Financial Performance - Q2 2025 earnings per diluted share were $0.17, compared to $0.29 in Q2 2024[8] - Year-to-date 2025 earnings per diluted share were $1.15, compared to $1.20 year-to-date 2024[8] - Avista Utilities Q2 2025 earnings per diluted share were $0.28, compared to $0.31 in Q2 2024[8] - AEL&P Q2 2025 earnings per diluted share were $0.01, same as Q2 2024[8] - The company expects to be at the low end of its consolidated guidance range due to $0.15 per diluted share of losses at its other businesses recorded in the first half of the year[24] Regulatory Outcomes - Washington: Base electric revenue increase of $11.9 million (2%) in year 1 and $68.9 million (11.6%) in year 2; Base gas revenue increase of $14.2 million (11.2%) in year 1 and $4.0 million (2.8%) in year 2[12] - Idaho: Base electric revenue increase of $19.5 million (6.3%) in year 1 and $14.7 million (4.5%) in year 2; Base gas revenue increase of $4.6 million (9.2%) in year 1 and $0.2 million (0.4%) in year 2[15] Capital Investments and Liquidity - Avista Utilities expects to spend between $525 million and $650 million annually on capital projects from 2025-2029[17] - The company issued $35 million in common stock through June 30, 2025[22] - The company has $148 million in available liquidity as of June 30, 2025[22] Earnings Guidance - The company provides 2025 earnings guidance for Avista Utilities of $2.43-$2.61 per share and for AEL&P of $0.09-$0.11 per share, resulting in consolidated earnings guidance of $2.52-$2.72 per share[23]

Core Insights - Avista Corp. reported a net income of $14 million for Q2 2025, a decrease from $23 million in Q2 2024, and year-to-date net income of $93 million, slightly down from $94 million in the same period last year [1][2][3] - Earnings per diluted share for Q2 2025 were $0.17, down from $0.29 in Q2 2024, while year-to-date earnings per diluted share were $1.15, compared to $1.20 in 2024 [1][2][3] - The company expressed disappointment over lower valuations in its investment portfolio, particularly in clean technology, due to shifting public policy and sentiment [1] Financial Performance - Avista Utilities contributed $23 million to net income in Q2 2025, down from $24 million in Q2 2024, and $101 million year-to-date, up from $91 million [1][2] - AEL&P's net income remained stable at $1 million for both Q2 2025 and Q2 2024, but year-to-date income decreased from $5 million in 2024 to $4 million in 2025 [1][2] - The other non-reportable segment incurred a loss of $10 million in Q2 2025, compared to a loss of $2 million in Q2 2024, and a loss of $12 million year-to-date, up from $2 million in 2024 [1][2] Revenue and Margins - Electric utility margin increased by $14 million in Q2 2025, attributed to general rate cases, customer growth, and non-decoupled load growth [4] - Natural gas utility margin rose by $5 million in Q2 2025, also due to general rate cases and customer growth [4] - Other operating expenses increased by $11 million in Q2 2025, driven by higher employee salaries, benefits, and thermal generation costs [5] Capital Expenditures and Investments - Avista Utilities' capital expenditures for the first half of 2025 were $236 million, with expectations of approximately $525 million for the full year [11][12] - AEL&P's capital expenditures were $10 million in the first half of 2025, with a projected total of $21 million for the year [12] - The company plans to invest $5 million in non-regulated investment opportunities and economic development projects in 2025 [13] Guidance and Outlook - Avista Corp. confirmed its 2025 consolidated earnings guidance in the range of $2.52 to $2.72 per diluted share, expecting to be at the low end due to losses in other businesses [14] - Avista Utilities is projected to contribute earnings between $2.43 and $2.61 per diluted share, supported by strong performance and regulatory outcomes [15] - AEL&P is expected to contribute earnings in the range of $0.09 to $0.11 per diluted share in 2025 [16]

[Executive Summary & Financial Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Financial%20Highlights) Avista Corp. reported decreased Q2 2025 net income and diluted EPS due to losses in other non-reportable segments, with year-to-date results showing similar trends [Q2 and YTD 2025 Consolidated Results](index=1&type=section&id=Q2%20and%20YTD%202025%20Consolidated%20Results) Avista Corp. reported Q2 2025 net income of $14 million and diluted EPS of $0.17, down from Q2 2024, with year-to-date figures also showing a decline in diluted EPS | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------ | :------ | :------ | :------- | :------- | | **Net Income (Loss) ($M):** | | | | | | Avista Utilities | $23 | $24 | $101 | $91 | | AEL&P | $1 | $1 | $4 | $5 | | Other non-reportable loss | $(10) | $(2) | $(12) | $(2) | | **Total net income** | **$14** | **$23** | **$93** | **$94** | | **EPS (Diluted):** | | | | | | Avista Utilities | $0.28 | $0.31 | $1.25 | $1.17 | | AEL&P | $0.01 | $0.01 | $0.05 | $0.06 | | Other non-reportable loss | $(0.12) | $(0.03) | $(0.15) | $(0.03) | | **Total diluted EPS** | **$0.17** | **$0.29** | **$1.15** | **$1.20** | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO noted strong core utility operations offsetting investment portfolio losses, expecting consolidated earnings at the low end of guidance and Avista Utilities at the upper end - Core utility operations showed strength, but investment portfolio valuations, especially in clean technology, were negatively impacted by shifting public policy and sentiment[1](index=1&type=chunk) - Recent multiyear rate plans in Washington, Oregon, and Idaho increase confidence in Avista Utilities' earnings, which are expected to be toward the upper end of guidance[1](index=1&type=chunk) - Consolidated earnings are expected to be at the low end of the 2025 guidance range due to unrealized losses on investments[1](index=1&type=chunk) [Analysis of Consolidated Earnings](index=2&type=section&id=Analysis%20of%20Consolidated%20Earnings) This section details the factors influencing Avista Corp.'s net income and EPS for Q2 and YTD 2025, highlighting utility margin gains offset by increased operating expenses and other business losses [Factors Affecting Net Income and EPS (Q2 2025 vs 2024)](index=2&type=section&id=Factors%20Affecting%20Net%20Income%20and%20EPS%20(Q2%202025%20vs%202024)) Q2 2025 saw increased utility margins from rate cases and customer growth, largely offset by higher operating expenses, depreciation, interest, and significant losses from other businesses | Factor (After-Tax) | Net Income Change ($M) | EPS Change | | :-------------------------- | :--------------------- | :--------- | | **2024 consolidated earnings** | **$23** | **$0.29** | | Avista Utilities: | | | | Electric utility margin | $14 | $0.17 | | Natural gas utility margin | $5 | $0.06 | | Other operating expenses | $(11) | $(0.14) | | Depreciation & amortization | $(3) | $(0.04) | | Interest expense | $(1) | $(0.01) | | Other | $(2) | $(0.03) | | Income tax at effective rate | $(3) | $(0.04) | | Total Avista Utilities | $(1) | $(0.03) | | AEL&P earnings | $0 | $0 | | Other businesses earnings | $(8) | $(0.09) | | **2025 consolidated earnings** | **$14** | **$0.17** | - Electric utility margin increased by **$14 million** (after-tax) due to general rate cases, customer growth, and non-decoupled load growth[2](index=2&type=chunk)[3](index=3&type=chunk) - Natural gas utility margin increased by **$5 million** (after-tax) primarily from rate cases and customer growth[2](index=2&type=chunk)[3](index=3&type=chunk) - Other operating expenses increased by **$11 million** (after-tax) due to higher employee costs, thermal generation costs, and increased amortizations and wildfire mitigation/insurance costs (with corresponding revenue increases)[2](index=2&type=chunk)[3](index=3&type=chunk) [Factors Affecting Net Income and EPS (YTD 2025 vs 2024)](index=2&type=section&id=Factors%20Affecting%20Net%20Income%20and%20EPS%20(YTD%202025%20vs%202024)) Year-to-date, Avista Utilities' margins grew significantly, but increased operating expenses and substantial losses from other businesses led to a slight consolidated net income decrease and a larger EPS decline | Factor (After-Tax) | Net Income Change ($M) | EPS Change | | :-------------------------- | :--------------------- | :--------- | | **2024 consolidated earnings** | **$94** | **$1.20** | | Avista Utilities: | | | | Electric utility margin | $42 | $0.52 | | Natural gas utility margin | $12 | $0.15 | | Other operating expenses | $(24) | $(0.30) | | Depreciation & amortization | $(5) | $(0.07) | | Interest expense | $(1) | $(0.01) | | Other | $(5) | $(0.07) | | Income tax at effective rate | $(9) | $(0.11) | | Dilution on earnings | n/a | $(0.03) | | Total Avista Utilities | $10 | $0.08 | | AEL&P earnings | $(1) | $(0.01) | | Other businesses earnings | $(10) | $(0.12) | | **2025 consolidated earnings** | **$93** | **$1.15** | - The effective tax rate for the first half of 2025 was **12.3%**, up from **2.9%** in the prior year, primarily due to a decrease in tax customer credits[9](index=9&type=chunk) - Losses at other businesses increased by **$10 million** (after-tax) year-to-date due to higher net investment losses from fair value changes and recognition of equity method investment losses[2](index=2&type=chunk)[9](index=9&type=chunk) [Liquidity and Capital Resources](index=3&type=section&id=Liquidity%20and%20Capital%20Resources) Avista Corp. maintained