EXHIBIT 4(d)


                               AVISTA CORPORATION


                           --------------------------


                              LETTER OF TRANSMITTAL


                      Avista Corp. is offering to issue its

                       7.75% FIRST MORTGAGE BONDS DUE 2007
                  (REGISTERED UNDER THE SECURITIES ACT OF 1933)

                               in exchange for its

                       7.75% FIRST MORTGAGE BONDS DUE 2007
                 (UNREGISTERED UNDER THE SECURITIES ACT OF 1933)

              PURSUANT TO THE PROSPECTUS, DATED               , 2002


--------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON            ,
2002 UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
--------------------------------------------------------------------------------


                                  Delivery To:

                                 CITIBANK, N.A.

By Registered or Certified Mail:  By Facsimile:    By Hand or Overnight Courier:
                                 (212) 825-3483            Citibank, N.A.
      Citibank, N.A.                                       111 Wall Street
      111 Wall Street         Confirm by Telephone:       14th Floor/Zone 3
     14th Floor/Zone 3           1-800-422-2066       New York, New York 10043
 New York, New York 10043                           Attn:  Sebastien Andrieszyn
                                                    Telephone:  (212) 657-9055

     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS
SET-FORTH ABOVE, OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY OF THIS
LETTER OF TRANSMITTAL.


<PAGE>


     The undersigned acknowledges that he or she has received and reviewed a
prospectus, dated , 2002 (the "Prospectus"), of Avista Corporation, a Washington
corporation (the "Company"), and this letter of transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to issue an aggregate principal amount of up to $150,000,000 of its
7.75% First Mortgage Bonds due 2007 (the "New Bonds"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in exchange for a like principal amount of issued and outstanding 7.75% First
Mortgage Bonds due 2007 (the "Old Bonds" and, together with the New Bonds, the
"Bonds"), which were not so registered. Capitalized terms used but not defined
herein have the meanings given to them in the Prospectus.

     In order for any Holder (as herein defined) of Old Bonds to tender all or
any portion of such Old Bonds, the Exchange Agent must receive either this
Letter of Transmittal completed by such Holder or an Agent's Message (as
hereinafter defined) with respect to such Holder. Certificates for Old Bonds are
to be forwarded herewith or, if a tender of Old Bonds is to be made by
book-entry transfer, the tender should be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company ("DTC")
pursuant to the procedures set forth in the Prospectus under "The Exchange Offer
-- Procedures for Tendering - Registered Holders and DTC Participants". Holders
of Old Bonds whose certificates are not immediately available, or who are unable
to deliver their certificates or confirmation of the book-entry tender of their
Old Bonds into the Exchange Agent's account at DTC (a "Book-Entry Confirmation")
and all other documents required by this Letter of Transmittal to the Exchange
Agent on or prior to the Expiration Date, must tender their Old Bonds according
to the guaranteed delivery procedures set forth in "The Exchange Offer --
Procedures for Tendering - Registered Holders and DTC Participants" section of
the Prospectus. See Instruction 1. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     IMPORTANT:  THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD BONDS OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVER) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.

     By causing Old Bonds to be credited to the Exchange Agent's account at DTC
in accordance with DTC's procedures for transfer, including the transmission by
DTC of an Agent's Message to the Exchange Agent, the DTC participant will be
deemed to confirm, on behalf of itself and the beneficial owners of such Old
Bonds, all provisions of this Letter of Transmittal applicable to it and such
beneficial owners as fully as if it had completed the information required
herein and executed and delivered this Letter of Transmittal to the Exchange
Agent. As used herein, the term "Agent's Message" means a message,
electronically transmitted by DTC to and received by the Exchange Agent, and
forming a part of the Book-Entry Confirmation, which states that DTC has
received an express acknowledgement from a Holder of Old Bonds stating that such
Holder has received and agrees to be bound by, and makes each of the
representations and warranties contained in, this Letter of Transmittal and,
further, that such Holder agrees that the Company may enforce this Letter of
Transmittal against such Holder.

     The term "Holder", as used in this Letter of Transmittal, means any of
(a) any person in whose name Old Bonds are registered on the books of the
Company, (b) any other person who has obtained a properly completed bond power
from the registered Holder, and (c) any DTC participant whose Old Bonds are held
of record by DTC. Holders who wish to tender their Old Bonds must complete this
Letter of Transmittal in its entirety or must cause an Agent's Message to be
transmitted.

