About Avista

Avista Corporation (Avista Corp. or Avista) operates as an electric and natural gas utility with certain other business ventures. The company, through its subsidiary, Alaska Electric Light and Power Company (AEL&P), also provides electric utility services in Juneau, Alaska. As of December 31, 2023, the company had two reportable business segments as follows: Avista Utilities – an operating division of Avista Corp., comprising the regulated utility operations in Washington, Idaho, Oregon and Montana. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho. Avista Utilities also provides natural gas distribution service in parts of northeastern and southwestern Oregon. Avista Utilities has electric generating facilities in Washington, Idaho, Oregon and Montana. Avista Utilities also supplies electricity to a small number of customers in Montana. Avista Utilities also engages in wholesale purchases and sales of electricity and natural gas as an integral part of energy resource management and its load-serving obligation. AEL&P – a regulated utility providing electric services in Juneau, Alaska that is a wholly-owned subsidiary and the primary operating subsidiary of Alaska Energy and Resources Company (AERC). The company has other businesses, including venture fund investments, real estate investments, and certain other investments made by Avista Capital, which is a direct, wholly owned subsidiary of Avista Corp. Avista Utilities As of December 31, 2023, Avista Utilities supplied retail electric service to approximately 416,000 customers and retail natural gas service to approximately 381,000 customers across its service territory. Avista Utilities' service territory covers 30,000 square miles with a population of 1.7 million. Electric Operations Avista Utilities generates, transmits and distributes electricity, serving electric customers in eastern Washington and northern Idaho and a small number of customers in Montana. Avista Utilities generates electricity from facilities that the company owns and purchases capacity, energy and fuel for generation under long-term and short-term contracts to meet customer load obligations. The company also sells electric capacity and energy, as well as surplus fuel in the wholesale market in connection with the company’s resource optimization activities as described below. As part of Avista Utilities' resource procurement and management operations in the electric business, the company engages in an ongoing process of resource optimization, which involves the selection from available energy resources to serve the company’s load obligations and the use of these resources to capture economic value through wholesale market transactions. These include sales and purchases of electric capacity and energy, fuel for electric generation, and derivative contracts related to capacity, energy, fuel and fuel transportation. Such transactions are part of the process of matching available resources with load obligations and hedging a portion of the related financial risks. To implement this process, the company makes continuing projections of: Electric loads at various points in time (ranging from intra-hour to multiple years) based on, among other things, estimates of customer usage and weather, historical data, contract terms, and emerging trends and climate modeling results; and Resource availability at these points in time based on, among other things, fuel choices and fuel markets, estimates of snowpack and streamflows, availability of generating units, historic and forward market information, contract terms and experience. Based on these projections, the company makes purchases and sales of electric capacity and energy, fuel for electric generation, and related derivative contracts to match expected resources to expected electric load requirements and reduce the company’s exposure to electricity (or fuel) market price changes. The process of resource optimization involves scheduling and dispatching available resources, as well as the following: purchasing fuel for generation; when economical, selling fuel and substituting wholesale electric purchases; and other wholesale transactions to capture the value of generating resources, transmission contract rights and fuel delivery (transport) capacity contracts. Avista Utilities' generation assets are interconnected through the regional transmission system and are operated on a coordinated basis to enhance load-serving capability and reliability. The company acquires both long-term and short-term transmission capacity to facilitate the company’s energy and capacity transactions. The company provides transmission and ancillary services in eastern Washington, northern Idaho and western Montana. Electric Requirements Avista Utilities' peak electric native load requirement for 2023 was 1,809 MW, which occurred on August 15, 2023. Electric Resources Avista Utilities has a diverse electric resource mix of company-owned and contracted hydroelectric, thermal, wind and solar generation facilities, and other contracts for power purchases and exchanges. As of December 31, 2023, Avista Utilities' electric generation resource mix (including contracts for power purchases) was approximately 48 percent hydroelectric, 43 percent thermal, and 9 percent other renewables. Hydroelectric Resources Avista Utilities owns and operates Noxon Rapids and Cabinet Gorge on the Clark Fork River and six smaller hydroelectric projects on