AVISTA CORP Q1 FY2025 earnings call

• Strong first quarter performance with Avista Utilities driving improvement, on track to meet 2025 consolidated earnings targets.
• Discussions with potential new large load customers continue, underscoring need for resources in 2025 Integrated Resource Plan; draft RFP filed, planned to release final RFP end of May, bids due June, short list in August, finalists selected by year end.
• Critical wildfire legislation passed in Washington and Idaho, significant progress in wildfire mitigation; resolution reached in Babb Road Fire litigation, no impact to earnings as insurance proceeds cover liability.
• Tariff mitigation efforts ongoing, working with supply chain partners to redirect manufacturing, secure price lists; natural gas supply from Canada believed exempt under US-Mexico-Canada Agreement.
• Rate case updates: Oregon GRC settlement reached, new rates to take effect Sept 1; Idaho electric and gas rate cases filed, first settlement discussion May 22, new rates to take effect Sept 1.

Consolidated earnings for the first quarter of 2025 were $0.98 per diluted share, an improvement from $0.91 in the first quarter of 2024. Avista Utilities' strong performance drove nearly 8% improvement in consolidated results. The other businesses recognized a $0.03 loss per diluted share in the first quarter due to periodic market valuations, losses from early stage joint venture investments, and borrowing costs. Avista Utilities is the key revenue contributor.

• Consolidated earnings guidance for 2025: $2.52 to $2.72 per diluted share.
• Avista Utilities expected to contribute $2.43 to $2.61 per diluted share, with an expected negative impact from ERM of $0.12 in the 90% customer, 10% company sharing band.
• AEL&P expected to contribute $0.09 to $0.11 per diluted share in 2025.
• Other businesses expected to have zero contribution to earnings in 2025 with volatility; long-term return expected on investments.
• Capital expenditures: $100 million in Q1 2025, expected $525 million for 2025, nearly $3 billion from 2025-2029 with 5%-6% annual growth rate.

• Tariff uncertainties: Potential impact from tariffs not yet fully mitigated, monitoring changing conditions.
• Market volatility: Affecting valuations of other investments, causing periodic losses.
• Wildfire risk: Ongoing challenges in mitigation despite legislation, need for continued efforts.
• Regulatory process uncertainties: Uncertainties in RFP process, rate case outcomes, and ERM mechanism adjustments.

Q: On the RFP, are costs related to IRA changes or tariffs baked into the process or can bids be refreshed?

A: Heather Rosentrater said they recognize uncertainty and have in the past had opportunities to refresh bids, and will look at the environment and determine if refreshing bids is appropriate during the RFP process.

Q: Regarding large load customers, push to natural gas needs and sourcing?

A: Heather Rosentrater said it's to be determined based on RFP results, with the 50 to 400 MW range acknowledging various scenarios from discussions with large load customers.

Q: Thoughts on wildfire settlement setting precedent?

A: Heather Rosentrater said this doesn't create a precedent, as each situation has unique facts to consider.

Q: Impact of unregulated business valuations, especially biotech trials?

A: Kevin Christie said there could be future impact as trials play out, but it's early, with hope and optimism, and too soon to see valuation markup, with potential clearer update in later half of this year or early next year.

Q: Changes in forward gas and power markets affecting ERM?

A: Kevin Christie said until the ERM mechanism is reset, there wouldn't be a material difference in 2025 or 2026, and they have a multipronged strategy including future rate cases and working with peers to make adjustments.

Q: Managing affordability with growth, least costs, and risk in RFP for self-build generation?

A: Heather Rosentrater said they use the integrated resource planning process to balance cost and compliance, seeing large load customers as an opportunity to help with affordability for existing residential customers.