Spokane, Washington-based Avista Corp (NYSE: AVA) has seen a turnaround in its financial outlook, with S&P Global Ratings revising its perspective from negative to stable following the release of its full-year 2024 results. The company’s improved financial performance is highlighted by a notable rise in its consolidated funds from operations (FFO) to debt ratio, which climbed to 14.1% in 2024, up from 13.1% in 2023 and 11.6% in 2022.
Key Drivers Behind the Revision
Positive Financial Measures:The improved FFO-to-debt ratio is largely attributed to a significant reduction in customer rate refunds and favorable regulatory outcomes across Washington, Idaho, and Oregon. In December 2024, the Washington commission approved multi-year rate increases for Avista, boosting electric revenue by $56.4 million and gas revenue by $18.2 million over 2025-2026.
Regulatory Success:Avista’s strong performance in securing favorable rate cases has helped stabilize its financial outlook. The nearly completed customer rate refund process further underscores the company’s commitment to maintaining robust financial metrics.
Stable Outlook and Ratings Affirmation:S&P Global Ratings has not only upgraded the outlook to stable but also affirmed Avista’s credit ratings—’BBB’ issuer credit rating, ‘A-‘ on senior secured debt, ‘A-2’ short-term rating, and ‘BB+’ on Avista Capital II’s preferred stock. The expectation is that Avista will maintain an FFO-to-debt ratio between 14% and 16% over the forecast period, provided there are no adverse regulatory outcomes or unforeseen liabilities.
Business Risk Profile:With over 99% of its consolidated EBITDA coming from regulated electric and gas utility operations across five states, Avista’s business risk profile is assessed as strong despite its significant financial risk, largely due to a heavy concentration in Washington and Idaho.
Potential Risks and Future Prospects
S&P Global cautions that if Avista’s FFO-to-debt ratio consistently weakens below 14%—due to adverse regulatory outcomes, delays in rate adjustments, or unexpected liabilities related to wildfires—the company’s ratings could be downgraded. Conversely, a substantial improvement to consistently above 20% could trigger an upgrade in its ratings.
Leveraging FMP APIs for In-Depth Financial Analysis
To gain deeper insights into Avista’s evolving financial health and regulatory performance, consider using these two Financial Modeling Prep APIs:
? Balance Sheet APIAccess detailed balance sheet data to analyze Avista’s asset structure, liquidity, and how the improved FFO-to-debt ratio is reflected in its financial statements.
? Annual Reports (Form 10-K) APIReview comprehensive annual reports to track regulatory outcomes, rate case impacts, and management’s commentary on future capital spending and risk management.
Conclusion
Avista’s transition to a stable outlook reflects significant improvements in its financial metrics and favorable regulatory outcomes. As the company continues to optimize its operations and secure multi-year rate increases, investors can expect a more resilient financial performance over the forecast period. Monitoring key financial documents and balance sheet data via the Balance Sheet and Annual Reports APIs will be essential for tracking Avista’s progress and assessing its long-term stability.