     Any other beneficial owner whose Old Bonds are registered in the name of a
broker or other nominee and who wishes to tender should contact such broker or
nominee promptly and instruct such broker or nominee to tender on behalf of the
beneficial owner. If the beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Bonds, either make appropriate arrangements
to register ownership of the Old Bonds in such beneficial owner's name or obtain
a properly completed bond power from the registered Holder of the Old Bonds. The
transfer of registered ownership may take considerable time.


                                       2
<PAGE>


     Complete the appropriate boxes below to indicate the Old Bonds to which
this Letter of Transmittal relates and the action the undersigned desires to
take with respect to the Exchange Offer. If the space provided below is
inadequate, the certificate numbers and principal amount of Old Bonds should be
listed on a separate signed schedule affixed hereto.

     THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER MAY BE DIRECTED TO THE EXCHANGE AGENT.

<TABLE>
<CAPTION>
------------------------------------------------------ ------------------ ----------------------- --------------------
              DESCRIPTION OF OLD BONDS                         1                    2                      3
------------------------------------------------------ ------------------ ----------------------- --------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)        CERTIFICATE        AGGREGATE PRINCIPAL     PRINCIPAL AMOUNT
                                                                          AMOUNT OF OLD BOND(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)                             REPRESENTED BY
APPEAR(S) ON CERTIFICATE(S))                           NUMBER(S)*         CERTIFICATE             TENDERED**
------------------------------------------------------ ------------------ ----------------------- --------------------
<S>                                                    <C>                <C>                     <C>

                                                       ------------------ ----------------------- --------------------

                                                       ------------------ ----------------------- --------------------

                                                       ------------------ ----------------------- --------------------
                                                             TOTAL

----------------------------------------------------------------------------------------------------------------------
*    Need not be completed if Old Bonds are being tendered by book-entry transfer.

**   Unless otherwise indicated in the column, a Holder will be deemed to have tendered ALL of the Old Bonds
     represented by the Old Bonds indicated in column 2. See Instruction 2. Old Bonds tendered hereby must be in
     denominations of principal amount of $1,000 and any integral multiple thereof. See Instruction 1.
----------------------------------------------------------------------------------------------------------------------
</TABLE>

[ ]      CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED BY BOOK-ENTRY
         TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC
         AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:
                               -------------------------------------------------
Account Number:
                ----------------------------------------------------------------
Transaction Code Number:
                          ------------------------------------------------------

     By crediting Old Bonds to the Exchange Agent's Account at DTC in accordance
with DTC's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the Holder of Old
Bonds acknowledges and agrees to be bound by the terms of this Letter of
Transmittal, the participant in ATOP confirms on behalf of itself and the
beneficial owners of such Old Bonds all provisions of this Letter of Transmittal
applicable to it and such beneficial owners as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent.

[ ]      CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED PURSUANT TO A
         NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
         COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s):
                                 -----------------------------------------------
Window Ticket Number (if any):
                                ------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
                                                     ---------------------------
Name of Eligible Institution that guaranteed delivery:
                                                        ------------------------


                                       3
<PAGE>


IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:

Account Number                           Transaction Code Number
               -----------------------                          ----------------

Name of Tendering Institution
                               -------------------------------------------------

[ ]      CHECK HERE IF TENDERED OLD BONDS ARE ENCLOSED HEREWITH.

[ ]      CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
         COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
         THERETO.

Name:
          ----------------------------------------------------------------------

Address:
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------


     If the undersigned is not a broker-dealer, the undersigned represents that
it is not participating in, and does not intend to participate in, a
distribution of the New Bonds. If the undersigned is a broker-dealer that will
receive New Bonds for its own account in exchange for Old Bonds, it represents
that the Old Bonds to be exchanged for New Bonds were acquired by it as a result
of market-making or other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Bonds; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.


                                       4
<PAGE>


                               TENDER OF OLD BONDS

Ladies and Gentlemen:

     Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Bonds indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Bonds tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Bonds as are being tendered hereby.

     The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact with full power of substitution, for
purposes of delivering this Letter of Transmittal and the Old Bonds to the
Company. The Power of Attorney granted in this paragraph shall be deemed
irrevocable from and after the Expiration Date and coupled with an interest. The
undersigned hereby acknowledges its full understanding that the Exchange Agent
also performs functions as agent of the Company.

