POWER PURCHASE AND SALE AGREEMENT

Power Purchase Agreement

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AVISTA CORP | POTLATCH CORPORATION

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Title: POWER PURCHASE AND SALE AGREEMENT
Governing Law: Idaho Date: 3/8/2004
Industry: Electric Utilities

POWER PURCHASE AND SALE AGREEMENT, Parties: avista corp , potlatch corporation

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EXHIBIT 10(1)

POWER PURCHASE AND SALE AGREEMENT

BETWEEN

AVISTA CORPORATION

AND

POTLATCH CORPORATION

INDEX TO SECTIONS

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Section Page

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<S> <C>

1. Definitions ................................................................................ 2

2. Representations............................................................................. 6

3. Term of Agreement .......................................................................... 7

4. Power Purchases (Power Deliveries to Avista) ............................................... 9

5. Power Sales (Power Deliveries to Potlatch).................................................. 12

6. Operation of Facility....................................................................... 13

7. Scheduling.................................................................................. 15

8. Billing and Payments........................................................................ 15

9. Metering.................................................................................... 18

10. Termination of Agreement.................................................................... 18

11. Forced Outage and Force Majeure............................................................. 19

12. Indemnity................................................................................... 20

13. Limitation of Liability .................................................................... 22

14. Insurance................................................................................... 23

15 Assignment ................................................................................. 25

16. No Unspecified Third Party Beneficiaries.................................................... 25

17. No Transmission Rights...................................................................... 25

18. Benefits for Renewable Fuels................................................................ 25

19. Default..................................................................................... 26

20. Release by Avista .......................................................................... 27

21. Release by Potlatch......................................................................... 27

22. Governmental Authority ..................................................................... 28

23. Several Obligations......................................................................... 28

24. Implementation ............................................................................. 28

25. Non-Waiver ................................................................................. 28

26. Entire Agreement and Amendment ............................................................. 29

27. Venue, Attorneys Fees and Choice of Law..................................................... 29

28. Compliance with Laws ....................................................................... 29

29. Confidentiality............................................................................. 30

30. Notices..................................................................................... 32

31. Settlement of Litigation.................................................................... 33

32. Exhibits.................................................................................... 33

</TABLE>

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This Power Purchase and Sale Agreement ("Agreement") is entered into as

of this 22nd day of July, 2003, by and between POTLATCH CORPORATION

("Potlatch"), a corporation organized and existing under the laws of the State

of Delaware, and AVISTA CORPORATION ("Avista") of Spokane, Washington, a

corporation organized and existing under the laws of the State of Washington,

hereinafter sometimes referred to collectively as "Parties" and individually as

"Party."

W I T N E S S E T H:

WHEREAS, Potlatch owns and operates pulp, paperboard, tissue and wood

products manufacturing plants in Nez Perce County, Idaho, herein collectively

referred to as the "Lewiston Plant;"

WHEREAS, Avista is presently supplying electric power to Potlatch at

the Lewiston Plant;

WHEREAS, Potlatch owns and operates four thermal electric generating

units located at the Lewiston Plant;

WHEREAS, there is pending before the United States District Court for

the District of Idaho, Case No. CV02-543-C-EJL, a complaint by Potlatch against

Avista;

WHEREAS, there is pending before the Idaho Public Utilities Commission,

Case No. AVU-E-02-08, a complaint by Potlatch against Avista;

WHEREAS, the Parties desire to settle all litigation pending between

them, pursuant to the terms of this Agreement;

WHEREAS, Potlatch desires to sell, and Avista desires to purchase, the

Net Facility Power pursuant to the terms of this Agreement; and

WHEREAS, the Parties intend that, except for self generation by

Potlatch to serve its own Load, Avista shall be the sole purchaser of Net

Facility Power and the sole supplier for Potlatch Load.

NOW, THEREFORE, in consideration of the mutual covenants and agreements

hereinafter set forth, the Parties agree as follows:

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1. DEFINITIONS. In addition to words defined elsewhere in this Agreement

as signified by initial capitalization, whenever used in this Agreement,

exhibits and attachments hereto, the terms below shall have the following

meanings:

(a) "BANKRUPT" With respect to either Party, when such Party (i) files a

petition or otherwise commences, authorizes or acquiesces in the commencement of

a proceeding or cause of action under any bankruptcy, insolvency, reorganization

or similar law, or has any such petition filed or commenced against it and such

petition is not dismissed within sixty (60) days after it is filed, (ii) makes

an assignment or any general arrangement for the benefit of creditors, (iii)

otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a

liquidator, administrator, receiver, trustee, conservator or similar official

appointed with respect to it or any substantial portion of its property or

assets, or (v) is generally unable to pay its debts as they fall due.

