Company Quick10K Filing
Quick10K
Avista
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$42.55 66 $2,800
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-14 Officers
8-K 2019-06-10 Other Events
8-K 2019-05-20 Regulation FD, Exhibits
8-K 2019-05-10 Officers, Exhibits
8-K 2019-05-09 Shareholder Vote
8-K 2019-05-02 Earnings, Exhibits
8-K 2019-03-19 Regulation FD, Exhibits
8-K 2019-02-08 Earnings, Exhibits
8-K 2019-01-23 Enter Agreement, Leave Agreement, Other Events, Exhibits
8-K 2019-01-23 Enter Agreement, Leave Agreement, Other Events, Exhibits
8-K 2019-01-15 Other Events, Exhibits
8-K 2019-01-08 Other Events, Exhibits
8-K 2019-01-03 Other Events, Exhibits
8-K 2018-12-17 Other Events, Exhibits
8-K 2018-12-10 Other Events, Exhibits
8-K 2018-12-05 Other Events, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-09-19 Other Events, Exhibits
8-K 2018-08-07 Other Events
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-06-12 Other Events
8-K 2018-06-04 Other Events
8-K 2018-05-25 Other Events
8-K 2018-05-18 Regulation FD, Exhibits
8-K 2018-05-15 Other Events, Exhibits
8-K 2018-05-10 Shareholder Vote
8-K 2018-05-08 Other Events
8-K 2018-04-13 Other Events
8-K 2018-04-03 Other Events
8-K 2018-03-27 Other Events
8-K 2018-03-21 Regulation FD, Exhibits
8-K 2018-03-16 Other Events
PGR Progressive 42,540
WSM Williams Sonoma 4,320
BFC Bank First National 428
ODC Oil-Dri Corp of America 234
SVBI Severn Bancorp 117
NVCN Neovasc 38
GULF Crimson Exploration 21
NURO Neurometrix 6
BWLA Bowl America 0
VII Vicon Industries 0
AVA 2019-03-31
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. New Accounting Standards
Note 3. Balance Sheet Components
Note 4. Revenue
Note 5. Leases
Note 6. Derivatives and Risk Management
Note 7. Pension Plans and Other Postretirement Benefit Plans
Note 8. Income Taxes
Note 9. Committed Lines of Credit
Note 10. Long-Term Debt To Affiliated Trusts
Note 11. Fair Value
Note 12. Common Stock
Note 13. Accumulated Other Comprehensive Loss
Note 14. Earnings per Common Share Attributable To Avista Corp. Shareholders
Note 15. Commitments and Contingencies
Note 16. Information By Business Segments
Note 17. Termination of Proposed Acquisition By Hydro One
Note 18. Assets Held for Sale
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-15 ava-20190331xex15.htm
EX-31.1 ava-20190331xex311.htm
EX-31.2 ava-20190331xex312.htm
EX-32 ava-20190331xex32.htm

Avista Earnings 2019-03-31

AVA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 ava-20190331x10q.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________________________________________
Form 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2019 OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number 1-3701
__________________________________________________________________________________________
AVISTA CORPORATION
(Exact name of Registrant as specified in its charter)

Washington
 
91-0462470
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
1411 East Mission Avenue, Spokane, Washington
 
99202-2600
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: 509-489-0500
Web site: http://www.myavista.com
None
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes  ¨    No  x
As of April 29, 2019, 65,750,156 shares of Registrant’s Common Stock, no par value (the only class of common stock), were outstanding.



AVISTA CORPORATION



AVISTA CORPORATION
INDEX
Item No.
 
 
Page
No.
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i


AVISTA CORPORATION



 

ii


AVISTA CORPORATION



ACRONYMS AND TERMS
(The following acronyms and terms are found in multiple locations within the document)
Acronym/Term
Meaning
aMW
-
Average Megawatt - a measure of the average rate at which a particular generating source produces energy over a period of time
AEL&P
-
Alaska Electric Light and Power Company, the primary operating subsidiary of AERC, which provides electric services in Juneau, Alaska
AERC
-
Alaska Energy and Resources Company, the Company's wholly-owned subsidiary based in Juneau, Alaska
AFUDC
-
Allowance for Funds Used During Construction; represents the cost of both the debt and equity funds used to finance utility plant additions during the construction period
ASC
-
Accounting Standards Codification
ASU
-
Accounting Standards Update
Avista Capital
-
Parent company to the Company’s non-utility businesses
Avista Corp.
-
Avista Corporation, the Company
Avista Utilities
-
Operating division of Avista Corp. (not a subsidiary) comprising the regulated utility operations in the Pacific Northwest
Capacity
-
The rate at which a particular generating source is capable of producing energy, measured in KW or MW
Cabinet Gorge
-
The Cabinet Gorge Hydroelectric Generating Project, located on the Clark Fork River in Idaho
Colstrip
-
The coal-fired Colstrip Generating Plant in southeastern Montana
Deadband or ERM deadband
-
The first $4.0 million in annual power supply costs above or below the amount included in base retail rates in Washington under the ERM in the state of Washington
EIM
-
Energy Imbalance Market
Energy
-
The amount of electricity produced or consumed over a period of time, measured in KWh or MWh. Also, refers to natural gas consumed and is measured in dekatherms
EPA
-
Environmental Protection Agency
ERM
-
The Energy Recovery Mechanism, a mechanism for accounting and rate recovery of certain power supply costs accepted by the utility commission in the state of Washington
FASB
-
Financial Accounting Standards Board
FCA
-
Fixed Cost Adjustment, the electric and natural gas decoupling mechanism in Idaho
FERC
-
Federal Energy Regulatory Commission
GAAP
-
Generally Accepted Accounting Principles
Hydro One
-
Hydro One Limited, based in Toronto, Ontario, Canada
IPUC
-
Idaho Public Utilities Commission
Juneau
-
The City and Borough of Juneau, Alaska
KW, KWh
-
Kilowatt (1000 watts): a measure of generating output or capability. Kilowatt-hour (1000 watt hours): a measure of energy produced
MPSC
-
Public Service Commission of the State of Montana
MW, MWh
-
Megawatt: 1000 KW. Megawatt-hour: 1000 KWh
Noxon Rapids
-
The Noxon Rapids Hydroelectric Generating Project, located on the Clark Fork River in Montana
OPUC
-
The Public Utility Commission of Oregon
PCA
-
The Power Cost Adjustment mechanism, a procedure for accounting and rate recovery of certain power supply costs accepted by the utility commission in the state of Idaho
PGA
-
Purchased Gas Adjustment
PPA
-
Power Purchase Agreement
RCA
-
The Regulatory Commission of Alaska
REC
-
Renewable energy credit
ROE
-
Return on equity

iii


AVISTA CORPORATION



ROR
-
Rate of return on rate base
SEC
-
U.S. Securities and Exchange Commission
TCJA
-
The "Tax Cuts and Jobs Act," signed into law on December 22, 2017
Therm
-
Unit of measurement for natural gas; a therm is equal to approximately one hundred cubic feet (volume) or 100,000 BTUs (energy)
Watt
-
Unit of measurement for electricity; a watt is equal to the rate of work represented by a current of one ampere under a pressure of one volt
WUTC
-
Washington Utilities and Transportation Commission


iv


AVISTA CORPORATION



Forward-Looking Statements
From time to time, we make forward-looking statements such as statements regarding projected or future:
financial performance;
cash flows;
capital expenditures;
dividends;
capital structure;
other financial items;
strategic goals and objectives;
business environment; and
plans for operations.
These statements are based upon underlying assumptions (many of which are based, in turn, upon further assumptions). Such statements are made both in our reports filed under the Securities Exchange Act of 1934, as amended (including this Quarterly Report on Form 10-Q), and elsewhere. Forward-looking statements are all statements except those of historical fact including, without limitation, those that are identified by the use of words that include “will,” “may,” “could,” “should,” “intends,” “plans,” “seeks,” “anticipates,” “estimates,” “expects,” “forecasts,” “projects,” “predicts,” and similar expressions.
Forward-looking statements (including those made in this Quarterly Report on Form 10-Q) 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:
Financial Risk
weather conditions, which affect both energy demand and electric generating capability, including the impact of precipitation and temperature on hydroelectric resources, the impact of wind patterns on wind-generated power, weather-sensitive customer demand, and similar impacts on supply and demand in the wholesale energy markets;
our ability to obtain financing through the issuance of debt and/or equity securities, which can be affected by various factors including our credit ratings, interest rates, other capital market conditions and global economic conditions;
changes in interest rates that affect borrowing costs, our ability to effectively hedge interest rates for anticipated debt issuances, variable interest rate borrowing and the extent to which we recover interest costs through retail rates collected from customers;
changes in actuarial assumptions, interest rates and the actual return on plan assets for our pension and other postretirement benefit plans, which can affect future funding obligations, pension and other postretirement benefit expense and the related liabilities;
deterioration in the creditworthiness of our customers;
the outcome of legal proceedings and other contingencies;
economic conditions in our service areas, including the economy's effects on customer demand for utility services;
declining energy demand related to customer energy efficiency, conservation measures and/or increased distributed generation;
changes in the long-term global climate and the long-term climate within our utilities' service areas, which can affect, among other things, customer demand patterns, the volume and timing of streamflows to our hydroelectric resources, as well as increased risk of severe weather or natural disasters, including wildfires;
industry and geographic concentrations which may increase our exposure to credit risks due to counterparties, suppliers and customers being similarly affected by changing conditions;

