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AVISTA CORP

AVISTA CORPAVAEarnings & Financial Report

NYSE · Utilities · Electric & Other Services Combined

Avista Corporation is an American energy company which generates and transmits electricity and distributes natural gas to residential, commercial, and industrial customers. Approximately 1,550 employees provide electricity, natural gas, and other energy services to 359,000 electric and 320,000 natural gas customers in three western states. The service territory covers 30,000 square miles (78,000 km2) in eastern Washington, northern Idaho, and parts of southern and eastern Oregon, with a popul...

What changed in AVISTA CORP's 10-K — 2023 vs 2024

Top changes in AVISTA CORP's 2024 10-K

387 paragraphs added · 374 removed · 282 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

72 edited+19 added−25 removed66 unchanged
Our development opportunities are created to prepare our employees at all levels to ensure they have the skills, knowledge and experience to perform today and well into the future. Keeping our workforce equipped to succeed is imperative to meet the emerging challenges that lay ahead. We develop training that is relevant, necessary and in demand for our organization.
Development opportunities are created to prepare our employees at all levels to ensure they have the skills, knowledge and experience to perform today and well into the future. Keeping our workforce equipped to succeed is imperative to meet the emerging challenges that lay ahead. We develop training that is relevant, necessary and in demand for our organization.
Under the terms of the PPA, we make the dispatch decisions, provide all natural gas fuel and receive the electric energy output. Therefore, we consider the Lancaster Plant to be a baseload resource. See “Note 5 of the Notes to Consolidated Financial Statements” for further discussion of this PPA.
Under the terms of the PPA, we make the dispatch decisions, provide all natural gas fuel and receive all electric energy output. Therefore, we consider the Lancaster Plant to be a baseload resource. See “Note 5 of the Notes to Consolidated Financial Statements” for further discussion of this PPA.
We have an agreement with NorthWestern to transfer our ownership at the end of 2025; see “Note 22 of the Notes to Consolidated Financial Statements” for discussion of our Colstrip transaction with NorthWestern, • a wood waste-fired boiler generating facility known as the Kettle Falls GS in northeastern Washington, • a two-unit natural gas-fired CT generating facility in northeastern Spokane (Northeast CT), • a two-unit natural gas-fired CT generating facility in northern Idaho (Rathdrum CT), and • two small natural gas-fired generating facilities (Boulder Park GS and Kettle Falls CT).
We have an agreement to transfer our ownership to NorthWestern at the end of 2025; see “Note 22 of the Notes to Consolidated Financial Statements” for discussion of our Colstrip agreement with NorthWestern, • a wood waste-fired boiler generating facility known as the Kettle Falls GS in northeastern Washington, • a two-unit natural gas-fired CT generating facility in northeastern Spokane (Northeast CT), • a two-unit natural gas-fired CT generating facility in northern Idaho (Rathdrum CT), and • two small natural gas-fired generating facilities (Boulder Park GS and Kettle Falls CT).
Over time, rate base is increased by additions to utility plant in service and reduced by depreciation and write-offs as authorized by the utility commissions. Our operating expenses and rate base are allocated or directly assigned to five regulatory jurisdictions: electric in Washington and Idaho, and natural gas in Washington, Idaho and Oregon.
Over time, rate base is increased by additions to utility plant in service and reduced by depreciation and write-offs as authorized/ordered by the utility commissions. Our operating expenses and rate base are allocated or directly assigned to five regulatory jurisdictions: electric in Washington and Idaho, and natural gas in Washington, Idaho and Oregon.
Highlights of the 2023 natural gas IRP include the following expectations and/or assumptions: • We anticipate having sufficient natural gas resources to meet expected loads with our current transportation contracts for natural gas. • Customer forecasts are increasingly difficult to model due to a variety of rules and codes. 16 AVISTA CORPORATION • Emissions compliance with various environmental laws greatly impact our resource strategy, including the use of renewable natural gas, synthetic methane, and credits or allowances. • Our Idaho preferred resource strategy continues to utilize a least cost basis.
Highlights of the 2023 natural gas IRP include the following expectations and/or assumptions: • We anticipate having sufficient natural gas resources to meet expected loads with our current transportation contracts for natural gas. • Customer forecasts are increasingly difficult to model due to a variety of rules and codes. • Emissions compliance with various environmental laws greatly impact our resource strategy, including the use of renewable natural gas, synthetic methane, and credits or allowances. • Our Idaho preferred resource strategy continues to utilize a least cost basis.
We meet our FERC requirements to coordinate transmission planning activities with other regional entities through NorthernGrid. Launched January 1, 2020, NorthernGrid is an association of all major transmission providers throughout the Pacific Northwest and Intermountain West, with facilities in California, Idaho, Montana, Oregon, Utah, Washington and Wyoming.
We meet our FERC requirements to coordinate transmission planning activities with other regional entities through NorthernGrid. Launched in 2020, NorthernGrid is an association of all major transmission providers throughout the Pacific Northwest and Intermountain West, with facilities in California, Idaho, Montana, Oregon, Utah, Washington and Wyoming.
This includes, among other resources, hydroelectric projects, cogeneration projects and wind generation projects at rates approved by the WUTC and the IPUC. See “Avista Utilities Electric Operating Statistics – Electric Operations” below for annual quantities of purchased power, wholesale power sales and power from exchanges in 2023, 2022 and 2021.
This includes, among other resources, hydroelectric projects, cogeneration projects and wind generation projects at rates approved by the WUTC and the IPUC. See “Avista Utilities Electric Operating Statistics – Electric Operations” below for annual quantities of purchased power, wholesale power sales and power from exchanges in 2024, 2023 and 2022.
As of December 31, 2023, we have two reportable business segments as follows: • Avista Utilities – an operating division of Avista Corp., comprising the regulated utility operations in Washington, Idaho, Oregon and Montana. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho.
As of December 31, 2024, we have two reportable business segments as follows: • Avista Utilities – an operating division of Avista Corp., comprising the regulated utility operations in Washington, Idaho, Oregon and Montana. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho.
Training is delivered through instructor-led courses, self-service topics, computer-based learning modules, and field-based, hands-on workshop models covering the range of our operations. Training programs include craft apprenticeship programs, engineering development programs, leadership development, communication skills, cross-functional learning and EID topics.
Training is delivered through instructor-led courses, self-service topics, computer-based learning modules, and field-based, hands-on workshop models covering the range of our operations. Training programs include craft apprenticeship programs, engineering development programs, leadership development, communication skills, cross-functional learning and other topics.
These customers generally pay the same rates as other customers in the same class, without charge for the cost of the natural gas delivered. 15 AVISTA CORPORATION Optimization transactions that we engage in throughout the year are included in our annual purchased gas cost adjustment filings with the various commissions and are subject to review for prudence during this process.
These customers generally pay the same rates as other customers in the same class, without charge for the cost of the natural gas delivered. Optimization transactions that we engage in throughout the year are included in our annual purchased gas cost adjustment filings with the various commissions and are subject to review for prudence during this process.
In general, requests for new retail rates are made based on revenues, operating expenses and net investment for a test year that ended prior to the date of the request, subject to possible adjustments, which differ among the various jurisdictions, designed to reflect the expected revenues, operating expenses and net investment during the period new retail rates will be in effect.
In general, requests for new retail rates are made based on revenues, operating expenses and net investment for a test year that ended prior to the date of the request, subject to possible adjustments, which differ among the various jurisdictions, designed to reflect the expected revenues, 16 AVISTA CORPORATION operating expenses and net investment during the period new retail rates will be in effect.
The Northeast CT, Rathdrum CT, Boulder Park GS and Kettle Falls CT generating units are primarily used to meet peaking electric requirements. We also operate these facilities when marginal costs are below prevailing wholesale electric prices. These generating facilities have access to natural gas supplies that are adequate to meet their respective operating needs. See “Item 2.
The Northeast CT, Rathdrum CT, Boulder Park GS and Kettle Falls CT generating units are primarily used to meet peaking electric requirements. We also operate these facilities when marginal costs are below prevailing wholesale electric prices. These generating facilities have access to natural gas supplies that are adequate to meet their respective operating needs.
Under normal streamflow and operating conditions, we estimate that we would be able to meet approximately one-half of our total average electric requirements (both retail and long-term wholesale) with the combination of our hydroelectric generation and long-term hydroelectric purchase contracts (including those with certain PUDs in the state of Washington).
Under normal streamflow and operating conditions, we estimate that we would be able to meet approximately one-half of our total average electric requirements (both retail and long-term wholesale) with the combination of our hydroelectric generation and long-term hydroelectric purchase contracts (including those with certain PUDs in the state of Washington and Columbia Basin Hydropower).
See “Notes 1, 13 and 23 of the 17 AVISTA CORPORATION Notes to Consolidated Financial Statements” for additional information about regulation (including power cost deferrals, purchased gas adjustments and decoupling mechanisms), depreciation and deferred income taxes. See “Item 7. Management’s Discussion and Analysis – Regulatory Matters” for information on general rate cases.
See “Notes 1, 13 and 23 of the Notes to Consolidated Financial Statements” for additional information about regulation (including power cost deferrals, purchased gas adjustments and decoupling mechanisms), depreciation and deferred income taxes. See “Item 7. Management’s Discussion and Analysis – Regulatory Matters” for information on general rate cases.
ALASKA ELECTRIC LIGH T AND POWER COMPANY AEL&P is the primary operating subsidiary of AERC, and the sole utility providing electrical energy in Juneau, Alaska. Juneau is a geographically isolated community with no electric interconnections with the transmission facilities of other utilities and no pipeline access to natural gas or other fuels.
ALASKA ELECTRIC LIGH T AND POWER COMPANY AEL&P is the primary operating subsidiary of AERC, and the sole utility providing electrical energy in Juneau, Alaska. Juneau is a geographically isolated community with no electric interconnections with the transmission facilities of other utilities and no 21 AVISTA CORPORATION pipeline access to natural gas or other fuels.
Coyote Springs 2, which is operated by Portland General Electric Company, is supplied with natural gas under a combination of term contracts and spot market purchases, including transportation agreements with bilateral renewal rights. Colstrip, which is operated by Talen, is supplied with fuel from adjacent coal reserves under coal supply and transportation agreements.
Coyote Springs 2, which is operated by Portland General Electric Company, is supplied with natural gas under a combination of term contracts and spot market purchases, including transportation agreements with bilateral renewal rights. 9 AVISTA CORPORATION Colstrip, which is operated by Talen, is supplied with fuel from adjacent coal reserves under coal supply and transportation agreements.
Natural gas buyers identify opportunities to purchase lower cost natural gas in the immediate term to inject into storage, and then sell the gas in a forward market to be withdrawn later. The reverse of this type of transaction also occurs. These transactions lock in incremental value for customers.
Natural gas buyers identify opportunities to purchase lower cost natural gas in the immediate term to inject into storage, and then sell the gas in a forward market to be withdrawn later. The reverse of this type of transaction also occurs. 15 AVISTA CORPORATION These transactions lock in incremental value for customers.
Juneau’s economy is primarily driven by government activities, tourism, commercial fishing, and mining, as well as activities as the commercial hub of southeast Alaska. 22 AVISTA CORPORATION AEL&P owns and operates electric generation, transmission and distribution facilities located in Juneau. AEL&P operates five hydroelectric generation facilities with 102.7 MW of hydroelectric generation capacity.
Juneau’s economy is primarily driven by government activities, tourism, commercial fishing, and mining, as well as activities as the commercial hub of southeast Alaska. AEL&P owns and operates electric generation, transmission and distribution facilities located in Juneau. AEL&P operates five hydroelectric generation facilities with 102.7 MW of hydroelectric generation capacity.
AEL&P maintains separate rate tariffs for each of its customer classes, as well as seasonal rates. 23 AVISTA CORPORATION AEL&P’s operations are subject to regulation by the RCA with respect to customer rates, standard of service, facilities, accounting and certain other matters, but not with respect to the issuance of securities.
AEL&P maintains separate rate tariffs for each of its customer classes, as well as seasonal rates. AEL&P’s operations are subject to regulation by the RCA with respect to customer rates, standard of service, facilities, accounting and certain other matters, but not with respect to the issuance of securities.
We commenced Western EIM operations in March 2022. The Western EIM, among other things, facilitates regional load balancing by allowing certain generating plants to receive automated dispatch signals from the CAISO in five-minute intervals. Reliability Standards Among its other provisions, the U.S.
We commenced Western EIM operations in March 2022. The Western EIM, among other things, facilitates regional load balancing by allowing certain generating plants to receive automated dispatch signals from the CAISO in five-minute intervals. 17 AVISTA CORPORATION Reliability Standards Among its other provisions, the U.S.
Its primary customers include city, state and federal governmental entities located in Juneau, as well as a mine located in the Juneau area. Most of AEL&P’s customers are served on a firm basis while certain of its customers, including its largest customer, are served on an interruptible sales basis.
Its primary customers include city, state and federal governmental entities located in Juneau, as well as a mine located in the Juneau area. Most of AEL&P’s customers are 22 AVISTA CORPORATION served on a firm basis while certain of its customers, including its largest customer, are served on an interruptible sales basis.
Alaska companies includes AERC and AJT Mining, which is a wholly-owned subsidiary of AERC and is an inactive mining company holding certain real estate. 25 AVISTA CORPORATION
Alaska companies includes AERC and AJT Mining, which is a wholly-owned subsidiary of AERC and is an inactive mining company holding certain real estate. 24 AVISTA CORPORATION
After December 31, 2025, we are prohibited by Clean Energy Transformation Act (CETA) from using energy produced by coal-fired plants to serve our retail customers in Washington. We entered into an agreement with NorthWestern to transfer our interest in Colstrip at the end of 2025. To the extent necessary, we will obtain energy produced by other resources. See “Item 7.
After December 31, 2025, we are prohibited by Clean Energy Transformation Act (CETA) from using energy produced by coal-fired plants to serve our retail customers in Washington. We entered into an agreement with NorthWestern to transfer our interest in Colstrip at the end of 2025. To the extent necessary, we will obtain energy produced by other regional resources.
In 2022, our peak electric native load was 1,860 MW, which occurred during the winter, and in 2021, it was 1,889 MW, which occurred during the summer. Electric Resources Avista Utilities has a diverse electric resource mix of Company-owned and contracted hydroelectric, thermal, wind and solar generation facilities, and other contracts for power purchases and exchanges.
In 2023, our peak electric native load was 1,809 MW, which occurred during the summer, and in 2022, it was 1,860 MW, which occurred during the winter. Electric Resources Avista Utilities has a diverse electric resource mix of Company-owned and contracted hydroelectric, thermal, wind and solar generation facilities, and other contracts for power purchases and exchanges.
Several of the co-owners of Colstrip, including us, have a coal contract that runs through December 31, 2025. See 10 AVISTA CORPORATION “Item 7. Management's Discussion and Analysis – Colstrip” for discussion regarding environmental and other issues surrounding Colstrip.
Several of the co-owners of Colstrip, including us, have a coal contract that runs through December 31, 2025. See “Item 7. Management's Discussion and Analysis – Colstrip” for discussion regarding environmental and other issues surrounding Colstrip.
The purchase price is a fixed price per KW of in-service capacity with a fixed decline in the price per KW over the remaining 20-year term of the PPA. 11 AVISTA CORPORATION We have exclusive rights to the capacity of Rattlesnake Flat Wind project developed, owned and managed by an unrelated third party and located in Adams County, Washington.
The purchase price is a fixed price per KW of in-service capacity with a fixed decline in the price per KW over the remaining term of the PPA. 10 AVISTA CORPORATION We have exclusive rights to the capacity of Rattlesnake Flat Wind project developed, owned and managed by an unrelated third party and located in Adams County, Washington.
Management's Discussion and Analysis – Environmental Matters and Contingencies – Climate Change – Washington Legislation and Regulatory Actions – Clean Energy Transformation Act” and “Colstrip.” In addition to retirement of coal-fired generating stations, some other generation plants in the region are being considered for possible closure due to environmental and other concerns.
See “Item 7. Management's Discussion and Analysis – Environmental Matters and Contingencies – Climate Change – Washington Legislation and Regulatory Actions – Clean Energy Transformation Act” and “Colstrip.” In addition to retirement of coal-fired generating stations, some hydroelectric and other generation plants in the region are being considered for possible closure due to environmental and other concerns.
Properties - Avista Utilities - Generation Properties” for the present generating capabilities of the above hydroelectric resources. 9 AVISTA CORPORATION The following graph shows Avista Utilities' hydroelectric generation (in thousands of MWhs) during the year ended December 31: (1) Normal hydroelectric generation is determined by reference to the effect of upstream dam regulation on median natural water flow.
