Ladies and gentlemen and welcome to the third quarter Avista Corporation earnings conference call. My name is Ann and I will your coordinator for today’s call. (Operator Instructions) As a reminder this conference is being record for replay purpose. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session following the presentation. I’d now like to turn the presentation over to Mr. Jason Lang, Investor Relations Manager. Please proceed, sir.

Thank you, Ann. Good morning everyone and welcome to Avista’s third quarter 2009 earnings conference call. Our earnings were released pre-market this morning and the release is available on our website at www.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; Vice President of Finance, Jason Thackston; Vice President and Chief Council for Regulatory and Governmental Affairs, David Meyer; and Vice President, Controller and Principal Accounting Officer, Christy Burmeister-Smith. Before we begin, I’d like to remind you that some of the statements that will be made today are forward-looking statements that involve risks and uncertainties, which are subject to change. A reference to the various factors which could cause actual results to differ materially from those discussed in today’s call, I will direct you to our Form 10-K 2008 and Form 10-Q for the period ended June 30, 2009, which are available on our website. To begin this presentation I’d like to recap the financial results presented in today’s press release. For the third quarter of 2009, our consolidated net income was $0.15 per diluted share compared to net income of $0.13 per diluted share for the third quarter of 2008. On a year-to-date basis our earnings were $1.18 per diluted share compared to $1.04 per diluted share for the first nine months of 2008. Now I’ll 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. We’re pleased with our 2009 results through September 30. Our continued solid financial performance keeps us on tract to meet our earnings expectation for the year. We are expecting to be at the upper end of our range for consolidated and utility earnings for 2009. We continue to make progress in the timely recover of our costs and capital investments we’re making in our generation, transmission and distribution infrastructure. New rates went into effect in Idaho August 1 and in September we reached an all party settlement in our Oregon natural gas general rate case. As approved by the Oregon commission new rates will become effective in Oregon on November 1. As part of the settlements we have agreed to refund a total of $2.4 million to our Oregon customers related to Oregon Senate Bill 408 over two month period, November and December of 2009. This refund is approximately equal to the new revenue from the general rate increase for this period. In Washington we reach the partial settlement in our general electric and natural gas rate case in September. The settlement resolved issues in the areas of cost of capital, power supply, rate spread and rate design and funding under the low income rate-payer assistance program. Issues in the case that remain unresolved include, among others, the prudence and timing of the addition of the power purchase agreement for the Lancaster plant. Capital additions to rate base, labor costs, tree trimming costs, information systems costs and the proposed continuation of the natural gas decoupling mechanism. These issues are being addressed in further regulatory proceedings before the WUTC. We expect a decision from the WUTC on the remaining issues and new rates to become effective by the end of the 2009, some eleven…

Thank you, Scott and good morning everyone. Avista Utilities contributed $0.13 per diluted share for the third quarter of 2009 compared to $0.12 in the same period in 2008. On a year-to-date basic our utility operations contributed $1.15 per share, an increase from $0.96 period in 2008. The improvement in our year-to-date results was primarily a result of increased gross margin due to the implementation of new retail rates in Washington and Idaho. The increased in net income was also due to a decrease in interest expense and income tax expense. The interest expense decrease was due to the effect of refinancing higher cost debt with lower cost long term debt and lower interest costs on our short term borrowings. An adjustment to reconcile our 2008 federal income tax return to the amount included in the financial statements for 2008 resulted in a $3.2 million decrease to income tax expense for the third quarter of 2009. These positive impacts on net income were partially offset by an increase in other operating expenses, depreciation and amortization and taxes other than income taxes. In addition, in the third quarter of 2008 we reported $5.7 million of internet income partially offset by $1.4 million of interest expense related to income tax settlements in that period. We absorbed $2 million of expense under the Washington Energy Recovery Mechanism in the third quarter of 2009 compared to a benefit of $0.1 million in the third quarter of 2008, which decreased electric gross margin and income from operations by $2.1 million in the third quarter of ‘09 as compared to the same period in ‘08. We absorbed $6.1 million of expense under the ERM in the first nine months of 2009 compared to $7.3 million in the first nine months of 2008; which increased electric gross…

Thanks Mark. Now, we’ll open this call up to questions.