the Spokane River. Hydroelectric generation is typically the company’s lowest cost source per MWh of electric energy and the availability of hydroelectric generation has a significant effect on total power supply costs. The company’s estimate of normal annual hydroelectric generation for 2024 (including resources purchased under long-term hydroelectric contracts with certain PUDs) is 563.1 aMW (or 4.95 million MWhs). Thermal Resources Avista Utilities owns the following thermal generating resources: The combined cycle natural gas-fired CT, known as Coyote Springs 2, located near Boardman, Oregon. A 15 percent interest in Units 3 and 4 of Colstrip, a coal-fired boiler generating facility located in southeastern Montana. The company has an agreement with NorthWestern to transfer the company’s ownership at the end of 2025. A wood waste-fired boiler generating facility known as the Kettle Falls GS in northeastern Washington. A two-unit natural gas-fired CT generating facility in northeastern Spokane (Northeast CT). A two-unit natural gas-fired CT generating facility in northern Idaho (Rathdrum CT). Two small natural gas-fired generating facilities (Boulder Park GS and Kettle Falls CT). Coyote Springs 2, which is operated by Portland General Electric Company, is supplied with natural gas under a combination of term contracts and spot market purchases, including transportation agreements with bilateral renewal rights. Colstrip, which is operated by Talen, is supplied with fuel from adjacent coal reserves under coal supply and transportation agreements. Several of the co-owners of Colstrip, including the company, have a coal contract that runs through December 31, 2025. The primary fuel for the Kettle Falls GS is wood waste generated as a by-product and delivered by trucks from forest industry operations within 100 miles of the plant. A combination of long-term contracts and spot purchases has provided, and is expected to meet, fuel requirements for the Kettle Falls GS. The Northeast CT, Rathdrum CT, Boulder Park GS and Kettle Falls CT generating units are primarily used to meet peaking electric requirements. The company also operates these facilities when marginal costs are below prevailing wholesale electric prices. These generating facilities have access to natural gas supplies that are adequate to meet their respective operating needs. The Lancaster Plant is a 270 MW natural gas-fired combined cycle combustion turbine plant located in northern Idaho, owned by an unrelated third-party. The company has a PPA for the output from the Lancaster Plant through December 31, 2041. Under the terms of the PPA, the company makes the dispatch decisions, provides all natural gas fuel and receives the electric energy output. Therefore, the company considers the Lancaster Plant to be a baseload resource. Wind Resources The company has exclusive rights to the capacity of Palouse Wind, a wind generation project developed, owned and managed by an unrelated third-party and located in Whitman County, Washington. Under the PPA, which expires in 2042, the company purchases the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. The project has a nameplate capacity of 105 MW. The company has an annual option to purchase the wind project, which the company has not exercised. The company has exclusive rights to the capacity of Rattlesnake Flat Wind project developed, owned and managed by an unrelated third party and located in Adams County, Washington. The facility has a nameplate capacity of 144 MW. The 20-year PPA began in December 2020 and the company purchases the power and renewable attributes produced by the project at a fixed price per MWh with a fixed escalation of the price over the term of the agreement. Solar Resources The company has exclusive rights to the capacity of the Lind Solar Farm, a solar generation project developed, owned and managed by an unrelated third-party and located in Lind, Washington. Under a PPA, which expires in 2038, the company purchases the power and renewable attributes produced by the project at a fixed price per MWh. The project has a nameplate capacity of 28 MW. Other Purchases, Exchanges and Sales In addition to the resources described above, the company purchases and sells power under various long-term contracts, and the company enters into short-term purchases and sales. Further, pursuant to The Public Utility Regulatory Policies Act of 1978, as amended, the company is required to purchase generation from qualifying facilities. This includes, among other resources, hydroelectric projects, cogeneration projects and wind generation projects at rates approved by the WUTC and the IPUC. Regional Capacity Issues After December 31, 2025, the company is prohibited by Clean Energy Transformation Act (CETA) from using energy produced by coal-fired plants to serve the company’s retail customers in Washington. The company entered into an agreement with NorthWestern to transfer its interest in Colstrip at the end of 2025. To the extent necessary, the company will obtain energy produced by other resources. In addition to retirement of coal-fired generating stations, some other generation plants in the region are being considered for possible closure due to environmental and other concerns. The reduction of regional generating capacity will have to be offset by the addition of new generating resources and energy storage facilities. Hydroelectric Licenses Avista Corp. is a licensee