OPUC Natural Gas Outlook 2014

July 8, 2014

Klamath Falls Low -18

Peak Day!

-18

Period AECO PriceCash $4.14

Winter 2014 $4.46

Winter 2015 $3.95

Winter 2016 $3.98

Winter 2017 $4.16

US Storage Balances

Natural Gas Procurement Plan Goal – To provide reliable supply at stable and competitive prices in an expected volatile market

Premise - Avista cannot accurately predict future natural gas prices, but market conditions and experience help shape our overall approach

Components: The Plan utilizes a mix of index, fixed price, and storage transactions

Transaction Dates: Hedge windows are developed to distribute the transactions throughout the Plan

Supply Basins: Plan to utilize the lowest pricing point for hedging – typically AECO

Delivery Periods: Hedges are completed in annual, seasonal and monthly timeframes. Discretionary long-term hedges may be also be executed.

Prior Year Hedges22.1%

Storage Withdrawals

10.8%

One Year or Less Hedges22.5%

Index44.6%

2014 - 2015 Procurement Plan ComponentsOregon

Note: Hedged includes long term and prompt year hedges executed prior to June 2014. Planned hedges, storage, and index are a basin weighted 60 day average forward price as of June 23, 2014.

PGA Commodity Cost Component Comparison