(b) "BASE GENERATION AMOUNT(S)" That amount of Net Facility Power,

expressed in megawatt-hours, less any Incremental Generation Amount, for each

hour and delivered by Potlatch to Avista. The maximum Base Generation Amount for

any July 1st through June 30th period (any such period referred to as the

"Operating Year") shall be 543,120 megawatt-hours during a normal year or

544,608 megawatt-hours during a leap year.

period of maximum electricity use during the portion of the billing period up to

and including the point where the maximum Base Generation Amount is reached.

Demand shall be calculated using a rolling 30-minute demand interval with

5-minute sub-intervals.

(d) "BILLING PERIOD" That period which begins at 0000 hours on the first

day of any month during the term of the Agreement and ends at 2400 hours on the

last day of such month.

(e) "EFFECTIVE DATE" The date this Agreement becomes effective pursuant to

Section 3(a) of this Agreement.

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(f) "EXCESS GENERATION AMOUNT(S)" That amount of Net Facility Power,

expressed in megawatt-hours, generated by the Facility, less any Incremental

Generation Amount, for each hour that is in excess of the maximum Base

Generation Amount of 543,120 megawatt-hours for any Operating Year during a

normal year or 544,608 megawatt-hours during a leap year.

(g) "EXCESS PERIOD DEMAND" The average kVa supplied during the 30-minute

period of maximum electricity use during the portion of the billing period after

the point where the maximum Base Generation Amount is reached. Demand shall be

calculated using a rolling 30-minute demand interval with 5-minute

sub-intervals.

(h) "FACILITY" The electric generating facilities, including all equipment

and structures necessary to generate and supply power, more particularly

described at Exhibit C (Description of the Facility).

(i) "FACILITY SERVICE POWER" Electric power used by the Facility during its

operation for station service, including, but not necessarily limited to

pumping, generator excitation and cooling, as further defined in Exhibit A.

(j) "FORCED OUTAGE" Any outage that either fully or partially curtails the

electrical output of the Facility caused by mechanical or electrical equipment

failure, plant related structural failure, or unscheduled maintenance required

to be performed to prevent equipment failure.

(k) "GOOD INDUSTRY PRACTICE(S)" Good industry practice as defined in the

Interconnection Agreement, which definition is adopted by reference for purposes

of this Agreement as though set forth in full herein.

(l) "GOVERNMENTAL AUTHORITY" Any federal, state or local government,

political subdivision thereof or other governmental, regulatory,

quasi-governmental, judicial, public or statutory instrumentality, authority,

body, agency, department, bureau, or entity or any arbitrator with authority to

bind a Party at law.

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(m) "GOVERNMENTAL RULE(S)" Any law, rule, regulation, ordinance, order,

code, permit, judgment, or similar form of decision of any Governmental

Authority having the effect of law or regulation.

(n) "HEAVY LOAD HOURS" ("HLH") The hours ending 0700 through 2200 Pacific

Prevailing Time, Monday through Saturday inclusive, excluding NERC holidays.

(o) "INCREMENTAL GENERATION AMOUNT(S)" The amount of Net Facility Power

expressed in megawatt-hours for each hour that is in excess of the Nominal

Generation Amount.

(p) "INDEX" The daily price expressed in dollars per megawatt-hour for firm

energy as published by Dow Jones for the Mid-Columbia point of delivery for the

applicable Heavy Load Hours or Light Load Hours. If prices for any hour are not

published for the Mid-Columbia point of delivery, Avista may extrapolate such

prices using reasonable commercial judgment; provided that Avista shall notify

Potlatch in writing of any such extrapolation and the basis thereof. In the

absence of this index, a comparable publication of firm energy prices at

Mid-Columbia shall be used as mutually agreed to by the Parties.

(q) "INTERCONNECTION AGREEMENT" The Generation Interconnection Agreement

between Potlatch and Avista.

(r) "LIGHT LOAD HOURS" ("LLH") All hours other than Heavy Load Hours.

(s) "LOAD" The hourly energy, expressed in megawatt-hours, consumed at

Potlatch's Lewiston Plant excluding Facility Service Power and Losses.

(t) "LOSSES" Electric power used by the Facility during its operation to

transform or transmit electric power to Points of Delivery. Losses shall be

deemed to be 200 kW.

