Mail Stop 3561

      March 16, 2006
Marian M. Durkin
Senior Vice President and General Counsel
AVA Formation Corp.
1411 East Mission Avenue
Spokane, Washington 99202

      Re:	AVA Formation Corp.
		Registration Statement on Form S-4
      Filed February 15, 2006
		File No. 333-131872

		Avista Corporation
		Form 10-K for Fiscal Year Ended December 31, 2005
		Filed March 7, 2006
		File No. 1-03701


Dear Ms. Durkin:

      We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.  After
reviewing this information, we may raise additional comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.



Form S-4

General
1. We note that AVA Formation Corp. is a newly formed company and
does not meet the requirements for the use of Form S-3.  Please
substantially revise to include the information required by Item
14
of Form S-4 with respect to AVA Formation Corp.
2. Please provide us with any gatefold information such as
pictures,
graphics or artwork that will be used in the prospectus.

Form of  Proxy
3. We note that the form of proxy includes a statement that the
proxy
confers the power to vote shares on the proposal and "such other
matters as may properly come before the meeting or any
adjournments
thereof."  Provide an opportunity to specify by boxes a choice
between approval or disapproval.  Refer to Rule 14a-4(b).
4. Please revise Proposal 2 to refer to the share exchange in
connection with the reorganization to a holding company structure.

Front Cover of the Proxy Statement/ Prospectus
5. Please revise the cover page as follows:
* Please limit the front cover to one page;
* Please omit the use of defined terms on the cover and in the
prospectus; instead, use abbreviated terms or terms that are clear
from their context;
* Please disclose recent stock price information for Avista common
stock and the trading symbols for Avista and AVA;
* Please highlight the risk factor reference by separating it from
the rest of the paragraph that appears in bold, or in some other
manner; please remove the other cross-references to "Proposal Two"
since this is not information required by Item 501 of Regulation
S-K;
* Please disclose the total number of shares being offered in the
share exchange;
* Please identify the person making the proxy solicitation; refer
to
Item 4 of Schedule 14; and
* Please revise to clarify that Avista`s common stock will be
delisted after the share exchange is consummated.

Additional Information About Avista and AVA, page 1
6. Please move this section so that it appears after the risk
factors.

Incorporation of Documents by Reference, page 1
7. We note that you filed on March 7, 2006 your Form 10-K for the
fiscal year ended December 31, 2005.  Please revise your
disclosure
to refer to this most recent Form 10-K.  See Item 11(a) of Form S-
4.

Summary, page 3
8. Please revise to include the information required by Item 5 of
Schedule 14A.
9. Please briefly describe the material differences in the rights
of
stockholders of Avista and AVA Formation.  For instance, it
appears
that there are differences with respect to cumulative voting to
elect
directors, the percentage required to approve amendments to the
charter will be lowered from 80% to two-thirds, and the preferred
purchase right will be eliminated.
10. Please briefly describe the revocability of the proxy.

Holding Company Proposal, page 3
AVA and Avista, page 3
11. For ease of understanding, please include in your summary
organizational charts comparing your current structure and the
holding company structure.  Refer to the Avista Form 425 filed on
March 3, 2006.

Selected Avista Financial Information, page 5
12. Please consider the use of the word "unaudited" for the year
ended December 31, 2005.  While this information appears to be
derived from the audited financial statements of Avista for the
relevant years, none of it is covered by an audit report and the
use
of the word unaudited to describe a part of the information may
imply
that the information presented for the preceding years are
audited.

Risk Factors, page 7
13. Your introductory paragraph implies that you are incorporating
risk factors by reference.  Please note that all material risk
factors must be disclosed in the proxy statement/ prospectus.
Please
revise the introductory paragraph of this section to eliminate the
implication that you have not discussed all material risks, and
revise as necessary to include a discussion of all material risks
in
your Risk Factors section.
14. Please include a risk factor describing the risks of the
proposed
share exchange and restructuring.
The performance of any new AVA subsidiaries is uncertain, page 7
15. The disclosure in this risk factor appears generic because the
information could apply to many companies in your industry or even
in
other industries.  Please revise to specifically indicate how the
stated risk applies to your company, or delete this risk factor.

