The URL can be used to link to this page

Home My WebLink About20190729Avista to IFG 1-5.pdfAVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION ldaho Pubiic Utilities Commission Otfice of the SecrehryHECEIVED JUL 2 I 20t9 JUzuSDICTION: CASE NO.: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 Idaho Forest Group Production Request IFG-OO1 DATE PREPARED WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: yl:,il?i:'^H5oise,rdaho Paul Kimball Regulatory Affairs (s}e) 4es-4s84 REQUEST: Please provide copies of all responses previously provided by the Company to all Staff s and Intervenor' s data requests. RESPONSE: Please see Avista's response 001C, which contains TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and exempt from public view and is separately filed under IDAPA 31.01.01, Rule 067 and233,and Section 9-340D, Idaho Code. Enclosed is a CD with all data requests and NON-CONFIDENTIAL responses associated with the current general rate case before the Idaho Public Utilities Commission. Avista will continue to provide copies of data requests, along with corresponding data responses, from all parties to this proceeding as they are received. AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JUzuSDICTION CASE NO.: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 Idaho Forest Group Production Request IFG-OO2 DATE PREPARED: 07 12112019WITNESS: Elizabeth Andrews RESPONDER: Paul Kimball DEPARTMENT: Regulatory Affairs TELEPHONE: (509) 49s-4s84 REQUEST: To the extent not already provided as part of its initial ratecase filing, please provide all workpapers, including electronic workpapers, and all confidential documents. Please provide the workpapers in Microsoft Excel format with all links intact and provide copies of any linked workpapers. If the workpapers contain any hard-coded numbers, please identify the source of the hard-coded numbers and provide a copy of the source documentation. RESPONSE: All workpapers and confidential documents where provided as part of the initial filing AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 IFG Production Request IFG-OO3 DATE PREPARED WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 07124120t9 Mark Thies Megan Thilo Finance (s09) 49s-2r4e REQUEST: Reference Avista's 2019 First Quarter l0-Q, p.34, where the Company states that"Hydro One paid Avista Corp. a $103 million terminationfee on January 24, 2019. The terminationfee was usedfor reimbursing the Company's transaction costs incurredfrom 2017 to 2019. The balance of the terminationfee remaining after payment of 2019 transaction costs and applicable income taxes wqs usedfor general corporate purposes and reduced the Company's needfor external financing. The 2019 costs totaled $19.7 million pre-tax and includedfinancial advisers'fees, legal .fees, consultingfees and employee time." a. Please provide a detailed break-out by category of the merger related "transaction costs" totaling $19.7 million referenced above, including but not limited to management time, BOD time, in-house and outside counsel time and costs, consultants time and costs, financial advisor's time and costs, and any and all similarly related costs and expenses. b. Were any Merger Case (IPUC Case No. AVU-E-I7-09lAYU-G-I7-05) costs or expenses referenced above and incurred in 2018 booked as test year costs for purposes of this rate case? c. Please state the dollar amount of "the balance of the termination fee remaining after payment of the 201 9 transaction costs and applicable income taxes" as referenced above, from your lst Quarter l0-Q. d. Please describe in detail and provide work papers related to the use of or application of the "balance of the termination fee" for "general corporate purposes," as referenced above from your lst Quarter 10-Q. e. Please describe how the "balance of the termination fee" was used to "reduc[e] the Company's need for