     The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Bonds
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents and warrants that (a) any New Bonds
acquired in exchange for Old Bonds tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Bonds, whether
or not such person is the undersigned, (b) neither the Holder of such Old Bonds
nor any such other person is engaged or intends to engage in, or has an
arrangement or understanding with any person to participate in, the distribution
(within the meaning of the Securities Act) of such New Bonds, (c) neither the
Holder of such Old Bonds nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of the Company, and (d) if such holder is
a broker or dealer registered under the Exchange Act, it will receive the New
Bonds for its own account in exchange for Old Bonds that were acquired as a
result of market-making activities or other trading activities.

     The undersigned also acknowledges that this Exchange Offer is being made by
the Company in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC"), as set forth in no-action letters issued to
third parties, that the New Bonds issued in exchange for the Old Bonds pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by Holders thereof (other than (i) any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, and (ii) any broker-dealer that purchases Old Bonds from the Issuer to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Bonds are
acquired in the ordinary course of such Holders' business and that such Holders
have no arrangement with any person to participate in the distribution (within
the meaning of the Securities Act) of such New Bonds. However, the Company does
not intend to request the SEC to consider, and the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in other circumstances. The undersigned
represents that it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of New
Bonds, and if such Holder is not a broker-dealer, that it is not engaged in, and
does not intend to engage in, and has no arrangement or understanding with any
person to participate in, a distribution (within the meaning of the Securities
Act) of New Bonds.

     If the undersigned is a broker-dealer that will receive New Bonds for its
own account in exchange for Old Bonds that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Bonds; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. The undersigned
acknowledges that in reliance on an interpretation by the staff of the SEC, a
broker-dealer may fulfill its prospectus delivery requirements with respect to
the New Bonds (other than a resale of New Bonds received in exchange for an
unsold allotment of Old Bonds purchased directly from the Company) with the
Prospectus which constitutes part of this Exchange Offer.


                                       5
<PAGE>


     The undersigned also warrants that acceptance of any tendered Old Bonds by
the Company and the issuance of New Bonds in exchange therefor shall constitute
performance in full by the Company of certain of its obligations under the
Registration Rights Agreement relating to the Old Bonds, which has been filed as
an exhibit to the registration statement in connection with the Exchange Offer.

     The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Old Bonds
tendered hereby. All authority conferred or agreed to be conferred in this
Letter of Transmittal and every obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in "The
Exchange Offer -- Withdrawal of Tenders of Old Bonds" section of the Prospectus.

     Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Bonds (and, if applicable, substitute
certificates representing Old Bonds for any Old Bonds not tendered or exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Bonds, please credit the account indicated above maintained at DTC. Similarly,
unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send the New Bonds (and, if applicable, substitute
certificates representing Old Bonds for any Old Bonds not exchanged) to the
undersigned at the address shown below in the box entitled "Description of Old
Bonds".

     The Company will be deemed to have accepted validly tendered Old Bonds
when, as and if the Company shall have given oral (promptly confirmed in
writing) or written notice of acceptance to the Exchange Agent.


                                       6
<PAGE>


         THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
BONDS" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
BONDS AS SET FORTH IN SUCH BOX ABOVE.

--------------------------------------------------------------------------------

                          SPECIAL ISSUANCE INSTRUCTIONS
                           (SEE INSTRUCTIONS 3 AND 4)

To be completed ONLY if certificates for Old Bonds not exchanged and/or New
Bonds are to be issued in the name of someone other than the person or persons
whose signature(s) appear(s) below on this Letter of Transmittal, or if Old
Bonds delivered by book-entry transfer which are not accepted for exchange are
to be returned by credit to an account maintained at DTC other than the account
indicated above.

Issue:   New Bonds and/or Old Bonds to:


Name(s)
           ------------------------------------------
                   (PLEASE TYPE OR PRINT)


           ------------------------------------------
                   (PLEASE TYPE OR PRINT)

Address

           ------------------------------------------
                         (ZIP CODE)

           ------------------------------------------
                (EMPLOYER IDENTIFICATION NUMBER
                   OR SOCIAL SECURITY NUMBER)

             (COMPLETE SUBSTITUTE FORM W-9)

[ ]    Credit unexchanged Old Bonds delivered by book-entry transfer to the DTC
       account set forth below.

--------------------------------------------------------------------------------
                              (DTC ACCOUNT NUMBER,
                                 IF APPLICABLE)
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------

                          SPECIAL DELIVERY INSTRUCTIONS
                           (SEE INSTRUCTIONS 3 AND 4)

To be completed ONLY if certificates for Old Bonds not exchanged and/or New
Bonds are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter of Transmittal below or to such person or
persons at an address other than shown in the box entitled "Description of Old
Bonds" on this Letter of Transmittal above.



