[10-Q] AVISTA CORP Quarterly Earnings Report
Rhea-AI Filing Summary
Avista Corporation reported higher profitability for the three months ended March 31, 2026, even as revenue declined. Total operating revenues were $570 million compared with $617 million a year earlier, driven by lower utility revenues offset in part by stronger alternative revenue programs.
Operating expenses fell to $436 million from $492 million, as resource costs and depreciation both decreased. Income from operations rose to $134 million from $125 million. Net income increased to $92 million versus $79 million, and diluted earnings per share improved to $1.11 from $0.98, reflecting better margins and a modestly higher share count.
Avista generated $179 million of cash from operating activities, against capital expenditures of $150 million, and ended the quarter with total assets of $8.4 billion, long-term debt of $2.8 billion, and shareholders’ equity of $2.8 billion. The quarterly dividend declared was $0.493 per share.
Positive
- None.
Negative
- None.
Key Figures
Key Terms
Alternative revenue programs financial
Energy Recovery Mechanism financial
Decoupling surcharge financial
Climate Commitment Act obligations financial
Allowance for Funds Used During Construction financial
Forward-looking statements regulatory
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
|
FOR THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
|
FOR THE TRANSITION PERIOD FROM TO |
Commission file number
(Exact name of Registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
|
Name of Each Exchange on Which Registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☒ |
Accelerated filer |
☐ |
|
Non-accelerated filer |
☐ |
Smaller reporting company |
|
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of April 30, 2026,
Table of Contents
AVISTA CORPORATION
AVISTA CORPORATION
INDEX
Item No. |
|
|
Page No. |
|
|
|
|
|
Acronyms and Terms |
|
iii |
|
Forward-Looking Statements |
|
1 |
|
Available Information |
|
6 |
Part I. Financial Information |
|
|
|
Item 1. |
Condensed Consolidated Financial Statements (unaudited) |
|
7 |
|
Condensed Consolidated Statements of Income and Comprehensive Income - |
|
7 |
|
Condensed Consolidated Balance Sheets - |
|
8 |
|
Condensed Consolidated Statements of Cash Flows - |
|
9 |
|
Condensed Consolidated Statements of Equity - |
|
11 |
|
Notes to Condensed Consolidated Financial Statements (unaudited) |
|
12 |
|
Note 1. Summary of Significant Accounting Policies |
|
12 |
|
Note 2. New Accounting Standards |
|
13 |
|
Note 3. Balance Sheet Components |
|
14 |
|
Note 4. Revenue |
|
17 |
|
Note 5. Derivatives and Risk Management |
|
18 |
|
Note 6. Pension Plans and Other Postretirement Benefit Plans |
|
21 |
|
Note 7. Income Taxes |
|
21 |
|
Note 8. Short-Term Borrowings |
|
22 |
|
Note 9. Long-Term Debt to Affiliated Trusts |
|
23 |
|
Note 10. Fair Value |
|
23 |
|
Note 11. Common Stock |
|
27 |
|
Note 12. Earnings per Common Share |
|
28 |
|
Note 13. Commitments and Contingencies |
|
28 |
|
Note 14. Information by Business Segments |
|
29 |
|
Report of Independent Registered Public Accounting Firm |
|
31 |
|
|
|
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
32 |
|
Business Segments |
|
32 |
|
Executive Overview |
|
32 |
|
Regulatory Matters |
|
33 |
|
Results of Operations - Overall |
|
35 |
|
Non-GAAP Financial Measures |
|
36 |
|
Results of Operations - Avista Utilities |
|
37 |
|
Results of Operations - Alaska Electric Light and Power Company |
|
44 |
|
Results of Operations - Other Businesses |
|
44 |
|
Critical Accounting Policies and Estimates |
|
44 |
|
Liquidity and Capital Resources |
|
44 |
i
Table of Contents
|
Overall Liquidity |
|
44 |
|
Review of Condensed Consolidated Cash Flow Statement |
|
44 |
|
Capital Resources |
|
45 |
|
Capital Expenditures |
|
46 |
|
Pension Plan |
|
46 |
|
Environmental Issues and Contingencies |
|
47 |
|
Enterprise Risk Management |
|
47 |
|
|
|
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
|
48 |
|
|
|
|
Item 4. |
Controls and Procedures |
|
48 |
|
|
|
|
Part II. Other Information |
|
|
|
Item 1. |
Legal Proceedings |
|
50 |
|
|
|
|
Item 1A. |
Risk Factors |
|
50 |
|
|
|
|
Item 5. |
Other Information |
|
50 |
|
|
|
|
Item 6. |
Exhibits |
|
51 |
|
|
|
|
|
Signature |
|
52 |
ii
Table of Contents
AVISTA CORPORATION
ACRONYMS AND TERMS
(The following acronyms and terms are found in multiple locations within the document)
Acronym/Term |
Meaning |
|
AEL&P |
- |
Alaska Electric Light and Power Company, the primary operating subsidiary of AERC, which provides electric services in Juneau, Alaska |
AERC |
- |
Alaska Energy and Resources Company, the Company's wholly-owned subsidiary based in Juneau, Alaska |
AFUDC |
- |
Allowance for Funds Used During Construction, represents the cost of both the debt and equity funds used to finance utility plant additions during the construction period |
ASC |
- |
Accounting Standards Codification |
ASU |
- |
Accounting Standards Update |
Avista Capital |
- |
Parent company to the Company’s non-utility businesses, with the exception of AJT Mining Properties, Inc., which is a subsidiary of AERC. |
Avista Corp. |
- |
Avista Corporation, the Company |
Avista Utilities |
- |
Operating division of Avista Corp. (not a subsidiary) comprising the regulated utility operations in the Pacific Northwest |
Capacity |
- |
The rate at which a particular generating source is capable of producing energy, measured in KW or MW |
CARES Act |
- |
Coronavirus Aid, Relief, and Economic Security Act |
CCA |
- |
Climate Commitment Act |
Colstrip |
- |
The coal-fired Colstrip Generating Plant in southeastern Montana |
Cooling degree days |
- |
The measure of the warmness of weather experienced, based on the extent to which the average of high and low temperatures for a day is above 65 degrees Fahrenheit (annual degree days above historic indicate warmer than average temperatures) |
Energy |
- |
The amount of electricity produced or consumed over a period of time, measured in KWh or MWh. Also, refers to natural gas consumed and is measured in dekatherms |
ERM |
- |
The Energy Recovery Mechanism, a mechanism for accounting and rate recovery of certain power supply costs accepted by the utility commission in the state of Washington |
FASB |
- |
Financial Accounting Standards Board |
FCA |
- |
Fixed Cost Adjustment, the electric and natural gas decoupling mechanism in Idaho |
FERC |
- |
Federal Energy Regulatory Commission |
GAAP |
- |
Generally Accepted Accounting Principles |
Heating degree days |
- |
The measure of the coldness of weather experienced, based on the extent to which the average of high and low temperatures for a day falls below 65 degrees Fahrenheit (annual degree days below historic indicate warmer than average temperatures) |
IPUC |
- |
Idaho Public Utilities Commission |
KW, KWh |
- |
Kilowatt (1000 watts): a measure of generating power or capability. Kilowatt-hour (1000 watt hours): a measure of energy produced over a period of time |
mmBTU |
- |
One million British Thermal Units, a thermal unit of measurement for natural gas |
MW, MWh |
- |
Megawatt: 1000 KW. Megawatt-hour: 1000 KWh |
MYRP |
- |
Multi-year rate plan |
OPUC |
- |
The Public Utility Commission of Oregon |
PCA |
- |
The Power Cost Adjustment mechanism, a procedure for accounting and rate recovery of certain power supply costs accepted by the utility commission in the state of Idaho |
PGA |
- |
Purchased Gas Adjustment |
PPA |
- |
Power Purchase Agreement |
iii
Table of Contents
AVISTA CORPORATION
ROE |
- |
Return on equity |
ROR |
- |
Rate of return on rate base |
ROU |
- |
Right-of-use lease asset |
SEC |
- |
U.S. Securities and Exchange Commission |
SOFR |
- |
Secured Overnight Financing Rate |
Therm |
- |
Unit of measurement for natural gas; a therm is equal to approximately one hundred cubic feet (volume) or 100,000 BTUs (energy) |
Watt |
- |
Unit of measurement of electric power or capability; a watt is equal to the rate of work represented by a current of one ampere under a pressure of one volt |
WUTC |
- |
Washington Utilities and Transportation Commission |
iv
Table of Contents
AVISTA CORPORATION
Forward-Looking Statements
From time to time, we make forward-looking statements such as statements regarding projected or future:
These statements are based upon underlying assumptions (many of which are based, in turn, upon further assumptions). Such statements are made both in our reports filed under the Securities Exchange Act of 1934, as amended (including this Quarterly Report on Form 10-Q), and elsewhere. Forward-looking statements are all statements except those of historical fact including, without limitation, those identified by the use of words that include “will,” “may,” “could,” “should,” “intends,” “plans,” “aspires,” “assumes,” “targets,” “seeks,” “anticipates,” “estimates,” “expects,” “forecasts,” “projects,” “predicts,” and similar expressions.
Forward-looking statements (including those made in this Quarterly Report on Form 10-Q) are subject to a variety of risks, uncertainties and other factors. Most of these factors are beyond our control. Any of these factors may have a significant effect on our operations, results of operations, financial condition or cash flows, and could cause actual results to differ materially from those anticipated in our statements. Such risks, uncertainties and other factors include, among others:
Utility Regulatory Risk
Operational Risk
1
Table of Contents
AVISTA CORPORATION
2
Table of Contents
AVISTA CORPORATION
Climate Change Risk
Cybersecurity Risk
Technology Risk
Strategic Risk
3
Table of Contents
AVISTA CORPORATION
External Mandates Risk
Financial Risk
4
Table of Contents
AVISTA CORPORATION
Energy Commodity Risk
Compliance Risk
Resource Adequacy Risk
Our expectations, beliefs and projections are expressed in good faith. We believe they are reasonable based on, without limitation, an examination of historical operating trends, our records and other information available from third parties. However, there can be no assurance that our expectations, beliefs or projections will be achieved. Furthermore, any forward-looking statement speaks only as of the date on which such statement is made. We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New risks, uncertainties and other factors emerge from time to time, and it is not possible to predict all such factors, nor can we assess the effect of each such factor on our business or the extent that any such factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement.
5
Table of Contents
AVISTA CORPORATION
Available Information
We file annual, quarterly and current reports and proxy statements with the SEC. The SEC maintains a website that contains these documents at www.sec.gov. We make annual, quarterly and current reports and proxy statements available on our website, https://investor.avistacorp.com, as soon as practicable after electronically filing these documents with the SEC. Except for SEC filings or portions thereof specifically referred to in this report, information contained on these websites is not part of this report.