(Operator Instructions) Your first question comes from Paul Ridzon - KeyBanc.

Hand full of questions, one is can you review, how we earned for the forward looking, we’ll be set and will be set?

The ERM for the ERM always gets reset when complete our power supply costs in our rate case and we just have a tentative settlement subject to the commission approval that would have with our on the power supply and capital structure that we reached in September. So we still have to go through the approval process with the Commission on that, but that will set our power supply costs, in which we will calculate ERM for 2010.

You just look at the gas trip is a big driver of how that is set?

Yes, we’ll look at well in power costs, but the gas strip, gas is a driver of that, but also forward power costs.

What takes you from $6 million absorption of the ERM to positive in the fourth quarter?

A lot of that is the same very similar, that the comparison of the current natural gas strip in the fourth quarter and power costs compared to what we had in our rates effective as of January of 2009.

You are currently based on $8 gas strip? I s that the number?

Yes. $8 in change.

Then from a rate making perspective and I guess regulatory balance sheet, what is going to happen to the stimulus funds? Was that go in its equity, obviously you can’t earn on it, but what is that due to the regulatory capital structure?

I think it’s just CapEx.

Contribution to eight construction.

So you’re going to spend some $19 million of government funds on smart meters?

We don’t expect to get any earnings on that.

I mean, we will get to spend that. The government will pay for it, but we don’t expect to add that to rate based and to get to earn on it. We will get to earn on what we spend in our share of that contribution, that matching share. That’s what we’ll get to put in rates, the other I’ll get pay. The customers will get the benefit of the capital that we deploy, but we’re not going to get to earn on that.

So it has no impact on equity layer?

It should have no impact.

Then going from ‘09 to ‘10, is got any improvement in the other segments, what’s driving that?

I mean in the tough economic times, we’ve had some reductions in certain of those funds. We anticipate that turning around. We’re not look to generate in significant earnings, we just think that the losses should slow down and get to a positive in that segment and it’s a pretty small number.

Is there any progress in kind of exiting those businesses or is that just not the right time to do that?

We don’t think it’s the right time to exit the businesses, given the current economic condition.

Your next question comes from Brian Russo - Ladenburg Thalmann & Co. Brian Russo - Ladenburg Thalmann & Co.: Could you be a little bit more specific on your external capital needs in 2010? You mentioned you’ll raise both debt and equity. Will the equity be accomplished through your sales agreement?

Here is how we look at it. When we have approximately $210 million of CapEx expected, and our dividend at the current rate is approximately $45 million. So if you have $255 million of needs of capital need, we generate around $170 million to $175 million of cash out of our existing business on a trailing 12 month base, assuming income is about $82 million depreciation around $90 million. So that leaves us with a need of about $80 million to $85 million and to maintain a reasonable capital structure would look at around a 50/50, just for example purposes, what we would need from an equity or debt perspective, that gives you some range of that expectation, to maintain our consolidated balance sheet. We’re about 47% equity as of September 30. Brian Russo - Ladenburg Thalmann & Co.: So will the sales agreements of 1.25 million shares left, if will that satisfy your external equity needs?

If we’re at $80 million to $85 million for the year and we have an expectation of around 50%. Let’s assume it’s on those calculations, $40 million to $42.5 million and where we’re trading at now, no, the $250 million won’t be enough. We anticipate applying to get another two million shares on that agency, renewing the program for 2010. We were look to go in and file to be able to do that and with that we would expect that to be able to cover any needs. Brian Russo - Ladenburg Thalmann & Co.: So we can expect incremental shares outstanding by year end of $2 million for updated sales agreement plus the remaining $1.5, so the total of $3.5 million, on top whatever your shares outstanding are now?

No. What we’re looking at raising and it’s equity, between $40 million and $50 million roughly and over the course of the year and we haven’t set out specifically how we would do it and let’s assume we’re around $20 today is where our stock is around that’s to get to that number, it’s 2 million to 2.5 million shares. Brian Russo - Ladenburg Thalmann & Co.: Just on the 2010 guidance, what kind of assumptions is you making to get you through the mid point in terms of say lower growth.

