AVA

New in FY2025

• Item 1A: Risk Factors" for a full discussion of these factors.
• The WUTC has up to eleven months to review the general rate case filings and issue a decision.
• Colstrip Tariff In 2019, the Washington State Legislature passed the CETA, which, among other things, requires costs associated with coal-fired generation facilities to be removed from rates no later than December 31, 2025.
• The WUTC order approving the settlement of the 2022 general rate cases, required us to establish a tracker for our Colstrip-related costs, including operating and maintenance expense, depreciation and amortization expense, and a return on rate base.
• In October 2024, we filed a cost recovery tariff seeking to recover the costs associated with our ownership of Colstrip in 2025.
• In the filing, we requested an increase in annual Colstrip tariff revenues of $19 million – from $24 million in 2024 to $43 million in 2025, effective January 1, 2025.
• In its review, WUTC Staff raised concerns related to (1) whether forecasted 2025 investments are allowed in rates; (2) whether the capital investment included in the filing will be used and useful for customers prior to the end of 2025; and (3) one major capital investment that will not be in service until 2027.
• In December 2024, the WUTC allowed our filed tariff to go into effect, but set the rates as subject to refund.
• A final order was issued in December 2025, which determined that certain investments in Colstrip were not used or useful to our customers after December 31, 2025, and as such should be prorated or disallowed.
• As a result, we are required to issue a refund to customers of $9 million, either in a lump sum or spread over up to three months.
• We are required to file a compliance filing by March 31, 2026 detailing the 2025 Colstrip investments and customer refunds.
• Idaho General Rate Cases 2023 General Rate Cases In August 2023, the IPUC approved the multi-party settlement agreement designed to increase annual base electric revenues by $22 million, or 8.0 percent, effective in September 2023, and $4 million, or 1.4 percent, effective in September 2024.
• The agreement was designed to increase annual base natural gas revenues by $1 million, or 2.7 percent, effective in September 2023, and a negligible increase effective in September 2024.
• The settlement was based on an ROE of 9.4 percent, with a common equity ratio of 50 percent, and an ROR of 7.19 percent. 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.
• AVISTA CORPORATION Oregon General Rate Cases 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 commission 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 multiyear 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.
• Power Cost Deferrals, Decoupling, Earnings Sharing Mechanisms, and Purchased Gas Adjustments See "Note 23 of the Notes to Consolidated Financial Statements" for discussion of these regulatory mechanisms.
• Alaska Electric Light and Power Company 2022 General Rate Case In August 2023, the RCA issued a final order related to AEL&P’s electric general rate case, which was originally filed in July 2022.
• The order reflected an ROE of 11.45 percent, a common equity ratio of 60.7 percent, and an ROR of 8.79 percent.
• AEL&P is required to file its next general rate case by August 2027.
• Results of Opera tions - Overall The following provides an overview of changes in our Consolidated Statements of 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.
• AVISTA CORPORATION 2025 compared to 2024 The following graph shows the total change in net income for 2025 to 2024, as well as the various factors that caused such change (dollars in millions): Utility revenues increased as a result of the effects of general rate cases and customer and load growth.
• This was partially offset by decreased wholesale revenues associated with decreased electric sale prices, as well as decreases in natural gas rates associated with the PGA regulatory mechanism, which do not impact utility margin or net income.
• Additionally, the increase in electric revenue was partially offset by a refund to be issued to customers for adjustments related to Colstrip investments.
• See "Regulatory Matters" for further details regarding the Colstrip final order.
• Electric utility resource costs decreased primarily due to decreased purchased power costs associated with decreased wholesale prices, as well as decreased amortizations of previously deferred costs.
• Electric utility resource costs also decreased due to the effects of the Washington general rate case and a lower level of authorized power supply costs resulting in increased deferrals of power supply costs.
• Natural gas utility resource costs decreased due to decreased commodity prices, as well as decreased amortization of previously deferred PGA costs.
• These decreases were offset by an increase in the amortization of costs associated with the CCA that are being recovered from customers.
• Utility operating expenses increased due to increased employee salaries and benefits costs.
• In addition, net amortizations and deferrals associated with wildfire mitigation and insurance costs have increased, with corresponding increases to revenue which result in no impact to net income.

and 344 more.

Gone since FY2024

• Risk Factors.” Utility Regulatory Risk We have a regulatory group which seeks to mitigate regulatory risk through open communications with regulatory commissioners and staff regarding the Company’s business plans and concerns.
• The regulatory group also considers the regulator’s priorities and rate policies and makes recommendations to senior management on regulatory strategy for the Company.
• Oversight of our regulatory strategies and policies is performed by senior management and the Board of Directors.
• See “Regulatory Matters” for further discussion of regulatory matters affecting the Company.
• Operational Risk To manage operational and event risks, we maintain emergency operating plans, business continuity and disaster recovery plans, maintain insurance coverage against some, but not all, potential losses and seek to negotiate indemnification arrangements with contractors for certain event risks.
• In addition, we design and follow detailed vegetation management and asset management inspection plans, which help mitigate wildfire and storm event risks, as well as identify utility assets which may be failing and in need of repair or replacement.
• We also have an Emergency Operating Center, which is a team of employees that plan for and train to deal with potential emergencies or unplanned outages at our facilities, resulting from natural disasters or other events.
• To prevent unauthorized access to our facilities, we have both physical and cyber security in place.
• To address the risk related to fuel cost, availability and delivery restraints, we have an energy resources risk policy, which includes a wholesale energy markets credit policy and control procedures to manage energy commodity price and credit risks.
• Development of the energy resources risk policy includes planning for sufficient capacity to meet our customer and wholesale energy delivery obligations.
• See further discussion of the energy resources risk policy below.
• Oversight of the operational risk management process is performed by the Environmental, Technology and Operations Committee of the Board of Directors and from senior management with input from each operating department.
• AVISTA CORPORATION Climate Change Risk Multiple departments work to mitigate risks related to climate change.
• Climate change adds uncertainty to existing risks that we have historically managed and mitigated.
• These efforts are reflected in electric and gas operations, investments in assets and asset reliability and resiliency across our operations.
• Power Supply staff monitor items such as snowpack and broader precipitation conditions, patterns and modeled or predicted climate change.
• These and other assessments are incorporated into our IRP processes.
• Environmental Affairs, Governmental Affairs and other departments monitor policy and regulatory developments that may relate to climate change to engage these efforts constructively and prepare for compliance matters.
• Our Wildfire Resiliency Plan was also developed to mitigate the increased wildfire risk associated with climate change.
• Business - Wildfire Resiliency Plan" for further discussion of the program.
• In addition, issues concerning climate-related risk and our clean energy goals are reviewed and regularly discussed by the Board of Directors.
• The Board’s Environmental, Technology and Operations Committee regularly reviews and discusses environmental and climate related risks, and advises the full Board on critical or emerging risks and/or related policies.
• Likewise, the Audit Committee provides oversight of climate-related disclosures.