1


AVISTA CORPORATION



Utility Regulatory Risk
state and federal regulatory decisions or related judicial decisions that affect our ability to recover costs and earn a reasonable return including, but not limited to, disallowance or delay in the recovery of capital investments, operating costs, commodity costs, interest rate swap derivatives and discretion over allowed return on investment;
the loss of regulatory accounting treatment, which could require the write-off of regulatory assets and the loss of regulatory deferral and recovery mechanisms;
Energy Commodity Risk
volatility and illiquidity in wholesale energy markets, including exchanges, the availability of willing buyers and sellers, changes in wholesale energy prices that can affect operating income, cash requirements to purchase electricity and natural gas, value received for wholesale sales, collateral required of us by individual counterparties and/or exchanges in wholesale energy transactions and credit risk to us from such transactions, and the market value of derivative assets and liabilities;
default or nonperformance on the part of any parties from whom we purchase and/or sell capacity or energy;
potential environmental regulations or lawsuits affecting our ability to utilize or resulting in the obsolescence of our power supply resources;
explosions, fires, accidents, pipeline ruptures or other incidents that may limit energy supply to our facilities or our surrounding territory, which could result in a shortage of commodities in the market that could increase the cost of replacement commodities from other sources;
Operational Risk
severe weather or natural disasters, including, but not limited to, avalanches, wind storms, wildfires, earthquakes, snow and ice storms, that can disrupt energy generation, transmission and distribution, as well as the availability and costs of fuel, materials, equipment, supplies and support services;
explosions, fires, accidents, mechanical breakdowns or other incidents that may impair assets and may disrupt operations of any of our generation facilities, transmission, and electric and natural gas distribution systems or other operations and may require us to purchase replacement power;
explosions, fires, accidents or other incidents arising from or allegedly arising from our operations that may cause wildfires, injuries to the public or property damage;
blackouts or disruptions of interconnected transmission systems (the regional power grid);
terrorist attacks, cyberattacks or other malicious acts that may disrupt or cause damage to our utility assets or to the national or regional economy in general, including any effects of terrorism, cyberattacks or vandalism that damage or disrupt information technology systems;
work force issues, including changes in collective bargaining unit agreements, strikes, work stoppages, the loss of key executives, availability of workers in a variety of skill areas, and our ability to recruit and retain employees;
increasing costs of insurance, more restrictive coverage terms and our ability to obtain insurance;
delays or changes in construction costs, and/or our ability to obtain required permits and materials for present or prospective facilities;
increasing health care costs and cost of health insurance provided to our employees and retirees;
third party construction of buildings, billboard signs, towers or other structures within our rights of way, or placement of fuel containers within close proximity to our transformers or other equipment, including overbuild atop natural gas distribution lines;
the loss of key suppliers for materials or services or other disruptions to the supply chain;
adverse impacts to our Alaska electric utility that could result from an extended outage of its hydroelectric generating resources or their inability to deliver energy, due to their lack of interconnectivity to any other electrical grids and the cost of replacement power (diesel);
changing river regulation or operations at hydroelectric facilities not owned by us, which could impact our hydroelectric facilities downstream;

2


AVISTA CORPORATION



change in the use, availability or abundancy of water resources and/or rights needed for operation of our hydroelectric facilities;
Compliance Risk
compliance with extensive federal, state and local legislation and regulation applicable to us, including numerous environmental, health, safety, infrastructure protection, reliability and other laws and regulations that affect our operations and costs;
the ability to comply with the terms of the licenses and permits for our hydroelectric or thermal generating facilities at cost-effective levels;
Cyber and Technology Risk
cyberattacks on the operating systems that are used in the operation of our electric generation, transmission and distribution facilities and our natural gas distribution facilities, and cyberattacks on such systems of other energy companies with which we are interconnected, which could damage or destroy facilities or systems or disrupt operations for extended periods of  time and result in the incurrence of liabilities  and costs;
cyberattacks on the administrative systems that are used in the administration of our business, including customer billing and customer service, accounting, communications, compliance and other administrative functions, and cyberattacks on such systems of our vendors and other companies with which we do business, which could result in the disruption of business operations, the release of private information and the incurrence of liabilities and costs;
changes in costs that impede our ability to effectively implement new information technology systems or to operate and maintain current production technology;
changes in technologies, possibly making some of the current technology we utilize obsolete or introducing new cyber security risks;
insufficient technology skills, which could lead to the inability to develop, modify or maintain our information systems;
Strategic Risk
growth or decline of our customer base and the extent to which new uses for our services may materialize or existing uses may decline, including, but not limited to, the effect of the trend toward distributed generation at customer sites;
the potential effects of negative publicity regarding our business practices, whether true or not, which could hurt our reputation and result in litigation or a decline in our common stock price;
changes in our strategic business plans, which may be affected by any or all of the foregoing, including the entry into new businesses and/or the exit from existing businesses and the extent of our business development efforts where potential future business is uncertain;
entering into or growth of non-regulated activities may increase earnings volatility;
potential legal proceedings arising from the termination of the proposed acquisition of the Company by Hydro One;
External Mandates Risk
changes in environmental laws, regulations, decisions and policies, including present and potential environmental remediation costs and our compliance with these matters;
the potential effects of initiatives, legislation or administrative rulemaking at the federal, state or local levels, including possible effects on our generating resources or restrictions on greenhouse gas emissions to mitigate concerns over global climate changes;
political pressures or regulatory practices that could constrain or place additional cost burdens on our distribution systems through accelerated adoption of distributed generation or electric-powered transportation or on our energy supply sources, such as campaigns to halt coal-fired power generation and opposition to other thermal generation, wind turbines or hydroelectric facilities;
wholesale and retail competition including alternative energy sources, growth in customer-owned power resource technologies that displace utility-supplied energy or that may be sold back to the utility, and alternative energy suppliers and delivery arrangements;

3


AVISTA CORPORATION



failure to identify changes in legislation, taxation and regulatory issues that are detrimental or beneficial to our overall business;
policy and/or legislative changes in various regulated areas, including, but not limited to, environmental regulation, healthcare regulations and import/export regulations; and
the risk of municipalization in any of our service territories.
Our expectations, beliefs and projections are expressed in good faith. We believe they are reasonable based on, without limitation, an examination of historical operating trends, our records and other information available from third parties. There can be no assurance that our expectations, beliefs or projections will be achieved or accomplished. Furthermore, any forward-looking statement speaks only as of the date on which such statement is made. We undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New risks, uncertainties and other factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the effect of each such factor on our business or the extent that any such factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement.
Available Information
Our website address is www.myavista.com. We make annual, quarterly and current reports available on our website as soon as practicable after electronically filing these reports with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. Except for SEC filings or portions thereof that are specifically referred to in this report, information contained on these websites is not part of this report.


