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                                                                 EXHIBIT 10(o)-7

                               AVISTA CORPORATION

                           PERFORMANCE AWARD AGREEMENT

This Performance Award Agreement (the "Agreement") is made by and between Avista
Corp., a Washington Corporation (the "Company") and the individual named in
section 1 (the "Participant") and selected by the Avista Corp. Organization and
Compensation Committee (the "Plan Administrator").

WHEREAS, Performance Awards are granted under the amended and restated Avista
Corp. Long-term Incentive Plan and the Avista Corp. 2000 Non-Officer Employee
Long-Term Incentive Plan (the "Mirror Plan") (collectively, the "Plans"). The
terms and conditions of the Performance Awards are set forth below and in the
Plans, which are incorporated into this Agreement by reference.

NOW, THEREFORE, in consideration of the premises contained herein and in the
Plans, it is agreed as follows:

1. TERMS OF PERFORMANCE AWARDS. The terms of the Performance Awards are set
forth as follows:

      (a)   The "Participant" is (name).

      (b)   The "Grant Date" is (grant date).

      (c)   The number of eligible "Performance Awards" shall be (number) units.
            "Performance Awards" granted under this Agreement are units that
            will be reflected in a book account maintained by the Company during
            the Performance Cycle, and that will be settled in cash or shares of
            Avista Corp. Common Stock to the extent provided in this Agreement
            and the Plans.

      (d)   The "Performance Cycle" is the period beginning on (beginning
            date)and ending on (ending date).

2. GRANT. Subject to the terms of this Agreement and the Plans, the Participant
is hereby granted the number of Performance Awards as set forth in section 1.

3. SETTLEMENT OF PERFORMANCE AWARDS. The Company shall deliver to the
Participant one share of Avista Corp. Common Stock (or cash equal to the Fair
Market Value of one share of Common Stock) for each Performance Award earned by
the Participant, as determined in accordance with the provisions of Exhibit 1,
which is attached to and forms a part of this Agreement. The earned Performance
Award payable to the Participant shall be paid in shares of Common Stock or in
cash (based on the Fair Market Value of the Common Stock as determined as of the
first business day next following the last day of the Performance Cycle), or in
a combination of the two, as determined by the Plan Administrator in its sole
discretion, except that cash shall be distributed in lieu of any fractional
share of Common Stock. The Participant may elect to defer part or all of the
payment, whether payable in Common Stock or cash, consistent with the provisions
of the Avista Corp. Executive Deferral Plan.

4. TIME OF PAYMENT. Except as otherwise provided in this Agreement, payment of
Performance Awards earned will be delivered as soon as feasible after the end of
the Performance Cycle.

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5. DIVIDEND EQUIVALENT RIGHTS. Any Performance Awards may, in the Plan
Administrator's discretion, earn Dividend Equivalent Rights. In respect of any
Performance Award that is outstanding on the dividend record date for Common
Stock, the Participant may be credited with an amount equal to the cash
distributions that would have been paid on the shares of Common Stock covered by
such Award had such covered shares been issued and outstanding on such dividend
record date. Dividend Equivalent Rights are to be paid in cash based on the
total number of Performance Awards earned at the end of the Performance Cycle
and delivered as soon as feasible after the Performance Cycle. Dividend
Equivalent Rights are subject to all applicable taxes, which are the
responsibility of the Participant. The Participant may elect to defer part or
all of the payment, consistent with the provisions of the Avista Corp. Executive
Deferral Plan.

6. TERMINATION OF EMPLOYMENT DURING PERFORMANCE CYCLE. Except as otherwise
provided in section 7, this section 6 shall apply if the Participant's
employment terminates during a Performance Cycle. If the Participant's
employment with the Company and/or Subsidiaries terminates during the
Performance Cycle because of Retirement, Disability, or death, the Participant
shall be entitled to a prorated value of the Performance Award earned in
accordance with Exhibit 1, determined at the end of the Performance Cycle, and
based on the ratio of the number of whole months the Participant is employed
during the Performance Cycle to the total number of months in the Performance
Cycle (36). If the Participant's employment with the Company and/or Subsidiaries
terminates during the Performance Cycle for any reason other than Retirement,
Disability, or death, the Performance Award granted under this Agreement will be
forfeited on the Date of Termination (as defined in section 9(b)); provided,
however, that in such circumstances, the Plan Administrator, in its sole
discretion, may determine that the Participant will be entitled to receive a
prorated or other portion of the Performance Award. In case of termination for
Cause, the Performance Award granted shall automatically terminate upon first
notification to the Participant of such termination, unless the Plan
Administrator determines otherwise. If a Participant's employment with the
Company is suspended pending an investigation of whether the Participant shall
be terminated for Cause, all the Participant's rights under any Award likewise
shall be suspended during the period of investigation. The effect of a
Company-approved leave of absence on the terms and conditions of an Award shall
be determined by the Plan Administrator, in its sole discretion.