Properties - Avista Utilities” for the present generating capabilities of the above hydroelectric resources. 8 AVISTA CORPORATION The following graph shows Avista Utilities' hydroelectric generation (in thousands of MWhs) during the year ended December 31: (1) Normal hydroelectric generation is determined by reference to the effect of upstream dam regulation on median natural water flow.
The following graph shows AEL&P's hydroelectric generation (in thousands of MWhs) during the time periods indicated below: (1) Normal hydroelectric generation is defined as the energy output of the plant during a year with average inflows to the reservoir. As of December 31, 2023, AEL&P served approximately 17,700 customers.
The following graph shows AEL&P's hydroelectric generation (in thousands of MWhs) during the time periods indicated below: (1) Normal hydroelectric generation is defined as the energy output of the plant during a year with average inflows to the reservoir. As of December 31, 2024, AEL&P served approximately 17,800 customers.
Management’s Discussion and Analysis of Financial Condition – Environmental Issues and Contingencies” for further discussion on clean energy, including applicable regulations. We have several contracts for RNG, including agreements with Pine Creek RNG to purchase an expected output of approximately 9.7 million therms annually from various projects.
Management’s Discussion and Analysis of Financial Condition – Environmental Issues and Contingencies” for further discussion on clean energy, including applicable regulations. We have several contracts for RNG to purchase an expected output of approximately 9.7 million therms annually from various projects.
If the required technology is not available or not affordable in the future, we may not meet our goals in the desired timeframe. Meeting our clean energy goals may also require accommodation from regulatory agencies. See the discussion under “Electric Resources” for more information on our existing clean electricity sources and efforts to achieve these goals. See “Item 7.
If the required technology is not available or not affordable in the future, we may not meet our goals in the desired timeframe. Meeting our clean energy goals may also require accommodation 13 AVISTA CORPORATION from regulatory agencies. See the discussion under “Electric Resources” for more information on our existing clean electricity sources and efforts to achieve these goals.
This PPA is a finance lease and, as of December 31, 2023, the finance lease obligation was $42.5 million. Snettisham Electric Company, a non-operating subsidiary of AERC, has the option to purchase the Snettisham project at any time for a price equal to the principal amount of the bonds outstanding at that time.
This PPA is a finance lease and, as of December 31, 2024, the finance lease obligation was $39 million. Snettisham Electric Company, a non-operating subsidiary of AERC, has the option to purchase the Snettisham project at any time for a price equal to the principal amount of the bonds outstanding at that time.
Solar Resources We have exclusive rights to the capacity of the Lind Solar Farm, a solar generation project developed, owned and managed by an unrelated third-party and located in Lind, Washington. Under a PPA, which expires in 2038, we purchase the power and renewable attributes produced by the project at a fixed price per MWh.
Solar Resources We have exclusive rights to the capacity of the Lind Solar Farm, a solar generation project developed, owned and managed by an unrelated third-party and located in Lind, Washington. Under a PPA, we purchase the power and renewable attributes produced by the project at a fixed price per MWh. See “Item 2.
Total Avista Corp. shareholders’ equity was $2.5 billion as of December 31, 2023, which includes a $145.6 million investment in Avista Capital and a $119.6 million investment in AERC. See “Note 24 of the Notes to Consolidated Financial Statements” for information with respect to the operating performance of each business segment (and other subsidiaries).
Total Avista Corp. shareholders’ equity was $2.6 billion as of December 31, 2024, which includes a $139 million investment in Avista Capital and a $123 million investment in AERC. See “Note 24 of the Notes to Consolidated Financial Statements” for information with respect to the operating performance of each business segment (and other subsidiaries).
AIDEA issued revenue bonds in 1998 (which were refinanced in 2015) to finance its acquisition of the project. These bonds were outstanding in the amount of $42.5 million at December 31, 2023 and mature in January 2034. AEL&P has a PPA and operating and maintenance agreement with the AIDEA to operate and maintain the facility.
AIDEA issued revenue bonds in 1998 (which were refinanced in 2015) to finance its acquisition of the project. These bonds were outstanding in the amount of $39 million as of December 31, 2024 and mature in January 2034. AEL&P has a PPA and operating and maintenance agreement with the AIDEA to operate and maintain the facility.
To implement this process, we make continuing projections of: • electric loads at various points in time (ranging from intra-hour to multiple years) based on, among other things, estimates of customer usage and weather, historical data, contract terms, and emerging trends and climate modeling results, and • resource availability at these points in time based on, among other things, fuel choices and fuel markets, estimates of snowpack and streamflows, availability of generating units, historic and forward market information, contract terms and experience.
To implement this process, we make continuing projections of: 7 AVISTA CORPORATION • electric loads at various points in time (ranging from intra-hour to multiple years) based on, among other things, estimates of customer usage and weather, historical data, contract terms, and emerging trends and climate modeling results, • resource availability at these points in time based on, among other things, fuel choices and fuel markets, estimates of snowpack and streamflows, availability of generating units, historic and forward market information, contract terms and experience, and • carbon costs associated with emission reduction legislation and policy.
We also provide opportunities for our employees to attend industry events and certification programs, courses or programs offered through energy-related organizations such as the Western Energy Institute, the American Gas Association and the Edison Electric Institute, as well as through our local colleges and universities. Workplace Safety Safety is an essential part of our mission.
We also provide opportunities for our employees to attend industry events and certification programs, courses or programs offered through energy-related organizations such as the Western Energy Institute, the American Gas Association and the Edison Electric Institute, as well as through our local colleges and universities.
Retail rates are designed to provide an opportunity to recover allowable operating expenses and earn a return of and a reasonable return on “rate base.” Rate base is generally determined by reference to the original cost (net of accumulated depreciation) of utility plant in service, subject to various adjustments for deferred income taxes and other items.
Retail rates are designed to provide an opportunity to recover allowable operating expenses and earn a return of and a reasonable return on “rate base.” Rate base is generally determined by reference to the original cost (net of accumulated depreciation) of utility plant in service, subject to various adjustments for deferred income taxes and other items and subject to possible reduction to the extent that a regulatory commission finds that part of an investment was imprudent.
Our compliance with these standards has not had a substantive impact on the operation, maintenance and marketing of our transmission system or our ability to provide service to customers. See “Item 7. Management’s Discussion and Analysis – Competition” for further information.
Our compliance with these standards has not had a substantive impact on the operation, maintenance and marketing of our transmission system or our ability to provide service to customers. See “Item 7.
We have a robust internal compliance program in place to manage compliance activities and mitigate the risk of potential noncompliance with these standards. We do not expect the costs associated with compliance with these standards to have a material impact on our financial results.
Failure to comply with NERC reliability standards could result in substantial financial penalties. We have a robust internal compliance program in place to manage compliance activities and mitigate the risk of potential noncompliance with these standards. We do not expect the costs associated with compliance with these standards to have a material impact on our financial results.
We acquire both long-term and short-term transmission 8 AVISTA CORPORATION capacity to facilitate our energy and capacity transactions. We provide transmission and ancillary services in eastern Washington, northern Idaho and western Montana. Electric Re quirements Avista Utilities' peak electric native load requirement for 2023 was 1,809 MW, which occurred on August 15, 2023.
We acquire both long-term and short-term transmission capacity to facilitate our energy and capacity transactions. We provide transmission and ancillary services in eastern Washington, northern Idaho and western Montana. Electric Re quirements Avista Utilities' peak electric native load requirement for 2024 was 1,869 MW, which occurred on January 13, 2024.
As of December 31, 2023, Avista Utilities' electric generation resource mix (including contracts for power purchases) was approximately 48 percent hydroelectric, 43 percent thermal and 9 percent other renewables. See “Item 2. Properties” for detailed information on Company-owned generating facilities.
As of December 31, 2024, Avista Utilities' electric generation resource mix (including contracts for power purchases) was approximately 44 percent hydroelectric, 43 percent thermal and 13 percent other renewables. See “Item 2. Properties” for detailed information on Company-owned generating facilities and a detailed list of our PPAs.
The project has a nameplate capacity of 28 MW. Other Purchases, Exchanges and Sales In addition to the resources described above, we purchase and sell power under various long-term contracts, and we enter into short-term purchases and sales. Further, pursuant to The Public Utility Regulatory Policies Act of 1978, as amended, we are required to purchase generation from qualifying facilities.
Properties” for a detailed list of our PPAs. Other Purchases, Exchanges and Sales In addition to the resources described above, we purchase and sell power under various long-term contracts, and we enter into short-term purchases and sales. Further, pursuant to The Public Utility Regulatory Policies Act of 1978, as amended, we are required to purchase generation from qualifying facilities.
Material changes to the plan are documented and communicated to RMC members. As part of the process of balancing natural gas retail load requirements with resources, we engage in the wholesale purchase and sale of natural gas. We plan for sufficient natural gas delivery capacity to serve our retail customers for a theoretical peak day event.
As part of the process of balancing natural gas retail load requirements with resources, we engage in the wholesale purchase and sale of natural gas. We plan for sufficient natural gas delivery capacity to serve our retail customers for a theoretical peak 14 AVISTA CORPORATION day event.
ITEM 1. B USINESS COMPANY OVERVIEW Avista Corp., incorporated in the territory of Washington in 1889, is primarily an electric and natural gas utility with certain other business ventures. Our mission is to improve our customers’ lives through innovative energy solutions, safely, responsibly and affordably. Our corporate headquarters is in Spokane, Washington, the second-largest city in Washington.
ITEM 1. B USINESS COMPANY OVERVIEW Avista Corp., incorporated in the territory of Washington in 1889, is primarily an electric and natural gas utility with certain other business ventures. Our corporate headquarters is in Spokane, Washington, the second-largest city in Washington.
Our estimate of normal annual hydroelectric generation for 2024 (including resources purchased under long-term hydroelectric contracts with certain PUDs) is 563.1 aMW (or 4.95 million MWhs). See “Item 2.
Our estimate of normal annual hydroelectric generation for 2025 (including resources purchased under long-term hydroelectric contracts with certain PUDs) is 621.5 aMW (or 5.44 million MWhs). See “Item 2.
Properties - Avista Utilities - Generation Properties” for the present generating capabilities of the above thermal resources. The Lancaster Plant is a 270 MW natural gas-fired combined cycle combustion turbine plant located in northern Idaho, owned by an unrelated third-party. We have a PPA for the output from the Lancaster Plant through December 31, 2041.
In addition to the resources we own listed above, we have a PPA for the output from the Lancaster Plant through December 31, 2041. The Lancaster Plant is a 270 MW natural gas-fired combined cycle combustion turbine plant located in northern Idaho, owned by an unrelated third-party.
AEL&P ELE CTRIC OPERATING STATISTICS Years Ended December 31, 2023 2022 2021 ELECTRIC OPERATIONS OPERATING REVENUES (Dollars in Thousands): Residential $ 20,232 $ 19,667 $ 18,940 Commercial and government 27,026 25,782 25,861 Public street and highway lighting 267 254 250 Total retail 47,525 45,703 45,051 Other 614 1 315 Total electric operating revenues $ 48,139 $ 45,704 $ 45,366 ENERGY SALES (Thousands of MWhs): Residential 161 163 160 Commercial and government 249 240 243 Public street and highway lighting 1 1 1 Total electric energy sales 411 404 404 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 15,142 15,036 14,919 Commercial and government 2,327 2,305 2,282 Public street and highway lighting 248 236 230 Total electric retail customers 17,717 17,577 17,431 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (KWh) 10,633 10,841 10,773 Revenue per KWh (in cents) 12.54 12.07 11.84 Annual revenue per customer $ 1,336 $ 1,308 $ 1,270 HEATING DEGREE DAYS: (1) Juneau, AK Actual 7,550 7,923 8,394 Historical average 8,336 8,337 8,335 % of average 91 % 95 % 101 % (1) Heating degree days are 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 heating degree days below historical average indicate warmer than average temperatures). 24 AVISTA CORPORATION OTHER BUS INESSES The following table shows our assets related to our other businesses, including intercompany amounts as of December 31 (dollars in thousands): Entity and Asset Type 2023 2022 Avista Capital Equity investments $ 153,350 $ 147,809 Real estate investments 4,512 7,852 Notes receivable – third parties 20,380 17,954 Other assets 2,452 2,865 Alaska companies (AERC and AJT Mining) 10,971 10,547 Total $ 191,665 $ 187,027 Avista Capital equity investments are primarily investments in emerging technology and biotechnology companies and venture capital funds, as well as investment in a joint venture focused on local real estate development and economic growth.
AEL&P ELE CTRIC OPERATING STATISTICS Years Ended December 31, 2024 2023 2022 ELECTRIC OPERATIONS OPERATING REVENUES (Dollars in Millions): Residential $ 22 $ 20 $ 20 Commercial and government 27 27 26 Total retail 49 47 46 Other 1 1 — Total electric operating revenues $ 50 $ 48 $ 46 ENERGY SALES (Thousands of MWhs): Residential 171 161 163 Commercial and government 255 249 240 Public street and highway lighting 1 1 1 Total electric energy sales 427 411 404 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 15,236 15,142 15,036 Commercial and government 2,338 2,327 2,305 Public street and highway lighting 249 248 236 Total electric retail customers 17,823 17,717 17,577 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (KWh) 11,192 10,633 10,841 Revenue per KWh (in cents) 12.66 12.54 12.07 Annual revenue per customer (in dollars) $ 1,417 $ 1,336 $ 1,308 HEATING DEGREE DAYS: (1) Juneau, AK Actual 8,139 7,550 7,923 Historical average 8,336 8,336 8,337 % of average 98 % 91 % 95 % (1) Heating degree days are 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 heating degree days below historical average indicate warmer than average temperatures). 23 AVISTA CORPORATION OTHER BUS INESSES The following table shows our assets related to our other businesses, including intercompany amounts as of December 31 (dollars in millions): Entity and Asset Type 2024 2023 Avista Capital Equity investments $ 157 $ 153 Notes receivable – third parties 18 20 Other assets 7 7 Alaska companies (AERC and AJT Mining) 12 11 Total $ 194 $ 191 Avista Capital equity investments are primarily investments in emerging technology and biotechnology companies and venture capital funds, as well as investment in a joint venture focused on local real estate development and economic growth.
This license embodies a settlement agreement relating to project operations and resource protection and mitigation efforts over the license term. Five of our six hydroelectric projects on the Spokane River (Long Lake, Nine Mile, Upper Falls, Monroe Street and Post Falls) are under one 50-year FERC license expiring in 2059 and are referred to collectively as the Spokane River Project.
Five of our six hydroelectric projects on the Spokane River (Long Lake, Nine Mile, Upper Falls, Monroe Street and Post Falls) are under one 50-year FERC license expiring in 2059 and are referred to collectively as the Spokane River Project. The license includes numerous natural and cultural resource protection measures that are subject to ongoing regulatory interpretation.
Cybersecurity” for further information. 19 AVISTA CORPORATION AVISTA U TILITIES ELECTRIC OPERATING STATISTICS Years Ended December 31, 2023 2022 2021 ELECTRIC OPERATIONS OPERATING REVENUES (Dollars in Thousands): Residential $ 425,258 $ 414,823 $ 394,717 Commercial 343,523 338,656 326,173 Industrial 109,689 107,740 106,756 Public street and highway lighting 7,976 7,483 7,472 Total retail 886,446 868,702 835,118 Wholesale 249,847 179,316 89,768 Sales of fuel (25,926 ) 84,256 63,673 Other 49,235 46,319 36,288 Alternative revenue programs 12,419 (31,844 ) (19,525 ) Deferrals and amortizations for rate refunds to customers 149 74 1,730 Total electric operating revenues $ 1,172,170 $ 1,146,823 $ 1,007,052 ENERGY SALES (Thousands of MWhs): Residential 4,020 4,154 3,955 Commercial 3,160 3,201 3,158 Industrial 1,671 1,699 1,666 Public street and highway lighting 17 17 17 Total retail 8,868 9,071 8,796 Wholesale 3,468 3,094 2,461 Total electric energy sales 12,336 12,165 11,257 ENERGY RESOURCES (Thousands of MWhs): Hydro generation (from Company facilities) 3,024 3,930 3,598 Thermal generation (from Company facilities) 5,084 4,055 3,635 Purchased power 5,121 5,065 4,954 Power exchanges (421 ) (385 ) (398 ) Total power resources 12,808 12,665 11,789 Energy losses and Company use (472 ) (500 ) (532 ) Total energy resources (net of losses) 12,336 12,165 11,257 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 366,450 361,564 356,387 Commercial 45,341 44,550 44,110 Industrial 1,188 1,193 1,205 Public street and highway lighting 690 681 666 Total electric retail customers 413,669 407,988 402,368 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (KWh) 10,971 11,487 11,098 Revenue per KWh (in cents) 10.58 9.99 9.98 Annual revenue per customer $ 1,160 $ 1,147 $ 1,108 AVERAGE HOURLY LOAD (aMW) 1,115 1,142 1,113 20 AVISTA CORPORATION AVISTA UTILITIES ELECTRIC OPERATING STATISTICS Years Ended December 31, 2023 2022 2021 RETAIL NATIVE LOAD at time of system peak (MW): Winter 1,771 1,860 1,696 Summer 1,809 1,810 1,889 COOLING DEGREE DAYS: (1) Spokane, WA Actual 811 758 946 Historical average 585 568 546 % of average 139 % 133 % 173 % HEATING DEGREE DAYS: (2) Spokane, WA Actual 6,012 6,811 6,124 Historical average 6,557 6,560 6,596 % of average 92 % 104 % 93 % (1) Cooling degree days are the measure of the warmness of weather experienced, based on the extent to which the average of high and low temperatures for a day exceeds 65 degrees Fahrenheit (annual degree days above historical average indicate warmer than average temperatures).
