Avista (AVA) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, May 5, 2026 at 10:30 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Heather Lynn Rosentrater
• Senior Vice President, Chief Financial Officer, Treasurer, and Regulatory Affairs — Kevin J. Christie
• Director, Investor Relations — Stacey Walters

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TAKEAWAYS

• Consolidated EPS -- $1.11 per diluted share, up from $0.98 the prior year.
• Non-GAAP Utility EPS -- $1.10 per diluted share for the first quarter of 2026, flat compared to the prior year.
• Capital Expenditures Outlook -- $615 million expected for Avista Utilities in 2026, with $3.4 billion planned from 2026 through 2030.
• Potential Incremental Investment -- Up to $350 million may be added for integrating a new large load customer, not included in the base capital plan.
• Rate Base Growth -- Integrating the prospective large load customer would produce 8% rate base growth above base plan.
• Growth Opportunity Queue -- Large load customer pipeline is approximately 1.1 gigawatts, down from 1.7 gigawatts previously.
• Resource Addition Timeline -- Memorandum of understanding with a key data center customer is targeted by May 31.
• Washington Rate Case -- First settlement conference for the general rate case is scheduled for May 22, marking the first four-year plan filing in Washington.
• Capital Markets Plans -- Company plans to issue $230 million in long-term debt and up to $90 million in common stock in 2026, including $14 million issued in the first quarter.
• Non-GAAP Utility Earnings Guidance -- Affirmed at $2.52–$2.72 per diluted share for 2026.
• ERM Impact on Guidance -- Forecasted $0.10 negative effect due to the Energy Recovery Mechanism, split 90% customer, 10% company.
• Hydro Generation Forecast -- Current projections show above-normal hydro generation for the year.
• Long-term Earnings Growth -- Expectation to grow EPS 4%–6% off the midpoint of 2025 guidance.
• Regulatory Approach -- Company emphasizes deferral mechanisms, multiyear rate plans, and proactive cost controls to mitigate risk.
• Battery Project -- Battery energy storage project designated in the base capital plan is targeted for commission in 2028.

SUMMARY

Avista Corporation (NYSE:AVA) management highlighted a clean first-quarter operating baseline, with the Colstrip-related revenue impact now fully lapsed, and confirmed stability in non-GAAP utility earnings. The company’s negotiations with a major data center, which could add up to 500 megawatts of incremental load, have a memorandum of understanding targeted by the end of May and could drive substantial rate base and capital investment growth. Management underscored the uniqueness of its four-year Washington rate case, noting potential industry precedent and a May 22 settlement conference to address complex regulatory considerations. Planned capital deployment and financing activity for 2026 were detailed, alongside infrastructure investments supporting reliability, resilience, and targeted resource additions.

• Kevin J. Christie noted, "Our first quarter 2026 non-GAAP utility earnings were $1.10 per diluted share compared to $1.10 per diluted share in 2025."
• Heather Lynn Rosentrater emphasized, "We are currently targeting a signed memorandum of understanding with this new customer by May 31."
• Company expects to recognize the remaining $0.09 ERM impact evenly across the second and third quarters.
• Management’s base capital plan explicitly excludes incremental regional transmission and further large load customer additions beyond the targeted data center opportunity.
• The clean energy implementation plan was updated and approved by the Washington Commission, providing a regulatory foundation for ongoing integrated resource planning.

INDUSTRY GLOSSARY

• Integrated Resource Plan (IRP): A multi-year utility planning document that identifies the mix of generation and demand-side resources needed to reliably and affordably serve customer demand in future years.
• Energy Recovery Mechanism (ERM): A regulatory framework in which certain deviations in energy costs are shared between customers and the company, typically according to specified proportions.
• General Rate Case (GRC): A formal proceeding before a utility regulator to set rates and revenue requirements, often involving a multi-year period outlook.

Full Conference Call Transcript

Stacey Walters: Thank you, and good morning. Thank you all for joining us for Avista Corporation’s first quarter 2026 earnings conference call. Our earnings and first quarter Form 10-Q were released pre-market this morning. You can find both documents and this presentation on our website. Joining me today are Avista Corporation President and CEO, Heather Lynn Rosentrater, and Senior Vice President, CFO, Treasurer, and Regulatory Affairs, Kevin J. Christie. We will be making forward-looking statements during this call. These involve assumptions, risks, and uncertainties which are subject to change. Various factors could cause actual results to differ materially from the expectations we discuss in today’s call.

Please refer to our Form 10-K for 2025 and our Form 10-Q for 2026 for a full discussion of these risk factors. Both are available on our website. On this call, we will also discuss non-GAAP utility earnings. Our first quarter earnings presentation is posted on our website and includes definitions and reconciliations for all non-GAAP disclosures, including non-GAAP utility earnings. Our non-GAAP utility earnings are comprised of results from our Avista Utilities and AEL&P segments. The unrealized gains and losses that have historically made up the majority of our non-regulated other business earnings can be significant, but they are difficult to predict and outside management’s control.

