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Utilities - Diversified — industry outlook

  • Period: 2026-10-19 to 2026-11-09
  • Events: 3
  • Generated: 2026-11-09T07:30:00.003Z

Earnings Guidance and Financial Targets

Avista Corporation (AVA) affirmed its 2026 Non-GAAP utility earnings range of $2.52–$2.72 per share, projecting long-term earnings growth of 4–6% annually through 2026. Otter Tail Corporation (OTTR) affirmed a FY2026 adjusted diluted EPS midpoint of $5.88 with a narrowed range of $5.73 to $6.03, while targeting long-term EPS growth of 7–9% and total shareholder returns of 10–12%, contingent on plastics earnings normalization in 2028. Kinder Morgan (KMI) expects FY2026 adjusted EPS growth to exceed budget by >13% and EBITDA to exceed budget by >6%, with net debt to adjusted EBITDA targeting a reduction to 3.6x by year-end. KMI projects a 2027 growth environment that is difficult to replicate year-over-year compared to 2026's one-time boosts, whereas OTTR anticipates plastics segment earnings will continue declining through 2027 before stabilizing at $45–$50 million in 2028.

Capital Expenditure and Infrastructure Investment

AVISTA CORP (AVA) expects 2026 utility capital expenditures of $615 million and forecasts $3.6 billion in base expenditures from 2027–2031, including projects selected from a 2025 RFP to be announced in 2028. OTTER TAIL CORP (OTTR) reaffirmed a five-year utility capital plan totaling $1.9 billion, with incremental opportunities increasing to $850 million, while scaling a wind project from 200 MW to 300 MW. KMI projects a capital expenditure run rate of approximately $4 billion annually for the next few years, driven by new contracts including a $5.4 billion addition in its 2026 backlog. AVA and OTTR both face execution risks regarding transmission timelines due to siting complexity, whereas KMI views its 2030–2032 in-service windows for major gas projects as high-confidence execution areas.

Regulatory Developments and Rate Case Outcomes

AVISTA CORP (AVA) anticipates a Washington rate decision in mid-December 2026 for a four-year multi-year plan, with Idaho filings expected in Q1 2027 and Oregon filings in fall 2027 for a five-year plan. OTTER TAIL CORP (OTTR) is pursuing a modified Minnesota rate case request for $38.7 million, down from $42.3 million, while evaluating other jurisdictions. AVA and OTTR both highlight regulatory lag as a persistent headwind, with AVA estimating a structural 0.6% ROE drag and OTTR noting ongoing cost pressures from vegetation management and labor. KMI notes a regulatory environment it finds comfortable regarding current FERC permitting timelines but supports pending Congressional reform to remove state veto power, believing it will not cause delays under current rules.

Load Growth, Data Center Strategy, and Demand Drivers

AVISTA CORP (AVA) and OTTER TAIL CORP (OTTR) are adjusting strategies regarding large industrial loads; AVA has implemented a 12-month moratorium on new large data center applications requiring significant generation, pending customer cost coverage for full infrastructure plus affordability contributions. In contrast, KMI and OTTR report shifting demand sources: KMI secured contracts with hyperscalers for the Permian Link project, while OTTR sees plastics demand shifting toward water infrastructure for data centers and manufacturing. AVA identifies approximately 85 MW of prospective load from commercial and mining expansion (excluding paused data centers), representing a potential 10% average day load increase. KMI forecasts a North American electricity peak demand growth of 225–245 GW by 2035, largely driven by natural gas, with Southeast interconnection requests exceeding 200 GW. AVA and KMI both anticipate the Energy Recovery Mechanism (ERM) drag to eliminate in 2027, resetting to near zero if regulators accept new forecasting baselines.

Commodity Prices, Operational Costs, and Market Volatility

OTTER TAIL CORP (OTTR) faces a margin compression in its plastics segment driven by a 9% YoY decline in PVC pipe prices versus a 10% YoY rise in resin and input costs, with sales prices expected to fall through 2027. KMI acknowledges rising costs per pipeline mile due to steel and compression prices but notes customers accept return thresholds, while AVA highlights wildfire recovery costs as a multi-year delay to revenue recognition and customer rebuilding. AVA and KMI disagree on the near-term outlook for large industrial growth: AVA views the data center pause as a potential upside risk if future approvals are restricted, while KMI remains "bullish" on the long-term demand-pull from hyperscalers and utilities, viewing 2026 outperformance as non-recurring in 2027.