refinanced these borrowings in September of last year with the issuance of first mortgage bonds. For the first quarter, we absorbed $1.2 million under the Washington Energy Recovery Mechanism compared to a benefit of $2.7 million in the first quarter of last year. As Scott mentioned earlier, we expect to be in a benefit position in the ERM by the end of 2010 primarily due to lower wholesale electric and natural gas fuel prices and the amount included in base rates, partially offset by below normal hydroelectric generation that we’ve talked about. For Advantage IQ their net income attributable to Avista for the first quarter increased compared to last year with earnings of $0.03 per diluted share and this was primarily due to the acquisition of Ecos last August. Advantage…

Thanks Mark. And now we’d like to open this call up for questions.

(Operator instructions) Your first question comes from the line of Brian Russo with Ladenburg Thalmann. Please proceed. Brian Russo – Ladenburg Thalmann: Hi, good morning, guys.

Good morning, Brian, how are you?

Good morning, Brian. Brian Russo – Ladenburg Thalmann: Could you quantify the positive net ERM position that you are going to be in by the end of the year?

What we’ve said, Brian, is that we would be in a positive – we will be, we expect, and there is an awful lot of factors that impact that. We are still relatively early in the year as hydro has to come off and gas prices will become more subject to that as we get into the third quarter and fourth quarter as hydro goes away, we are more subject to movements in natural gas prices. So, we don’t want to put a definitive number out there because there is still some range to that. But we do expect to be within in the $4 million debt band on the positive side. Brian Russo – Ladenburg Thalmann: Okay. So the – and just to be clear that you are – there is a seasonality I guess of the quarterly impact of the expected net ERM position and will be more heavily weighted in that 3Q and 4Q?

I know, it is more because of the natural gas prices and our reliance on natural gas generation in those periods. We do have a higher reliance on that. And we saw this last year as well. We started – last year though we started in a benefit position in the first quarter, but then it dropped quickly and second and third quarters and came all the way back in the fourth quarter. We see a similar shape to that shaping up this year, although we did start in a negative position in the fourth quarter. We expect by the end of the year to be in a positive. Brian Russo – Ladenburg Thalmann: Okay. So, on your guidance, you mentioned that mild weather, below normal hydro and then the prevailing gas power prices have reduced guidance by $0.10 to $0.15 from your previous expectation. Where you previously expecting to be at the midpoint of your guidance or that you had anticipated a positive ERM so maybe there was a bias towards the higher end because if your midpoint is at $1.65, $0.10 gets you down to $1.55, but I am – you know and it looks like there might be a little more downside there given the $0.10 to $0.15 range.

Brian I know I think we were – we issued our guidance. The guidance or the ERM is encompassed in the range so that’s a little bit of a challenge because when you include that you could be towards the higher end. If you have a negative, you could be towards the lower end. So, that’s also why we gave the $0.10 to $0.15. If you take that – you are reasonably – you are doing the math right in that towards the middle – we get down towards the bottom, because we have a $0.10 range on each side of the middle, just specifically with the math. A few cents here and there, we don’t change in our guidance. We try to have a reasonable forecast. So I am not – the ERM – we call that our specifically because that encompasses the negative hydro. Recall, all of our hydro runs through our power supply cost, which runs through our ERM. So to the extent we have negative hydro, and we expect to be in a positive ERM for the year, we expect to offset that negative hydro with the benefit of lower natural gas prices and lower power prices in the market relative to the rates that we have in our current retail rates that power supply cost impact. So, we are offsetting in our expectations that negative hydro with the ERM. We are. And previously we’ve stated that the midpoint does not include the ERM. Brian Russo – Ladenburg Thalmann: Okay, so I guess save the fuel factor embedded in rates and then the ERM was consistent with the prevailing gas prices assuming a zero ERM, what would have been the delta on your guidance? Would it probably be $0.15 to $0.20 right, now $0.10 to $0.15?

We haven’t really gone to put that information out. There is an awful lot of factors that impact that, the lower hydro we also have the opportunity to sell a little bit less and the power prices impact that. So, we really did this in a combined expectation. Our primary reason for being down truly is loads. We had, again, as Scott mentioned, one of the mildest first quarters in history and that’s hard to overcome primarily from our natural gas because the natural gas business is first and fourth quarter, is where you deliver most of your natural gas and when you miss the first quarter that’s challenging to over come. And that’s truly the biggest impact to that $0.10 to $0.15 and we’ve offset that somewhat with managing our business as well as the positive impact we expect from the ERM. Brian Russo – Ladenburg Thalmann: Okay. And just lastly, just more specifically on normalized hydroelectric output. Is it somewhere in the lines of about 4.6 million megawatt hours and then could you give us kind of a sense of what you expect to generate this year given where the hydro conditions are?

Yes, this is Dennis. What we are forecasting obviously with the snowpack, as Mark mentioned and Scott as well, we’ve gotten off to a pretty lousy start. But given where we sit today and our forecast for the rest of the year, we are projecting about 81% of normal hydro generation. Brian Russo – Ladenburg Thalmann: Okay, that’s very helpful. So, how does that compare with the water supply levels that get posted to – my question I guess is can you – you generate more megawatt hours on a percentage basis despite it being below normal than what’s reflected in the water supply basins, right? If your supply basins are, say, 70% of normal, you are still able to generate 81% of your normal?

Yes, that’s correct. If you look at the water supply forecast, or actually for our drainages worse than that, but those current projections are included in our forecast, and remember that the new water year starts essentially in September. So the reservoirs are full at that point and we are assuming at that point normal precipitation. So beginning in September we assume a normal hydro production going into a new water year. So, you – that against the situation we’ve had so far it penciled out at 81%. Brian Russo – Ladenburg Thalmann: Got you.

