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

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

Electric utility revenues increased as a result of the effects of general rate cases and customer growth, partially offset by decreased wholesale revenues as part of our resource optimization activities. Natural gas utility revenues decreased slightly primarily due to decreased wholesale revenues.

Utility resource costs decreased primarily due to decreased commodity prices. These were partially offset by increased purchased volumes of power and natural gas, as well as increased amortizations of previously deferred costs compared to the third quarter of 2023.

Utility operating expenses increased due to increased thermal generation costs, legal costs and employee medical expenses. In addition, net amortizations and deferrals associated with wildfire mitigation costs have increased, with corresponding increases to revenue which result in no impact to earnings.

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

Interest expense increased primarily due to increased borrowings outstanding and increased interest rates compared to 2023.

Income tax benefits decreased 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.

The decrease in earnings related to other is primarily due to increased taxes other than income tax, as well as net investment losses recorded in the third quarter of 2024 compared to net investment gains in 2023.

Nine months ended September 30, 2024 compared to the nine months ended September 30, 2023

The following graph shows the total change in net income for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as well as the 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 volumes and sales of fuel as part of our resource optimization activities. This was partially offset by decreased wholesale sale prices. Natural gas utility revenues increased primarily due to increased wholesale revenues and additional decoupling revenues associated with surcharge deferrals from lower customer use.

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, legal costs and employee medical expenses. In addition, net amortizations and deferrals associated with wildfire mitigation costs have increased, with corresponding increases to revenue which result in no impact to earnings.

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

Interest expense increased primarily due to increased borrowings outstanding during the period and increased interest rates compared to 2023.

Income tax was an expense for the nine months ended September 30, 2024, compared to a benefit for the nine months ended September 30, 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.