Avista Corporation's Quarterly Report (Form 10-Q) for the Period Ended March 31, 2025

Business Segments

Avista Utilities and AEL&P are the company’s two main business segments. The Avista Utilities segment includes electric and natural gas utility operations in the Pacific Northwest, while AEL&P provides electric utility services in Alaska. There are also some other non-reportable business segments.

Executive Overview

Overall, the company’s net income increased in the first quarter of 2025 compared to 2024, primarily due to the effects of general rate cases. These increases were partially offset by higher operating expenses, depreciation, amortization, income taxes, and losses from other businesses.

The company is closely monitoring the potential impacts of trade tariffs, which could increase capital and operating costs, as well as create supply chain disruptions. However, the tariffs have not had a material impact so far.

Avista Utilities is focused on resource adequacy, with plans to add around 950 MW of new generating capacity by 2035 to replace retiring facilities. Regulatory lag remains a concern, as increased costs from tariffs or other factors may not be fully recovered in a timely manner.

Regulatory Matters

Avista Utilities has filed for general rate cases in its Washington, Idaho, and Oregon jurisdictions:

• In Washington, rates are designed to increase electric revenues by 2% in 2025 and 7.5% in 2026, and natural gas revenues by 11.2% in 2025 and 2.8% in 2026.
• In Idaho, the company has proposed electric revenue increases of 14% in 2025 and 5% in 2026, and natural gas revenue increases of 17.7% in 2025 and 1.7% in 2026.
• In Oregon, the company has reached a settlement to increase electric revenues by 5% in 2025.

The company also has various regulatory mechanisms in place, such as power cost adjustments and decoupling, to help manage volatility in power and natural gas costs.

Results of Operations

Avista Utilities’ electric utility margin increased $36 million in Q1 2025 compared to Q1 2024, primarily due to the effects of general rate cases and customer growth. Natural gas utility margin increased $8 million for similar reasons.

AEL&P’s net income remained consistent at $4 million in both periods. The company’s other businesses had a net loss of $3 million in Q1 2025, compared to breakeven in Q1 2024, primarily due to higher investment losses.

Liquidity and Capital Resources

The company has adequate liquidity, with $261 million available under its credit facilities as of March 31, 2025. It expects to issue $80 million of common stock and $120 million of long-term debt in 2025 to fund capital expenditures, which are expected to be around $525 million for Avista Utilities in 2025.

The company’s pension plan is currently underfunded, and it expects to contribute $10 million per year from 2025 through 2029 to the plan.

Environmental Issues and Contingencies

The company is monitoring the potential impacts of new building codes in Washington that may restrict the use of natural gas, as well as various federal environmental regulations and executive actions. To the extent these changes result in increased costs, the company will seek to recover them through the ratemaking process.

Enterprise Risk Management

The company’s key financial risks, including interest rate risk, credit risk, and energy commodity risk, have not materially changed from the prior year. The company uses various techniques to manage these risks, such as interest rate swaps and collateral requirements.

Overall, the report highlights Avista’s efforts to navigate regulatory changes, manage costs, and maintain a strong financial position to serve its customers and shareholders.