8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 19, 2006

AVISTA CORPORATION

(Exact name of registrant as specified in its charter)

Washington	1-3701	91-0462470
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1411 East Mission Avenue, Spokane, Washington	99202-2600
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: 509-489-0500

Web site: http://www.avistacorp.com

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 7 – Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure.

The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On September 20 and 21, 2006, management of Avista Corporation (Avista Corp. or the Company) will be participating in meetings with investors and will provide a business update presentation. A copy of the business update presentation is furnished as Exhibit 99.1.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Business update presentation dated September 2006, which is being furnished pursuant to Item 7.01.

Neither the furnishing of any presentation as an exhibit to this Current Report nor the inclusion in such presentation of a reference to Avista Corp.’s Internet address shall, under any circumstances, be deemed to incorporate the information available at such Internet address into this Current Report. The information available at Avista Corp.’s Internet address is not part of this Current Report or any other report furnished or filed by Avista Corp. with the Securities and Exchange Commission.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AVISTA CORPORATION (Registrant)
Date: September 19, 2006	/s/ Marian M. Durkin
	Marian M. Durkin
	Senior Vice President, General Counsel and Chief Compliance Officer

EX-99.1

1

We answer to you.

Business Update

September 2006

NYSE: AVA

www.avistacorp.com

Exhibit 99.1

2

We answer to you.

Corporate Summary

Regulated

Non-regulated

Energy company involved in the production,

transmission and distribution of energy as well as

other energy-related businesses

Incorporated in 1889 and headquartered in

Spokane, Washington

Avista Utilities is a company operating division

comprising the regulated utility operations that

provides electric and natural gas service to

customers in Washington, Idaho and Oregon

Avista Advantage is a business process outsourcer

that provides facilities resource management

Avista Energy provides electricity, natural gas and

hydroelectric portfolio optimization and

management, as well as risk management services

3

We answer to you.

Avista Utilities

4

We answer to you.

Avista Service Territory

Electric Customers

338,000

Gas Customers

297,000

5

We answer to you.

Q2 YTD 2006 Results

3,547 new electric customers

4,080 new natural gas customers

Extended service to:

1,683 electric development lots

3,719 gas development lots

0

3,000

6,000

9,000

12,000

15,000

18,000

21,000

2002

2003

2004

2005

Q2 YTD

2006

Electric

Gas

Customer Growth

Forecasted growth for the next four years:

2+% for electric customers

3+% for natural gas customers

6

We answer to you.

2006 Utility Capital Expenditures

Total Utility capital expenditures results in an additional $80 million to net rate base

230 kV

Upgrades $29

Other $7

IS/IT & Security

$10

Gas $11

Environmental

$10

Growth $40

Electric

Transmission &

Distribution $26

Generation $27

$160 Million Total CapEx

*

* Excludes Automated Meter Reading

7

We answer to you.

Transmission System Upgrades

Palouse

230 Line

Lolo Substation

Beacon-Bell 230 Lines

$29,200

2006

$20,835

2007

Benewah

Fiber Optic and C. Fork RAS

$21,926

2004

$27,104

2005

$21,041

230 kV Upgrade Total CapX

Boulder Sub & 230 Lines

Dry Creek Sub & 230 Lines

Beacon-Rathdrum Line

2003

Palouse

230 Line

Lolo Substation

$29,200

2006

$20,835

2007

Benewah Substation

Fiber Optic and C. Fork RAS

$21,926

2004

$27,104

2005

$21,041

230 kV Upgrade Total CapX

Boulder Sub & 230 Lines

Dry Creek Sub & 230 Lines

2003

230 kV Construction Schedule and Cost Trend

($ thousands)

Total project cost is approximately $120 million through 2007

8

We answer to you.

Noxon

Rapids/Cabinet Gorge Turbine Upgrades

Avista’s two largest hydro projects

Noxon

Rapids

Improve efficiency, reliability and eliminate

operating restrictions

Replace turbine runners on Units 1-4

Requires $31.4 million of capital over the

next seven years

Capacity increase of 38 MW, bringing total

capacity to 570 MW

Noxon

Rapids Dam

Cabinet Gorge

Unit #4 turbine upgrade

Scheduled September 2006-March 2007

Project cost $6 million

Capacity increase of 10 MW, bringing total

capacity to 271 MW

Cabinet Gorge Dam

9

We answer to you.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Peakers

Average Load

(with reserves)

