Avista Corporation · NYSE:AVA
Avista — 2020 AGA Financial Forum
32 slides from Avista's conference presentation, May 15, 2020
Slide 1: 2020 AGA Financial Forum
Our Customers | Our People Perform | Invent 2020 AGA Financial Forum May 18-19, 2020 NYSE: AVA www.avistacorp.com
Slide 2: Disclaimer
Disclaimer 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 h
Slide 3: Avista at a glance
Avista at a glance . Incorporated in the territory of Washington in 1889 . Primarily an electric and natural gas utility . At the end of 2019, employed 1,796 people at Avista Utilities and 124 in our subsidiary businesses (including Alaska Electric Light & Power) . 2019 Operating revenue: $1.3 billi
Slide 4: Our focus for 2020
Our focus for 2020 . Remain focused on running a great utility and providing reliable energy service to our customers during the COVID-19 pandemic . Invest prudent capital in our utility infrastructure to maintain and enhance our system . Maintain appropriate capital structure . Continue to reduce r
Slide 5: COVID-19 Summary
COVID-19 Summary . Primary focus is on the safety of our customers and employees while providing reliable energy service. . Implemented business continuity plans and we believe that we will continue to be able to conduct our utility operations effectively. . We have informed retail customers and sta
Slide 6: COVID-19 Financial Impacts
COVID-19 Financial Impacts . April electric loads were a 5% overall decline, with a 10% increase in residential, a 12% decrease in commercial and a 14% decrease in industrial. Natural gas loads were within normal bounds for the time of year. . We have decoupling and other regulatory mechanisms in Wa
Slide 7: Expectations that drive performance
Expectations that drive performance . General rate cases in 2019: □ Settlement in Oregon, new rates effective January 15, 2020 □ Settlement in Idaho, new rates effective December 1, 2019 □ Partial settlement in Washington, new rates effective April 1, 2020 . Earnings challenges in 2020 □ Regulatory
Slide 8: Net Income and Diluted EPS
Net Income and Diluted EPS ($ in thousands, except per-share data) Q1 2020 Q1 2019 Net Income (Loss) by Business Segment attributable to Avista Corp. Shareholders Avista Utilities $45,979 $111,901 Alaska Electric Light and Power Company $3,395 $3,552 Other $(950) $341 Total Net Income attributable t
Slide 9: Investments to upgrade our systems
Investments to upgrade our systems 5% to 6% rate base growth $405 $405 $405 $405 Failed Plant & $21 $18 $16 $15 Operations $42 $42 $53 $43 Customer Requested $75 $64 $80 $88 Performance & $50 Capacity $60 $51 $50 Customer Service, Quality $74 $58 & Reliability $91 $90 Mandatory & Compliance $148 $15
Slide 10: Driving effective regulatory outcomes
Driving effective regulatory outcomes Timely and adequate recovery of costs and capital investments Washington Idaho Oregon . In October 2019, the Oregon Commission . In November 2019, the Idaho Commission approved a settlement designed to . In March 2020, the Washington approved a settlement design
Slide 11: Avista's commitment to renewable energy
Avista’s commitment to renewable energy Our Commitment . Carbon-neutral supply of electricity by the end of 2027 . Serve customers with 100% clean electricity by 2045 Our History . Among the lowest carbon emitting electric utilities in the Long history of commitment to nation* environmental stewards
Slide 12: Western Energy Imbalance Market
Western Energy Imbalance Market . Plan to join in 2022. . Real-time energy market should allow Avista to further integrate renewable generation on the system. . Avista estimates the total cost of joining the EIM to be approximately $25 million for both capital and operating expense over the three-ye
Slide 13: Washington Clean Energy Transformation Act (CETA)
Washington Clean Energy Transformation Act (CETA) Energy Resources . Must eliminate the allocation of coal-fired resources to Washington customers by the end of 2025 . Colstrip depreciation accelerated to 2025 in Washington general rate case, implemented April 1, 2020 . Achieve carbon neutrality by
Slide 14: 2020 Earnings Guidance
2020 Earnings Guidance 2020 Earnings Guidance Revised Original Avista Utilities $1.77 − $1.89 $1.89 − $2.01 AEL&P $0.07 − $0.11 $0.08 − $0.12 Other $(0.09) − $(0.05) $(0.02) − $0.02 Consolidated $1.75 − $1.95 $1.95 − $2.15 Revised effective May 8, 2020 Guidance Assumptions . The midpoint of our guid
Slide 15: A solid investment
A solid investment . Strong and responsible core utility □ Investing substantially to modernize infrastructure and upgrade systems □ Successful rate case settlements in 2019 in Washington, Oregon and Idaho □ Committed to reducing regulatory timing lag by 2023; long-term growth rate of 4 to 6 percent