7. CHANGE IN CONTROL. If a Change in Control occurs during the Performance
Cycle, and the Participant's Date of Termination (as defined in section 9(b))
does not occur before the Change in Control date, the Participant shall be
entitled to a prorated value of the Performance Award that would have been
earned by the Participant in accordance with Exhibit 1, determined as of the
date of the Change in Control, prorated based on the ratio of the number of
whole months the Participant is employed during the Performance Cycle through
the date of the Change in Control, to the total number of months in the
Performance Cycle; provided, however, that a Payout Factor of at least 100% as
set forth in Exhibit 1 for the Performance Cycle shall be deemed to have been
achieved as of the date of the Change in Control. Notwithstanding the provisions
of sections 3, 4, and 5, the value of the Performance Award, and any Dividend
Equivalent Right, earned in accordance with the foregoing provisions of this
section shall be delivered to the Participant in a lump sum cash payment as soon
as feasible after the occurrence of a Change in Control, with the value of a
Performance Award equal to the Fair Market Value of a share of Common Stock
determined under the provision of section 3 as of the date of the Change in
Control. Distributions to the Participant under sections 3 and 5 shall not be
affected by payments under this section, except that the number of Performance
Awards and Dividend Equivalent Rights earned by and payable to the Participant
shall be reduced by the number of Performance Awards and Dividend Equivalent
Rights with respect to which payment

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was made to the Participant under this section. The Participant shall not be
required to repay any amounts to the Company on account of any distribution made
under this section for any reason, including failure to achieve any performance
objectives.

8. TAXES. The Participant is liable for any and all taxes, including withholding
taxes, arising out of the grant, vesting, payment or settlement of any
Performance Awards and Dividend Equivalent Rights. The Company shall have the
right to require the Participant to remit to the Company, or to withhold from
any Dividend Equivalent Rights or other amounts due to the Participant, as
compensation or otherwise, an amount sufficient to satisfy all federal, state
and local withholding tax requirements. If Dividend Equivalent Rights are
insufficient to cover required taxes, the Participant may satisfy remaining
withholding obligations, in whole or in part, by paying cash or by electing to
have the Company withhold awarded shares of Common Stock in such amounts that
are sufficient to satisfy the withholding obligations.

9. DEFINITIONS. For purposes of this Agreement, the terms used in this Agreement
shall be subject to the following:

      (a)   Change in Control. The term "Change in Control" is defined in
            section 2.4 of both the amended and restated Avista Corp. Long Term
            Incentive Plan and the Mirror Plan.

      (b)   Date of Termination. The Participant's "Date of Termination" shall
            be the first day occurring on or after the Grant Date on which the
            Participant is not employed by the Company or any Subsidiary,
            regardless of the reason for the termination of employment; provided
            that a termination of employment shall not be deemed to occur by
            reason of a transfer of the Participant between the Company and a
            Subsidiary or between two Subsidiaries; and further provided that
            the Participant's employment shall not be considered terminated
            while the Participant is on a leave of absence from the Company or a
            Subsidiary approved by the Participant's employer. If, as a result
            of a sale or other transaction, the Participant's employer ceases to
            be a Subsidiary (and the Participant's employer is or becomes an
            entity that is separate from the Company), and the Participant is
            not, at the end of the 30-day period following the transaction,
            employed by the Company or an entity that is then a Subsidiary, then
            the occurrence of such transaction shall be treated as the
            Participant's Date of Termination caused by the Participant being
            discharged by the employer.