6
Table of Contents
PART I. Financial Information
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Avista Corporation
For the Three Months Ended March 31
Dollars in millions, except per share amounts
(Unaudited)
|
|
2026 |
|
|
2025 |
|
||
Operating Revenues: |
|
|
|
|
|
|
||
Utility revenues, exclusive of alternative revenue programs |
|
$ |
|
|
$ |
|
||
Alternative revenue programs |
|
|
|
|
|
( |
) |
|
Total operating revenues |
|
|
|
|
|
|
||
Operating Expenses: |
|
|
|
|
|
|
||
Utility operating expenses: |
|
|
|
|
|
|
||
Resource costs |
|
|
|
|
|
|
||
Other operating expenses |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Taxes other than income taxes |
|
|
|
|
|
|
||
Non-utility operating expenses |
|
|
|
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
||
Income from operations |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Interest expense to affiliated trusts |
|
|
|
|
|
|
||
Capitalized interest |
|
|
( |
) |
|
|
( |
) |
Other income-net |
|
|
( |
) |
|
|
( |
) |
Income before income taxes |
|
|
|
|
|
|
||
Income tax expense |
|
|
|
|
|
|
||
Net income and Comprehensive income |
|
$ |
|
|
$ |
|
||
Weighted-average common shares outstanding (thousands), basic |
|
|
|
|
|
|
||
Weighted-average common shares outstanding (thousands), diluted |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Earnings per common share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
The Accompanying Notes are an Integral Part of These Statements.
7
Table of Contents
CONDENSED CONSOLIDATED BALANCE SHEETS
Avista Corporation
Dollars in millions
(Unaudited)
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Assets: |
|
|
|
|
|
|
||
Current Assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable-less allowances of $ |
|
|
|
|
|
|
||
Inventory |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Net utility property |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Non-current regulatory assets |
|
|
|
|
|
|
||
Other property and investments-net and other non-current assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Liabilities and Equity: |
|
|
|
|
|
|
||
Current Liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Short-term borrowings |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Long-term debt to affiliated trusts |
|
|
|
|
|
|
||
Pensions and other postretirement benefits |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Non-current regulatory liabilities |
|
|
|
|
|
|
||
Other non-current liabilities and deferred credits |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
and (See Notes to Condensed Consolidated |
|
|
|
|
|
|
||
Equity: |
|
|
|
|
|
|
||
Shareholders’ Equity: |
|
|
|
|
|
|
||
Common stock, |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Retained earnings |
|
|
|
|
|
|
||
Total shareholders’ equity |
|
|
|
|
|
|
||
Total liabilities and equity |
|
$ |
|
|
$ |
|
||
The Accompanying Notes are an Integral Part of These Statements.
8
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Avista Corporation
For the Three Months Ended March 31
Dollars in millions
(Unaudited)
|
|
2026 |
|
|
2025 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Non-cash items included in net income: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Benefit from (provision for) deferred income taxes |
|
|
|
|
|
( |
) |
|
Power and natural gas cost (deferrals) amortizations, net |
|
|
( |
) |
|
|
|
|
Amortization of debt expense |
|
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
|
||
Equity-related AFUDC |
|
|
( |
) |
|
|
( |
) |
Pension and other postretirement benefit expense |
|
|
|
|
|
|
||
Other regulatory assets and liabilities |
|
|
|
|
|
|
||
Other deferred debits and credits |
|
|
|
|
|
|
||
Change in decoupling regulatory deferral |
|
|
( |
) |
|
|
|
|
Realized and unrealized (gains) losses on assets and investments |
|
|
( |
) |
|
|
|
|
Contributions to defined benefit pension plan |
|
|
( |
) |
|
|
( |
) |
Changes in certain current assets and liabilities: |
|
|
|
|
|
|
||
Accounts and notes receivable |
|
|
|
|
|
( |
) |
|
Inventory |
|
|
( |
) |
|
|
( |
) |
Collateral for derivative instruments |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Investing Activities: |
|
|
|
|
|
|
||
Utility property capital expenditures (excluding equity-related AFUDC) |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
The Accompanying Notes are an Integral Part of These Statements.
9
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Avista Corporation
For the Three Months Ended March 31
Dollars in millions
(Unaudited)
|
|
2026 |
|
|
2025 |
|
||
Financing Activities: |
|
|
|
|
|
|
||
Net decrease in short-term borrowings |
|
$ |
( |
) |
|
$ |
( |
) |
Maturity of long-term debt and finance leases |
|
|
( |
) |
|
|
( |
) |
Issuance of common stock, net of issuance costs |
|
|
|
|
|
|
||
Cash dividends paid |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net decrease in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
The Accompanying Notes are an Integral Part of These Statements.
10
Table of Contents
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Avista Corporation
For the Three Months Ended March 31
Dollars in millions, except per share amounts
(Unaudited)
|
|
2026 |
|
|
2025 |
|
||
Common Stock, Shares (in thousands): |
|
|
|
|
|
|
||
Shares outstanding at beginning of period |
|
|
|
|
|
|
||
Shares issued |
|
|
|
|
|
|
||
Shares outstanding at end of period |
|
|
|
|
|
|
||
Common Stock, Amount: |
|
|
|
|
|
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Equity compensation expense |
|
|
|
|
|
|
||
Issuance of common stock, net of issuance costs |
|
|
|
|
|
|
||
Payment of minimum tax withholdings for share-based payment awards |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
|
|
|
|
|
||
Accumulated Other Comprehensive Loss: |
|
|
|
|
|
|
||
Balance at beginning of period |
|
|
( |
) |
|
|
|
|
Other comprehensive loss |
|
|
|
|
|
|
||
Balance at end of period |
|
|
( |
) |
|
|
|
|
Retained Earnings: |
|
|
|
|
|
|
||
Balance at beginning of period |
|
|
|
|
|
|
||
Net income |
|
|
|
|
|
|
||
Dividends on common stock |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
|
|
|
|
|
||
Total equity |
|
$ |
|
|
$ |
|
||
Dividends declared per common share |
|
$ |
|
|
$ |
|
||
The Accompanying Notes are an Integral Part of These Statements.
11
Table of Contents
AVISTA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The accompanying condensed consolidated financial statements of Avista Corp. as of and for the interim periods ended March 31, 2026 and March 31, 2025 are unaudited; however, in the opinion of management, the statements reflect all adjustments necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. The condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The Condensed Consolidated Statements of Income and Comprehensive Income for the interim periods are not necessarily indicative of the results expected for the full year. These condensed consolidated financial statements do not contain the detail or footnote disclosure concerning accounting policies and other matters which would be included in full fiscal year consolidated financial statements; therefore, they should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (2025 Form 10-K).
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Avista Corp. is primarily an electric and natural gas utility with certain other business ventures. Avista Utilities is an operating division of Avista Corp., comprising its regulated utility operations in the Pacific Northwest. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho. Avista Utilities also provides natural gas distribution service in parts of northeastern and southwestern Oregon. Avista Utilities has electric generating facilities in Washington, Idaho, Oregon and Montana. Avista Utilities also supplies electricity to a small number of customers in Montana.
AERC is a wholly-owned subsidiary of Avista Corp. The primary subsidiary of AERC is AEL&P, which comprises Avista Corp.'s regulated utility operations in Alaska.
Avista Capital, a wholly owned non-regulated subsidiary of Avista Corp., is the parent company of the subsidiary companies in the non-utility businesses, except AJT Mining Properties, Inc., which is a subsidiary of AERC. See Note 14 for business segment information.
Basis of Reporting
The condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company and its subsidiaries and other majority owned subsidiaries and variable interest entities for which the Company or its subsidiaries are the primary beneficiaries. Intercompany balances are eliminated in consolidation. The accompanying condensed consolidated financial statements include the Company’s proportionate share of utility plant and related operations associated with its interests in jointly owned plants.
Regulation
The Company is subject to state regulation in Washington, Idaho, Montana, Oregon and Alaska. The Company is subject to federal regulation primarily by the FERC, as well as various other federal agencies with regulatory oversight of particular aspects of its operations.
Derivative Assets and Liabilities
Derivatives are recorded as either assets or liabilities on the Condensed Consolidated Balance Sheets measured at estimated fair value.
The WUTC and the IPUC issued accounting orders authorizing Avista Corp. to offset energy commodity derivative assets or liabilities with a regulatory liability or asset. This accounting treatment is intended to defer the recognition of mark-to-market gains and losses on energy commodity transactions until the period of delivery. Realized benefits and costs result in adjustments to retail rates through PGAs, the ERM in Washington, the PCA mechanism in Idaho, and periodic general rate cases. The resulting regulatory assets associated with energy commodity derivative instruments are probable of recovery through future rates.
12
Table of Contents
AVISTA CORPORATION
Substantially all forward contracts to purchase or sell power and natural gas are recorded as derivative assets or liabilities at estimated fair value with an offsetting regulatory liability or asset. Contracts not considered derivatives are accounted for on the accrual basis until they are settled or realized unless there is a decline in the fair value of the contract determined to be other-than-temporary.
For interest rate swap transactions Avista Corp. records all mark-to-market gains and losses in each accounting period as assets and liabilities, as well as offsetting regulatory liabilities or assets, such that there is no impact on the income statement. The interest rate swap derivatives are risk management tools similar to energy commodity derivatives. Upon settlement of interest rate swap derivatives, the regulatory asset or liability is amortized as a component of interest expense over the term of the associated debt. The Company records an offset of interest rate swap derivative assets and liabilities with regulatory assets and liabilities, based on the prior practice of the commissions to provide recovery through the ratemaking process.
The Company has multiple master agreements with a variety of entities allowing for cross-commodity netting of derivative agreements with the same counterparty (e.g. power derivatives can be netted with natural gas derivatives under certain conditions). In addition, some master agreements allow for the netting of commodity derivatives and interest rate swap derivatives for the same counterparty. The Company does not have agreements which allow for cross-affiliate netting among multiple affiliated legal entities. The Company nets all derivative instruments when allowed by the agreement for presentation in the Condensed Consolidated Balance Sheets.
Fair Value Measurements
Fair value represents the price that would be received when selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Derivative assets and liabilities, deferred compensation assets, and some equity investments are reported at estimated fair value on the Condensed Consolidated Balance Sheets. See Note 10 for the Company’s fair value disclosures.
Contingencies
The Company has unresolved regulatory, legal and tax issues which have inherently uncertain outcomes. The Company accrues a loss contingency if it is probable that a liability has been incurred and the amount of the loss or impairment can be reasonably estimated. The Company also discloses loss contingencies that do not meet these conditions for accrual if there is a reasonable possibility that a material loss may be incurred. See Note 13 for further discussion of the Company's commitments and contingencies.
NOTE 2. NEW ACCOUNTING STANDARDS
ASU 2023-06 "Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative"
In October 2023, the FASB issued ASU 2023-06, which incorporates a variety of SEC required disclosures into the FASB Accounting Standards Codification (ASC). For entities subject to SEC's existing disclosure requirements, the effective date for each amendment will be the date on which the SEC removes the related disclosure from Regulation S-X or Regulation S-K, with early adoption permitted. If the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K by June 30, 2027, the disclosure requirements will be removed from the Codification. The requirements of the ASU will not have a material impact on the Company's financial statements.
ASU 2024-03 "Disaggregation of Income Statement Expenses"
In November 2024, the FASB issued ASU 2024-03, requiring additional footnote disclosures disaggregating certain expenses included on the income statement. The ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is in the process of evaluating the impact of the ASU; however, it has determined it will not early adopt in 2026.
