Item 8.01 Other Events.

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In March 2016, the Public Counsel Section of the Washington Attorney General’s Office (Public Counsel) filed a Petition for Judicial Review of the Washington Utilities and Transportation Commission's (WUTC) January 2016 order (Order 05) that concluded Avista Corporation’s (Avista Corp. or the Company) electric and natural gas general rate cases that were originally filed with the WUTC in February 2015. Order 05 approved new electric and natural gas rates that became effective on January 11, 2016. The new rates were designed to provide an $8.1 million decrease in electric base revenue and a $10.8 million increase in natural gas base revenue.

Public Counsel requested that the Washington State Court of Appeals (Court) (1) vacate or set aside portions of the WUTC’s orders; (2) identify errors contained in the WUTC’s orders; (3) find that the rates approved in Order 05 and reaffirmed in a subsequent order were unlawful and not fair, just and reasonable; (4) remand the matter to the WUTC for further proceedings consistent with these rulings, including a determination of our revenue requirement for electric and natural gas services; and (5) find the customers are entitled to a refund.

On August 7, 2018, the Court issued a "Published Opinion" (Opinion) which concluded that the WUTC's use of an attrition allowance to calculate Avista Corp.'s rate base violated Washington law. In the Opinion, the Court stated that because the projected additions to rate base in the future were not "used and useful" for service at the time the request for the rate increase was made, they may not lawfully be included in the Company's rate base to justify a rate increase.Accordingly, the WUTC erred in including an attrition allowance in the calculation of Avista Corp.’s electric and natural gas rate base. The Court noted, however, that the law does not prohibit an attrition allowance in the calculation, for rate-making purposes, of recoverable operating and maintenance expense. Since the WUTC order provided one lump sum attrition allowance without distinguishing what portion was for rate base and which was for operating and maintenance expenses or other considerations, the Court struck all portions of the attrition allowance attributable to the Company's rate base and reversed and remanded the case for the WUTC to recalculate Avista Corp.’s rates without including an attrition allowance in the calculation of rate base.

The Company cannot predict the outcome of this matter at this time, but given the Opinion issued by the Court, the Company will participate in any regulatory process that is yet to be established by the WUTC.


Avista Corporation is an electric and natural gas utility with certain other business ventures. The Company operates through two business segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). Avista Utilities segment generates, transmits and distributes electricity, and distributes natural gas serving electric and natural gas customers in eastern Washington and northern Idaho and natural gas customers in parts of Oregon. AEL&P is a utility providing electric services in Juneau, Alaska. It operates other businesses, including sheet metal fabrication, venture fund investments and real estate investments, as well as certain other investments of Avista Capital, Inc., a subsidiary of the Company. Through Advanced Manufacturing and Development (AM&D), doing business as METALfx, the Company performs custom sheet metal fabrication of electronic enclosures, parts and systems for the computer, construction, telecommunication, renewable energy and medical industries.

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