4


PART I. Financial Information
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Avista Corporation
For the Three Months Ended March 31
Dollars in thousands, except per share amounts
(Unaudited)
 
2019
 
2018
Operating Revenues:
 
 
 
Utility revenues:
 
 
 
Utility revenues, exclusive of alternative revenue programs
$
393,241

 
$
408,356

Alternative revenue programs
(4,658
)
 
(5,939
)
Total utility revenues
388,583

 
402,417

Non-utility revenues
7,898

 
6,944

Total operating revenues
396,481

 
409,361

Operating Expenses:
 
 
 
Utility operating expenses:
 
 
 
Resource costs
137,347

 
154,618

Other operating expenses
83,978

 
77,298

Merger transaction costs
19,664

 
672

Depreciation and amortization
48,914

 
44,733

Taxes other than income taxes
31,943

 
30,829

Non-utility operating expenses:
 
 
 
Other operating expenses
7,355

 
6,824

Depreciation and amortization
209

 
181

Total operating expenses
329,410

 
315,155

Income from operations
67,071

 
94,206

Interest expense
25,651

 
24,776

Interest expense to affiliated trusts
357

 
253

Capitalized interest
(928
)
 
(968
)
Merger termination fee
(103,000
)
 

Other expense (income)-net
(907
)
 
4,479

Income before income taxes
145,898

 
65,666

Income tax expense
30,017

 
10,710

Net income
115,881

 
54,956

Net income attributable to noncontrolling interests
(87
)
 
(66
)
Net income attributable to Avista Corp. shareholders
$
115,794

 
$
54,890

Weighted-average common shares outstanding (thousands), basic
65,733

 
65,639

Weighted-average common shares outstanding (thousands), diluted
65,941

 
65,931

 
 
 
 
Earnings per common share attributable to Avista Corp. shareholders:
 
 
 
Basic
$
1.76

 
$
0.84

Diluted
$
1.76

 
$
0.83

The Accompanying Notes are an Integral Part of These Statements.

5


CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Avista Corporation
For the Three Months Ended March 31
Dollars in thousands
(Unaudited)
 
2019
 
2018
Net income
$
115,881

 
$
54,956

Other Comprehensive Income:
 
 
 
Change in unfunded benefit obligation for pension and other postretirement benefit plans - net of taxes of $43 and $55 respectively
160

 
204

Total other comprehensive income
160

 
204

Comprehensive income
116,041

 
55,160

Comprehensive income attributable to noncontrolling interests
(87
)
 
(66
)
Comprehensive income attributable to Avista Corporation shareholders
$
115,954

 
$
55,094


The Accompanying Notes are an Integral Part of These Statements.

6


CONDENSED CONSOLIDATED BALANCE SHEETS
Avista Corporation
Dollars in thousands
(Unaudited) 
 
March 31,
 
December 31,
 
2019
 
2018
Assets:
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
14,861

 
$
14,656

Accounts and notes receivable-less allowances of $6,395 and $5,233, respectively
170,200

 
165,824

Materials and supplies, fuel stock and stored natural gas
61,354

 
63,881

Regulatory assets
41,566

 
48,552

Other current assets
60,948

 
54,010

Assets held for sale
15,874

 

Total current assets
364,803

 
346,923

Net utility property
4,626,054

 
4,648,930

Goodwill
52,426

 
57,672

Non-current regulatory assets
605,497

 
614,354

Other property and investments-net and other non-current assets
241,203

 
114,697

Total assets
$
5,889,983

 
$
5,782,576

Liabilities and Equity:
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
109,922

 
$
108,372

Current portion of long-term debt and capital leases
104,989

 
107,645

Short-term borrowings
119,000

 
190,000

Regulatory liabilities
55,464

 
113,209

Other current liabilities
175,454

 
120,358

Liabilities held for sale
1,813

 

Total current liabilities
566,642

 
639,584

Long-term debt and capital leases
1,701,207

 
1,755,529

Long-term debt to affiliated trusts
51,547

 
51,547

Pensions and other postretirement benefits
218,456

 
222,537

Deferred income taxes
501,928

 
487,602

Non-current regulatory liabilities
786,233

 
780,701

Other non-current liabilities and deferred credits
195,748

 
71,031

Total liabilities
4,021,761

 
4,008,531

Commitments and Contingencies (See Notes to Condensed Consolidated Financial Statements)
 
 
 
Equity:
 
 
 
Avista Corporation Shareholders’ Equity:
 
 
 
Common stock, no par value; 200,000,000 shares authorized; 65,749,932 and 65,688,356 shares issued and outstanding, respectively
1,140,242

 
1,136,491

Accumulated other comprehensive loss
(7,706
)
 
(7,866
)
Retained earnings
734,774

 
644,595

Total Avista Corporation shareholders’ equity
1,867,310

 
1,773,220

Noncontrolling Interests
912

 
825

Total equity
1,868,222

 
1,774,045

Total liabilities and equity
$
5,889,983

 
$
5,782,576

The Accompanying Notes are an Integral Part of These Statements.


7


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Avista Corporation
For the Three Months Ended March 31
Dollars in thousands
(Unaudited) 
 
2019
 
2018
Operating Activities:
 
 
 
Net income
$
115,881

 
$
54,956

Non-cash items included in net income:
 
 
 
Depreciation and amortization
49,123

 
45,823

Deferred income tax provision and investment tax credits
8,883

 
(5,049
)
Power and natural gas cost amortizations (deferrals), net
(48,084
)
 
72

Amortization of debt expense
669

 
815

Amortization of investment in exchange power
613

 
613

Stock-based compensation expense
4,845

 
1,963

Equity-related AFUDC
(1,485
)
 
(1,392
)
Pension and other postretirement benefit expense
9,084

 
8,170

Other regulatory assets and liabilities and deferred debits and credits
1,016

 
2,127

Change in decoupling regulatory deferral
4,471

 
5,703

Other
(1,943
)
 
3,778

Contributions to defined benefit pension plan
(7,300
)
 
(7,300
)
Changes in certain current assets and liabilities:
 
 
 
Accounts and notes receivable
(9,787
)
 
15,963

Materials and supplies, fuel stock and stored natural gas
(394
)
 
8,815

Collateral posted for derivative instruments
3,432

 
18,382

Other current assets
1,705

 
(473
)
Accounts payable
16,697

 
(21,997
)
Income taxes payable
19,360

 
15,432

Other current liabilities
30,095

 
38,374

Net cash provided by operating activities
196,881

 
184,775

 
 
 
 
Investing Activities:
 
 
 
Utility property capital expenditures (excluding equity-related AFUDC)
(93,615
)
 
(81,817
)
Issuance of notes receivable at subsidiaries
(200
)
 
(1,000
)
Repayments of notes receivable at subsidiaries
261

 

Equity and property investments made by subsidiaries
(3,504
)
 
(3,671
)
Distributions received from investments
149

 

Other
(755
)
 
(866
)
Net cash used in investing activities
(97,664
)
 
(87,354
)
The Accompanying Notes are an Integral Part of These Statements.

8


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Avista Corporation
For the Three Months Ended March 31
Dollars in thousands
(Unaudited)
 
2019
 
2018
Financing Activities:
 
 
 
Net decrease in short-term borrowings
$
(71,000
)
 
$
(55,398
)
Maturity of long-term debt and capital leases
(665
)
 
(3,037
)
Issuance of common stock, net of issuance costs
190

 
232

Cash dividends paid
(25,615
)
 
(24,634
)
Other
(896
)
 
(4,483
)
Net cash used in financing activities
(97,986
)
 
(87,320
)
 
 
 
 
Net increase in cash and cash equivalents, including cash classified within current assets held for sale
1,231

 
10,101

Less: Net increase in cash and cash equivalents classified within current assets held for sale (see Note 18 of Notes to Condensed Consolidated Financial Statements)
1,026

 

Net increase in cash and cash equivalents
205

 
10,101

 
 
 
 
Cash and cash equivalents at beginning of period
14,656

 
16,172

 
 
 
 
Cash and cash equivalents at end of period
$
14,861

 
$
26,273

The Accompanying Notes are an Integral Part of These Statements.



9


CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Avista Corporation
For the Three Months Ended March 31
Dollars in thousands
(Unaudited)
 
2019
 
2018
Common Stock, Shares:
 
 
 
Shares outstanding at beginning of period
65,688,356

 
65,494,333

Shares issued
61,576

 
174,144

Shares outstanding at end of period
65,749,932

 
65,668,477

Common Stock, Amount:
 
 
 
Balance at beginning of period
$
1,136,491

 
$
1,133,448

Equity compensation expense
4,452

 
1,798

Issuance of common stock, net of issuance costs
190

 
232

Payment of minimum tax withholdings for share-based payment awards
(891
)
 
(3,929
)
Balance at end of period
1,140,242

 
1,131,549

Accumulated Other Comprehensive Loss:
 
 
 
Balance at beginning of period
(7,866
)
 
(8,090
)
Other comprehensive income
160

 
204

Reclassification of excess income tax benefits

 
(1,742
)
Balance at end of period
(7,706
)
 
(9,628
)
Retained Earnings:
 
 
 
Balance at beginning of period
644,595

 
604,470

Net income attributable to Avista Corporation shareholders
115,794

 
54,890

Cash dividends paid on common stock
(25,615
)
 
(24,634
)
Reclassification of excess income tax benefits

 
1,742

Balance at end of period
734,774

 
636,468

Total Avista Corporation shareholders’ equity
1,867,310

 
1,758,389

Noncontrolling Interests:
 
 
 
Balance at beginning of period
825

 
656

Net income attributable to noncontrolling interests
87

 
66

Cash dividends paid to subsidiary noncontrolling interests

 
(540
)
Balance at end of period
912

 
182

Total equity
$
1,868,222

 
$
1,758,571

Dividends declared per common share
$
0.3875

 
$
0.3725

The Accompanying Notes are an Integral Part of These Statements.