Mail:    New Bonds and/or Old Bonds to:


Name(s)
            ------------------------------------------
               (PLEASE TYPE OR PRINT)


            ------------------------------------------
               (PLEASE TYPE OR PRINT)

Address

            ------------------------------------------
                     (ZIP CODE)



--------------------------------------------------------------------------------



  IMPORTANT:   THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN
               LIEU THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD BONDS
               OR A BOOK-ENTRY CONFIRMATION AND ALL OTHER REQUIRED
               DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY) MUST BE
               RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
               CITY TIME, ON THE EXPIRATION DATE.

               PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
               CAREFULLY BEFORE COMPLETING ANY BOX ABOVE


                                       7
<PAGE>


--------------------------------------------------------------------------------
                                PLEASE SIGN HERE
                   (TO BE COMPLETED BY ALL TENDERING HOLDERS)
                   (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)

Dated:

x                                                                         , 2002
  -------------------------------------------    -------------------------------

x                                                                         , 2002
  -------------------------------------------    -------------------------------
             SIGNATURE(S) OF OWNER                           DATE

         Area Code and Telephone Number
                                       -----------------------------------------

         This Letter of Transmittal must be signed by the registered Holder(s)
as the name(s) appear(s) on the certificate(s) for the Old Bonds hereby tendered
or on a DTC security position listing or by any person(s) authorized to become a
registered Holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.

Name(s):
          ----------------------------------------------------------------------

          ----------------------------------------------------------------------
                             (PLEASE TYPE OR PRINT)

Capacity:
          ----------------------------------------------------------------------

Address:
          ----------------------------------------------------------------------

          ----------------------------------------------------------------------
                              (INCLUDING ZIP CODE)


                               SIGNATURE GUARANTEE
                         (IF REQUIRED BY INSTRUCTION 3)

Signature(s) Guaranteed by
an Eligible Institution:
                         -------------------------------------------------------
                                         (AUTHORIZED SIGNATURE)

--------------------------------------------------------------------------------
                                     (TITLE)

--------------------------------------------------------------------------------
                                 (NAME AND FIRM)

Dated:
        -------------------------------
--------------------------------------------------------------------------------


                                       8
<PAGE>


                                  INSTRUCTIONS

         FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER



1.  DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD BONDS; GUARANTEED DELIVERY
    PROCEDURES.


     In order for any Holder of Old Bonds to tender all or any portion of such
Old Bonds, the Exchange Agent must receive either this Letter of Transmittal
completed by such Holder or an Agent's Message (as hereinafter defined) with
respect to such Holder. Certificates for all physically tendered Old Bonds, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or facsimile hereof or Agent's Message in
lieu hereof) and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at the address set forth herein prior to
the Expiration Date, or the tendering Holder must comply with the guaranteed
delivery procedures set forth below. Old Bonds tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
As used herein, the term "Agent's Message" means a message, electronically
transmitted by DTC to and received by the Exchange Agent, and forming a part of
the Book-Entry Confirmation, which states that DTC has received an express
acknowledgment from a Holder of Old Bonds stating that such Holder has received
and agrees to be bound by, and makes each of the representations and warranties
contained in, this Letter of Transmittal and, further, that such Holder agrees
that the Company may enforce this Letter of Transmittal against such Holder.

     Holders whose certificates for Old Bonds are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent prior to the Expiration Date, or who cannot complete the
procedures for book-entry tender on a timely basis, may tender their Old Bonds
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
"The Exchange Offer -- Procedures of Tendering - Registered Holders and DTC
Participants - Registered Holders." Pursuant to such procedures, (1) such tender
must be made through an Eligible Institution, (2) prior to the Expiration Date,
the Exchange Agent must receive from such Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Company (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the Holder of Old Bonds, the certificate
numbers of such Old Bonds (unless tender is to be made by book-entry transfer)
and the principal amount of Old Bonds tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the date of delivery of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Bonds in proper form for
transfer, or a Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof or Agent's Message in
lieu thereof), with any required signature guarantees and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (3) the certificates for all physically
tendered Old Bonds, in the proper form for transfer, or Book-Entry Confirmation,
as the case may be, together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof or Agent's Message in lieu thereof), with
any required signature guarantees and all other documents required by this
Letter of Transmittal, must be received by the Exchange Agent within five NYSE
trading days after the date of execution of the Notice of Guaranteed Delivery.