It’s about 1.5% low growth in our expectations, which we’ve had a long running consistency on that. So, that’s our expected low growth. Brian Russo - Ladenburg Thalmann & Co.: Okay and correct me if I’m wrong, but I think in your consolidated tables it looks like lower growth until what our sales were relatively flat in the third quarter, to slightly down as well as flat to slightly down in the nine months ended. Is that accurate?

Yes. Brian Russo - Ladenburg Thalmann & Co.: So you’re expecting a pick up maybe in the fourth or at least in 2010?

That is correct. Brian Russo - Ladenburg Thalmann & Co.: Can you just update us on any transmission projects that are being proposed that you might be involved in the Northwest?

No, still Brian really too early around the Pacific gas and electric transmission line of has been proposed. We’re still actively engaged in negotiations and planning around that, but see no significant capital expenditures on that project in 2009 or 2010. So still on a study mode and to be determined and just normal what I’d call normal transmission for reliability purposes in our service territories. So, no large transmission projects and again with our wind projects what we’re excited about is if we do choose to build wind early we have data transmission near those wind projects and we do not need to put any significant transmission investment to build the wind. Brian Russo - Ladenburg Thalmann & Co.: Will the wind project need additional equity above and beyond what you laid out early, should above the CapEx profile you had so for?

It’s a three year project, so over the course of time, we’ll continue to capitalize the company to maintain a prudent balance sheet. We want to have our strong investment grade ratings and maintain our capital for what we have allowed by our commissions, butut that capital will be spent over a three year period. So the incremental equity over that period, there maybe some as we go forward, yes. Brian Russo - Ladenburg Thalmann & Co.: Advantage IQ I think in the press release when you announced the acquisition of Ecos and you convey that was a creative, can you quantify that in terms of its impact 2010?

It’s included in the expectations for the $0.10 to $0.13 for Advantage IQ. It’s not a significant impact, but we do expect it to be accretive.

Your next question comes from James Bellessa – D.A. Davidson & Co., James Bellessa – D.A. Davidson & Co.: Earlier in the year when you were providing earnings guidance, did you anticipate the third quarter tax benefit of $3.2 million are $0.06 of share?

No, again we do our accrual every third quarter and there times it can be up there times going to be down last year in ‘08 we had a positive in the third quarter, 5.7 less $1.4 million on a pre-tax basis. So we had a positive then and we had a positive this year, but we didn’t have that expected. We don’t know that until we file our return and do all of our analysis. James Bellessa – D.A. Davidson & Co.: So you did not anticipate it, but when you got to the August earnings report and you increased your outlook for your utility, did you then have an anticipation you were going to get a benefit or is that something that later on in the quarter happened?

Yes, even filed our return yet. So, we worked through in September we file our return, so we did not have an expectation that it would be that much of a benefit when we did our August numbers. James Bellessa - D.A. Davidson & Co.: Now, therefore why doesn’t your earnings band for the utility go up by that $0.06 for this year that you are still repeating what you were saying last August?

Now what we added was that we’ll be at the upper end range. So Jim, we have provided some commentary that we didn’t change our range, but we expect it that our position within that range will be at the upper end of the range. James Bellessa - D.A. Davidson & Co.: That’s also for consolidated business, so that you’re saying not just the utility, but the overall business guidance you expect at the upper end of the range?

For both the utility and consolidate. So that is the change.

Your next question comes from Chris Ellinghaus - Shields & Co. Chris Ellinghaus - Shields & Co.: I apologize. I think I missed a piece of the ERM discussion. Relative to prior quarter comments where you were suggesting that the ERM would be positive in the second half of the year, were you specking at that point to have drag of $2 million for the quarter?

I think we anticipated that the third quarter would have some drag and then it would turnaround in the fourth quarter. Really, we just speak to it. It’s an annual calculation and we just speak to where we expected to be at the end of the year and we said at that time we expected to be on a positive side. We continue to expect to be on the positive side on the ERM. Chris Ellinghaus - Shields & Co.: Okay that $2 million is an after tax number?

No, that is a pretax number. Chris Ellinghaus - Shields & Co.: Also with Advantage IQ, the slight positive swing year-over-year, what was that attributable to?

Chris, it’s a number of things. It’s continuing to add new customers continuing to expand in our consulting areas. Again while it hasn’t been the traditional growth that we’ve seen, year-over-year we’re still seeing anywhere around 10% growth, roughly in the business. So those consolidated revenues that continue to grow because of business performance.