(u) "NET FACILITY POWER" Electric power generated by the Facility and

measured at the point of generation less Facility Service Power and less

electric power used to compensate for Losses.

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If any adjustment to the meter readings is required hereunder to determine the

Net Facility Power actually delivered to the Points of Delivery, the electric

power which the Parties agree is used by the Facility in its operation and

losses to the Points of Delivery is set forth in Exhibit A.

(v) "NOMINAL GENERATION AMOUNT(S)" A calculation to be performed daily and

shall be the same for each hour of that day, but only used when the Parties

execute a Power Purchase of Incremental Generation Amounts, to be determined as

follows: The amount of electric power generated by the Facility, expressed in

megawatts per hour, determined by averaging the hourly Net Facility Power

generation amounts less any Power Purchases of Incremental Generation Amounts

for each hour for the immediate past period counting backwards beginning two (2)

days prior to the current day and consisting of thirty (30) days, not

necessarily contiguous, in which the average Net Facility Power was greater than

720 megawatt-hours for each of these days (30 aMW). The Nominal Generation

Amount shall be not less than fifty-five (55) megawatts per hour. The Nominal

Generation Amount shall be calculated as of the date of any transaction for a

Power Purchase of Incremental Generation Amounts and shall be the same amount

for each hour during the term of such transaction. If the Power Purchase

transaction for an Incremental Generation Amount is a prescheduled transaction,

then the Nominal Generation Amount calculation will serve to set the Base

Generation Amount or Excess Generation Amount for the duration of the

Incremental Generation Transaction Period, and any Net Facility Power above that

amount shall be deemed the Incremental Generation Amount. The "Incremental

Generation Transaction Period" shall be all hours of each of the days specified

for delivery of Incremental Generation Amounts that are part of a single

prescheduled transaction which is also the first such transaction executed by

the Parties for Incremental Generation Amount deliveries during those same days.

The Incremental Generation Amount shall be set equal to zero for the purpose of

calculating Base Generation Amounts (as defined in Subsection 1(b)), Excess

Generation Amounts (as defined in Subsection 1(f)), and Nominal Generation

Amounts during those hours in which no Incremental Generation Amount is

purchased by Avista, in accordance with Section 4.

(w) "PACIFIC PREVAILING TIME" The Pacific Time, either standard time or

daylight savings time, whichever is in effect at the relevant time.

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(x) "POINTS OF DELIVERY" The locations where the Facility is electrically

interconnected with Avista's electrical system

(y) "POWER PURCHASE(S)" Power transactions in which Avista purchases from

Potlatch electric power generated by the Facility.

(z) "POWER SALE(S)" Power transactions in which Potlatch purchases electric

power from Avista.

(aa) "TRUE-UP PROCESS" That process described in Section 3(f) for settling

obligations incurred under this Agreement in the event of termination.

(bb) "WEEK" The period of time beginning at 0000 hours on any Sunday during

the term of this Agreement and ending at 2400 hours on the immediately

subsequent Saturday.

2. REPRESENTATIONS.

(a) Potlatch represents that it is the sole owner of the Facility, that all

licenses or permits required for the operation thereof have been or will be

obtained in the name of, or assigned to Potlatch, prior to the Effective Date

and that the undersigned is authorized to execute this Agreement in Potlatch's

behalf. Potlatch also represents that each generating unit described at Exhibit

C (Description of the Facility) is a qualifying facility ("Qualifying Facility")

pursuant to law and the rules of the Federal Energy Regulatory Commission.

(b) Each Party represents and warrants to the other:

(1) subject to the provisions of Subsections 3(b) and 3(c), it has

all authorizations from Governmental Authority necessary for it to legally

perform its obligations under this Agreement or will obtain such authorizations

in a timely manner prior to the time at which any performance by it requiring

such authorizations becomes due;

(2) the execution, delivery and performance of this Agreement are

within its statutory and corporate powers, have been duly authorized by all

necessary action and do not violate any of

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the terms or conditions in its governing documents, any material contract to

which it is a party or by which it or any of its properties may be affected or

bound, or any Governmental Rule applicable to it;

(3) this Agreement constitutes a legal, valid and binding

obligation of the Party enforceable against it in accordance with its terms, and

the Party has all rights such that it can and shall perform its obligations to

the other Party in conformance with the terms and conditions of this Agreement,

subject to bankruptcy, insolvency, reorganization and other laws affecting

creditor's rights generally and general principles of equity;

(4) no Bankruptcy is pending against it, being contemplated by it,

or to its knowledge threatened against it; and

(5) subject to the provisions of Subsections 3(b) and 3(c) there

are no suits, proceedings, judgments, rulings or orders by or before any

Governmental Authority that could reasonably be expected to have a material

adverse effect on its ability to perform this Agreement.