13
Table of Contents
AVISTA CORPORATION
ASU 2025-05 "Measurement of Credit Losses for Accounts Receivable and Contract Assets"
In July 2025, the FASB issued ASU 2025-05, providing a practical expedient that may be elected to assume current conditions as of the balance sheet date will remain unchanged for the remaining life of the receivable when developing an estimate of expected credit losses on accounts receivable arising from contracts with customers. The ASU is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual periods, and early adoption is permitted. The Company elected to utilize the practical expedient, effective January 1, 2026, which did not have a material impact on the financial statements.
ASU 2025-06 "Targeted Improvements to the Accounting for Internal-Use Software"
In September 2025, the FASB issued ASU 2025-06, which updates the capitalization criteria for internally developed software projects. The ASU is effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual periods, and early adoption is permitted. The Company is in the process of evaluating the impact of the ASU; however, it has determined it will not early adopt in 2026.
ASU 2025-10 "Accounting for Government Grants Received by Business Entities"
In December 2025, the FASB issued ASU 2025-10, which establishes authoritative accounting guidance for government grants received by a business entity. The ASU is effective for annual reporting periods beginning after December 15, 2028 and interim reporting periods within those annual periods, and early adoption is permitted. The Company is in the process of evaluating the impact of the ASU; however, it has determined it will not early adopt in 2026.
NOTE 3. BALANCE SHEET COMPONENTS
Inventory
Inventories of materials and supplies, emission allowances, stored natural gas, and fuel stock are recorded at average cost and consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Materials and supplies |
|
$ |
|
|
$ |
|
||
Emission allowances |
|
|
|
|
|
|
||
Stored natural gas |
|
|
|
|
|
|
||
Fuel stock |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Other Current Assets
Other current assets consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Prepayments |
|
$ |
|
|
$ |
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Derivative assets net of collateral |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
14
Table of Contents
AVISTA CORPORATION
Net Utility Property
Net utility property, which is recorded at original cost, net of accumulated depreciation, consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Utility plant in service |
|
$ |
|
|
$ |
|
||
Construction work in progress |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Less: Accumulated depreciation and amortization |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Other Property and Investments-Net and Other Non-Current Assets
Other property and investments-net and other non-current assets consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Equity investments |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Non-utility property |
|
|
|
|
|
|
||
Notes receivable |
|
|
|
|
|
|
||
Long-term prepaid license fees |
|
|
|
|
|
|
||
Pension asset |
|
|
|
|
|
|
||
Investment in affiliated trust |
|
|
|
|
|
|
||
Deferred compensation assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Other Current Liabilities
Other current liabilities consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
Accrued taxes other than income taxes |
|
$ |
|
|
$ |
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Employee paid time off accruals |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Pensions and other postretirement benefits |
|
|
|
|
|
|
||
Customer deposits |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
15
Table of Contents
AVISTA CORPORATION
Other Non-Current Liabilities and Deferred Credits
Other non-current liabilities and deferred credits consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
$ |
|
|
$ |
|
|||
Finance lease liabilities |
|
|
|
|
|
|
||
Deferred investment tax credits |
|
|
|
|
|
|
||
Climate Commitment Act obligations |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Regulatory Assets and Liabilities
Regulatory assets and liabilities consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Current |
|
|
Non-Current |
|
|
Current |
|
|
Non-Current |
|
||||
Regulatory Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Energy commodity derivatives |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred Climate Commitment Act costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred power costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Decoupling surcharge |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unamortized debt repurchase costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax related assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension and other postretirement benefit plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
AFUDC above FERC allowed rate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Settlement with Coeur d'Alene Tribe |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Advanced meter infrastructure |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility plant abandoned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Demand side management programs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Colstrip |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wildfire resiliency |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Insurance deferrals |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other regulatory assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Regulatory Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income tax related liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Excess deferred income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred Climate Commitment Act revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred power costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred natural gas costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Decoupling rebate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility plant retirement costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for rate refund |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other regulatory liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
16
Table of Contents
AVISTA CORPORATION
NOTE 4. REVENUE
Disaggregation of Total Operating Revenue
The following table disaggregates total operating revenue by segment and source for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||
Avista Utilities |
|
|
|
|
|
|
||
Revenue from contracts with customers |
|
$ |
|
|
$ |
|
||
Derivative revenues |
|
|
|
|
|
|
||
Alternative revenue programs |
|
|
|
|
|
( |
) |
|
Deferrals and amortizations for rate refunds to customers |
|
|
( |
) |
|
|
|
|
Other utility revenues |
|
|
|
|
|
|
||
Total Avista Utilities |
|
|
|
|
|
|
||
AEL&P |
|
|
|
|
|
|
||
Revenue from contracts with customers |
|
|
|
|
|
|
||
Total operating revenues |
|
$ |
|
|
$ |
|
||
Utility Revenue from Contracts with Customers by Type and Service
The following table disaggregates revenue from contracts with customers associated with the Company's electric operations for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||||||||||||||||||
|
|
Avista |
|
|
AEL&P |
|
|
Total Utility |
|
|
Avista |
|
|
AEL&P |
|
|
Total Utility |
|
||||||
ELECTRIC OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Public street and highway lighting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total retail revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Transmission |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other revenue from contracts with |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total electric revenue from contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The following table disaggregates revenue from contracts with customers associated with the Company's natural gas operations for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||
|
|
Avista Utilities |
|
|
Avista Utilities |
|
||
NATURAL GAS OPERATIONS |
|
|
|
|
|
|
||
Revenue from contracts with customers |
|
|
|
|
|
|
||
Residential |
|
$ |
|
|
$ |
|
||
Commercial |
|
|
|
|
|
|
||
Industrial and interruptible |
|
|
|
|
|
|
||
Total retail revenue |
|
|
|
|
|
|
||
Transportation |
|
|
|
|
|
|
||
Other revenue from contracts with customers |
|
|
|
|
|
|
||
Total natural gas revenue from contracts with customers |
|
$ |
|
|
$ |
|
||
Unsatisfied Performance Obligations
The Company has certain capacity arrangements under which the Company has a contractual obligation to provide either electric or natural gas capacity to a customer for a fixed fee. Most of these arrangements are paid for in arrears by the customers and do not result in deferred revenue and only result in receivables from the customers. The Company has one capacity agreement under which the customer makes payments throughout the year. As of March 31, 2026, the Company estimates it had unsatisfied capacity performance
17
Table of Contents
AVISTA CORPORATION
obligations of $
NOTE 5. DERIVATIVES AND RISK MANAGEMENT
Energy Commodity Derivatives
Avista Corp. is exposed to market risks relating to changes in electricity and natural gas commodity prices and certain other fuel prices. Market risk is, in general, the risk of fluctuation in the market price of the commodity being traded and is influenced primarily by supply and demand. Market risk includes the fluctuation in the market price of associated commodity derivative instruments. Avista Corp. utilizes instruments that meet the definition of a derivative under U.S. GAAP, such as forwards, futures, swaps and options, to manage the various risks relating to these commodity price exposures. Avista Corp. has an energy resources risk policy and control procedures to manage these risks.
As part of Avista Corp.'s resource procurement and management operations in the electric business, Avista Corp. engages in an ongoing process of resource optimization, which involves the economic selection from available energy resources to serve Avista Corp.'s load obligations and the use of these resources to capture available economic value through wholesale market transactions. These include sales and purchases of electric capacity and energy, fuel for electric generation, and derivative contracts related to capacity, energy and fuel. Such transactions are part of the process of matching resources with load obligations and hedging a portion of the related financial risks. These transactions range from terms of intra-hour periods up to multiple years.
As part of its resource procurement and management of its natural gas business, Avista Corp. makes continuing projections of its natural gas loads and assesses available natural gas resources including natural gas storage availability. Natural gas resource planning typically includes peak requirements, low and average monthly requirements and delivery constraints from natural gas supply locations to Avista Corp.’s distribution system. However, daily variations in natural gas demand can be significantly different than monthly demand projections. Based on these projections, Avista Corp. plans and executes a series of transactions to hedge a portion of its projected natural gas requirements through forward market transactions and derivative instruments. These transactions may extend as much as three natural gas operating years (November through October) into the future. Avista Corp. also leaves a significant portion of its natural gas supply requirements unhedged for purchase in short-term and spot markets.
Avista Corp. plans for sufficient natural gas delivery capacity to serve its retail customers for a theoretical peak-day event. Avista Corp. generally has more pipeline and storage capacity than is needed during periods other than a peak-day. Avista Corp. optimizes its natural gas resources by using market opportunities to generate economic value that mitigates the fixed costs. Avista Corp. also optimizes its natural gas storage capacity by purchasing and storing natural gas when prices are traditionally lower, typically in the summer, and withdrawing during higher priced months, typically during the winter. However, if market conditions and prices indicate that Avista Corp. should buy or sell natural gas at other times during the year, Avista Corp. engages in optimization transactions to capture value in the marketplace. Natural gas optimization activities include, but are not limited to, wholesale market sales of surplus natural gas supplies, purchases and sales of natural gas to optimize use of pipeline and storage capacity, and participation in the transportation capacity release market.
The following table presents the underlying energy commodity derivative volumes as of March 31, 2026 expected to be settled in each respective year (in thousands of MWhs and mmBTUs):
|
|
Purchases |
|
|
Sales |
|
||||||||||||||||||||||||||
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
||||||||||||||||||||
Year |
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
||||||||
Remainder 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2029 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of March 31, 2026, there are
18
Table of Contents
AVISTA CORPORATION
The following table presents the underlying energy commodity derivative volumes as of December 31, 2025 expected to be settled in each respective year (in thousands of MWhs and mmBTUs):
|
|
Purchases |
|
|
Sales |
|
||||||||||||||||||||||||||
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
||||||||||||||||||||
Year |
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
|
Physical |
|
|
Financial |
|
||||||||
2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2028 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2025, there were
The electric and natural gas derivative contracts above will be included in either power supply costs or natural gas supply costs during the period they are scheduled to be delivered and will be included in the various deferral and recovery mechanisms (ERM, PCA and PGAs), or in the general rate case process, and are expected to be recovered through retail rates from customers.
Foreign Currency Exchange Derivatives
A significant portion of Avista Corp.’s natural gas supply (including fuel for power generation) is obtained from Canadian sources. Most of those transactions are executed in U.S. dollars, which avoids foreign currency risk. A portion of Avista Corp.’s short-term natural gas transactions and long-term Canadian transportation contracts are committed based on Canadian currency prices. The short-term natural gas transactions are settled within
The following table summarizes the foreign currency exchange derivatives outstanding as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Number of contracts |
|
|
|
|
|
|
||
Notional amount (in United States dollars) |
|
$ |
|
|
$ |
|
||
Notional amount (in Canadian dollars) |
|
|
|
|
|
|
||
Summary of Outstanding Derivative Instruments
The amounts recorded on the Condensed Consolidated Balance Sheet as of March 31, 2026 and December 31, 2025 reflect the offsetting of derivative assets and liabilities where a legal right of offset exists.