Discussion of non-GAAP utility results and earnings guidance reflects management’s focus on the core utility business. And now, let me turn it over to Kevin for a recap of the financial results presented in today’s press release.

Kevin J. Christie: Thank you, Stacey. Our consolidated first quarter 2026 earnings were $1.11 per diluted share compared to $0.98 in 2025. Our first quarter 2026 non-GAAP utility earnings were $1.10 per diluted share compared to $1.10 per diluted share in 2025. Now I will turn the call over to Heather.

Heather Lynn Rosentrater: Thank you, Stacey. It is hard to believe the first quarter is already behind us. The year began with real momentum and the pace of activity across our business has only accelerated. In a short amount of time, we have taken meaningful steps to strengthen reliability and resilience, move forward with our growth opportunities, and continue delivering value for our customers and shareholders. We continue to advance important grid hardening work, pursue load growth opportunities, and support resource adequacy for our customers into the future, all of which contribute to the long-term strength of our utility. Our ongoing investment in grid hardening and resilience, including vegetation management, is helping to prevent outages that can occur periodically during inclement weather.

Although much of the work is driven by our wildfire mitigation program, we have experienced benefits resulting from these efforts through enhanced system resilience and storm response preparedness year-round. We found that the predictive tools we developed to monitor wildfire weather conditions also help us better anticipate other weather-related outage risks. That means we can stage crews and materials earlier and, when appropriate, alert potentially affected customers so they can prepare before outages occur. The work we are doing to build a more wildfire-resilient system also benefits us day-to-day in smoother operations and results in better outcomes for our customers and the communities we serve.

And we saw directly how being better prepared through predictive tools and material pre-staging enables faster restoration work just a couple of months ago. In March, nearly 60 thousand customers were impacted by outages from high winds, and I commend each of the employees and partners who joined us in the restoration efforts, replacing poles, reconnecting lines, and rebuilding infrastructure to successfully restore power to all customers. I am happy to say that our grid hardening and resilience efforts improved the overall response to the storm. Related to the work underway to advance our growth opportunities, we remain optimistic about the opportunities ahead.

We are planning for the growth identified in our most recent integrated resource plan and potential new large load customer growth in a way that supports customer affordability, system reliability, and compliance with clean energy requirements. A key part of this work is strategic resource planning—making sure we add the right mix of resources at the right time and in the most cost-effective way so we can meet reliability and clean energy requirements without taking on unnecessary expense. Negotiations continue with one of the prospective data center developer customers looking to locate in our service territory, with a projected incremental load of up to 500 megawatts.

Ensuring appropriate protections for our current customers is a key element of our negotiations, as we expect the new large load customer to return a significant contribution to support affordability for our existing customers. We are currently targeting a signed memorandum of understanding with this new customer by May 31. In addition to negotiation discussions with the potential data center developer, we continue to discuss these opportunities with community leaders and other stakeholders. We are also engaging with policymakers and the Washington Commission regarding data centers to advocate for policies that ensure appropriate allocation of costs and benefits associated with the integration of these large loads.

To support resource adequacy for our customers into the future, resource planning is a crucial task. As we work with potential new large load customers, we also continue to work toward final contracts with the projects selected from our recent request for proposals, including the build-transfer for a battery energy storage project included in our base capital plan and targeted to come online in 2028. At Avista Corporation, several related processes together inform our decision-making about these future resources as we consider the timing of integrating potential new large loads. Work has already begun on our 2027 electric integrated resource plan, or IRP.

We have made progress with key data points for the IRP, like our clean energy implementation plan, which was recently updated and approved by the Washington Commission. Long-term affordability is central to our planning practice as we evaluate the resource needs into the future. Overall, I am optimistic about the opportunities ahead. I will now turn the call to Kevin for additional discussion of earnings.

Kevin J. Christie: Thank you, Heather, and good morning, everyone. Our focus on delivering results at the utility is fundamental to our success. Our performance this quarter reflects the continued commitment of our teams to disciplined cost management. We began the year with solid execution across the business, and we are well positioned as we move forward. Alongside our other initiatives, regulatory outcomes are key to our progress. The first settlement conference for our Washington GRC takes place on the 22nd of this month, and we will continue to work through the regulatory process if no satisfactory settlement is reached. We continue to invest in our utility infrastructure to support customer growth and maintain safe and reliable service.

Based on updates to project costs, we now expect capital expenditures at Avista Utilities of $615 million in 2026. We expect capital expenditures from 2026 through 2030 of $3.4 billion. We continue to estimate potential capital investment of up to $350 million associated with integrating a new large load customer that would be incremental to the $3.4 billion five-year capital plan. Integrating that investment in our five-year projection would result in a rate base growth of 8%. Our base capital plan also does not include incremental transmission, like regional grid expansion, and any large load customer additions beyond the customer previously mentioned.