Cybersecurity” for further information. 18 AVISTA CORPORATION AVISTA U TILITIES ELECTRIC OPERATING STATISTICS Years Ended December 31, 2024 2023 2022 ELECTRIC OPERATIONS OPERATING REVENUES (Dollars in Millions): Residential $ 473 $ 425 $ 415 Commercial 369 344 339 Industrial 131 110 108 Public street and highway lighting 9 8 7 Total retail 982 887 869 Wholesale 225 250 179 Sales of fuel 13 (26 ) 84 Other 58 49 46 Alternative revenue programs 23 12 (32 ) Total electric operating revenues $ 1,301 $ 1,172 $ 1,146 ENERGY SALES (Thousands of MWhs): Residential 4,018 4,020 4,154 Commercial 3,166 3,160 3,201 Industrial 1,785 1,671 1,699 Public street and highway lighting 17 17 17 Total retail 8,986 8,868 9,071 Wholesale 3,740 3,468 3,094 Total electric energy sales 12,726 12,336 12,165 ENERGY RESOURCES (Thousands of MWhs): Hydroelectric generation (from Company facilities) 3,168 3,024 3,930 Thermal generation (from Company facilities) 4,995 5,084 4,055 Purchased power 4,965 5,121 5,065 Power exchanges (14 ) (421 ) (385 ) Total power resources 13,114 12,808 12,665 Energy losses and Company use (388 ) (472 ) (500 ) Total energy resources (net of losses) 12,726 12,336 12,165 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 371,076 366,450 361,564 Commercial 45,794 45,341 44,550 Industrial 1,175 1,188 1,193 Public street and highway lighting 739 690 681 Total electric retail customers 418,784 413,669 407,988 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (KWh) 10,827 10,971 11,487 Revenue per KWh (in cents) 11.78 10.58 9.99 Annual revenue per customer (in dollars) $ 1,276 $ 1,160 $ 1,147 AVERAGE HOURLY LOAD (aMW) 1,117 1,115 1,142 19 AVISTA CORPORATION AVISTA UTILITIES ELECTRIC OPERATING STATISTICS Years Ended December 31, 2024 2023 2022 RETAIL NATIVE LOAD at time of system peak (MW): Winter 1,869 1,771 1,860 Summer 1,831 1,809 1,810 COOLING DEGREE DAYS: (1) Spokane, WA Actual 903 811 758 Historical average 596 585 568 % of average 152 % 139 % 133 % HEATING DEGREE DAYS: (2) Spokane, WA Actual 5,875 6,012 6,811 Historical average 6,569 6,557 6,560 % of average 89 % 92 % 104 % (1) Cooling degree days are the measure of the warmness of weather experienced, based on the extent to which the average of high and low temperatures for a day exceeds 65 degrees Fahrenheit (annual degree days above historical average indicate warmer than average temperatures).
Under the PPA, which expires in 2042, we purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. The project has a nameplate capacity of 105 MW.
Under the PPA, we purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. We have an annual option to purchase the wind project, which we have not exercised.
(2) Heating degree days are 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 historical averages indicate warmer than average temperatures). 21 AVISTA CORPORATION AVISTA UTILITIES NATURAL GAS OPERATING STATISTICS Years Ended December 31, 2023 2022 2021 NATURAL GAS OPERATIONS OPERATING REVENUES (Dollars in Thousands): Residential $ 325,631 $ 284,452 $ 221,405 Commercial 164,048 139,923 100,819 Interruptible 12,747 6,474 4,781 Industrial 4,568 3,997 3,015 Total retail 506,994 434,846 330,020 Wholesale 55,295 133,235 113,277 Transportation 8,172 8,627 8,547 Other 6,773 8,156 7,325 Alternative revenue programs (7,520 ) (1,513 ) 12,890 Deferrals and amortizations for rate refunds to customers 876 134 1,254 Total natural gas operating revenues $ 570,590 $ 583,485 $ 473,313 THERMS DELIVERED (Thousands of Therms): Residential 225,665 242,452 219,835 Commercial 138,719 147,059 130,399 Interruptible 20,158 14,166 16,013 Industrial 4,914 5,606 5,402 Total retail 389,456 409,283 371,649 Wholesale 262,188 280,154 356,891 Transportation 165,066 171,785 172,260 Interdepartmental and Company use 413 618 479 Total therms delivered 817,123 861,840 901,279 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 340,655 337,073 332,187 Commercial 37,193 36,753 36,448 Interruptible 50 44 42 Industrial 187 188 190 Total natural gas retail customers 378,085 374,058 368,867 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (therms) 662 719 662 Revenue per therm (in dollars) $ 1.44 $ 1.17 $ 1.01 Annual revenue per customer $ 956 $ 844 $ 667 HEATING DEGREE DAYS: (1) Spokane, WA Actual 6,012 6,811 6,124 Historical average 6,557 6,560 6,596 % of average 92 % 104 % 93 % Medford, OR Actual 4,295 4,408 4,107 Historical average 4,248 4,248 4,254 % of average 101 % 104 % 97 % (1) Heating degree days are 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).
(2) Heating degree days are 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 historical averages indicate warmer than average temperatures). 20 AVISTA CORPORATION AVISTA UTILITIES NATURAL GAS OPERATING STATISTICS Years Ended December 31, 2024 2023 2022 NATURAL GAS OPERATIONS OPERATING REVENUES (Dollars in Millions): Residential $ 317 $ 326 $ 284 Commercial 163 164 140 Interruptible 9 13 6 Industrial 4 4 4 Total retail 493 507 434 Wholesale 61 55 133 Transportation 11 8 9 Other 29 8 8 Alternative revenue programs 12 (7 ) (2 ) Total natural gas operating revenues $ 606 $ 571 $ 582 THERMS DELIVERED (Thousands of Therms): Residential 217,808 225,665 242,452 Commercial 137,972 138,719 147,059 Interruptible 20,682 20,158 14,166 Industrial 4,347 4,914 5,606 Total retail 380,809 389,456 409,283 Wholesale 271,803 262,188 280,154 Transportation 178,236 165,066 171,785 Interdepartmental and Company use 391 413 618 Total therms delivered 831,239 817,123 861,840 NUMBER OF RETAIL CUSTOMERS (Average for Period): Residential 343,267 340,655 337,073 Commercial 37,353 37,193 36,753 Interruptible 52 50 44 Industrial 185 187 188 Total natural gas retail customers 380,857 378,085 374,058 RESIDENTIAL SERVICE AVERAGES: Annual use per customer (therms) 635 662 719 Revenue per therm (in dollars) $ 1.46 $ 1.44 $ 1.17 Annual revenue per customer (in dollars) $ 925 $ 956 $ 844 HEATING DEGREE DAYS: (1) Spokane, WA Actual 5,875 6,012 6,811 Historical average 6,569 6,557 6,560 % of average 89 % 92 % 104 % Medford, OR Actual 3,963 4,295 4,408 Historical average 4,282 4,248 4,248 % of average 93 % 101 % 104 % (1) Heating degree days are 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).
The WUTC and IPUC do not approve or disapprove of the content in the IRP; rather, they acknowledge that the IRP was prepared in accordance with applicable standards if that is the case. The IRP details projected growth in demand for energy and the new resources needed to serve customers over the next 20 years.
The WUTC and IPUC review the IRP and give the public the opportunity to comment. The WUTC and IPUC do not approve or disapprove of the content in the IRP; rather, they acknowledge that the IRP was prepared in accordance with applicable standards if that is the case.
See "Natural Gas Operations - Natural Gas Supply" for information regarding our supply of natural gas for both fuel and delivery to natural gas customers.
See "Natural Gas Operations - Natural Gas Supply" for information regarding our supply of natural gas for both fuel and delivery to natural gas customers. See “Item 2. Properties - Avista Utilities” for the present generating capabilities of the above thermal resources.
We regard the IRP as a tool for resource evaluation, rather than an acquisition plan for a particular project. In June 2023, we filed our 2023 Electric IRP with the WUTC and the IPUC.
The IRP details projected growth in demand for energy and the new resources needed to serve customers over the next 20 years. We regard the IRP as a tool for resource evaluation, rather than an acquisition plan for a particular project. In December 2024, we filed our 2025 Electric IRP with the WUTC and the IPUC.
The fund will increase distributed energy resources such as energy efficiency, small-scale renewables, and energy storage. We are subject to the Washington State Energy Independence Act, which requires us to obtain a portion of our electricity from qualifying renewable resources or through purchase of RECs and acquiring all cost effective conservation measures.
We are subject to the Washington State Energy Independence Act, which requires us to obtain a portion of our electricity from qualifying renewable resources or through purchase of RECs and acquiring all cost effective energy efficiency measures. Future generation resource decisions will be affected by legislation for restrictions on greenhouse gas emissions and renewable energy requirements. See “Item 7.
RC West oversees grid compliance with federal and regional grid standards, and can determine measures to prevent or mitigate system emergencies in day-ahead or real-time operations. Vulnerability to Cyberattack The energy sector, including electric and natural gas utility companies, have become the subject of cyberattacks and ransomware attacks with increased frequency.
RC West oversees grid compliance with federal and regional grid standards, and can determine measures to prevent or mitigate system emergencies in day-ahead or real-time operations.
(2) Other contracts for power purchases includes power purchase agreements for solar and wind energy. (3) The forecast assumes near normal hydroelectric generation. (4) Includes the Lancaster Plant PPA. Excludes Boulder Park GS, Kettle Falls CT, Northeast CT and Rathdrum CT, as these are considered peaking facilities and are generally not used to meet our base load requirements.
(2) Estimated available energy production from Company-owned Boulder Park GS, Kettle Falls CT, Northeast CT and Rathdrum CT resources. (3) Other contracts for power purchases includes power purchase agreements for solar and wind energy. (4) The forecast assumes near normal hydroelectric generation. 12 AVISTA CORPORATION (5) Includes the Lancaster Plant PPA.
We are required to self-certify our compliance with these standards on an annual basis and undergo regularly scheduled periodic reviews by the NERC and its 18 AVISTA CORPORATION regional entity, the Western Electricity Coordinating Council (WECC). Failure to comply with NERC reliability standards could result in substantial financial penalties.
The FERC approves NERC Reliability Standards, including western region standards that make up the set of legally enforceable standards for the United States bulk electric system. We are required to self-certify our compliance with these standards on an annual basis and undergo regularly scheduled periodic reviews by the NERC and its regional entity, the Western Electricity Coordinating Council (WECC).
We also sell electric capacity and energy, as well as surplus fuel in the wholesale market in connection with our resource optimization activities as described below.
Avista Utilities generates electricity from facilities that we own and purchases capacity, energy and fuel for generation under long-term and short-term contracts to meet customer load obligations. We also sell electric capacity and energy, as well as surplus fuel in the wholesale market in connection with our resource optimization activities as described below.
People Development, Retention and Attraction We strive to hire and retain talented people who are innovative and skilled so we can continue to provide safe, reliable and affordable service to our customers and advance the Company at the same time. Retention of our talented people is a focal strategy addressed through employee engagement efforts and the pay equity project.
The following is an overview of some of our key human capital initiatives intended to inspire engaged and thriving employees and other stakeholders, such as our customers and business partners. 6 AVISTA CORPORATION Employee Attraction, Development and Retention We strive to hire and retain talented people who are innovative and skilled so we can continue to provide safe, reliable and affordable service to our customers and advance the Company at the same time.
Additional generating resources required will either be owned by us or be owned by other parties who will sell us the capacity and energy under PPAs.
Management’s Discussion and Analysis of Financial Condition – Environmental Issues and Contingencies” and “Colstrip” for information related to existing and proposed laws and regulations, and issues relating to Colstrip. Additional generating resources required will either be owned by us or be owned by other parties who will sell us the capacity and energy under PPAs.
The facility has a nameplate capacity of 144 MW. The 20-year PPA began in December 2020 and we purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement.
We purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. See “Item 2. Properties” for a detailed list of our PPAs.
We expect to spend $437 million ($124 million of which was spent through 2023) implementing the plan components over the life of the 10-year plan that began in 2020. The IPUC and WUTC approved deferral of certain costs of the wildfire resiliency plan, and we will continue to seek recovery of costs in future rate filings.
In 2024, we spent $34 million in capital and $18 million in operating expenses on wildfire resiliency and we expect similar levels of expenditures in 2025. The IPUC and WUTC approved deferral and recovery of certain operating expenses of the wildfire resiliency plan, and we will continue to seek recovery of costs in future rate filings.
Future Reso urce Needs Avista Utilities has operational strategies to provide sufficient resources to meet our energy requirements under a range of operating conditions. These operational strategies consider the amount of energy needed, which varies because of the factors that influence demand over intra-hour, hourly, daily, monthly and annual durations.
These operational strategies consider the amount of energy needed, which varies because of the factors that influence demand over intra-hour, hourly, daily, monthly and annual durations. Our average hourly load was 1,117 aMW in 2024, 1,115 aMW in 2023 and 1,142 aMW in 2022.
We are required to file an Integrated Resource Plan (IRP) or Washington Progress Report with the WUTC and IPUC every two years. The WUTC and IPUC review the IRP and give the public the opportunity to comment.
Excludes Boulder Park GS, Kettle Falls CT, Northeast CT and Rathdrum CT, as these are considered peaking facilities and are generally not used to meet our base load requirements. We are required to file an Integrated Resource Plan (IRP) or Washington Progress Report with the WUTC and IPUC every two years.
Our administrative and operating networks are targeted by hackers on a regular basis. A successful attack on our administrative networks could compromise the security and privacy of data, including operating, financial and personal information.
Vulnerability to Cyberattack The energy sector, including electric and natural gas utility companies, has become the subject of cyberattacks with increased frequency and we, along with other utility companies, are the target of these frequent attacks. A successful attack on our administrative networks could compromise the security and privacy of data, including operating, financial and personal information.
Material on our website is not part of this report. AVISTA U TILITIES Gene ral At the end of 2023, Avista Utilities supplied retail electric service to approximately 416,000 customers and retail natural gas service to approximately 381,000 customers across its service territory. Avista Utilities' service territory covers 30,000 square miles with a population of 1.7 million.
We work with our employees to reinforce personal responsibility regarding safety and health, and to implement measures to create and maintain a safe work environment. AVISTA U TILITIES Gene ral At the end of 2024, Avista Utilities supplied retail electric service to approximately 422,000 customers and retail natural gas service to approximately 383,000 customers across its service territory.
Electric O perations General Avista Utilities generates, transmits and distributes electricity, serving electric customers in eastern Washington and northern Idaho and a small number of customers in Montana. Avista Utilities generates electricity from facilities that we own and purchases capacity, energy and fuel for generation under long-term and short-term contracts to meet customer load obligations.
Avista Utilities' service territory covers 30,000 square miles with a population of 1.7 million. Electric O perations General Avista Utilities generates, transmits and distributes electricity, serving electric customers in eastern Washington and northern Idaho and a small number of customers in Montana.
Management’s Discussion and Analysis of Financial Condition – Environmental Issues and Contingencies” for further discussion on clean energy, including applicable regulations. Wildfire Resiliency Plan We are implementing additional measures to enhance our ability to mitigate the potential for, and impact of, wildfires within our service territories.
