AVISTA CORP

Our environmental issues and contingencies disclosures have not materially changed during the three months ended March 31, 2025 except as follows:

Washington State Building Codes

In April 2022, the Washington State Building Code Council (SBCC) approved a revised energy code requiring most new commercial buildings and large multifamily buildings to install all-electric space heating. An amendment to the code allows for natural gas to supplement electric heat pumps. In addition, in November 2022, the SBCC approved new building and energy codes for residential housing, requiring new residential buildings in Washington to use electricity as the primary heat source. These building codes have been subject to various legal challenges, as discussed in our 2024 Form 10-K.

In November 2024, Washington voters approved Initiative 2066, which would prohibit state and local governments from restricting access to natural gas, prohibit the SBCC from discouraging or penalizing the use of natural gas, and prohibit the WUTC from approving any multi-year rate plan that requires or incentivizes natural gas companies to terminate or limit natural gas service. In March 2025, a Washington state court held that the Initiative violates the “single subject rule” and is invalid. That decision has been appealed and the appeal remains pending.

Over time, the building code changes would likely have an adverse impact on our natural gas business and natural gas customers but could also have a positive effect on our electric business. While we are in the process of studying the implications of the changes on our business, at this time, we are not able to quantify the likely net effect, positive or negative, on our overall results of operations over the long term. However, the changes would clearly require that additional generating capacity be available to utilities and customers in Washington state.

EPA Regulations for Power Plants

On April 25, 2024, the EPA released a package of final regulations addressed to electric generation facilities as further described in our 2024 Form 10-K.

These rules potentially fall within the scope of a number of Presidential executive orders that have been issued, which are discussed in more detail under “2025 Presidential Executive Action” below. In addition, a substantial number of legal challenges have been filed regarding these rules, and those lawsuits remain pending. At the same time, we continue to analyze each of these rules to assess the impact, if any, they may have on our existing generating units, including Colstrip and/or our natural gas fired generating units. To the extent there are any additional costs associated with compliance, we will seek to recover those costs through the ratemaking process.

2025 Presidential Executive Action

Since taking office, the U.S. President's Administration has issued a multitude of Executive Orders directed towards national energy resources and development. These include, actions to:

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immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 or the Infrastructure and Jobs Act;

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require agency review of regulations, programs and executive orders that might limit the development or use of domestic energy resources such as oil, natural gas, coal and nuclear;

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revoke the prior Administration’s Executive Orders on climate policy;

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require agency review of regulations, programs and executive orders that limit consumer choice for vehicles and appliances;

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require review of the 2009 EPA endangerment finding for greenhouse gasses under the Clean Air Act;

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direct the EPA to revise or eliminate the use of a social cost of carbon in federal decision-making;

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declare a national emergency to expedite the development of energy infrastructure;

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direct emergency action under section 202(c) of the Federal Power Act by streamlining and expediting the approval of orders allowing electric generation resources to operate at maximum capacity during times of anticipated grid failure;

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grant a two-year exemption from the EPA’s MATS rule for certain stationary sources, including Colstrip, citing the lack of commercially viable emissions-control technology needed to meet the rules 2027 compliance deadline; and

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directs the United States Attorney General to identify and act against state and local laws that burden domestic energy production and may be unconstitutional, preempted by federal law, or otherwise unlawful, particularly those tied to climate change, carbon penalties or carbon cap and trade programs, and Environmental, Social and Governance policies.

Some of these Executive Orders are the subject of legal challenges and/or are the subject of federal court injunctions, either in whole or in part. We are assessing potential impacts, opportunities and risks that may arise from these and other executive actions that may be taken by the Administration. To the extent that any action taken by the Administration results in increased costs for our business, we will seek to recover those costs through the rate-making process.

See the 2024 Form 10-K for further discussion of our environmental issues and contingencies.