In addition to that, we did have a little bit wetter than normal April. And as we do this, the other thing that benefits us is we don’t spill as much. So we are able to retain what water we do have and that helps Dennis and his group have that slightly better generation than the hydro result – than snowpack.

Yes, I think the important think to remember is you can look at the run-off forecast and certainly, significant impact in Q1 and Q2 but beginning Q3 all the reservoir systems in the Pacific Northwest should be full generally. So, we start a new water year with the assumption of normal water, a normal generation. Brian Russo – Ladenburg Thalmann: Okay, thank you.

And I would just like to remind you, as Mark said that even with the four hydro, we still are in a benefit position of the ERM and that with embedded in base rates in Washington is $5.61 per decatherm or we do have a good opportunity to continue to perform quite well with our power supply. Brian Russo – Ladenburg Thalmann: Thank you.

Your next question comes from the line of Paul Ridzon with KeyBanc. Please proceed. Paul Ridzon – KeyBanc: Good morning, guys.

Hey, Paul.

Hi, Paul. Paul Ridzon – KeyBanc: You’ve mentioned $0.10 to $0.15 that you kind of felt in the first quarter. But can you kind of divide that out amongst the factors?

We really didn’t, Paul. We – what we wanted to say was to give you a sense of where we were because we were guiding to the low end, we wanted to give you a sense of how much that impact that we did expect and there are a few things that we talk about and those are still true. We’ve got the lower margins or lower loads just due to the milder weather. And we felt that impact and partially offsetting that is the positive impacts from the ERM and the positive impacts as we continue to manage our business from a cost perspective. Paul Ridzon – KeyBanc: And do you do any analysis of kind of weather normalization of sales and what are you seeing as far as consumption patters if you try to weather normalize?

We do look at the weather normalized and we are closer to normal, but we are slightly down. The economy, as Scott mentioned in his remarks, the economy is still down. So we have seen some slight reduction relative to the economy, but overall on a weather normalized basis we are much closer to the prior year than we have been and it’s not the 20% down that we saw for natural gas use primarily, so when we weather normalize that, we are at a slight decline versus that 20% down. Paul Ridzon – KeyBanc: Okay. Thank you very much.

Thank you, Paul.

Your next question comes from the line of James Bellessa with D.A. Davidson & Company. Please proceed. James Bellessa – D.A. Davidson & Company: Good morning.

Hi, Jim.

Good morning, Jim. James Bellessa – D.A. Davidson & Company: You indicated that you are going to be within the $4 million debt band on the ERM this year, what – would you go through that?

Yes, that’s where – I mean again we started out in a negative position in the first quarter, as we reported $1.2 million, but similar to last year, and as Scott mentioned on the – on where the price of natural gas is in our retail rates, we do expect based on our forecast to be in a positive position. Last year, we ended up in a positive position and we anticipate that result or a similar result this year. But it will be within that $4 million debt band just to give you an idea where it’s at. James Bellessa – D.A. Davidson & Company: And what is –what was the ERM benefit last year amount?

$3 million. James Bellessa – D.A. Davidson & Company: Okay. Then on the –

And again, that’s Washington, Jim, just to be clear. James Bellessa – D.A. Davidson & Company: Okay. $3 million Washington, okay. Now, on the Advantage IQ, you’ve made an acquisition. The – without the acquisition, would you have been just flat or directionally which way would you have been without that acquisition.

Jim, we would have been flat to just a tiny bit positive. What we are seeing – with the interest rates where they are, we are not getting the float revenue that we traditionally have gotten, so that’s been a little bit of a drag on the business. We continue to see some growth in our core business of bill pay, however, we still are fighting some of the reduction s in the retail marketplace with store closure – closings, et cetera. So, the organic growth we traditionally saw in Advantage has continued to lag a little bit. However, that being said Jim, as you know that we’ve got a new management team in place over there. Our new CEO is doing an absolute fantastic job. The Ecos business is growing and has some tremendous upside. We are very optimistic about where this business is going. We still have some great opportunities to continue to grow this business with other opportunities and mergers and acquisitions as well as just growing our base. Businesses or opportunities to do consulting services continue to be quite good. So, we are very optimistic about this business and think it’s well positioned to continue to grow once the economy continues to recover, I think Advantage will recover right with it. James Bellessa – D.A. Davidson & Company: You say in the press release you consolidated Spokane Energy. What is Spokane Energy and why did you do it for the first time, this time, this quarter?

Spokane Energy is a company that has a – handles the capacity sales for us and prior to January 1, it was considered a qualifying special purpose entity, which we didn’t have to consolidate. January 1, some new accounting standards came into play that required that it be consolidated. There is no impact on the income statement. There is some (inaudible) amount on the balance sheet. There is a good explanation of it in the 10-K in Item 7, and then there will be quite a bit more in the 10-Q note too this time. James Bellessa – D.A. Davidson & Company: And then did your filing expectation for Oregon get slipped back, you say it now like the end of the third quarter, I thought may be it was earlier in the year.

Yes. Jim, this is Kelly. We had planned to file it before the end of the second quarter. We did spend a lot of time putting together Washington, Idaho, and so it slipped a month or two. It will be sometime this summer. James Bellessa – D.A. Davidson & Company: Thank you very much.

Thanks, Jim.

(Operator instructions) And at this time I would like to turn the presentation back over to Mr. Jason Lang for closing remarks.

I want to thank everyone for joining us today. We certainly appreciate your interest in our company. Have a great day.