10


AVISTA CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
The accompanying condensed consolidated financial statements of Avista Corp. as of and for the interim periods ended March 31, 2019 and March 31, 2018 are unaudited; however, in the opinion of management, the statements reflect all adjustments necessary for a fair statement of the results for the interim periods. All such adjustments are of a normal recurring nature. The condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The Condensed Consolidated Statements of Income for the interim periods are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements do not contain the detail or footnote disclosure concerning accounting policies and other matters which would be included in full fiscal year consolidated financial statements; therefore, they should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Form 10-K).
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Avista Corp. is primarily an electric and natural gas utility with certain other business ventures. Avista Utilities is an operating division of Avista Corp., comprising its regulated utility operations in the Pacific Northwest. Avista Utilities provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho. Avista Utilities also provides natural gas distribution service in parts of northeastern and southwestern Oregon. Avista Utilities has electric generating facilities in Washington, Idaho, Oregon and Montana. Avista Utilities also supplies electricity to a small number of customers in Montana, most of whom are employees who operate the Company's Noxon Rapids generating facility.
AERC is a wholly-owned subsidiary of Avista Corp. The primary subsidiary of AERC is AEL&P, which comprises Avista Corp.'s regulated utility operations in Alaska.
Avista Capital, a wholly owned non-regulated subsidiary of Avista Corp., is the parent company of all of the subsidiary companies in the non-utility businesses, with the exception of AJT Mining Properties, Inc., which is a subsidiary of AERC. See Note 16 for business segment information. See Note 18 for discussion of assets held for sale at METALfx, an unregulated subsidiary of the Company.
Basis of Reporting
The condensed consolidated financial statements include the assets, liabilities, revenues and expenses of the Company and its subsidiaries and other majority owned subsidiaries and variable interest entities for which the Company or its subsidiaries are the primary beneficiaries. Intercompany balances were eliminated in consolidation. The accompanying condensed consolidated financial statements include the Company’s proportionate share of utility plant and related operations resulting from its interests in jointly owned plants.
Derivative Assets and Liabilities
Derivatives are recorded as either assets or liabilities on the Condensed Consolidated Balance Sheets measured at estimated fair value.
The WUTC and the IPUC issued accounting orders authorizing Avista Corp. to offset energy commodity derivative assets or liabilities with a regulatory asset or liability. This accounting treatment is intended to defer the recognition of mark-to-market gains and losses on energy commodity transactions until the period of delivery. Realized benefits and costs result in adjustments to retail rates through PGAs, the ERM in Washington, the PCA mechanism in Idaho, and periodic general rate cases. The resulting regulatory assets associated with energy commodity derivative instruments have been concluded to be probable of recovery through future rates.
Substantially all forward contracts to purchase or sell power and natural gas are recorded as derivative assets or liabilities at estimated fair value with an offsetting regulatory asset or liability. Contracts that are not considered derivatives are accounted for on the accrual basis until they are settled or realized unless there is a decline in the fair value of the contract that is determined to be other-than-temporary.
For interest rate swap derivatives, Avista Corp. records all mark-to-market gains and losses in each accounting period as assets and liabilities, as well as offsetting regulatory assets and liabilities, such that there is no income statement impact. The interest rate swap derivatives are risk management tools similar to energy commodity derivatives. Upon settlement of interest rate swap derivatives, the regulatory asset or liability is amortized as a component of interest expense over the term of the associated debt. The Company records an offset of interest rate swap derivative assets and liabilities with regulatory assets and liabilities, based on the prior practice of the commissions to provide recovery through the ratemaking process.

11


AVISTA CORPORATION



The Company has multiple master netting agreements with a variety of entities that allow for cross-commodity netting of derivative agreements with the same counterparty (i.e. power derivatives can be netted with natural gas derivatives). In addition, some master netting agreements allow for the netting of commodity derivatives and interest rate swap derivatives for the same counterparty. The Company does not have any agreements which allow for cross-affiliate netting among multiple affiliated legal entities. The Company nets all derivative instruments when allowed by the agreement for presentation in the Condensed Consolidated Balance Sheets.
Fair Value Measurements
Fair value represents the price that would be received when selling an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Energy commodity derivative assets and liabilities, deferred compensation assets, as well as derivatives related to interest rate swaps and foreign currency exchange contracts, are reported at estimated fair value on the Condensed Consolidated Balance Sheets. See Note 11 for the Company’s fair value disclosures.
Contingencies
The Company has unresolved regulatory, legal and tax issues which have inherently uncertain outcomes. The Company accrues a loss contingency if it is probable that a liability has been incurred and the amount of the loss or impairment can be reasonably estimated. The Company also discloses loss contingencies that do not meet these conditions for accrual if there is a reasonable possibility that a material loss may be incurred. As of March 31, 2019, the Company has not recorded any significant amounts related to unresolved contingencies. See Note 15 for further discussion of the Company's commitments and contingencies.
NOTE 2. NEW ACCOUNTING STANDARDS
ASU No. 2016-02, "Leases (Topic 842)"
ASU No. 2018-01, "Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842"
ASU No. 2018-11, "Leases (Topic 842): Targeted Improvements"
On January 1, 2019, the Company adopted ASU No. 2016-02, which outlines a model for entities to use in accounting for leases and supersedes previous lease accounting guidance, as well as several practical expedients in ASU Nos. 2018-01 and 2018-11.
The Company adopted ASU No. 2016-02 utilizing a modified retrospective adoption method with the "package of three" and hindsight practical expedients offered by the standard. The "package of three" provides for an entity to not reassess at adoption whether any expired or existing contracts are deemed, for accounting purposes, to be or contain leases, the classification of any expired or existing leases, and any initial direct costs for any existing leases. As a result, the Company did not apply the new guidance to existing contracts that are or contain leases, and did not reassess the classification of those leases. The Company used the benefit of hindsight in determining both term and impairments associated with any existing leases. Use of this practical expedient has resulted in lease terms that best represent management's expectations with respect to use of the underlying asset but did not result in recognition of any impairment.
The Company elected to adopt ASU No. 2018-01, which allows an entity to exclude from application of Topic 842 all easements executed prior to January 1, 2019. In addition, the Company elected to adopt the "comparatives under 840" practical expedient offered in ASU No. 2018-11, which allows an entity to apply the new lease standard at the adoption date, recognizing any necessary cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption and presenting comparative periods in the financial statements under ASC 840 (previous lease accounting guidance). Adoption of the standard did not result in a cumulative effect adjustment within the Company's financial statements.
As allowed by ASU No. 2016-02, the Company elected not to apply the requirements of the standard to short-term leases, those leases with an initial term of 12 months or less. These leases are not recorded on the balance sheet and are immaterial to the financial statements.
Adoption of the standard impacted the Company's Condensed Consolidated Balance Sheet through recognition of right-of-use (ROU) assets and lease liabilities for the Company's operating leases. Accounting for finance leases (formerly capital leases) remained substantially unchanged, except the Company reclassified the amounts as of December 31, 2018 to conform to the presentation of operating leases as of March 31, 2019. See Note 5 for further information on the Company's leases.
ASU No. 2018-02 “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”
In February 2018, the FASB issued ASU No. 2018-02, which amended the guidance for reporting comprehensive income. This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the enactment of the TCJA in December 2017. This ASU became effective for periods beginning after December