19
Table of Contents
AVISTA CORPORATION
The following table presents the fair values and locations of energy commodity derivative instruments recorded on the Condensed Consolidated Balance Sheet as of March 31, 2026 (dollars in millions):
|
|
Fair Value |
|
|||||||||||||
Derivative and Balance Sheet Location |
|
Gross |
|
|
Gross |
|
|
Collateral |
|
|
Net Asset |
|
||||
Other current assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other current liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other non-current liabilities and deferred credits |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total derivative instruments recorded on the balance sheet |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
The following table presents the fair values and locations of derivative instruments recorded on the Condensed Consolidated Balance Sheet as of December 31, 2025 (dollars in millions):
|
|
Fair Value |
|
|||||||||||||
Derivative and Balance Sheet Location |
|
Gross |
|
|
Gross |
|
|
Collateral |
|
|
Net Asset |
|
||||
Other current assets |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Other current liabilities |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Other non-current liabilities and deferred credits |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total derivative instruments recorded on the balance sheet |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Exposure to Demands for Collateral
Avista Corp.'s derivative contracts often require collateral (in the form of cash or letters of credit) or other credit enhancements, or reductions or terminations of a portion of the contract through cash settlement.
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Cash collateral posted |
|
$ |
|
|
$ |
|
||
Letters of credit outstanding |
|
$ |
|
|
$ |
|
||
In the event of changes in market prices or a downgrade in Avista Corp.'s credit ratings (including maintaining "investment grade" credit rating) or other established credit criteria, or, in some cases, if the counterparty has reasonable grounds to believe that there has been a material change in Avista Corp.'s creditworthiness, additional collateral may be required. Counterparties could request immediate payment or demand immediate and ongoing collateralization on derivative instruments in net liability positions.
In periods of price volatility, the level of exposure can change significantly. In addition, these contracts contain customary events of default (including cross-defaults to indebtedness and other obligations) and termination provisions. As a result, sudden and significant demands may be made against Avista Corp.'s credit facilities and cash. See Note 8 for further discussion of these credit facilities, including the immediate reimbursement obligation associated with outstanding letters of credit.
The following table presents the aggregate fair value of energy commodity derivative instruments with credit-risk-related contingent features in a liability position, and the amount of additional collateral (in cash or letters of credit) Avista Corp. could be required to post as of March 31, 2026 (dollars in millions):
|
|
March 31, |
|
|
|
|
2026 |
|
|
Liabilities with credit-risk-related contingent features |
|
$ |
|
|
Additional collateral to post |
|
|
|
|
20
Table of Contents
AVISTA CORPORATION
NOTE 6. PENSION PLANS AND OTHER POSTRETIREMENT BENEFIT PLANS
Avista Utilities
The Company contributed $
The Company uses a December 31 measurement date for its defined benefit pension and other postretirement benefit plans. The following table sets forth the components of net periodic benefit costs for the three months ended March 31 (dollars in millions):
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss recognition |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net periodic benefit cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total service costs in the table above are recorded to the same accounts as labor expense. Labor and benefits expense is recorded to various projects based on whether the work is a capital project or an operating expense. Approximately
The non-service portion of costs in the table above are recorded to other expense below income from operations in the Condensed Consolidated Statements of Income and Comprehensive Income or capitalized as a regulatory asset. Approximately
NOTE 7. INCOME TAXES
In accordance with interim reporting requirements, the Company uses an estimated annual effective tax rate for computing its provisions for income taxes. An estimate of annual income tax expense (or benefit) is made each interim period using estimates for annual pre-tax income, income tax adjustments and tax credits. The estimated annual effective tax rates do not include discrete events such as tax law changes, examination settlements, accounting method changes or adjustments to tax expense or benefits attributable to prior years. Discrete events are recorded in the interim period in which they occur or become known. The estimated annual tax rate is applied to year-to-date pre-tax income to determine income tax expense (or benefit) for the interim period consistent with the annual estimate. In subsequent interim periods, income tax expense (or benefit) for the period is computed as the difference between the year-to-date amount reported for the previous interim period and the current period’s year-to-date amount.
The following table reconciles the difference between the Company's effective tax rate and the federal statutory rate for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||||||||||
Income from continuing operations before income tax expense (benefit) |
|
$ |
|
|
N/A |
|
|
$ |
|
|
N/A |
|
||||
U.S. federal statutory tax rate |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
State income taxes, net of federal income tax effect |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Flow through related to deduction of meters and mixed service costs (1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Excess deferred tax amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
CARES Act tax benefit amortization |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Effective tax rate |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
21
Table of Contents
AVISTA CORPORATION
In July 2025, the U.S. enacted a reconciliation bill commonly referred to as the One Big Beautiful Bill Act. The Company continues to analyze the tax and other effects of the reconciliation bill, and does not expect the provisions of the bill to have a material impact on financial results or its annual effective tax rate in 2026.
NOTE 8. SHORT-TERM BORROWINGS
Avista Corp.
Lines of Credit
Avista Corp. has a committed line of credit in the total amount of $
Balances outstanding and interest rates on borrowings (excluding letters of credit) under Avista Corp.’s revolving committed line of credit were as follows as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Borrowings outstanding at end of period |
|
$ |
|
|
$ |
|
||
Letters of credit outstanding at end of period |
|
$ |
|
|
$ |
|
||
Average interest rate on borrowings at end of period |
|
|
% |
|
|
% |
||
Letter of Credit Facility
Avista Corp. has a letter of credit agreement in the aggregate amount of $
Avista Corp. had $
Covenants and Default Provisions
The short-term borrowing agreements contain customary covenants and default provisions, including a change in control (as defined in the agreements). The events of default under each of the credit facilities also include a cross default from other indebtedness (as defined) and, in the case of the letter of credit agreement, other obligations. The committed line of credit agreement also includes a covenant which does not permit the ratio of “consolidated total debt” to “consolidated total capitalization” of Avista Corp. to be greater than
AEL&P
AEL&P has a committed line of credit in the amount of $
AEL&P’s revolving committed line of credit had a balance of $
The committed line of credit agreement contains customary covenants and default provisions, including a cross default from other indebtedness (as defined). The credit agreement has a covenant which does not permit the ratio of "consolidated total debt at AEL&P"
22
Table of Contents
AVISTA CORPORATION
to "consolidated total capitalization at AEL&P," including the impact of the Snettisham bonds to be greater than
NOTE 9. LONG-TERM DEBT TO AFFILIATED TRUSTS
In
The distribution rates were as follows during the three months ended March 31, 2026 and the year ended December 31, 2025:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2026 |
|
|
2025 |
|
||
Low distribution rate |
|
|
% |
|
|
% |
||
High distribution rate |
|
|
% |
|
|
% |
||
Distribution rate at the end of the period |
|
|
% |
|
|
% |
||
Concurrent with the issuance of the Preferred Trust Securities, Avista Capital II issued $
The Company owns
NOTE 10. FAIR VALUE
The carrying values of cash and cash equivalents, accounts and notes receivable, accounts payable, and short-term borrowings as shown on the Condensed Consolidated Balance Sheets are reasonable estimates of their fair values. The carrying values of long-term debt (including current portion and material finance leases) and long-term debt to affiliated trusts as shown on the Condensed Consolidated Balance Sheets may be different from the estimated fair value. See below for the estimated fair value of long-term debt and long-term debt to affiliated trusts.
The fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to fair values derived from unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are defined as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities. Active markets are those in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, but which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.
23
Table of Contents
AVISTA CORPORATION
Level 3 – Pricing inputs include significant inputs generally unobservable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The determination of the fair values incorporates various factors including the credit standing of the counterparties involved and the impact of credit enhancements (such as cash deposits and letters of credit), and the impact of Avista Corp.’s nonperformance risk on its liabilities.
The following table sets forth the carrying value and estimated fair value of the Company’s financial instruments not reported at estimated fair value on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||
Long-term debt (Level 2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Long-term debt (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Snettisham finance lease obligation (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt to affiliated trusts (Level 3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
These estimates of fair value of long-term debt and long-term debt to affiliated trusts were primarily based on available market information, which generally consists of estimated market prices from third party brokers for debt with similar risk and terms. The price ranges obtained from the third party brokers consisted of market prices of
24
Table of Contents
AVISTA CORPORATION
The following table discloses by level within the fair value hierarchy the Company’s assets and liabilities measured and reported on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 at fair value on a recurring basis (dollars in millions):
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Counterparty |
|
|
Total |
|
|||||
March 31, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Energy commodity derivatives |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
Equity Investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Deferred compensation assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mutual Funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed income securities (3) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Equity securities (3) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Energy commodity derivatives (2) |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Energy commodity derivatives |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
Equity Investments |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Deferred compensation assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Mutual Funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed income securities (3) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Equity securities (3) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Energy commodity derivatives (2) |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
The difference between the amount of derivative assets and liabilities disclosed in respective levels in the table above and the amount of derivative assets and liabilities disclosed on the Condensed Consolidated Balance Sheets is due to netting arrangements with certain counterparties. See Note 5 for additional discussion of derivative netting.
To establish fair value for energy commodity derivatives, the Company uses quoted market prices and forward price curves to estimate the fair value of energy commodity derivative instruments included in Level 2. Electric derivative valuations are performed using market quotes, adjusted for periods in between quotable periods. Natural gas derivative valuations are estimated using New York Mercantile Exchange pricing for similar instruments, adjusted for basin differences, using market quotes. Where observable inputs are available for substantially the full term of the contract, the derivative asset or liability is included in Level 2.
Deferred compensation assets and liabilities represent funds held by the Company in a Rabbi Trust for an executive deferral plan. These funds consist of actively traded equity and bond funds with quoted prices in active markets.
25
Table of Contents
AVISTA CORPORATION
Level 3 Fair Value
Natural Gas Exchange Agreement
For the natural gas commodity exchange agreement, the Company uses the same Level 2 market quotes described above; however, the Company also estimates the purchase and sales volumes (within contractual limits) as well as the timing of those transactions. Changing the timing of volume estimates changes the timing of purchases and sales, impacting which brokered quote is used. Because the brokered quotes can vary significantly from period to period, the unobservable estimates of the timing and volume of transactions can have a significant impact on the calculated fair value. The Company currently estimates volumes and timing of transactions based on a most likely scenario using historical data. Historically, the timing and volume of transactions are not highly correlated with market prices and market volatility.
The following table presents the quantitative information which was used to estimate the fair values of the Level 3 assets and liabilities above as of March 31, 2026 (dollars in millions, except for per mmBTU amounts):
|
|
Fair Value |
|
|
Valuation |
|
Unobservable |
|
Range and Weighted |
|
|
|
March 31, 2026 |
|
|
Technique |
|
Input |
|
Average Price |
|
Natural gas exchange agreement |
|
$ |
( |
) |
|
Internally derived weighted average cost of gas |
|
Forward purchase prices |
|
$ |
|
|
|
|
|
|
|
Forward sales prices |
|
$ |
|
|
|
|
|
|
|
|
Purchase volumes |
|
||
|
|
|
|
|
|
|
Sales volumes |
|
||
The valuation methods, significant inputs and resulting fair values described above were developed by the Company and are reviewed on at least a quarterly basis to ensure they provide a reasonable estimate of fair value each reporting period.
