Avista Corporation (AVA) | The Buildout — AI Infrastructure
The Verdict
Avista Corp. is a regulated electric and natural gas utility. Through Avista Utilities it distributes and transmits electricity and distributes natural gas across parts of eastern Washington and northern Idaho, with regulated operations in Washington, Idaho, Oregon and Montana; through its subsidiary AEL&P it supplies electric service in Juneau, Alaska. It owns generating stations across hydro, natural gas and — until the January 1, 2026 transfer — coal. It does not make AI hardware, software or services. Its place in the AI build-out is as a potential power provider: if a data-center developer sites in its territory, Avista would supply regulated electric service and build the generation and transmission to serve that load.
| Market Cap | — |
| Revenue (TTM) | $1.9B |
| Revenue Growth | −1.8% |
| EBITDA Margin (TTM) | 33.4% |
| Net Debt | $3.3B |
| Earnings Beats | 3 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- The core utility is growing: Q1 2026 consolidated EPS was $1.11 versus $0.98 a year earlier, and Avista Utilities segment net income rose to $87M from $78M.
- The capital plan is the growth engine: $3.4B from 2026 through 2030, with 2026 Avista Utilities capex raised to $615M from $585M, and that capital earns a regulated return.
- The hydro fleet is the largest block of listed capacity — Noxon Rapids at 562 MW and Cabinet Gorge at 273 MW — and management said hydro generation ran above normal for the year.
- National data-center demand is large, so the paused MOU reads as a framework issue rather than a demand issue; the read-through notes that neighbor Northwestern Energy is pursuing a larger data-center pipeline than Avista's paused project.
- Grid-hardening and public safety power shutoff investments appear to be paying off: management said the prior work "do seem to be demonstrating their value," citing trees found in de-energized lines during the wildfire event.
What We’re Watching
- The data-center MOU is paused: the May 31, 2026 target was missed, the 500 MW project was removed as capital-plan upside, and any restart depends on a tariff or special-contract framework still being explored.
- The Washington 4-year rate case is heading to litigation; management does not expect a settlement, with a hearing September 17–18, 2026 and a commission order expected mid-December 2026.
- The Spokane wildfire costs are unquantified; a UTC petition is possible, securitization was ruled out for this event, and management said the damage assessment was incomplete.
- Nonregulated earnings can swing: a gain on the ERock position held through EIP is expected next quarter, and management says it would likely reverse on ERock's public stock price.
The core utility case looks intact — regulated rate-base growth, a raised capital plan, and reaffirmed long-term targets — but the growth optionality has weakened and the risk profile has widened. The 500 MW data-center project was removed as capital-plan upside, the May 31 MOU target was missed, and the Washington rate case is heading to litigation rather than settlement. The wildfire event added an unquantified cost and recovery question on top. The open question is whether the large-load framework lands and the rate case resolves constructively before the growth thread goes dormant.
Earnings
Avista's June 30, 2026 quarter carried revenue of $413M and EBITDA of $122M, a 29.5% margin, with net income of $35M and free cash flow of negative $54M. Revenue was essentially flat against the $411M reported a year earlier, and gross margin compressed. Management did not review the numbers live: it directed investors to the premarket press release and 10-Q, which confirmed 2026 utility earnings guidance, and devoted the call to the Spokane-area wildfires.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $413M | $570M | $411M | +0.5% |
| Gross margin | 13.1% | 63.9% | 68.4% | -5530bps |
| EBITDA | $122M | $201M | $129M | −5.4% |
| EPS | $0.42 | $1.12 | $0.17 | +143.1% |
At this time, about 7,300 of our 429,000 electric customers are out of power and about 5,300 of our 386,000 natural gas customers are without service.— Heather Rosentrater, CEO, 2026-08-03
Management tone: Management's tone moved from confident and execution-oriented on the May 5, 2026 call to crisis management on the August 3, 2026 call. On the August call the company redirected the agenda to the Spokane wildfires and deferred financials to the press release and 10-Q, so there was no live financial discussion. Management moved from targeting a signed data-center MOU by May 31 to describing the MOU as paused, and from hoping to settle at least part of the Washington rate case to saying it does not expect a settlement.