12


AVISTA CORPORATION



15, 2018 and early adoption was permitted. Upon adoption, the requirements of this ASU must be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the TCJA is recognized. The Company early adopted this standard effective January 1, 2018 and elected to apply the guidance during the period of adoption rather than apply the standard retrospectively. As a result, the Company reclassified $1.7 million in tax benefits from accumulated other comprehensive loss to retained earnings during the three months ended March 31, 2018.
ASU 2018-13 " Fair Value Measurement (Topic 820)"
In August 2018, the FASB issued ASU No. 2018-13, which amends the fair value measurement disclosure requirements of ASC 820. The requirements of this ASU include additional disclosure regarding the range and weighted average used to develop significant unobservable inputs for Level 3 fair value estimates and the elimination of certain other previously required disclosures, such as the narrative description of the valuation process for Level 3 fair value measurements. This ASU is effective for periods beginning after December 15, 2019 and early adoption is permitted. Entities have the option to early adopt the eliminated or modified disclosure requirements and delay the adoption of all the new disclosure requirements until the effective date of the ASU. The Company is in the process of evaluating this standard; however, it has determined that it will not early adopt any portion of this standard as of March 31, 2019.
ASU No. 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)"
In August 2018, the FASB issued ASU No. 2018-14, which amends ASC 715 to add, remove and/or clarify certain disclosure requirements related to defined benefit pension and other postretirement plans. The additional disclosure requirements are primarily narrative discussion of significant changes in the benefit obligations and plan assets. The removed disclosures are primarily information about accumulated other comprehensive income expected to be recognized over the next year and the effects of changes associated with assumed health care costs. This ASU is effective for periods beginning after December 15, 2021 and early adoption is permitted. The Company is in the process of evaluating this standard; however, it has determined that it will not early adopt this standard as of March 31, 2019.
NOTE 3. BALANCE SHEET COMPONENTS
Materials and Supplies, Fuel Stock and Stored Natural Gas
Inventories of materials and supplies, fuel stock and stored natural gas are recorded at average cost for our regulated operations and the lower of cost or market for our non-regulated operations and consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Materials and supplies
$
47,705

 
$
47,403

Fuel stock
4,930

 
4,869

Stored natural gas
8,719

 
11,609

Total
$
61,354

 
$
63,881

Other Current Assets
Other current assets consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Collateral posted for derivative instruments after netting with outstanding derivative liabilities
$
37,347

 
$
26,809

Prepayments
16,647

 
17,536

Other
6,954

 
9,665

Total
$
60,948

 
$
54,010


13


AVISTA CORPORATION



Net Utility Property
Net utility property consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Utility plant in service
$
6,202,942

 
$
6,209,968

Construction work in progress
165,725

 
160,598

Total
6,368,667

 
6,370,566

Less: Accumulated depreciation and amortization
1,742,613

 
1,721,636

Total net utility property
$
4,626,054

 
$
4,648,930

Other Property and Investments-Net and Other Non-Current Assets
Other property and investments-net and other non-current assets consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Operating lease ROU assets
$
70,834

 
$

Finance lease ROU assets
53,711

 

Non-utility property
29,557

 
31,355

Equity investments
32,967

 
29,257

Investment in affiliated trust
11,547

 
11,547

Notes receivable
11,161

 
11,073

Deferred compensation assets
8,675

 
8,400

Other
22,751

 
23,065

Total
$
241,203

 
$
114,697

Other Current Liabilities
Other current liabilities consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Accrued taxes other than income taxes
$
49,206

 
$
36,858

Income taxes payable
20,368

 
141

Employee paid time off accruals
21,813

 
20,992

Accrued interest
30,315

 
16,704

Current portion of pensions and other postretirement benefits
9,503

 
9,151

Operating lease liabilities
4,120

 

Finance lease liabilities
2,695

 

Utility energy commodity derivative liabilities
4,035

 
3,908

Other current liabilities
33,399

 
32,604

Total other current liabilities
$
175,454

 
$
120,358


14


AVISTA CORPORATION



Other Non-Current Liabilities and Deferred Credits
Other non-current liabilities and deferred credits consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Operating lease liabilities
$
67,635

 
$

Finance lease liabilities
53,850

 

Deferred investment tax credits
31,383

 
29,725

Asset retirement obligations
18,455

 
18,266

Derivative liabilities
10,861

 
10,300

Other
13,564

 
12,740

Total
$
195,748

 
$
71,031

Regulatory Assets and Liabilities
Regulatory assets and liabilities consisted of the following as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31, 2019
 
December 31, 2018
 
Current
 
Non-Current
 
Current
 
Non-Current
Regulatory Assets
 
 
 
 
 
 
 
Energy commodity derivatives
$
28,159

 
$
11,862

 
$
41,428

 
$
16,866

Decoupling surcharge
6,782

 
8,395

 
3,408

 
17,501

Pension and other postretirement benefit plans

 
224,805

 

 
228,062

Interest rate swaps

 
138,327

 

 
133,854

Deferred income taxes

 
93,646

 

 
91,188

Settlement with Coeur d'Alene Tribe

 
42,316

 

 
42,643

Demand side management programs

 
15,064

 

 
19,674

Utility plant to be abandoned

 
24,477

 

 
24,334

Other regulatory assets
6,625

 
46,605

 
3,716

 
40,232

Total regulatory assets
$
41,566

 
$
605,497

 
$
48,552

 
$
614,354

 
 
 
 
 
 
 
 
Regulatory Liabilities
 
 
 
 
 
 
 
Income tax related liabilities
$
29,401

 
$
421,216

 
$
27,997

 
$
425,613

Deferred natural gas costs
1,253

 

 
40,713

 

Deferral power costs
12,555

 
26,106

 
25,072

 
16,933

Decoupling rebate
1,061

 
4,664

 
6,782

 
204

Utility plant retirement costs

 
300,373

 

 
297,379

Interest rate swaps

 
20,396

 

 
28,078

Other regulatory liabilities
11,194

 
13,478

 
12,645

 
12,494

Total regulatory liabilities
$
55,464

 
$
786,233

 
$
113,209

 
$
780,701

NOTE 4. REVENUE
ASC 606 defines the core principle of the revenue recognition model is that an entity should identify the various performance obligations in a contract, allocate the transaction price among the performance obligations and recognize revenue when (or as) the entity satisfies each performance obligation.

15


AVISTA CORPORATION



Utility Revenues
Revenue from Contracts with Customers
General
The majority of Avista Corp.’s revenue is from rate-regulated sales of electricity and natural gas to retail customers, which has two performance obligations, (1) having service available for a specified period (typically a month at a time) and (2) the delivery of energy to customers. The total energy price generally has a fixed component (basic charge) related to having service available and a usage-based component, related to the delivery and consumption of energy. The commodity is sold and/or delivered to and consumed by the customer simultaneously, and the provisions of the relevant utility commission authorization determine the charges the Company may bill the customer. Given that all revenue recognition criteria are met upon the delivery of energy to customers, revenue is recognized immediately at that time.
Revenues from contracts with customers are presented in the Condensed Consolidated Statements of Income in the line item "Utility revenues, exclusive of alternative revenue programs."
Non-Derivative Wholesale Contracts
The Company has certain wholesale contracts which are not accounted for as derivatives and, accordingly, are within the scope of ASC 606 and considered revenue from contracts with customers. Revenue is recognized as energy is delivered to the customer or the service is available for a specified period of time, consistent with the discussion of rate-regulated sales above.
Alternative Revenue Programs (Decoupling)
ASC 606 retained existing GAAP associated with alternative revenue programs, which specified that alternative revenue programs are contracts between an entity and a regulator of utilities, not a contract between an entity and a customer. GAAP requires that an entity present revenue arising from alternative revenue programs separately from revenues arising from contracts with customers on the face of the Condensed Consolidated Statements of Income. The Company's decoupling mechanisms (also known as a FCA in Idaho) qualify as alternative revenue programs. Decoupling revenue deferrals are recognized in the Condensed Consolidated Statements of Income during the period they occur (i.e. during the period of revenue shortfall or excess due to fluctuations in customer usage), subject to certain limitations, and a regulatory asset or liability is established that will be surcharged or rebated to customers in future periods. GAAP requires that for any alternative revenue program, like decoupling, the revenue must be expected to be collected from customers within 24 months of the deferral to qualify for recognition in the current period Condensed Consolidated Statement of Income. Any amounts included in the Company's decoupling program that are not expected to be collected from customers within 24 months are not recorded in the financial statements until the period in which revenue recognition criteria are met. The amounts expected to be collected from customers within 24 months represents an estimate that must be made by the Company on an ongoing basis due to it being based on the volumes of electric and natural gas sold to customers on a go-forward basis.
Derivative Revenue
Most wholesale electric and natural gas transactions (including both physical and financial transactions), and the sale of fuel are considered derivatives, which are specifically scoped out of ASC 606. As such, these revenues are disclosed separately from revenue from contracts with customers. Revenue is recognized for these items upon the settlement/expiration of the derivative contract. Derivative revenue includes those transactions that are entered into and settled within the same month.
Other Utility Revenue
Other utility revenue includes rent, revenues from the lineman training school, sales of materials, late fees and other charges that do not represent contracts with customers. Other utility revenue also includes the provision for earnings sharing and the deferral and amortization of refunds to customers associated with the TCJA. This revenue is scoped out of ASC 606, as this revenue does not represent items where a customer is a party that has contracted with the Company to obtain goods or services that are an output of the Company’s ordinary activities in exchange for consideration. As such, these revenues are presented separately from revenue from contracts with customers.
Other Considerations for Utility Revenues
Gross Versus Net Presentation
Revenues and resource costs from Avista Utilities’ settled energy contracts that are “booked out” (not physically delivered) are reported on a net basis as part of derivative revenues.
Utility-related taxes collected from customers (primarily state excise taxes and city utility taxes) are taxes that are imposed on Avista Utilities as opposed to being imposed on its customers; therefore, Avista Utilities is the taxpayer and records these