Equity Investments
The Company has
For the second investment, fair value is determined using an income approach utilizing a discounted cash flow model. The model is based on income statement forecasts from the underlying company to determine cash flows for the period of ownership. The model then utilizes market multiples from publicly traded comparable companies in similar industries and projects to estimate the terminal fair value. The market multiples are reduced to reflect the difference in the life cycle between the publicly traded comparable companies and the start-up nature of the investment company. The selection of appropriate comparable companies, market multiples and the reduction to those market multiples requires management judgment. The significant assumptions in the model include the discount rate representing the risk associated with the investment, market multiples and the related reduction to those multiples, revenue forecasts, and the estimated terminal date for the investment. In the event there were relevant market transactions for the same or similar securities of the subject company or there is a reasonable possibility of a transaction occurring, those transactions are used to determine the fair value of Avista Corp.’s investment under a market approach instead of utilizing a discounted cash flow model. The market transactions are considered Level 3 inputs because they are not publicly available observable transactions.
26
Table of Contents
AVISTA CORPORATION
The following table presents the quantitative information and assumptions which were used to estimate the fair values of the Level 3 equity investments as of March 31, 2026 (dollars in millions):
|
|
Fair Value at |
|
|
|
|
|
|
|
|
|
|
March 31, 2026 |
|
|
Valuation Technique |
|
Unobservable Input |
|
Range |
|
|
$ |
|
|
Market approach |
|
values |
|
$ |
||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
Discounted cash flows |
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
$ |
||
|
|
|
|
|
|
|
|
|||
The following table presents activity for assets and liabilities measured at fair value using significant unobservable inputs (Level 3) for the three months ended March 31 (dollars in millions):
|
|
Natural Gas Exchange Agreement |
|
|
Equity Investments |
|
|
Total |
|
|||
Three Months Ended March 31, 2026: |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Total gains or (losses) (realized/unrealized): |
|
|
|
|
|
|
|
|
|
|||
Included in regulatory assets/liabilities |
|
|
|
|
|
— |
|
|
|
|
||
Ending balance as of March 31, 2026 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Three Months Ended March 31, 2025: |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Total gains or (losses) (realized/unrealized): |
|
|
|
|
|
|
|
|
|
|||
Included in regulatory assets/liabilities |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
Settlements |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Ending balance as of March 31, 2025 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
There were
NOTE 11. COMMON STOCK
The Company issued shares of common stock for total net proceeds of $
27
Table of Contents
AVISTA CORPORATION
The following table presents the computation of basic and diluted earnings per common share for the three months ended March 31 (dollars in millions, except per share amounts, and shares in thousands):
|
|
2026 |
|
|
2025 |
|
||
Numerator: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Denominator: |
|
|
|
|
|
|
||
Weighted-average number of common shares outstanding-basic |
|
|
|
|
|
|
||
Effect of dilutive securities: |
|
|
|
|
|
|
||
Performance and restricted stock awards |
|
|
|
|
|
|
||
Weighted-average number of common shares outstanding-diluted |
|
|
|
|
|
|
||
Earnings per common share: |
|
|
|
|
|
|
||
Basic |
|
$ |
|
|
$ |
|
||
Diluted |
|
$ |
|
|
$ |
|
||
There were
NOTE 13. COMMITMENTS AND CONTINGENCIES
In the course of its business, the Company becomes involved in various claims, controversies, disputes and other contingent matters, including the items described in this Note. Some of these claims, controversies, disputes and other contingent matters involve litigation or other contested proceedings. For all such matters, the Company will vigorously protect and defend its interests and pursue its rights. However, no assurance can be given as to the outcome of any matter because litigation and other contested proceedings are subject to numerous uncertainties. For matters affecting Avista Utilities’ or AEL&P's operations, the Company intends to seek, to the extent appropriate, recovery of costs through the ratemaking process.
Collective Bargaining Agreements
The Company's collective bargaining agreement with the IBEW represents
In April 2025, the Company's System Operators voted to unionize, and the National Labor Relations Board certified the IBEW Local
Orofino Fire
In August 2023, a fire started in windy conditions near Orofino, Idaho, burning
Rathdrum, Idaho Natural Gas Incident
In October 2021, there was an incident in Rathdrum, Idaho involving the Company’s natural gas infrastructure. The incident occurred after a third party damaged those facilities during excavation work. The incident resulted in a fire which destroyed one residence and resulted in minor injuries to the occupants. In January 2023, the Company was served with a lawsuit filed in the District Court of Kootenai County, Idaho by one property owner, seeking unspecified damages. In February 2024, the Company received a second
28
Table of Contents
AVISTA CORPORATION
lawsuit filed by the owners of the adjacent property, seeking damages for personal injury and emotional distress from having witnessed the incident. On motions for summary judgment, the Court dismissed the party which had originally contracted for the excavation work, as well as claims brought on behalf of the children of the property owners whose home was damaged. The remainder of the case remains pending and the Company continues to vigorously defend itself in the legal proceedings; however, at this time, the Company is unable to predict the likelihood of an adverse outcome or estimate a range of potential loss in the event of such an outcome.
Complaint of Consumers for Independent Regional Transmission Planning for All FERC-Jurisdictional Transmission Facilities at 100kV and Above
In December 2024, the Company received notice of a complaint filed with the FERC by Consumers for Independent Regional Transmission Planning against all FERC-jurisdictional Transmission providers with local planning tariffs utilizing facilities at 100 kV and above, which includes the Company. The complaint alleges that the local transmission planning process allows individual transmission owners to plan FERC-jurisdictional transmission facilities without regard to whether that planning is the more efficient or cost-effective project for the interconnected grid and cost effective for customers. The Company intends to vigorously defend itself in this action; however, at this time, the Company is unable to predict the likelihood of an adverse outcome or estimate a range of potential loss in the event of such an outcome.
Other Contingencies
In the normal course of business, the Company has various other legal claims and contingent matters outstanding. The Company believes any liability arising from these actions will not have a material impact on its financial condition, results of operations or cash flows. It is possible a change could occur in the Company’s estimates of the probability or amount of a liability being incurred. Such a change, should it occur, could be significant. See "Note 22 of the Notes to Consolidated Financial Statements" in the 2025 Form 10-K for additional discussion regarding other contingencies.
NOTE 14. INFORMATION BY BUSINESS SEGMENTS
The business segment presentation reflects the information reviewed by the Company's Chief Operating Decision Maker (CODM, the Company's ). Such information is the basis for the analysis of segment performance and the allocation of resources. Performance is evaluated based on net income (loss) and variances of actual performance from the Company's budget and/or forecast when making decisions. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Avista Utilities' business is managed based on the total regulated utility operation; therefore, it is considered
29
Table of Contents
AVISTA CORPORATION
The following table presents information for each of the Company’s business segments (dollars in millions):
|
|
Reportable Segments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Avista |
|
|
Alaska |
|
|
Total Utility |
|
|
Other Non-Reportable Segment Items |
|
|
Eliminations (1) |
|
|
Total |
|
||||||
For the three months ended March 31, 2026: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Resource costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other segment expenses (income) (3) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
For the three months ended March 31, 2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenues |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Resource costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Interest expense (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Other segment expenses (income) (3) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Capital expenditures (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
As of March 31, 2026: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
As of December 31, 2025: |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
30
Table of Contents
AVISTA CORPORATION
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of
Avista Corporation
Results of Review of Interim Financial Information
We have reviewed the accompanying condensed consolidated balance sheet of Avista Corporation and subsidiaries (the "Company") as of March 31, 2026, the related condensed consolidated statements of income and comprehensive income, equity, and cash flows for the three-month periods ended March 31, 2026 and 2025, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2025, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein); and in our report dated February 24, 2026, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Deloitte & Touche LLP
Portland, Oregon
May 4, 2026
31
Table of Contents
AVISTA CORPORATION
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) was prepared in accordance with the SEC’s Regulation S-K for interim financial information and with the instructions to Form 10-Q. Accordingly, this MD&A does not contain the full detail or analysis, or the full discussion of trends and uncertainties, that are required to accompany financial statements for a full fiscal year and are contained in the Company's 2025 Form 10-K. Therefore, this MD&A should be read in conjunction with the Company's 2025 Form 10-K for full detail and analysis of the Company's financial condition, and results of operations, and a full discussion of trends and uncertainties that the Company faces.
Business Segments
Our business segments have not changed during the three months ended March 31, 2026. See the 2025 Form 10-K as well as “Note 14 of the Notes to Condensed Consolidated Financial Statements” for further information regarding our business segments.
The following table presents net income (loss) for each of our business segments and the other businesses for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||
Avista Utilities |
|
$ |
87 |
|
|
$ |
78 |
|
AEL&P |
|
|
4 |
|
|
|
4 |
|
Other non-reportable segment loss |
|
|
1 |
|
|
|
(3 |
) |
Net income |
|
$ |
92 |
|
|
$ |
79 |
|
Executive Overview
Overall Results
Net income for the three months ended March 31, 2026 increased compared to the three months ended March 31, 2025, due to increased utility margin resulting from the effects of our general rate cases and net investment gains at our other businesses compared to net investment losses in the first quarter of 2025.
When comparing results from the first quarter of 2026 to the first quarter of 2025, the transfer of our ownership of Colstrip (effective January 1, 2026) has resulted in fluctuations in multiple line items on the income statement, which ultimately net to an immaterial impact on earnings. The removal of Colstrip from our generation portfolio resulted in an increase in authorized power supply cost and increases in both electric utility revenues and electric resource costs (resulting in no impact on electric utility margin). In addition, other operating costs and depreciation expense have decreased, with a corresponding decrease in electric utility revenues associated with recovery of these costs.
More detailed explanations of the fluctuations in revenues and expenses are provided in the results of operations and business segment discussions (Avista Utilities, AEL&P, and the other businesses) that follow this summary.
See the summary of key developments and issues that are the focus of management under the heading “Executive Overview” in the MD&A of our 2025 10-K. The following developments have occurred since that report:
Current Hydroelectric Conditions and Outlook
Due to precipitation and warm weather, our hydroelectric generation year-to-date has been above normal. Due to the warm weather, the average current level of snowpack in the areas serving our hydroelectric facilities is below normal. The amount of hydroelectric generation over the rest of the year will be affected not only by current snowpack levels but also by prevailing temperatures (which affect the timing and speed of run-off) and the volume, timing and form of precipitation. On balance, we expect hydroelectric generation for the entire year will be approximately above the normal level. While our current hydro forecast shows above normal levels of generation, even if we were above or below normal, there would be no material change to our position in the ERM.
32
Table of Contents
AVISTA CORPORATION
Enterprise Resource Planning (ERP) Project
We are planning to implement an ERP system, replacing certain existing technology tools currently in use. The system will be designed to accurately maintain our financial records, enhance operational functionality, and provide timely information to our management team related to business operations. We expect the ERP system to be implemented in 2028, with capital expenditures of approximately $130 million.
Regulatory Matters
General Rate Cases
We regularly review the need for electric and natural gas rate changes in each state in which we provide service. We expect to continue to file for rate adjustments to:
With regard to the timing and plans for future filings, the assessment of our need for rate relief and the development of rate case plans takes into consideration short-term and long-term needs, as well as specific factors including, but not limited to, in-service dates of major capital investments and the timing of changes in major revenue and expense items.