extemal financing," as referenced above from your 1't Quarter l0-Q. Please provide work papers showing this reduction in need for external financing. f. Is it the Company's position that it is entitled to retain the entirety of the $103 million Termination Fee from the failed Hydro One Merger for itself and its shareholders, with none of the Termination Fees to inure to the benefit of Avista's customers? If so, please explain the rational for this position. g. Would Avista agree or disagree that Intervenors in the Merger Case (Case No. AVU-E-17-09/AVU-G-17-05), including IFG, incurred significant legal and expert Page I of2 costs and fees in participating in the Merger Case and in supporting the proposed merger with Hydro One and in supporting the Stipulated Settlement? RESPONSE: a. Please see IFG_PR_003 Attachment A for a detailed break-out by category of the merger related transaction costs for the first quarter of 2019. Additionally, at IFG_PR_003 Attachment A, we have included a detailed break-out by category of merger related transaction costs for April and May 2019. b. Expenses associated with the merger with Hydro One were charged to Non-Utility accounts and, therefore, were not included in this case. As stated in Ms. Andrew's testimony at page 17, lines 20-22: "Regulatory Affairs personnel did a thorough review of its general ledger to verifr that no costs were included in this case that were associated with the proposed transaction." c. As of the end of the first quarter, approximately $52 million of the $103 million termination fee was used for reimbursement of our transaction costs and income taxes incurred from2017 to 2019. Termination fee Reimbursement of Transactions Costs (2017 -2019) Reimbursement of Taxes $103 million $(38) million $(14) million $ 5l million e d. Please see IFG_PR_003 Attachment B. The entire balance of the termination fee was used to reduce the Company's need for external financing. Please see IFG_PR_003 Attachment B. In our December forecast, we planned to issue $97.9 million in common stock for 2019. In that forecast, the balance of the termination fee was used to reduce the Company's need for extemal financing to $22.2 million. f. The purpose of the termination fee was two-fold. First, while the Company received approximately $103 million from Hydro One, approximately $52 million was used to reimburse Avista for expenses incurred related to the failed transaction, and taxes. The remaining $51 million was used to compensate the shareholders of Avista for the lost opportunity cost of the failed merger, by reducing the Company's need for external financing. The time and effort devoted to the failed merger foreclosed other opportunities that might have benefited shareholders. To use this fee for non-corporate purposes, would cause the fee to fail in its intended purpose, especially where the parties to the merger were quite clear in insisting that customers should bear no portion of the merger-related costs. From the outset of the proposed transaction, great care was taken to assure that all merger transaction costs were accounted for "below the line" - i.e., borne only by shareholders and not customers. Avista did not invest "customer" funds as a part of this transaction; shareholders made the investment. As such, customers took on, rightly, no risk with the transaction, and therefore no portion of the fee should inure to customers. g. Avista has no information to determine whether or not IFG incurred "significant" costs related to its involvement in the proposed merger proceeding. Page 2 of 2 2019 transaction costs lnvestment Advisor Other (Legal, labor, etc) Total est. transaction costs $'oOos 18,500 1,500 Termination fee from H1 20,000 103,000 Net cash for 2019*83,000 *excludes reimbursement of taxes and transaction costs for 2017 and 20!8 o oooc x coE 6I oo &lo-_-tI NNrr(, hu,oo NNqq nobo ool Go E(!a Eo(.) 