adequate liquidity as of June 30, 2025, and outlined debt and equity issuances along with significant capital expenditure plans for Avista Utilities and AEL&P [Liquidity Position](index=3&type=section&id=Liquidity%20Position) As of June 30, 2025, Avista Corp. had $106 million in available liquidity under its committed line of credit and $42 million under its letter of credit facility | Entity | Available Liquidity (as of June 30, 2025) | | :-------------------- | :---------------------------------------- | | Avista Corp. (committed line of credit) | $106 million | | Avista Corp. (letter of credit facility) | $42 million | | AEL&P (line of credit) | $9 million | [Debt and Equity Issuances](index=3&type=section&id=Debt%20and%20Equity%20Issuances) Avista Corp. issued $120 million in long-term debt in July 2025 and expects to issue up to $80 million in common stock for the year - Issued **$120 million** of long-term debt in July 2025 to repay committed line of credit borrowings; no further long-term debt issuances expected in 2025[5](index=5&type=chunk) - AEL&P entered into a **$20 million** term loan in July 2025 to repay its line of credit and fund capital expenditures[5](index=5&type=chunk) - Expects to issue up to **$80 million** of common stock in 2025, including **$35 million** issued in the first half[5](index=5&type=chunk) [Capital Expenditures and Investments](index=3&type=section&id=Capital%20Expenditures%20and%20Investments) Avista Utilities' capital expenditures were $236 million in H1 2025, with $525 million expected for the year and $3 billion over five years | Entity | H1 2025 Capital Expenditures | 2025 Expected Capital Expenditures | 5-Year (2025-2029) Expected Capital Expenditures | | :-------------------- | :--------------------------- | :--------------------------------- | :----------------------------------------------- | | Avista Utilities | $236 million | ~$525 million | $3 billion (5-6% annual growth) | | AEL&P | $10 million | $21 million | N/A | | Other businesses | N/A | $5 million | N/A | [Earnings Guidance and Outlook](index=3&type=section&id=Earnings%20Guidance%20and%20Outlook) Avista Corp. confirmed its 2025 consolidated earnings guidance at the low end of the range, while Avista Utilities is expected to perform at the upper end, and AEL&P has its own specific guidance [2025 Consolidated Guidance](index=3&type=section&id=2025%20Consolidated%20Guidance) Avista Corp. confirmed its 2025 consolidated earnings guidance of $2.52 to $2.72 per diluted share, expecting to be at the low end due to investment losses - Confirmed 2025 consolidated earnings guidance range of **$2.52 to $2.72 per diluted share**[9](index=9&type=chunk) - Expects to be at the low end of the consolidated range due to **$0.15 per diluted share** of losses from other businesses in the first half of 2025[9](index=9&type=chunk) [Avista Utilities Guidance](index=4&type=section&id=Avista%20Utilities%20Guidance) Avista Utilities is projected to contribute towards the upper end of its $2.43 to $2.61 per diluted share guidance for 2025, despite an anticipated ERM impact - Avista Utilities is expected to contribute toward the upper end of a range of **$2.43 to $2.61 per diluted share** in 2025[10](index=10&type=chunk) - Guidance for Avista Utilities includes an expected **$0.12 negative impact** from the ERM in 2025, with **$0.08** already absorbed in the first half[10](index=10&type=chunk) [AEL&P Guidance and Long-Term Growth](index=4&type=section&id=AEL%26P%20Guidance%20and%20Long-Term%20Growth) AEL&P is expected to contribute $0.09 to $0.11 per diluted share in 2025, with long-term earnings growth projected at 4-6 percent - AEL&P is expected to contribute in the range of **$0.09 and $0.11 per diluted share** in 2025[11](index=11&type=chunk) - Long-term earnings growth is expected in the **4-6 percent range** from the forecast 2025 base year[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section defines utility margin as a non-GAAP measure to enhance understanding of operating performance and provides a reconciliation to GAAP operating revenues [Utility Margin Definition and Purpose](index=4&type=section&id=Utility%20Margin%20Definition%20and%20Purpose) Electric and natural gas utility margin are non-GAAP measures used to clarify operating performance by illustrating the impact of loads, rates, and supply costs - Electric and natural gas utility margin are non-GAAP financial measures[13](index=13&type=chunk) - These measures enhance understanding of operating performance by showing the impact of changes in loads, rates, and supply costs[14](index=14&type=chunk) - They are not intended to replace utility operating revenues as determined in accordance with GAAP[14](index=14&type=chunk) [Reconciliation of Utility Operating Revenues to Utility Margin](index=4&type=section&id=Reconciliation%20of%20Utility%20Operating%20Revenues%20to%20Utility%20Margin) Avista Utilities' total utility margin, net of tax, increased for both Q2 and YTD 2025 compared to 2024, primarily driven by electric utility margin growth | Metric (After-Tax, $M) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :----------------------- | :------ | :------ | :------- | :------- | | **For the three months ended June 30:** | | | | | | Operating revenues | $400 | $391 | N/A | N/A | | Resource costs | $129 | $143 | N/A | N/A | | Income taxes | $56 | $52 | N/A | N/A | | **Utility margin, net of tax** | **$215** | **$196** | N/A | N/A | | **For the six months ended June 30:** | | | | | | Operating revenues | N/A | N/A | $1,004 | $986 | | Resource costs | N/A | N/A | $385 | $436 | | Income taxes | N/A | N/A | $131 | $116 | | **Utility margin, net of tax** | N/A | N/A | **$488** | **$434** | - Total utility margin, net of tax, increased from **$196 million** in Q2 2024 to **$215 million** in Q2 2025[15](index=15&type=chunk) - Total utility margin, net of tax, increased from **$434 million** in YTD 2024 to **$488 million** in YTD 2025[15](index=15&type=chunk) [Company Overview](index=5&type=section&id=Company%20Overview) Avista Corp. is an energy company serving approximately 423,000 electric and 383,000 natural gas customers across a 30,000 square mile service territory, with AEL&P serving Juneau, Alaska - Avista Corp. is an energy company providing electric service to approximately **423,000 customers** and natural gas to approximately **383,000 customers**[17](index=17&type=chunk) - Service territory covers **30,000 square miles** in eastern Washington, northern Idaho, and parts of southern and eastern Oregon, with a population of **1.7 million**[17](index=17&type=chunk) - AEL&P, an Avista subsidiary, provides retail electric service to **18,000 customers** in Juneau, Alaska[17](index=17&type=chunk) [Forward-Looking Statements and Risk Factors](index=5&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines various risks, including regulatory, operational, climate change, cybersecurity, technology, strategic, external mandates, financial, energy commodity, and compliance risks, that could materially affect future results [General Disclaimer](index=5&type=section&id=General%20Disclaimer) The news release contains forward-looking statements subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations - The news release contains forward-looking statements about future financial performance, cash flows, capital expenditures, and operational plans[18](index=18&type=chunk) - These statements are subject to risks, uncertainties, and factors, many beyond the company's control, that could cause actual results to differ materially[18](index=18&type=chunk) [Utility Regulatory Risk](index=5&type=section&id=Utility%20Regulatory%20Risk) Risks include adverse regulatory decisions impacting cost recovery, return on investment, disallowance of costs, and potential loss of regulatory accounting treatment - Regulatory decisions affecting cost recovery and reasonable return, including disallowance or delay in recovery of capital investments, operating costs, and commodity costs[19](index=19&type=chunk) - Risk of losing regulatory accounting treatment, which could require write-offs of regulatory assets and loss of deferral/recovery mechanisms[19](index=19&type=chunk) [Operational Risk](index=5&type=section&id=Operational%20Risk) Operational risks include weather impacts, wildfires, natural disasters, geopolitical conflicts, infrastructure disruptions, workforce issues, and increasing costs - Weather conditions impacting energy demand, electric generating capability (hydroelectric, wind), and wholesale energy markets[20](index=20&type=chunk) - Wildfires ignited by equipment, severe weather, natural disasters, political unrest, and conflicts disrupting energy generation, transmission, and distribution[20](index=20&type=chunk) - Workforce issues (collective bargaining, key executive loss, worker availability), increasing costs of insurance, and delays/changes in construction costs[21](index=21&type=chunk) [Climate Change Risk](index=6&type=section&id=Climate%20Change%20Risk) Climate change risks involve increased severe weather, changes in water resources for hydroelectric facilities, and long-term shifts affecting demand and costs - Increasing frequency and intensity of severe weather or natural disasters (e.g., wildfires) disrupting energy infrastructure and affecting fuel/material costs[22](index=22&type=chunk) - Changes in water resource use, availability, or rights needed for hydroelectric operations[22](index=22&type=chunk) - Long-term