20210325Avista to Staff 75 Attachment A3.PDF

INFRASTRUCTURE AND PROJECT FINANCE
CREDIT OPINION
5 February 2018
Update
RATINGS
Avista Corp.
Domicile Spokane, Washington,United States
Long Term Rating Baa1
Type LT Issuer Rating
Outlook Negative
Please see the ratings section at the end of this reportfor more information. The ratings and outlook shown
reflect information as of the publication date.
Contacts
Nana Hamilton +1.212.553.9440
AVP-Analyst
[e-mail]
Richa N Patel +1.212.553.9475
Associate Analyst
[e-mail]
Jim Hempstead +1.212.553.4318
MD-Utilities
[e-mail]
CLIENT SERVICES
Americas 1-212-553-1653
Asia Pacific 852-3551-3077
Japan 81-3-5408-4100
EMEA 44-20-7772-5454
AVISTA CORP.
Update following outlook change to negative
Summary
Avista Corporation's (Avista) credit profile reflects its primary business as a low-risk vertically
integrated electric and gas utility with supportive cost recovery mechanisms, such as electric
and gas revenue decoupling. Regulatory developments in Washington, Avista's primary
regulatory jurisdiction, create some uncertainty for the company going forward. In addition
we expect Avista's credit profile to be pressured by recently enacted tax reform given the
high contribution of deferred income taxes to its operating cash flows.
On 19 July 2017, Canadian electric utility Hydro One, Ltd. (HOL unrated) announced it
had reached an agreement to acquire Avista for $53 per share in a $5.3 billion all-cash
transaction, including the assumption of roughly $1.9 billion of Avista reported debt. Our
assessment of Avista's credit profile assumes that there will be no acquisition debt issued
at the Avista level and that there will be no significant change to Avista's regulated capital
structure and dividend policy as a result of the acquisition.
Avista has some unregulated exposure in addition to its ownership of regulated utility Alaska
Electric Light and Power (AEL&P, Baa3 stable ), which provide marginal operational and cash
flow diversity, but remain neutral in terms of our view of Avista's credit.
Exhibit 1
Historical CFO Pre-WC, Total Debt and CFO Pre-WC to Debt
$ in millions
$323 $330 $380 $386 $424
$1,638 $1,752 $1,838
$1,991 $2,063
19.7%
18.8%
20.7%
19.4%
20.6%
17.5%
18.0%
18.5%
19.0%
19.5%
20.0%
20.5%
21.0%
$0
$500
$1,000
$1,500
$2,000
$2,500
12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017 (LTM)
CFO pre-W/C Total Debt (CFO pre-W/C) / Debt
Source: Moody's Investors Service
Credit Strengths
» Low-risk utility with supportive cost recovery mechanisms
» Track record of stable cash flow generation
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
Credit Challenges
» Concerns around management of regulatory relationships in Washington
» Reduction in contribution of deferred taxes to operating cash flow as a result of tax reform
» Some uncertainty over degree to which Avista may be required to support HOL acquisition debt
Rating Outlook
The negative outlook reflects the expected reduced contribution of deferred taxes to operating cash flow and regulatory uncertainty
related to the ongoing Washington rate case. We project weaker credit metrics going forward, with CFO pre WC to debt falling to or
below our previously communicated 17% threshold in the absence of actions to mitigate tax reform impacts and without adequate
regulatory relief in Washington. In addition, Avista's credit profile would be negatively affected by any indication that it would be
required to support HOL's acquisition debt. The outlook could be stabilized if Avista receives sufficient regulatory relief in Washington
or if state-level regulatory and corporate financial actions are taken to offset the negative tax reform impact such that CFO pre WC to
debt remains consistently at or above 18%.
