Investor Presentation
May 2024
NYSE: AVA | www.avistacorp.com |
Disclaimer
Except as expressly noted, the information in this presentation is current as of May 1, 2024, and should not be relied upon as being current as of any subsequent date. Avista undertakes no duty to update this presentation, except as may be required by law.
All forward-looking statements in this presentation are based on underlying assumptions (many of which are based, in turn, upon further assumptions). These statements are subject to a variety of risks, uncertainties and other factors. Most of these factors are beyond our control and may have a significant effect on our operations, results of operations, financial condition or cash flows, which could cause actual results to differ materially from those anticipated in our statements.
Such risks, uncertainties and other factors include, among others, those included in the appendix herein and in our most recent Annual Report on Form 10-K, or Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission. Those reports are also available on our website at https://investor.avistacorp.com.
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Responsible Growth with a Focus on Results
Constructive regulatory
outcomes
- Regulatory mechanisms and fixed charges secure 92% of revenue
- Regulatory outcomes demonstrate Commission support and alignment with strategic priorities
- Timely recovery of capital in Washington
Improving regulatory returns
- Utility earnings growth from 2022- 2023 of 35 percent
- Long-termearnings growth in line with rate base growth of 4-6% from a 2025 base year, assuming constructive regulatory outcome in Washington
Mitigating wildfire risk
- Continuous mitigation efforts target vegetation management and grid hardening to areas of highest risk first
- Proactive operational measures include both Fire Safety Mode and Public Safety Power Shutoffs (PSPS)
Exploring investment to meet
clean energy goals
- Serve customers with 100% clean electricity by 2045
- Carbon neutral in our gas operations by 2045
Stable financial metrics continue
to improve
- Improved cash from operations due to impact of general rate cases and recovery of deferred costs
- FFO-to-debtexpected to firmly support S&P's BBB rating by end of year
Focused on excellence and
efficiency
- Continued focus on efficient business operations
- Committed to safe, reliable, high- quality service
- Among the lowest electric rates of an investor-owned utility in the U.S.
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Avista at a Glance
Primarily a regulated electric and gas utility
Already one of the lowest carbon- emitting electric utilities in the U.S.*
Incorporated in the territory of
Washington in 1889
Generation portfolio 57% renewable
Renewables
9%
As of | Hydro |
12/31/2023 | |
48% | |
Thermal
43%
FINANCIALS AT A GLANCE
1.7 | 171.1 | 2.24 | 1.90 | 2.5 | |||||||||||||||||
billion | million | billion | |||||||||||||||||||
2023 OPERATING | 2023 NET INCOME | 2023 DILUTED | 2024 ANNUALIZED | AVISTA CORPORATION | 1% CUSTOMER | ||||||||||||||||
REVENUE | ATTRIBUTABLE TO | EARNINGS PER | DIVIDEND PER SHARE | SHAREHOLDERS' | GROWTH IN 2023 | ||||||||||||||||
AVISTA CORP | SHARE | EQUITY AS OF | |||||||||||||||||||
SHAREHOLDERS | 12/31/2023 |
4 * Source: Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States, ERM, November 2023.
Consolidated Earnings Bridge
* Including intracompany.
The chart above includes electric and gas utility margin, which are considered non-GAAP financial measures. Refer to the Appendix for a reconciliation of these
non-GAAP measures.