3. TERM OF AGREEMENT.

(a) Subject to the provisions of this Section 3, this Agreement shall be

effective at 0000 hours on July 1, 2003. Power Purchases and Sales pursuant to

this Agreement shall be deemed to have commenced upon the Effective Date.

(b) Potlatch and Avista shall jointly petition the Idaho Public Utility

Commission ("IPUC") for an order approving this Agreement. This Agreement is

conditioned upon approval by the IPUC of the following provisions:

(1) approval of the Agreement as a settlement of all known

existing disputes between the Parties, without precedential value and without

prejudice to the Parties' positions on similar issues in the future;

(2) direct assignment of all Power Purchase costs paid by Avista

to Potlatch under this Agreement to Avista's Idaho operations; and

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(3) deferral and recovery of 100% of all Power Purchase costs paid

by Avista to Potlatch under this Agreement to Avista's Idaho Power Cost

Adjustment ("PCA") or otherwise recovered by Avista through base rates.

In the event that the IPUC does not approve the Agreement or approves

it upon conditions that are unacceptable to Avista or Potlatch in their sole

discretion, the Agreement shall terminate upon the date of such order, subject

to the True-Up Process described below.

After IPUC initial approval of this Agreement, should the IPUC revise

regulatory treatment of the Agreement in a manner unacceptable to Avista or

Potlatch in their sole discretion, the Agreement shall terminate upon the date

of such order, without being subject to the True-Up Process described below.

Federal Energy Regulatory Commission ("FERC") of the Interconnection

Agreement between Avista and Potlatch within sixty (60) days of the Effective

Date of this Agreement. In the event that FERC does not approve the

Interconnection Agreement or approves it upon conditions that are unacceptable

to Avista or Potlatch in their sole discretion, this Agreement shall terminate

upon the date of such order, subject to the True-Up Process described below.

(d) In the event that any third person requests rehearing of an order of

the IPUC that approves the Agreement or appeals an order of the IPUC that

approves this Agreement to a court of competent jurisdiction, the Agreement

shall terminate upon the date of an order on rehearing or order on appeal that

disapproves the Agreement or approves it upon conditions that are unacceptable

to Avista or Potlatch in their sole discretion, subject to the True-Up Process

described below.

(e) In the event this Agreement is not finally approved by December 31,

2003, neither Party shall have any further obligations hereunder, and this

Agreement shall terminate, subject to the True-Up Process described below.

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(f) TRUE-UP PROCESS: In the event that this Agreement is terminated

pursuant to Subsections 3(b) through 3(e) except as otherwise provided, the

Parties agree to refund amounts paid and received hereunder that exceed amounts

that would have been paid and received had this Agreement not taken effect from

the Effective Date to the date of termination ("Interim Period"). Such refund

amounts shall be calculated as the difference between the amounts paid and

received hereunder and the amounts that would have been paid and received if

Potlatch had utilized its Facility to generate electricity for its own Load at

the Lewiston Plant during the Interim Period and purchased its remaining

electricity requirements at Schedule 25 rates. If the amount of electricity

generated by the Facility exceeds the Load at the Lewiston Plant during the

Interim Period, Avista shall be deemed to have purchased the amount in excess

of the Load, and such purchase shall be priced at the energy rates contained

in Schedule 25, calculated for each month of the Interim Period. Incremental

Generation Amounts and prices paid therefor during the Interim Period shall

not be subject to this True-Up Process.

(g) This Agreement shall terminate at 2400 hours on June 30, 2013.

4. POWER PURCHASES (POWER DELIVERIES TO AVISTA).

(a) Potlatch shall sell and deliver and Avista shall purchase and accept

delivery of Net Facility Power in accordance with the terms and conditions of

this Agreement. Such purchase by Avista shall satisfy Avista's obligation to

purchase power from the Facility pursuant to the Public Utility Regulatory

Policies Act for the term of this Agreement. All prices for Power Purchases

described in this Section 4 are all inclusive, and Avista shall not impose any

charges or set-offs for transmission, losses, ancillary services or other

similar costs.