Factors that Could Lead to an Upgrade
» Demonstrated improvement in regulatory relationships
» CFO pre-WC to debt above 21% on a sustainable basis
» CFO pre-WC less dividends above 17% on a sustained basis
Factors that Could Lead to a Downgrade
» Sustained depredation of regulatory relationships in Washington resulting in inadequate regulatory relief
» CFO pre-WC to debt at 17% or below on a consistent basis
» Direct financial support of HOL's acquisition debt
Key Indicators
Exhibit 2
KEY INDICATORS [1]
Avista Corp.
12/31/2013 12/31/2014 12/31/2015 12/31/2016 9/30/2017(LTM)
CFO pre-WC + Interest / Interest 5.0x 5.2x 5.7x 5.4x 5.4x
CFO pre-WC / Debt 19.7%18.8%20.7%19.4%20.6%
CFO pre-WC – Dividends / Debt 15.2%14.3%16.2%15.0%16.1%
Debt / Capitalization 46.7%44.6%44.8%44.5%44.6%
[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.
Source: Moody's Financial Metrics™
Profile
Avista Corporation is primarily a regulated electric and gas utility servicing around 377,000 electric and 340,000 gas customers in
Washington, Idaho and Oregon. Avista also owns Alaska Energy and Resources Company (AERC; not rated), parent of Alaska Electric
Light and Power Company (AEL&P; Baa3 stable) which serves around 17,000 electric customers in Juneau, Alaska.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on
www.moodys.com for the most updated credit rating action information and rating history.
2 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
Avista's utility operations are primarily regulated by the Washington Utilities and Transportation Commission (WUTC), the Idaho
Public Utilities Commission (IPUC) and the Oregon Public Utility Commission (OPUC). AEL&P is under the purview of the Regulatory
Commission of Alaska (RCA).
Exhibit 3
2016 Earnings Contribution
Avista Utilities
94%
AELP
6%
Excludes Other Segment
Source: Avista Corporation
Detailed Credit Considerations
DIRECT SUPPORT OF HYDRO ONE'S ACQUISITION FINANCING WOULD BE CREDIT NEGATIVE
At announcement of its acquisition of Avista, HOL indicated that the $3.4 billion equity purchase price would be financed with the
issuance of nearly $2.6 billion of HOL debt in addition to CAD1.4 billion of contingent convertible debentures. HOL announced a
bought deal offering of the CAD1.4 billion convertible debentures at transaction announcement, and the offering closed on August 9,
2017. In total, the announced acquisition is credit negative for both HOL and its primary subsidiary Hydro One Inc. (HOI A3 negative)
and potentially for Avista because of the significant amount of debt issued at the parent entity used to finance the acquisition.
However, as currently envisioned, we expect that the transaction debt will be a direct obligation of HOL, a much larger holding
company, and that it will not materially change Avista's financial obligations in terms of support. This is because HOL's primary credit
support is derived from HOI's CAD$17.8 billion rate base and over CAD$721 million of annual net income that can be used to service
HOL's debt obligations.
A dependence on Avista to support HOL’s acquisition debt would be a material credit negative for Avista. Illustratively, Avista's cash
flow to debt coverage would decline to a low of approximately 8%, a level not supportive of an investment grade credit profile, should
all of the $2.6 billion of acquisition debt be imputed to Avista. While Avista’s own balance sheet is protected to some degree by state
regulatory commission oversight, we would see any significant linkage between Avista and acquisition-related debt support as a drag
on Avista’s overall credit quality.
The transaction has been approved by Avista shareholders and the U.S. Federal Energy Regulatory Commission (FERC). Regulatory
approvals have been filed for, and are pending from the state utility commissions in Washington, Idaho, Oregon, Montana, and Alaska
and the transaction is expected to close in the second half of 2018.
CREDIT SUPPORTIVE COST RECOVERY MECHANISMS
We view Avista's regulatory jurisdictions to be generally credit supportive. The Washington Utilities and Transportation Commission
(WUTC), which regulates roughly 60% of the company's revenue, has electric and gas decoupling mechanisms which allow for timely
recovery of fixed costs for the utility and drive stable and predictable gross margin and cash flow in the face of declining use, in addition
to attrition adjustments for ongoing rates. Even though we view the Washington regulatory environment as generally credit supportive,
3 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
the progress of Avista's most recent rate case in WA, discussed in the next section, raise some concern around the utility's management
of its regulatory relationships in WA.