under the Federal Power Act (FPA) as administered by the FERC, which includes regulation of hydroelectric generation resources. Excluding the Little Falls Hydroelectric Generating Project (Little Falls), the company’s other seven hydroelectric plants are regulated by the FERC through two project licenses. The licensed projects are subject to the provisions of Part I of the FPA. These provisions include payment for headwater benefits, condemnation of licensed projects upon payment of just compensation, and take-over by the federal government of such projects after the expiration of the license upon payment of the lesser of ‘net investment’ or ‘fair value’ of the project, in either case, plus severance damages. In the unlikely event that a take-over occurs, it could lead to either the decommissioning of the hydroelectric project or offering the project to another party (likely through sale and transfer of the license). Cabinet Gorge and Noxon Rapids are under one 45-year FERC license expiring in 2046. This license embodies a settlement agreement relating to project operations and resource protection and mitigation efforts over the license term. Five of the company’s six hydroelectric projects on the Spokane River (Long Lake, Nine Mile, Upper Falls, Monroe Street and Post Falls) are under one 50-year FERC license expiring in 2059 and are referred to collectively as the Spokane River Project. The license includes numerous natural and cultural resource protection measures that are subject to ongoing regulatory interpretation. The sixth, Little Falls, is operated under separate Congressional authority and is not licensed by the FERC. It is the subject of a 50-year agreement with the Spokane Tribe, expiring in 2044. Future Resource Needs Avista Utilities has operational strategies to provide sufficient resources to meet the company’s energy requirements under a range of operating conditions. These operational strategies consider the amount of energy needed, which varies because of the factors that influence demand over intra-hour, hourly, daily, monthly and annual durations. The company’s average hourly load was 1,115 aMW in 2023. The company is required to file an Integrated Resource Plan (IRP) or Washington Progress Report with the WUTC and IPUC every two years. The WUTC and IPUC review the IRP and give the public the opportunity to comment. The WUTC and IPUC do not approve or disapprove of the content in the IRP; rather, they acknowledge that the IRP was prepared in accordance with applicable standards if that is the case. The IRP details projected growth in demand for energy and the new resources needed to serve customers over the next 20 years. The company regards the IRP as a tool for resource evaluation, rather than an acquisition plan for a particular project. In June 2023, the company filed its 2023 Electric IRP with the WUTC and the IPUC. The company anticipates its next IRP to be filed in 2025. The company is subject to the Washington State Energy Independence Act, which requires the company to obtain a portion of its electricity from qualifying renewable resources or through purchase of RECs and acquiring all conservation measures. Future generation resource decisions will be affected by legislation for restrictions on greenhouse gas emissions and renewable energy requirements. Natural Gas Operations Avista Utilities provides natural gas distribution services to retail customers in parts of eastern Washington, northern Idaho, and northeastern and southwestern Oregon. The company procures natural gas from various supply basins and over varying time periods. The company also uses natural gas storage to support high demand periods and the procurement of natural gas when prices may be lower. The company makes continuing projections of its natural gas loads and assesses available natural gas resources. Based on these projections, the company plans and executes a series of transactions to hedge a portion of the company’s customers' projected natural gas requirements through forward market transactions and derivative instruments. These transactions may extend for multiple years into the future. The company also leaves a portion of its natural gas supply requirements unhedged for purchase in the short-term spot markets. The company’s purchase of natural gas supply is governed by the company’s procurement plan and is reviewed and approved annually by the Risk Management Committee (RMC), which is consisted of certain officers and other management personnel. Once approved, the plan is implemented and monitored by the company’s gas supply and risk management groups. The company also provides distribution transportation service to qualified, large commercial and industrial natural gas customers who purchase natural gas through third-party marketers. For these customers, the company receives their purchased natural gas from such third-party marketers into the company’s distribution system and deliver it to the customers’ premises. The company has several contracts for RNG, including agreements with Pine Creek RNG to purchase an expected output of approximately 9.7 million therms annually from various projects. Natural Gas Supply The company purchases natural gas, for both fuel for generation and delivery to natural gas customers, in wholesale markets and are connected to multiple supply basins in the western United States and Canada through firm capacity transportation rights on six different