See “Item 7. Management’s Discussion and Analysis of Financial Condition – Environmental Issues and Contingencies” for further discussion on clean energy, including applicable regulations. Wildfire Resiliency Plan We have a wildfire resiliency plan focused on four primary areas: transmission and distribution system hardening, enhanced vegetation management, situational awareness, and operations and response.
Excluding the Little Falls Hydroelectric Generating Project (Little Falls), our other seven hydroelectric plants are regulated by the FERC through two project licenses. The licensed projects are subject to the provisions of Part I of the FPA.
Excluding the Little Falls Hydroelectric Generating Project (Little Falls), our other seven hydroelectric plants are regulated by the FERC through two project licenses. Cabinet Gorge and Noxon Rapids are under one 45-year FERC license expiring in 2046. This license embodies a settlement agreement relating to project operations and resource protection and mitigation efforts over the license term.
In 2022, we held our biennial employee experience survey and prioritized initiatives focusing on enhancing our employee experience. Continuous learning plays a large part in fostering collaboration and innovation among our employees and is pervasive throughout the Company.
We continue to think creatively about how we reach out to our communities regarding employment opportunities, with a goal of attracting talented individuals who can ultimately help advance the Company's objectives. Continuous learning plays a large part in fostering collaboration and innovation among our employees and is pervasive throughout the Company.
Removed
Human Capital Our approach to people is a critical strategy and the priorities for this strategy include, among other things: • attracting, developing, and retaining a diverse, engaged and skilled workforce, • providing opportunities for continuous learning, development, career growth, and movement within the Company, • supporting and rewarding our employees through competitive pay and benefits, • encouraging and supporting a community-minded culture, and • investing in the physical, emotional and financial health and safety of our employees.
Added
Human Capital On December 31, 2024, Avista Utilities employed 1,950 individuals with bargaining unit employees comprising 36 percent of our overall workforce. Our approach to people is a critical strategy to inspire engaged and thriving employees by empowering a high-performing organization where employees are valued, respected and have opportunities to grow.
Removed
The following is an overview of some of our key human capital initiatives intended to foster the overall well-being of our employees and other stakeholders, such as our customers and business partners.
Added
Among other things, this strategy supports hiring talented people and equipping them with capabilities, tools and a culture that empowers them to pursue great ideas – ideas that engage the imagination, stretch us all and ensure we continue to provide exemplary and cost-effective service.
Removed
Equity, Inclusion and Diversity We strive to foster a culture that values trust, and respect based on equity, inclusion and diversity, and offering all employees the opportunity to enrich their lives and careers through challenging and meaningful work - all in an equal opportunity workplace surrounded by a supportive and inclusive environment.
Added
Focus areas for this strategy strive to: • Strengthen employee attraction, engagement, and retention, while building a sense of community and purpose, • Ensure safety and well-being through innovative programs, best practices, tools, and technology, • Expand innovation disciplines, capabilities, and mindsets with cross-departmental interactions and external networks to build the utility of the future.
Removed
Our equity, inclusion, and diversity (EID) initiatives are focused on equity in our systems and processes, employee recruitment, employee training and development, and employee 6 AVISTA CORPORATION engagement, including participation in employee resource groups. Employee resource groups are voluntary, employee-led groups fostering a diverse and inclusive workplace aligned with our organizational mission, values and goals and business practices.
Added
We are focused on innovative recruiting and educational outreach to organizations and schools to create greater awareness of the variety of career opportunities available in our industry and at the Company.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If insurance or indemnification agreements are unable to adequately protect us or reimburse us for out-of-pocket costs, it could have a material adverse effect on our results of operations, financial condition and cash flows. Damage to facilities could be caused by severe weather or natural disasters, such as snow, ice, wind storms, wildfires, earthquakes or avalanches.
If insurance or indemnification agreements are unable to adequately protect us or reimburse us for out-of-pocket costs, it could have a material adverse effect on our results of operations, financial condition and cash flows. Damage to facilities could be caused by severe weather or natural disasters, such as snow, ice, wind storms, floods, wildfires, earthquakes or avalanches.
In addition, custom or new technology (including potential generative artificial intelligence) that is heavily relied upon may not be maintained and updated appropriately due to resource restraints, or other factors, which could cause technology failures or give rise to additional operational or security risks.
In addition, custom or new technology (including generative artificial intelligence) that is heavily relied upon may not be maintained and updated appropriately due to resource restraints, or other factors, which could cause technology failures or give rise to additional operational or security risks.
A combination of factors exposes our operations to commodity price risks, including: • our obligation to serve our retail customers at rates set through the regulatory process - we cannot decline to serve our customers and we cannot change retail rates to reflect current energy prices unless and until we receive regulatory approval, • customer demand, which is beyond our control because of weather, customer choices, prevailing economic conditions and other factors, • some of our energy supply cost is fixed by the nature of the energy-producing assets or through contractual arrangements (however, a significant portion of our energy resource costs are not fixed), and • the potential non-performance by commodity counterparties, which could lead to replacement of the scheduled energy or natural gas at higher prices.
A combination of factors exposes our operations to commodity price risks, including: • our obligation to serve our retail customers at rates set through the regulatory process - we cannot decline to serve our customers and we cannot change retail rates to reflect current energy prices unless and until we receive regulatory approval, • customer demand, which is beyond our control because of weather, customer choices, prevailing economic conditions and other factors, • some of our energy supply cost is fixed by the nature of the energy-producing assets or through contractual arrangements (however, a significant portion of our energy resource costs are not fixed), and 32 AVISTA CORPORATION • the potential non-performance by commodity counterparties, which could lead to replacement of the scheduled energy or natural gas at higher prices.
Potential direct effects of climate change include changes in the timing and magnitude of snowpack and streamflow, impacting hydro generation; timing and magnitude of changes in electric and gas load; increased weather-related stress on, or damage to, energy infrastructure; increased frequency and intensity of extreme weather events that may impact energy generation and delivery.
Potential direct effects of climate change include changes in the timing and magnitude of snowpack and streamflow, impacting hydroelectric generation; timing and magnitude of changes in electric and gas load; increased weather-related stress on, or damage to, energy infrastructure; increased frequency and intensity of extreme weather events that may impact energy generation and delivery.
However, these deferred costs require cash outflows from the time of natural gas purchases until the costs are later recovered through retail sales. The cost of power supply can be significantly affected by weather, and therefore is subject to trends in climate change.
However, these deferred costs require cash outflows from the time of natural gas purchases until the costs are later recovered through retail rates. The cost of power supply can be significantly affected by weather, and therefore is subject to trends in climate change.
AEL&P operates several hydroelectric power generation facilities and has diesel generating capacity from multiple facilities to provide backup service to firm customers when necessary; however, a single hydroelectric power generation facility, the Snettisham hydroelectric project, provides approximately two-thirds of AEL&P’s hydroelectric power generation.
AEL&P operates several hydroelectric power generation facilities and has diesel generating capacity to provide backup service to firm customers when necessary; however, a single hydroelectric power generation facility, the Snettisham hydroelectric project, provides approximately two-thirds of AEL&P’s hydroelectric power generation.
When we enter into fixed price energy commodity transactions for future delivery, we are subject to credit terms that may require us to provide collateral to wholesale counterparties related to the difference between current prices 33 AVISTA CORPORATION and the agreed upon fixed prices. These collateral requirements can place significant demands on our cash flows or borrowing arrangements.
When we enter into fixed price energy commodity transactions for future delivery, we are subject to credit terms that may require us to provide collateral to wholesale counterparties related to the difference between current prices and the agreed upon fixed prices. These collateral requirements can place significant demands on our cash flows or borrowing arrangements.
In addition, tariffs and trade restrictions could have a similar impact on our suppliers and certain customers, which could have a negative impact on our financial condition, results of operations and cash flows. 30 AVISTA CORPORATION See “Item 7.
In addition, tariffs and trade 29 AVISTA CORPORATION restrictions could have a similar impact on our suppliers and certain customers, which could have a negative impact on our financial condition, results of operations and cash flows. See “Item 7.
To the extent that hydroelectric generation is less than normal, significantly more costly power supply resources must be acquired and the ability to realize net benefits from surplus hydroelectric wholesale sales is reduced. Wholesale prices also vary based on wind patterns as wind generation capacity is material in the Pacific Northwest but its contribution to supply is inconsistent.
To the extent that hydroelectric generation is less than normal, more costly power supply resources must be dispatched or acquired and the ability to realize net benefits from surplus hydroelectric wholesale sales is reduced. Wholesale prices also vary based on wind patterns as wind generation capacity is material in the Pacific Northwest but its contribution to supply is inconsistent.
The FERC, the NERC and the WECC perform periodic audits of the Company. Failure to comply with the FERC, the NERC, or the WECC requirements can result in financial penalties. Future legislation, administrative rules or Executive Orders could have a material adverse effect on our operations, results of operations, financial condition and cash flows. 34 AVISTA CORPORATION
The FERC, the NERC and the WECC perform periodic audits of the Company. Failure to comply with the FERC, the NERC, or the WECC requirements can result in financial penalties. Future legislation, administrative rules or Executive Orders could have a material adverse effect on our operations, results of operations, financial condition and cash flows.
This could result in higher commodity costs to replace the lost generation, as well as higher costs to retire the generation source before the end of its expected life. This also includes costs (including replacement of lost generation) associated with our transfer of Colstrip ownership to NorthWestern at the end of 2025. See “Item 7.
This could result in higher commodity costs to replace the lost generation, as well as higher costs to retire the generation source before the end of its expected life. This also includes costs (including replacement of lost generation) associated with our transfer of Colstrip 33 AVISTA CORPORATION ownership to NorthWestern at the end of 2025. See “Item 7.
In addition, credit rating downgrades could reduce the number of counterparties willing to do business with us or result in the termination of outstanding regulatory authorizations for certain financing activities. Credit risk may be affected by industry concentration and geographic concentration.
In addition, credit rating downgrades could reduce the number of counterparties willing to do business with us or result in the termination of outstanding regulatory authorizations for certain financing activities. 31 AVISTA CORPORATION Credit risk may be affected by industry concentration and geographic concentration.
Any of the above could also result in the loss or release of confidential 28 AVISTA CORPORATION customer and/or employee information or other proprietary data that could adversely affect our reputation and competitiveness, could result in costly litigation and negatively impact our results of operations.
Any of the above could also result in the loss or release of confidential customer and/or employee information or other proprietary data that could adversely affect our reputation and competitiveness, could result in costly litigation and negatively impact our results of operations.
Our operations are subject to operational and event risks that include: • severe weather or natural disasters, including, but not limited to, avalanches, wind storms, wildfires, earthquakes, snow and ice storms, and heat waves due to normal weather variations as well as the impacts of climate change which could disrupt energy generation, transmission and distribution, as well as the availability and costs of materials, equipment, supplies, support services and general business operations, • blackouts or disruptions of interconnected transmission systems (the regional power grid), • unplanned outages at generating plants, • changes in the availability and cost of purchased power, fuel and natural gas, including delivery constraints, which can disrupt service to customers, • explosions, fires, accidents, or mechanical breakdowns that could occur while operating and maintaining our generation, transmission and distribution systems, • property damage or injuries to third parties caused by our generation, transmission and distribution systems, • natural disasters that can disrupt energy generation, transmission and distribution, and general business operations, • terrorist attacks or other malicious acts that may disrupt or cause damage to our utility assets or the vendors we utilize, and • increased costs or delay of capital projects associated with the ability of suppliers, vendors or contractors to perform, • general workforce problems, including decreased employee engagement, which may impact strategy execution and negatively affect retention, ability to attract workers, and result in challenges in collective bargaining, possible work stoppages, and strikes.
Our operations are subject to operational and event risks that include: • severe weather or natural disasters, including, but not limited to, avalanches, wind storms, wildfires, earthquakes, floods, snow and ice storms, and heat waves due to normal weather variations as well as the impacts of climate change which could disrupt energy generation, transmission and distribution, as well as the availability and costs of materials, equipment, supplies, support services and general business operations, • blackouts or disruptions of interconnected transmission systems (the regional power grid), • unplanned outages at generating plants, • changes in the availability and cost of purchased power, fuel and natural gas, including delivery constraints and restrictions imposed by the transition to renewable and/or non-emitting energy sources, which can disrupt service to customers, • explosions, fires, accidents, or mechanical breakdowns that could occur while operating and maintaining our generation, transmission and distribution systems, including, but not limited to, increased risk associated with emerging renewable technologies as these technologies continue to mature, • property damage or injuries to third parties caused by our generation, transmission and distribution systems, • natural disasters that can disrupt energy generation, transmission and distribution, and general business operations, • terrorist attacks or other malicious acts that may disrupt or cause damage to our utility assets or the vendors we utilize, and • increased costs or delay of capital projects associated with the ability of suppliers, vendors or contractors to perform, • general workforce problems, including decreased employee engagement, which may impact strategy execution and negatively affect retention, ability to attract workers, and result in challenges in collective bargaining, possible work stoppages, and strikes.
We are subject to environmental regulation by federal, state and local authorities related to our past, present and future operations. See “Note 22 of the Notes to Consolidated Financial Statements” for further details of these matters. Import tariffs could lead to increased prices on raw materials that are critical to our business.
We are subject to environmental regulation by federal, state and local authorities related to our past, present and future operations. See “Note 22 of the Notes to Consolidated Financial Statements” for further details of these matters. Import tariffs could lead to increased prices on energy commodities and/or equipment and materials that are critical to our business.
Our strategic business plans could be affected by or result in the following: • disruptive innovations in the marketplace may outpace our ability to compete or manage our risk, • customers may have a choice in the future over the sources from which to receive their energy and we may not be able to compete, • potential difficulties in integrating acquired operations and in realizing expected opportunities, diversions of management resources and losses of key employees, challenges with respect to operating new businesses and other unanticipated risks and liabilities, • non-regulated investments in businesses outside of our core utilities operations may increase earnings volatility, • market or other conditions that could adversely affect our operations or require changes to our business strategy and could result in reduced assets and net income, • affordability of electric and/or gas services may be a challenge for customers resulting in increased delayed payment for utility services, • potential reputational risk arising from repeated general rate case filings, degradation in the quality of service, or from failed strategic investments and opportunities, which could erode shareholder, customer and community satisfaction with the Company, and • the risk of municipalization or other form of service territory reduction. 29 AVISTA CORPORATION External Mandates Risk Factors External mandate risk involves forces outside the Company, which may include significant changes in customer expectations, disruptive technologies that result in obsolescence of our business model and government action that could impact the Company.
Our strategic business plans could be affected by or result in the following: • disruptive innovations in the marketplace may outpace our ability to compete or manage our risk (including the transition to renewable and/or non-emitting energy resources), • customers may have a choice in the future over the sources from which to receive their energy and we may not be able to compete, • potential difficulties in integrating acquired operations and in realizing expected opportunities, diversions of management resources and losses of key employees, challenges with respect to operating new businesses and other unanticipated risks and liabilities, • reduced control over generation resources resulting from reliance on contract power from third-party owners of generation assets, which could limit our ability to balance resources with demand, • non-regulated investments in businesses outside of our core utilities operations may increase earnings volatility, • market or other conditions that could adversely affect our operations or require changes to our business strategy and could result in reduced assets and net income, • affordability of electric and/or gas services may be a challenge for customers resulting in increased delayed payment for utility services, • potential reputational risk arising from repeated general rate case filings, degradation in the quality of service, or from failed strategic investments and opportunities, which could erode shareholder, customer and community satisfaction with the Company, and • the risk of municipalization or other form of service territory reduction. 28 AVISTA CORPORATION External Mandates Risk Factors External mandate risk involves forces outside the Company, which may include significant changes in customer expectations, disruptive technologies that result in obsolescence of our business model and government action that could impact the Company.
We expect continuing legislative and regulatory activity in the future and we are evaluating the extent to which potential changes to environmental laws and regulations may: • increase the operating costs of generating plants, • increase the lead time and capital costs for the construction of new generating plants, • require modification of our existing generating plants, • require existing generating plant operations to be curtailed or shut down, • reduce the amount of energy available from our generating plants, • restrict the types of generating plants that can be built or contracted with, • require construction of specific types of generation plants at higher cost, and • increase the cost or limit our ability to distribute natural gas to customers.
