AVISTA CORP

, Reliability Standards" and "Environmental Issues and Contingencies" for further discussion of compliance issues that impact our Company.

Resource adequacy risk is managed internally through our integrated resource planning (IRP) evaluation that produces a preferred resource strategy to meet forecasted energy demand over the next twenty plus years. The IRP is conducted every two years to account for changes in assumptions such as forecasted load growth, energy market prices, climate change and other variables. If new resources are shown to be needed in the next four years, then we will initiate a competitive resource request for proposal process to procure new generating resources prior to the anticipated need. We will also hedge shorter term capacity and energy needs per our risk management policy to acquire additional generation as needed. We also participate in the Western EIM and the western resource adequacy program to reduce risk associated with near term energy and capacity needs.

External resource adequacy risk associated with regional capacity shortfalls is monitored and addressed through participation in regional coordination efforts. These efforts include participation in interregional transmission planning conducted by the western power pool, day ahead organized markets, western resource adequacy program, gas-electric coordination initiatives, joint regional transmission infrastructure projects and evaluation of joint generation projects.

The information required by this item is set forth in the Enterprise Risk Management section of "Item 7. Management’s Discussion and Analysis" and is incorporated herein by reference.