     The method of delivery of Old Bonds, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder, but the delivery will be deemed made only when actually received by
the Exchange Agent. Instead of delivery by mail, it is recommended that Holders
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Old Bonds or Letters of Transmittal should be sent to Avista Corp. Holders
may request their respective brokers, dealers, commercial banks, trust companies
or nominees to effect the above transactions for such Holders.

     See the Prospectus under "The Exchange Offer".


                                       9
<PAGE>


2.  PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
    TRANSFER).

     If less than all of the Old Bonds evidenced by a submitted certificate are
to be tendered, the tendering Holder(s) should fill in the aggregate principal
amount of Old Bonds to be tendered in the box above entitled "Description of Old
Bonds -- Principal Amount Tendered". A reissued certificate representing the
balance of nontendered Old Bonds will be sent to such tendering Holder, unless
otherwise provided in the appropriate box on this Letter of Transmittal,
promptly after the Expiration Date. ALL OF THE OLD BONDS DELIVERED TO THE
EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.

3.  SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
    GUARANTEE OF SIGNATURES.

     If this Letter of Transmittal is signed by the Holder of the Old Bonds
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates or on DTC's security position listing as the
Holder of such Old Bonds without any change whatsoever.

     If any tendered Old Bonds are owned of record by two or more joint owners,
all of such owners must sign this Letter of Transmittal.

     If any tendered Old Bonds are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
certificates.

     If this Letter of Transmittal is signed by the registered Holder or Holders
of the Old Bonds specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Bonds
are to be issued, or any untendered Old Bonds are to be reissued, to a person
other than the registered Holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) or bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal is signed by a person other than the
registered Holder or Holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate bond powers, in
either case signed exactly as the name or names of the registered Holder or
Holders appear(s) on the certificate(s) and signatures on such certificate(s) or
bond powers must be guaranteed by an Eligible Institution.

     If this Letter of Transmittal or any certificates representing Old Bonds or
any bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.

     EXCEPT AS PROVIDED BELOW, ENDORSEMENTS ON CERTIFICATES FOR OLD BONDS OR
SIGNATURES ON BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A
FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK
OR TRUST COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN
"ELIGIBLE INSTITUTION").

     SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION IF THE OLD BONDS ARE TENDERED: (1) BY A REGISTERED HOLDER
OF OLD BONDS WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" OR (2) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.

4.  SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.

     Tendering Holders of Old Bonds should indicate in the applicable box the
name and address to which New Bonds issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Bonds not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Holders tendering Old Bonds by book-entry transfer may request that


                                       10
<PAGE>


Old Bonds not exchanged be credited to such account maintained at DTC as such
Holder may designate hereon. If no such instructions are given, such Old Bonds
not exchanged will be returned to the name or address of the person signing this
Letter of Transmittal.

5.  TAXPAYER IDENTIFICATION NUMBER.

     Federal income tax law generally requires that a tendering Holder whose Old
Bonds are accepted for exchange must provide the Company (as payor) with such
Holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering Holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering Holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering Holder of New Bonds may be subject to backup withholding in an
amount equal to 30% (subject to further adjustment under applicable law) of all
reportable payments made after the exchange. If withholding results in an
overpayment for taxes, a refund may be obtained.

     Certain types of Holders of Old Bonds (generally including, among others,
corporations and certain foreign entities) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.

     To prevent backup withholding, each tendering Holder of Old Bonds must
provide its correct TIN by completing the "Form W-9" set forth below, certifying
that the Holder is a U.S. person (including a U.S. resident alien), that the TIN
provided is correct (or that such Holder is awaiting a TIN) and that (1) the
Holder is exempt from backup withholding, (2) the Holder has not been notified
by the Internal Revenue Service that such Holder is subject to a backup
withholding as a result of a failure to report all interest or dividends or (3)
the Internal Revenue Service has notified the Holder that such Holder is no
longer subject to backup withholding. If the tendering Holder of Old Bonds is a
nonresident alien or foreign entity not subject to backup withholding, such
Holder must give the Company a completed Form W-8BEN, Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding, or if applicable,
Form W-8ECI, Certificate of Foreign Person's Claim for Exemption From
Withholding on Income Effectively Connected with the Conduct of a Trade or
Business in the United States. These forms may be obtained from the Exchange
Agent. If the Old Bonds are in more than one name or are not in the name of the
actual owner, such Holder should consult the W-9 Guidelines for information on
which TIN to report. If such Holder does not have a TIN, such Holder should
consult the W-9 Guidelines for instructions on applying for a TIN, check the box
in Part 2 of the Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the Form means that such Holder
has already applied for a TIN or that such Holder intends to apply for one in
the near future. If such Holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such Holder furnishes
its TIN to the Company.