We did pick up the Cadence acquisition mid year in 2008. So we had it for the full period in 2009. Now we did also offsetting that is that we don’t have the same ownership. We have 75% ownership. We did get experience slightly and we did Ecos for the month of September. Chris Ellinghaus - Shields & Co.: Does that also include any kind of transaction expenses year-over-year as a delta?

The expenses are included in how we account for the acquisition, yes. Chris Ellinghaus - Shields & Co.: There was one comment that Scott made, on the Oregon settlement. Can you just go over the offsetting factor there that you had in the settlement.

Chris, I’m going to let David Meyer, our Chief Regulatory Counsel walk you through the Oregon step and Senate Bill 408.

Chris, this is David. In that settlement, well let me back up. We had originally file for just an excess of $12 million and through negotiation we settled out at $8.8 million, but one of the advantages of the settlement was to bring those new rates into effect early, much earlier that 2010 implementation date. So they would be in effect on November 1 and that allowed us to get more revenues for the months of November and December, which happened to offset almost entirely a refund obligation under Senate Bill 408 of $2 million. So we’ll work off essentially that refund obligation over the next two months and then starting January 1 of 2010, we’ll begin with earnings from that $8.75 million settlement. Chris Ellinghaus - Shields & Co.: Was that by design?

Yes.

Your next question comes from Paul Ridzon - Key Bank

On the second quarter call you talked about being in the $4 million to $10 million ERM band. Is that still reasonable?

In the 75, 25 share, we expect to be within the $4 million debt band. We’re pretty close to whether we get to that other band or not, it hasn’t moved significantly, but it has moved slightly down.

What’s go on at Colstrip?

We expected to be online no later than mid-November. So we feel pretty good about it.

Still expecting to incur about $10 million of losses from that?

That’s all incorporated all of the amounts are incorporated within the power supply cost and ERM. That’s built included in our expectations for ERM for this year.

Previous management always kind of talked about as soon as IQ got to about $100 million of revenues, it was probably time to start thinking about exit strategy. What is your thought process around that?

Paul, we are going to continue to execute on our strategies around Advantage IQ, and what we’ll do is continue to see opportunities in that business. Remember when we say ‘Monetize,’ that doesn’t necessarily mean, we’re going to a set a value for the business, where we monetize as we might obviously, keep a portion or the majority of the business. It will give our partner and opportunity to exit the business, if they so choose. So we’ll continue to look at that in the 2011-2012 timeframe, but we’ve got some great opportunities to continue to grow the business and with the acquisition of Ecos and with the focus on sustainability and energy-efficiency in these markets, Ecos brings tremendous expertise to continue to allows us to growth our consulting services and providing more products and services to our customers. So we’re going to continue to execute around those strategies and we’ll see where it takes us.

Are you seeing any more rollup-type acquisition potential out there?

You’re always having our eye on the marketplace and if this is opportunities, we’ve certainly take advantage of them.

Your final question comes from James Bellessa - D.A. Davidson & Co. James Bellessa - D.A. Davidson & Co.: The question about Advantage IQ, you cite in the press release managed bills totaling $13.5 million for the first nine months, but if you ex out Cadence and Ecos, it looks to me like they were down over half a billion dollars. Can you explain that or discuss that, please?

We did have some decline, Jim, in overall managed bills I mean, some of them are, we had some client based reductions and just some reductions that have occurred just in as well as some of that is timing of what dollars where we’re getting to build, what we’re managing in that. Overall as we’ve seen utility operations, gas prices has come down. Electric has stabilized. So we can see some have some expected lowering in bills just as we’re seeing that with our own customer base. So it’s not overly concerning, but you are accurate it has come down. James Bellessa - D.A. Davidson & Co.: During the current recession, are you picking up market share or losing market share?

We have actually added overall slightly to our accounts that we manage. It’s not a significant number, but we have seen an addition. We have had some losses and we have had some pick ups in accounts, but on a net basis, we have a slight increase in accounts, which given these tough economic times we feel pretty good about.

Ladies and gentlemen, this concludes today’s question-and-answer session. I would now like to turn the call back over to Jason Lang for closing remarks.

Thank you all for joining us today. We certainly appreciate your interest in our company. Have a great day