Hydro

Base Load Thermal

Contracts

Gas Dispatch

Annual Average Loads and Resources 2008-2016

(in aMW)

10

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Integrated Resource Plan (IRP)

Over half of future energy needs are

met with renewables, plant upgrades

and conservation

A Request for Proposal for up to 35

average MW of renewable energy was

issued to the public on January 4, 2006

Energy and Capacity deficits begin in

2010 and 2009, respectively. Over a

period of ten years, Avista’s 2005 IRP

calls for acquisition of:

69 MW of Conservation

400 MW of Wind

80 MW of Other Renewable Resources

52 MW of Hydroelectric Efficiency Upgrades

250 MW of Coal-based Generation

Resource Mix

14%

3%

22%

19%

42%

3%

8%

26%

11%

52%

0%

10%

20%

30%

40%

50%

60%

Wind/Other

Renewables

Contract

Gas

Coal

Hydro

2006

2016

11

We answer to you.

Avista Utilities

Regulatory Update

Authorized

48%

10.25%

8.88%

Oregon Natural Gas

(implemented in October 2003)

43%

40%

Common

Equity

Level

Return

on

Equity

Rate of

Return

Jurisdiction and service

10.40%

9.25%

Idaho Electric and Natural Gas

(implemented in September 2004)

10.40%

9.11%

Washington Electric and Natural Gas

(implemented in January 2006)

$73 million

$66 million

$466 million

$141 million

$845 million

Gas

Gas

Electric

Gas

Electric

Oregon

Idaho

Washington

Rate Base

12

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Electric Power Cost Mechanisms

Idaho PCA

$0

90/10 Sharing

90/10 Sharing

Power Supply Costs in Base Rates

$0

Washington ERM

90/10 Sharing

+ $10 Million

50/50 Sharing

+ $4 Million

Power Supply Costs in Base Rates

-$4 Million

-50/50 Sharing

-$10 Million

-90/10 Sharing

13

We answer to you.

Washington Production and Transmission Update

Filed August 31, 2006

Increase of 8.8% or $28.9 million in revenue

Rates effective on or before February 1, 2007

Increase driven by:

Additional investments in Avista’s hydroelectric

and thermal generating plants

Upgrades to 230 kV transmission system

Higher operating costs for purchasing and

generating electricity

Request includes pro-forma period loads for

the 2007 calendar year

Proposing to pass on to customers the

reduction in average cost of debt

Not proposing changes to the capital

structure, the cost of equity or O&M and

A&G expenses

(000s)

Production

Revenue &

Expense

$7,416

26%

Increased

Power Costs to

Serve Load

Growth

$13,224

45%

Transmission

Investment

$1,761

6%

Transmission

Revenue &

Expense

$769

3%

Generation

Investment

$5,681

20%

14

We answer to you.

Purchased Gas Adjustment Filings

Nov. 1, 2006

Nov. 1, 2006

Nov. 1, 2006

Proposed Effective Date

8.8%

3.2%

8.1%

% Increase

$11.0 m

$2.7 m

$16.7 m

Amount

Aug. 31, 2006

Sept. 14, 2006

Aug. 31, 2006

Filing Date

Oregon

Idaho

Washington

15

We answer to you.

Advantage IQ

16

We answer to you.

Advantage IQ

Bill payment processing and related services for large,

multi-site customers

Started in 1996

Today we manage $10.0 billion annually in customer

payments

Pay over 500,000 bills per month supporting 180,000

sites in the United States and Canada

$75 million in client savings in the past two years from

bill errors

Management services include electricity, natural gas,

water, sewer, waste and telecom expenses

17

We answer to you.

Advantage IQ serves more than 350 customers in the

following industry categories

Casual Dining

Education

Medium Box Retail

Commercial

Banking/Finance

Convenience Stores

Government

Small Box Retail

Big Box Retail

Entertainment

Grocery

Hospitality

Airlines

Communications

Fast Food

Industrial

18

We answer to you.

Revenue Growth

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003

2004

2005

2006

Projected

35% increase

over 2004

19

We answer to you.

Net Income

($2,000)

($1,000)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

2003

2004

2005

2006

Projected

2006 Guidance

$0.10-$0.12

20

We answer to you.

Advantage IQ Growth Opportunities

Existing Customers

We grow as our customers grow

Expanded services

New Customers

New Services

Advanced analysis, budgeting, consulting

Supply Management

International

Acquisition/Merger/Monetization

21

We answer to you.

Avista Energy

22

We answer to you.