We expect continuing legislative and regulatory activity in the future and we are evaluating the extent to which potential changes to environmental laws and regulations may: • increase the operating costs of generating plants, • increase the lead time and capital costs for the construction of new generating plants, • require modification of our existing generating plants, • require existing generating plant operations to be curtailed or shut down, • reduce the amount of energy available from our generating plants, • restrict the types of generating plants that can be built or contracted with, • require construction of specific types of generation plants at higher cost, including emerging generation sources still in development that operate at a higher risk of failure, and • increase the cost or limit our ability to distribute natural gas to customers.
Wildfire risks may be exacerbated by increasing temperatures and/or decreasing precipitation due to climate change. We are subject to various operational and event risks.
Wildfire risks may be exacerbated by increasing temperatures and/or decreasing precipitation due to climate change. 25 AVISTA CORPORATION We are subject to various operational and event risks.
Management's Discussion and Analysis – Regulatory Matters.” In the future, we may no longer meet the criteria for continued application of regulatory accounting principles for all or a portion of our regulated operations.
See further discussion of regulatory matters in “Item 7. Management's Discussion and Analysis – Regulatory Matters.” In the future, we may no longer meet the criteria for continued application of regulatory accounting principles for all or a portion of our regulated operations.
Also, wildfires could lead to extended operational outages of our equipment while we wait for the wildfire to be extinguished before restoring power, and the cost to implement rapid response or repair to such facilities could be significant.
Also, wildfires could lead to extended operational outages of our equipment while we wait for the wildfire to be extinguished before restoring power, and the cost to implement rapid response or repair to such facilities could be significant. Wildfires caused by our equipment could cause significant damage to our reputation, which could erode shareholder, customer and community satisfaction.
In addition, regionally, there are regulatory and legislative initiatives that have been passed which are designed to limit greenhouse gas emissions and increase the use of renewable sources of energy.
In addition, there are regulatory and legislative initiatives that have been passed which are designed to limit greenhouse gas emissions and increase the use of renewable sources of energy. In addition, regulatory and legislative initiatives may restrict customers' access to natural gas and/or require or limit natural gas infrastructure in buildings.
Wildfires caused by our equipment could cause significant damage to our reputation, which could erode shareholder, customer and 26 AVISTA CORPORATION community satisfaction. In addition, wildfires caused by our equipment could lead to increased litigation and insurance costs, loss of insurance coverage, the need to be self-insured or the need to consider non-traditional insurance coverage or other risk mitigation procedures.
In addition, wildfires caused by our equipment could lead to increased litigation and insurance costs, loss of insurance coverage, the need to be self-insured or the need to consider non-traditional insurance coverage or other risk mitigation procedures.
See “Forward-Looking Statements” for additional factors which could have a significant impact on our operations, results of operations, financial condition or cash flows and could cause actual results to differ materially from those anticipated in such statements.
See “Forward-Looking Statements” for additional factors which could have a significant impact on our operations, results of operations, financial condition or cash flows and could cause actual results to differ materially from those anticipated in such statements. Additional risks and uncertainties not presently known to us or that we currently do not consider material could also adversely affect us.
We have concentrations of suppliers and customers in the electric and natural gas industries including: • electric and natural gas utilities, • electric generators and transmission providers, • oil and natural gas producers and pipelines, • financial institutions including commodity clearing exchanges and related parties, and • energy marketing and trading companies. 32 AVISTA CORPORATION We have concentrations of credit risk related to our geographic location in the western United States and western Canada energy markets.
We have concentrations of suppliers and customers in the electric and natural gas industries including: • electric and natural gas utilities, • electric generators and transmission providers, • oil and natural gas producers and pipelines, • financial institutions including commodity clearing exchanges and related parties, and • energy marketing and trading companies.
Management's Discussion and Analysis – Environmental Issues and Contingencies” and “Forward-Looking Statements” for discussion of or reference to additional external mandates which could have a material adverse effect on our results of operations, financial condition and cash flows. Financial Risk Factors Certain retail electricity and natural gas sales volumes vary directly with changes in temperatures.
Management's Discussion and Analysis – Environmental Issues and Contingencies” and “Forward-Looking Statements” for discussion of or reference to additional external mandates which could have a material adverse effect on our results of operations, financial condition and cash flows.
The cost to implement rapid response or repair to such facilities can be significant. Overhead electric lines are most susceptible to damage caused by severe weather and are not covered by insurance.
The cost to implement rapid response or repair to such facilities can be significant. Overhead electric lines are most susceptible to damage caused by severe weather and are not covered by insurance. Physical attacks on our assets could have a negative impact on our business and our results of operations.
Such legislation could direct and/or restrict the operation and raise the costs of our power generation resources and energy delivery infrastructure as well as the distribution of natural gas to our customers.
Other initiatives may seek to promote social interests expressed as energy equity, environmental justice or similar frameworks. Such legislation could direct and/or restrict the operation and raise the costs of our power generation resources and energy delivery infrastructure as well as the distribution of natural gas to our customers.
To the extent that power supply costs are above the amount allowed currently in retail rates, the difference is partially absorbed by the Company in current expense and is partially deferred or shared with customers through regulatory mechanisms. However, these deferred costs require cash outflows from the time of power purchases until the costs are later recovered through retail sales.
To the extent that power supply costs are above the amount allowed currently in retail rates, the difference is partially absorbed by the 30 AVISTA CORPORATION Company in current expense and is partially deferred or shared with customers through regulatory mechanisms.
See further discussion at “Note 1 of the Notes to Consolidated Financial Statements – Regulatory Deferred Charges and Credits.” Operational Risk Factors Weather (temperatures, precipitation levels, wind patterns and storms) has a significant effect on our results of operations, financial condition and cash flows. These effects could increase as climate changes occur.
Financial Risk Factors Weather (temperatures, precipitation levels, wind patterns and storms) has a significant effect on our results of operations, financial condition and cash flows. These effects could increase as climate changes occur.
There are various risks associated with technology systems such as hardware or software failure, communications failure, data distortion or destruction, unauthorized access to data, misuse of proprietary or confidential data, unauthorized control through electronic means, programming mistakes and other deliberate or inadvertent human errors.
These cyberattacks have become more common and sophisticated and, as such, we could be required to incur costs to strengthen our systems and respond to emerging concerns. 27 AVISTA CORPORATION There are various risks associated with technology systems such as hardware or software failure, communications failure, data distortion or destruction, unauthorized access to data, misuse of proprietary or confidential data, unauthorized control through electronic means, programming mistakes and other deliberate or inadvertent human errors.
Tariffs and other restrictions on trade with foreign countries could significantly increase the prices of raw materials that are critical to our business, such as steel poles or wires.
Tariffs and other restrictions on trade with foreign countries could significantly increase the prices of energy commodities (electricity and natural gas) and equipment and materials that are critical to our business.
Our ability to access capital on reasonable terms is subject to numerous factors and market conditions, many of which are beyond our control. If we are unable to obtain capital on reasonable terms, it may limit or prohibit our ability to finance capital expenditures and repay maturing long-term debt.
We access long-term capital markets to finance capital expenditures, repay maturing long-term debt and obtain additional working capital, including needs related to power and natural gas purchases and sales, from time-to-time. Our ability to access capital on reasonable terms is subject to numerous factors and market conditions, many of which are beyond our control.
Our liquidity needs could exceed our short-term credit availability and lead to defaults on various financing arrangements. We would also likely be prohibited from paying dividends on our common stock.
If we are unable to obtain capital on reasonable terms, it may limit or prohibit our ability to finance capital expenditures and repay maturing long-term debt. Our liquidity needs could exceed our short-term credit availability and lead to defaults on various financing arrangements. We would also likely be prohibited from paying dividends on our common stock.
This could result in experiencing a loss of revenues and/or additional costs to replace or restore assets and systems, and may increase costs associated with heightened security requirements.
Significant destruction or interruption of 26 AVISTA CORPORATION these assets and systems could prevent us from fulfilling our critical business functions, including delivering energy to customers. This could result in experiencing a loss of revenues and/or additional costs to replace or restore assets and systems, and may increase costs associated with heightened security requirements.
If regulators do not grant rate increases or grant substantially lower rate increases than our requests in the future or if recovery of deferred expenses is disallowed, it could have a negative effect on our financial condition, results of operations or cash flows. See further discussion of regulatory matters in “Item 7.
If regulators do not grant rate increases or grant substantially lower rate increases than our requests in the future or if recovery of deferred expenses is disallowed, or if regulators do not allow us to recover costs associated with assets required to be retired or divested, such as Colstrip, to comply with emerging laws and regulations, it could have a negative effect on our financial condition, results of operations or cash flows.
As a result of these combined factors, our net cost of power supply – the difference between our costs of generation and market purchases, reduced by our revenue from wholesale sales – varies significantly because of weather. 31 AVISTA CORPORATION We rely on regular access to financial markets but we cannot assure favorable or reasonable financing terms will be available when we need them.
As a result of these combined factors, our net cost of power supply – the difference between our costs of generation and market purchases, reduced by our revenue from wholesale sales – varies significantly because of weather.
These concentrations of counterparties and concentrations of geographic location may affect our overall exposure to credit risk because the counterparties may be similarly affected by changes in conditions. We are a participant in the EIM, and engage in direct and indirect power purchase and sale transactions in connection with that participation.
We have concentrations of credit risk related to our geographic location in the western United States and western Canada energy markets. These concentrations of counterparties and concentrations of geographic location may affect our overall exposure to credit risk because the counterparties may be similarly affected by changes in conditions.
The price of power tends to be lower during periods with excess supply, such as the spring when hydroelectric conditions are usually at their maximum and various facilities are required to operate to meet environmental mandates. Oversupply can be exacerbated when intermittent resources such as wind generation are producing output that may be supported by price subsidies.
However, these deferred costs require cash outflows from the time of power purchases until the costs are later recovered through retail rates. The price of power tends to be lower during periods with excess supply, such as the spring when hydroelectric conditions are usually at their maximum and various facilities are required to operate to meet environmental mandates.
Access to capital markets is critical to our operations and our capital structure. We have significant capital requirements that we expect to fund, in part, by accessing capital markets. As such, the state of financial markets and credit availability in the global, United States and regional economies impacts our financial condition.
As such, the state of financial markets and credit availability in the global, United States and regional economies impacts our financial condition. We could experience increased borrowing costs or limited access to capital on reasonable terms.
Security threats are continuing to evolve, and our industry has been subject to, and will likely continue to be subject to, attempts to disrupt operations. Significant destruction or interruption of these assets and systems could prevent us from fulfilling our critical business functions, including delivering energy to customers.
Our generation, transmission and distribution assets and the systems that monitor and operate these assets are critical infrastructure for providing service to our customers. Security threats are continuing to evolve, and our industry has been subject to, and will likely continue to be subject to, attempts to disrupt operations.
In extreme situations, we may be required to sell excess energy at negative prices.
Oversupply can be exacerbated when intermittent resources such as wind generation are producing output that may be supported by price subsidies. In extreme situations, we may be required to sell excess energy at negative prices.
Weather impacts are described in the following subtopics: • certain retail electricity and natural gas sales, • the cost of natural gas supply, and • the cost of power supply. Wildfires ignited, or allegedly ignited, by Avista Corp. equipment or facilities, could cause significant loss of life and property, thereby causing serious operational and financial harm.
See further discussion at “Note 1 of the Notes to Consolidated Financial Statements – Regulatory Deferred Charges and Credits.” Operational Risk Factors Wildfires ignited, or allegedly ignited, by Avista Corp. equipment or facilities, could cause significant loss of life and property, thereby causing serious operational and financial harm.
Removed
Physical attacks on our assets could have a negative impact on our business and our results of operations. 27 AVISTA CORPORATION Our generation, transmission and distribution assets and the systems that monitor and operate these assets are critical infrastructure for providing service to our customers.
Added
The realization of many of the risks discussed herein depends upon the prior occurrence of some event or circumstance – i.e. a “trigger”.
Removed
These cyberattacks have become more common and sophisticated and, as such, we could be required to incur costs to strengthen our systems and respond to emerging concerns.
Added
We may or may not discuss the occurrence of a trigger that has not resulted in an adverse effect on us, and the absence of such disclosure should not be construed as a representation that no such trigger has occurred.
Removed
In addition, regulatory and legislative initiatives may restrict customers' access to natural gas and/or require or limit natural gas infrastructure in buildings other initiatives may seek to promote social interests expressed as energy equity, environmental justice or similar frameworks.
Added
Weather impacts are described in the following subtopics: • certain retail electricity and natural gas sales, • the cost of natural gas supply, and • the cost of power supply. Certain retail electricity and natural gas sales volumes vary directly with changes in temperatures.
Removed
We could experience increased borrowing costs or limited access to capital on reasonable terms. We access long-term capital markets to finance capital expenditures, repay maturing long-term debt and obtain additional working capital, including needs related to power and natural gas purchases and sales, from time-to-time.
Added
We rely on regular access to financial markets but we cannot assure favorable or reasonable financing terms will be available when we need them. Access to capital markets is critical to our operations and our capital structure. We have significant capital requirements that we expect to fund, in part, by accessing capital markets.
Added
We are a participant in the EIM, and engage in direct and indirect power purchase and sale transactions in connection with that participation.

Item 2. Properties

Properties — owned and leased real estate

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We hold a long-term transmission agreement with the BPA that allows us to serve our native load customers that are connected through the BPA’s transmission system. Natural Gas Plant Avista Utilities has natural gas distribution mains of approximately 3,600 miles in Washington, 2,200 miles in Idaho and 2,400 miles in Oregon.
We hold a long-term transmission agreement with the BPA that allows us to serve our native load customers that are connected through the BPA’s transmission system. 36 AVISTA CORPORATION Natural Gas Plant Avista Utilities has natural gas distribution mains of approximately 3,600 miles in Washington, 2,200 miles in Idaho and 2,400 miles in Oregon.
Business – Avista Utilities – Natural Gas Operations” for further discussion of Jackson Prairie. ALASKA ELECTRIC LIGH T AND POWER COMPANY Substantially all of AEL&P's utility properties are subject to the lien of the AEL&P mortgage indenture.
Business – Avista Utilities – Natural Gas Operations” for further discussion of Jackson Prairie. ALASKA ELECTRIC LIGH T AND POWER COMPANY Substantially all of AEL&P's utility properties (except the Snettisham plant) are subject to the lien of the AEL&P mortgage indenture.
We have an electric transmission system of approximately 700 miles of 230 kV line and 36 AVISTA CORPORATION approximately 1,600 miles of 115 kV line. We also own an 11 percent interest in approximately 500 miles of a 500 kV line between Colstrip, Montana and Townsend, Montana.
We have an electric transmission system of approximately 700 miles of 230 kV line and approximately 1,600 miles of 115 kV line. We also own an 11 percent interest in approximately 500 miles of a 500 kV line between Colstrip, Montana and Townsend, Montana.
Avista Utilities' electric properties, located in the states of Washington, Idaho, Montana and Oregon, include the following: Generation Properties Present Capability (MW) (1) Hydroelectric Generating Stations (River) Washington: Long Lake (Spokane) 88.0 Little Falls (Spokane) 48.0 Nine Mile (Spokane) 40.6 Upper Falls (Spokane) 10.2 Monroe Street (Spokane) 15.0 Idaho: Cabinet Gorge (Clark Fork) (2) 273.0 Post Falls (Spokane) 11.9 Montana: Noxon Rapids (Clark Fork) 562.4 Total Hydroelectric 1,049.1 Thermal Generating Stations (cycle, fuel source) Washington: Kettle Falls GS (combined-cycle, wood waste) (3) 53.5 Kettle Falls CT (combined-cycle, natural gas) (3) 6.9 Northeast CT (simple-cycle, natural gas) 64.8 Boulder Park GS (simple-cycle, natural gas) 24.6 Idaho: Rathdrum CT (simple-cycle, natural gas) 166.5 Montana: Colstrip Units 3 and 4 (simple-cycle, coal) (4) 222.0 Oregon: Coyote Springs 2 (combined-cycle, natural gas) 322.0 Total Thermal 860.3 Total Generation Properties 1,909.4 (1) Present capability is the maximum capacity of the plant under standard test conditions without exceeding specified limits of temperature, stress and environmental conditions.
