Item 1.01 Entry into a Material Definitive Agreement

On January 16, 2023, Avista Corporation (Avista Corp. or the Company) entered into an agreement with NorthWestern Corporation (NorthWestern) under which the Company would abandon its 15 percent ownership in Colstrip Units 3 and 4, and NorthWestern would acquire ownership. There is no monetary exchange included in the transaction. The transaction is scheduled to close on December 31, 2025 or such other date as the parties mutually agree upon.

Under the agreement, the Company will remain obligated through the close of the transaction to pay its share of (i) operating expenses, (ii) capital expenditures, but not in excess of the portion allocable pro rata to the portion of useful life expired through the close of the transaction and (iii) except for certain costs relating to post-closing activities, site remediation expenses. In addition, the Company would enter into a vote sharing agreement under which it would retain its voting rights with respect to decisions relating to remediation.

The Company will retain its Colstrip transmission system assets, which are excluded from the transaction.

The Company entered into the agreement, in part, in anticipation of compliance with the Washington Clean Energy Transformation Act (CETA). CETA, among other things, imposes deadlines by which each electric utility must eliminate from its electricity rates in Washington the costs and benefits associated with coal-fired resources, such as Colstrip. The practical impact of CETA is that electricity from such resources, including Colstrip, may no longer be delivered to Washington retail customers after 2025.

Under the Colstrip Ownership & Operating Agreement, each of the other owners of Colstrip will have a 90-day period in which to evaluate the transaction and determine whether to exercise their respective rights of first refusal as to a portion of the generation being turned over to NorthWestern.

The transaction is subject to the satisfaction of customary closing conditions including the receipt of any required regulatory approvals, as well as NorthWestern's ability to enter into a new coal supply agreement by December 31, 2024.

See further commitments and contingency considerations related to the Company's interest in Colstrip as included in "Note 15 of the Notes to Condensed Consolidated Financial Statements" as included in the Company's Form 10-Q for the period ended September 30, 2022.

The foregoing description of the agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the agreement, which is filed as Exhibit 2.1.

Item 9.01 Financial Statements and Exhibits



(d)     Exhibits
  2.1     Colstrip Units 3 & 4 Interests Abandonment and Acquisition Agreement,
        dated as of January 16, 2023, among Avista Corporation and NorthWestern
        Corporation.
104     Cover Page Interactive Data File (formatted as inline XBRL with
        applicable taxonomy extension information contained in Exhibits 101.)

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