Good day and thank you for standing by. Welcome to Avista Corporation Q4 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Stacey Walters, Investor Relations Manager. Please go ahead. Good morning. Thank you for

joining us for a VISTA's fourth quarter 2025 earnings conference call. Our earnings and 2025 Form 10-K were released pre-market this morning. You can find both documents on our website along with the presentation that accompanies our remarks this morning. Joining me today are Avista Corp. President and CEO, Heather Rosentrader, and Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, Kevin Christie. We will be making forward-looking statements during this call. These involve assumptions, risks, and uncertainties which are subject to change. Various factors could cause actual results to differ materially from the expectations we discuss in today's call. Please refer to our Form 10-K for 2025 for a full discussion of these risk factors, which is available on our website. On this call, we will also discuss non-GAAP utility earnings. Our fourth quarter earnings presentation is posted on our website and includes definitions and reconciliations for all non-GAAP disclosures, including non-GAAP utility earnings. Our non-GAAP utility earnings are comprised of results from our Avisa Utilities and AEL&P segments. The unrealized gains and losses that have historically made up the majority of our non-regulated other business earnings can be significant, but they are difficult to predict and outside management's control. The shift to discussion of non-GAAP utility results and earnings guidance reflects management's focus on the core utility business. And now, let me begin with a recap of the financial results presented in today's press release. Our 2025 consolidated earnings were $2.38 per diluted share compared to $2.29 in 2024. Our 2025 non-GAAP utility earnings were $2.55 per diluted share compared to $2.38 per diluted share in 2024. For the fourth quarter of 2025, our consolidated earnings were $0.87 per diluted share compared to $0.84 per diluted share for the fourth quarter of 2024. Our non-GAAP utility earnings were $0.88 per diluted share for the fourth quarter of 2025 compared to $0.89 per diluted share for the fourth quarter of 2024. And now, I'll turn the call over to Heather. Thank you, Stacey.

And as I reflect on my first year as CEO of Vista, I am struck by how it combined exciting opportunities for growth and investment with an unprecedented level of uncertainty. Yet, just as we have for the last 136 years, our teams leaned in and sustained their focus on executing our strategies. Before I get into the details, I want to start with how we're thinking about this last quarter. While our results were impacted by a few specific items, our sustained focus led to progress on key priorities. That includes progress on our request for proposal, or RFP, continued discussions with potential large load customers, and steady regulatory activity. All of this supports the strength of our utility over the long term. We remain committed to delivering safe, reliable energy to the communities we serve and creating value for our shareholders. As we closed out 2025, Avista Utilities' results were impacted by both the one-time adjustment of coal strip-related investments, which on its own decreased our earnings per share by seven cents, and other timing-related items. Even with those headwinds, we were able to land within the original utility guidance range and excluding those factors, utility results would have been above the midpoint of our 2025 utilities earnings guidance. With 2025 concluded, we're excited to look ahead to 2026. Last month, we filed a four-year rate plan with the Washington Utilities and Transportation Commission. This filing reflects how we're thinking about supporting safe and reliable service over the long term. Among other considerations, our proposal addresses rising costs related to grid modernization, clean energy compliance, purchased power, hydropower infrastructure investments, and emerging risks such as wildfires and extreme weather. By filing a four-year case rather than a two-year case, we aim to reduce the frequency of regulatory proceedings, provide greater stability in our cost recovery and shareholder returns, and provide more transparency and predictability for our customers. Last month, we announced the projects we selected from our RFP process. The first selection is an upgrade to existing natural gas turbines, which will add 14 megawatts of capacity without increasing carbon emissions. Second, we selected a 100 megawatt battery energy storage system to be located in eastern Washington and to be built and transferred to Avista under a billed transfer agreement. Finally, we selected a 200 megawatt power purchase agreement for wind from Montana and approximately 40 megawatts of demand response programs across our service territory. These projects will bring valuable, resilient energy solutions to our portfolio. Since we first reported on our queue of interest from potential new large load customers last year, we've continued to work through conversations with these potential customers. And I am happy to announce that we've received a significant deposit from a data center developer intending to locate in our service territory in Washington. The initial load is expected to be 125 megawatts, quickly ramping up to a maximum of 500 megawatts. We expect the initial load to come online by 2030 and we'll keep you updated as we make progress. As expected, as we have worked with customers in our queue to evaluate their projects, we are narrowing in on the most feasible opportunities. At present, including the customer just mentioned, approximately 1,700 megawatts remain in our queue of potential large load customers. We continue to receive inbound interest, and we expect to begin curated recruiting to attract additional interest that could align with specific geographic and electric infrastructure areas of the system that are best suited for large load interconnections. We know affordability is critically important, and as we look to add new large load in our service territory, it's our expectation that agreements we reach, both with our current negotiations and future prospective customers, would make a significant contribution to customer affordability. We've also made significant strides in expanding our energy assistance programs for our customers in need. These programs help make energy bills more affordable for those that most need the support. Recent enhancements to our Best in Class programs have expanded our reach for energy assistance to as much as four times as many customers in need in the last two years. These programs are fundamental to how we think about serving our communities now and into the future. The opportunities that were a highlight of 2025 continue into 2026. The Washington Commission has encouraged Avista to explore early acquisition of resources to capitalize on tax credit opportunities. We are still evaluating several other RFP bid projects, exploring the acquisition or long-term contracting of these projects to take advantage of tax credits, serve large loads, and enhance flexibility until Avista has a need for serving more load. Beyond generation, additional transmission is needed to move energy from generation resources to load centers. The North Plains Connector is one such project that supports this need and we have significant additional opportunities closer to home that would improve regional grid reliability and resilience as customer demand evolves finally earlier this month the board of directors raised the dividend for our shareholders to one dollar and 97 cents per share our dividend is an important component of shareholder return and for 24 consecutive years the board of directors has raised the dividend for our shareholders resulting in compound annual growth of more than five percent over that time period we remain committed to the importance of returns for our shareholders and to the financial strength of our company we are now targeting a competitive competitive payout range of 60 to 70 percent which is in line with our peers And for the last few years, we've been a bit above our target payout range, which was 65% to 75% during that period. As a result, we expect that our dividend growth rate will be less than the growth in our earnings per share until we reach our target payout range. And now, I'll hand the call to Kevin for additional discussion of earnings.