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Investing in the Utility of the Future
$575 | Wildfire Resiliency | |||
$500 | $525 | |||
Substation Rebuilds | ||||
Hydro Plant | ||||
Modernization | ||||
2024 | 2025 | 2026 | ||
Avista Utilities Expected | Top 3 Capital Programs | |||
Capital Spend 2024-2026 | 2024-2026 |
Other
7%
Enterprise
Technology
15%
Transmission
and Distribution
Natural48% Gas
13%
Generation
17%
Allocation of Avista Utilities
Expected Capital Spend
2024-2026
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Driving Effective Regulatory Outcomes
Washington | | General rate cases (multiyear rate plans) for electric and gas filed January 2024 for new rates to be effective December 2024. |
Proposed electric revenue increase of $77.1M (13%) in year 1, and $53.7M (11.7%) in year 2. | ||
Proposed base gas revenue increase of $17.3M (13.6%) in year 1, and $4.6M (3.2%) in year 2. | ||
Proposed overall rate of return of 7.61% (proposed 48.5% equity ratio, proposed ROE of 10.4%). | ||
| Proposed update to ERM construct to reflect a 95% customer / 5% company sharing of power supply cost above or below authorized. | |
Idaho
- Multiparty settlement approved and new rates effective 9/2023 in two-year GRCs for electric and gas.
- Base electric revenue increase of $22.1M (8%) in year 1, and $4.3M (1.4%) in year 2.
- Base gas revenue increase of $1.3M (2.7%) in year 1, and $0.003M (0.01%) in year 2.
- Overall rate of return 7.19% (9.4% ROE and 50% equity ratio).
- Next rate case filing expected in the first quarter of 2025.
Oregon New rates effective 1/2024.
- Base revenue increase of $7.2M (4.7%).
- ROE increase to 9.5%, for an overall rate of return of 7.24%.
- Next rate case filing expected in the latter half of 2024.
Alaska | | Rate order received August 2023. |
Rate increase of 6.0% approved. | ||
| ROE of 11.45% and 60.7% equity ratio. |
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Mitigating our Wildfire Risk
Wildfire Resiliency Plan
- Incorporates grid hardening, vegetation management, situational awareness, and emergency response and operations
- $430 million investment in both capital and O&M planned ($124 million spent since 2020)
- WUI 2 and 3 zones to be addressed first
Proactive
Operations
- Leading-edgefire weather dashboard enables prediction of wildfire risk at a feeder- level granularity
- Fire Safety Mode utilizes a risk-informedapproach to operating our system, employs higher sensitivities
- Public safety power shutoffs (PSPS) when conditions warrant
Regulatory | Legislative | |||
Support | Action | |||
• | Deferral treatment for | • | Partnering with | |
wildfire resiliency costs | neighboring utilities and | |||
beyond amounts | EEI to seek Federal | |||
authorized in rates | support for wildfire risk | |||
• | Deferral treatment for | • | Leading regional | |
insurance costs beyond | efforts to seek state- | |||
amounts authorized in | level support for wildfire | |||
rates | risk | |||
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Earnings Guidance
2024 | |
Avista Utilities | $2.23 - $2.39 |
AEL&P | $0.09 - $0.11 |
Other | $0.04 - $0.06 |
Consolidated | $2.36 - $2.56 |
as of May 1, 2024 |
Guidance Assumptions
- Our guidance does not include the effect of unusual or non-recurring items until the effects are probable. Various factors could cause actual results to differ materially from our expectations, including our earnings guidance. Please refer to our 10-K for 2023 and the cautionary statements shared later in this presentation, for a full discussion of these factors.
- The midpoint of our guidance range does not include any expense or benefit under the ERM. For the full year, we expect the ERM to be a negative $0.07 per diluted share in the 90% customer / 10% Company sharing band.
- By the end of the second quarter, we expect to finalize an agreement with a prospective large electric customer in our service territory previously served in the wholesale markets. The expected increase in utility margin would help to offset the forecast impact of the ERM on results in 2024.
- Our guidance for Avista Utilities includes unrecovered structural costs estimated to reduce the return on equity by 70 basis points. We expect 60 basis points of regulatory timing lag in 2024, resulting in an expected return on equity at Avista Utilities of 8.1% in 2024.
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COMPANY CONTACT
Stacey Wenz
Investor Relations Manager
(509) 495-2046
stacey.wenz@avistacorp.com
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Disclaimer
Avista Corporation published this content on 17 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 May 2024 20:32:10 UTC.