Voting Procedures, page 8
16. Please clarify that proxies indicating votes against a
proposal
will not be used to vote in favor of adjourning or otherwise
postponing the meeting to allow for additional voting on the
proposal.  Otherwise, include a separate proposal describing the
procedures for adjourning or postponing a meeting.

Proposal 1 - Election of Directors, page 9
17. We note disclosure indicating the board "has no reason to
believe
that any nominee will be unable to serve as a director."  Please
expand your disclosure to state, if true, that each of the
nominees
has consented to becoming a director.  In addition, please file
the
appropriate written consents.  Refer to Rule 438 of Regulation C.
18. Please revise to include all of the information required by
Item
7 of Schedule 14A.  For example, the business experience during
the
past five years for Mrs. Blake, Mr. Knight, Dr. Powell and Ms.
Stanley is unclear.  See Item 401(e) of Regulation S-K.
19. Please substantiate or delete the promotional references
appearing in the biographical information of Ms. Stanley.  For
example, we note disclosure indicating she has held "progressively
responsible positions of leadership" and was named one of the
"Twenty-Five Women to Watch in Banking."
20. Please identify the two parties to the commercial transaction
under the description of Mr. Eiguren`s business experience.

Director and Executive Compensation, page 17
21. Please disclose whether the vesting schedule of options issued
to
executive officers will accelerate as a result of the company`s
restructuring.

Class Action Securities Litigation, page 29
22. To the extent possible, please update the current status of
the
legal proceedings discussed in this section.  Please also explain
to
us why you do not expect that this lawsuit will have a material
adverse effect on your financial condition, results of operations
or
cash flows.  We may have further comment after reviewing your
response.

Proposal 2 - Holding Company Proposal, page 30

Corporate Reorganization, page 30
23. Please include a discussion of the background of the
reorganization proposal.
24. Please revise to briefly describe the operations of the four
business segments of Avista, particularly the segment you
categorize
as "Other."
25. In the charts appearing on pages 32-34, please revise to
explain
the difference between a business entity and business segment.

Reasons for Holding Company Proposal, page 34
26. Please balance your disclosure of the potential benefits of
the
proposed restructuring with equally prominent disclosure of
potential
negative consequences of the proposal.
27. We note that the holding company structure would permit the
use
of financing techniques by non-utility businesses.  Please
describe
in greater detail the financing techniques to which you refer.
28. We note disclosure on page 34 indicating that the holding
company
structure would make it easier for AVA to enter into new
businesses
within other sectors of the energy industry.  We also note
disclosure
on page 37 indicating that after the effective time of the share
exchange, AVA may form new subsidiaries that may engage in
businesses
that are not related to the energy business.  Please identify and
describe the businesses you contemplate entering into.

Amendment or Termination of Plan of Exchange, page 37
29. Please explain why you are unable to predict under what
circumstances the share exchange might be terminated or abandoned.
We may have further comment after reviewing your response.

Material United States Income Tax Consequences, page 38
30. Please note that the signed tax opinion must be filed before
the
registration statement is declared effective.  Please revise your
statements that the opinion "will be based...," so that the
opinion
speaks as of the effective date of the registration statement.
31. We note that you have filed a short-form tax opinion (see
Exhibit
8).  Please revise your disclosure so that the prospectus clearly
states that the discussion in the tax consequences section of the
prospectus is the opinion of Heller Ehrman LLP.  Similarly, please
revise your tax opinion to clearly state that the discussion in
the
tax consequences section of the prospectus is counsel`s opinion.
In
addition, please revise to clarify which statements in the
disclosure
are the opinions of Heller Ehrman.  It is not appropriate to
require
investors to determine which portions of the disclosure are
statements of law and conclusions of law.

Listing of AVA Common Stock, page 46
32. We note that listing AVA common stock on the New York Stock
Exchange is a condition to the consummation of the share exchange.
Please further explain this condition, including the timing of the
listing with the completion of the share exchange.

