Avista Pauses 500 MW Data Center Deal Two Weeks After Announcing It
Strategic Reversal
Company Background
Avista Corp. (NYSE: AVA) is a regulated electric and gas utility headquartered in Spokane, Washington, serving 429,000 electric and 386,000 natural gas customers across eastern Washington, northern Idaho, and parts of Oregon, with a market capitalization of approximately $3.5 billion. The company reported full-year 2025 GAAP net income of $193 million, or $2.38 per diluted share, and 2026 non-GAAP utility earnings guidance of $2.52 to $2.72 per diluted share.
In addition to its base capital plan of $615 million in 2026 and $3.4 billion through 2030, Avista has been flagging for investors the possibility of a hypothetical additional $350 million in capital expenditures associated with integrating a new large load customer — a figure it presented in both its February and May 2026 investor materials as a potential driver of an 8% rate base CAGR versus a 7% base case. The prospect of data center growth had become a visible part of the investor narrative heading into mid-2026.
Avista's core utility operations have been solid: first-quarter 2026 non-GAAP utility earnings rose to $1.10 per diluted share from $1.01 a year earlier, driven by general rate case outcomes. A four-year multi-year rate plan filed with the Washington Utilities and Transportation Commission in January 2026 requested a $111 million (13.9%) base electric rate increase for 2027, with phased increases through 2030.
What Was Disclosed
Fourteen days after announcing a memorandum of understanding with a developer seeking to bring up to 500 MW of load into its Washington service territory, Avista paused negotiations with that developer and halted processing of energy service requests from all new large data center developers. The company said the decision follows "recent community interest and concern related to the Company's previously announced Memorandum of Understanding with a data center developer" and that it needs additional time to partner with governmental agencies on "a clear and coordinated planning process."
CEO Heather Rosentrater acknowledged the community response directly: "We've heard the questions and concerns from our customers, community members and local leaders, and we take that feedback seriously. This input has demonstrated a need for a broader coordinated planning effort, which Avista will actively participate in." The company outlined four standing principles for any eventual large data center service: existing customers will not bear the costs of serving a new large customer; required engineering studies and system upgrades must be completed before any service begins; any final agreement requires Washington Utilities and Transportation Commission approval; and any project must deliver net benefits for existing customers.
The original May 29, 2026 MOU was with an unnamed developer seeking an initial load of 125 MW starting in 2029, with a pathway to expand to 500 MW by 2032. The MOU was explicitly non-binding and subject to execution of definitive agreements and WUTC regulatory approval. The next contractual step would have been negotiation of an Engineering and Procurement Contract. No financial commitments had been made.
Why It Matters
The speed of the reversal is notable. Avista announced the MOU on May 29, 2026, describing it as "an important first step in a collaborative process." Exactly 14 days later, negotiations were paused and new large data center requests frozen pending a broader community and governmental alignment process. The MOU had been non-binding, but it was the first concrete step toward a deal that Avista had been presenting to investors as a growth opportunity worth up to $350 million in incremental capital.
That $350 million figure — labeled "hypothetical" in Avista's own materials — was used in both the February 25, 2026 earnings presentation and the May 5, 2026 first-quarter update to illustrate a potential uplift from 7% to 8% rate base growth. No definitive agreements had been signed, and management had characterized the number as an estimate excluded from base guidance. The pause does not alter current earnings guidance, which remains at $2.52 to $2.72 per diluted share for 2026, and the core utility continues to perform in line with expectations.
The more immediate question is how long the pause lasts and whether the Washington regulatory and community process Avista is now seeking produces a framework that allows large load additions to proceed, or imposes new constraints. Avista is also currently before the WUTC with its multi-year rate plan and has a pending Alaska general rate case; the community-opposition dynamic in Washington adds a new variable to an already active regulatory calendar.
