CEO Perspective
"The core of our operations, our utility, is strong," said Heather Rosentrater, President and CEO of Avista. "Our utility earnings were up from 2024, but were negatively impacted by the late-December Washington order regarding our exit from Colstrip. Throughout the year, our team remained focused on execution of our key initiatives. Outcomes from our recent request for proposal reinforce our utility strength and support our ability to continue delivering safe, reliable energy to the communities we serve and creating enduring value for our shareholders."
Initiating 2026 Utility Earnings Guidance
Avista Corp. is initiating 2026 non-GAAP utility earnings guidance2 with a range of $2.52 to $2.72 per diluted share. In 2026, a large industrial customer gave its notice of intent to return to procuring power independently in the power markets sooner than we expected. Our 2026 non-GAAP utility earnings guidance reflects a decrease of $0.12 per diluted share due to this departure.
Analysis of 2025 GAAP Earnings
2025 net income increased compared to 2024 primarily due to the effects of our general rate cases, customer growth and load growth. This increase in net income was partially offset by increased losses at our other businesses, as discussed below.
Analysis of 2025 Non-GAAP Utility Earnings
The following table presents the changes in non-GAAP utility earnings and non-GAAP utility earnings per diluted share for the fourth quarter and year ended Dec. 31, 2025, as compared to the respective periods in 2024. It also outlines the various after-tax factors that contributed to these changes (dollars in millions, except per-share data):
Fourth Quarter
Year-to-Date
NetIncome (a)
Earningsper Share
NetIncome (a)
Earningsper Share
2024 utility earnings
$
71
$
0.89
$
187
$
2.38
Changes in net income and diluted earnings per share:
Avista Utilities
Electric utility margin (including intracompany) (b)
20
0.24
88
1.09
Natural gas utility margin (including intracompany) (c)
4
0.05
18
0.22
Other operating expenses (d)
(10
)
(0.12
)
(48
)
(0.59
)
Depreciation and amortization (e)
(2
)
(0.03
)
(12
)
(0.15
)
Interest expense
(1
)
(0.01
)
(3
)
(0.04
)
Other (f)
(3
)
(0.04
)
(8
)
(0.10
)
Income tax at effective rate (g)
(6
)
(0.07
)
(13
)
(0.16
)
Dilution on earnings
n/a
(0.02
)
n/a
(0.07
)
Total Avista Utilities
2
(0.00
)
22
0.20
AEL&P
(1
)
(0.01
)
(2
)
(0.03
)
2025 utility earnings
$
72
$
0.88
$
207
$
2.55
The tax impact of each line item was calculated using Avista Corp.'s federal statutory tax rate of 21 percent.
Electric utility margin increased as a result of general rate cases, customer growth and non-decoupled load growth, partially offset by a $9 million pre-tax refund to be issued to customers for adjustments related to Colstrip investments. The Energy Recovery Mechanism (ERM) resulted in a $14 million pre-tax expense in 2025, compared to an $8 million pre-tax expense in 2024.
Natural gas utility margin increased primarily due to the effects of our general rate cases.
Other operating expenses increased due to increased employee salaries and benefits costs. In addition, net amortizations and deferrals associated with wildfire mitigation and insurance costs have increased, with corresponding increases to revenue which result in no impact to earnings.
Depreciation and amortization increased primarily due to additions to utility plant.
Other decreases to earnings include decreased interest income compared to the prior year and increased taxes other than income taxes.
Our effective tax rate in 2025 was 11% compared to 2% in the prior year. The change is primarily due to a decrease in tax customer credits as the majority of the tax customer credits have been returned to customers.
Analysis of 2025 Non-Regulated Other Business Losses
Losses at our non-regulated other businesses were $14 million in 2025, compared to $7 million in 2024. The fluctuation in results is primarily related to higher net investment losses. Approximately 75 percent of investment losses in 2025 were related to investments in clean technology. That sector was negatively impacted by shifting public policy and sentiment, leading to decreased valuations of underlying holdings in these investments. Approximately 25 percent of investment losses in 2025 were due to dilution of our ownership percentage in a biotechnology investment.
In 2025, we updated our estimates for an existing environmental remediation liability at one of our subsidiaries, which resulted in a pre-tax expense of $3 million.
Liquidity and Capital Resources
Liquidity
As of Dec. 31, 2025, we had $110 million of available liquidity under the Avista Corp. committed line of credit and $36 million of available liquidity under our letter of credit facility. AEL&P had $22 million available under their line of credit as of Dec. 31, 2025.
In July 2025, we issued $120 million of long-term debt, using proceeds to repay borrowings outstanding on our committed line of credit. Also in July 2025, AEL&P entered into a $20 million term loan, using the proceeds to repay borrowings under AEL&P's line of credit and fund capital expenditures.
We issued $78 million of common stock in 2025.
In 2026, we expect to issue approximately $230 million of long-term debt and up to $90 million of common stock.
Capital Expenditures
In 2025, Avista Utilities' capital expenditures were $553 million and AEL&P's capital expenditures were $17 million.
For Avista Utilities, we expect base capital expenditures as follows through 2030 (dollars in millions):
2026
2027
2028
2029
2030
Expected base annual capital expenditures
$
585
$
635
$
800
$
680
$
710
These estimates include expenditures for the projects selected through our energy resource request for proposal. These estimates do not include incremental transmission projects, like regional grid expansion, or additional generation. We estimate hypothetical additional capital expenditures associated with integrating a new large load customer of up to $350 million, which is excluded from base capital above.
Capital expenditures at AEL&P are expected to be $17 million in 2026, $16 million in 2027 and $11 million in 2028.
2026 Utility Earnings Guidance and Outlook
Avista Corp. is initiating its 2026 non-GAAP utility earnings guidance with a range of $2.52 to $2.72 per diluted share.
This non-GAAP utility earnings guidance is based on the following assumptions:
Normal weather and hydroelectric generation
A negative impact from the ERM of ($0.10) cents per diluted share within the 90% customer, 10% company sharing band
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