Thank you, Heather, and good morning, everyone. In each of the last four quarters, I've shared with you how strong our utility performance is and how our utility earnings form the foundation of our business and future plans. And that's still true today. We're focused on delivering results at our utility. Of course, we're disappointed by the order we received late in December from the Washington Commission, requiring us to adjust recovery of needed investments at Coal Strip. Were it not for the impact of that order, Avista Utilities would have reported earnings above the midpoint of our 2025 earnings guidance for the segment. I want to emphasize that our utility earnings in 2025 reflect the strength of our operational execution and the continued diligence in the cost management that we've reported in each of our 2025 earnings calls, alongside constructive regulatory outcomes, with the exception of the coal strip order in December. We've had a quiet fourth quarter in our non-regulated business results, and it appears that valuations have steadied from earlier in 2025. Alongside our other initiatives, regulatory outcomes are key to our success. As Heather mentioned, in January, we filed a four-year rate plan with the Washington Commission. The single largest driver of our requested rate increase in rate year one is power supply cost. Setting an appropriate baseline for power supply cost is pivotal to the success of our rate plan. We believe the workshops undertaken with the parties after our last rate case provided an understanding of the shifts in our regional power markets. We will continue to work through the regulatory process, beginning with the initial settlement conference set for May 22nd and the evidentiary hearings on September 17th and 18th. We continue to invest in our utility infrastructure to support customer growth and maintain safe and reliable service. Capital expenditures at Avista Utilities were $553 million in 2025 and are expected to be $585 million in 2026. From 2026 through 2030, we expect capital expenditures of $3.4 billion, a base capital compound growth rate of 5%. This reflects the addition of $164 million to our capital plan associated with the self-build natural gas combustion turbine upgrades and build transfer battery energy storage system selected from our 2025 RFP. We continue to estimate a potential capital investment of up to $350 million associated with integrating a new large customer that would be incremental to the $3.4 billion five-year expenditure plan. integrating that investment in our five-year projection would result in a compound capital growth rate of 12 percent our base capital plan does not include incremental transmission projects like regional grid expansion or additional generation pulled forward from our 2025 rfp in 2025 we issued 120 million of long-term debt and 78 million of common stock for 2026 we are updating our funding plans and now expect to issue approximately $230 million of long-term debt and up to $90 million of common stock, compared to $120 million of debt and $80 million of common stock disclosed in Q3. This increase reflects higher capital expenditures in 2025, as well as additional debt to support liquidity, given the recovery timing of deferrals, while maintaining a prudent capital structure. We are initiating non-GAAP utility earnings guidance with a range of $2.52 to $2.72 per diluted share for 2026. As Stacey mentioned, utility earnings include earnings from our Avista utilities and AEL&P segments with no other adjustments. The closest GAAP measure is consolidated earnings, and since we are removing the impact of our non-regulated businesses, we are required to refer to utility earnings as a non-gap measure. Last year, we set guidance for these other businesses at zero and indicated that we expected variability in results due to ongoing costs, dilution, and periodic valuation updates. As a management team, we can't control public policy, and the valuation losses we experienced in 2025 were the direct result of shifts in public policy and sentiment due to the administration change. By discussing our non-GAAP utility earnings and giving you guidance that is focused where we as a management team are focused, we're striving to limit the noise in our results and communicate with you about where we're headed as a business. In 2024, a large industrial customer in our service territory contracted with us for electric service. This customer owns transmission rights and has access to procure their own energy. They sought relief in a period of high market power prices through service with us. As market prices have since declined, they notified us earlier this year of their intent to return to procuring their power independently in the power market sooner in 26 than what we had expected. Our 2026 non-GAAP utility earnings guidance reflects a one-time decrease of $0.12 as a result of this departure. Our guidance includes an expected negative impact from the energy recovery mechanism of $0.10 at the midpoint in the 90% customer, 10% company sharing band. While our current hydro forecast shows normal levels of generation for the year, even if we were above or below normal, there would be no material change to our position in the year. Over the long term, we expect that our earnings will grow 4% to 6% from the midpoint of our 2025 consolidated earnings guidance. We are raising our long-term expected return on equity to Vista Utilities to approximately 9%, excluding any impact from the IRM. This reflects expected structural lag of 60 basis points. Now we'll be happy to take your questions.

