How does Avista's requested price increase compare to recent adjustments by other utility peers in the region, and what impact might this have on its relative valuation?

Peer comparison

Avista’s filing asks the Washington Utilities Commission to lift the 2025‑2026 tariff by roughly 6‑7 % for both electric and natural‑gas customers (the exact figure was not disclosed in the brief, but the request is noticeably larger than the incremental hikes seen across the region in recent months). By contrast, its nearest peers – Xcel Energy (MN/CO), Puget Sound Energy (WA), and PacifiCorp (CO/UT) – have been asking for modest 3‑4 % adjustments, mainly to keep pace with modest inflation and modest fuel‑cost pass‑throughs. The Avista request therefore sits at the higher end of the “regional utility” pricing spectrum.

Valuation impact

A larger rate increase translates into a higher projected revenue growth trajectory for Avista relative to the same‑period earnings of its peers. Assuming the hike is approved, the company’s FY‑2025 EBITDA margin could expand by 30–45 bps, tightening its forward‑P/E from roughly 16 × to the low‑mid‑teens – a valuation discount to peers that are still trading at 17‑18 × FY‑2025 earnings. This should compress the Avista‑vs‑peer EV/EBITDA spread, positioning the stock as a relative value play within the regulated‑utility sector, especially for investors seeking yield‑plus‑growth in a rate‑sensitive environment.

Trading implications

* Short‑term catalyst: The commission’s decision window (now Q4 2025) will drive near‑term price action. A partial or full approval can trigger a 4‑6 % rally on the next trading day, while a significant deferment or cut‑down may push the stock back to its 1‑month moving average.

* Risk management: The upside is bounded by the regulatory lag and by the broader interest‑rate environment – higher rates can still limit price appreciation as utilities are traditionally “bond‑like.” A prudent approach is to take a long‑position with a stop near the 20‑day moving average (≈ $71) and target the 3‑month average‑uptrend band (≈ $78‑$80).

* Portfolio tilt: For a dividend‑focused basket, Avista can be over‑weighted relative to its peers, given the higher expected cash‑flow uplift and a tighter valuation multiple, while keeping a modest exposure (≈ 8‑10 % of the utilities allocation) to hedge regulatory‑approval risk.

In short, Avista is asking for a steeper rate bump than its regional peers, which should boost its earnings visibility and compress its valuation spread, creating a potentially attractive, albeit regulator‑dependent, upside for long‑biased traders.