Experts, page 49
33. Please update the experts section of the filing to reflect the
updating of the financial statements upon your filing of Avista`s
December 31, 2005 Form 10-K.


Proposal 3: Ratification of Appointment of the Independent
Registered..., page 53
34. Please describe the nature of the services comprising the fees
disclosed under the category "All Other Fees."  Refer to Item
9(e)(4)
of Schedule 14A.

Security Ownership of Management and Others, page 54
35. Please revise to include your principal stockholder, Barclays,
in
the beneficial ownership table.

Exhibits

Exhibit 23(b) Consent of Independent Registered Public Accounting
Firm
36. Please have your independent registered public accountants`
provide an updated consent to the use of their reports on your
December 31, 2005 financial statements and on the effectiveness of
internal control in the amended filing.

Undertakings
37. Please revise to delete the paragraph pursuant to Item 512(b)
of
Regulation S-K since you are a new registrant and therefore not
permitted to incorporate by reference Exchange Act documents.

Form 10-K for the fiscal year ended December 31, 2005

Item 1. Business, page 1
38. Please provide support for the qualitative and comparative
statements that appear in this section.  Please mark your support
or
provide page references in your response to the sections you rely
upon for each specific statement.  To the extent you are unable to
provide support, please delete the qualitative and comparative
statement.  We note the following:

* Avista Utilities expects to continue to be among the industry
leaders in performance, value and service in its electric and
natural
gas utility business.

* Based on Avista Utilities` forecast for electric customer growth
of
2.5 percent and natural gas customer growth of 4 percent within
its
service area, Avista Utilities anticipates retail electric and
natural gas load growth will average between 3 and 3.5 percent
annually for the next four years.



Item 7. Management`s Discussion and Analysis of Financial
Condition,
page 24
39. Please explain to us, and in future filings discuss, in
reasonable detail any known material trends and uncertainties that
will have or are reasonably likely to have a material impact on
your
revenues or income or result in your liquidity decreasing or
increasing in any material way.  For example, if relevant, you may
discuss the evolving trends in each segment of your business, the
nature of your competition, and the consumer demands for your
products and services in the geographical markets where you
operate
and the trends that would affect each segment.  In doing so,
provide
additional information about the quality and variability of your
earnings and cash flows so that investors can ascertain the
likelihood of the extent past performance is indicative of future
performance.  In addition, discuss in reasonable detail the
material
opportunities, challenges and risks in the short and long term and
the specific actions you are taking to address each.  Please refer
to
SEC Release No. 33-8350.
Executive Level Summary, page 27
40. We note your disclosure indicating that Avista Utilities
operating and financial performance is substantially dependent
upon,
among other things, weather conditions, the price of natural gas
and
electricity in the wholesale market and weather conditions.
Please
tell us, and in future filings describe more specifically, how
these
factors affect your operating and financial performance.

Capital Resources, page 51
41. Please tell us, and in future filings discuss, the anticipated
effects, if any, that the proposed restructuring of the company
will
have on future compliance with the financial covenants discussed
in
this section.

Financial Statements

Consolidated Statements of Cash Flows, page 69
42. Please explain how you classify AFUDC in the statement of cash
flows.  Please tell us what portion of the allowance relates to
equity funds versus capitalized interest expense incurred.  If you
exclude AFUDC from investing activities, please explain your
basis.
Please see footnote 7 to SFAS no. 95.  On a different note, can
you
show us how the AFUDC rate is determined and explain the "maximum
allowable rates" referred to under AFUDC.


Notes to Financial Statements

Note 1. Summary of Significant Accounting Policies, page 72

Other Non-Utility Revenues, page 73
43. We presume you are recognizing revenues from the Advanced
Manufacturing and Development operations when products are shipped
to
customers rather than upon delivery of the product to your
customers
based on the risk of loss as dictated by your shipping terms.
Please
tell us and disclose your shipping terms.  If shipment is not when
all of the risks and rewards of ownership are transferred to the
customer, provide your basis in GAAP for your revenue recognition
policy.