Avista Utilities' electric properties, located in the states of Washington, Idaho, Montana and Oregon, include the following: Company-Owned Generation Properties Present Capability (MW) (1) Hydroelectric Generating Stations (River) Washington: Long Lake (Spokane) 88 Little Falls (Spokane) 48 Nine Mile (Spokane) 41 Upper Falls (Spokane) 10 Monroe Street (Spokane) 15 Idaho: Cabinet Gorge (Clark Fork) (2) 273 Post Falls (Spokane) 12 Montana: Noxon Rapids (Clark Fork) 562 Total Hydroelectric 1,049 Thermal Generating Stations (cycle, fuel source) Washington: Kettle Falls GS (combined-cycle, wood waste) (3) 53 Kettle Falls CT (combined-cycle, natural gas) (3) 7 Northeast CT (simple-cycle, natural gas) 65 Boulder Park GS (simple-cycle, natural gas) 25 Idaho: Rathdrum CT (simple-cycle, natural gas) 166 Montana: Colstrip Units 3 and 4 (simple-cycle, coal) (4) 222 Oregon: Coyote Springs 2 (combined-cycle, natural gas) 322 Total Thermal 860 Total Generation Properties 1,909 (1) Present capability is the maximum capacity of the plant under standard test conditions without exceeding specified limits of temperature, stress and environmental conditions.
(2) AEL&P does not own this generating facility but has a PPA under which it has the right to purchase, and the obligation to pay for the capacity and energy of this facility. See further information at “Part 1. Item 1.
AEL&P has a PPA under which it has the right to purchase, and the obligation to pay for, all the capacity and energy of this facility. See further information at “Part 1. Item 1.
AEL&P's utility electric properties, located in Alaska include the following: Generation Properties and Transmission and Distribution Lines Present Capability (MW) (1) Hydroelectric Generating Stations Snettisham (2) 78.2 Lake Dorothy 14.3 Salmon Creek 5.0 Annex Creek 3.6 Gold Creek 1.6 Total Hydroelectric 102.7 Diesel Generating Stations Lemon Creek 51.8 Auke Bay 25.2 Gold Creek 7.0 Industrial Blvd.
AEL&P's utility electric properties, located in Alaska include the following: Present Capability (MW) (1) Hydroelectric Generating Stations Snettisham (2) 78 Lake Dorothy 14 Salmon Creek 5 Annex Creek 4 Gold Creek 2 Total Hydroelectric 103 Diesel Generating Stations Lemon Creek 52 Auke Bay 25 Gold Creek 7 Industrial Blvd.
Plant 23.5 Total Diesel 107.5 Total Generation Properties 210.2 37 AVISTA CORPORATION (1) Present capability is the maximum capacity of the plant under standard test conditions without exceeding specified limits of temperature, stress and environmental conditions.
Plant 23 Total Diesel 107 Total Generation Properties 210 (1) Present capability is the maximum capacity of the plant under standard test conditions without exceeding specified limits of temperature, stress and environmental conditions. (2) AEL&P does not own this generating facility and it is not subject to the lien of the AEL&P mortgage indenture.
(4) Jointly owned; data refers to our 15 percent interest. See “Item 7. Management’s Discussion and Analysis of Financial Condition – Colstrip” for information related to Colstrip Units 3 and 4. Electric Distribution and Transmission Plant Avista Utilities owns and operates approximately 19,700 miles of primary and secondary electric distribution lines providing service to retail customers.
(4) Jointly owned; data refers to our 15 percent interest. See “Item 7. Management’s Discussion and Analysis of Financial Condition – Colstrip” for information related to Colstrip Units 3 and 4. Electric Power Purchase Agreements Avista Utilities enters into long-term PPAs to purchase a portion or all of the output of specific generation assets.
Added
These generating assets are owned by other parties, not the Company, and are not subject to the lien of Avista Corp.'s mortgage 35 AVISTA CORPORATION indenture. See further discussion of certain of these PPAs in “Part 1 – Item 1. Business – Avista Utilities – Electric Operations”.
Added
The following is a summary of PPAs as of December 31, 2024: Generating Source Present Capability (MW) (1) Expiration of Contract Hydroelectric Douglas County PUD 16 2028 Grant County PUD 76 2052 Chelan County PUD (2) 175 2045 Columbia Basin Hydro (3) 11 2045 Total Hydroelectric 278 Thermal Lancaster 270 2041 Wind Clearwater Wind 100 2055 Palouse Wind 105 2042 Rattlesnake Flat Wind 144 2040 Total Wind 349 Solar Lind Solar 28 2038 Total Power Purchase Agreements 925 (1) Present capability is the maximum capacity of the plant under standard test conditions without exceeding specified limits of temperature, stress and environmental conditions.
Added
(2) Our contracted portion of generation asset output from Chelan County PUD changes throughout the life of the agreement. Our output is expected to increase 88 MW in 2026, decrease 88 MW in 2032, and decrease 88 MW in 2034.
Added
(3) Our output from this contract is expected to increase to a total of 147 MW by 2030 as we receive additional capacity under this contract. Electric Distribution and Transmission Plant Avista Utilities owns and operates approximately 19,900 miles of primary and secondary electric distribution lines providing service to retail customers.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Avista Corp. Market Information and Dividend Policy Avista Corp.'s common stock is listed on the New York Stock Exchange under the ticker symbol “AVA.” As of January 31, 2024, there were 6,110 registered shareholders of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Avista Corp. Market Information and Dividend Policy Avista Corp.'s common stock is listed on the New York Stock Exchange under the ticker symbol “AVA.” As of January 31, 2025, there were 5,781 registered shareholders of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

159 edited+77 added−63 removed127 unchanged
Negative amounts are decreases in decoupling revenue in the current year and will be rebated to customers in future years.
Negative amounts are decreases in decoupling revenue in the current year and will be rebated to customers in future years.
(b) Positive amounts are increases in decoupling revenue in the current year and are related to the amortization of rebate balances that resulted in prior years and are being refunded to customers (causing a corresponding decrease in retail revenue from customers) in the current year.
(b) Positive amounts are increases in decoupling revenue in the current year and are related to the amortization of rebate balances that resulted in prior years and are being refunded to customers (causing a corresponding decrease in retail revenue from customers) in the current year.
The following accounting policies represent those that our management believes are particularly important to the consolidated financial statements and require the use of estimates and assumptions: • Regulatory accounting , in accordance with ASC Topic 980, Regulated Operations , among other things, requires that costs and/or obligations that, in our judgement, are probable of recovery through rates charged to customers, but are not yet reflected in rates, not be reflected in our Consolidated Statements of Income until the period in which they are reflected in rates and matching revenues are recognized.
The following accounting policies represent those that management believes are particularly important to the consolidated financial statements and require the use of estimates and assumptions: • Regulatory accounting , in accordance with ASC Topic 980, Regulated Operations , among other things, requires that costs and/or obligations that, in our judgement, are probable of recovery through rates charged to customers, but are not yet reflected in rates, not be reflected in our Consolidated Statements of Income until the period in which they are reflected in rates and matching revenues are recognized.
The generation, transmission, distribution, service and storage facilities in which we have ownership interests or which we may need to acquire or develop are subject to environmental laws, regulations and rules relating to construction permitting, air emissions, water quality, fisheries, wildlife, endangered species, avian interactions, wastewater and stormwater discharges, waste handling, natural resource protection, historic and cultural resource protection, and other similar activities.
The generation, transmission, distribution, service and storage facilities in which we have ownership interests or which we may need to acquire or develop are subject to environmental laws, regulations and rules relating to construction permitting, air quality and emissions, water quality, fisheries, wildlife, endangered species, avian interactions, wastewater and stormwater discharges, waste handling, natural resource protection, historic and cultural resource protection, and other similar activities.
Our Risk Management Committee (RMC) also reviews interest rate risk management plan. Our interest rate swap derivatives are considered economic hedges against the future forecasted interest rate payments of long-term debt. Interest rates on our long-term debt are generally set based on underlying U.S.
Our Risk Management Committee (RMC) also reviews the interest rate risk management plan. Our interest rate swap derivatives are considered economic hedges against the future forecasted interest rate payments of long-term debt. Interest rates on our long-term debt are generally set based on underlying U.S.
We need to finance capital expenditures and acquire additional funds for operations from time to time. The cash requirements needed to service our indebtedness, both short-term and long-term, reduce the amount of cash flow available to fund capital expenditures, purchased power, fuel and natural gas costs, dividends and other requirements. Short Term Borrowings Avista Corp.
We need to finance capital expenditures and acquire additional funds for operations from time to time. The cash requirements needed to service our indebtedness, both short-term and long-term, reduce the amount of cash available to fund capital expenditures, purchased power, fuel and natural gas costs, dividends and other requirements. Short Term Borrowings Avista Corp.
Changes in actual experience can vary significantly from our projections. See also “Competition” above for a discussion of competitive factors that could affect our results of operations in the future. Environmental Issues and Contingencies We are subject to environmental regulation by federal, state and local authorities.
Changes in actual experience can vary significantly from our projections. See also “Competition” above for a discussion of competitive factors that could affect our results of operations in the future. Environmental Issues and Contingencies We are subject to environmental regulation by federal, state, tribal and local authorities.
We mitigate reputational risk primarily through a focus on adherence to our core policies, including our Code of Conduct, maintaining an appropriate culture and tone at the top, and through communication and engagement with external stakeholders.
We strive to mitigate reputational risk primarily through a focus on adherence to our core policies, including our Code of Conduct, maintaining an appropriate culture and tone at the top, and through communication and engagement with external stakeholders.
See “Notes 1, 4 and 23 of the Notes to Consolidated Financial Statements” for further discussion of our regulatory accounting policy and mechanisms. • Pension plans and other postretirement benefit plans , discussed in further detail below. • Equity investments, specifically valuations performed to determine the fair value of certain investment holdings, require judgement in the selection of assumptions used to estimate fair value of investments for which there is not a 53 AVISTA CORPORATION quoted active market price.
See “Notes 1, 4 and 23 of the Notes to Consolidated Financial Statements” for further discussion of our regulatory accounting policy and mechanisms. • Pension plans and other postretirement benefit plans , discussed in further detail below. • Equity investments, specifically valuations performed to determine the fair value of certain investment holdings, require judgement in the selection of assumptions used to estimate fair value of investments for which there is not a 52 AVISTA CORPORATION quoted active market price.
The CCA also has direct impacts on our Idaho electric operations as it applies to power that is delivered in Washington but is allocated to Idaho customers (wholesale sales) or power generated in Washington that is ultimately delivered to Idaho customers.
The CCA also has direct impacts on our Idaho electric operations as it applies to power that is delivered in Washington but is allocated to Idaho customers (wholesale sales) or power generated in Washington that is delivered to Idaho customers.
To prevent the threat of municipalization, we work to build strong relationships with the communities we serve through, among other things: • communicating and being involved with local business leaders and community organizations, • providing customers with a multitude of limited income initiatives, including energy fairs, senior outreach, low income workshops, mobile outreach strategy and a Low Income Rate Assistance Plan, • tailoring internal company initiatives to focus on choices for customers, to increase their overall satisfaction with the Company, and • engaging in the legislative process in a manner that fosters the interests of our customers and the communities we serve.
To prevent the threat of municipalization, we work to build strong relationships with the communities we serve through, among other things: • communicating and being involved with local business leaders and community organizations, • providing customers with a multitude of limited income initiatives, including energy fairs, senior outreach, low income workshops, mobile outreach strategy and a Low Income Rate Assistance Plan, 68 AVISTA CORPORATION • tailoring internal company initiatives to focus on choices for customers, to increase their overall satisfaction with the Company, and • engaging in the legislative process in a manner that fosters the interests of our customers and the communities we serve.
Business Segments As of December 31, 2023, we have two reportable business segments, Avista Utilities and AEL&P. We also have other businesses which do not represent a reportable business segment and are conducted by various direct and indirect subsidiaries of Avista Corp. See “Part I, Item 1. Business – Company Overview” for further discussion of our business segments.
Business Segments As of December 31, 2024, we have two reportable business segments, Avista Utilities and AEL&P. We also have other businesses which do not represent a reportable business segment and are conducted by various direct and indirect subsidiaries of Avista Corp. See “Part I, Item 1. Business – Company Overview” for further discussion of our business segments.
The approved rates were also designed to increase annual base natural gas revenues by $7.5 million, or 6.5 percent, effective in December 2022, and $1.5 million, or 1.2 percent, effective in December 2023. To mitigate the overall impact of the revenue increases on customers, part of the 2022 base rate increase was offset with tax customer credits.
The approved rates were also designed to increase annual base natural gas revenues by $8 million, or 6.5 percent, effective in December 2022, and $2 million, or 1.2 percent, effective in December 2023. To mitigate the overall impact of the revenue increases on customers, part of the 2022 base rate increase was offset with tax customer credits.
In the AEL&P section, we include a discussion of utility margin, which is also a non-GAAP financial measure. 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 that are included (excluded) in the most directly comparable measure calculated and presented in accordance with GAAP.
In the AEL&P section, we also include a discussion of electric 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 that are included (excluded) in the most directly comparable measure calculated and presented in accordance with GAAP.
The expectations regarding retail load growth are also based upon various assumptions, including: • assumptions relating to weather and economic and competitive conditions, • internal analysis of company-specific data, such as energy consumption patterns, 62 AVISTA CORPORATION • internal business plans, • an assumption that we will incur no material loss of retail customers due to self-generation or retail wheeling, and • an assumption that demand for electricity and natural gas as a fuel for mobility will for now be immaterial.
The expectations regarding retail load growth are also based upon various assumptions, including: • assumptions relating to weather and economic and competitive conditions, • internal analysis of company-specific data, such as energy consumption patterns, • internal business plans, • an assumption that we will incur no material loss of retail customers due to self-generation or retail wheeling, and • an assumption that demand for electricity and natural gas as a fuel for mobility will for now be immaterial.
Accounting Standards to be Adopted in 2024 We are not expecting the adoption of accounting standards to have a material impact on our financial condition, results of operations and cash flows in 2024. For more information on accounting standards expected to be adopted in future periods, see "Note 2 of the Notes to the Consolidated Financial Statements".
Accounting Standards to be Adopted in 2025 We are not expecting the adoption of accounting standards to have a material impact on our financial condition, results of operations and cash flows in 2025. For more information on accounting standards expected to be adopted in future periods, see "Note 2 of the Notes to the Consolidated Financial Statements".
The SBCC has since voted to approve revised residential and commercial energy regulations that continue to require new residential and commercial buildings in Washington to use electricity as the primary heat source. In light of this action, the plaintiffs in the State Action amended their complaint to challenge the new regulations.
The SBCC has since voted to approve revised residential and commercial energy regulations that continue to require new residential and commercial buildings in Washington to use electricity as the primary heat source. In light of this action, the plaintiffs in the State Action amended their complaint to challenge the new regulations. The State Action remains pending.
Pension costs are affected by among other things: • employee demographics (including age, compensation and length of service by employees), • the amount of cash contributions to the pension plan, • the actual return on pension plan assets, • expected return on pension plan assets, • discount rate used in determining the projected benefit obligation and pension costs, • assumed rate of increase in employee compensation, • life expectancy of participants and other beneficiaries, and • expected method of payment (lump sum or annuity) of pension benefits.
Pension cost is affected by among other things: • employee demographics (including age, compensation and length of service by employees), • the amount of cash contributions to the pension plan, • the actual return on pension plan assets, • expected return on pension plan assets, • discount rate used in determining the projected benefit obligation and pension costs, • assumed rate of increase in employee compensation, • life expectancy of participants and other beneficiaries, and • expected method of payment (lump sum or annuity) of pension benefits.
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). 46 AVISTA CORPORATION 2023 compared to 2022 Utility Operating Revenues The following graphs present Avista Utilities' electric operating revenues and MWh sales for 2023 and 2022, respectively (dollars in millions and MWhs in thousands): (1) This balance includes public street and highway lighting, which is considered part of retail electric revenues, and deferrals/amortizations to customers related to federal income tax law changes.
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). 45 AVISTA CORPORATION 2024 compared to 2023 Utility Operating Revenues The following graphs present Avista Utilities' electric operating revenues and MWh sales for 2024 and 2023, respectively (dollars in millions and MWhs in thousands): (1) This balance includes public street and highway lighting, which is considered part of retail electric revenues, and deferrals/amortizations to customers related to federal income tax law changes.
Factors that could cause purchased power and natural gas costs to exceed the levels currently recovered from customers under base rates include, but are not limited to, higher prices in wholesale markets and/or an increased need to purchase power in the wholesale markets, and a lack of regulatory approval for higher authorized net power supply costs.
Factors that could cause purchased power and natural gas costs to exceed the levels currently recovered 54 AVISTA CORPORATION from customers under base rates include, but are not limited to, higher prices in wholesale markets and/or an increased need to purchase power in the wholesale markets, and a lack of regulatory approval for higher authorized net power supply costs.
