AVISTA CORP

The following provides an overview of changes in our Condensed Consolidated Statements of Income and Comprehensive 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 and Comprehensive Income.

Three months ended September 30, 2025 compared to the three months ended September 30, 2024

The following graph shows the total change in net income for the third quarter of 2025 compared to the third quarter of 2024, as well as the factors that caused such change (dollars in millions):

Electric utility revenues increased primarily as a result of the effects of general rate cases and customer growth, which was partially offset by decreased wholesale revenues. Natural gas revenues decreased due to decreased rates associated with the PGAs (which do not impact utility margin or net income), as well as decreased wholesale volumes.

Utility resource costs decreased primarily due to net amortizations and deferrals of electric resource costs under our regulatory recovery mechanisms. This includes the effects of the Washington general rate case and a lower level of authorized power supply costs resulting in increased deferrals.

Utility operating expenses increased due to increased employee salaries and benefits costs, as well as thermal generation costs. In addition, net amortizations and deferrals associated with wildfire mitigation and insurance 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.

Increases in earnings from other activity are primarily due to net investment gains, compared to net investment losses in the third quarter of 2024. This increase in earnings was partially offset by increased non-utility operating expenses associated with updating our estimates for an existing environmental remediation liability at one of our subsidiaries, which resulted in a pre-tax expense of $3 million.

Nine months ended September 30, 2025 compared to the nine months ended September 30, 2024

The following graph shows the total change in net income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, as well as the factors that caused such change (dollars in millions):

Utility revenues increased as a result of the effects of general rate cases and customer and load growth. This was partially offset by decreased wholesale revenues associated with decreased sale prices, as well as decreased natural gas rates associated with PGA regulatory mechanism, which do not impact utility margin or net income.

Electric utility resource costs decreased primarily due to decreased purchased power associated with decreased wholesale prices, as well as decreased amortizations of previously deferred costs. Electric utility resource costs also decreased due to the effects of the Washington general rate case and a lower level of authorized power supply costs resulting in increased deferrals of power supply costs. Natural gas utility resource costs decreased due to decreased commodity prices, as well as decreased amortizations of previously deferred PGA costs. These decreases were offset by an increase in the amortization of costs associated with the CCA that are being recovered from customers.

Utility operating expenses increased due to increased employee salaries and benefits costs, as well as thermal generation costs. In addition, net amortizations and deferrals associated with wildfire mitigation and insurance 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.

Income tax expense increased primarily due to the decrease in tax customer credits which offset the bill impact of rate increases included in our prior general rate cases. Income tax expense also increased due to increased pre-tax net income compared to the prior year. 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 net investment losses compared to the prior year. In addition, non-utility operating expenses increased due to updating our estimates for an existing environmental remediation liability at one of our subsidiaries, which resulted in a pre-tax expense of $3 million.