16


AVISTA CORPORATION



transactions on a gross basis in revenue from contracts with customers and operating expense (taxes other than income taxes). The utility-related taxes collected from customers at AEL&P are imposed on the customers rather than AEL&P; therefore, the customers are the taxpayers and AEL&P is acting as their agent. As such, these transactions at AEL&P are presented on a net basis within revenue from contracts with customers.
Utility-related taxes that were included in revenue from contracts with customers were as follows for the three months ended March 31 (dollars in thousands):
 
2019
 
2018
Utility-related taxes
$
19,089

 
$
19,167

Non-Utility Revenues
Revenue from Contracts with Customers
Non-utility revenues from contracts with customers are primarily derived from the operations of METALfx. The contracts associated with METALfx have one performance obligation, the delivery of a product, and revenues are recognized when the risk of loss transfers to the customer, which occurs when products are shipped.
Significant Judgments and Unsatisfied Performance Obligations
The only significant judgments involving revenue recognition are estimates surrounding unbilled revenue and receivables from contracts with customers and estimates surrounding the amount of decoupling revenues that will be collected from customers within 24 months (discussed above).
The Company has certain capacity arrangements, where the Company has a contractual obligation to provide either electric or natural gas capacity to its customers for a fixed fee. Most of these arrangements are paid for in arrears by the customers and do not result in deferred revenue and only result in receivables from the customers. The Company does have one capacity agreement where the customer makes payments throughout the year and depending on the timing of the customer payments, it can result in an immaterial amount of deferred revenue or a receivable from the customer. As of March 31, 2019, the Company estimates it had unsatisfied capacity performance obligations of $9.1 million, which will be recognized as revenue in future periods as the capacity is provided to the customers. These performance obligations are not reflected in the financial statements, as the Company has not received payment for these services.
Disaggregation of Total Operating Revenue
The following table disaggregates total operating revenue by segment and source for the three months ended March 31 (dollars in thousands):
 
2019
 
2018
Avista Utilities
 
 
 
Revenue from contracts with customers
$
354,301

 
$
354,162

Derivative revenues
24,127

 
58,392

Alternative revenue programs
(4,658
)
 
(5,939
)
Deferrals and amortizations for rate refunds to customers
2,135

 
(19,822
)
Other utility revenues
1,797

 
1,961

Total Avista Utilities
377,702

 
388,754

AEL&P
 
 
 
Revenue from contracts with customers
10,736

 
14,650

Deferrals and amortizations for rate refunds to customers
(48
)
 
(1,122
)
Other utility revenues
193

 
135

Total AEL&P
10,881

 
13,663

Other
 
 
 
Revenue from contracts with customers
7,647

 
6,729

Other revenues
251

 
215

Total other
7,898

 
6,944

Total operating revenues
$
396,481

 
$
409,361


17


AVISTA CORPORATION



Utility Revenue from Contracts with Customers by Type and Service
The following table disaggregates revenue from contracts with customers associated with the Company's utility operations for the three months ended March 31 (dollars in thousands):
 
2019
 
2018
 
Avista Utilities
 
AEL&P
 
Total Utility
 
Avista Utilities
 
AEL&P
 
Total Utility
ELECTRIC OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
Residential
$
115,392

 
$
5,852

 
$
121,244

 
$
114,753

 
$
6,538

 
$
121,291

Commercial and governmental
79,245

 
4,821

 
84,066

 
78,909

 
8,044

 
86,953

Industrial
25,248

 

 
25,248

 
25,119

 

 
25,119

Public street and highway lighting
1,903

 
63

 
1,966

 
1,859

 
68

 
1,927

Total retail revenue
221,788

 
10,736

 
232,524

 
220,640

 
14,650

 
235,290

Transmission
5,152

 

 
5,152

 
3,830

 

 
3,830

Other revenue from contracts with customers
8,194

 

 
8,194

 
6,291

 

 
6,291

Total electric revenue from contracts with customers
$
235,134

 
$
10,736

 
$
245,870

 
$
230,761

 
$
14,650

 
$
245,411

 
 
 
 
 
 
 
 
 
 
 
 
NATURAL GAS OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
Residential
$
77,336

 
$

 
$
77,336

 
$
80,653

 
$

 
$
80,653

Commercial
36,595

 

 
36,595

 
37,373

 

 
37,373

Industrial and interruptible
1,627

 

 
1,627

 
1,683

 

 
1,683

Total retail revenue
115,558

 

 
115,558

 
119,709

 

 
119,709

Transportation
2,484

 

 
2,484

 
2,567

 

 
2,567

Other revenue from contracts with customers
1,125

 

 
1,125

 
1,125

 

 
1,125

Total natural gas revenue from contracts with customers
$
119,167

 
$

 
$
119,167

 
$
123,401

 
$

 
$
123,401

NOTE 5. LEASES
ASC 842, which outlines a model for entities to use in accounting for leases and supersedes previous lease accounting guidance, became effective on January 1, 2019. The core principle of the model is that an entity should recognize the ROU assets and liabilities that arise from leases on the balance sheet and depreciate or amortize the asset and liability over the term of the lease, as well as provide disclosure to enable users of the condensed consolidated financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.
Significant Judgments and Assumptions
The Company determines if an arrangement is a lease, as well as its classification, at its inception.
ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and lease liabilities are recognized at the commencement date of the agreement based on the present value of lease payments over the lease term. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. The implicit rate is used when it is readily determinable. The operating and finance lease ROU assets also include any lease payments made and exclude lease incentives, if any, that accrue to the benefit of the lessee.
Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Any difference between lease expense and cash paid for leased assets is recognized as a regulatory asset or regulatory liability.
Description of Leases
The Company has operating leases for land associated with its utility operations, as well as communication sites which support network and radio communications within its service territory. The Company's leases have remaining terms of 1 to 74 years.

18


AVISTA CORPORATION



Most of the Company's leases include options to extend the lease term for periods of 5 to 50 years. Exercise of these options is at the Company's discretion.
The Company has an operating lease with the state of Montana associated with submerged land around the Company's hydroelectric facilities in the Clark Fork River basin, which expires in 2046. The terms of this lease are subject to renegotiation, depending on the outcome of ongoing litigation between Montana and NorthWestern Energy. In addition, the state of Montana and Avista Corp. are engaged in litigation regarding the lease terms. As such, amounts recorded for this lease are uncertain and amounts may change in the future depending on the outcome of the ongoing litigation.
Through its wholly-owned subsidiary, AEL&P, the Company has a PPA which is treated as a finance lease for accounting purposes related to the Snettisham Hydroelectric Project, which expires in 2034. For ratemaking purposes, this lease is treated as an operating lease with a constant level of annual rental expense (straight line rent expense). Because of this regulatory treatment, any difference between the operating lease expense for ratemaking purposes and the expenses recognized under finance lease treatment (interest and amortization of the finance lease ROU asset) is recorded as a regulatory asset and amortized during the later years of the lease when the finance lease expense is less than the operating lease expense included in base rates. In 2018 and prior years, the total cost associated with the Snettisham PPA was included in resource costs. Due to the adoption of the new lease standard, the amortization of the ROU asset is now included in depreciation and amortization and the interest associated with the lease liability is now included in interest expense on the Condensed Consolidated Statement of Income.
Certain of the Company's lease agreements include rental payments which are periodically adjusted over the term of the agreement based on the consumer price index. The Company's lease agreements do not include any material residual value guarantees or material restrictive covenants.
Avista Corp. does not record leases with a term of 12-months or less in the Condensed Consolidated Balance Sheet. Total short-term lease cost for the three months ended March 31, 2019 is immaterial. 
Leases that Have Not Yet Commenced
In March 2019, the Company signed a PPA with Clearway Energy Group (Clearway) to purchase all of the power generated from the Rattlesnake Flat Wind project in Adams County, Washington. The facility has a nameplate capacity of 144 MW and is expected to generate approximately 50 aMW. During negotiations with Clearway, Avista Corp. was involved in the selection of the preferred generation facility type. The PPA is a 20-year agreement with deliveries expected to begin in 2020. The PPA provides Avista Corp. with additional renewable energy, capacity and environmental attributes. Avista Corp. expects to recover the cost of the power purchased through its retail rates. This PPA is considered a lease under ASC 842; however, all of the payments are variable payments based on whether power is generated from the facility. Since all the payments are variable, the Company will not record a lease liability for the agreement, but the expense will be included in resource costs when it becomes operational in 2020.
The components of lease expense were as follows for the three months ended March 31 (dollars in thousands):
 
