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Case Status:    SETTLED
On or around 06/11/2007 (Date of last review)

Filing Date: September 27, 2002

On December 20, 2007 the judge entered a Final Order and Judgment definitively approving the settlement and dismissing the case with prejudice against defendants. A separate order will follow granting reimbursement of attorneys' fees and expenses.

According to a press release dated Avista Corp. has agreed to a $9.5 million settlement to end a class action lawsuit filed by investors five years ago who alleged the company and senior executives engaged in fraud and other securities law violations. The pending settlement, announced this week, needs the approval of U.S. District Judge Fred Van Sickle of Spokane. Avista denies the core allegations of the lawsuit originally filed in September 2002 that it failed to disclose its role in electricity trades between Enron Corp. and Portland General Electric, an Enron subsidiary at the time.

According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, on January 6, 2006, the Company filed a motion to dismiss the November 10, 2005 complaint, asserting deficiencies in the amended complaint, including that the plaintiffs failed to adequately allege loss causation. On June 2, 2006, the U.S. District Court entered an order denying the Company’s motion to dismiss the complaint. The U.S. District Court’s order denying the Company’s motion to dismiss is not a decision on the merits of the lawsuit and the matter will proceed in the normal course of litigation.

As disclosed by the same SEC filing, on November 10, 2005, an amended class action complaint was filed in the United States District Court for the Eastern District of Washington against Avista Corp. and certain of its current and former officers. Several class action complaints were originally filed in September through November 2002 in the same court against the same parties. In February 2003, the court issued an order, which consolidated the complaints and in August 2003, the plaintiffs filed a consolidated amended class action complaint. On June 13, 2005, the Company filed a motion for reconsideration of its earlier motion to dismiss this complaint, based, in part, on a recent United States Supreme Court decision with respect to the pleading requirements surrounding a sufficient showing of loss causation. On October 19, 2005, the Court granted the Company’s motion to dismiss this complaint. The order to dismiss was issued without prejudice, which allowed the plaintiffs to amend their complaint. The amended complaint filed on November 10, 2005 alleges damages due to the decrease in the total market value of the Company’s common stock during the class period, alleged to be approximately $2.6 billion. These alleged losses stemmed from violations of federal securities laws through alleged misstatements and omissions of material facts with respect to the Company’s energy trading practices in western power markets. The plaintiffs assert that alleged misstatements and omissions regarding these matters were made in the Company’s filings with the Securities and Exchange Commission and other information made publicly available by the Company, including press releases. The class action complaint asserts claims on behalf of all persons who purchased, converted, exchanged or otherwise acquired the Company’s common stock during the period between November 23, 1999 and August 13, 2002.

The original complaint charges Avista Corp. and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that defendants made misstatements of material facts and omitted to state material facts in their public statements and elsewhere, including failing to disclose that Avista was engaged in highly risky energy trading activities with Enron and Portland General Electric involving so-called "Ricochet" or "megawatt laundering" trades in which Avista acted as a middleman between Enron and Portland General Electric so that Enron could evade California's caps on electric power prices and charge California artificially high prices for electricity, that Avista routinely acted as a middleman between affiliates such as Enron and Portland General Electric in order to facilitate transactions to proceed which would have been prohibited under federal rules if the affiliates had engaged in them without an intermediary, and that Avista was and is exposed to substantial contingent legal liabilities as a result of the foregoing, including the threatened revocation of its license to trade electric power on the wholesale markets, or market-based rate authority, by the Federal Energy Regulatory Commission.

The complaint further alleges that on August 14, 2002, after the Federal Energy Regulatory Commission announced that it may take formal enforcement action on charges that Avista helped manipulate California power prices during 2000, Avista stock tumbled 11.85 percent, and on September 17, 2002 Avista stock traded at as low as$11.10 per share, down from its class period high of $67.55.

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