At this time, we will conduct the question and answer session.

As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We will compile the Q&A roster. Our first question comes from the line of Char Perez of Wells Fargo Securities. Your line is now open.

Hi, good morning. This is Whitney Lutilema on for Char.

Hi, Whitney.

Hi, Whitney. Hi. So just to take a step back and think about the financing, there's just multiple moving pieces in 2026, from the customer departure to the headwind, the IRM variability, and obviously the Washington rate case. how are you sequencing financing decisions? What would cause you to pull forward or push out equity issuance? How much flexibility do you have to bridge with debt or hybrids without pressuring

the credit profile? Well, for the guidance that we've expressed here for 2026, we've incorporated the base plan that we've described so that includes the capital investment and to the extent that we had additional capital investment opportunities we would need to reassess how much debt and equity we would issue we issue our equity through a period periodic offering program and so you you'd see steady progress throughout the year towards that 90 million again barring some kind of additional investment opportunity which would be a positive thing if we had that opportunity As far as using other mechanisms, again, we would likely stick with our periodic offering program unless we had a much more significant investment opportunity. And then we would have to reassess whether we'd visit other mechanisms or vehicles.

And then just following up on the incremental CapEx, I think it's $250 to integrate a new large-load customer. So what's the internal go or no-go threshold before you commit to that type of incremental build? How do you ensure existing customers are insulated if the large load doesn't fully materialize?

I would start by saying that the next step, now that we have a significant deposit on board from that potential customer, is moving towards an MOU. And we'd expect to move towards that MOU in the next 90 or so days. And as we work forward there, we would likely have ongoing conversations with the customer, and again, I want to emphasize a point, to the extent that we're able to add this customer, they would make a significant contribution back to the system and our existing customers such that it would help with affordability. and we would ensure that those same customers would not be negatively impacted to the extent that the customer were to start conversations with us, maybe even go to construction and then walk away. We would have in place, in addition to the deposit, we would have collateral and security to protect our business and our customers, significant amounts such that we would expect no impact if they were to walk away. Now, that's not the intent. We would expect them to go forward and contribute revenue to the system on an ongoing basis for many years into the future. Well said. Thank you.

Thank you. Our next question comes from the line of Julianne DeMoulin-Smith of Jeffries. Your line

is now open. Yeah, good morning. It's Brian Rousseau. I'm for Julianne. Good morning, Brian. Good morning. Hey, just to follow up on the financing plan for the potential $350 million upside CapEx, should we kind of generally model that as a 50-50 debt and equity, and would you possibly consider hybrids?

