S&P: Avista uanffected

Standard & Poor's said Avista Corp.'s (BB+/stable/--) announcement that its Avista Energy trading subsidiary will incur a loss for the first quarter of 2005 will not affect ratings on Avista.

In its analysis of Avista's operations, S&P said it always zeroes out margins and cash flows from speculative trading and adds about $40 million in off-balance sheet debt to reflect Avista Energy's capital adequacy requirement. These provide a measure of conservatism over Avista's own forecasts.

Moreover, S&P said the losses that will be incurred are not expected to be significant enough to materially impact Avista's financial profile.

Overall S&P said it reaffirms its expectation that Avista will continue to pay down debt and avoid further capital investments in unregulated businesses.

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