Foreign Currency Translation Adjustment, page 74
44. Your disclosure suggests that Avista Energy Canada, Ltd.`s
functional currency is the Canadian dollar.  Please address the
salient economic factors that support this conclusion pursuant to
paragraph 42 of SFAS No. 52.

Depreciation
45. Please explain to us how the hydroelectric depreciation rates
include annuity and interest components.  In this regard, an
example
may be informative.

Note 12. Pension Plans and Other Postretirement Benefit Plans,
page
86
46. Please explain to us how you calculate the market related
value
of plan assets as that term is defined in SFAS 87.  Since there is
an
alternative to how you can calculate this item, and it has a
direct
effect on pension expense, we believe you should disclose how you
determine this amount in accordance with paragraph 12 of APB 22.

Note 18. Interest Rate Swap Agreements, page 94
47. We are unclear on what your accounting will be in the event
regulatory accounting orders are not obtained prior to mandatory
cash
settlements of your interest rate swaps.  Please help us
understand
your accounting and whether lack of an accounting order would
cause
the amounts included in other comprehensive income to be
reclassified
to the net income versus a regulatory liability.   You may want to
provide us a step-by-step analysis of the transaction(s) and the
related accounting and rationale for such accounting at each step.
On a related note, it appears you classify the cash flows
associated
with hedges of anticipated debt issuances as a financing activity.
Please explain to us in detail the basis for your classification
in
this statement.   We may have further comment.

Note 26. Commitments and Contingencies, page 100
California Refund Proceeding
48. You state that based on information currently known to your
management, you do not expect that the California refund
proceeding
will have a material adverse effect on your financial condition,
results of operations or cash flows due to netting against
counterparty defaults.  Please tell us your legal basis for
assuming
that any refunds you may be obligated to make will be offset by
amounts owed to you.  Further, tell us your basis in GAAP for
offsetting a contingent liability with a contingent recovery.  If
not, then you should revise your assessment of materiality to
eliminate netting the amounts of potential refunds against
counterparty defaults.  Please revise or advise.

Northeast Combustion Turbine Site
49. Please tell us whether your accrual of the estimated clean-up
costs during 2005 was made without consideration of any potential
recovery of clean-up costs from Co-op and the engineering firm
whom
you refer to in this note.  Please also tell us the extent to
which
you may have considered potential rate recovery of such clean up
costs in your materiality assumptions.  Refer to SAB Topic 10:F.

Item 9A. Controls and Procedures
50. We note your statement that disclosure controls and procedures
can only provide "reasonable assurance" of achieving their control
objectives.  In future filings, please revise to state that your
disclosure controls and procedures are effective at the
"reasonable
assurance" level.  Please refer to Part II.F.4 of Final Rule
Release
33-8238.


* * * *

      As appropriate, please amend your filings in response to
these
comments.  You may wish to provide us with marked copies of the
amendment to expedite our review.  Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested information.  Detailed cover letters greatly
facilitate
our review.  Please understand that we may have additional
comments
after reviewing your amendment and responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities Act
of
1933 and that they have provided all information investors require
for an informed investment decision.  Since the company and its
management are in possession of all facts relating to a company`s
disclosure, they are responsible for the accuracy and adequacy of
the
disclosures they have made.

      Notwithstanding our comments, in the event the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:

* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;

* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy
and
accuracy of the disclosure in the filing; and

* the company may not assert staff comments and the declaration of
effectiveness as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the
United States.

	In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.

      We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.

      We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement.  Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration.  Please provide this
request at least two business days in advance of the requested
effective date.




      You may contact Sondra Snyder, Staff Accountant, at (202)
551-
3332 or James Allegretto, Senior Assistant Chief Accountant, at
(202)
551-3849 if you have questions on the financial statements and
related matters.  Please contact Matthew Benson at (202) 551-3335
or
Peggy Kim, Senior Staff Attorney, at (202) 551-3411 with any other
questions.



						Sincerely,



						H. Christopher Owings
						Assistant Director

cc:	J. Anthony Terrell, Esq.
	Dewey Ballantine LLP
	Fax: (212) 259-6333
??

??

??

??

Marian M. Durkin
AVA Formation Corp.
March 16, 2006
Page 12