The events of default under each of the credit facilities also include a cross default from other indebtedness (as defined) and in some cases other obligations. Some of these agreements also include a covenant which does not permit our 57 AVISTA CORPORATION ratio of “consolidated total debt” to “consolidated total capitalization” to be greater than 65 percent at any time.
The events of default under each of the credit facilities also include a cross default from other indebtedness (as defined) and in some cases other obligations. Some of these agreements also include a covenant which does not permit our ratio of “consolidated total debt” to “consolidated total capitalization” to be greater than 65 percent at any time.
We have a Senior Vice President, Chief Strategy and Clean Energy Officer who leads strategic initiatives, searches for and evaluates opportunities and makes recommendations to other members of senior management and the Board of Directors.
We have a Senior Vice President, Energy Policy and Chief Strategy Officer who leads strategic initiatives, searches for and evaluates opportunities and makes recommendations to other members of senior management and the Board of Directors.
After considering the expected issuances of long-term debt and common stock during 2024, we expect net cash flows from operating activities, together with cash available under our credit facilities, to provide adequate resources to fund capital expenditures, dividends, and other contractual commitments. 58 AVISTA CORPORATION Limitations on Issuances of Preferred Stock and First Mortgage Bonds We are restricted under our Restated Articles of Incorporation, as amended, as to the additional preferred stock we can issue.
After considering the expected issuances of long-term debt and common stock during 2025, we expect net cash flows from operating activities, together with cash available under our credit facilities, to provide adequate resources to fund capital expenditures, dividends, and other contractual commitments. 57 AVISTA CORPORATION Limitations on Issuances of Preferred Stock and First Mortgage Bonds We are restricted under our Restated Articles of Incorporation, as amended, as to the additional preferred stock we can issue.
See further discussion at “Capital Resources.” We regularly file for rate adjustments for recovery of operating costs and capital investments and to seek the opportunity to earn reasonable returns. 55 AVISTA CORPORATION We have regulatory mechanisms in place that provide for the deferral and recovery of the majority of power and natural gas supply costs.
See further discussion at “Capital Resources.” We regularly file for rate adjustments for recovery of operating costs and capital investments and to seek the opportunity to earn reasonable returns. We have regulatory mechanisms in place that provide for the deferral and recovery of the majority of power and natural gas supply costs.
Actual expenditures may vary from our estimates due to factors such as changes in business conditions or strategic plans. See “Liquidity” for information regarding other material cash requirements for 2024 and thereafter. Pensio n Plan We contributed $10.0 million to the pension plan in 2023.
Actual expenditures may vary from our estimates due to factors such as changes in business conditions or strategic plans. See “Liquidity” for information regarding other material cash requirements for 2025 and thereafter. Pensio n Plan We contributed $10 million to the pension plan in 2024.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for a detailed discussion of our dividend policy and the factors which could limit the payment of dividends. Compet ition Our electric and natural gas distribution utility business has historically been recognized as a natural monopoly.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” for a detailed discussion of our dividend policy and the factors which could limit the payment of dividends. 59 AVISTA CORPORATION Compet ition Our electric and natural gas distribution utility business has historically been recognized as a natural monopoly.
In December 2019, a proposed revision to the rule 66 AVISTA CORPORATION was published in the Federal Register to address the D.C. Circuit's decision. The rule includes technical requirements for CCR landfills and surface impoundments under Subtitle D of the Resource Conservation and Recovery Act, the nation's primary law for regulating solid waste.
In December 2019, a proposed revision to the rule was published in the Federal Register to address the D.C. Circuit's decision. The rule includes technical requirements for CCR landfills and surface impoundments under Subtitle D of the Resource Conservation and Recovery Act, the nation's primary law for regulating solid waste.
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. Climate Change Risk Multiple departments work to mitigate risks related to climate change.
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. 67 AVISTA CORPORATION Climate Change Risk Multiple departments work to mitigate risks related to climate change.
Factors beyond our control that could result in an increased need to purchase power in the wholesale markets include, but are not limited to: • increases in demand (due to either weather or customer growth), • reduced snowpack or lower streamflows (due to weather) for hydroelectric generation, • unplanned outages at generating facilities, and • failure of third parties to deliver on energy or capacity contracts.
Factors beyond our control that could result in an increased need to purchase power in the wholesale markets include, but are not limited to: • reduced snowpack and/or lower streamflows for hydroelectric generation (due to lower precipitation and/or warmer weather or extreme cold weather), • increases in demand (due to either weather or customer growth), • unplanned outages at generating facilities, and • failure of third parties to deliver on energy or capacity contracts.
See "Energy Commodity Risk". Upon settlement of interest rate swap derivatives, the cash payments made or received are recorded as a regulatory asset or liability and (after a prudency review through a general rate case) are subsequently amortized as a component of interest expense over the life of the associated debt.
See "Energy Commodity Risk". Upon settlement of interest rate swap derivatives, the 69 AVISTA CORPORATION cash payments made or received are recorded as a regulatory asset or liability and (after a prudency review through a general rate case) are subsequently amortized as a component of interest expense over the life of the associated debt.
Discussion of 2021 financial statement items and year-to-year comparisons between 2022 and 2021 not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Conditions and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of 2022 financial statement items and comparisons between 2023 and 2022 not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Conditions and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023.
We intend to seek recovery of costs related to ongoing and new requirements through the ratemaking process. 64 AVISTA CORPORATION Washington Climate Commitment Act The CCA, and its implementing regulations, established a cap and trade program to reduce GHG emissions and achieve the GHG limits previously established under state law.
We intend to seek recovery of costs related to ongoing and new requirements through the ratemaking process. Washington Climate Commitment Act The CCA, and its implementing regulations, established a cap and trade program to reduce GHG emissions and achieve the GHG limits previously established under state law.
Direct impacts of climate changes include, without limitation, variations in the amount and timing of energy demand throughout the year, variations in the level and timing of precipitation throughout the year, as well as variations in temperature, and the resulting impact on the availability of hydroelectric resources at times of peak demand as well as an increased risk of wildfire.
Direct impacts of climate changes include, without limitation, variations in the amount and timing of energy demand throughout the year, variations in the level and timing of precipitation throughout the year, as well as variations in temperature, and the resulting impact on the availability of hydroelectric resources at times of peak demand as well as an increased risk of wildfire and other impacts of extreme weather.
See “Enterprise Risk Management – Credit Risk Liquidity Considerations” and “Note 8 of the Notes to Consolidated Financial Statements.” The following table summarizes our credit ratings as of February 20, 2024: Standard & Poor's (1) Moody's (2) Corporate/Issuer rating BBB Baa2 Senior Secured Debt A- A3 Senior Unsecured Debt BBB Baa2 (1) Standard & Poor’s lowest “investment grade” credit rating is BBB-.
See “Enterprise Risk Management – Credit Risk Liquidity Considerations” and “Note 8 of the Notes to Consolidated Financial Statements.” The following table summarizes our credit ratings as of February 25, 2025: Standard & Poor's (1) Moody's (2) Corporate/Issuer rating BBB Baa2 Senior Secured Debt A- A3 Senior Unsecured Debt BBB Baa2 (1) Standard & Poor’s lowest “investment grade” credit rating is BBB-.
The most directly comparable GAAP financial measure to electric and natural gas utility margin is utility operating revenues as presented in “Note 24 of the Notes to Consolidated Financial Statements.” The presentation of electric utility margin and natural gas utility margin is intended to enhance understanding of our operating performance.
The most directly comparable GAAP 44 AVISTA CORPORATION financial measure to electric and natural gas utility margin is utility operating revenues as presented in “Note 24 of the Notes to Consolidated Financial Statements.” The presentation of electric utility margin and natural gas utility margin is intended to enhance understanding of our operating performance.
Participants in the wholesale energy markets include: • other utilities, • federal power marketing agencies, • energy marketing and trading companies, • independent power producers, • financial institutions, and • commodity brokers. Utility Customer and Load Growth We develop customer and load growth forecasts for the next five years.
Participants in the wholesale energy markets include: • other utilities, • federal power marketing agencies, • energy marketing and trading companies, 60 AVISTA CORPORATION • independent power producers, • financial institutions, and • commodity brokers. Utility Customer and Load Growth We develop customer and load growth forecasts for the next five years.
Indirect impacts include, without limitation, changes in laws and regulations intended to 63 AVISTA CORPORATION mitigate the risk of, or alter, climate changes, including restrictions on the operation of our power generation resources and obligations or limitations imposed on the sale of natural gas.
Indirect impacts include, without limitation, changes in laws and regulations intended to mitigate the risk of, or alter, climate changes, including restrictions on the operation of our power generation resources and obligations or limitations imposed on the sale of natural gas.
The following chart reflects the sensitivities associated with a change in certain actuarial assumptions by the indicated percentage (dollars in millions): Actuarial Assumption Change in Assumption Effect on Projected Benefit Obligation Effect on Pension Cost Expected long-term return on plan assets (0.5 )% $ — * $ 2.6 Expected long-term return on plan assets 0.5 % — * (2.6 ) Discount rate (0.5 )% 31.4 2.5 Discount rate 0.5 % (28.5 ) (2.5 ) * Changes in the expected return on plan assets would not affect our projected benefit obligation.
The following chart reflects the sensitivities associated with a change in certain actuarial assumptions by the indicated percentage (dollars in millions): Actuarial Assumption Change in Assumption Effect on Projected Benefit Obligation Effect on Pension Cost Expected long-term return on plan assets (0.5 )% $ — * $ 3 Expected long-term return on plan assets 0.5 % — * (3 ) Discount rate (0.5 )% 31 3 Discount rate 0.5 % (28 ) (3 ) * Changes in the expected return on plan assets would not affect our projected benefit obligation.
The interest rate on $51.5 million of long-term debt to affiliated trusts is adjusted quarterly, reflecting current market rates. Amounts borrowed under our committed line of credit agreements have variable interest rates.
The interest rate on $52 million of long-term debt to affiliated trusts is adjusted quarterly, reflecting current market rates. Amounts borrowed under our committed line of credit agreements have variable interest rates.
The State Action remains pending. 65 AVISTA CORPORATION 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 every Oregon agency with jurisdiction over GHG-related matters, with the aim of reducing Oregon’s overall GHG emissions to 80 percent below 1990 levels by 2050.
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 every Oregon agency with jurisdiction over GHG-related matters, with the aim of reducing Oregon’s overall GHG emissions to 80 percent below 1990 levels by 2050.
In January 2023, we entered into an agreement with NorthWestern under which, subject to the terms and conditions specified in the agreement, we will transfer our ownership of Colstrip. See “Note 22 of the Notes to Consolidated Financial Statements” for further discussion of the agreement.
Due to the enactment of CETA in Washington, in January 2023 we entered into an agreement with NorthWestern under which, subject to the terms and conditions specified in the agreement, we will transfer our ownership of Colstrip. See “Note 22 of the Notes to Consolidated Financial Statements” for further discussion of the agreement.
Environmental laws and regulations may restrict or impact our business activities in many ways, including, but not limited to, by: • increasing the operating costs of generating plants and other assets, • increasing the lead time and capital costs for the construction of new generating plants and other assets, • requiring modification of existing generating plants, • requiring existing generating plant operations to be curtailed or shut down, • reducing the amount of energy available from generating plants, • restricting the types of generating plants that can be built or contracted with, • requiring construction of specific types of generation plants at higher cost, and • increasing costs of distributing, or limiting our ability to distribute, electricity and/or natural gas.
Environmental laws and regulations may restrict or impact our business activities in many ways, including, but not limited to: 61 AVISTA CORPORATION • increasing the operating costs of generating plants, natural gas and electric transmission and distribution facilities and other assets, • increasing the lead time and capital costs for the construction of new generating plants, natural gas and electric transmission and distribution facilities and other assets, • requiring modification of existing generating plants, natural gas and electric transmission and distribution facilities, • requiring existing generating plant, natural gas and/or operations to be curtailed or shut down, • reducing the amount of energy available from generating plants, • restricting the types of generating plants that can be built or contracted with, • requiring construction of specific types of generation plants at higher cost, and • increasing costs of distributing, or limiting our ability to distribute, electricity and/or natural gas.
In addition, in November 2022, the SBCC approved new building and energy codes for residential housing, requiring new residential buildings in Washington to use electricity as the primary heat source.
In addition, in November 2022, the SBCC approved 63 AVISTA CORPORATION new building and energy codes for residential housing, requiring new residential buildings in Washington to use electricity as the primary heat source.
Oversight of our 67 AVISTA CORPORATION 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.
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.
Securing prices throughout the year and even into subsequent years mitigates potential adverse impacts of significant purchase requirements in a volatile price environment. 73 AVISTA CORPORATION The following table presents energy commodity derivative fair values as a net asset or (liability) as of December 31, 2023 that are expected to settle in each respective year (dollars in thousands).
Securing prices throughout the year and even into subsequent years mitigates potential adverse impacts of significant purchase requirements in a volatile price environment. 72 AVISTA CORPORATION The following table presents energy commodity derivative fair values as a net asset or (liability) as of December 31, 2024 that are expected to settle in each respective year (dollars in millions).
Negative amounts are decreases in decoupling revenue in the current year and are related to the amortization of surcharge balances that resulted in prior years and are being surcharged to customers (causing a corresponding increase in retail revenue from customers) in the current year. Total electric revenues increased $25.3 million for 2023 as compared to 2022.
Negative amounts are decreases in decoupling revenue in the current year and are related to the amortization of surcharge balances that resulted in prior years and are being surcharged to customers (causing a corresponding increase in retail revenue from customers) in the current year. Total electric revenues increased $129 million for 2024 as compared to 2023.
For example, in addition to limiting our ability to conduct transactions, if our credit ratings were lowered to below “investment grade” based on positions outstanding at December 31, 2023 (including contracts that are considered derivatives and those that are considered non-derivatives), we would potentially be required to post the following additional collateral (dollars in thousands): December 31, 2023 Additional collateral taking into account contractual thresholds (1) $ 17,500 Additional collateral without contractual thresholds 34,320 (1) This amount is different from the amount disclosed in “Note 8 of the Notes to Consolidated Financial Statements” because, while this analysis includes contracts that are not considered derivatives in addition to the contracts considered in Note 8, this analysis also takes into account contractual threshold limits that are not considered in Note 8.
For example, in addition to limiting our ability to conduct transactions, if our credit ratings were lowered to below “investment grade” based on positions outstanding at December 31, 2024 (including contracts that are considered derivatives and those that are considered non-derivatives), we would potentially be required to post the following additional collateral (dollars in millions): December 31, 2024 Additional collateral taking into account contractual thresholds (1) $ 22 Additional collateral without contractual thresholds 33 (1) This amount is different from the amount disclosed in “Note 8 of the Notes to Consolidated Financial Statements” because, while this analysis includes contracts that are not considered derivatives in addition to the contracts considered in Note 8, this analysis also takes into account contractual threshold limits that are not considered in Note 8.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 financial statement items and year-to-year comparisons between 2023 and 2022.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Annual Report on Form 10-K generally discusses financial statement items and comparisons between 2024 and 2023.
The order results in an approved base electric revenue increase of 6.0 percent (designed to increase annual electric revenues by $2.1 million), and makes non-refundable the interim rate increase of 4.5 percent that was approved by the RCA in August 2022 and took effect in September 2022.
The order results in an approved base electric revenue increase of 6.0 percent (designed to increase annual electric revenues by $2 million), and makes non-refundable the interim rate increase of 4.5 percent that was approved by the RCA in August 2022 and took effect in September 2022. The final increase to rates was effective in October 2023.
In August 2023, the IPUC approved the multi-party settlement agreement designed to increase annual base electric revenues by $22.1 million, or 8.0 percent, effective in September 2023, and $4.3 million, or 1.4 percent, effective in September 2024.
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.
Included in our 2022 pension costs is $11.8 million of settlement costs, which were deferred as a regulatory asset and therefore did not impact our net income in 2022. See “Note 12 of the Notes to Consolidated Financial Statements” for further discussion of pension settlement accounting treatment.
Included in our 2022 pension cost is $12 million of settlement cost, which was deferred as a regulatory asset and therefore did not impact our net income in 2022. See “Note 12 of the Notes to Consolidated Financial Statements” for further discussion of pension settlement accounting treatment.
As such, our costs recorded in a period may not reflect the actual level of cash benefits provided to pension plan participants. 54 AVISTA CORPORATION We revise the key assumption of the discount rate each year.
As such, our cost recorded in a period may not reflect the actual level of cash benefits provided to pension plan participants. We revise the key assumption of the discount rate each year.