climate and weather changes affecting customer demand, streamflows for hydroelectric generation, and costs of generation, transmission, and distribution[22](index=22&type=chunk) [Cybersecurity Risk](index=6&type=section&id=Cybersecurity%20Risk) Cybersecurity risks include attacks on operational and administrative systems, potentially causing damage, disruptions, data breaches, and significant liabilities - Cyberattacks on operating systems for electric generation, transmission, and distribution facilities, potentially causing damage, disruption, liabilities, and costs[23](index=23&type=chunk) - Cyberattacks on administrative systems (customer billing, accounting) or systems of vendors, leading to business disruption, release of private information, and associated costs[23](index=23&type=chunk) [Technology Risk](index=6&type=section&id=Technology%20Risk) Technology risks encompass obsolescence, new cybersecurity threats from AI, changes in IT system costs, and insufficient workforce technology skills - Changes in technologies potentially rendering current technology obsolete or introducing new cybersecurity risks, especially with developmental technologies like generative AI[24](index=24&type=chunk) - Changes in the use, perception, or regulation of generative AI technologies, which could limit utilization, increase regulatory scrutiny, or create intellectual property uncertainties[24](index=24&type=chunk) - Changes in costs impeding the implementation of new IT systems or the operation/maintenance of current production technology[24](index=24&type=chunk) [Strategic Risk](index=6&type=section&id=Strategic%20Risk) Strategic risks include changes in customer base, negative publicity, shifts in business plans, competition, increased earnings volatility from non-regulated activities, and municipalization - Growth or decline of customer base due to new uses or decline in existing services, including the trend toward distributed generation[25](index=25&type=chunk) - Potential effects of negative publicity on business practices, reputation, and common stock price[25](index=25&type=chunk) - Wholesale and retail competition, alternative energy sources, customer-owned power resource technologies, and non-regulated activities increasing earnings volatility and investment losses[25](index=25&type=chunk) [External Mandates Risk](index=8&type=section&id=External%20Mandates%20Risk) Risks from external mandates include changes in environmental laws, initiatives impacting generating resources or natural gas usage, political pressures, and increasing costs from tariffs - Changes in environmental laws, regulations, decisions, and policies, including responses to climate change concerns and more stringent requirements for air/water quality[26](index=26&type=chunk) - Potential effects of federal, state, or local initiatives/legislation, including restrictions on greenhouse gas emissions or natural gas usage[26](index=26&type=chunk) - Political pressures or regulatory practices that could constrain or add cost burdens to distribution systems (e.g., accelerated adoption of distributed generation) or energy supply sources[26](index=26&type=chunk) [Financial Risk](index=8&type=section&id=Financial%20Risk) Financial risks include financing ability, interest rate changes, commodity market volatility, actuarial assumptions, legal outcomes, economic conditions, and declining demand - Ability to obtain financing through debt/equity securities, affected by credit ratings, interest rates, capital market, and global economic conditions[27](index=27&type=chunk) - Volatility in energy commodity markets affecting hedging, cash flow, collateral requirements, and credit risk[27](index=27&type=chunk) - Economic conditions in service areas affecting customer demand, and declining electricity/natural gas demand due to energy efficiency, conservation, or increased electrification[27](index=27&type=chunk) [Energy Commodity Risk](index=8&type=section&id=Energy%20Commodity%20Risk) Energy commodity risks involve market volatility, counterparty default, environmental regulations affecting power supply, and incidents limiting energy supply or increasing replacement commodity costs - Volatility and illiquidity in wholesale energy markets, impacting operating income, cash requirements, wholesale sales value, and collateral[28](index=28&type=chunk) - Default or nonperformance by parties from whom capacity or energy is purchased/sold[28](index=28&type=chunk) - Potential environmental regulations or lawsuits affecting the ability to utilize or causing obsolescence of power supply resources[28](index=28&type=chunk) [Compliance Risk](index=8&type=section&id=Compliance%20Risk) Compliance risks include changes in laws and regulations impacting operations and costs, and the ability to meet license and permit terms cost-effectively - Changes in laws, regulations, decisions, and policies at federal, state, or local levels impacting electric and gas operations and costs[29](index=29&type=chunk) - Ability to comply with terms of licenses and permits for hydroelectric or thermal generating facilities at cost-effective levels[29](index=29&type=chunk)

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) This section provides essential identification details for Avista Corporation's Form 10-Q filing for the quarter ended June 30, 2025 [Registrant Information](index=1&type=section&id=Registrant%20Information) This section details Avista Corporation's identification for its Form 10-Q filing, including legal name, incorporation state, address, and stock exchange listing for the quarter ended June 30, 2025 - Avista Corporation (Registrant) filed a Quarterly Report on Form 10-Q for the period ended **June 30, 2025**[1](index=1&type=chunk)[2](index=2&type=chunk) - The registrant is classified as a **'Large accelerated filer'** and is not a 'shell company'[4](index=4&type=chunk)[5](index=5&type=chunk) Registrant Information | Detail | Value | | :--- | :--- | | **Registrant Name** | AVISTA CORPORATION | | **State of Incorporation** | Washington | | **Commission File Number** | 1-3701 | | **Trading Symbol** | AVA | | **Exchange** | New York Stock Exchange | | **Common Stock Outstanding (as of July 31, 2025)** | 81,110,750 shares | [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section lists all major sections and subsections of the Form 10-Q, facilitating navigation and comprehensive review [Acronyms and Terms](index=5&type=section&id=ACRONYMS%20AND%20TERMS) This section defines key acronyms and terms used throughout the report, essential for understanding the company's operations, regulatory environment, and financial reporting [Key Acronyms and Terms](index=5&type=section&id=Acronyms%20and%20Terms) This section defines key acronyms and terms used in the report, crucial for understanding company operations and regulatory environment - The report includes a glossary of acronyms and terms to clarify company-specific and industry-standard terminology[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) Acronyms and Terms | Acronym/Term | Meaning | | :--- | :--- | | **AEL&P** | Alaska Electric Light and Power Company | | **AERC** | Alaska Energy and Resources Company | | **AFUDC** | Allowance for Funds Used During Construction | | **Avista Utilities** | Operating division of Avista Corp. comprising regulated utility operations in the Pacific Northwest | | **ERM** | Energy Recovery Mechanism (Washington) | | **FCA** | Fixed Cost Adjustment (Idaho decoupling mechanism) | | **FERC** | Federal Energy Regulatory Commission | | **GAAP** | Generally Accepted Accounting Principles | | **IPUC** | Idaho Public Utilities Commission | | **OPUC** | The Public Utility Commission of Oregon | | **PCA** | Power Cost Adjustment mechanism (Idaho) | | **PGA** | Purchased Gas Adjustment | | **ROE** | Return on equity | | **ROR** | Rate of return on rate base | | **WUTC** | Washington Utilities and Transportation Commission | [Forward-Looking Statements](index=8&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements on future performance and strategy, emphasizing inherent risks and uncertainties [Forward-Looking Statements and Associated Risks](index=8&type=section&id=Forward-Looking%20Statements) This section details forward-looking statements on future performance and strategy, highlighting inherent risks from regulatory, operational, climate, cybersecurity, and financial factors - Forward-looking statements cover projected financial performance, cash flows, capital expenditures, dividends, capital structure, strategic goals, business environment, and operational plans[13](index=13&type=chunk)[16](index=16&type=chunk) - Key risks include regulatory decisions impacting cost recovery and returns, operational risks from weather and infrastructure, and financial risks from financing and commodity volatility[14](index=14&type=chunk)[17](index=17&type=chunk)[25](index=25&type=chunk)[28](index=28&type=chunk) - Emerging risks encompass climate change impacts, cybersecurity threats to systems, and technology risks from new or obsolete technologies, including generative AI[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) - The company does not undertake to update any forward-looking statements to reflect events or circumstances occurring after the statement date[29](index=29&type=chunk) [Available Information](index=12&type=section&id=Available%20Information) This section directs readers to the company's public filings, including annual, quarterly, and current reports, available on SEC and investor relations websites [Access to Public Filings](index=12&type=section&id=Available%20Information) This section directs readers to the company's public filings, including annual, quarterly, and current reports, available on the SEC and investor relations websites - The company files annual, quarterly, and current reports and proxy statements with the SEC, available on **www.sec.gov**[30](index=30&type=chunk) - These documents are also available on the company's investor relations website, **https://investor.avistacorp.com**[30](index=30&type=chunk) [Part I. Financial Information](index=13&type=section&id=Part%20I.