Avista Utilities
Washington General Rate Cases
2024 General Rate Cases
In December 2024, the WUTC issued orders related to our multi-year electric and natural gas general rate cases filed with the WUTC in January 2024.
The approved rates within the orders are designed to increase annual electric base revenues by $12 million (or 2.0 percent), effective January 1, 2025 (Rate Year 1), and $69 million (or 11.4 percent) for Rate Year 2. The Rate Year 2 increase includes $54 million related to higher authorized power supply costs resulting from the removal of Colstrip from our generation portfolio. This base increase is offset by decreases in capital and operating costs removed from customer rates of $43 million, effective January 1, 2026, as we are no longer recovering Colstrip related costs.
The approved rates are also designed to increase annual natural gas base revenues by $14 million (or 11.2 percent), effective January 1, 2025, and $4 million (or 2.8 percent) for Rate Year 2.
The WUTC approved an ROE of 9.8 percent, based on a common equity ratio of 48.5 percent, and an ROR of 7.32 percent.
The WUTC did not approve of our request to modify the ERM under which differences between actual net power supply costs and the amount reflected in base retail customer rates are tracked. Based on our forecast energy commodity costs in 2025 and 2026, we expect actual net power supply costs to exceed the level included in base rates. We plan to continue to address how net power supply costs are set in base rates in future regulatory proceedings.
The Commission continued its support for important recovery mechanisms such as wildfire and insurance balancing accounts, and decoupling.
33
Table of Contents
AVISTA CORPORATION
2026 General Rate Cases
In January 2026, we filed an MYRP with the WUTC. The MYRP requests base rate relief over four years designed to produce the additional base revenues shown below (dollars in millions):
Rate Year |
Rates Effective |
|
Electric |
|
|
Natural Gas |
|
||||||||||
1 |
2027 |
|
$ |
111 |
|
|
|
13.9 |
% |
|
$ |
12 |
|
|
|
4.7 |
% |
2 |
2028 |
|
|
43 |
|
|
|
4.7 |
% |
|
|
7 |
|
|
|
2.4 |
% |
3 |
2029 |
|
|
34 |
|
|
|
3.5 |
% |
|
|
6 |
|
|
|
2.1 |
% |
4 |
2030 |
|
|
28 |
|
|
|
2.8 |
% |
|
|
3 |
|
|
|
1.1 |
% |
We requested an overall rate of return beginning in 2027 of 7.5 percent, with a 48.5 common equity ratio and a 10.2 percent return on equity. We requested an increase to the overall rate of return in 2029 to 7.67 percent, with a 48.5 common equity ratio and 10.5 percent return on equity.
Key drivers of the revenue requirement in Rate Year 1 (2027) are outlined below (dollars in millions):
|
|
Electric |
|
|
Natural Gas |
|
||
Electric resource costs |
|
$ |
46 |
|
|
$ |
— |
|
Capital additions |
|
|
29 |
|
|
|
5 |
|
Employee benefits |
|
|
7 |
|
|
|
1 |
|
Insurance |
|
|
7 |
|
|
|
— |
|
Regulatory amortizations |
|
|
5 |
|
|
|
4 |
|
Wildfire |
|
|
4 |
|
|
|
— |
|
Other |
|
|
13 |
|
|
|
2 |
|
Total |
|
$ |
111 |
|
|
$ |
12 |
|
In the MYRP, we propose certain changes to the calculation of authorized baseline power supply costs. These changes are designed to address the changing market dynamics which have led to significant volatility in actual power supply costs. The MYRP provides updates to our baseline power supply cost for rate years one and two; as required by Washington law, baseline power supply costs for Rate Years 3 and 4 will be established in later filings and as such are not included in the additional revenue requirements for those years shown above. In addition, we are proposing changes to the timing for recovery of costs deferred under the ERM.
In addition to requesting re-approval of existing insurance, wildfire, and decoupling deferral accounts, we are proposing an additional deferral mechanism for costs associated with employee benefits.
Washington law requires utilities to file MYRPs of a minimum of two and up to four years. The law allows utilities filing a rate plan of 3 or 4 years the option to file a new rate plan for the third year and fourth year. Under this provision, we have the opportunity to address the numerous unpredictable factors that could materially affect our financial position over a longer-term rate plan. These risks include, but are not limited to, inflation, interest rate volatility, labor and benefits challenges, escalating capital costs, and other unforeseen cost drivers.
The WUTC has up to eleven months to review the general rate case filings and issue a decision. The initial settlement conference is expected to take place in May 2026, with evidentiary hearings scheduled for September 2026.
Idaho General Rate Cases
2025 General Rate Cases
In August 2025, the IPUC approved the all-party settlement agreement designed to increase annual base electric revenues by $20 million, or 6.3 percent, effective September 2025, and $15 million, or 4.5 percent, effective September 2026. For natural gas, the agreement was designed to increase annual base natural gas revenues by $5 million, or 9.2 percent, effective September 2025, and decrease annual base natural gas revenues by $0.2 million, or 0.4 percent, effective September 2026.
The settlement was based on an ROE of 9.6 percent with a common equity ratio of 50 percent and an ROR of 7.28 percent.
34
Table of Contents
AVISTA CORPORATION
Oregon General Rate Case
2024 General Rate Case
In May 2025, the OPUC approved the all-party settlement agreement designed to increase annual base revenues by $4 million, or 5.0 percent, effective in September 2025. The settlement was based on an ROE of 9.5 percent with a common equity ratio of 50 percent and an ROR of 7.22 percent.
To mitigate the overall impact of the revenue increases on customers, $5 million of tax customer credits will be accelerated and returned to customers over a three-year period.
Future Oregon General Rate Cases
In July 2025, the Governor of Oregon signed House Bill 3179 into law which modifies certain provisions of law that relate to general rate case filings and cost recovery. The law, among other things, extends the length of time for the OPUC to suspend rates from a proposed effective date from nine to ten months, does not allow residential rate increases of any kind between November 1 and March 31, does not allow new rates to take effect from a proceeding where the return on equity is at issue within eighteen months of the prior rate effective date, authorizes (but does not require) securitization of “capital investments” that will cause rates to “rise by more than five percent” under specific circumstances, and calls for the OPUC to establish rules requiring utilities to establish a multi-year rate plan for rate revisions where a company’s return on equity is reviewed. Such rate plans must be no less than three years and no more than seven years in length. Rulemakings to institute these provisions started in September 2025 and will continue through 2026. We are analyzing the possible effects of this legislation, including how it will impact the timing of future rate case filings.
Avista Utilities
Purchased Gas Adjustments, Power Cost Deferrals and Decoupling Mechanisms
See our 2025 Form 10-K for discussion of the various regulatory recovery mechanisms in each of our jurisdictions.
In 2025, we received approval from the WUTC to recover $32 million of the ERM deferred surcharge balance in Washington over a two-year period starting July 1, 2025.
During the first quarter of 2026, we filed a request with the WUTC to recover from customers $65 million of ERM costs deferred in 2025 over a one-year period starting July 1, 2026.
Results of Operations - Overall
The following provides an overview of changes in our Condensed Consolidated Statements of Income and Comprehensive Income. More detailed explanations are provided, particularly for operating revenues and operating expenses, in the business segment discussions (Avista Utilities, AEL&P, and the other businesses) that follow this section.
The balances included below for utility operations reconcile to the Condensed Consolidated Statements of Income and Comprehensive Income.
35
Table of Contents
AVISTA CORPORATION
Three months ended March 31, 2026 compared to the three months ended March 31, 2025
The following graph shows the total change in net income for the first quarter of 2026 compared to the first quarter of 2025, as well as the factors that caused such change (dollars in millions):
Electric utility revenues decreased primarily as a result of decreased wholesale revenues associated with lower market prices, and a reduction of revenues associated with the recovery of Colstrip costs, which were partially offset by other increases in retail rates associated with our general rate cases. Natural gas revenues decreased due to decreased rates associated with the PGAs and the CCA (which do not impact utility margin or net income), as well as decreased wholesale revenues, transportation revenues and an increased provision for rate refunds associated with overearnings in Washington.
Electric utility resource costs decreased primarily due to decreased purchased power costs associated with decreased wholesale prices, as well as decreased fuel for generation costs partially due to the removal of Colstrip from our generation portfolio. These decreases were partially offset by a decrease in deferrals under the ERM. Natural gas utility resource costs decreased due to decreases in the amortization of costs associated with the CCA and net deferrals and amortizations of costs under PGAs, as well as a decrease in volumes of natural gas purchased.
Other operating expenses remained unchanged, with decreased expenses from Colstrip offset by expected increases in other expenses.
Utility depreciation and amortization decreased primarily due to our exit from Colstrip in 2026. In anticipation of the exit, we had accelerated depreciation, as we were required to recover costs from Washington customers by the end of 2025.
Increases in earnings from other activity are primarily due to net investment gains, compared to net investment losses in the first quarter of 2025.
Non-GAAP Financial Measures
The following discussion for Avista Utilities includes two financial measures considered “non-GAAP financial measures”: electric utility margin and natural gas utility margin.
Generally, a non-GAAP financial measure is a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts included (excluded) in the most directly comparable measure calculated and presented in accordance with GAAP. Electric utility margin is electric operating revenues less electric resource costs, while natural gas utility
36
Table of Contents
AVISTA CORPORATION
margin is natural gas operating revenues less natural gas resource costs. The most directly comparable GAAP financial measure to electric and natural gas utility margin is utility operating revenues as presented in "Note 14 of the Notes to Condensed Consolidated Financial Statements."
The presentation of electric utility margin and natural gas utility margin is intended to enhance the understanding of operating performance. We use these measures internally and believe they provide useful information to investors in their analysis of how changes in loads (due to weather, economic or other conditions), rates, supply costs and other factors impact our results of operations. Changes in loads, as well as power and natural gas supply costs, are generally deferred and recovered from customers through regulatory accounting mechanisms. Accordingly, the analysis of utility margin generally excludes most of the change in revenue resulting from these regulatory mechanisms. We present electric and natural gas utility margin separately below for Avista Utilities since each business has different cost sources, cost recovery mechanisms and jurisdictions, so we believe separate analysis is beneficial. These measures are not intended to replace utility operating revenues as determined in accordance with GAAP as an indicator of operating performance. Reconciliations of operating revenues to utility margin are set forth below.
Results of Operations - Avista Utilities
Resource Optimization
We engage in resource optimization, which involves the selection from available energy resources to serve our load obligations and the use of these resources to capture economic value through wholesale market transactions; this is ultimately intended to lower net power and natural gas supply costs. Our resource optimization transactions can include physical sales and purchases of electric capacity and energy, fuel for electric generation, natural gas to optimize use of pipeline and storage capacity, as well as financial derivative contracts related to capacity, energy, fuel and fuel transportation. See our 2025 Form 10-K for further discussion of our optimization activities.
We typically enter into multiple transactions simultaneously to capture value. Even though these transactions are considered together when determining the net impact, they are recorded in separate items within components of utility operating revenue and resource costs and can cause fluctuations in each item. Gains and losses on financial derivative contracts are included in certain line items below (such as wholesale sales and purchases of power and natural gas, sales of fuel and other fuel costs). The ERM, PCA and PGAs are based on net supply costs and consider all transactions related to resource procurement and optimization (both physical and financial).
