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 June 30, 2024 compared to the three months ended June 30, 2023

The following graph shows the total change in net income for the second quarter of 2024 compared to the second 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, and the ERM surcharge to customers partially offset by decreased wholesale sales as part of our resource optimization activities. Natural gas utility revenues increased primarily due to increased retail revenues.

Utility resource costs increased primarily due to increased natural gas and electric costs deferred in prior periods that are being amortized in 2024. These were partially offset by a decrease in natural gas deferrals in the current period and a decrease in fuel for generation.

Utility operating expenses increased due to increased thermal generation costs, vegetation management, legal and employee medical expenses, as well as increased amortizations of previously deferred wildfire mitigation costs 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 second quarter of 2024, compared to a benefit in the second quarter of 2023. The change is primarily due to the decrease in tax customer credits which offset a portion of the bill impact of rate increases included in our prior general rate cases. This decrease in tax customer credits was partially offset by the timing impact of spreading these fewer available 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.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

The following graph shows the total change in net income for the six months ended June 30, 2024 compared to the six months ended June 30, 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, 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 purchased power and fuel for generation, as well as increased power supply costs deferred in prior periods that are being amortized in 2024. Natural gas utility resource costs increased due to an increase in net amortizations of previously deferred costs. The increased net amortizations was partially offset by decreased purchased natural gas costs.

Utility operating expenses increased due to increased thermal generation costs, vegetation management, legal and employee medical expenses, as well as increased amortizations of previously deferred wildfire mitigation costs 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 half of 2024, compared to a benefit in the first half of 2023. The change is primarily due to the decrease in tax customer credits offsetting the bill impact of rate increases included in our prior general rate cases. This decrease in tax customer credits was partially offset by the timing impact of spreading these fewer available 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.