Executive Summary

Q3 2024 diluted EPS was $0.23, up from $0.19 in Q3 2023, with utility margin growth offset by higher power supply, medical, bad debt, and legal costs; management expects Avista Utilities to finish 2024 near the low end of its guidance range due to these headwinds .
Consolidated 2024 EPS guidance was lowered by $0.10 to $2.26–$2.46, driven by weaker-than-expected private equity market valuations at “Other” businesses (now forecast to a net loss of -$0.06 to -$0.04 EPS) .
Operational execution remained solid: Clearwater Wind came online early; wildfire mitigation advanced (successful PSPS deployment and 9 AI-enabled fire detection cameras); Avista signed a non-binding MOU to pursue ownership in the North Plains Connector transmission project supporting reliability and future resource access .
Rate case cadence continues (Washington order expected mid-December; Oregon case filed Nov 1; Idaho filing planned early 2025), with ERM modification sought to reduce power supply cost volatility; a new large customer load is partially offsetting higher power supply costs in 2024 .
Near-term stock narrative: guidance cut and regulatory outcomes in December are primary catalysts; medium-term thesis hinges on constructive rate case outcomes, disciplined capex execution ($515M in 2024 and ~$1.7B 2025–2027), and execution on transmission/resource additions to manage regional power supply volatility .

What Went Well and What Went Wrong

What Went Well

Utility margin grew YoY in Q3: electric +$13.4M and natural gas +$2.5M (after-tax EPS impact +$0.17 and +$0.03), reflecting effects of general rate cases .
Wildfire mitigation and reliability execution: successful PSPS deployment restored service same day; deployment of 9 AI-enabled fire detection cameras improved early detection across high-risk areas .
Strategic progress on clean energy and transmission: Clearwater Wind online early; non-binding MOU to pursue North Plains Connector ownership to access high-load-factor wind and enhance reliability; RFP for new generation expected shortly after IRP finalization (Jan 2025) .

What Went Wrong

Higher-than-expected power supply costs and increased maintenance for thermal assets, medical, bad debt, and ongoing legal costs pressured the quarter and 2024 utility outlook (near low end of guidance) .
ERM expense increased: Q3 recognized a $3.2M pretax ERM expense and the full-year expected ERM impact worsened to -$0.08 per diluted share (from -$0.07 earlier) due to hydro conditions and January cold-event purchased power costs .
“Other” segment valuations did not recover as anticipated; guidance revised to a net loss of -$0.06 to -$0.04 EPS, reducing consolidated guidance by $0.10 .

Financial Results

Quarterly Progression (Operating Revenues, Utility Margin, EPS)

Metric	Q1 2024	Q2 2024	Q3 2024
Avista Utilities Operating Revenues ($USD Millions)	$594.936	$390.814	$383.746
Utility Margin (Net of Tax) ($USD Millions)	$238.919	$195.674	$192.031
Consolidated Diluted EPS ($USD)	$0.91	$0.29	$0.23

YoY Comparison (Q3)

Metric	Q3 2023	Q3 2024
Avista Utilities Operating Revenues ($USD Millions)	$369.673	$383.746
Utility Margin (Net of Tax) ($USD Millions)	$176.075	$192.031
Consolidated Diluted EPS ($USD)	$0.19	$0.23

Segment Net Income and EPS

Segment	Q1 2024 Net Income ($USD Millions)	Q1 2024 EPS	Q2 2024 Net Income ($USD Millions)	Q2 2024 EPS	Q3 2024 Net Income ($USD Millions)	Q3 2024 EPS
Avista Utilities	$67.508	$0.86	$23.935	$0.31	$19.803	$0.25
AEL&P	$3.911	$0.05	$1.109	$0.01	$0.041	—
Other	$0.076	—	-$2.186	-$0.03	-$1.357	-$0.02
Consolidated Total	$71.495	$0.91	$22.858	$0.29	$18.487	$0.23

KPIs and Power Supply Mechanics

KPI	Q1 2024	Q2 2024	Q3 2024	YTD 2024
ERM Impact (Pretax, $USD Millions)	-$6.0	+$1.3 (Q2-only)	-$3.2 (Q3-only)	-$7.8
Expected Full-Year ERM EPS Impact	-$0.07 EPS	-$0.07 EPS	-$0.08 EPS	-$0.08 EPS

Note: Operating revenues and utility margin are presented for Avista Utilities; management highlights these non-GAAP margin measures alongside GAAP revenues to analyze load, rates, and supply cost impacts .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated EPS	FY 2024	$2.36–$2.56 (Q1/Q2)	$2.26–$2.46 (Q3)	Lowered
Avista Utilities EPS Contribution	FY 2024	$2.23–$2.39 (Q1/Q2)	Near low end of $2.23–$2.39 (Q3)	Maintained (low end bias)
AEL&P EPS Contribution	FY 2024	$0.09–$0.11 (Q1/Q2)	$0.09–$0.11 (Q3)	Maintained
Other Businesses EPS Contribution	FY 2024	+$0.04–+$0.06 (Q1/Q2)	-$0.06 to -$0.04 (Q3)	Lowered
ERM EPS Impact	FY 2024	-$0.07 (Q1/Q2)	-$0.08 (Q3)	Lowered (more negative)
Avista Utilities Capex	FY 2024	~$500M (Q1/Q2)	~$515M (Q3)	Raised
AEL&P Capex	FY 2024	~$21M (Q1/Q2)	~$21M (Q3)	Maintained
2025–2027 Capex (Avista Utilities)	Multi-year	N/A	$525M (2025); $575M (2026); $600M (2027)	New disclosure
Dividend	Current	N/A	$0.475 per share declared Nov 14, 2024	Announced

