AVISTA CORP

The following provides an overview of changes in our Consolidated Statements of 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 following graph shows the total change in net income for 2025 to 2024, as well as the various factors that caused such change (dollars in millions):

Utility revenues increased as a result of the effects of general rate cases and customer and load growth. This was partially offset by decreased wholesale revenues associated with decreased electric sale prices, as well as decreases in natural gas rates associated with the PGA regulatory mechanism, which do not impact utility margin or net income. Additionally, the increase in electric revenue was partially offset by a refund to be issued to customers for adjustments related to Colstrip investments. See "Regulatory Matters" for further details regarding the Colstrip final order.

Electric utility resource costs decreased primarily due to decreased purchased power costs associated with decreased wholesale prices, as well as decreased amortizations of previously deferred costs. Electric utility resource costs also decreased due to the effects of the Washington general rate case and a lower level of authorized power supply costs resulting in increased deferrals of power supply costs. Natural gas utility resource costs decreased due to decreased commodity prices, as well as decreased amortization of previously deferred PGA costs. These decreases were offset by an increase in the amortization of costs associated with the CCA that are being recovered from customers.

Utility operating expenses increased due to increased employee salaries and benefits costs. In addition, net amortizations and deferrals associated with wildfire mitigation and insurance costs have increased, with corresponding increases to revenue which result in no impact to net income.

Utility depreciation and amortization increased primarily due to additions to utility plant.

Income tax expense increased primarily due to the decrease in tax customer credits which offset the bill impact of rate increases included in our prior general rate cases. Income tax expense also increased due to increased pre-tax net income compared to the prior year. See “Note 13 of the Notes to Consolidated Financial Statements” for further details and a reconciliation of our effective tax rate.

The decrease in earnings related to other is primarily due to increased net investment losses compared to the prior year. In addition, non-utility operating expenses increased due to updated estimates for an existing environmental remediation liability at one of our subsidiaries, which resulted in a pre-tax expense of $3 million in 2025.