pipeline networks. Access to this diverse portfolio of natural gas resources allows for natural gas procurement decisions that benefit the company’s natural gas customers. These interstate pipeline transportation rights provide the capacity to serve approximately 25 percent of peak natural gas customer demands from domestic sources and 75 percent from Canadian sources. Natural Gas Storage Avista Utilities owns a one-third interest in Jackson Prairie, an underground aquifer natural gas storage field located near Chehalis, Washington. Jackson Prairie has a total peak day deliverability of 12 million therms, with a total working natural gas capacity of 256 million therms. The company’s share is one-third of the peak day deliverability and total working capacity. The company also contracts for additional storage capacity and delivery at Jackson Prairie from Northwest Pipeline for a portion of their one-third share of the storage project. Future Resource Needs In March 2023, the company filed its 2023 Natural Gas IRP with the WUTC, the IPUC and the OPUC. The IRP details projected growth in demand for energy and the new resources needed to serve customers over the next 20 years. The company regards the IRP as a tool for resource evaluation, rather than an acquisition plan for a particular project. The company anticipates having sufficient natural gas resources to meet expected loads with the company’s transportation contracts for natural gas. The company is required to file a natural gas IRP every two years and the company anticipates its next IRP to be filed in 2025. Utility Regulation As a public utility, Avista Corp. is subject to regulation by state utility commissions for retail electric and natural gas rates, accounting, the issuance of securities and other matters. The retail electric and natural gas operations are subject to the jurisdiction of the WUTC, IPUC, OPUC and MPSC. Approval of the issuance of securities is not required from the MPSC. The company is subject to the jurisdiction of the FERC for licensing of hydroelectric generation resources, and for electric transmission services and wholesale sales. Since Avista Corp. is a ‘holding company’ (in addition to being itself an operating utility), the company is subject to the jurisdiction of the FERC under the Public Utility Holding Company Act of 2005, which imposes certain reporting and record-keeping requirements on Avista Corp. and its subsidiaries. The company and its subsidiaries are required to make books and records available to the FERC and the state utility commissions. Regional Transmission Planning The company meets its FERC requirements to coordinate transmission planning activities with other regional entities through NorthernGrid. Launched January 1, 2020, NorthernGrid is an association of all major transmission providers throughout the Pacific Northwest and Intermountain West, with facilities in California, Idaho, Montana, Oregon, Utah, Washington and Wyoming. Through the company’s participation in NorthernGrid, the company meets the regional transmission planning requirements of FERC Order Nos. 890 and 1000, and follow-on orders. NorthernGrid and its members also work with other western organizations, including WestConnect and the California Independent System Operator (CAISO), to address broader interregional planning. Regional Energy Markets The CAISO operates the Western Energy Imbalance Market (EIM) in the western United States. All investor-owned utilities in the Pacific Northwest are participants in the Western EIM. The company commenced Western EIM operations in March 2022. The Western EIM, among other things, facilitates regional load balancing by allowing certain generating plants to receive automated dispatch signals from the CAISO in five-minute intervals. Reliability Standards Among its other provisions, the U.S. Energy Policy Act provides for the implementation of mandatory reliability standards and authorizes the FERC to assess penalties for non-compliance with these standards and other FERC regulations. The FERC certified the NERC as the single Electric Reliability Organization authorized to establish and enforce reliability standards and delegate authority to regional entities for the purpose of establishing and enforcing reliability standards, including but not limited to cybersecurity measures. The FERC approves NERC Reliability Standards, including western region standards that make up the set of legally enforceable standards for the United States bulk electric system. The company is required to self-certify its compliance with these standards on an annual basis and undergo regularly scheduled periodic reviews by the NERC and its regional entity, the Western Electricity Coordinating Council (WECC). AEL&P AEL&P is the primary operating subsidiary of AERC, and the sole utility providing electrical energy in Juneau, Alaska. AEL&P owns and operates electric generation, transmission and distribution facilities located in Juneau. AEL&P operates five hydroelectric generation facilities with 102.7 MW of hydroelectric generation capacity. AEL&P owns four of these generation facilities (totaling 24.5 MW of capacity) and has a PPA for the output of the Snettisham hydroelectric project (totaling 78.2 MW of capacity). AEL&P has a PPA and operating and maintenance agreement with the AIDEA to operate and maintain the facility. This PPA is a take-or-pay obligation, expiring in December 2038. Snettisham