Avista Energy

Energy Marketing and Resource Management

Adding customer value through our

experience and knowledge of the

integrated gas and electric systems.

Teck

Cominco

Chelan PUD

23

We answer to you.

Avista Energy Overview

51 employees headquartered in

Spokane, Washington

Deep operating experience within the region

Four employees in Vancouver, BC office

Natural gas end-use marketing with over

250 customers

Two employees in Montana

Natural gas end-use marketing with over

12 customers 

Strong record of financial performance

Annual Average Return on Equity

approximately 15% (1997 to 2005)

Net income of $277 million since 2000

Total dividends to Avista Capital of $176 million

Lancaster Generating Station

24

We answer to you.

Avista Energy Business Model

How the business operates …

Marketing

energy to wholesale and large end-use customers

Moving

energy

between

locations,

by

transporting

to

higher

price

markets

Moving

energy

between

time

periods,

by

storing

it

in

the

interim

Capturing

price

differences

between

commodities,

by

converting

gas

into

power

Speculating

on future price movements

25

We answer to you.

Firm Electric and Natural Gas Resources

SASKATCHEWAN

Medford

Mid-Columbia

Chelan

Malin

COB

Spokane

AECO

Sumas

Stanfield

Lancaster

(270mw)

BRITISH COLUMBIA

ALBERTA

Jackson  Prairie Storage

John

Day

(2.7 BCF)

Kingsgate

Teck Cominco

Clark PUD

(280 mw)

To Rockies

MONTANA

IDAHO

OREGON

Electricity

Transmission

BPA

PGE

Hydro Facilities

-

Chelan PUD

-

Teck

Cominco

Location

Spread

Time

Spread

Gas

Pipeline Transport

GTNC

WGPW

Natural Gas Storage

-

COBB (Montana)

-

Jackson Prairie

Inter-commodity Spread

Natural Gas-fired Generation

-

Lancaster Project

-

Clark County PUD

-

Barrick

Goldstrike

Mines

COBB Storage

(.74

BCF)

*

*

Barrick

(Nevada)

(115 mw)

26

We answer to you.

Avista Energy

Key Contractual Assets and Strategic Agreements

Power Generation and Transmission

Lancaster 270 MW CCCT power project

250 MW of NW point-to-point transmission (BPA)

200 MW of firm AC intertie transmission capacity

Chelan PUD: real-time management of 2000 MW hydro system

Teck-Cominco: 450 MW hydro optimization

Clark PUD: 280 MW CCCT optimization

Barrick

Goldstrike

Mines: 115 MW thermal optimization

Columbia Power Corporation: 70 MW hydro optimization in 2007

Natural Gas

Jackson Prairie Natural Gas Storage

(2.7 million MMBtu’s working capacity; 100,000 MMBtu’s per day)

Nova/ANG/GTN: long-term natural gas transport

250 plus end-user customers and growing

Clark County PUD: fuel manager (48,000 m/day)

City

of

Ellensburg:

utility

operations

(storage,

transportation,

commodity,

scheduling)

27

We answer to you.

Avista Energy Growth Opportunities

Improve recent ROE performance

Grow asset base that we manage for other firms

Grow end-use gas customer business

Consider strategic alternatives

28

We answer to you.

Financial

29

We answer to you.

Consolidated Earnings

$0.60

$0.89

$0.72

$0.92

$0.91

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

2002

2003

2004

2005

Q2 YTD 2006

30

We answer to you.

AVA Dividend Payment History

$0.12

$0.125

$0.130

$0.135

$0.140

$0.145

$0.100

$0.105

$0.110

$0.115

$0.120

$0.125

$0.130

$0.135

$0.140

$0.145

$0.150

Dividend Increase Occurred

Dividend Payment Trend

$0.12 per share

dividend initially

paid Dec. 15, 1998

31

We answer to you.

Percent Change in Stock Price

Compared to Northwest Utilities and the S&P MidCap

Utilities

December 31, 2002 through September 1, 2006

PSD +1.90

AVA +107.18

IDA +54.09

CGC +28.40

S&P +64.90

NWN +42.09

-20%

0%

20%

40%

60%

80%

100%

120%

32

We answer to you.

2006 Earnings Guidance

$(0.05)

Other

$0.10-$0.12

Avista Advantage

$0.20-$0.30

Energy Marketing & Resource Management

$1.00-$1.15

Avista Utilities

$1.30-$1.45

Consolidated

33

We answer to you.