Turning to liquidity, we expect to issue $230 million of long-term debt and up to $90 million of common stock in 2026, which includes $14 million issued in the first quarter. This morning, we are affirming our non-GAAP utility earnings guidance with a range of $2.52 to $2.72 per diluted share for 2026. Our guidance includes an expected negative impact from the Energy Recovery Mechanism, or ERM, of $0.10 in a 90% customer, 10% company sharing band. Our current hydro forecast shows above-normal levels of generation for the year. We do not expect a material change to our position.

The ERM resulted in $0.01 expense in the first quarter, and we expect to recognize the remaining $0.09 spread evenly in the second and third quarters. Expected long-term equity at Avista Utilities is approximately 9%, excluding the impact from the ERM. This reflects expected regulatory lag of 0.6%. Over the long term, we continue to expect that our earnings will grow 4% to 6% from the midpoint of our 2025 earnings guidance. Our first quarter results are a strong start to delivering on our commitment to financial strength. Heather and I are excited to build on this strength as we look ahead. We will now open the call for questions.

Operator: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from Shar Pourreza from Wells Fargo Securities. Your line is now open.

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

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

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

Kevin J. Christie: That is another good question, and it is hard to prioritize the three—they are all very important. If we are going to need to stay out longer while we are working through the proceeding, we, of course, would need some interim rate relief as we continue to make capital investments. And then as we look forward, we have had a lot of success with multi-years in other states like Idaho and Washington. To have a quality multiyear with a strong first-year starting point is also equally important as we look forward, and then, of course, earning a fair return for our shareholders.

Whitney Wutalama: That sounds good. Thank you, Kevin and Heather.

Operator: Thank you. One moment for our next question. Our next question comes from Michael Logan from Barclays. Your line is now open.

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

Heather Lynn Rosentrater: Great question, thank you. We shared that we are working towards a May 31 date for an MOU, and so the next-step timeline would be identified through that agreement. I do not think we have a clear understanding of what that next step will be, but we are looking towards that May 31 date.

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

Heather Lynn Rosentrater: We do continue to vet those opportunities, and we are at about 1.1 gigawatts now in the queue. As we continue to work with these customers, we have higher confidence in what may come to be. We are excited about the opportunities that are still out there—specifically the one customer, but there are others as well that we are working. We are continuing to plan to be able to go out and have curated opportunities for customers once we have a better understanding of the best geographic locations that have available capacity, and we do have some of those areas on our system. We are also looking to be more proactive.

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

Kevin J. Christie: Michael, thanks for the questions. With regard to the Washington GRC, we are deep in the discovery process, which helps the parties formulate their positions as we enter into settlement, and, of course, we are prepping for settlement. I would like to think there is an opportunity for us to settle at least some, if not all, of the case. That being said, as you highlight, this is the first four-year that any utility, as far as we know, has filed in the state of Washington, and so there are a number of issues to work through.

From a party perspective that might engage in settlement, it is hard to say how constructive or how well we can come together, given that they are going to view risks in a certain way and we are going to view risks in a certain way. I cannot give you a probability of settlement, but I think everybody is going to give it a shot.

Michael Logan: Great. Thank you for taking my question.

Kevin J. Christie: Thank you.

Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our next question comes from Julien Dumoulin-Smith from Jefferies.

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

Kevin J. Christie: Thanks, Brian, for the question. I will start with the off-ramp that you referred to. We have the ability after the first year to file a replacement for years three and four, given the 11-month process, and that would occur if some form of inflation or additional investments beyond what is built into the case materialize. We have been very successful over the last several years adding deferral mechanisms that help to hedge some of our risk. In this particular case, we have a new mechanism that we are requesting around employee benefits—that is one of the remaining more volatile, harder-to-control items for us.

If we were to have success with building that mechanism in, and with the other mechanisms that we have in place, we should be in pretty good shape. Of course, that is barring some kind of extreme inflationary activity—in that case, we would use the mechanism where we refile if that were to occur. We feel like we are in a good position to manage the risk that we might see materialize. The company is very focused on managing our costs, and we see some opportunities as we look forward. All of those things combined make us optimistic.

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

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

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

Heather Lynn Rosentrater: I am happy to cover this one, Brian. As you mentioned, the North Plains Connector, which we have talked a lot about, likely has opportunities beyond the five-year capital budget, but we are continuing to work with peers and other regional organizations to identify other opportunities for transmission investment that might make sense for us and our customers. There are a lot of reports acknowledging the need for more transmission in our region. We feel that we are geographically blessed—we are in between where a lot of the load growth is and where a lot of the new resources are.

We do see potential opportunities in the future for additional investment there and we will continue to participate in those activities.

Operator: I am showing no further questions at this time. I would like to turn it back to Stacey Walters for closing remarks.

Stacey Walters: Thank you all for joining us today and for your interest in Avista Corporation. We hope you have a great day.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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