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 June 30, 2026 compared to the three months ended June 30, 2025

The following graph shows the total change in net income for the second quarter of 2026 compared to the second quarter of 2025, as well as the factors that caused such change (dollars in millions):

Electric Utility revenues increased due to increases in retail rates associated with our general rate case, which were partially offset by removing the recovery of Colstrip related costs. This increase to revenues was largely offset by decreased wholesale revenues and decreases in volumes sold. The decrease in volumes sold is due to the departure of a large industrial customer in April 2026. Natural gas revenues increased due to rate increases, largely offset by decreases in wholesale revenues and decoupling revenues.

Electric utility resource costs decreased primarily due to decreased fuel for generation costs partially due to the removal of Colstrip from our generation portfolio. This was partially offset by increased purchased power volumes and wholesale prices, as well as increased costs under the ERM. Natural gas utility resource costs decreased due to decreases in volumes of natural gas purchased.

Other utility operating expenses increased due primarily to increased employee salaries and benefit costs, partially offset with decreases from removing Colstrip related expenses.

Utility depreciation and amortization decreased primarily due to our exit from Colstrip in 2026.

Income tax expense increased primarily due to increased pre-tax income from continuing operations (including equity method earnings) compared to the prior year.

Increased equity method earnings were primarily the result of underlying investment appreciation recognized in the second quarter of 2026, compared to losses recognized in the second quarter 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.

Six months ended June 30, 2026 compared to the six months ended June 30, 2025

The following graph shows the total change in net income for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, as well as the factors that caused such change (dollars in millions):

Electric utility revenues decreased primarily as a result of decreased wholesale revenues associated with lower market prices, a reduction of revenues associated with the recovery of Colstrip costs, and the departure of a large industrial customer in April 2026, which were partially offset by other increases in retail rates associated with our general rate cases. Natural gas revenues decreased due to decreased rates associated with the PGAs and the CCA (which do not impact net income), as well as decreased wholesale revenues, transportation revenues and an increased provision for rate refunds associated with overearnings in Washington.

Electric utility resource costs decreased primarily due to decreased fuel for generation costs partially due to the removal of Colstrip from our generation portfolio. These decreases were partially offset by a decrease in deferrals under the ERM. Natural gas utility resource costs decreased due to decreases in the amortization of costs associated with the CCA and net deferrals and amortizations of costs under PGAs, as well as a decrease in volumes of natural gas purchased.

Other utility operating expenses increased due primarily to increased employee salaries and benefit costs, partially offset with decreases from removing Colstrip related expenses.

Utility depreciation and amortization decreased primarily due to our transfer of Colstrip.

Income tax expense increased primarily due to increased pre-tax income from continuing operations (including equity method earnings) compared to the prior year.

Increased equity method earnings were primarily the result of underlying investment appreciation recognized in the first half of 2026, compared to losses recognized in the first half 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.