Avista Corp. affiliate Avista Power and STEAG AG, Germany’slargest independent power producer agreed to form a joint ventureto develop, build and/or buy electric generation assets throughoutNorth America. Initial regions of interest include the Northwest,the Southwest and the Southeast. Projects of interest include thosepowered by natural gas, coal and hydro.

STEAG will buy a 50% interest in Avista Power to effect thepartnership and invest jointly with Avista in future projects.STEAG also secured an option to purchase a minority interest inAvista Corp. marketing and trading affiliate Avista Energy.

Avista and STEAG AG will have equal ownership in Avista Power,which was formed to develop, build and buy generation facilities toserve wholesale power markets throughout Canada and the UnitedStates directly and in support of Avista Energy trading andmarketing activities.

The partnership is STEAG AG’s first foray into the U.S. energymarket, and the company will establish a U.S. subsidiary.

“Avista Power blends Avista Corp.’s established success in thenational energy business (through affiliate Avista Energy) withSTEAG’s extensive worldwide experience in the design, construction,financing and operation of electric generating plants (throughSTEAG IPP International),” said T.M. Matthews, Avista Corp. CEO.”This will also strengthen Avista Power’s previously announcedventure with Cogentrix Energy Inc., and will strengthen AvistaEnergy as STEAG exercises its purchase option.”

Avista Power has two projects in development. The first project,a 270 megawatt gas-fired combined cycle combustion turbine inRathdrum, ID, was announced in December. Co-owned by Avista Powerand Cogentrix Energy Inc. of Charlotte, NC, construction of thisplant is scheduled to begin in the third quarter with commercialoperation expected in the third quarter of 2001. The secondproject, a 120 megawatt gas-fired combined cycle combustion turbinein Lordsburg, NM, was announced earlier this month. Construction isexpected to begin this year with commercial operation in 2000.Avista Energy will act as fuel manager and power marketer for theelectric generation facilities owned by Avista Power.

Avista Corp. owns/operates 11 generating plants (hydro, woodwaste, coal, and gas) in the Northwest with about 1,600 MW ofcapacity. STEAG AG, through its IPP International division, ownsand operates eight plants (mostly coal) with 5,439 MW of capacity.STEAG, with annual revenues of more than US$2 billion, isheadquartered in Essen, Germany and is a diversified group ofcompanies with international operations channeled through threecorporate divisions: Power Generation, IPP International andElectronic Systems/Process Technology.

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