AVISTA CORP

The material risks to our businesses, and our mitigation process and procedures to address these risks, were discussed in our 2025 Form 10-K and have not materially changed during the six months ended June 30, 2026. See the 2025 Form 10-K.

Financial Risk

Our financial risks have not materially changed during the six months ended June 30, 2026. Refer to the 2025 Form 10-K. The financial risks included below are required interim disclosures, even if they have not materially changed from December 31, 2025.

Credit Risk

As of June 30, 2026, we had cash deposited as collateral of $13 million and letters of credit of $6 million outstanding related to our energy contracts. Price movements and/or a downgrade in our credit ratings or other established credit criteria could impact further the amount of collateral required. See “Credit Ratings” in the 2025 Form 10-K for further information. For example, in addition to limiting our ability to conduct transactions, if our credit ratings were lowered to below “investment grade” based on our positions outstanding at June 30, 2026 (including both contracts considered derivatives and those considered non-derivatives), we would potentially be required to post the following additional collateral (dollars in millions):

Energy Commodity Risk

Our energy commodity risks have not materially changed during the six months ended June 30, 2026. See the 2025 Form 10-K. The following table presents energy commodity derivative fair values as a net asset or (liability) as of June 30, 2026 expected to be settled in each respective year (dollars in millions). As of June 30, 2026, there are no energy commodity derivative contracts outstanding with expected settlements after 2028:

The following table presents energy commodity derivative fair values as a net asset or (liability) as of December 31, 2025 expected to be settled in each respective year (dollars in millions). As of December 31, 2025, there are no energy commodity derivative contracts outstanding with expected settlements after 2028.

(1)

Physical transactions represent commodity transactions in which we take or make delivery of either electricity or natural gas; financial transactions represent financial derivative instruments that are settled in cash with no physical delivery of the underlying commodity, such as futures, swap derivatives, or options contracts.

The above electric and natural gas derivative contracts will be included in either power supply costs or natural gas supply costs during the period they are settled and will be included in deferral and recovery mechanisms (ERM, PCA, and PGAs), or in the general rate case process, and are expected to eventually be collected through retail rates from customers.