In Idaho, Avista was authorized electric and gas decoupling mechanisms in December 2015 for a three year period beginning January
1, 2016. In December 2017, the IPUC approved a multi-party settlement to increase annual electric base revenues by $12.9 million
and $4.5 million and gas base revenues by $1.2 million and $1.1 million effective 1 January 2018 and 1 January 2019 respectively. Both
electric and gas revenue increases are based on a 9.5% ROE and 50% equity ratio relative to a requested 9.9% ROE and 50% equity
ratio. The authorized electric revenue increase was more than half of Avista's filed request for a $28 million increase and the authorized
gas rate increase was approximately 40% of Avista's request for a $5.6 million gas revenue increase.
As part of its March 2016 rate case order in Oregon, Avista is now allowed to implement a revenue-per-customer decoupling
mechanism. In September 2017, the OPUC approved a settlement to increase natural gas base revenues by $3.5 million based on a
9.4% return on equity (ROE) and a 50% equity ratio, with an increase of $2.6 million effective on 1 October 2017 and an increase of
$0.9 million effective on 1 November 2017.
In Alaska, the RCA approved an all-party settlement in November 2017, authorizing a $1.3 million base rate increase, based on an
11.95% ROE and 58.18% equity ratio, in line with interim rates that went into effect in November 2016. The authorized return is
significantly above the average of recently authorized returns for the industry, a credit positive. However, we note that Alaska has a
statutory period of 450 days or approximately 15 months to decide on rate cases, the longest in the nation and has not authorized cash
flow stabilizing mechanisms such as revenue decoupling.
WASHINGTON RATE CASE STILL PENDING FOLLOWING REJECTION OF INITIAL RATE FILING
In Washington, Avista's February 2016 rate filing was rejected by the WUTC in December 2016, followed by a WUTC denial
for reconsideration of the December decision in February 2017. This was a surprising outcome considering our view that a core
competency of utility management is managing regulatory relationships, making an outright denial by the regulator unusual and
unexpected.
In an attempt to address WUTC concerns, Avista filed new electric and gas general rate cases in May 2017 requesting total electric and
gas rate increases of approximately $90 million and approximately $17 million, respectively, in a three-step plan spanning May 2018
to May 2020. Both electric and gas filings propose a 9.9% allowed ROE with a 50% common equity ratio, compared to the currently
allowed in rates 9.5% and 48.5% respectively.
On 21 October 2017, WUTC staff recommended a total gas rate increase of $6.6 million for the May 2018 to May 2020 period
based on a 9.1% ROE and 48.5% equity ratio. The staff also recommended, on 6 November 2017, a total electric rate increases
of approximately $29 million for the three year period, based on a 9.1% ROE and 48.5% equity ratio. Avista revised its initial
revenue requirement in rebuttal testimony on 1 December 2017 and is currently requesting total electric and gas rate increases of
approximately $82 million and approximately $14 million, respectively, based on a 9.9% ROE and 48.5% equity ratio. A final order on
the rate case is expected in April 2018.
Details of the requested annual increases and WUTC recommendations are outlined in Exhibit 4 below.
