104918--2/27/2007--AVISTA_CORP

related topics
{capital, credit, financial}
{gas, price, oil}
{operation, natural, condition}
{financial, litigation, operation}
{condition, economic, financial}
{control, financial, internal}
{regulation, change, law}
Our results of operations, financial condition and cash flows are significantly affected by weather. We are subject to commodity price risk. Deferred power and natural gas costs are subject to regulatory review; costs higher than those recovered in base rates reduce cash flows, and it may take several years for us to recover deferred costs. We are subject to the risk that regulators will not grant sufficient recovery of our costs and not provide a reasonable rate of return for our shareholders. We are subject to credit risk. Commodity trading, marketing and resource management activities may cause volatility in our cash flows and results of operations; we cannot, and do not attempt to, fully hedge our assets or positions against changes in commodity prices, and our hedging procedures may not fully match the corresponding purchase or sale. Risk management procedures may not prevent losses. We rely on access to credit from banks. Downgrades in our credit ratings could limit our ability to obtain financing, adversely affect the terms of financing and impact our ability to acquire energy resources. An increase in interest rates could negatively affect our future results of operations and cash flows. We are subject to various operational and event risks that are common to the utility industry. Relicensing our hydroelectric facilities located on the Spokane River at a cost-effective level with reasonable terms and conditions may not be possible. We are currently the subject of several regulatory proceedings, and we are named in multiple lawsuits related to our participation in western energy markets as disclosed in Note 25 of the Notes to Consolidated Financial Statements. We are subject to the risk from the potential effects of any legislation or administrative rulemaking. We have contingent liabilities, as disclosed in Note 25 of the Notes to Consolidated Financial Statements, and cannot predict the outcome of these matters.

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