%20Financial%20Information) This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results [Item 1. Condensed Consolidated Financial Statements](index=13&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Avista Corporation's unaudited condensed consolidated financial statements, including income, balance sheet, cash flow, and equity, with detailed notes - The interim financial statements are unaudited and prepared in accordance with **GAAP** for interim financial information, reflecting all necessary normal recurring adjustments[42](index=42&type=chunk) - The company changed its financial statement presentation from thousands to **millions** starting with the 2024 Form 10-K, with no material impact on previously reported information[46](index=46&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section presents the company's unaudited condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Income and Comprehensive Income (Three Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | | :--- | :--- | :--- | | Total Operating Revenues | 411 | 402 | | Total Operating Expenses | 354 | 347 | | Income from Operations | 57 | 55 | | Income Before Income Taxes | 15 | 24 | | Income Tax Expense | 1 | 1 | | Net Income and Comprehensive Income | 14 | 23 | | Basic EPS | 0.17 | 0.29 | | Diluted EPS | 0.17 | 0.29 | Condensed Consolidated Statements of Income and Comprehensive Income (Six Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | | :--- | :--- | :--- | | Total Operating Revenues | 1,028 | 1,011 | | Total Operating Expenses | 846 | 856 | | Income from Operations | 182 | 155 | | Income Before Income Taxes | 106 | 97 | | Income Tax Expense | 13 | 3 | | Net Income and Comprehensive Income | 93 | 94 | | Basic EPS | 1.15 | 1.20 | | Diluted EPS | 1.15 | 1.20 | [Condensed Consolidated Balance Sheets](index=14&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and equity Condensed Consolidated Balance Sheets (as of June 30, 2025 vs. December 31, 2024) | Account | June 30, 2025 (Millions $) | December 31, 2024 (Millions $) | | :--- | :--- | :--- | | **Assets:** | | | | Total Current Assets | 667 | 656 | | Net Utility Property | 6,133 | 5,987 | | Total Assets | 8,065 | 7,941 | | **Liabilities & Equity:** | | | | Total Current Liabilities | 668 | 771 | | Long-term Debt | 2,749 | 2,614 | | Total Liabilities | 5,420 | 5,350 | | Total Shareholders' Equity | 2,645 | 2,591 | | Total Liabilities and Equity | 8,065 | 7,941 | [Condensed Consolidated Statements of Cash Flows](index=15&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024, categorized by operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Activity | 2025 (Millions $) | 2024 (Millions $) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 224 | 317 | | Net Cash Used in Investing Activities | (248) | (254) | | Net Cash Provided by (Used in) Financing Activities | 3 | (83) | | Net Decrease in Cash and Cash Equivalents | (21) | (20) | | Cash and Cash Equivalents at End of Period | 9 | 15 | [Condensed Consolidated Statements of Equity](index=17&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section presents the company's unaudited condensed consolidated statements of equity for the six months ended June 30, 2025 and 2024, detailing changes in common stock and retained earnings Condensed Consolidated Statements of Equity (Six Months Ended June 30) | Metric | 2025 (Millions $) | 2024 (Millions $) | | :--- | :--- | :--- | | Common Stock Balance (Beginning) | 1,720 | 1,644 | | Issuance of Common Stock, net | 35 | 18 | | Retained Earnings Balance (Beginning) | 871 | 841 | | Net Income | 93 | 94 | | Dividends on Common Stock | (79) | (74) | | Total Equity (End of Period) | 2,645 | 2,527 | | Dividends Declared per Common Share | 0.980 | 0.950 | [Note 1. Summary of Significant Accounting Policies](index=18&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies applied in preparing the condensed consolidated financial statements, including the company's business segments and regulatory environment - Avista Corp. operates primarily as an electric and natural gas utility in the Pacific Northwest (Avista Utilities) and Alaska (AEL&P), with non-utility businesses under Avista Capital[43](index=43&type=chunk)[44](index=44&type=chunk) - The company is subject to state regulation in Washington, Idaho, Montana, Oregon, and Alaska, and federal regulation by **FERC** and other agencies[47](index=47&type=chunk) - Derivative instruments (energy commodity, interest rate swaps) are recorded at fair value on the balance sheet, with offsetting regulatory assets/liabilities to defer income statement impact until delivery or settlement[48](index=48&type=chunk)[49](index=49&type=chunk)[51](index=51&type=chunk) [Note 2. New Accounting Standards](index=19&type=section&id=Note%202.%20New%20Accounting%20Standards) This note discusses recently issued accounting pronouncements and their expected impact on the company's financial statements, including disclosure improvements and income tax disclosures - **ASU 2023-06** (Disclosure Improvements) is not expected to have a material impact on financial statements[55](index=55&type=chunk) - **ASU 2023-09** (Income Tax Disclosures) will result in expanded income tax disclosures, effective for fiscal years beginning after **December 15, 2024**[56](index=56&type=chunk)[57](index=57&type=chunk) - **ASU 2024-03** (Disaggregation of Income Statement Expenses) is being evaluated, with no early adoption planned for 2025; effective for annual periods after **December 15, 2026**[58](index=58&type=chunk) [Note 3. Balance Sheet Components](index=20&type=section&id=Note%203.%20Balance%20Sheet%20Components) This note provides detailed breakdowns of key balance sheet components, including inventory, net utility property, and regulatory assets and liabilities, as of June 30, 2025, and December 31, 2024 Inventory Composition (Millions $) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Materials and supplies | 101 | 99 | | Emission allowances | 102 | 79 | | Stored natural gas | 7 | 10 | | Fuel stock | 6 | 5 | | **Total Inventory** | **216** | **193** | Net Utility Property (Millions $) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Utility plant in service | 8,365 | 8,180 | | Construction work in progress | 274 | 238 | | Less: Accumulated depreciation and amortization | (2,506) | (2,431) | | **Total Net Utility Property** | **6,133** | **5,987** | Regulatory Assets and Liabilities (Millions $) | Category | June 30, 2025 (Current/Non-Current) | December 31, 2024 (Current/Non-Current) | | :--- | :--- | :--- | | **Regulatory Assets** | | | | Energy commodity derivatives | $30 / $14 | $27 / $14 | | Deferred Climate Commitment Act costs | $19 / $0 | $50 / $0 | | Total Regulatory Assets | $122 / $851 | $137 / $847 | | **Regulatory Liabilities** | | | | Deferred Climate Commitment Act revenues | $31 / $0 | $44 / $0 | | Utility plant retirement costs | $0 / $464 | $0 / $448 | | Total Regulatory Liabilities | $108 / $843 | $108 / $834 | [Note 4. Revenue](index=22&type=section&id=Note%204.%20Revenue) This note details the company's revenue recognition policies and disaggregates total operating revenues by segment and source for the three and six months ended June 30, 2025 and 2024 - Utility revenues from rate-regulated sales of electricity and natural gas are recognized upon energy delivery, with two performance obligations: service availability and energy delivery[68](index=68&type=chunk) - Alternative revenue programs (decoupling mechanisms) are recognized separately from customer contracts, with deferrals recognized in the period they occur if expected to be collected within **24 months**[70](index=70&type=chunk) Total Operating Revenue by Segment and Source (Three Months Ended June 30, Millions $) | Segment/Source | 2025 | 2024 | | :--- | :--- | :--- | | **Avista Utilities** | | | | Revenue from contracts with customers | 330 | 319 | | Derivative revenues | 52 | 49 | | Alternative revenue programs | 12 | 16 | | Other utility revenues | 8 | 7 | | Total Avista Utilities | 400 | 391 | | **AEL&P** | | | | Revenue from contracts with customers | 11 | 11 | | **Total Operating Revenues** | **411** | **402** | Total Operating Revenue by Segment and Source (Six Months Ended June 30, Millions $) | Segment/Source | 2025 | 2024 | | :--- | :--- | :--- | | **Avista Utilities** | | | | Revenue from contracts with customers | 856 | 819 | | Derivative revenues | 113 | 138 | | Alternative revenue programs | 4 | 19 | | Other utility revenues | 33 | 10 | | Total Avista Utilities | 1,004 | 986 | | **AEL&P** | | | | Revenue from contracts with customers | 24 | 25 | | **Total Operating Revenues** | **1,028** | **1,011** | [Note 5. Derivatives and Risk Management](index=25&type=section&id=Note%205.