AVISTA CORP

The following provides an overview of changes in our Condensed Consolidated Statements of Income. More detailed explanations are provided, particularly for operating revenues and operating expenses, in the business segment discussions (Avista Utilities, AEL&P, and the other businesses) that follow this section.

The balances included below for utility operations reconcile to the Condensed Consolidated Statements of Income.

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

The following graph shows the total change in net income for the first quarter of 2024 compared to the first quarter of 2023, as well as the various factors that caused such change (dollars in millions):

Electric utility revenues increased as a result of the effects of general rate cases (including a tranche of tax customer credits that were returned to customers as of the fourth quarter of 2023), the ERM surcharge to customers, and increased wholesale sales and sales of fuel as part of our resource optimization activities. Natural gas utility revenues increased primarily due to increased wholesale revenues.

Electric utility resource costs increased primarily due to increased wholesale prices for our purchased power, as well as net amortizations and deferrals of power supply costs related to increased deferred costs in 2023 that are being amortized in 2024. Natural gas utility resource costs increased due to net amortizations and deferrals of costs related to a decrease in deferred costs during the period, as well as an increase in amortization of previously deferred costs. The increased net amortizations and deferrals were partially offset by decreased purchased natural gas costs.

Utility operating expenses increased due to increased benefits expense, as well as increased amortizations of previously deferred items now included in customer rates (resulting in no impact to net income).

Utility depreciation and amortization increased primarily due to additions to utility plant.

Income tax was an expense in the first quarter of 2024, compared to a benefit in the first quarter of 2023. The change is primarily due to decreased tax customer credits, which offset the bill impact of rate increases included in our prior general rate cases, partially offset by the timing impact of spreading the decreased credits over the year as a percentage of pre-tax income based on the estimated annual effective tax rate. See "Note 7 of the Notes to Condensed Consolidated Financial Statements" for further details and a reconciliation of our effective tax rate.