This presentation contains forward-looking statements, including statements regarding the company’s current expectations for future financial performance and cash

flows, capital expenditures, the company’s current plans or objectives for future operations, future hydroelectric generation projections, projected energy deficits in

future

periods

and

other

factors,

which

may

affect

the

company

in

the

future.

Such

statements

are

subject

to

a

variety

of

risks,

uncertainties

and

other

factors,

most

of

which

are

beyond

the

company’s

control

and

many

of

which

could

have

significant

impact

on

the

company’s

operations,

results

of

operations,

financial

condition

or

cash

flows and could cause actual results to differ materially from the those anticipated in such statements.

The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: weather conditions, including the

effect of precipitation and temperatures on the availability of hydroelectric resources and the effect of temperatures on customer demand; changes in wholesale energy

prices

that

can

affect,

among

other

things,

cash

requirements

to

purchase

electricity

and

natural

gas

for

retail

customers,

as

well

as

the

market

value

of

derivative

assets

and liabilities and unrealized gains and losses; volatility and illiquidity in wholesale energy markets, including the availability and prices of purchased energy and

demand for energy sales; the effect of state and federal regulatory decisions affecting the ability of the Company to recover its costs and/or earn a reasonable return; the

outcome

of

pending

regulatory

and

legal

proceedings

arising

out

of

the

“western

energy

crisis”

of

2001

and

2002,

and

including

possible

retroactive

price

caps

and

resulting

refunds;

changes

in

the

utility

regulatory

environment

in

the

individual

states

and

provinces

in

which

the

Company

operates

as

well

as

the

United

States

and

Canada in general; the outcome of legal proceedings and other contingencies concerning the Company or affecting directly or indirectly its operations; the potential

effects of any legislation or administrative rulemaking passed into law, including the Energy Policy Act of 2005 which was passed into law in August 2005; the effect

from

the

potential

formation

of

a

Regional

Transmission

Organization;

wholesale

and

retail

competition;

changes

in

global

energy

markets;

the

ability

to

relicense

the

Spokane River Project at a cost-effective level with reasonable terms and conditions; unplanned outages at any Company-owned generating facilities; unanticipated

delays or changes in construction costs with respect to present or prospective facilities; natural disasters that can disrupt energy delivery as well as the availability and

costs of materials and supplies and support services; blackouts or large disruptions of transmission systems; the potential for future terrorist attacks, particularly with

respect to utility plant assets; changes in the long-term climate of the Pacific Northwest; changes in future economic conditions in the Company’s service territory and

the United States in general; changes in industrial, commercial and residential growth and demographic patterns in the Company’s service territory; the loss of

significant customers and/or suppliers; failure to deliver on the part of any parties from which the Company purchases and/or sells capacity or energy; changes in the

creditworthiness

of

customers

and

energy

trading

counterparties;

the

Company’s

ability

to

obtain

financing

through

the

issuance

of

debt

and/or

equity

securities;

the

effect

of

any

potential

change

in

the

Company’s

credit

ratings;

changes

in

actuarial

assumptions,

the

interest

rate

environment

and

the

actual

return

on

plan

assets

with

respect

to

the

Company’s

pension

plan;

increasing

health

care

costs

and

the

resulting

effect

on

health

insurance

premiums

paid

for

employees

and

on

the

obligation

to

provide

postretirement

health

care

benefits;

increasing

costs

of

insurance,

changes

in

coverage

terms

and

the

ability

to

obtain

insurance;

employee

issues,

including

changes in collective bargaining unit agreements, strikes, work stoppages or the loss of key executives, as well as the ability to recruit and retain employees; changes in

rapidly advancing technologies, possibly making some of the current technology quickly obsolete; changes in tax rates and/or policies; and changes in, and compliance

with, environmental and endangered species laws, regulations, decisions and policies, including present and potential environmental remediation costs.

For a further discussion of these factors and other important factors, please refer to the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2005 and

Quarterly Report on Form 10-Q for the quarter ended June 30, 2006. The forward-looking statements contained in this presentation speak only as of the date hereof. The

company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such

statement is made or to reflect the occurrence of unanticipated events.  New factors emerge from time to time, and it is not possible for management to predict all of such

factors,

nor

can

it

assess

the

impact

of

each

such

factor

on

the

company’s

business

or

the

extent

to

which

any

such

factor,

or

combination

of

factors,

may

cause

actual

results to differ materially from those contained in any forward-looking statement.

34

We answer to you.