(b) Avista shall pay $42.92 per megawatt-hour for the Base Generation

Amount generated by the Facility each hour and delivered by Potlatch to Avista.

LLH) Index price per megawatt-hour, up to a maximum price paid to Potlatch of

$55 per megawatt-hour, for

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Excess Generation Amounts generated by the Facility each hour and delivered by

Potlatch to Avista. Potlatch may choose to not schedule and deliver Excess

Generation Amounts to Avista and instead supply electric power to the Load

during any Week; provided, however, Potlatch shall notify Avista of its election

in accordance with Subsection 7(a) and such election shall be binding for the

Week. In the event Potlatch does not notify Avista of its election in accordance

with Subsection 7(a), Potlatch shall be deemed to have elected to supply the

power to its Load for the Week. Avista shall not pay Potlatch for such Excess

Generation that is not scheduled and delivered to Avista.

(d) The maximum Excess Generation Amount that Avista shall purchase for any

Operating Year shall be 43,800 megawatt-hours. Excess Generation Amounts in

excess of the maximum Excess Generation Amount shall be deemed used to serve

Potlatch Load.

(e) Avista shall pay for Incremental Generation Amounts as set forth

herein. Avista shall make price offers for Incremental Generation Amounts to

Potlatch, either upon its own initiative or upon Potlatch's request, subject to

Subsection 4(f) below. Prices offered by Avista shall include all Avista costs,

including but not limited to, unit contingency, transmission, losses, ancillary

services and other costs, but excluding third party transmission costs. Potlatch

may request a price offer from Avista on a prescheduled basis for Incremental

Generation Amounts consistent with Section 7. Unless the Parties otherwise

agree, Avista, using reasonable commercial efforts, shall provide a price offer

which shall be eighty-five percent (85%) of a unit contingent sale price that

Avista is able to execute with a third party for the Incremental Generation

Amount that Potlatch will make available to Avista on a prescheduled basis. If

Avista is unable, after using reasonable commercial efforts to execute a unit

contingent sale, or is unwilling, using reasonable commercial judgement to

execute a unit contingent sale, then Avista shall not be obligated to offer a

prescheduled price to Potlatch. Any Avista purchases of firm, rather than unit

contingent, Incremental Generation Amounts shall be subject to separate

negotiation and mutual agreement at the time of such purchases.

If the Parties are unable to mutually agree upon a prescheduled price

for Incremental Generation Amounts and Potlatch desires to sell Incremental

Generation Amounts to Avista, Potlatch may request a real-time price offer for

the hour from Avista consistent with Section 7.

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Subject to Subsection 4(f) below, if the Parties are unable to mutually agree on

a real-time price for such hour, then Potlatch may elect, consistent with

Section 7, to receive a price based on eighty percent (80%) of the weighted

average price of Avista's real-time hourly sales and purchases for the hour in

which the Parties agree that Avista will purchase Incremental Generation

Amounts. If Avista has no real-time hourly purchases or sales for the hour in

which Potlatch elects to sell Incremental Generation Amounts to Avista, then

eighty percent (80%) of the hourly real-time market price internally recorded by

Avista based on information which Avista generally discovers through its

participation in the market shall be used as the price for the Incremental

Generation Amount for such hour.

(f) Avista shall use the same degree of care and effort to purchase and, if

necessary, to resell Incremental Generation Amounts as it uses in selling

electric power from Avista owned generating resources. Notwithstanding anything

in this Agreement, Avista reserves the right to refuse to purchase Incremental

Generation Amounts due to commercially reasonable internal policy limitations

prohibiting purchases for resale or Governmental Rules prohibiting purchases for

resale. Avista shall make reasonable efforts to notify Potlatch in advance of

such internal policy limitations or Governmental Rules.

(g) With regard to a prescheduled purchase of an Incremental Generation

Amount, at the time of execution of the transaction, Avista shall provide

Potlatch with a facsimile copy of the transaction confirmation that shall

include the mutually agreed upon price and estimated Incremental Generation

Amount as provided by Potlatch. With regard to a real-time purchase of an

Incremental Generation Amount, at the time of execution of the transaction,

Avista shall provide Potlatch with a voice confirmation of either the price or

Potlatch's election to take the calculated price, in accordance with Subsection

4(e). Potlatch shall provide a voice confirmation of the estimated Incremental

Generation Amount. Potlatch may call Avista's real-time scheduler in the hour

following the hour of delivery of the Incremental Generation Amount and Avista

shall provide the real-time market price internally recorded in accordance with

Subsection 4(e) for Potlatch's information purposes only.