Three months ended March 31, 2026 compared to the three months ended March 31, 2025
Utility Operating Revenues
Customers
The following table presents Avista Utilities' average number of electric and natural gas retail customers for the three months ended March 31, 2026 and 2025:
|
|
Electric Customers |
|
|
Natural Gas Customers |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Residential |
|
|
379,390 |
|
|
|
374,849 |
|
|
|
347,763 |
|
|
|
345,712 |
|
Commercial |
|
|
45,927 |
|
|
|
45,578 |
|
|
|
37,502 |
|
|
|
37,397 |
|
Interruptible |
|
|
— |
|
|
|
— |
|
|
|
50 |
|
|
|
52 |
|
Industrial |
|
|
1,122 |
|
|
|
1,152 |
|
|
|
181 |
|
|
|
183 |
|
Public street and highway lighting |
|
|
689 |
|
|
|
718 |
|
|
|
— |
|
|
|
— |
|
Total retail customers |
|
|
427,128 |
|
|
|
422,297 |
|
|
|
385,496 |
|
|
|
383,344 |
|
37
Table of Contents
AVISTA CORPORATION
The following graphs present Avista Utilities' electric operating revenues and megawatt-hour (MWh) sales for the three months ended March 31, 2026 and 2025 (dollars in millions and MWhs in thousands):
Total electric operating revenues in the graph above include intracompany sales of $0 million and $1 million for the three months ended March 31, 2026 and 2025, respectively.
38
Table of Contents
AVISTA CORPORATION
The following table presents the current year decoupling deferrals and the amortization of prior year decoupling deferrals reflected in utility electric operating revenues for the three months ended March 31 (dollars in millions):
|
|
Electric Decoupling Revenues |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Current year decoupling deferrals (a) |
|
$ |
8 |
|
|
$ |
(7 |
) |
Amortization of prior year decoupling deferrals (b) |
|
|
(1 |
) |
|
|
— |
|
Total electric decoupling revenue |
|
$ |
7 |
|
|
$ |
(7 |
) |
Total electric revenues decreased $17 million for the first quarter of 2026 as compared to the first quarter of 2025. The primary changes that occurred during the period were as follows:
39
Table of Contents
AVISTA CORPORATION
The following graphs present Avista Utilities' natural gas operating revenues and therms delivered for the three months ended March 31, 2026 and 2025 (dollars in millions and therms in thousands):
Total natural gas operating revenues in the graph above include intracompany sales of $1 million and $3 million for the three months ended March 31, 2026 and 2025, respectively.
40
Table of Contents
AVISTA CORPORATION
The following table presents the current year decoupling deferrals and the amortization of prior year decoupling deferrals reflected in utility natural gas operating revenues for the three months ended March 31 (dollars in millions):
|
|
Natural Gas Decoupling Revenues |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
Current year decoupling deferrals (a) |
|
$ |
21 |
|
|
$ |
1 |
|
Amortization of prior year decoupling deferrals (b) |
|
|
(5 |
) |
|
|
(2 |
) |
Total natural gas decoupling revenue |
|
$ |
16 |
|
|
$ |
(1 |
) |
Total natural gas revenues decreased $34 million for the first quarter of 2026 as compared to the first quarter of 2025. The primary changes that occurred during the period were as follows:
41
Table of Contents
AVISTA CORPORATION
Utility Resource Costs
The following graph presents Avista Utilities' electric resource costs for the three months ended March 31, 2026 and 2025 (dollars in millions):
Total electric resource costs in the graph above include intracompany resource costs of $1 million and $3 million for the three months ended March 31, 2026 and 2025, respectively.
Total electric resource costs decreased $14 million for the first quarter of 2026 as compared to the first quarter of 2025. The changes that occurred during the period were as follows:
42
Table of Contents
AVISTA CORPORATION
The following graph presents Avista Utilities' natural gas resource costs for the three months ended March 31, 2026 and 2025 (dollars in millions):
Total natural gas resource costs in the graph above include intracompany resource costs of $0 million and $1 million for the three months ended March 31, 2026 and 2025, respectively.
Total natural gas resource costs decreased $39 million for the first quarter of 2026 as compared to the first quarter of 2025 due to the following:
Utility Margin
The following table reconciles Avista Utilities' operating revenues, as presented in "Note 14 of the Notes to Condensed Consolidated Financial Statements", to the Non-GAAP financial measure utility margin for the three months ended March 31, 2026 and 2025 (dollars in millions):
|
|
Electric |
|
|
Natural Gas |
|
|
Intracompany |
|
|
Total |
|
||||||||||||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||||||
Operating revenues |
|
$ |
346 |
|
|
$ |
363 |
|
|
$ |
210 |
|
|
$ |
244 |
|
|
$ |
(1 |
) |
|
$ |
(4 |
) |
|
$ |
555 |
|
|
$ |
603 |
|
Resource costs |
|
|
112 |
|
|
|
126 |
|
|
|
95 |
|
|
|
134 |
|
|
|
(1 |
) |
|
|
(4 |
) |
|
|
206 |
|
|
|
256 |
|
Utility margin |
|
$ |
234 |
|
|
$ |
237 |
|
|
$ |
115 |
|
|
$ |
110 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
349 |
|
|
$ |
347 |
|
Electric utility margin decreased $3 million primarily due to the removal of revenues related to the recovery of Colstrip capital and operating costs, partially offset by other effects of our general rate cases. Natural gas utility margin increased $5 million primarily due to the effects of general rate cases.
In the first quarter of 2026 we had a pre-tax expense of $1 million under the ERM in Washington compared to a pre-tax expense of $7 million in the first quarter of 2025.
43
Table of Contents
AVISTA CORPORATION
Intracompany revenues and resource costs represent purchases and sales of natural gas between our natural gas distribution operations and our electric generation operations (as fuel for our generation plants). These transactions are eliminated in the presentation of total results for Avista Utilities and in the condensed consolidated financial statements but are included in the separate results for electric and natural gas presented above.
Results of Operations - Alaska Electric Light and Power Company
For the first quarter of 2026 and 2025, net income for AEL&P was $4 million, respectively.
Results of Operations - Other Businesses
Our other businesses had net income of $1 million for the three months ended March 31, 2026 compared to a net loss of $3 million for the three months ended March 31, 2025.
The fluctuation in results is primarily related to net investment gains in the first quarter of 2026, compared to net investment losses in the first quarter of 2025.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements. Changes in these estimates and assumptions are considered reasonably possible and may have a material effect on our condensed consolidated financial statements and thus, actual results could differ from the amounts reported and disclosed herein. Our critical accounting policies that require the use of estimates and assumptions were discussed in detail in the 2025 Form 10-K and have not changed materially.
Liquidity and Capital Resources
Overall Liquidity
Our sources of overall liquidity and the requirements for liquidity have not materially changed in the three months ended March 31, 2026. See the 2025 Form 10-K for further discussion.
As of March 31, 2026, we had $110 million of available liquidity under the Avista Corp. committed line of credit, $46 million of available liquidity under our letter of credit facility, and $25 million under the AEL&P committed line of credit. With our existing credit facilities and the expected issuances of common stock and long-term debt within the next year, we believe we have adequate liquidity to meet our needs for the next 12 months.
Review of Condensed Consolidated Cash Flow Statement
Operating Activities
Net cash provided by operating activities was $179 million for the three months ended March 31, 2026, compared to $184 million for the three months ended March 31, 2025. There was a decrease of $31 million associated with net decoupling deferrals and amortizations, primarily associated with decoupling surcharges recognized in the first quarter of 2026 due to milder weather and decreased customer usage. Changes in other current liabilities and accounts payable decreased operating cash flows by $37 million compared to the first quarter of 2025, primarily due to the timing of a litigation settlement accrual during the first quarter of 2025, as well as decreased payables for natural gas purchases as volumes purchased in 2026 decreased. These decreases were partially offset by the change in other current assets, which increased operating cash flows by $60 million, due to timing of prepayments and insurance proceeds receivables recorded during the first quarter of 2025.
Investing Activities
Net cash used in investing activities was $148 million for the three months ended March 31, 2026, compared to $103 million for the three months ended March 31, 2025. We paid $150 million for utility capital expenditures in 2026, compared to $103 million in 2025.
44
Table of Contents
AVISTA CORPORATION
Financing Activities
Net cash used in financing activities was $32 million for the three months ended March 31, 2026, compared to $94 million for the three months ended March 31, 2025. In the first quarter of 2026, we repaid $3 million in short term borrowings, compared to $67 million in the first quarter of 2025. We issued $14 million of common stock and paid $41 million in dividends in the three months ended March 31, 2026, compared to issuing $16 million of common stock and paying $40 million in dividends in the three months ended March 31, 2025.
Capital Resources
Our consolidated capital structure, including the current portion of long-term debt and short-term borrowings consisted of the following as of March 31, 2026 and December 31, 2025 (dollars in millions):
|
|
March 31, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||
Current portion of long-term debt and leases |
|
$ |
9 |
|
|
|
0.2 |
% |
|
$ |
9 |
|
|
|
0.1 |
% |
Short-term borrowings |
|
|
385 |
|
|
|
6.3 |
|
|
|
388 |
|
|
|
6.5 |
|
Long-term debt to affiliated trusts |
|
|
52 |
|
|
|
0.9 |
|
|
|
52 |
|
|
|
0.9 |
|
Long-term debt and leases |
|
|
2,846 |
|
|
|
46.9 |
|
|
|
2,846 |
|
|
|
47.4 |
|
Total debt |
|
|
3,292 |
|
|
|
54.3 |
|
|
|
3,295 |
|
|
|
54.9 |
|
Total shareholders’ equity |
|
|
2,776 |
|
|
|
45.7 |
|
|
|
2,709 |
|
|
|
45.1 |
|
Total |
|
$ |
6,068 |
|
|
|
100.0 |
% |
|
$ |
6,004 |
|
|
|
100.0 |
% |
Our shareholders’ equity increased $67 million during the first quarter of 2026 primarily due to net income and the issuance of common stock, which was partially offset by dividends paid.
Short Term Borrowings
Avista Corp.
Avista Corp. has a committed line of credit with various financial institutions in the total amount of $500 million with an expiration date of June 2029. We may request that the lenders extend their commitments for an additional one-year period (subject to customary conditions).
We also have a continuing letter of credit agreement in the aggregate amount of $50 million. Either party may terminate the agreement at any time.
The following table summarizes the balances outstanding and available liquidity as of March 31, 2026 (dollars in millions):
|
|
Amount of Facility |
|
|
Borrowings Outstanding |
|
|
Letters of Credit Outstanding (1) |
|
|
Available Liquidity |
|
||||
Line of Credit expiring June 2029 |
|
$ |
500 |
|
|
$ |
385 |
|
|
$ |
5 |
|
|
$ |
110 |
|
Letter of Credit Facility |
|
|
50 |
|
|
N/A |
|
|
|
4 |
|
|
|
46 |
|
|
Total |
|
$ |
550 |
|
|
$ |
385 |
|
|
$ |
9 |
|
|
$ |
156 |
|
The Avista Corp. credit facilities contain customary covenant and default provisions, including a change in control (as defined in the agreements). The events of default under each of the credit facilities also include a cross default from other indebtedness (as defined) and, in the case of the letter of credit agreement, other obligations. The committed line of credit agreement also includes a covenant
45
Table of Contents
AVISTA CORPORATION
which does not permit our ratio of “consolidated total debt” to “consolidated total capitalization” to be greater than 65 percent at any time. As of March 31, 2026, we complied with this covenant with a ratio of 54.3 percent.
