Avista Corporation — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report; the supplied filing does not provide standalone fourth-quarter results. Avista is principally a regulated electric and natural gas utility serving the Pacific Northwest and Juneau, Alaska.
Financial performance and position
| Metric | 2023 | 2022 | Change / context |
|---|---|---|---|
| Total operating revenue | $1.752 billion | $1.710 billion | Up 2.4% |
| Operating income | $257.7 million | $190.2 million | Up $67.4 million |
| Net income | $171.2 million | $155.2 million | Up 10.3% |
| Diluted EPS | $2.24 | $2.12 | Up $0.12 |
| Operating cash flow | $447.1 million | $124.2 million | Improved, partly reflecting collateral returned and receivable collections |
| Utility capital expenditures | $498.6 million | $452.0 million | Up $46.6 million |
| Total debt | $3.041 billion | $2.923 billion | Debt was 55.0% of capital, versus 55.6% |
| Cash and cash equivalents | $35.0 million | $13.4 million | At year-end |
Avista Utilities’ combined electric and natural gas utility margin, a non-GAAP measure, was $1.004 billion, up from $931.5 million. Electric margin rose to $747.9 million from $687.9 million; natural gas margin rose to $256.4 million from $243.6 million. These margins exclude resource costs and are not GAAP operating income.
Current assets were $661.8 million and current liabilities were $775.2 million at year-end. Avista reported $176.3 million available under Avista Corp.’s credit facilities and $25.0 million available under AEL&P’s line of credit. Management said liquidity was adequate for the next 12 months. The company complied with its debt covenants.
Material changes versus 2022
- Net income at Avista Utilities increased to $167.0 million from $117.9 million; AEL&P income rose to $8.9 million from $7.5 million. Other businesses swung to a $4.8 million loss from $29.7 million income, primarily due to investment losses versus gains in 2022.
- Rapid snowmelt after historically high May–June temperatures caused one of Avista Utilities’ worst hydroelectric generation years. Hydro generation fell to 3.024 million MWh from 3.930 million MWh; thermal generation rose to 5.084 million MWh from 4.055 million MWh.
- Interest expense increased to $140.8 million from $117.6 million, reflecting higher rates and borrowings. Depreciation and amortization increased to $265.3 million from $253.0 million.
- Cash from operations rose substantially, but was affected by timing and working-capital items, including a $129.2 million increase from returned derivative collateral, versus a $141.0 million cash use in 2022.
Outlook, management commentary and risks
- Rates and financing: In January 2024, Avista filed Washington multi-year electric and natural gas rate cases proposing staged annual base-revenue increases through 2025. Approval is pending. The proposals include a 10.4% ROE assumption; this is a rate-case request, not a company earnings forecast. Avista expects to issue up to $85 million of long-term debt and $70 million of common stock in 2024.
- Resource transition: Avista plans to transfer its 15% interest in Colstrip Units 3 and 4 to NorthWestern at the end of 2025, subject to closing conditions and approvals. Washington rules prohibit coal-fired generation from serving retail customers after 2025. Avista expects no direct material financial impact from the transaction, but will retain certain remediation responsibilities.
- Clean-energy plans: The 2023 electric resource plan forecasts annual energy-requirement growth of 0.9%, up from 0.2% in the 2021 plan, and identifies a need for long-duration storage after 2035. The company’s 100% clean-electricity-by-2045 and natural-gas-carbon-neutral-by-2045 goals are aspirational and depend on technology, affordability and regulatory support.
- Climate Commitment Act: Washington compliance costs were deferred; natural gas customer rates began reflecting them in March 2024. The company expected an aggregate customer-bill increase of approximately 3.8%. Idaho regulators denied Avista’s request to include these compliance costs in its power-cost adjustment mechanism.
- Operational events: A third-party pipeline damage incident in November 2023 affected nearly 37,000 natural gas customers. Avista received regulatory approval to defer $10.3 million of related costs for later recovery consideration. January 2024 pipeline and storage problems, together with cold weather, raised commodity prices; Avista reported no customer service interruptions.
- Key risks and contingencies: Wildfire claims and litigation—including the Babb Road Fire, for which a liability trial is scheduled for May 2025—have uncertain outcomes and no estimable loss range disclosed. Other matters include the Boyds and Orofino fires, Colstrip-related disputes and environmental obligations, and a Department of Justice claim related to alleged damage to National Park Service resources. The filing states that outcomes or potential losses cannot currently be predicted or estimated for several of these matters.
- Other exposures: Regulatory decisions may delay or limit cost recovery; weather and low hydro conditions can increase purchased-power needs; commodity volatility can drive collateral and cash requirements; and cyberattacks, severe weather, wildfire, environmental regulation and access to capital remain material risks.
Most important facts for investors to verify
- Progress and final outcomes of the 2024 Washington rate cases, including the proposed increases and ERM changes.
- Hydroelectric conditions, power-purchase costs and customer recovery of deferred power, gas and CCA costs.
- Closing conditions, timing and retained remediation obligations for the planned Colstrip transfer.
- Developments and potential financial exposure in wildfire and other legal proceedings, particularly the Babb Road Fire litigation.
- Execution of the 2024 capital program and planned debt and equity issuance, alongside liquidity and borrowing costs.
- Whether the company’s clean-energy plans can be achieved while maintaining reliability and affordability.