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

The following graph shows the total change in net income for the third quarter of 2026 compared to the third 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 primarily due increased retail volumes, largely offset by decreases in decoupling revenues.

Electric utility resource costs increased primarily due to increased authorized power supply costs resulting from our general rate cases and increased purchased power volumes and wholesale prices, partially offset by decreased fuel for generation costs primarily due to the removal of Colstrip from our generation portfolio. Natural gas utility resource costs increased due to increases in natural gas prices.

Other utility operating expenses decreased due primarily to the 2026 time study that was completed, resulting in the allocation of certain employee compensation to Utility Property which was previously included in other operating expenses. See “Note 1 of the Notes to Condensed Consolidated Financial Statements” for additional information regarding the change in accounting estimate.

Utility depreciation and amortization increased primarily due to additions to utility plant, partially offset by decreases 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 third quarter of 2026 as compared to the third quarter of 2025. See “Note 5 of the Notes to Condensed Consolidated Financial Statements” for additional information regarding the earnings recorded in the third quarter of 2026.

Nine months ended September 30, 2026 compared to the nine months ended September 30, 2025

The following graph shows the total change in net income for the nine months ended September 30, 2026 compared to the nine months ended September 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, as well the Coyote Springs 2 facility being offline for major maintenance in 2026. These decreases were partially offset by an increase in authorized power supply costs resulting from our general rate cases. 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, partially offset by an increase in purchase price of natural gas.

Other utility operating expenses increased due primarily to increased employee salaries and benefit costs. The increases were partially offset with decreases from removing Colstrip related expenses, as well as the completion of the 2026 time study, resulting in the allocation of certain employee compensation to Utility Property which was previously included in other operating expenses. See “Note 1 of the Notes to Condensed Consolidated Financial Statements” for additional information regarding the change in accounting estimate.

Utility depreciation and amortization decreased primarily due to our transfer of Colstrip, partially offset by increases due to additions to utility plant.

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 2026, compared to losses recognized in 2025. See “Note 5 of the Notes to Condensed Consolidated Financial Statements” for additional information regarding the earnings recorded in 2026.