%20Derivatives%20and%20Risk%20Management) This note describes the company's use of derivative instruments to manage market risks related to commodity prices and interest rates, including fair value measurements and collateral requirements - Avista Corp. uses derivative instruments (forwards, futures, swaps, options) to manage market risks related to electricity, natural gas commodity, and fuel prices[81](index=81&type=chunk) - The company hedges a portion of its natural gas requirements and optimizes natural gas resources to mitigate fixed costs and capture market value[83](index=83&type=chunk)[84](index=84&type=chunk) Energy Commodity Derivative Volumes (as of June 30, 2025, in thousands) | Year | Electric Purchases (MWh) | Gas Purchases (mmBTUs) | Electric Sales (MWh) | Gas Sales (mmBTUs) | | :--- | :--- | :--- | :--- | :--- | | Remainder 2025 | 4 | 36,252 | 765 | 639 | | 2026 | — | 46,599 | 680 | 1,393 | | 2027 | — | 20,706 | — | 1,393 | | 2028 | — | 3,641 | — | 1,013 | Fair Values of Derivative Instruments (as of June 30, 2025, Millions $) | Derivative Type | Gross Asset | Gross Liability | Collateral Netted | Net Asset (Liability) | | :--- | :--- | :--- | :--- | :--- | | Interest rate swap derivatives | 1 | 0 | 0 | 1 | | Energy commodity derivatives | 14 | (58) | 13 | (31) | | **Total** | **15** | **(58)** | **13** | **(30)** | - As of **June 30, 2025**, the company had **$25 million** in cash collateral posted and **$8 million** in letters of credit outstanding related to energy commodity derivatives[95](index=95&type=chunk) [Note 6. Pension Plans and Other Postretirement Benefit Plans](index=29&type=section&id=Note%206.%20Pension%20Plans%20and%20Other%20Postretirement%20Benefit%20Plans) This note provides information on the company's pension and other postretirement benefit plans, including contributions made and the net periodic benefit cost for the six months ended June 30, 2025 and 2024 - The company contributed **$7 million** to its pension plan for the six months ended **June 30, 2025**, and expects total contributions of **$10 million** for 2025[98](index=98&type=chunk) Net Periodic Benefit Cost (Six Months Ended June 30, Millions $) | Component | Pension Benefits (2025) | Pension Benefits (2024) | Other Postretirement Benefits (2025) | Other Postretirement Benefits (2024) | | :--- | :--- | :--- | :--- | :--- | | Service cost | 8 | 8 | 1 | 1 | | Interest cost | 18 | 17 | 3 | 4 | | Expected return on plan assets | (22) | (23) | (2) | (2) | | Net loss recognition | 1 | 2 | — | — | | **Net periodic benefit cost** | **5** | **4** | **2** | **2** | [Note 7. Income Taxes](index=29&type=section&id=Note%207.%20Income%20Taxes) This note details the company's income tax provisions, including the estimated annual effective tax rate and a reconciliation of income tax expense for the six months ended June 30, 2025 and 2024 - The company uses an estimated annual effective tax rate for interim income tax provisions, with discrete events recorded in the period they occur[100](index=100&type=chunk) Income Tax Expense Reconciliation (Six Months Ended June 30, Millions $) | Factor | 2025 (Amount / Rate) | 2024 (Amount / Rate) | | :--- | :--- | :--- | | Federal income taxes at statutory rates | $22 / 21.0% | $20 / 21.0% | | Flow through related to deduction of meters and mixed service costs | $(4) / (3.8)% | $(12) / (12.3)% | | Tax effect of regulatory treatment of utility plant differences | $(6) / (5.8)% | $(6) / (6.5)% | | State income tax expense | $1 / 0.9% | $1 / 0.7% | | **Total income tax expense** | **$13 / 12.3%** | **$3 / 2.9%** | - The U.S. reconciliation bill (One Big Beautiful Bill Act), enacted in **July 2025**, is not expected to have a material impact on financial results or the annual effective tax rate in 2025[102](index=102&type=chunk) [Note 8. Short-Term Borrowings](index=30&type=section&id=Note%208.%20Short-Term%20Borrowings) This note outlines the company's short-term borrowing facilities, including committed lines of credit and letters of credit, along with outstanding balances and average interest rates - Avista Corp. has a **$500 million** committed line of credit expiring **June 2029** and a **$50 million** letter of credit facility[103](index=103&type=chunk)[105](index=105&type=chunk) Avista Corp. Short-Term Borrowings (Millions $) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Borrowings outstanding (committed line of credit) | 389 | 342 | | Letters of credit outstanding | 5 | 5 | | Average interest rate on borrowings | 5.42% | 5.52% | - Avista Corp. complied with its debt covenant of consolidated total debt to total capitalization not exceeding **65%** as of **June 30, 2025**[107](index=107&type=chunk) - AEL&P has a **$25 million** committed line of credit expiring **June 2028**, with **$16 million** outstanding as of **June 30, 2025**, classified as long-term due to refinancing intent[108](index=108&type=chunk)[109](index=109&type=chunk) [Note 9. Long-Term Debt](index=31&type=section&id=Note%209.%20Long%20Term%20Debt) This note details recent long-term debt issuances, including Avista Corp.'s first mortgage bonds and AEL&P's term loan agreement, and their intended use of proceeds - In **July 2025**, Avista Corp. issued **$120 million** of **6.18%** first mortgage bonds due **2055**, using proceeds to repay short-term borrowings[110](index=110&type=chunk)[111](index=111&type=chunk) - AEL&P entered a **$20 million** term loan agreement in **July 2025** at **5.49%** interest, maturing **July 2030**, to repay committed line of credit borrowings and fund capital expenditures[113](index=113&type=chunk) [Note 10. Long-Term Debt to Affiliated Trusts](index=32&type=section&id=Note%2010.%20Long-Term%20Debt%20to%20Affiliated%20Trusts) This note describes the company's long-term debt obligations to affiliated business trusts, including the principal amount and distribution rates on preferred trust securities - The company has **$52 million** in Floating Rate Junior Subordinated Deferrable Interest Debentures, Series B, issued to Avista Capital II, an affiliated business trust[114](index=114&type=chunk)[116](index=116&type=chunk) Distribution Rates on Preferred Trust Securities | Period | Low Distribution Rate | High Distribution Rate | Distribution Rate at Period End | | :--- | :--- | :--- | :--- | | Six months ended June 30, 2025 | 5.46% | 5.64% | 5.47% | | Year ended December 31, 2024 | 5.64% | 6.51% | 5.64% | [Note 11. Fair Value](index=32&type=section&id=Note%2011.%20Fair%20Value) This note explains the fair value measurement hierarchy and presents carrying and estimated fair values of financial instruments, including recurring assets and liabilities - Fair value measurements are categorized into a three-level hierarchy based on input observability, with Level 1 for quoted prices in active markets and Level 3 for unobservable inputs[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) Carrying Value and Estimated Fair Value of Financial Instruments Not Reported at Fair Value (Millions $) | Instrument | June 30, 2025 (Carrying Value / Estimated Fair Value) | December 31, 2024 (Carrying Value / Estimated Fair Value) | | :--- | :--- | :--- | | Long-term debt (Level 2) | $1,100 / $937 | $1,100 / $938 | | Long-term debt (Level 3) | $1,534 / $1,191 | $1,534 / $1,163 | | Snettisham finance lease obligation (Level 3) | $37 / $34 | $39 / $35 | | Long-term debt to affiliated trusts (Level 3) | $52 / $47 | $52 / $47 | Assets and Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2025, Millions $) | Category | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | Energy commodity derivatives | — | 14 | — | 2 | | Interest rate swap derivatives | — | 1 | — | 1 | | Equity Investments | — | — | 49 | 49 | | Deferred compensation assets (Mutual Funds) | 9 | — | — | 9 | | **Total Assets** | **9** | **15** | **49** | **61** | | **Liabilities:** | | | | | | Energy commodity derivatives | — | 43 | 15 | 33 | | **Total Liabilities** | **—** | **43** | **15** | **33** | [Note 12. Common Stock](index=37&type=section&id=Note%2012.%20Common%20Stock) This note details the issuance of common stock and the net proceeds received during the three and six months ended June 30, 2025, including shares issued through at-the-market transactions - The company issued common stock for net proceeds of **$19 million** during the three months ended **June 30, 2025**, and **$35 million** during the six months ended **June 30, 2025**[136](index=136&type=chunk) - Approximately **0.5 million** shares were issued in at-the-market transactions during the three months ended **June 30, 2025**, and **0.9 million** shares for the six months ended **June 30, 2025**[136](index=136&type=chunk) [Note 13. Earnings per Common Share](index=37&type=section&id=Note%2013.