Management Guidance
Management reaffirmed 2026 non-GAAP utility earnings guidance of $2.52 to $2.72 per diluted share, and the August 3 press release confirmed 2026 utility earnings guidance. It raised 2026 Avista Utilities capex to $615M from $585M and reaffirmed the 2026–2030 capital plan of $3.4B. The 2026 financing plan is $230M of long-term debt and up to $90M of common stock, including $14M issued in the first quarter. Long-term targets are 4% to 6% earnings growth from the midpoint of 2025 guidance and roughly 9% return on equity at Avista Utilities, excluding the ERP. The guide assumes normal weather and hydroelectric generation, a $0.10 negative ERM impact, and effective regulatory outcomes. The August call added no live update to any of these figures.
Trajectory
Revenue runs in a strong seasonal pattern — the winter quarters carry far more than the summer ones — and the year-over-year line has been close to flat: the March quarter moved from $617M to $570M and the June quarter from $411M to $413M. Trailing-twelve-month revenue is $1,919M with EBITDA of $641M, a 33.4% margin. Two items complicate the comparison. The exit from Colstrip, effective January 1, 2026, removed power-supply revenue and the matching cost roughly together, and the energy recovery mechanism is guided to a $0.10 per-share drag for 2026, weighted to the second and third quarters. Cash generation is thin next to reported earnings: trailing free cash flow is negative $104M against $227M of net income.
The Model
The model carries FY+1 revenue of $1,920.5M and EBITDA of $640M, a 33.3% margin, then FY+2 revenue of $2,027.5M and EBITDA of $683M, a 33.7% margin. FY+1 is essentially flat with trailing-twelve-month revenue; it rests on the $615M of 2026 capital spending and the $3.4B 2026–2030 capital plan that compound the rate base. FY+2 assumes the rate base and regulatory outcomes keep advancing, with the potential large-load capital treated as an option rather than a base-case driver.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $2.0B | $1.9B | $2.0B |
| YoY Growth | — | −2.2% | +5.6% |
| EBITDA | $643M | $640M | $683M |
| EBITDA Margin | 32.7% | 33.3% | 33.7% |
Projections are the median of 4 independent model runs. The model’s revenue sits 2.1% below analyst consensus.
Management reaffirmed 2026 non-GAAP utility earnings guidance of $2.52 to $2.72 per diluted share, and the August 3 press release confirmed 2026 utility earnings guidance. It raised 2026 Avista Utilities capex to $615M from $585M and reaffirmed the 2026–2030 capital plan of $3.4B. The 2026 financing plan is $230M of long-term debt and up to $90M of common stock, including $14M issued in the first quarter. Long-term targets are 4% to 6% earnings growth from the midpoint of 2025 guidance and roughly 9% return on equity at Avista Utilities, excluding the ERP. The guide assumes normal weather and hydroelectric generation, a $0.10 negative ERM impact, and effective regulatory outcomes. The August call added no live update to any of these figures.
What Could Go Right — and Wrong
- A signed MOU or electric service agreement with the data-center customer, with the 500 MW project and its up to $350M of capital re-added to the plan.
- A constructive Washington rate case order that preserves the 4-year structure and a reasonable return; the order is due mid-December 2026.
- A large-load tariff or special-contract framework at the Washington commission that protects existing customers and unlocks the ~1.1 GW queue.
- Contained wildfire restoration costs with clear rate recovery, reinforcing the mitigation and 4-year rate-plan narrative.
- Monetization of the noncore bioscience investment or an EIP exit, reducing equity needs against the planned financing.
- The data-center MOU lapses or the customer chooses another jurisdiction, leaving the large-load thread dormant.
- An adverse Washington rate case order — on the 4-year term, the return, or power-supply treatment — that pressures earned ROE.
- Wildfire restoration costs exceed the initial assessment and recovery is challenged, with insurance not covering the gap.
- Nonregulated results reverse materially on the ERock position, hitting reported earnings and the equity-need picture.
- Hydro conditions deteriorate — snowpack is already below normal — or the ERM headwind runs larger than guided.