6.  TRANSFER TAXES.

     The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Bonds to it or its order pursuant to the Exchange Offer. If, however, New
Bonds and/or substitute Old Bonds not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
Holder of the Old Bonds tendered hereby, or if tendered Old Bonds are registered
in the name of any person other than the person signing this Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
transfer of Old Bonds to the Company or its order pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering Holder.

7.  COMPANY DETERMINATION FINAL; WAIVER OF CONDITIONS.

     All questions as to the validity, form eligibility (including time of
receipt), acceptance of tendered Old Bonds and withdrawal of tendered Old Bonds
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Bonds not properly tendered or any Old Bonds the Company's
acceptance of which would, in the opinion of counsel for the Company, be


                                       11
<PAGE>


unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Bonds. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Bonds must be cured within such time as the Company shall determine. None
of the Company, the Exchange Agent nor any other person shall be under any duty
to give notification of defects or irregularities with respect to tenders of Old
Bonds, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Bonds will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Bonds received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders of the Old Bonds, unless otherwise provided in
this Letter of Transmittal, as soon as practicable following the Expiration
Date.

8.  NO CONDITIONAL TENDERS.

     No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Old Bonds, by causing this Letter of
Transmittal or an Agent's Message in lieu hereof to be delivered to the Exchange
Agent, shall waive any right to receive notice of the acceptance of their Old
Bonds for exchange.

     None of the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Bonds nor shall any of them incur any liability for failure to give any such
notice.

9.  MUTILATED, LOST, STOLEN OR DESTROYED OLD BONDS.

     Any Holder whose Old Bonds have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the addresses indicated above for further
instructions.

10. REQUESTS FOR ADDITIONAL COPIES.

     Requests for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent, at the addresses and
telephone numbers indicated above.

11. INCORPORATION OF LETTER OF TRANSMITTAL.

     This Letter of Transmittal shall be deemed to be incorporated in and
acknowledged and accepted by an tender through the DTC's ATOP procedures by any
participant on behalf of itself and the beneficial owners of any Old Bonds so
tendered.

12. WITHDRAWALS.

     This tender may be withdrawn only in accordance with the procedures set
forth in "The Exchange Offer -- Withdrawal of Tenders of Old Bonds" section of
the Prospectus.


                                       12
<PAGE>


                    TO BE COMPLETED BY ALL TENDERING HOLDERS
                               (SEE INSTRUCTION 5)

--------------------- ---------------------------------- -----------------------
SUBSTITUTE            PART 1 -- PLEASE  PROVIDE  YOUR    TIN: __________________
Form W-9              TIN IN THE BOX AT RIGHT AND        (Social Security Number
                      CERTIFY BY SIGNING AND DATING            or Employer
                      BELOW:                              Identification Number)

--------------------- ---------------------------------- -----------------------
                      PART 2 -- TIN APPLIED FOR [ ]

--------------------- ----------------------------------------------------------
DEPARTMENT OF THE     PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN")
TREASURY INTERNAL     AND CERTIFICATION
REVENUE SERVICE
                      CERTIFICATION:  UNDER THE PENALTIES OF PERJURY, I CERTIFY
                      THAT

                      (1)  the number shown on this form is my correct
                           Taxpayer Identification Number (or I am
                           waiting for a number to be issued to me).

                      (2)  I am not subject to backup withholding
                           either because: (a) I am exempt from backup
                           withholding, or (b) I have not been
                           notified by the Internal Revenue Service
                           (the "IRS") that I am subject to backup
                           withholding as a result of a failure to
                           report all interest or dividends, or (c)
                           the IRS has notified me that I am no longer
                           subject to backup withholding,

                      (3)  I am a U.S. person (including a U.S. resident
                           alien), and

                      (4)  any other information provided on this form is
                           true and correct.

                      SIGNATURE:                           DATE:
                                 ------------------------         --------------
--------------------- ----------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified
subsequently by the IRS that you are no longer subject to backup withholding.
--------------------------------------------------------------------------------

           YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
                    THE BOX IN PART 2 OF SUBSTITUTE FORM W-9

--------------------------------------------------------------------------------
             CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of the exchange, 30%
(subject to further adjustment under applicable law) of all reportable payments
made to me thereafter will be withheld until I provide a number.



------------------------------------------    ----------------------------------
          SIGNATURE                                   DATE
--------------------------------------------------------------------------------


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