Negative amounts are decreases in decoupling revenue in the current year and are related to the amortization of surcharge balances that resulted in prior years and are being surcharged to customers (causing a corresponding increase in retail revenue from customers) in the current year. Total natural gas revenues decreased $12.9 million for 2023 as compared to 2022.
Negative amounts are decreases in decoupling revenue in the current year and are related to the amortization of surcharge balances that resulted in prior years and are being surcharged to customers (causing a corresponding increase in retail revenue from customers) in the current year. Total natural gas revenues increased $35 million for 2024 as compared to 2023.
As of December 31, 2023, AEL&P complied with this covenant with a ratio of 48.8 percent. As of December 31, 2023, Avista Corp. and its subsidiaries complied with 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.
As of December 31, 2024, AEL&P complied with this covenant with a ratio of 49.7 percent. As of December 31, 2024, Avista Corp. and its subsidiaries complied with 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.
Of our pension costs (excluding the SERP), approximately 60 percent are expensed and 40 percent are capitalized consistent with labor charges. The costs related to the SERP are expensed. Our costs for the pension plan are determined in part by actuarial formulas that are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience.
Of our pension cost (excluding the SERP), approximately 55 percent is expensed and 45 percent is capitalized consistent with labor charges. The cost related to the SERP is expensed. Our cost for the pension plan is determined in part by actuarial formulas that are dependent upon numerous factors resulting from actual plan experience and assumptions of future experience.
Rate strategies, such as decoupling, help mitigate the impacts of revenue fluctuations due to weather, conservation or the economy. 69 AVISTA CORPORATION Weather Risk To partially mitigate the risk of financial under-performance due to weather-related factors, we developed decoupling rate mechanisms that were approved by the Washington, Idaho and Oregon commissions.
Rate strategies, such as decoupling and operating expense balancing accounts, help mitigate the impacts of revenue fluctuations due to weather, conservation or the economy. Weather Risk To partially mitigate the risk of financial under-performance due to weather-related factors, we developed decoupling rate mechanisms that were approved by the Washington, Idaho and Oregon commissions.
Most of these issuances came through our sales agency agreements under which the sales agents may offer and sell new shares of our common stock from time to time, with the balance related to compensation plans.
Most of the stock was issued through our sales agency agreements under which we may offer and sell new shares of our common stock from time to time through our sales agents, with the balance related to compensation plans.
These transactions are eliminated in the presentation of total results for Avista Utilities and in the consolidated financial statements but are included in the separate results for electric and natural gas presented above. 52 AVISTA CORPORATION Results of Operations - Alaska E lectric Light and Power Company 2023 compared to 2022 Net income for AEL&P was $8.9 million for the year ended December 31, 2023, compared to $7.5 million for 2022.
These transactions are eliminated in the presentation of total results for Avista Utilities and in the consolidated financial statements but are included in the separate results for electric and natural gas presented above. 51 AVISTA CORPORATION Results of Operations - Alaska E lectric Light and Power Company 2024 compared to 2023 Net income for AEL&P was $8 million for 2024, compared to $9 million for 2023.
The enterprise risk process supports management in identifying, assessing, quantifying, managing and mitigating the risks. Despite all risk mitigation measures, however, risks are not eliminated.
Each area identifies risks and implements the related mitigation measures. The enterprise risk process supports management in identifying, assessing, quantifying, managing and mitigating the risks. Despite all risk mitigation measures, however, risks are not eliminated.
The following chart reflects the assumptions used each year for the pension discount rate (exclusive of the SERP), the expected long-term return on plan assets and the actual return on plan assets and their impacts to the pension plan associated with the change in assumption (dollars in millions): 2023 2022 2021 Discount rate (exclusive of SERP) Pension discount rate 5.86 % 6.10 % 3.39 % Increase/(decrease) to projected benefit obligation $ 14.0 $ (198.3 ) $ (15.6 ) Return on plan assets (a) Expected long-term return on plan assets 8.30 % 5.80 % 5.40 % Increase/(decrease) to pension costs $ (13.1 ) $ (3.0 ) $ 0.7 Actual return on plan assets, net of fees 15.00 % (21.80 )% 7.10 % Actual gain (loss) on plan assets $ 78.8 $ (163.9 ) $ 50.4 (a) The SERP has no plan assets.
The following chart reflects the assumptions used each year for the pension discount rate (exclusive of the SERP), the expected long-term return on plan assets and the actual return on plan assets and their impacts to the pension plan associated with the change in assumption (dollars in millions): 2024 2023 2022 Discount rate (exclusive of SERP) Pension discount rate 6.13 % 5.86 % 6.10 % Increase/(decrease) to projected benefit obligation $ (17 ) $ 14 $ (198 ) Return on plan assets (a) Expected long-term return on plan assets 7.80 % 8.30 % 5.80 % Increase/(decrease) to pension costs $ 3 $ (13 ) $ (3 ) Actual return on plan assets, net of fees 7.30 % 15.00 % (21.80 )% Actual gain (loss) on plan assets $ 42 $ 79 $ (164 ) (a) The SERP has no plan assets.
The primary source of operating cash flows for Avista Utilities is revenues from sales of electricity and natural gas. Significant uses of cash flows from Avista Utilities include the purchase of power, fuel and natural gas, and payment of other operating expenses, taxes and interest, with any excess being available for other corporate uses such as capital expenditures and dividends.
Significant uses of cash flows from Avista Utilities include the purchase of power, emissions allowances, fuel and natural gas, and payment of other operating expenses, taxes and interest, with any excess being available for other corporate uses such as capital expenditures and dividends.
Regulatory lag can be mitigated to some extent by the incorporation of reasonably expected forward-looking information into an authorization of increased rates. However, there is no protection against unexpected inflation and increased interest rates, as experienced in 2022 and 2023.
Regulatory lag can be mitigated to some extent by the incorporation of reasonably expected forward-looking information into an authorization of increased rates. However, there is no protection against unexpected inflation and increased interest rates, as experienced in 2022 and 2023. See “Regulatory Matters” for additional discussion of the general rate cases.
This was experienced in 2023, which included gains and losses on financial derivative contracts in certain line items below (such as wholesale sales and purchases of power and natural gas, sales of fuel, and other fuel costs).
Gains and losses on financial derivative contracts in certain line items below (such as wholesale sales and purchases of power and natural gas, sales of fuel, and other fuel costs).
We actively monitor the exposure to possible collateral calls and take steps to minimize capital requirements. As of December 31, 2023, we had cash deposited as collateral of $43.1 million and letters of credit of $20.0 million outstanding related to energy contracts.
We actively monitor the exposure to possible collateral calls and take steps to minimize capital requirements. As of December 31, 2024, we had cash deposited as collateral of $24 million and letters of credit of $12 million outstanding related to energy contracts.
Review of Consolidate d Cash Flow Statement 2023 compared to 2022 Consolidated Operating Activities Net cash provided by operating activities was $447.1 million for 2023 compared to $124.2 million for 2022.
Review of Consolidate d Cash Flow Statement 2024 compared to 2023 Consolidated Operating Activities Net cash provided by operating activities was $534 million for 2024 compared to $447 million for 2023.
Our hydroelectric and biomass generation facilities can be used to comply with the CETA’s clean energy standards. We intend to seek recovery of costs associated with the clean energy legislation and regulations through the regulatory process. As required under the CETA, in October 2021 we filed our first CEIP.
Our hydroelectric and biomass generation facilities can be used to comply with the CETA’s clean energy standards. We intend to seek recovery of costs associated with the clean energy legislation and regulations through the regulatory process. In compliance with the CETA, we filed our first CEIP in October 2021, that was approved by the WUTC in June 2022.
We actively monitor the collateral required by such exchanges to effectively manage capital requirements. Our exposure to risks attributable to counterparties' credit profile is dynamic in normal markets and may change significantly in more volatile markets. The amount of potential default risk from each counterparty depends on the extent of forward contracts, unsettled transactions, interest rates and market prices.
Our exposure to risks attributable to counterparties' credit profile is dynamic in normal markets and may change significantly in more volatile markets. The amount of potential default risk from each counterparty depends on the extent of forward contracts, unsettled transactions, interest rates and market prices.
The following table summarizes our actual and expected capital expenditures as of and for the year ended December 31, 2023 (dollars in thousands): Avista Utilities AEL&P 2023 Actual capital expenditures Capital expenditures (per the Consolidated Statement of Cash Flows) $ 484,716 $ 13,921 Expected total annual capital expenditures (by year) 2024 $ 500,000 $ 21,000 2025 525,000 10,000 2026 575,000 12,000 59 AVISTA CORPORATION The following graph shows Avista Utilities' expected capital expenditures for 2024-2026 by category (in millions): These estimates of capital expenditures are subject to continuing review and adjustment.
The following table summarizes our actual and expected capital expenditures as of and for the year ended December 31, 2024 (dollars in millions): Avista Utilities AEL&P 2024 Actual capital expenditures Capital expenditures (per the Consolidated Statement of Cash Flows) $ 510 $ 23 Expected total annual capital expenditures (by year) 2025 $ 525 $ 12 2026 575 10 2027 600 14 The following graph shows Avista Utilities' expected capital expenditures for 2025-2027 by category (in millions): These estimates of capital expenditures are subject to continuing review and adjustment.
Total natural gas operating revenues in the graph above include intracompany sales of $33.4 million and $54.8 million for 2023 and 2022, respectively.
Total natural gas operating revenues in the graph above include intracompany sales of $16 million and $33 million for 2024 and 2023, respectively.
Regulation and Rates The Regulatory Affairs department is critical in mitigation of financial risk as they have regular communications with state commission regulators and staff and they monitor and develop rate strategies.
Oversight of financial risk mitigation strategies is performed by senior management and the Finance Committee of the Board of Directors. Regulation and Rates The Regulatory Affairs department is critical in mitigation of financial risk as they have regular communications with state commission regulators and staff and they monitor and develop rate strategies.
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. 44 AVISTA CORPORATION 2023 compared to 2022 The following graph shows the total change in net income for 2023 to 2022, as well as the various factors that caused such change (dollars in millions): Utility revenues increased at Avista Utilities primarily due to increased retail rates (including natural gas PGAs), increased electric wholesale sales prices and volumes, and increased electric decoupling revenues.
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. 43 AVISTA CORPORATION 2024 compared to 2023 The following graph shows the total change in net income for 2024 to 2023, as well as the various factors that caused such change (dollars in millions): Utility revenues increased at Avista Utilities primarily due to increased electric retail rates (due to the effects of general rate cases), and increased sales of fuel.
Total electric operating revenues in the graph above include intracompany sales of $6.5 million and $11.7 million for 2023 and 2022, respectively. 47 AVISTA CORPORATION The following table presents the current year deferrals and the amortization of prior year decoupling balances reflected in utility electric operating revenues for the years ended December 31 (dollars in thousands): Electric Decoupling Revenues 2023 2022 Current year decoupling deferrals (a) $ (3,278 ) $ (24,943 ) Amortization of prior year decoupling deferrals (b) 15,697 (6,901 ) Total electric decoupling revenue $ 12,419 $ (31,844 ) (a) Positive amounts are increases in decoupling revenue in the current year and will be surcharged to customers in future years.
Total electric operating revenues in the graph above include intracompany sales of $4 million and $6 million for 2024 and 2023, respectively. 46 AVISTA CORPORATION The following table presents the current year decoupling deferrals and the amortization of prior year decoupling balances reflected in utility electric operating revenues for the years ended December 31 (dollars in millions): Electric Decoupling Revenues 2024 2023 Current year decoupling deferrals (a) $ 5 $ (3 ) Amortization of prior year decoupling deferrals (b) 18 15 Total electric decoupling revenue $ 23 $ 12 (a) Positive amounts are increases in decoupling revenue in the current year and will be surcharged to customers in future years.
As of December 31, 2023, we had interest rate swap agreements outstanding with a notional amount totaling $30.0 million and we had deposited no cash as collateral for these interest rate swap derivatives.
As of December 31, 2024, we had one interest rate swap agreement outstanding with a notional amount totaling $10 million and we had deposited no cash as collateral for these interest rate swap derivatives.
The following table summarizes our actual and expected investments and capital expenditures at our other businesses as of and for the year ended December 31, 2023 (dollars in thousands): Other 2023 Actual investments and capital expenditures Investments and capital expenditures $ 16,805 Expected total annual investments and capital expenditures (by year) 2024 $ 22,000 2025 17,000 2026 14,000 These estimates of investments and capital expenditures are subject to continuing review and adjustment.
The following table summarizes our actual and expected investments and capital expenditures at our other businesses as of and for the year ended December 31, 2024 (dollars in millions): Other 2024 Actual investments and capital expenditures Investments and capital expenditures $ 10 Expected total annual investments and capital expenditures (by year) 2025 $ 9 2026 4 2027 3 These estimates of investments and capital expenditures are subject to continuing review and adjustment.
Balances outstanding and interest rates on borrowings (excluding letters of credit) under Avista Corp.'s lines of credit were as follows as of and for the year ended December 31 (dollars in thousands): 2023 2022 $500 million line of credit, expiring June 2028 Maximum balance outstanding during the year $ 357,000 $ 345,000 Average balance outstanding during the year 246,337 205,947 Average interest rate during the year 6.06 % 3.06 % Average interest rate at end of year 6.46 % 5.31 % $100 million line of credit, terminated June 2023 Maximum balance outstanding during the period (1) $ 15,000 77,000 Average balance outstanding during the period (1) 283 15,656 Average interest rate during the period (1) 7.75 % 7.56 % Average interest rate at end of year N/A N/A (1) Amounts for each period are from entering the agreement in December 2022 to the termination in June 2023.
As of December 31, 2024, we complied with this covenant with a ratio of 54.7 percent. 56 AVISTA CORPORATION Balances outstanding and interest rates on borrowings (excluding letters of credit) under Avista Corp.'s lines of credit were as follows as of and for the year ended December 31 (dollars in millions): 2024 2023 $500 million line of credit, expiring June 2028 Maximum balance outstanding during the year $ 350 $ 357 Average balance outstanding during the year 270 246 Average interest rate during the year 6.26 % 6.06 % Average interest rate at end of year 5.52 % 6.46 % $100 million line of credit, terminated June 2023 Maximum balance outstanding during the period (1) N/A $ 15 Average balance outstanding during the period (1) N/A — Average interest rate during the period (1) N/A 7.75 % Average interest rate at end of year N/A N/A (1) Amounts for each period are from entering the agreement in December 2022 to the termination in June 2023.
The total estimated benefits of these credits, $27.6 million for electric customers and $12.5 million for natural gas customers, are being returned over a two-year period from December 2022 to December 2024. In addition, the order approved a separate tracking mechanism and tariff for purposes of recovering existing and prospective Colstrip costs.
The total estimated benefits of these credits, $28 million for electric customers and $13 million for natural gas customers, were returned over a two-year period from December 2022 to December 2024. In addition, the order approved a separate tracking mechanism and tariff for purposes of recovering existing and prospective Colstrip costs through December 31, 2025. See "Colstrip Tracker" below.
Washington Legislation and Regulatory Actions Clean Energy Transformation Act In 2019, the Washington State Legislature passed the CETA, which requires Washington utilities to eliminate the costs and benefits associated with coal-fired resources from their retail electric sales by December 31, 2025. This requirement effectively prohibits sales of energy produced by coal-fired generation to Washington retail customers after December 31, 2025.
Washington Legislation and Regulatory Actions Clean Energy Transformation Act In 2019, the Washington State Legislature passed the CETA, which effectively prohibits sales of energy produced by coal-fired generation to Washington retail customers after December 31, 2025.
Risk Factors.” Utility Regulatory Risk Regulatory risk is mitigated through a separate regulatory group which communicates with commission regulators 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.
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.
Our Board of Directors and its Committees take an active role in the oversight of risk affecting the Company. We collect risk information across the Company, and senior management reviews the Company’s major risks and risk mitigation measures. Each area identifies risks and implements the related mitigation measures.
We have an enterprise risk management process for managing risks throughout the organization. Our Board of Directors and its Committees take an active role in the oversight of risk affecting the Company. We collect risk information across the Company, and senior management reviews the Company’s major risks and risk mitigation measures.
We hedge a portion of the foreign currency risk by purchasing Canadian currency exchange derivatives when such commodity transactions are initiated. This risk has not had a material effect on our financial condition, results of operations or cash flows and these differences in cost related to currency fluctuations are included with natural gas supply costs for ratemaking.
This risk has not had a material effect on our financial condition, results of operations or cash flows and these differences in cost related to currency fluctuations are included with natural gas supply costs for ratemaking.

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