Avista Corporation Q1 FY2026 earnings call

• Advancing grid hardening work like vegetation management to prevent outages, with benefits in enhanced system resilience and storm response preparedness. Predictive tools for wildfire weather also help anticipate other weather - related outage risks. - Planning for growth opportunities, including negotiations with a prospective data center developer with up to 500 megawatts incremental load, targeting a signed MOU by May 31. Engaging with community leaders, stakeholders, policymakers, and the Washington Commission regarding data centers. - Working toward final contracts with projects selected from recent request for proposals, including a battery energy storage project in base capital plan targeted to come online in 2028. Starting work on 2027 electric integrated resource plan, with progress on key data points like updated and approved clean energy implementation plan. - Avista Utilities expected capital expenditures in 2026: $615 million; 2026 - 2030: $3.4 billion. Potential capital investment up to $350 million associated with new large load customer incremental to the $3.4 billion five - year capital plan, resulting in 8% rate base growth if included.

Consolidated first quarter 2026 earnings were $1.11 per diluted share compared to $0.98 in 2025. First quarter 2026 non - GAAP utility earnings were $1.10 per diluted share compared to $1.10 per diluted share in 2025. Non - GAAP utility earnings are comprised of results from Avista Utilities and AEL&P segments. The unrealized gains and losses in non - regulated other business earnings are significant but hard to predict and outside management's control.

• Affirmed non - GAAP utility earnings guidance for 2026 with a range of $2.52 to $2.72 per diluted share, including an expected negative impact from the Energy Recovery Mechanism (ERM) of $0.10 in a 90% customer, 10% company sharing band. - Expect to issue $230 million of long - term debt and up to $90 million of common stock in 2026, with $14 million issued in the first quarter. - Hydro forecast shows above - normal levels of generation for 2026, no material change expected. ERM resulted in $0.01 expense in first quarter, remaining $0.09 expected to be recognized evenly in second and third quarters. - Expected long - term equity at Avista Utilities is approximately 9%, excluding ERM impact, reflecting expected regulatory lag of 0.6%. - Long - term earnings expected to grow 4% to 6% from the midpoint of 2025 earnings guidance.

• Forward - looking statements involve assumptions, risks, and uncertainties subject to change, with actual results possibly differing materially from expectations. Refer to Form 10 - K for 2025 and Form 10 - Q for 2026 for full risk factor discussion. - Unrealized gains and losses in non - regulated other business earnings are significant, difficult to predict, and outside management's control.

Q: On the electric margin, how should we think about electric utility margin from here now that the quarter has lapsed the Colstrip - related revenue effect? Does 1Q represent a cleaner baseline for the rest of 2026, or are there still a few unusual comparison items that we should keep in mind?

A: Kevin J. Christie said we would consider the first quarter a more clean quarter as we go forward, but we will have to go through the whole year as we compare quarter after quarter from 2025, which had Colstrip in it for the entire year, and 2026 will not. But I think the first quarter of the year is a pretty good representation.

Q: On the regulatory side in Oregon, just in relation to the Fair Act transition and as Oregon moves towards the multiyear rate plan, what is the most important element in these discussions that you need to preserve during the transition? Is it the ability to file in late 2027 for 2028 rates, continued access to interim recovery tools, or some form of indexing to avoid a larger first - year catch - up?

A: Kevin J. Christie said that if we are going to need to stay out longer while working through the proceeding, we would need some interim rate relief as we continue to make capital investments. To have a quality multiyear with a strong first - year starting point is also equally important as we look forward, and then, of course, earning a fair return for our shareholders.

Q: Regarding the large load customer that put down a deposit, how are you feeling about reaching an MOU, or when can we expect that? I think you said 90 days or so on your last earnings call. And then subsequent to that, how long would the process take to reach an ESA and potentially formally enter your capital program?

A: Heather Lynn Rosentrater said they shared that they are working towards a May 31 date for an MOU, and the next - step timeline would be identified through that agreement, but they do not have a clear understanding of what the next step will be yet, looking towards that May 31 date.

Q: You highlighted previously 1.7 gigawatts remaining in your queue of potential large load customers. How are you feeling about that pipeline? Is there an update to that number?

A: Heather Lynn Rosentrater said they do continue to vet those opportunities, and they are at about 1.1 gigawatts now in the queue. As they continue to work with these customers, they have higher confidence in what may come to be, excited about the opportunities still out there, continuing to plan to be able to go out and have curated opportunities for customers once they have a better understanding of the best geographic locations that have available capacity, and looking to be more proactive.

Q: Regarding the Washington rate case later this month, how are you feeling about the prospects of reaching a settlement, or given that it is your first four - year plan filing in the state, do you expect it to be fully litigated?

A: Kevin J. Christie said they are deep in the discovery process regarding the Washington GRC, which helps the parties formulate their positions as they enter into settlement, prepping for settlement, and they would like to think there is an opportunity for them to settle at least some, if not all, of the case, but given it is the first four - year plan filing in the state, there are a number of issues to work through, and it is hard to say the probability of settlement but everybody is going to give it a shot.

Q: Just to follow up on the four - year multiyear rate plan in Washington, remind us of your confidence or ability to manage within the revenue requirements and the return requirements over the four - year period, albeit with an off - ramp up to two years, especially given the geopolitical backdrop, fuel, inflation, etc. How can you de - risk this plan, if at all, relative to what has been filed?

A: Kevin J. Christie said they have the ability after the first year to file a replacement for years three and four given the 11 - month process if some form of inflation or additional investments beyond what is built into the case materialize. They have a new mechanism they are requesting around employee benefits, one of the remaining more volatile, harder - to - control items, and if they are successful with building that mechanism in and with the other mechanisms they have in place, they should be in pretty good shape, barring some kind of extreme inflationary activity in which case they would use the mechanism where they refile if that were to occur, feeling like they are in a good position to manage the risk they might see materialize, the company is very focused on managing its costs, and they see some opportunities as they look forward, all of those things combined making them optimistic.

Q: Understanding that you are reporting the non - GAAP utility EPS going forward, I noticed in other businesses there really were not any non - cash mark - to - market gains this quarter. Is there any insight there relative to what we are seeing in the broader market? And any additional thoughts on monetizing any of the investments that are more liquid than others?

A: Kevin J. Christie said it is nice to see that things have leveled off, or appear to have leveled off, a bit from about a year ago, and they think with that calming they would see minor adjustments overall, referring to the bioscience company when talking about monetization, saying to the extent they are excited about the opportunity there, it is a noncore investment, and they would exit at the point in time that makes sense, and if there was value created through that exit, then that would help with their overall equity needs, and hopefully they would be issuing low or no equity for a period of time, which would help boost their overall earnings.

Q: You mentioned regional transmission opportunities possibly that would be upside to the CapEx. Can you discuss those some more? Understanding North Plains Connector would likely be post - 2030, I am trying to get a sense of whether there is incremental upside to the CapEx relative to that $350 million that you highlighted.

A: Heather Lynn Rosentrater said the North Plains Connector, which they have talked a lot about, likely has opportunities beyond the five - year capital budget, but they are continuing to work with peers and other regional organizations to identify other opportunities for transmission investment that might make sense for them and their customers, there are a lot of reports acknowledging the need for more transmission in their region, feeling that they are geographically blessed in between where a lot of the load growth is and where a lot of the new resources are, seeing potential opportunities in the future for additional investment there and will continue to participate in those activities.