Yeah, to be clear, we'd expect that spending to start maybe in earnest to the extent that we're able to proceed sometime later this year, but really in 27, 28, and into 29. And we would expect a 50-50 cap structure or funding approach with incremental capital beyond what we've described here. Oh, and to your question around hybrids, we would consider that option if we were able to move forward with that much additional capital beyond the base plan.

Okay. And would you also consider monetizing the other businesses, which, according to the 10K, have an equity interest value of $148 million as of December 2025? I'm wondering, because of your shift in reporting, it just seems that there's a much bigger focus on the utility. And are any of those investments considered non-core, so to speak?

Yeah, I appreciate you noticing all of that, Brian, and that's exactly the intent here. We would look to monetize some of our non-regulated investments to the extent that there's an opportunity to do so with a material gain. And if that were to take place, that would help affect our equity, meaning that we would issue less equity on a go-forward basis.

that would be the likely plan. Okay, great. And one more question. Just to be clear, the 4% to 6% long-term EPS CAGR correlates to the 5% rate-based CAGR. Therefore, this 12% hypothetical rate-based CAGR would, in theory, be accretive to the 4% to 6%, correct?

Yeah, let me walk you through that. So the way I think about it is, so the 5% kegger on our capital investment plan over the next five years, you'll notice from the graphic that we were displaying that we have an increase in the middle due to the RFP. And so to call it 5%, I'd say that's a bit conservative. We have a significant increase from, you know, year one through three when we execute on the investments related to the RFP in 2028. And then in the back end, we would expect that we have additional investment opportunities, hopefully the large load and more, and then that would pull us up to the 12% rate-based kegger. If we had that opportunity and all those investments came to fruition, that would help pull us up to the top end of the 4% to 6% range. I don't have exact figures, and we don't know yet all the investment opportunities that we might have, whether we could get above the 6%, but we would talk to you about that in subsequent quarters.

Great. And then one more, lastly, on the large customer, would you look to file a large tariff or an ESA?

Yeah, we call it a special contract, and we would file that special contract with the commission in both Washington and Idaho. And when we file those special contracts, which is a pretty standard approach in our states for large customers, we would expect the commission to look favorably upon a large load special contract to the extent, as we've said before, we would be providing significant benefit back to existing customers from an affordability perspective. So, I think that the Commission would carefully review, but we're encouraged by the fact that it could help with affordability. Okay, great. Thank you very much.

Thank you. Thank you, Brian. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. Our next question comes from the line of chris hark of missouho your line is now open hi good morning everybody how are you

good good morning chris i just have a follow-up question on the kegger there just given the low result in 2025 uh do you still expect to be in a four to six percent range and then what kind of roe are you using to get to the midpoint of uh 2026 guidance yeah we we certainly believe

that we can we can get to our our four to six percent growth 2025 were were um was our baseline and although we fell short there over the next three four or five years we'd expect to be in that four to six percent range so that that that is the plan and we think we can get there

what was your second question chris uh and then the the roe that you're using to get to

2026 guidance assumed or early well again we've expressed here that we expect to be at on a long run basis at nine which is an increase from eight eight and that incorporates the urm or does not include the arm i should say so in 2026 as we've described to you here we're going to have pressure on that 9% due to the fact that we're likely to be, as we've said here, $0.10 or so negative. And then we continue to have structural lag around 60 basis points. We also lost that large customer, which has an impact. So, overall, we would expect to be in the low to mid-eighths in 2026 from a utility ROE with the IRM. Okay. Thank you. Super helpful. And then

And just one last thing, just looking for some clarity on the rate-based CAGR. Have you included that upside CapEx in the CAGR at all?

The upside CapEx is not included. We're using the incremental $350 million related to a potential large load as a proxy for how it could help from an overall investment opportunity. and to the extent that we are able to pull forward additional items from or investments from the RFP and we have the opportunity to invest in additional transmission, that would all be incremental to that base.

Okay. Thank you. That's it for me. Have a good one, guys. Great. Thanks, Chris.

Thank you. I am showing no further questions at this time. I would now like to turn it back to Stacey Walters for closing remarks.

Thank you all for joining us today and for your interest in the VISTA. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.