2019
Operating lease cost:
 
Fixed lease cost (Other operating expenses)
$
1,103

Variable lease cost (Other operating expenses)
243

Total operating lease cost
$
1,346

 
 
Finance lease cost:
 
Amortization of ROU asset (Depreciation and amortization)
$
910

Interest on lease liabilities (Interest expense)
699

Total finance lease cost
$
1,609


19


AVISTA CORPORATION



Supplemental cash flow information related to leases was as follows for the three months ended March 31 (dollars in thousands):
 
2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash outflows:
 
Operating lease payments
$
4,092

Interest on finance lease
699

Total operating cash outflows
$
4,791

 
 
Finance cash outflows:
 
Principal payments on finance lease
$
665

Supplemental balance sheet information related to leases was as follows for March 31, 2019 (dollars in thousands):
 
March 31,
 
2019
Operating Leases
 
Operating lease ROU assets (Other property and investments-net and other non-current assets)
$
70,834

 
 
Other current liabilities
$
4,120

Other non-current liabilities and deferred credits
67,635

Total operating lease liabilities
$
71,755

 
 
Finance Leases
 
Finance lease ROU assets (Other property and investments-net and other non-current assets) (a)
$
53,711

 
 
Other current liabilities (b)
$
2,695

Other non-current liabilities and deferred credits (b)
53,850

Total finance lease liabilities
$
56,545

 
 
Weighted Average Remaining Lease Term
 
Operating leases
27.32 years

Finance leases
9.64 years

 
 
Weighted Average Discount Rate
 
Operating leases
3.82
%
Finance leases
4.85
%

20


AVISTA CORPORATION



(a)
At December 31, 2018, the finance lease ROU assets were included in "Net utility property" on the Condensed Consolidated Balance Sheet. Due to the adoption of ASC 842 on January 1, 2019, the Company has reclassified these amounts to "Other property and investments-net and other non-current assets" on the Condensed Consolidated Balance Sheet such that their presentation as of March 31, 2019 is consistent with operating leases.
(b)
At December 31, 2018, the finance lease liabilities were included in "Current portion of long-term debt" and "Long-term debt and capital leases" on the Condensed Consolidated Balance Sheet. Due to the adoption of ASC 842 on January 1, 2019, the Company has reclassified these amounts to "Other current liabilities" and "Other non-current liabilities and deferred credits" on the Condensed Consolidated Balance Sheet such that their presentation as of March 31, 2019 is consistent with operating leases.
Maturities of lease liabilities (including principal and interest) were as follows as of March 31, 2019 (dollars in thousands):
 
Operating Leases
 
Finance Leases
Remainder 2019
$
4,272

 
$
4,091

2020
4,364

 
5,462

2021
4,367

 
5,457

2022
4,375

 
5,460

2023
4,383

 
5,456

Thereafter
95,923

 
54,574

Total lease payments
$
117,684

 
$
80,500

Less: imputed interest
(45,929
)
 
(23,955
)
Total
$
71,755

 
$
56,545

Future minimum lease payments (including principal and interest) under Topic 840 as of December 31, 2018 (dollars in thousands):
 
Operating Leases
 
Finance Leases
2019
$
4,995

 
$
5,455

2020
4,876

 
5,462

2021
4,859

 
5,457

2022
4,782

 
5,460

2023
4,780

 
5,456

Thereafter
102,389

 
54,574

Total lease payments
$
126,681

 
$
81,864

Less: imputed interest

 
(24,654
)
Total
$
126,681

 
$
57,210

NOTE 6. DERIVATIVES AND RISK MANAGEMENT
Energy Commodity Derivatives
Avista Corp. is exposed to market risks relating to changes in electricity and natural gas commodity prices and certain other fuel prices. Market risk is, in general, the risk of fluctuation in the market price of the commodity being traded and is influenced primarily by supply and demand. Market risk includes the fluctuation in the market price of associated derivative commodity instruments. Avista Corp. utilizes derivative instruments, such as forwards, futures, swap derivatives and options, in order to manage the various risks relating to these commodity price exposures. Avista Corp. has an energy resources risk policy and control procedures to manage these risks.
As part of Avista Corp.'s resource procurement and management operations in the electric business, Avista Corp. engages in an ongoing process of resource optimization, which involves the economic selection from available energy resources to serve Avista Corp.'s load obligations and the use of these resources to capture available economic value through wholesale market transactions. These include sales and purchases of electric capacity and energy, fuel for electric generation, and derivative contracts related to capacity, energy and fuel. Such transactions are part of the process of matching resources with load

21


AVISTA CORPORATION



obligations and hedging a portion of the related financial risks. These transactions range from terms of intra-hour up to multiple years.
As part of its resource procurement and management of its natural gas business, Avista Corp. makes continuing projections of its natural gas loads and assesses available natural gas resources including natural gas storage availability. Natural gas resource planning typically includes peak requirements, low and average monthly requirements and delivery constraints from natural gas supply locations to Avista Corp.’s distribution system. However, daily variations in natural gas demand can be significantly different than monthly demand projections. On the basis of these projections, Avista Corp. plans and executes a series of transactions to hedge a portion of its projected natural gas requirements through forward market transactions and derivative instruments. These transactions may extend as much as four natural gas operating years (November through October) into the future. Avista Corp. also leaves a significant portion of its natural gas supply requirements unhedged for purchase in short-term and spot markets.
Avista Corp. plans for sufficient natural gas delivery capacity to serve its retail customers for a theoretical peak day event. Avista Corp. generally has more pipeline and storage capacity than what is needed during periods other than a peak-day. Avista Corp. optimizes its natural gas resources by using market opportunities to generate economic value that helps mitigate fixed costs. Avista Corp. also optimizes its natural gas storage capacity by purchasing and storing natural gas when prices are traditionally lower, typically in the summer, and withdrawing during higher priced months, typically during the winter. However, if market conditions and prices indicate that Avista Corp. should buy or sell natural gas at other times during the year, Avista Corp. engages in optimization transactions to capture value in the marketplace. Natural gas optimization activities include, but are not limited to, wholesale market sales of surplus natural gas supplies, purchases and sales of natural gas to optimize use of pipeline and storage capacity, and participation in the transportation capacity release market.
The following table presents the underlying energy commodity derivative volumes as of March 31, 2019 that are expected to be delivered in each respective year (in thousands of MWhs and mmBTUs):
 
Purchases
 
Sales
 
Electric Derivatives
 
Gas Derivatives
 
Electric Derivatives
 
Gas Derivatives
Year
Physical (1)
MWh
 
Financial (1)
MWh
 
Physical (1)
mmBTUs
 
Financial (1)
mmBTUs
 
Physical (1)
MWh
 
Financial (1)
MWh
 
Physical (1)
mmBTUs
 
Financial (1)
mmBTUs
Remainder 2019
30

 
596

 
4,640

 
81,438

 
109

 
2,280

 
669

 
35,913

2020

 

 
1,138

 
53,388

 
123

 
959

 
1,430

 
16,378

2021

 

 

 
15,290

 

 
246

 
1,049

 
4,100

2022

 

 

 

 

 

 

 

2023

 

 

 

 

 

 

 

Thereafter

 

 

 

 

 

 

 

 
The following table presents the underlying energy commodity derivative volumes as of December 31, 2018 that are expected to be delivered in each respective year (in thousands of MWhs and mmBTUs):
 
Purchases
 
Sales
 
Electric Derivatives
 
Gas Derivatives
 
Electric Derivatives
 
Gas Derivatives
Year
Physical (1)
MWh
 
Financial (1)
MWh
 
Physical (1)
mmBTUs
 
Financial (1)
mmBTUs
 
Physical (1)
MWh
 
Financial (1)
MWh
 
Physical (1)
mmBTUs
 
Financial (1)
mmBTUs
2019
206

 
941

 
10,732

 
101,293

 
197

 
2,790

 
2,909

 
54,418

2020

 

 
1,138

 
47,225

 
123

 
959

 
1,430

 
14,625

2021

 

 

 
9,670

 

 

 
1,049

 
4,100

2022

 

 

 

 

 

 

 

2023

 

 

 

 

 

 

 

Thereafter

 

 

 

 

 

 

 

 
(1)
Physical transactions represent commodity transactions in which Avista Corp. will take or make delivery of either electricity or natural gas; financial transactions represent derivative instruments with delivery of cash in the amount of the benefit or cost but with no physical delivery of the commodity, such as futures, swap derivatives, options, or forward contracts.

