AVISTA CORP

Overall Results

Net income for the three and six months ended June 30, 2026 increased compared to the three and six months ended June 30, 2025, primarily due to net investment gains at our other businesses, compared to net investment losses in the respective periods of 2025. See “Note 5 of the Notes to Condensed Consolidated Financial Statements” for additional information regarding the gain recorded in the second quarter of 2026, as well as expected gains and losses during the remainder of 2026.

The effects of our general rate cases also increased net income in 2026.

When comparing results from the first half of 2026 to the first half of 2025, the transfer of our ownership of Colstrip (effective January 1, 2026) has resulted in fluctuations in multiple line items on the income statement, which ultimately net to an immaterial impact on net income. The removal of Colstrip from our generation portfolio resulted in an increase in authorized power supply cost and increases in both electric utility revenues and electric resource costs (resulting in no impact on net income). In addition, other operating costs and depreciation expense have decreased, with a corresponding decrease in electric utility revenues associated with recovery of these costs.

More detailed explanations of the fluctuations in revenues and expenses are provided in the results of operations and business segment discussions (Avista Utilities, AEL&P, and the other businesses) that follow this summary.

See the summary of key developments and issues that are the focus of management under the heading “Executive Overview” in the MD&A of our 2025 10-K. The following developments have occurred since that report:

2026 Wildfire Conditions

A number of wildfires have occurred within our service territory in 2026, impacting our operations. While the causes of some fires remain under investigation, virtually all have been attributed to human activity or lightning. Two fires ignited near our facilities but have since been fully contained. One fire damaged a small storage facility. No structures were impacted by the other fire. We do not believe either of these ignitions resulted from the improper operation or maintenance of our facilities. In response to an increased wildfire risk driven primarily by high winds and drier-than-normal conditions, we have proactively implemented enhanced system protections and public safety power shutoffs. We continue to monitor conditions closely and respond as needed to mitigate this elevated risk.

Hydroelectric Conditions and Outlook

Our hydroelectric generation year-to-date has been above normal. The amount of hydroelectric generation is affected not only by snowpack levels but also by prevailing temperatures (which affect the timing and speed of run-off) and the volume, timing and form of precipitation. On balance, we expect hydroelectric generation for the entire year will be above normal. While our current hydroelectric forecast shows above normal levels of generation for the full year, whether actual results are above or below normal, there would be no material change to our net income, based upon our forecast surcharge position in the 90 percent customer, 10 percent company sharing band of the ERM.

Potential Large Load Growth

In May 2026, we entered into a non-binding memorandum of understanding (MOU) with a data center developer seeking interconnection and energy supply in our Washington service territory. The developer is seeking an initial load demand of 125 MW starting in 2029, with a pathway to expand to 500 MW by 2032.

In June 2026, we announced that we will take additional time to evaluate the processing of energy requests from data center developers, and have paused negotiations associated with the MOU. This decision followed community interest and concern surrounding the MOU. We are seeking to partner with governmental agencies on creating a clear and coordinated planning process as we consider additional stakeholder feedback associated with large load requests.

Enterprise Resource Planning (ERP) Project

We are planning to implement an ERP system, replacing certain existing technology tools currently in use. The system will be designed to accurately maintain our financial records, enhance operational functionality, and provide timely information to our management team related to business operations. We expect the ERP system to be implemented in 2028, with capital expenditures of approximately $130 million.