%20Earnings%20per%20Common%20Share) This note presents the basic and diluted earnings per common share calculations for the three and six months ended June 30, 2025 and 2024, including net income and weighted-average shares outstanding Earnings Per Common Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Income (Millions $) | 14 | 23 | | Weighted-average common shares outstanding-basic (thousands) | 80,715 | 78,390 | | Basic EPS | $0.17 | $0.29 | | Diluted EPS | $0.17 | $0.29 | Earnings Per Common Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Income (Millions $) | 93 | 94 | | Weighted-average common shares outstanding-basic (thousands) | 80,466 | 78,276 | | Basic EPS | $1.15 | $1.20 | | Diluted EPS | $1.15 | $1.20 | [Note 14. Commitments and Contingencies](index=37&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note outlines the company's significant commitments and contingencies, including ongoing collective bargaining, wildfire-related litigation settlements, and the planned transfer of Colstrip ownership - Negotiations are ongoing for a new collective bargaining agreement with the **IBEW**, covering approximately **90%** of Avista Utilities' bargaining unit employees, with a risk of operational disruptions if an agreement is not reached[139](index=139&type=chunk) - The company settled all claims related to the Boyds Fire for **$3 million**, with responsibility split between vegetation management contractors, and settled a single plaintiff claim for less than **$0.1 million**[141](index=141&type=chunk)[142](index=142&type=chunk) - The company and CN Utility Consulting settled all Babb Road Fire lawsuits for **$27 million**, with the company paying **$21 million**, and insurance proceeds were received in **July 2025**[147](index=147&type=chunk)[148](index=148&type=chunk) - Avista Corp. entered an agreement to transfer its **15%** ownership in Colstrip Units 3 and 4 to NorthWestern by **December 31, 2025**, with no monetary exchange[152](index=152&type=chunk) [Note 15. Information by Business Segments](index=41&type=section&id=Note%2015.%20Information%20by%20Business%20Segments) This note provides financial information by business segment, detailing net income (loss) for Avista Utilities, AEL&P, and other segments for the three and six months ended June 30, 2025 and 2024 - The company operates with two reportable segments: Avista Utilities (Pacific Northwest) and AEL&P (Alaska), plus an 'Other' non-reportable category[161](index=161&type=chunk) Net Income (Loss) by Business Segment (Three Months Ended June 30, Millions $) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Avista Utilities | 23 | 24 | | AEL&P | 1 | 1 | | Other Non-Reportable Segment | (10) | (2) | | **Total Net Income** | **14** | **23** | Net Income (Loss) by Business Segment (Six Months Ended June 30, Millions $) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Avista Utilities | 101 | 91 | | AEL&P | 4 | 5 | | Other Non-Reportable Segment | (12) | (2) | | **Total Net Income** | **93** | **94** | [Report of Independent Registered Public Accounting Firm](index=43&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP reviewed Avista Corporation's interim financial information, finding no material modifications needed for **GAAP** conformity and confirming the **December 31, 2024**, balance sheet's fair statement - Deloitte & Touche LLP conducted a review of the interim financial information for the periods ended **June 30, 2025**, and **2024**[166](index=166&type=chunk)[169](index=169&type=chunk) - Based on their reviews, no material modifications were identified for the interim financial information to be in conformity with **GAAP**[166](index=166&type=chunk) - The firm expressed an unqualified opinion on the consolidated financial statements for the year ended **December 31, 2024**, and confirmed the fair statement of the **December 31, 2024**, balance sheet information[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial condition and results for the three and six months ended June 30, 2025, covering performance, segments, regulatory matters, and liquidity - Net income decreased for both the three and six months ended **June 30, 2025**, primarily due to losses in other businesses from lower investment valuations, partially offset by increased earnings at Avista Utilities from general rate cases[172](index=172&type=chunk)[173](index=173&type=chunk) - The 2025 electric IRP projects adding approximately **490 MW** of generating capacity by **2030** and **950 MW** by **2035**, with a request for proposal issued for up to **425 MW**[175](index=175&type=chunk)[176](index=176&type=chunk) - Regulatory lag, the delay between cost increases and rate recovery, remains an inherent challenge, potentially exacerbated by unexpected inflation and interest rates[183](index=183&type=chunk) [Business Segments](index=44&type=section&id=Business%20Segments) This section reviews the net income (loss) performance of the company's business segments, including Avista Utilities, AEL&P, and other segments, for the three and six months ended June 30, 2025 and 2024 - The company's business segments remained unchanged during the six months ended **June 30, 2025**[172](index=172&type=chunk) Net Income (Loss) by Business Segment (Three and Six Months Ended June 30, Millions $) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Avista Utilities | 23 | 24 | 101 | 91 | | AEL&P | 1 | 1 | 4 | 5 | | Other non-reportable segment loss | (10) | (2) | (12) | (2) | | **Net Income** | **14** | **23** | **93** | **94** | [Executive Overview](index=44&type=section&id=Executive%20Overview) This section provides a high-level summary of the company's financial performance, strategic initiatives, and key operational factors, including hydro generation expectations and potential impacts of tariffs - Net income decreased in Q2 and YTD 2025 compared to 2024, primarily due to losses in other businesses from lower investment valuations, partially offset by increased earnings at Avista Utilities from general rate cases[173](index=173&type=chunk) - The 2025 electric IRP outlines a preferred strategy to add approximately **490 MW** of generating capacity by **2030** and **950 MW** by **2035**, with a request for proposal issued for up to **425 MW**[175](index=175&type=chunk)[176](index=176&type=chunk) - The company expects 2025 hydro generation to be **85%** of normal, requiring additional thermal generation or market purchases[178](index=178&type=chunk) - Tariffs on imported goods could increase capital and operating expenses and disrupt supply chains, though they have not had a material impact to date[179](index=179&type=chunk)[180](index=180&type=chunk) [Regulatory Matters](index=45&type=section&id=Regulatory%20Matters) This section discusses recent regulatory decisions and filings in Washington, Idaho, and Oregon, including approved rate increases, Return on Equity (ROE), and Rate of Return (ROR) for utility operations - Washington **WUTC** approved annual electric base revenue increases of **$12 million (2.0%)** for 2025 and **$44 million (7.5%)** for 2026, and natural gas increases of **$14 million (11.2%)** for 2025 and **$4 million (2.8%)** for 2026[187](index=187&type=chunk)[188](index=188&type=chunk) - The **WUTC** approved a Return on Equity (**ROE**) of **9.8%** and a Rate of Return (**ROR**) of **7.32%** for Washington[188](index=188&type=chunk) - The company expects to file its next multi-year electric and natural gas general rate cases in Washington in **Q1 2026**[191](index=191&type=chunk) - Idaho **IPUC** settlement agreement, if approved, would increase annual electric base revenues by **$20 million (6.3%)** in **September 2025** and **$15 million (4.5%)** in **September 2026**[195](index=195&type=chunk)[196](index=196&type=chunk) - Oregon **OPUC** approved a settlement increasing annual base revenues by **$4 million (5.0%)** in **September 2025**, with an **ROE** of **9.5%** and **ROR** of **7.22%**[199](index=199&type=chunk) [Results of Operations - Overall](index=47&type=section&id=Results%20of%20Operations%20-%20Overall) This section provides an overall analysis of the company's financial performance, detailing changes in net income, utility revenues, operating expenses, and income tax expense for the three and six months ended June 30, 2025 - Net income decreased by **$9 million** for the three months ended **June 30, 2025**, and by **$1 million** for the six months ended **June 30, 2025**, compared to the prior year periods[33](index=33&type=chunk) - For **Q2 2025**, electric utility revenues increased due to general rate cases and increased wholesale sales volumes, partially offset by decreased wholesale prices; natural gas revenues decreased due to lower **PGA** rates and sales volumes[205](index=205&type=chunk) - For **YTD 2025**, utility revenues increased from general rate cases and customer/load growth, offset by decreased wholesale revenues and natural gas **PGA** decreases[211](index=211&type=chunk) - Utility operating expenses increased in both periods due to higher employee salaries, benefits, thermal generation costs, and increased wildfire mitigation and insurance costs[206](index=206&type=chunk)[213](index=213&type=chunk) - Income tax expense increased **YTD 2025** primarily due to decreased tax customer credits and higher pre-tax net income[214](index=214&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and explains the use of non-GAAP financial measures, specifically electric and natural gas utility margins, for analyzing operating performance and understanding the impact of supply costs - Electric utility margin (electric operating revenues less electric resource costs) and natural gas utility margin (natural gas operating revenues less natural gas resource costs) are non-GAAP financial measures used to analyze operating performance[216](index=216&type=chunk)[217](index=217&type=chunk) - These measures help understand the impact of changes in loads, rates, and supply costs, as changes in supply costs are generally deferred and recovered through regulatory mechanisms[217](index=217&type=chunk) [Results of Operations - Avista Utilities](index=50&type=section&id=Results%20of%20Operations%20-%20Avista%20Utilities) This section analyzes the operating results of Avista Utilities, focusing on customer