AVISTA CORP

Avista Utilities has a diverse electric resource mix of Company-owned and contracted hydroelectric, thermal, wind and solar generation facilities, and other contracts for power purchases and exchanges. As of December 31, 2025, Avista Utilities' electric generation resource mix (including contracts for power purchases) was approximately 48 percent hydroelectric, 37 percent thermal and 15 percent other renewables. On January 1, 2026, the Company transferred its ownership in Colstrip to NorthWestern, resulting in a generation resource mix (including contracts for power purchases) of approximately 53 percent hydroelectric, 32 percent thermal and 15 percent other renewables. See “Item 2. Properties” for detailed information on Company-owned generating facilities and a detailed list of our PPAs.

Hydroelectric Resources

Avista Utilities owns and operates Noxon Rapids and Cabinet Gorge on the Clark Fork River and six smaller hydroelectric projects on the Spokane River. Hydroelectric generation is typically our lowest cost source per MWh of electric energy and the availability of hydroelectric generation has a significant effect on total power supply costs. Under normal streamflow and operating conditions, we estimate that we would be able to meet approximately one-half of our total average electric requirements (both retail and long-term wholesale) with the combination of our hydroelectric generation and long-term hydroelectric purchase contracts (including those with certain PUDs in the state of Washington and Columbia Basin Hydropower). Normal and actual annual hydroelectric generation increased in 2025 as a result of increased output received from additional capacity under one of our PPA contracts. Our estimate of normal annual hydroelectric generation for 2026 (including resources purchased under long-term hydroelectric contracts with certain PUDs) is 648.3 aMW (or 5.68 million MWhs).

See “Item 2. Properties - Avista Utilities” for the present generating capabilities of the above hydroelectric resources.

The following graph shows Avista Utilities' hydroelectric generation (in thousands of MWhs) during the year ended December 31:

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Normal hydroelectric generation is determined by reference to the effect of upstream dam regulation on median natural water flow. Natural water flow is the flow of the rivers without the influence of dams, whereas regulated water flow reflects water flow changes from upstream dams due to releasing or holding back water. The calculation of normal varies annually due to the timing of upstream dam regulation throughout the year, as well as changes in PUD contracts.

Thermal Resources

Avista Utilities owns the following thermal generating resources:

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the combined cycle natural gas-fired CT, known as Coyote Springs 2, located near Boardman, Oregon,

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a wood waste-fired boiler generating facility known as the Kettle Falls GS in northeastern Washington,

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a two-unit natural gas-fired CT generating facility in northeastern Spokane (Northeast CT),

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a two-unit natural gas-fired CT generating facility in northern Idaho (Rathdrum CT), and

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two small natural gas-fired generating facilities (Boulder Park GS and Kettle Falls CT).

Coyote Springs 2, which is operated by Portland General Electric Company, is supplied with natural gas under a combination of term contracts and spot market purchases, including transportation agreements with bilateral renewal rights.

The primary fuel for the Kettle Falls GS is wood waste generated as a by-product and delivered by trucks from forest industry operations within 100 miles of the plant. A combination of long-term contracts and spot purchases has provided, and is expected to meet, fuel requirements for the Kettle Falls GS.

The Northeast CT, Rathdrum CT, Boulder Park GS and Kettle Falls CT generating units are primarily used to meet peaking electric requirements. We also operate these facilities when marginal costs are below prevailing wholesale electric prices. These generating facilities have access to natural gas supplies that are adequate to meet their respective operating needs.

We previously held a 15 percent interest in Units 3 and 4 of Colstrip, a coal-fired generating facility located in southeastern Montana. We transferred our ownership interest to NorthWestern on January 1, 2026. See “Item 7. Management's Discussion and Analysis – Colstrip” and “Note 22 of the Notes to Consolidated Financial Statements” for discussion regarding environmental and other issues surrounding Colstrip.

In addition to the resources we own listed above, we have a PPA for the output from the Lancaster Plant through December 31, 2041. The Lancaster Plant is a 270 MW natural gas-fired combined cycle combustion turbine plant located in northern Idaho, owned by an unrelated third-party. Under the terms of the PPA, we make the dispatch decisions, provide all natural gas fuel and receive all electric energy output. Therefore, we consider the Lancaster Plant to be a baseload resource. See “Note 5 of the Notes to Consolidated Financial Statements” for further discussion of this PPA.

See "Natural Gas Operations - Natural Gas Supply" for information regarding our supply of natural gas for both fuel and delivery to natural gas customers.

See “Item 2. Properties - Avista Utilities” for the present generating capabilities of the above thermal resources.

The following graph shows Avista Utilities' thermal generation (in thousands of MWhs) during the year ended December 31:

Wind Resources

We have exclusive rights to the capacity of Palouse Wind, a wind generation project developed, owned and managed by an unrelated third-party and located in Whitman County, Washington. Under the PPA, we purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. We have an annual option to purchase the wind project, which we have not exercised. The purchase price is a fixed price per KW of in-service capacity with a fixed decline in the price per KW over the remaining term of the PPA.

We have exclusive rights to the capacity of Rattlesnake Flat Wind project developed, owned and managed by an unrelated third party and located in Adams County, Washington. We purchase the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement.

See “Item 2. Properties” for a detailed list of our PPAs.

Solar Resources

We have exclusive rights to the capacity of the Lind Solar Farm, a solar generation project developed, owned and managed by an unrelated third-party and located in Lind, Washington. Under a PPA, we purchase the power and renewable attributes produced by the project at a fixed price per MWh.

See “Item 2. Properties” for a detailed list of our PPAs.

Other Purchases, Exchanges and Sales

In addition to the resources described above, we purchase and sell power under various long-term contracts, and we enter into short-term purchases and sales. Further, pursuant to The Public Utility Regulatory Policies Act of 1978, as amended, we are required to purchase generation from qualifying facilities. This includes, among other resources, hydroelectric projects, cogeneration projects and wind generation projects at rates approved by the WUTC and the IPUC.

See “Avista Utilities Electric Operating Statistics – Electric Operations” below for annual quantities of purchased power, wholesale power sales and power from exchanges in 2025, 2024 and 2023. See “Electric Operations” above for additional information on the use of wholesale purchases and sales as part of our resource optimization process and see “Future Resource Needs” below for the magnitude of these power purchase and sales contracts in future periods.

Regional Capacity Issues

The northwest region is experiencing increased load growth, more frequent extreme weather events, and a transition to more variable energy resources. Both the region’s electric and natural gas delivery systems are also reaching full utilization during peak load conditions. Purchases of capacity and energy at any time are dependent upon the availability of excess capacity in the west region at that time. Many coal-fired electric generating stations throughout the western United States are scheduled for retirement in the next several years. Depending upon a variety of factors, these retirements could have an impact upon the availability and price of purchased power in, and the dynamics of, the market in which we conduct our wholesale purchases and sales. After December 31, 2025, we are prohibited by the Clean Energy Transformation Act (CETA) from using energy produced by coal-fired plants to serve our retail customers in Washington (with some exceptions for coal generated short-term purchases), and we transferred our interest in Colstrip to NorthWestern on January 1, 2026. To the extent necessary, we will obtain energy produced by other regional resources. See “Item 7. Management's Discussion and Analysis – Environmental Matters and Contingencies – Climate Change – Washington Legislation and Regulatory Actions – Clean Energy Transformation Act” and “Colstrip.”

In addition to the retirement of coal-fired generating stations, some hydroelectric and other generation plants in the region are being considered for possible closure due to environmental and other concerns. The reduction of regional generating capacity will have to be offset by the addition of new generating resources and energy storage facilities.