Slide 16: We welcome your questions
We welcome your questions Company Contact John Wilcox, Investor Relations Manager 509-495-4171 john.wilcox@avistacorp.com www.avistacorp.com Photo: Huntington Park, Spokane, Wash. 16
Slide 17: Appendix
Avista Corporation Appendix 17
Slide 18: Environment, Social and Governance
Environment, Social and Governance Founded in 1889 on clean, renewable hydropower Among the lowest carbon emitting electric utilities in the nation Carbon neutral electric supply by 2027 and serve customers with 100% Environmental clean electricity by 2045 Three renewable energy projects imp
Slide 19: Strong and stable utility core
Strong and stable utility core Avista Utilities . Regulated electric and natural gas operations . Serves customers in Washington, Idaho and Oregon . Contributes about 95% of earnings Alaska Electric Light & Power Company Our Customers | Our People (AEL&P) Perform | Invent . Regulated electric operat
Slide 20: Avista Utilities
Avista Utilities Significant investments in utility infrastructure 20
Slide 21: Avista Utilities Rate Base
Avista Utilities Rate Base Estimated Rate Authorized Authorized Base as of Overall Authorized Common March 2020 Rate of Return on Equity Jurisdiction and service ($ in millions) (1) Return Equity Ratio Washington electric $1,728 7.50% 9.4% 48.5% Washington natural gas 418 7.50% 9.4% 48.5% Idaho elec
Slide 22: Solid foundation and continued commitment to innovation
Solid foundation and continued commitment to innovation Providing safe and reliable service for over 130 years . Diverse customer base □ 30,000 square mile service territory □ Service area population 1.7 million – 395,000 retail electric customers – 363,000 retail natural gas customers . Strong cust
Slide 23: A responsible mix of generation
A responsible mix of generation Founded on clean, renewable hydropower . Strategy is to control a portfolio of resources that responsibly and affordably meet our long-term energy needs with carbon neutral by 2027 and 100% clean by 2045 . Filed electric Integrated Resource Plan in February 2020 in Id
Slide 24: Alaska Electric Light & Power Company
Alaska Electric Light & Power Company Oldest regulated electric utility in Alaska, founded in 1893 . Serves 17,000 electric customers in the City and Borough of Juneau, meeting nearly all of its energy needs with hydropower . One of the lowest-cost electric utilities in the state . Approved capital
Slide 25: Growth outside core utility
Growth outside core utility Strategic Investments Developing platforms for future growth 25
Slide 26: Creating new growth platforms
Creating new growth platforms . Targeted investments □ Invested $14 million in 2019 □ Plan to invest $15 million in each of 2020 and 2021, $12 million in 2022 □ Energy Impact Partners – Private equity fund that invests in emerging technologies, services, and business models throughout electric suppl
Slide 27: Financial Performance Metrics
Avista Corporation Financial Performance Metrics 27
Slide 28: Financial Performance
Financial Performance Total Earnings per Diluted Share Attributable to Avista Corporation $2.97 $2.15 $1.97 $2.07 $1.79 2015 2016 2017* 2018* 2019** Continuing Operations Ecova (DiscOp) *2018 earnings reduced by $0.04 per diluted share and 2017 earnings reduced by $0.19 per diluted share of acquisit
Slide 29: Prudent Balance Sheet and Liquidity
Prudent Balance Sheet and Liquidity . As of April 30th, we had $188 million of available liquidity under our $400 million line of credit. . In April 2020, we entered into a 364-day credit agreement to improve liquidity with COVID-19 in the amount of $100 million. . In 2020, we expect to issue approx
Slide 30: Attractive and growing dividend
Attractive and growing dividend Targeting 65%-75% Payout Ratio by 2023 $1.62 $1.55 $1.49 $1.43 $1.37 $1.32 2015 2016 2017 2018 2019 2020 *Current quarterly dividend of $0.405 annualized 30
Slide 31: Risks, Uncertainties and Other Factors That Could Affect Future Results
Risks, Uncertainties and Other Factors That Could Affect Future Results Forward-looking 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 co
Slide 32: Risks, Uncertainties and Other Factors That Could Affect Future Results
Risks, Uncertainties and Other Factors That Could Affect Future Results Strategic Risk growth or decline of our customer base due to new uses for our services or decline in existing services, including, but not limited to, the effect of the trend toward distributed generation at customer sites; the