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2024 and Q2 2024)	Current Period (Q3 2024)	Trend
ERM and power supply volatility	ERM full-year impact expected -$0.07 EPS; hydro below normal; added large customer expected to offset higher power supply costs	Q3 ERM pretax expense $3.2M; full-year ERM now -$0.08 EPS; utility to finish near low end due to higher power supply and costs	Worsening ERM impact
Clean energy resources	Planning accelerated generation needs; IRP in progress; discussions on North Plains Connector	Clearwater Wind online early; non-binding MOU for North Plains Connector; RFP for new generation expected after Jan 2025 IRP	Execution advancing
Wildfire mitigation & PSPS	Expanded mitigation, grid hardening; PSPS preparation underway	Successful PSPS deployment; 9 AI-enabled fire detection cameras deployed; planning further weather stations/undergrounding	Strengthening toolkit
Regulatory cadence	Confirmed rate case filings: Washington ongoing; Oregon Q4; Idaho Q1 2025	Expect constructive Washington order mid-Dec; Oregon rate case filed Nov 1; Idaho planned early 2025; ERM modification pending	Continued progress
Other segment/private equity valuations	Expect +$0.04–$0.06 contribution; potential monetization over time	Valuations lagging; guidance revised to -$0.06 to -$0.04 EPS; CFO sees potential exits longer term	Near-term headwind

Management Commentary

“With headwinds from higher than expected power supply, medical and bad debt costs, and ongoing legal expenses, we expect to be at the low end of the Avista Utilities guidance range.” — CEO Dennis Vermillion .
“We… have signed a non-binding memorandum of understanding [for the North Plains Connector]… which will improve regional reliability, diversify available resources, and support demand growth.” — CEO Dennis Vermillion .
“We are lowering our consolidated earnings guidance by $0.10 to a range of $2.26 to $2.46 per diluted share.” — CFO Kevin Christie .
“We experienced conditions that required the use of the PSPS tool… we were able to quickly restore service… that same day… We deployed 9 artificial intelligence-enabled fire detection cameras.” — President/COO Heather Rosentrater .
“In the third quarter, we recognized a pretax expense of $3.2 million under the Energy Recovery Mechanism… year-to-date, [ERM] $7.8 million pretax expense.” — CFO Kevin Christie .

Q&A Highlights

North Plains Connector milestones: definitive agreements targeted in 6–9 months; ownership payments likely mostly post-energization, with some earlier smaller payments .
Generation RFPs: early 2025 launch post-IRP; ownership more competitive under IRA via self-build/build-transfer structures .
ERM optimization: portfolio optimization continues; regulatory proceeding seeks to significantly change ERM impact given regional dynamics; owning more resources could help .
“Other” segment guidance: loss is mark-to-market driven; segment is small but strategic; management optimistic about future monetizations/exits .
Washington ballot initiatives: repeal of Climate Commitment Act failed (I‑2117); energy choice (I‑2066) too close to call at time of call .
Wildfire lessons: successful PSPS impacting ~1,500 customers with same-day restoration; advancing legislation in WA and ID; further grid hardening planned .

Estimates Context

S&P Global consensus estimates for Q3 2024 EPS and revenue were unavailable at time of analysis due to data access limits. As a result, comparisons versus Wall Street consensus cannot be provided; we default to company-reported results and guidance for this quarter .
If/when S&P Global data access is restored, we will add beat/miss analysis relative to “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q3 2024 and update adjustment implications.

Key Takeaways for Investors

Guidance cut is the near-term stock narrative: consolidated EPS reduced to $2.26–$2.46 on “Other” segment valuation headwinds; utilities segment expected near low end due to cost pressures and ERM .
Regulatory outcomes are pivotal: Washington general rate order (mid-Dec) and Oregon gas rate case (filed Nov 1) will drive 2025 base earnings trajectory and recovery of structural/regulatory timing lag .
Power supply risk management remains central: ERM impact worsened to -$0.08 EPS for 2024; addition of a large customer load is a useful offset; ERM modification in WA could reduce volatility longer term .
Execution on transmission/resource additions will shape medium-term ROE: North Plains Connector MOU, early Clearwater Wind, and early-2025 generation RFP support reliability and clean energy goals amid growing peak demand .
Capital plan and equity funding are disciplined: 2024 capex ~$515M and ~$1.7B 2025–2027; approximately $70M common stock issuance in 2024; no additional long-term debt expected in 2024 .
Operational resilience and wildfire mitigation are de-risking tail events: successful PSPS and AI fire detection deployment underscore improved risk control and potential cost containment over time .
Dividend support: $0.475 quarterly dividend declared Nov 14, 2024, signaling continued capital returns amid regulatory execution .

AVISTA CORP (AVA)·Q3 2024 Earnings Summary