Looking Ahead
The next 12 months are regulatory and event-driven rather than demand-driven. The near-term items are the wildfire damage assessment and any UTC petition, the Washington rate case hearing on September 17–18 with a commission order expected mid-December 2026, and a nonregulated reversal on the ERock position in the next quarter. The data-center thread is paused with no replacement date; a restart depends on the tariff and special-contract framework and on community and regulatory processes management describes as underway. The 2026 guide, the capital plan and the financing plan all stand as stated in the written materials, with no live update from the August call.
- Q3 2026ERock gain reversal — Expected nonregulated gain likely reverses on ERock's public stock price.
- Sept 17–18, 2026Washington rate case hearing — Tests the contested 4-year term, return level and power-supply treatment.
- Mid-December 2026Washington GRC order — Commission decision due after settlement talks failed; sets multiyear rates.
- 2026Oregon FAIR Act transition — Oregon is transitioning under the FAIR Act to multiyear rate plans, discussed on the Q1 2026 call.
- 2028Battery storage online — Build-transfer project in the base capital plan; final contracts pending.
- Post-2030North Plains Connector — Regional transmission opportunity, beyond the 5-year capital budget.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $1.9B | $2.0B | $1.9B | +1.4% |
| Gross Margin | 59.8% | 56.2% | 44.2% | 350bps |
| EBITDA | $581M | $643M | $641M | +10.7% |
| EBITDA Margin | 30.0% | 32.7% | 33.4% | +276bps |
| Net Income | $180M | $193M | $227M | +7.4% |
| Free Cash Flow | $1M | −$101M | −$104M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)44.2%
- EBITDA Margin (TTM)33.4%
- Net Margin (TTM)11.8%
- ROIC4.7%
- FCF Conversion-16.2%
- SBC / Revenue0.3%
The Company
Avista Corp. is a regulated electric and natural gas utility, incorporated in the territory of Washington in 1889 and headquartered in Spokane, Washington. Through Avista Utilities it distributes and transmits electricity and distributes natural gas in parts of eastern Washington and northern Idaho, with regulated operations across Washington, Idaho, Oregon and Montana. Through its subsidiary AEL&P it also supplies electric service in Juneau, Alaska. It owns generating stations across hydro, natural gas and — until the January 1, 2026 transfer — coal; hydro is the largest block of listed capacity, led by Noxon Rapids at 562 MW and Cabinet Gorge at 273 MW.
The company owns its generation fleet along with transmission and distribution, and its earnings come from earning a regulated return on the capital it invests in that system. Rate cases in each state set the prices. The current plan calls for $615M of Avista Utilities capital spending in 2026 and $3.4B from 2026 through 2030. Retail customer counts were 427,128 electric and 385,496 natural gas as of March 31, 2026. Management also holds nonregulated investments through its EIP fund, including a position in ERock that went public.
Business Segments
Competitive Landscape
Avista competes for regional load and for data-center siting. The supply-chain wiring layer names IDACORP, Northwestern Energy, Portland General Electric, PacifiCorp and Puget Sound Energy as competitors, and several are tagged specifically for electric utility services and data-center loads. The read-through notes that Northwestern Energy's data-center pipeline — Quantica and Atlas development agreements with a 1.1 GW focus and electric service agreements expected by year-end 2026 — is larger than Avista's paused 500 MW project. Avista's hydro fleet is a clean firm resource that could differentiate it, but its large-load position is contested.
- IDACORP (IDA)Named in the wiring layer as competing for electric utility services and data-center loads; not discussed in the company's own filings.
- Northwestern Energy (NWE)The only documented counterparty: NWE states its transmission system is directly interconnected with Avista. NWE acquired Avista's Colstrip interest (222 MW) and is pursuing a larger data-center pipeline and regional transmission projects.
- Portland General Electric (POR)Named in the wiring layer for electric utility services and data-center loads; not discussed in the company's own filings.
- PacifiCorpNamed in the wiring layer for electric utility services; not discussed in the company's own filings.
- Puget Sound EnergyNamed in the wiring layer for electric utility services and data-center loads; not discussed in the company's own filings.
Supply Chain
Avista purchases power and equipment and supplies regulated electricity and gas. Its supplier map spans wind, hydro, solar and gas purchase agreements plus grid equipment, but only one link — Northwestern Energy — is documented; the rest are inferred.
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