20180126Avista to Staff_DR_120(H1).docx

HYDRO ONE LIMITED
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:OREGONDATE PREPARED:10/02/2017
CASE NO.:UM 1897WITNESS:Mayo Schmidt/Chris Lopez
REQUESTER:PUC StaffRESPONDER:Adele PantusaTYPE:Data RequestDEPT:Law
REQUEST NO.:Staff – 120(H1)TELEPHONE:[phone]EMAIL:[e-mail]:Please explain what support in terms of Avista retained earnings and Hydro One capital investment in Avista if any Hydro One plans to provide to raise Avista’s credit ratings with Moody’s and S&P by at least 1 notch above current ratings as referenced on Avista/300 Thies/7.RESPONSE: There are currently no specific plans in terms of Hydro One capital investments in Avista to raise Avista’s credit ratings with Moody’s and S&P by at least 1 notch above current ratings.
However, S&P has revised the outlook on Avista’s “BBB” rating to positive based on the following rationale. “The outlook revision on Avista reflects the potential for higher ratings upon the completion of the acquisition by Hydro One Ltd. (HOL)…” Through Commitment 33 Hydro One will support a capital structure that includes a strong common equity ratio, and Hydro One has a demonstrated ability to support such a commitment. This strong common equity ratio is an important component in supporting financial metrics that are designed to allow Avista access to debt financing under reasonable terms and on a sustainable basis.