Balances outstanding and interest rates of borrowings (excluding letters of credit) under Avista Corp.'s lines of credit were as follows as of and for the three months ended March 31 (dollars in millions):
|
|
2026 |
|
|
2025 |
|
||
$500 million line of credit, expiring June 2029 |
|
|
|
|
|
|
||
Maximum balance outstanding during the period |
|
$ |
415 |
|
|
$ |
366 |
|
Average balance outstanding during the period |
|
$ |
383 |
|
|
$ |
322 |
|
Average interest rate during the period |
|
|
4.81 |
% |
|
|
5.44 |
% |
Average interest rate at end of the period |
|
|
4.78 |
% |
|
|
5.42 |
% |
AEL&P
AEL&P has a $25 million committed line of credit that expires in June 2028. As of March 31, 2026, there was no balance outstanding under this committed line of credit, and $25 million of available liquidity.
The AEL&P credit facility contains customary covenants and default provisions including a covenant which does not permit the ratio of “consolidated total debt at AEL&P” to “consolidated total capitalization at AEL&P” (including the impact of the Snettisham obligation) to be greater than 67.5 percent at any time. As of March 31, 2026, AEL&P complied with this covenant with a ratio of 48.7 percent.
As of March 31, 2026, Avista Corp. and its subsidiaries complied with all of the covenants of their financing agreements, and none of Avista Corp.'s subsidiaries constituted a “significant subsidiary” as defined in Avista Corp.'s committed line of credit.
See "Note 8 of the Notes to Condensed Consolidated Financial Statements" for additional information regarding our short-term borrowing arrangements.
Liquidity Expectations
In 2026, we expect to issue $230 million of long-term debt. We expect to issue $90 million of common stock in 2026 (including $14 million issued through March 31, 2026).
Capital Expenditures and Other Investments
We are making capital investments to enhance service and system reliability for our customers and replace aging infrastructure, and expect base Avista Utilities' capital expenditures of the following (dollars in millions):
|
|
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
|||||
Expected base annual capital expenditures |
|
$ |
615 |
|
|
$ |
635 |
|
|
$ |
800 |
|
|
$ |
680 |
|
|
|
710 |
|
|
These planned capital expenditures are subject to continuing review and adjustment. These estimates include expenditures for new projects identified through our 2025 request for proposal process. However, these estimates do not include potential expenditures that could result from integrating a new large load customer, incremental transmission projects like regional grid expansion, or additional generation. See the 2025 Form 10-K for further information on our expected capital expenditures.
Pension Plan
In the three months ended March 31, 2026, we contributed $3 million to the pension plan and we expect contributions to total $10 million in 2026. We expect to contribute a total of $40 million to the pension plan in the period 2027 through 2030, with an annual contribution of $10 million.
The final determination of pension plan contributions for future periods is subject to multiple variables, most of which are beyond our control, including changes to the fair value of pension plan assets, changes in actuarial assumptions (in particular, the discount rate
46
Table of Contents
AVISTA CORPORATION
used in determining the benefit obligation), or changes in federal legislation. We may change our pension plan contributions in the future depending on changes to any variables, including those listed above.
See "Note 6 of the Notes to Condensed Consolidated Financial Statements" for additional information regarding the pension plan.
Environmental Issues and Contingencies
Our environmental issues and contingencies disclosures have not materially changed during the three months ended March 31, 2026 except as follows:
Presidential Executive Action
On March 16, 2026, the U.S. President's Administration issued an Executive Order entitled “Removing Regulatory Barriers to Affordable Home Construction,” with the stated objective of increasing housing supply and affordability by reducing federal, state and local regulatory requirements that the Administration views as increasing construction costs and slowing development. Among other things, the Executive Order directs various federal agencies to incentivize state and local governments to eliminate mandatory green or energy-efficient building codes, review and potentially eliminate “unduly burdensome or costly” federal energy efficiency requirements, revise permitting rules relating to stormwater, wetlands and water pollution controls, and shorten environmental review timelines for housing projects.
On April 20, 2026, the U.S. President’s Administration issued several Executive Orders invoking authority under the Defense Production Act of 1950 (DPA) to (a) designate oil production and storage, coal and natural gas related power generation activities, electric facilities and supply chains, and large scale energy and energy-related infrastructure as critical resources under the DPA and (b) authorize the Department of Energy to use its authority under the DPA to expand and accelerate domestic capacity in each of these areas.
We are evaluating the extent to which potential changes from these Executive Orders may affect our financial results and operations.
Oregon Legislation and Regulatory Actions
Climate Protection Plan
In March 2020, Oregon Governor Kate Brown issued Executive Order No. 20-04, “Directing State Agencies to Take Actions to Reduce and Regulate Greenhouse Gas Emissions.” The Executive Order launched rulemaking proceedings for Oregon agencies with jurisdiction over GHG-related matters, with the aim of reducing Oregon’s overall GHG emissions to 80 percent below 1990 levels by 2050. This Executive Order led to the Oregon Department of Environmental Quality (ODEQ) developing cap and reduce rules known as the CPP. The CPP originally became effective in January 2022, but was subsequently challenged and declared invalid on procedural grounds. Thereafter, the ODEQ reissued the CPP in November 2024 with updated compliance periods.
On April 16, 2026, approximately 30 parties, consisting of businesses, utilities, trade associations and unions, filed a Petition challenging the repromulgated version of the CPP. Avista Corp. is a party to the litigation, which remains pending.
See the 2025 Form 10-K for further discussion of our environmental issues and contingencies.
Enterprise Risk Management
The material risks to our businesses, and our mitigation process and procedures to address these risks, were discussed in our 2025 Form 10-K and have not materially changed during the three months ended March 31, 2026. See the 2025 Form 10-K.
Financial Risk
Our financial risks have not materially changed during the three months ended March 31, 2026. Refer to the 2025 Form 10-K. The financial risks included below are required interim disclosures, even if they have not materially changed from December 31, 2025.
47
Table of Contents
AVISTA CORPORATION
Credit Risk
As of March 31, 2026, we had cash deposited as collateral of $10 million and letters of credit of $4 million outstanding related to our energy contracts. Price movements and/or a downgrade in our credit ratings or other established credit criteria could impact further the amount of collateral required. See “Credit Ratings” in the 2025 Form 10-K for further information. For example, in addition to limiting our ability to conduct transactions, if our credit ratings were lowered to below “investment grade” based on our positions outstanding at March 31, 2026 (including both contracts considered derivatives and those considered non-derivatives), we would potentially be required to post the following additional collateral (dollars in millions):
|
|
March 31, 2026 |
|
|
Additional collateral taking into account contractual thresholds |
|
$ |
29 |
|
Additional collateral without contractual thresholds |
|
|
40 |
|
Energy Commodity Risk
Our energy commodity risks have not materially changed during the three months ended March 31, 2026. See the 2025 Form 10-K. The following table presents energy commodity derivative fair values as a net asset or (liability) as of March 31, 2026 expected to be settled in each respective year (dollars in millions). As of March 31, 2026, there are no energy commodity derivative contracts outstanding with expected settlements after 2028:
|
|
Purchases |
|
|
Sales |
|
||||||||||||||||||||||||||
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
||||||||||||||||||||
Year |
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
||||||||
Remainder 2026 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(15 |
) |
|
$ |
(10 |
) |
|
$ |
9 |
|
|
$ |
10 |
|
|
$ |
(1 |
) |
|
$ |
— |
|
2027 |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
(5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
2028 |
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
The following table presents energy commodity derivative fair values as a net asset or (liability) as of December 31, 2025 expected to be settled in each respective year (dollars in millions). As of December 31, 2025, there are no energy commodity derivative contracts outstanding with expected settlements after 2028.
|
|
Purchases |
|
|
Sales |
|
||||||||||||||||||||||||||
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
|
Electric Derivatives |
|
|
Gas Derivatives |
|
||||||||||||||||||||
Year |
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
|
Physical (1) |
|
|
Financial (1) |
|
||||||||
2026 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(17 |
) |
|
$ |
(10 |
) |
|
$ |
8 |
|
|
$ |
4 |
|
|
$ |
(3 |
) |
|
$ |
— |
|
2027 |
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
2028 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
The above electric and natural gas derivative contracts will be included in either power supply costs or natural gas supply costs during the period they are settled and will be included in deferral and recovery mechanisms (ERM, PCA, and PGAs), or in the general rate case process, and are expected to eventually be collected through retail rates from customers.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The information required by this item is set forth in the Enterprise Risk Management section of "Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated herein by reference.
Item 4. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
The Company has disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) (Act) that are designed to ensure that information required to be disclosed in the reports it files or submits under
48
Table of Contents
AVISTA CORPORATION
the Act is recorded, processed, summarized and reported on a timely basis. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. With the participation of the Company’s principal executive officer and principal financial officer, the Company's management evaluated its disclosure controls and procedures as of the end of the period covered by this report. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon this evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective at a reasonable assurance level as of March 31, 2026.
There have been no changes in the Company's internal control over financial reporting that occurred during the first quarter of 2026 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
49
Table of Contents
AVISTA CORPORATION
PART II. Other Information
Item 1. Legal Proceedings
See “Note 13 of Notes to Condensed Consolidated Financial Statements” in “Part I. Financial Information Item 1. Condensed Consolidated Financial Statements.”
Item 1A. Risk Factors
Refer to the 2025 Form 10-K for disclosure of risk factors that could have a significant impact on our results of operations, financial condition or cash flows and could cause actual results or outcomes to differ materially from those discussed in our reports filed with the SEC (including this Quarterly Report on Form 10-Q), and elsewhere. These risk factors have not materially changed from the disclosures provided in the 2025 Form 10-K.
Item 5. Other Information
During the fiscal quarter ended March 31, 2026, none of our directors or officers informed us of the
50
Table of Contents
AVISTA CORPORATION
Item 6. Exhibits
15 |
|
Letter Re: Unaudited Interim Financial Information (1) |
|
|
|
31.1 |
|
Certification of Chief Executive Officer (Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) (1) |
|
|
|
31.2 |
|
Certification of Chief Financial Officer (Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) (1) |
|
|
|
32 |
|
Certification of Corporate Officers (Furnished Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002) (2) |
|
|
|
101.INS |
|
Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its inline XBRL tags are embedded within the inline XBRL document. |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101. |
|
|
|
(1) |
|
Filed herewith. |
(2) |
|
Furnished herewith. |
51
Table of Contents
AVISTA CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
AVISTA CORPORATION |
|
|
|
(Registrant) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
May 4, 2026 |
|
/s/ Kevin J. Christie |
|
|
|
Kevin J. Christie |
|
|
|
Senior Vice President, Chief Financial Officer, Treasurer and Regulatory Affairs Officer (Principal Financial Officer) |
52