growth, electric and natural gas operating revenues, and utility margins for the three and six months ended June 30, 2025 - Avista Utilities' average electric retail customers increased to **423,664** in **Q2 2025** (from 417,621 in Q2 2024) and **422,980** in **YTD 2025** (from 417,454 in YTD 2024)[220](index=220&type=chunk)[241](index=241&type=chunk) - Average natural gas retail customers increased to **383,447** in **Q2 2025** (from 380,232 in Q2 2024) and **383,396** in **YTD 2025** (from 380,308 in YTD 2024)[220](index=220&type=chunk)[241](index=241&type=chunk) - **Q2 2025** electric operating revenues increased **$18 million** YoY, driven by a **$33 million** increase in retail electric revenue (from MWhs sold and rate increases) and a **$2 million** increase in wholesale electric revenues, partially offset by an **$11 million** decrease in electric decoupling revenue[226](index=226&type=chunk) - **YTD 2025** electric operating revenues increased **$15 million** YoY, primarily due to a **$73 million** increase in retail electric revenue (from rate increases and MWhs sold), partially offset by a **$33 million** decrease in wholesale electric revenues and a **$20 million** decrease in electric decoupling revenue[247](index=247&type=chunk)[252](index=252&type=chunk) - **Q2 2025** natural gas operating revenues decreased **$10 million** YoY, mainly due to a **$17 million** decrease in retail revenues (from lower rates and sales volumes), partially offset by a **$7 million** increase in natural gas decoupling revenues[232](index=232&type=chunk) - **YTD 2025** natural gas operating revenues were consistent YoY, with a **$24 million** decrease in retail revenues (from lower rates) offset by a **$24 million** increase in other gas revenues (**CCA** emissions credits amortization)[254](index=254&type=chunk) Avista Utilities' Utility Margin (Three Months Ended June 30, Millions $) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Electric Utility Margin | 216 | 199 | | Natural Gas Utility Margin | 55 | 49 | | **Total Utility Margin** | **271** | **248** | Avista Utilities' Utility Margin (Six Months Ended June 30, Millions $) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Electric Utility Margin | 453 | 399 | | Natural Gas Utility Margin | 166 | 151 | | **Total Utility Margin** | **619** | **550** | [Results of Operations - Alaska Electric Light and Power Company](index=63&type=section&id=Results%20of%20Operations%20-%20Alaska%20Electric%20Light%20and%20Power%20Company) This section presents the net income for Alaska Electric Light and Power Company (AEL&P) for the three and six months ended June 30, 2025 and 2024 AEL&P Net Income (Millions $) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | 1 | 1 | | Six months ended June 30 | 4 | 5 | [Results of Operations - Other Businesses](index=63&type=section&id=Results%20of%20Operations%20-%20Other%20Businesses) This section details the net loss from the company's other non-reportable businesses, explaining the primary drivers behind the increased loss, including investment valuations and ownership dilution Other Businesses Net Loss (Millions $) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three months ended June 30 | (10) | (2) | | Six months ended June 30 | (12) | (2) | - The increased net loss is primarily due to higher net investment losses, with approximately **75%** related to clean technology investments impacted by shifting public policy and sentiment, and **25%** due to ownership dilution from new share issuances[267](index=267&type=chunk) [Critical Accounting Policies and Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms that the company's critical accounting policies and estimates, which require significant management judgment, have not materially changed from the 2024 Form 10-K - Critical accounting policies and estimates, which require significant management judgment and can materially affect financial statements, have not materially changed from the **2024 Form 10-K**[268](index=268&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity and capital resources, including available credit, cash flow from operating and financing activities, consolidated capital structure, and projected capital expenditures - As of **June 30, 2025**, the company had **$106 million** available under Avista Corp.'s committed line of credit, **$42 million** under its letter of credit facility, and **$9 million** under AEL&P's committed line of credit[270](index=270&type=chunk) - Net cash provided by operating activities decreased to **$224 million** for the six months ended **June 30, 2025**, from **$317 million** in the prior year, primarily due to changes in power and natural gas cost deferrals and amortizations[271](index=271&type=chunk) - Net cash provided by financing activities was **$3 million** for the six months ended **June 30, 2025**, compared to **$83 million** used in the prior year, driven by increased short-term borrowings and common stock issuances[273](index=273&type=chunk) Consolidated Capital Structure (Millions $) | Component | June 30, 2025 (Amount / % of total) | December 31, 2024 (Amount / % of total) | | :--- | :--- | :--- | | Total Debt | $3,176 / 54.6% | $3,125 / 54.7% | | Total Shareholders' Equity | $2,645 / 45.4% | $2,591 / 45.3% | | **Total** | **$5,821 / 100.0%** | **$5,716 / 100.0%** | - Avista Utilities' capital expenditures are projected at **$525 million** in 2025, **$575 million** in 2026, and **$600 million** in 2027[283](index=283&type=chunk) [Environmental Issues and Contingencies](index=66&type=section&id=Environmental%20Issues%20and%20Contingencies) This section discusses environmental regulations and their potential impact on the company's electric and natural gas businesses, including Washington building codes, voter initiatives, and new EPA regulations - Washington State building codes requiring all-electric space heating for most new commercial and large multifamily buildings, and electricity as the primary heat source for new residential buildings, could adversely impact the natural gas business but positively affect the electric business[288](index=288&type=chunk)[290](index=290&type=chunk) - Washington voters approved Initiative 2066 to prohibit restrictions on natural gas access, but a state court ruled it invalid, with an appeal pending[289](index=289&type=chunk) - The **EPA** released new regulations for electric generation facilities, which are subject to legal challenges and Presidential executive orders, with the company assessing impacts and planning to seek cost recovery through ratemaking[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[295](index=295&type=chunk) [Enterprise Risk Management](index=67&type=section&id=Enterprise%20Risk%20Management) This section outlines the company's approach to managing material business risks, including interest rate risk, credit risk, and energy commodity risks, and confirms no material changes in mitigation procedures - Material business risks and mitigation procedures have not materially changed during the six months ended **June 30, 2025**[297](index=297&type=chunk) - The company manages interest rate risk through policies limiting variable rate exposures and timing long-term debt issuances[299](index=299&type=chunk) - Credit risk exposure includes **$25 million** in cash collateral and **$8 million** in letters of credit for energy contracts as of **June 30, 2025**[300](index=300&type=chunk) - If credit ratings fell below 'investment grade', the company could be required to post an additional **$18 million** in collateral (with contractual thresholds) or **$36 million** (without contractual thresholds)[300](index=300&type=chunk) - Energy commodity risks have not materially changed, with derivative contracts expected to be included in power/natural gas supply costs and recovered through retail rates[302](index=302&type=chunk)[305](index=305&type=chunk) [Future Resource Needs](index=69&type=section&id=Future%20Resource%20Needs) This section outlines the company's Integrated Resource Plans (IRP) for natural gas and electric resources, addressing future energy demand, emissions compliance, and varied state and federal regulations - The **2025 Natural Gas IRP** outlines a preferred resource portfolio to meet forecast system energy demand and comply with emissions legislation over **20 years**[307](index=307&type=chunk) - Customer usage forecasts are increasingly difficult due to varied state and federal rules; Washington building codes are assumed to remain in effect[311](index=311&type=chunk) - Oregon's preferred resource strategy assumes renewable natural gas, energy efficiency, emissions reductions, and carbon capture to meet **CPP** requirements[311](index=311&type=chunk) - Washington's strategy utilizes conventional natural gas, energy efficiency, and allowance offsets to meet **CCA** requirements[311](index=311&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section incorporates market risk disclosures by reference from the Enterprise Risk Management section of Management's Discussion and Analysis - Information on quantitative and qualitative disclosures about market risk is incorporated by reference from the Enterprise Risk Management section of **MD&A**[308](index=308&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective at a reasonable assurance level as of **June 30, 2025**, with no material changes in internal control over financial reporting during **Q2 2025** - The company's disclosure controls and procedures are designed to ensure timely and accurate reporting of information required under the **Securities Exchange Act of 1934**[309](index=309&type=chunk) - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of **June 30, 2025**[309](index=309&type=chunk) - No material changes in internal control over financial reporting occurred during the second quarter of **2025**[310](index=310&type=chunk) [Part II. Other Information](index=70&type=section&id=Part%20II.