Exhibit 4WA Revenue Increase Request Update

Effective Date Filed Revenue Increase
26 May 2017
Filed Base % Increase WUTC Staff
Recommendation
6 November 2017
Rebuttal Revenue
Increase
1 December 2017
Filed Revenue Increase
26 May 2017
Filed Base % Increase WUTC Staff
Recommendation
21 October 2017
Rebuttal Revenue
Increase
1 December 2017
1-May-18 $61.4 M 12.50%$10.0 M $54.4M $8.3M 9.30%$1.1 M $6.6 M
1-May-19 $14.0 M*2.50%$9.5 M $13.5 M $4.2M 4.40%$2.7 M $3.7 M
1-May-20 $14.4 M*2.50%$9.7 M $13.9 M $4.2 M 4.40%$2.8 M $3.8 M
Electric Natural Gas
* Excludes power supply adjustmentSource: Avista Corp., S&P Global Market Intelligence
4 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
Since the WUTC is Avista's most important regulator, overseeing roughly 60% of the company's revenue generation, a strong
regulatory relationship with the WUTC is important for Avista's credit and adequate regulatory relief will be essential to the company's
ability to maintain a stable financial profile over the next 12-24 months.
FINANCIAL PROFILE EXPECTED TO BE PRESSURED BY TAX REFORM
As of 30 September 2017 (LTM), Avista's key financial metrics continue to be stable, with cash flow from operations before the changes
in working capital (CFO pre-WC) to debt at 20.6%. This level is in-line with other Baa1 vertically integrated peers and without the
impact of recently enacted tax reform, could have been sufficient to support the company's current credit profile in spite of the delay in
regulatory relief in WA and should the outcome of the rate case be slightly less favorable than expected.
For 2017, the earnings impact of the delayed rate relief in WA was offset by recent rate increases in Idaho and Oregon, as well as
strong power supply conditions, including higher than expected hydro generation and lower gas prices. However, we anticipate that
credit metrics will be pressured under normal power supply conditions if regulatory relief from WA is insufficient. In addition, for the
next 12-18 months, we project a decline in Avista's credit metrics as a result of tax reform. Deferred income taxes have constituted
a significant portion of Avista's operating cash flow, over a third of operating cash flow in 2016, approximately 23% as of LTM 30
September 2017 and averaging about 27% over the 2013 to LTM 30 September 2017 period. With the lower tax rate and loss of bonus
depreciation from tax reform, we project cash flow to debt coverage around 16-17% over the next two years.
Exhibit 5
Avista Corp. Deferred Income Taxes Contribution to Operating Cash Flow (CFO)
($ in millions)
$24
$144
$52
$125 $96
$243 $267
$376 $358
$412
9.7%
54.0%
13.8%
34.8%
23.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
12/31/13 12/31/14 12/31/15 13/31/2016 LTM 9/30/2017
Deferred Income Taxes CFO Deferred Income Taxes % of CFO
Source: Moody's Financial Metrics™
RECENT DEVELOPMENTS IN WASHINGTON'S CLEAN AIR RULE ARE POSITIVE FOR AVISTA
In September 2016, the Washington State Department of Ecology adopted the Clean Air Rule (CAR) which establishes emission
standards for green house gas (GHG) emissions from certain sources in the state, including power plants and natural gas distributors.
The plan called for a reduction of GHG emissions over time, at a pace of 1.7% annually until 2035.
Avista projects approximately 2.4 million metric tons of GHG emissions in 2018 from owned and controlled resources. This includes
emissions from approximately 550 MW net capacity Avista-owned gas power plants (excludes Kettle Falls plant) and Avista's 222 MW
net capacity share (15% ownership) of units 3 and 4 of the Colstrip coal power plant. It also includes emissions from the 270 MW
Lancaster gas plant whose output is contracted to Avista through 2026 under a power purchase agreement. We view the ability to
reduce emissions from owned generation as more feasible than from natural gas deliveries - which are primarily based on customer
needs and generally outside the control of the company - since the company only acts as a conduit for natural gas deliveries. Therefore,
it would be a credit negative if Avista was held financially accountable for the emissions of roughly 117 Bcf of gas deliveries per year,
resulting in increased rates and customer bills with no added benefit of service.
In a positive development for Avista and other affected parties, the rule's compliance requirements have been suspended following
a court ruling on parts of the CAR by the Thurston County Superior Court on 15 December 2017. The ruling favored employer groups
5 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
which sued in 2016, arguing that the state Department of Ecology did not have the authority to enforce CAR without legislative
approval. Further, the ruling judge agreed that the state could not impose emission reductions on non-fuel burning gasoline and
natural-gas distributors and similar businesses.
