Avista Pauses Data-Center Project Amid Wildfire Uncertainty

Avista Corporation (NYSE: AVA) reported second-quarter 2026 financial results that revealed a divergence between GAAP profitability and core utility performance, while simultaneously announcing a quarterly dividend declaration. The company’s stock price reflected market concerns regarding operational risks and strategic pauses, with the share trading down 2.22% to $39.55 on August 4, 2026.

Financial Performance and Earnings Guidance

For the second quarter ended June 30, 2026, Avista reported net income of $35 million, a significant increase from $14 million in the same period of 2025. Earnings per diluted share based on GAAP reached $0.43, surpassing the consensus estimate of $0.23 and doubling the $0.17 recorded a year earlier. This improvement was largely attributed to the recovery of non-utility investment losses recognized in the previous year.

However, non-GAAP utility earnings, which strip out volatile investment gains, remained flat at $23 million, or $0.29 per diluted share, compared to $24 million in the prior year. Revenue for the quarter came in at $413 million, missing analyst estimates of $426.9 million, although it represented a slight increase from the prior year period. Year-to-date GAAP net income rose to $127 million from $93 million in 2025.

Management reaffirmed its 2026 non-GAAP utility earnings guidance, projecting a range of $2.52 to $2.72 per diluted share. This outlook assumes normal weather conditions for the remainder of the year and includes a negative $0.10 per share impact from the Energy Resource Management (ERM) mechanism, which operates within a 90% customer and 10% company sharing band. Looking long-term, the company projects adjusted utility earnings to grow between 4% and 6% annually from the midpoint of 2025 earnings guidance.

Operational Challenges and Strategic Pauses

A primary driver of recent market sentiment has been the impact of wildfires in the Spokane, Washington, area. The fires left approximately 7,300 electric and 5,300 natural gas customers without service. While management noted that wildfire-mitigation measures, including vegetation management and public-safety power shutoffs, functioned as intended, the extent of repair costs and insurance coverage remains uncertain. The company stated it is too early to determine the full financial impact or potential cost recovery through Washington’s securitization mechanism.

In response to these operational challenges, Avista paused negotiations on a potential 500-megawatt data-center project. The company removed the project from its capital plan upside, stating it would only proceed if the initiative provides clear net benefits, ensures reliability for existing customers, and does not shift costs to them. Additionally, the Washington four-year rate case remains on track, with hearings scheduled for September 17-18 and a decision expected in mid-December, though management warned that the settlement process would be difficult.

Dividend Declaration and Outlook

On August 4, 2026, Avista’s board of directors declared a quarterly dividend of $0.4925 per share, consistent with previous quarters. The annualized dividend amounts to $1.97, yielding approximately 5.0%. The dividend is payable on September 14, 2026, to shareholders of record as of the close of business on August 18, 2026.

Non-regulated segment results provided some offset to utility challenges, boosted by an IPO-related gain from the EIP fund. However, management cautioned that results from non-regulated investments remain volatile, with a gain anticipated in the third quarter expected to largely reverse at current share prices. Institutional investors have adjusted their positions recently, with major funds such as Goldman Sachs and State Street increasing their stakes in the fourth and second quarters, respectively. Analysts currently maintain a consensus "Hold" rating on the stock, with an average price target of $39.25.