%20Other%20Information) This part contains additional information not included in the financial statements, covering legal proceedings, risk factors, other disclosures, exhibits, and the report's signature [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates detailed information on legal proceedings, commitments, and contingencies by reference from Note 14 of the Condensed Consolidated Financial Statements - Legal proceedings information is incorporated by reference from **Note 14** of the Notes to Condensed Consolidated Financial Statements[313](index=313&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) This section references risk factors from the **2024 Form 10-K**, noting no material changes but enhancing discussion on equity investment risks and their net income impact - Risk factors from the **2024 Form 10-K** remain materially unchanged[313](index=313&type=chunk) - Enhanced discussion highlights risks inherent in equity investments, where fair values fluctuate and directly affect net income, with no assurance of eventual financial gains[313](index=313&type=chunk) [Item 5. Other Information](index=70&type=section&id=Item%205.%20Other%20Information) This section confirms no directors or officers reported adopting or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended **June 30, 2025** - No directors or officers reported adopting or terminating **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements during **Q2 2025**[314](index=314&type=chunk) [Item 6. Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and XBRL-related documents Key Exhibits Filed | Exhibit No. | Description | | :--- | :--- | | 15 | Letter Re: Unaudited Interim Financial Information | | 31.1 | Certification of Chief Executive Officer | | 31.2 | Certification of Chief Financial Officer | | 32 | Certification of Corporate Officers | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents | | 104 | Cover page formatted as Inline XBRL | [Signature](index=72&type=section&id=Signature) The report is signed on behalf of Avista Corporation by Kevin J. Christie, Senior Vice President, Chief Financial Officer, Treasurer, and Regulatory Affairs Officer, on **August 5, 2025** - The report was signed by Kevin J. Christie, Senior Vice President, Chief Financial Officer, Treasurer and Regulatory Affairs Officer, on **August 5, 2025**[318](index=318&type=chunk)[319](index=319&type=chunk)

Core Insights - The Avista Foundation awarded $175,950 in grants to nonprofit organizations in Washington, Idaho, and Oregon during the second quarter to support education and youth development [1][2]. Grant Distribution - The grants support a variety of organizations and programs, including: - Arts Alliance in Idaho received $2,000 - Asotin County Library Foundation in Washington received $1,000 - Assistance League of Klamath Basin in Oregon received $1,500 - Big Brothers Big Sisters of the Inland Northwest in Washington received $3,500 - Boys & Girls Clubs of Kootenai County in Idaho received $1,500 - Communities in Schools of Spokane County in Washington received $10,000 - YMCA of The Inland Northwest in Washington received $10,000 - Vanessa Behan in Washington received $20,000 [2][4]. Specific Initiatives Supported - The Avista Foundation is supporting the International Rescue Committee's efforts to develop STEAM and digital literacy skills for refugee and immigrant youth in Spokane, Washington [3]. - In Sandpoint, Idaho, a grant is aiding the Arts Alliance in providing hands-on science and arts education through an AmeriCorps STEAM instructor [3]. - The Asotin County Library Foundation's "1,000 Books Before Kindergarten" initiative is being supported to promote early literacy in Clarkston, Washington [3]. Foundation Overview - Since its establishment in 2002, the Avista Foundation has granted over $17 million, focusing on vulnerable populations, education, and cultural vitality [5].

Core Viewpoint - Avista Corp. will hold its quarterly conference call to discuss second quarter 2025 results on August 6, 2025, at 10:30 a.m. Eastern Daylight Time, with a news release issued earlier that day at 7:05 a.m. [1] Company Overview - Avista Corp. is an energy company engaged in the production, transmission, and distribution of energy, serving 422,000 electric customers and 383,000 natural gas customers across a service territory of 30,000 square miles in eastern Washington, northern Idaho, and parts of southern and eastern Oregon, with a total population of 1.7 million [3] - The company also has a subsidiary, Alaska Energy and Resources Company, which provides retail electric service to 18,000 customers in Juneau, Alaska [3] - Avista's stock is traded under the ticker symbol "AVA" [3]

Core Insights - Avista Healthcare Partners has successfully closed Avista Healthcare Partners CV II, L.P., a continuation fund for GCM, with significant investments from Goldman Sachs Alternatives and BlackRock [1][3] - Since Avista's acquisition of GCM in 2019, the company has more than doubled its revenue through strategic investments in technology, facilities, and human capital [2] Company Overview - Avista Healthcare Partners is a New York-based private equity firm founded in 2005, with over $9 billion invested in 50 healthcare businesses globally, focusing on growth-oriented healthcare product and technology sectors [5] - GCM, headquartered in Union City, California, specializes in complex manufacturing services for medical technology OEMs, offering precision machining, fabrication, and integration services [6] Investment Strategy - The continuation fund for GCM includes substantial unfunded capital commitments aimed at supporting acquisition opportunities and strategic investments [1] - Goldman Sachs Alternatives emphasizes partnership and shared success, with over $500 billion in assets and extensive experience in alternative investments [7][9]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: High-Yielding Stocks in Utilities Sector - The AES Corporation has a dividend yield of 6.87% and was downgraded from Buy to Hold by Argus Research on May 27, 2025, with an accuracy rate of 62% [7] - Portland General Electric Company has a dividend yield of 5.11% and received a downgrade from Barclays, with a price target cut from $48 to $45 on April 30, 2025, maintaining an Equal-Weight rating [7] - Avista Corporation has a dividend yield of 5.13% and was rated Underperform by B of A Securities with a price target of $37 reinstated on September 12, 2024 [7]

Group 1 - Pinnacle West (PNW) and Avista Corporation (AVA) are both regulated electric utilities operating in the Western U.S. but have different investment profiles [1] - Pinnacle West is based in Arizona and is characterized by growth potential [1] Group 2 - Joseph Jones, a professor with over fifteen years of market study experience, focuses on portfolio construction from a dividend growth investor's perspective [1]

Core Viewpoint - Avista and other parties have reached a settlement agreement regarding electric and natural gas rate cases, which is pending approval from the Idaho Public Utilities Commission [1][2][4]. Electric Revenue Summary - The settlement agreement proposes an increase in annual base electric revenues by $19.5 million (6.3%) effective September 1, 2025, and by $14.7 million (4.5%) effective September 1, 2026 [2][10]. - A residential electric customer using an average of 939 kilowatt hours per month would see a 6.7% increase of $6.95 per month for a revised bill of $111.25 effective September 1, 2025, and a 4.7% increase of $5.22 per month for a revised bill of $116.47 effective September 1, 2026 [5]. - The overall electric revenue impact varies by rate schedule, with the total billing change for 2025 being 6.6% and for 2026 being 4.6% [7]. Natural Gas Revenue Summary - The settlement agreement proposes an increase in annual base natural gas revenues by $4.6 million (9.2%) effective September 1, 2025, and a decrease of $0.2 million (0.4%) effective September 1, 2026 [2]. - A residential natural gas customer using an average of 66 therms per month would see a 6.8% increase of $4.11 per month for a revised bill of $64.74 effective September 1, 2025, with no rate change effective September 1, 2026 [6]. - The total natural gas revenue impact for 2025 is 5.4%, with a slight decrease of 0.2% in 2026 [8]. Financial Structure - The settlement includes a 9.6% return on equity (ROE) with a common equity ratio of 50% and a rate of return (ROR) on rate base of 7.28% [3][11]. - The original request from Avista aimed for a higher increase in annual base revenues, with $43.0 million (14.4%) for electric and $8.8 million (10.3%) for natural gas [10]. Customer Impact and Services - The settlement is designed to provide fair and reasonable rates for customers, allowing for longer recovery periods for certain deferred costs, which helps mitigate bill impacts [4]. - Avista serves over 145,000 electric and 93,000 natural gas customers in Idaho, indicating a significant customer base affected by these changes [9].