Liquidity Analysis
We expect Avista to maintain adequate liquidity over the next 12-18 months.
Avista's external liquidity sources consist of a $400 million senior secured revolving credit facility, which expires in April 2021. At
the end of 2017, there was $260 million available under the line of credit. Since Avista currently has unsecured investment grade
ratings from two nationally recognized rating agencies, the company has the option to request the banks to relinquish the existing
First Mortgage Bond collateral position, but it has chosen not to do so for economic reasons. Despite the collateral staying in place
at Avista's discretion, the secured nature of the credit facilities somewhat constrains Avista's liquidity flexibility, in our opinion, since
the typical investment grade issuer (having an unsecured facility) can use collateral as an option to improve bank credit access during
periods of unforeseen liquidity stress.
Avista was in compliance with the facility’s sole covenant of less than 65% capitalization, with a ratio of 53.6% as of 30 September
2017. We note that the company has no material adverse change language beyond the close of the facility - a credit positive.
AEL&P has a $25 million line of credit which expires in November 2019 and requires a consolidated debt to capitalization covenant of
67.5%. As of 31 March 2017, there were no borrowings or letters of credit outstanding under the facility and AEL&P was in compliance
with its covenant, with a ratio of 53.9%.
Avista's next material debt maturities occur in May and June 2018, when $7 million and an aggregate of around $265.5 million of
senior debt is due, respectively. We expect that Avista will address upcoming maturities with planned debt issuances in 2018. The
company also issued $55 million of equity in the fourth quarter of 2017.
Exhibit 6
Avista Corp. Debt Maturities
($ in millions)
$273
$90
$52 $-
$250
$14 $- $-
$-
$50
$100
$150
$200
$250
$300
2018 2019 2020 2021 2022 2023 2024 2024
* Excludes debt maturities of $15 million at Alaska Energy and Resources Company in 2019
Source: Avista Corporation
6 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
Methodology and Scorecard
Exhibit 7
Rating Factors
Avista Corp.
Regulated Electric and Gas Utilities Industry Grid [1][2]
Factor 1 : Regulatory Framework (25%)Measure Score Measure Score
a) Legislative and Judicial Underpinnings of the Regulatory Framework A A A A
b) Consistency and Predictability of Regulation Baa Baa Baa Baa
Factor 2 : Ability to Recover Costs and Earn Returns (25%)
a) Timeliness of Recovery of Operating and Capital Costs Baa Baa Baa Baa
b) Sufficiency of Rates and Returns Baa Baa Baa Baa
Factor 3 : Diversification (10%)
a) Market Position Baa Baa Baa Baa
b) Generation and Fuel Diversity A A A A
Factor 4 : Financial Strength (40%)
a) CFO pre-WC + Interest / Interest (3 Year Avg)5.6x A 4.4x - 4.8x A
b) CFO pre-WC / Debt (3 Year Avg)20.6%Baa 15% - 17%Baa
c) CFO pre-WC – Dividends / Debt (3 Year Avg)16.1%Baa 11% - 13%Baa
d) Debt / Capitalization (3 Year Avg)44.3% A 47% - 49%Baa
Rating:
Grid-Indicated Rating Before Notching Adjustment Baa1 Baa1
HoldCo Structural Subordination Notching 0 0 0
a) Indicated Rating from Grid Baa1 Baa1
b) Actual Rating Assigned (P)Baa1 (P)Baa1
Moody's 12-18 Month Forward
View
As of Date Published [3]
Current
LTM 9/30/2017
[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.
[2] As of 9/30/2017 (LTM)
[3] This represents Moody's forward view; not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures.
