Revised February 2007 AUDIT COMMITTEE CHARTER I. PURPOSE The purpose of the Audit Committee (“Committee”) of the Board of Directors (“Board”) of Avista Corporation (the “Company”) is to assist the Board in its oversight of the: • integrity of the Company’s financial statements; • Company’s compliance with legal and regulatory requirements and ethical standards; • independent auditors’ qualifications and independence; • performance of the Company’s internal audit function and independent auditors; • adequacy of the effectiveness of the Company’s systems of internal controls regarding finance and accounting that management and the Board have established, including without limitation all internal controls established and maintained pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Sarbanes-Oxley Act of 2002; • independent auditors’ annual audit of the Company’s financial statements; and • preparation of the report of the Committee to be included in the Company’s annual proxy statement. Consistent with this function, the Committee should encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee should also provide an open avenue of communication among the independent auditors, financial and senior management, the internal auditing function, and the Board. II. COMPOSITION The Committee shall be ...