22


AVISTA CORPORATION



The electric and natural gas derivative contracts above will be included in either power supply costs or natural gas supply costs during the period they are delivered and will be included in the various deferral and recovery mechanisms (ERM, PCA and PGAs), or in the general rate case process, and are expected to be collected through retail rates from customers.
Foreign Currency Exchange Derivatives
A significant portion of Avista Corp.’s natural gas supply (including fuel for power generation) is obtained from Canadian sources. Most of those transactions are executed in U.S. dollars, which avoids foreign currency risk. A portion of Avista Corp.’s short-term natural gas transactions and long-term Canadian transportation contracts are committed based on Canadian currency prices and settled within 60 days with U.S. dollars. Avista Corp. hedges a portion of the foreign currency risk by purchasing Canadian currency exchange derivatives when such commodity transactions are initiated. The foreign currency exchange derivatives and the unhedged foreign currency risk have not had a material effect on Avista Corp.’s financial condition, results of operations or cash flows and these differences in cost related to currency fluctuations are included with natural gas supply costs for ratemaking.
The following table summarizes the foreign currency exchange derivatives that Avista Corp. has outstanding as of March 31, 2019 and December 31, 2018 (dollars in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Number of contracts
22

 
31

Notional amount (in United States dollars)
$
6,681

 
$
4,018

Notional amount (in Canadian dollars)
8,917

 
5,386

Interest Rate Swap Derivatives
Avista Corp. is affected by fluctuating interest rates related to a portion of its existing debt, and future borrowing requirements. Avista Corp. hedges a portion of its interest rate risk with financial derivative instruments, which may include interest rate swap derivatives and U.S. Treasury lock agreements. These interest rate swap derivatives and U.S. Treasury lock agreements are considered economic hedges against fluctuations in future cash flows associated with anticipated debt issuances.
The following table summarizes the unsettled interest rate swap derivatives that Avista Corp. has outstanding as of March 31, 2019 and December 31, 2018 (dollars in thousands):
Balance Sheet Date
 
Number of Contracts
 
Notional Amount
 
Mandatory Cash Settlement Date
March 31, 2019
 
6
 
$
70,000

 
2019
 
 
6
 
60,000

 
2020
 
 
2
 
25,000

 
2021
 
 
8
 
90,000

 
2022
December 31, 2018
 
6
 
$
70,000

 
2019
 
 
6
 
60,000

 
2020
 
 
2
 
25,000

 
2021
 
 
7
 
80,000

 
2022
Upon settlement of interest rate swap derivatives, the cash payments made or received are recorded as a regulatory asset or liability and are subsequently amortized as a component of interest expense over the life of the associated debt. The settled interest rate swap derivatives are also included as a part of Avista Corp.'s cost of debt calculation for ratemaking purposes.
The fair value of outstanding interest rate swap derivatives can vary significantly from period to period depending on the total notional amount of swap derivatives outstanding and fluctuations in market interest rates compared to the interest rates fixed by the swaps. Avista Corp. is required to make cash payments to settle the interest rate swap derivatives when the fixed rates are higher than prevailing market rates at the date of settlement. Conversely, Avista Corp. receives cash to settle its interest rate swap derivatives when prevailing market rates at the time of settlement exceed the fixed swap rates.
Summary of Outstanding Derivative Instruments
The amounts recorded on the Condensed Consolidated Balance Sheet as of March 31, 2019 and December 31, 2018 reflect the offsetting of derivative assets and liabilities where a legal right of offset exists.

23


AVISTA CORPORATION



The following table presents the fair values and locations of derivative instruments recorded on the Condensed Consolidated Balance Sheet as of March 31, 2019 (in thousands):
 
 
Fair Value
Derivative and Balance Sheet Location
 
Gross
Asset
 
Gross
Liability
 
Collateral
Netted
 
Net Asset
(Liability)
on Balance
Sheet
Foreign currency exchange derivatives
 
 
 
 
 
 
 
 
Other current liabilities
 
$
15

 
$
(15
)
 
$

 
$

Interest rate swap derivatives
 
 
 
 
 
 
 
 
Other current assets
 
2,587

 
(530
)
 

 
2,057

Other property and investments-net and other non-current assets
 
2,503

 
(1,754
)
 

 
749

Other current liabilities
 

 
(524
)
 

 
(524
)
Other non-current liabilities and deferred credits
 

 
(12,402
)
 
2,860

 
(9,542
)
Energy commodity derivatives
 
 
 
 
 
 
 
 
Other current assets
 
262

 
(12
)
 

 
250

Other current liabilities
 
26,875

 
(55,284
)
 
24,374

 
(4,035
)
Other non-current liabilities and deferred credits
 
4,349

 
(16,211
)
 
10,543

 
(1,319
)
Total derivative instruments recorded on the balance sheet
 
$
36,591

 
$
(86,732
)
 
$
37,777

 
$
(12,364
)
The following table presents the fair values and locations of derivative instruments recorded on the Condensed Consolidated Balance Sheet as of December 31, 2018 (in thousands):
 
 
Fair Value
Derivative and Balance Sheet Location
 
Gross
Asset
 
Gross
Liability
 
Collateral
Netted
 
Net Asset
(Liability)
on Balance
Sheet
Foreign currency exchange derivatives
 
 
 
 
 
 
 
 
Other current liabilities
 
$

 
$
(45
)
 
$

 
$
(45
)
Interest rate swap derivatives
 
 
 
 
 
 
 
 
Other current assets
 
5,283

 

 

 
5,283

Other property and investments-net and other non-current assets
 
5,283

 
(440
)
 

 
4,843

Other non-current liabilities and deferred credits
 

 
(7,391
)
 
530

 
(6,861
)
Energy commodity derivatives
 
 
 
 
 
 
 
 
Other current assets
 
400

 
(130
)
 

 
270

Other current liabilities
 
31,457

 
(73,155
)
 
37,790

 
(3,908
)
Other non-current liabilities and deferred credits
 
4,426

 
(21,292
)
 
13,427

 
(3,439
)
Total derivative instruments recorded on the balance sheet
 
$
46,849

 
$
(102,453
)
 
$
51,747

 
$
(3,857
)
Exposure to Demands for Collateral
Avista Corp.'s derivative contracts often require collateral (in the form of cash or letters of credit) or other credit enhancements, or reductions or terminations of a portion of the contract through cash settlement. In the event of a downgrade in Avista Corp.'s credit ratings or changes in market prices, additional collateral may be required. In periods of price volatility, the level of exposure can change significantly. As a result, sudden and significant demands may be made against Avista Corp.'s credit facilities and cash. Avista Corp. actively monitors the exposure to possible collateral calls and takes steps to mitigate capital requirements.

24


AVISTA CORPORATION



The following table presents Avista Corp.'s collateral outstanding related to its derivative instruments as of March 31, 2019 and December 31, 2018 (in thousands):
 
March 31,
 
December 31,
 
2019
 
2018
Energy commodity derivatives
 
 
 
Cash collateral posted
$
72,264

 
$
78,025

Letters of credit outstanding
56,100

 
6,500

Balance sheet offsetting (cash collateral against net derivative positions)
34,917

 
51,217

 
 
 
 
Interest rate swap derivatives
 
 
 
Cash collateral posted
2,860

 
530

Balance sheet offsetting (cash collateral against net derivative positions)