60FtstoqE-q\qNOOOtsDoNNOttF I N- | 6 ootsN$oN-F@N@6icioidNdoNNOttr . N- ' () Eo5 E.b:6_E6 q,J Jz D.= ts c i,fiE?g;;I=E 8Eq I Ppi *Eq38et =(/)6EE+iD i i.i.;6,!200000!z[[[d o6E oo -9o Eul ot o Eoulto(L E.oo (L oo6otsNN 6.tFOOtnOOltnttsoo=s = 0q P P e q P c G? q'q d o? cq od 9'-'-O ----O O -1@ ? O N 6 3 N ts oOtsF(O66(DtslOFO€OtFOFONF tOOFtsOOiF I iF'--O' OF';'OOhNN DoON N ! F NtsFo of . (o-oroFF o{-G!OFOFl'F'6i oonn oo)o- @- trD.l cq aD o)N{N6dd66t+ o ral{+66OD.,i +FG ocqqNts'',\atso NO-o o d@ N@O!t@oto?qco?@aooo-tNNtF O FN()NOOtshNdCPatq':qao?NFrlOOFO@$NONNOONNI-'F@TOOFFF@lNo, (t$o6@ooocq -a?o?9qO@ @FOOOOO @-@OOo-o- @-o6slo@ o60000NNoOOFO@lOF.lOv-oNv-ooFoiN600000N@$t NO@Oitso 'oo$ NFNo-o .EE P5s E .Et: o _s6H oJ r 6E€EtefEx:ir:$:q{e EEEFFFEgE @\@o L 'qo@6to ooo- @ @o.9 .9za fr a g.frG.y.Y6c>>c.9 b b.98aa 3.E66.E E qqE \=oJF(r<wdIOPs& Bi9.o96 ziR'a 1>z*{ E ='{o(/)dt r)NNO'-: d otoNo @ |joN. @ o z_ IF =a 06tuJzzuJI uJot EI(L Ioz J JJttuJ o{ 6@ 60+ o@oN oo6hhaloDo (o (e c)!lFOjioFtsOOONNNNNNNNo - N nci ui {-X;[ d; J h.i o d; q--r-qqq-d d N oo)ooNo6h N om60000c)oooo,-6-Nd:d o- !t t o- NF F NF o@@@OFNo@dNoooo- 6o9a -E26 oPoa6x!-a6J<aAa=@xoqo qu !U:,EHebE-.= l= I O f<dt2dl(Loooooo9ooooo=> > > > >so o o o 06ooaoaotFFtF.qUJUJrllUUl> iLZJ<EEdri uz. -e-zP:fr€Y Yflii#8-s= 6 ggAg;HfrilFiEEUgggEEE: rorolo6oo0nNNNNNNNN rtriddctctdd llooooctrssoo00.9.9 aaooooEC -(E -qoooo.9.9. ooooCC-asoooo.9.9 ooiot NnoF 6E0)aa a 5ss I iZa Z { q. t,33AE.3E'ErYoo.966.e.e E6.e6.e k 6 6e E E a Z': E Z o Zri 9Io.Y.Y O O O.Y O 6 0_::@B9a(Di9@*(/)g+S."eet.E"U.3aE88gEEgg;Eq,EgEgS oo@ q o tsFtOO(O@FiOo-+-L^iOOONNo- rfN I oN oo oo$ i-.@ $r@ tso- -@ijoo' oN ooo@9dFa--N-$oo$NNJJ IJz 98Eiat ..6=A220u,.id7q)27 -9Jz=ztodE{r TEHE=ao=r>2idaxgu9$q I999i (L ooaolo@ 6N8J"tO)oN oa?oN6_ o 6oF No oN oooooNN z =@O6EN<eENoF'Eooooocsc@!NFI (L EoF o oF 6oF Actuals Through 201812 CASH FLOW FROM OPERATIONS Retail Sales Receipts Wholesale Sales Receipts M iscellaneous Revenue Receipts Total Sales Receipts Income Tax Refund / Other Misc Receipts Total Other Receipts Purchased Power Disbursement Purchased Gas Disbursernent Fuel Expense Cash Resource Costs Cash Collateral Total Fuel And Purchases Working Capital And Other Operating Cash Collateral FAS 87 Payments FAS 106 Payments DSM Net Surv Revenue Related Taxes Property Taxes Other General Taxes Settled Interest Rate Swap LTD Interest Net Interest On Auto Financing Total Other Disbursernents Net Cash Provided By Operating CASH FLOW FROM INVESTING Construction Expenditure Investments Other Plant Investment And Sale Other Capital Expenditures Subsidiary Dividends Subsidiary Loans Net Cash Provided By Investing Avista Utilities Direct Cash Flow Statement includes term fee; No term net $g3M fee DEC2B DEC2A 2019 2019 1,079,928 61,974 32,267 1,174,169 85,491 85,491 -123,774 -123,445 -90,044 54,050 -283,213 -292,754 0 -22,000 -6,973 1,079,928 61,974 32,267 1,174,169 2,491 2,491 -123,774 -123,445 -90,044 54,050 -283,213 -292,754 0 -22,000 -6,973 Variance -83,000 -83,000 18,451 -64,549 0 0 0 0 0 0 0 0 -55,994 -46,992 -1,47 5 s,283 -84,337 -5,359 -585,454 -55,994 -46,992 -1,47 5 5,283 -84,201 -5,208 -567,003 0 0 0 0 0 0 0 0 0 0 136 l5l 390,993 -405,800 0 0 10,000 -16,557 412,357 326,444 -405,800 0 0 10,000 -16,557 -412,357 0 0 0 0 0 0 I FG_PR_003 Attachment B.xlsx Page 1 of 2 -19,513 -543 17,159-36,672 Income Taxes Income Taxes Actuals Through 201812 Avista Utilities Direct Cash Flow Statement includes term fee; No term net $83M fee DEC2B DEC2A 2019 2019 Variance CASH FLOW FROM FINANCING In ST And Cash 3 8s4 Issue Costs Total Financing Proceeds _) \11 213,417 -3,423 279,144 -846 65,707 Maturity Of Long Term Debt Common Stock Redernption Common Dividend Disbursement Total Financing Retirements -90,000 0 -102,156 -192,156 -90,000 0 -103,313 -193,313 0 0 -1,158 -1,158 Net Cssh Provided By Financing 21,281 85,830 64,549 Net Change In Cash And Cash Equivalents -83 -83 0 Beginning Cash And Cash Equivalents Ending Cash And Cash Equivalents Net Change In Cash 5,583 5,500 -83 5,583 5,500 -83 0 0 0 Ending Short Term Debt Letters of credit outstanding Total Credit Facilities Available * based on $400M 193,840 22,027 I 84,1 33 194,694 22,027 183,279 854 0 (854) Cash Disbursement - Accelerated Equity Cash Receipts - Hydro One for Accelerated Equity 0 0 0 0 0 0 I FG_PR_003 Attachment B.xlsx Page2 of 2 Proceeds From Issuance OfLTD Common Stock Issuance 180,000 97 190,000 174 AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JUzuSDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E- l9-04 IPUC Production Request IFG-OO4 DATE PREPARED: 71812019WITNESS: Mark Thies RESPONDER: Patrick Ehrbar DEPARTMENT: Regulatory Affairs TELEPHONE: (509) 495-8620 REQUEST: Reference Case No. AVU-E-I7-09/AVU-G-17-05 and the Stipulation and Settlement Agreement ("Stipulation") reached between the Applicants (Avista and Hydro One), and various Intervenors, including Idaho Forest Group (IFG). Merger Commitment No. 58 attached to the Stipulation and agreed to by the Company and Stipulating Intervenors, including IFG, provided that Hydro One would pay approximately $5 million to establish a fund in Idaho for energy efficiency investment, weatherization, conservation and low-income assistance, with the establishment of a stakeholder's committee (EWCL Committee) to distribute such funds. a. Would the Company consider dedicating a portion of the Termination Fees to fulfill this Commitment No. 58 and to fund the EWCL Committee and its conservation investment activities in Idaho? RESPONSE: The purpose of the termination fee was two-fold. First, while the Company received approximately $103 million from Hydro One, approximately $521 million was used to reimburse Avista for expenses incurred related to the failed transaction, and taxes. The remaining $512 million was used to compensate the shareholders of Avista for the lost opportunity cost of the failed merger, by reducing the Company's need for external financing. The time and effort devoted to the failed merger foreclosed other opportunities that might have benefited shareholders at least as much. To use this fee for non-corporate purposes, would cause the fee to fail in its intended purpose. From the outset of the proposed transaction, great care was taken to assure that all merger transaction costs were accounted for "below the line" - i.e., borne only by shareholders and not customers. Avista did not invest "customer" funds as a part of this transaction; shareholders made the investment. As such, customers took on, rightly, no risk with the transaction, and therefore no portion of the fee should inure to customers. Avista does, however, have what we believe are robust energy efficiency programs for our customers, and will continue to partner with IFG, and all of our customers, on energy efficiency opportunities including the PI Data Project, subject to the conditions of our Commission-approved energy efficiency tariffs. AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 IPUC Production Request IFG-OO5 DATE PREPARED WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 71812019 Mark Thies Patrick Ehrbar Regulatory Affairs (s09) 49s-8620 REQUEST: Reference Case No. AVU-E-I7-09/AVU-G-17-05 and Merger Commitment No. 60 wherein Avista agreed to work with IFG in qualifying IFG projects for DSM funding with respect to installation of information technology to gather real time IFG plant energy consumption and peak demand information data (referred to as the PI Data Project), and to replace aging compressors, saws and other equipment with state of the art machinery at IFG mills served by Avista. a. Would the Company consider using a portion of the Termination Fees to fulfill its obligation to IFG under Commitment No. 60? RESPONSE: Please see the Company's response to IFG-004.