      (c)   Disability. "Disability" means "disability" as that term is defined
            for purposes of the Company's Long Term Disability Plan or other
            similar successor plan applicable to salaried employees.

      (d)   Retirement. "Retirement" of the Participant shall mean retirement as
            of the individual's retirement date under the Retirement Plan for
            Employees of Avista Corporation or other similar successor plan
            applicable to salaried employees.

10. ASSIGNABILITY. No Performance Award or Dividend Equivalent Right granted or
awarded under the Plan may be assigned or transferred by the Participant other
than by will or by the applicable laws of descent and distribution, and, during
the Participant's lifetime, settlements of such Awards may be payable only to
the Participant or a permitted assignee or transferee of the Participant (as
provided below). Notwithstanding the foregoing, the Plan Administrator, in its
sole discretion, may permit such assignment or transfer and may permit a
Participant of such Performance Awards or Dividend Equivalent Rights to
designate a beneficiary who may receive

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compensation settlement under the Award after the Participant's death; provided,
however, that any amount so assigned or transferred shall be subject to all the
same terms and conditions contained in this Agreement.

11. GENERAL.

      11.1 AWARD AGREEMENTS. Performance Awards granted under the Plans shall be
evidenced by a written agreement that shall contain such terms, conditions,
limitations and restrictions as the Plan Administrator shall deem advisable and
that are not inconsistent with the Plans.

      11.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS. Nothing contained
in this Agreement, the Plans, or any action of the Plan Administrator taken
under the Plans or this Agreement shall be construed as giving any Participant
or employee of the Company any right to be retained in the employ of the Company
or to limit the Company's right to terminate the employment or services of the
Participant.

      11.3 REGISTRATION. At the present time, the Company has an effective
registration statement with respect to the shares. The Company intends to
maintain this registration but has no obligation to do so. In the event that
such registration ceases to be effective, you will not receive a Performance
Award settlement or payment unless exemptions from registration under federal
and state securities laws are available; such exemptions from registration are
very limited and might be unavailable. BY ACCEPTING THE AGREEMENT, YOU HEREBY
ACKNOWLEDGE THAT YOU HAVE READ SECTION ENTITLED REGISTRATION OF THE PLAN.

      11.4 NO RIGHTS AS A SHAREHOLDER. No Performance Award shall entitle the
Participant to any dividends (except to the extent provided in an award of
Dividend Equivalent Rights), voting or any other right of a shareholder unless
and until the date of issuance under the Plan of the shares that are the subject
of such Performance Award, free of all applicable restrictions.

      11.5 COMPLIANCE WITH LAWS AND REGULATIONS. Notwithstanding anything in the
Plan to the contrary, the Board, in its sole discretion, may bifurcate the Plan
so as to restrict, limit or condition the use of any provision of the Plan to
Participants who are officers or directors subject to Section 16 of the Exchange
Act without so restricting, limiting or conditioning the Plan with respect to
other Participants.

      11.6 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not effect the validity and enforceability of any other
provision of this Agreement. If any provision of the Agreement is determined to
be invalid, illegal or unenforceable in any jurisdiction, or as to any person,
or would disqualify any Performance Award under any law deemed applicable by the
Plan Administrator, such provision shall be construed or deemed amended by the
Plan Administrator to conform to applicable laws, or, if the Plan Administrator
determines that the provision cannot be so construed or deemed amended without
materially altering the intent of the Plans or the Performance Award, such
provision shall be stricken as to such jurisdiction, person or Performance
Award, and the remainder of the Agreement and any such Performance Award shall
remain in full force and effect.

12. ADMINISTRATION. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Plan Administrator, and
the Plan Administrator shall have all powers with respect to this Agreement as
it has with respect to the Plans. Any interpretation of the Agreement by the
Plan Administrator and any decision made by it with respect to the Agreement are
final and binding.

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13. CONSTRUCTION. This Agreement is subject to and shall be construed in
accordance with the Plan, the terms of which are explicitly made applicable
hereto. Unless otherwise defined herein, capitalized terms in this Agreement
shall have the same definitions as set forth in the Plan. In the event of any
conflict between the provisions hereof and those of the Plan, the provisions of
the Plan shall govern.

14. AMENDMENT. This Agreement may be amended by written agreement of the
Participant and the Company, without the consent of any other person.