Source: Moody’s Financial Metrics™
Appendix
Exhibit 8
Peer Comparison
(in US millions)
FYE
Dec-15
FYE
Dec-16
LTM
Sep-17
FYE
Dec-15
FYE
Dec-16
LTM
Sep-17
FYE
Dec-15
FYE
Dec-16
LTM
Sep-17
FYE
Dec-15
FYE
Dec-16
LTM
Sep-17
Revenue 1,485 1,442 1,450 3,093 3,165 3,373 1,268 1,259 1,333 1,898 1,923 2,018
EBITDA 418 473 481 1,125 1,260 1,240 483 477 515 657 693 739
(CFO Pre-W/C) / Debt 20.7% 19.4% 20.6% 20.1% 21.6% 24.2% 16.0% 15.1% 18.2% 21.6% 19.3%21.1%
(CFO Pre-W/C - Dividends) / Debt 16.2% 15.0% 16.1% 13.5% 15.3% 20.2% 11.4% 10.2% 13.1% 17.8% 15.3% 16.9%
Debt / EBITDA 4.4x 4.2x 4.3x 3.7x 3.3x 3.3x 4.4x 4.6x 4.2x 3.8x 3.9x 3.7x
Debt / Book Capitalization 44.8% 44.5% 44.6% 45.5% 44.4% 42.6% 40.1% 39.4% 38.8% 46.8% 47.4% 46.9%
EBITDA / Interest Expense 5.2x 5.4x 5.0x 4.6x 5.3x 5.3x 4.6x 4.5x 4.8x 4.8x 5.2x 5.2x
Baa1 Negative Baa1 Stable A3 Stable A3 Stable
Avista Corp.Puget Sound Energy, Inc.Idaho Power Company Portland General Electric Company
[1] All figures & ratios calculated using Moody’s estimates & standard adjustments. FYE = Financial Year-End. LTM = Last Twelve Months.
Source: Moody’s Financial Metrics™
7 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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Exhibit 9
Cash Flow and Credit Measures [1]
($ in millions)
CF Metrics 2013 2014 2015 2016 2017
As Adjusted
EBITDA 387 401 418 473 481
FFO 298 330 386 442 428
- Div 73 78 82 87 91
RCF 224 251 304 355 337
FFO 298 330 386 442 428
+/- WC (48) (50) (4) (28) (13)
+/- Other 25 - (6) (56) (4)
CFO 275 280 376 358 412
- Div 73 78 82 87 91
- Capex 310 328 394 407 407
FCF (109) (127) (101) (136) (86)
Debt / EBITDA 4.2x 4.4x 4.4x 4.2x 4.3x
EBITDA / Interest 4.8x 5.2x 5.2x 5.4x 5.0x
FFO / Debt 18.2% 18.8% 21.0% 22.2% 20.7%
RCF / Debt 13.7% 14.3% 16.5% 17.8% 16.3%
[1] All figures & ratios calculated using Moody's estimates & standard adjustments.Source: Moody’s Financial Metrics™
Ratings
Exhibit 10
Category Moody's Rating
AVISTA CORP.
Outlook Negative
Issuer Rating Baa1
First Mortgage Bonds A2
Senior Secured A2
Senior Unsecured MTN (P)Baa1
ALASKA ELECTRIC LIGHT AND POWER
COMPANY(AELP)
Outlook Stable
Issuer Rating Baa3
AVISTA CORP. CAPITAL II
Outlook Negative
BACKED Pref. Stock Baa2
Source: Moody's Investors Service
8 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including
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agreed to pay to Moody’s Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain
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Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s
Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally
Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an
entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered
with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred
stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees
ranging from JPY200,000 to approximately JPY350,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
REPORT NUMBER 1109174
9 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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MOODY'S INVESTORS SERVICE INFRASTRUCTURE AND PROJECT FINANCE
CLIENT SERVICES
Americas 1-212-553-1653
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Japan 81-3-5408-4100
EMEA 44-20-7772-5454
10 5 February 2018 AVISTA CORP.: Update following outlook change to negative
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