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(h) MULTIPLE INCREMENTAL GENERATION AMOUNT TRANSACTIONS WITHIN A SINGLE

HOUR: Should the Parties enter into more than one transaction for delivery in

any hour of Incremental Generation Amounts, then the actual Incremental

Generation Amounts produced by Potlatch's Facility will be first committed to

the transaction entered into on the earliest date and time and the remaining

actual Incremental Generation Amounts will be committed to the remaining

transactions in the order in which the Parties entered into those transactions.

5. POWER SALES (POWER DELIVERIES TO POTLATCH).

(a) Avista shall sell and deliver and Potlatch shall purchase and accept

delivery of electric power and energy required for Potlatch's Load at the

Lewiston Plant for the duration of the Agreement in accordance with the terms

and conditions of this Agreement, Avista's Rules and Regulations in effect with

the IPUC, applicable tariff schedules and orders of the IPUC in effect at the

time electric power is delivered hereunder, as they may be changed from time to

time, and any other requirements imposed by law, provided:

(1) Avista shall not be obligated to provide to Potlatch Facility

Service Power or Losses; and

(2) Any demand charge assessed to Potlatch for periods in which

Power Purchases are made shall be based on either:

(i) The coincident hourly sum of (1) Net Facility Power

produced by the Facility (expressed in kilowatts) and (2) electric power

(expressed in kilowatts) that flows from Avista's electric system to the

Potlatch Load added vectorily to only the reactive power ("kVARs") that flows

from Avista's electric system to the Potlatch Load during periods when Avista

purchases from Potlatch either Base Generation Amounts or Excess Generation

Amounts, or;

(ii) The coincident hourly sum of (1) Incremental

Generation Amounts produced by the Facility (expressed in kilowatts) and (2)

electric power (expressed in kilowatts) that flows from Avista's electric system

to the Potlatch Load added vectorily to only the reactive power ("kVARs") that

flows from Avista's electric system to the Potlatch Load during periods when

Potlatch elects to use Excess Generation Amounts to serve its Load.

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Reactive power produced by the Facility as described in either of the

cases under Subsection 5(a)(2)(i) or 5(a)(2)(ii) above shall not be included in

the demand calculation.

(3) Any demand charge assessed to Potlatch for periods in

which no Power Purchases are made shall be based only on kilowatts that flow

from Avista's electric system to the Potlatch Load added vectorily to only the

reactive power that flows from Avista's electric system to the Potlatch Load.

(b) Avista shall bill for all electric power delivered by Avista for

Potlatch's Load at the rates set forth in Avista's Extra Large General Service

Schedule 25, including all adjustments thereto, unless and until such time as

the IPUC issues an order authorizing Avista to bill at a different rate. Nothing

shall prejudice any Party's right to propose, or the Commission to order, in

future proceedings that Potlatch's service should be priced at rates other than

Schedule 25 rates. This Agreement shall not be construed as restricting the

right of either Party to petition the IPUC to establish, disestablish, amend or

alter Avista's Rules and Regulations in effect with the IPUC, applicable tariff

schedules and orders of the IPUC, including but not limited to Schedule 25.

6. OPERATION OF FACILITY.

(a) Potlatch shall construct, operate and maintain the Facility and

associated electrical equipment in compliance with Qualifying Facility status

and in accordance with applicable laws and regulations and in accordance with

Good Industry Practice. Potlatch shall construct, operate and maintain the

Facility and other equipment associated with the Lewiston Plant at its own risk

and expense. Avista shall construct, operate and maintain its interconnection

facilities, that portion of its system that is interconnected to the Facility,

and all equipment needed to receive and transmit electric power in accordance

with applicable laws and regulations and in accordance with the Interconnection

Agreement and Good Industry Practice.

(b) Interconnection of electrical systems under this Agreement shall be

governed by the Interconnection Agreement. Nothing herein is intended to amend

or alter the Interconnection Agreement as it may be amended or superceded. In

the event that the Interconnection Agreement

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is superceded or amended as a consequence of a lawful order of the Federal

Energy Regulatory Commission, or other agency or court having jurisdiction

thereof, the Parties agree to negotiate in good faith such amendments to this

Agreement as are necessary to preserve the intent of this Agreement. Subject to

Governmental Rules, in the event of a conflict between the terms of this

Agreement and the Interconnection Agreement, the terms of this Agreement shall

take precedence.

communications between Potlatch and

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