Electric Company, a non-operating subsidiary of AERC, has the option to purchase the Snettisham project at any time for a price equal to the principal amount of the bonds outstanding at that time. AEL&P has 107.5 MW of diesel generating capacity from four facilities to provide back-up service to firm customers when necessary. As of December 31, 2023, AEL&P served approximately 17,700 customers. Its primary customers include city, state and federal governmental entities located in Juneau, as well as a mine located in the Juneau area. Most of AEL&P’s customers are served on a firm basis while certain of its customers, including its largest customer, are served on an interruptible sales basis. AEL&P maintains separate rate tariffs for each of its customer classes, as well as seasonal rates. AEL&P’s operations are subject to regulation by the RCA with respect to customer rates, standard of service, facilities, accounting and certain other matters, but not with respect to the issuance of securities. AEL&P is subject to the jurisdiction of the FERC with respect to permits and licenses necessary to operate certain of its hydroelectric facilities. One of these licenses (for the Lake Dorothy hydroelectric project) expires in 2053 while the other (for the Salmon Creek and Annex Creek hydroelectric projects) expires in 2058. The Snettisham hydroelectric project is subject to regulation by the State of Alaska with respect to dam safety and certain aspects of its operations. AEL&P is subject to regulation with respect to air and water quality, land use and other environmental matters under both federal and state laws. Other Businesses Avista Capital equity investments are primarily investments in emerging technology and biotechnology companies and venture capital funds, as well as investment in a joint venture focused on local real estate development and economic growth. Alaska companies includes AERC and AJT Mining, which is a wholly-owned subsidiary of AERC and is an inactive mining company holding certain real estate. Properties Avista Utilities Substantially all of Avista Utilities' properties are subject to the lien of Avista Corp.'s mortgage indenture. Electric Distribution and Transmission Plant Avista Utilities owns and operates approximately 19,700 miles of primary and secondary electric distribution lines providing service to retail customers. The company has an electric transmission system of approximately 700 miles of 230 kV line and approximately 1,600 miles of 115 kV line. The company also owns an 11 percent interest in approximately 500 miles of a 500 kV line between Colstrip, Montana and Townsend, Montana. The company’s transmission and distribution systems also include numerous substations with transformers, switches, monitoring and metering devices and other equipment. The 230 kV lines are the backbone of the company’s transmission grid and are used to transmit power from generation resources, including Noxon Rapids, Cabinet Gorge and the Mid-Columbia hydroelectric projects, to the major load centers in the company’s service area, as well as to transfer power between points of interconnection with adjoining electric transmission systems. These lines interconnect at various locations with the BPA, Grant County PUD, PacifiCorp, NorthWestern and Idaho Power Company and serve as points of delivery for power from generating facilities outside of the company’s service area, including Colstrip, Coyote Springs 2 and the Lancaster Plant. These lines also provide a means to optimize resources through short-term purchases and sales of power with entities within and outside of the Pacific Northwest. The 115 kV lines provide for transmission of energy and the integration of smaller generation facilities with the company’s service-area load centers, including the Spokane River hydroelectric projects, the Kettle Falls projects, Rathdrum CT, Boulder Park GS and the Northeast CT. These lines interconnect with the BPA, Chelan County PUD, the Grand Coulee Project Hydroelectric Authority, Grant County PUD, NorthWestern, PacifiCorp and Pend Oreille County PUD. Both the 115 kV and 230 kV interconnections with the BPA are used to transfer energy to facilitate service to each other’s customers that are connected through the other’s transmission system. The company holds a long-term transmission agreement with the BPA that allows the company to serve its native load customers that are connected through the BPA’s transmission system. Natural Gas Plant Avista Utilities has natural gas distribution mains of approximately 3,600 miles in Washington, 2,200 miles in Idaho and 2,400 miles in Oregon. The company has natural gas transmission mains of approximately 75 miles in Washington and 15 miles in Oregon. The company’s natural gas system includes numerous regulator stations, service distribution lines, monitoring and metering devices, and other equipment. The company owns a one-third interest in Jackson Prairie, an underground natural gas storage field located near Chehalis, Washington. Alaska Electric Light and Power Company Substantially all of AEL&P's utility properties are subject to the lien of the AEL&P mortgage indenture. In addition to the generation properties above, AEL&P owns 61 miles of transmission lines, which are primarily consisted of 69 kV line, and 184 miles of distribution lines. History Avista Corporation was founded in 1889. The company was incorporated in the territory of Washington in 1889.