15. GOVERNING LAW. The validity, construction, interpretation and enforceability
of this agreement shall be determined and governed by the laws of the State of
Washington without giving effect to the principles of conflicts of laws. For the
purpose of litigating any dispute that arises under this Agreement, the parties
hereby consent to exclusive jurisdiction in Washington State and agree that such
litigation shall be conducted in the courts of Spokane County, Washington or the
federal courts of the United States.

16. SUCCESSORS. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to agree in
writing to assume the Company's obligations under this Agreement and to perform
such obligations in the same manner and to the same extent that the Company is
required to perform them. As used in this Agreement, "Company" shall mean the
Company and any successor to its business and/or assets that assumes and agrees
to perform the Company's obligations under the Agreement by operation of law or
otherwise.

IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company
has caused these presents to be executed in its name and on its behalf, all as
of the Grant Date.

 AVISTA CORPORATION
      /s/  Gary G. Ely
      -----------------
By:  Gary G. Ely
     Chairman of the Board, President and Chief Executive Officer

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                                                                 EXHIBIT 10(o)-7

                                    EXHIBIT 1
                             PERFORMANCE AWARD PLAN
                         PERFORMANCE MEASURES AND GOALS
                           2003-2005 PERFORMANCE CYCLE

The following graph and table present the relationship between the Company's
relative three-year total shareholder return (stock price appreciation plus
reinvested dividends) commencing January 1, 2003 and ending December 31, 2005
and the award opportunity. Awards are interpolated for performance results
between the figures shown.

                              [PERFORMANCE GRAPH]

<TABLE>
<CAPTION>
       THREE-YEAR RELATIVE                                        PAYOUT FACTOR
  TOTAL SHAREHOLDER RETURN (1)(2)                                (% OF TARGET)
-------------------------------------                            -------------
<S>                                                              <C>
greater than or equal  85(TH)                                        150%
                       70(TH)                                        125%
                       55(TH)                                        100%
                       50(TH)                                         75%
                       45(TH)                                         50%
less than or equal     45(TH)                                          0%
</TABLE>

The number of shares delivered at the end of the three-year cycle will range
from zero to 150% of the grant. The actual payment depends on Avista's
three-year total shareholder return compared to the returns reported in the S&P
400 Utilities Index. To receive 100% of the Award, Avista must perform at the
55th percentile among the S&P 400 Utilities Index. To receive 150% of the Award,
Avista must perform at or above the 85th percentile ranking. Dividend Equivalent
Rights are calculated and paid out in cash when and to the extent the
performance shares are paid.

Example Formula:

Assuming that the Shares granted were 5,300 and the Total Shareholder Return is
ranked at the 50th percentile after the three-year Performance Cycle, then the
Participant's final award is 3,975 Shares of Stock plus Dividend Equivalents
Rights.

<TABLE>
<S>                  <C>     <C>                                    <C>   <C>
Payout Factor                # of Performance Shares Granted to     =     Final # of Performance Shares
(% of Target)        X                  Participant                              Awarded to Participant
                                                                    =     3,975 shares plus Dividend
     75%             X                  5,300 shares                            Equivalent Rights
</TABLE>

Notes:        (1) Stock price for the beginning of the cycle is calculated
                  as the average month-end closing price for the two months
                  prior to the beginning of the performance cycle (ie closing
                  price for November 29, 2002 is $9.77 and December 31, 2002 is
                  $11.56, averaged together is $10.67); stock price for the end
                  of the cycle is calculated as the average month-end closing
                  price for the last two months of the three-year Performance
                  Cycle.

              (2) Avista's three-year total shareholder return is measured
                  against the performance of companies making up the S&P 400
                  Utilities Index.

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                          ACCEPTANCE AND ACKNOWLEDGMENT

I, a resident of the state of ___________________________________, accept the
Performance Award described in this Agreement and in the Plan, and acknowledge
that I have received a copy of this Agreement and the Plan. I have read and
understand the Plan, and I hereby make the representations, warranties and
acknowledgments, and undertake the indemnity and other obligations, therein
specified.

Dated: ________________

_________________________                            _________________________
Social Security Number                               Signature of Employee

                                                     ___________________________
                                                     Printed Name
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