20171129Avista to Staff 1-7.pdf

Avista Corp.
1411 East Mission P.O. Box3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 800-727-9170
November 28,2017
Z--
Paul Kimball
Regulatory Analyst
Enclosures
CC (Email):
#stsrfr
cwp,
REC E IVED
20ll HOv 29 tt{ l0: 03
lLlAi i,j ,,ilBLtc
, ll il :T!=S CtIMMISSION
Idaho Public Utilities Commission
472W. Washington St.
Boise, ID 83702-0074
Attn: Brandon Karpen
Deputy Attorney General
Re: Production Request of the Commission Staff in Case No. AVU-E-17-09
Dear Mr. Karpen,
Enclosed are Avista's responses to IPUC Staffs production requests in the above referenced
docket. Included in this mailing are the original and two poper copies of Avista's responses to
production requests: Staff 001(AVA) - 007(AVA). Also enclosed on three separate CD's are
copies of Avista's responses to the production requests. The electronic versions of the responses
were emailed on lll28ll7.
If there are any questions regarding the enclosed information, please contact Paul Kimball at (509)
495-4584 or via e-mail at [e-mail]
Sincerely
IPUC (Hanian)
Clearwater (Richardson, Reading, Lewallen, Haugen, Jacobs, Wren, Smith)
Idaho Conservation League (Otto)
Idaho Forest Group (Miller, Williams, Crowley)
CAPAI (Purdy)
WNIDCL (Franco)
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: lll08l20l7
CASE NO: AVU-E-17-09 / AVU-G-17-05 WITNESS: Mark Thies
REQUESTER: IPUC RESPONDER: Paul KimballTYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff-001(AVA) TELEPHONE: (509) 49s-4584
REQUEST:
Please provide copies of all data request questions received by Avista and/or Hydro One from all
parties in each of the jurisdictions the Company serves regarding the proposed merger.
RESPONSE:
Please see Staff PR_001(AVA) Attachment A for the non-confidential questions. Avista and
Hydro One are in the process of negotiating a protective agreement with IPUC Staff and
intervenors and will produce the Highly Confidential questions served on Avista and Hydro One in
the other jurisdictions as soon as the protective agreements for the IPUC proceeding have been
executed.
l$
=
(= A)<rnr\) f)r.D iTlre:]Em
{J
G'
_;
t-- ---::':]
,--1._()
ii*rr
=F6r}C)U)
C)2
500869550 v'1
RECE IVEO
HolJ 2e AH &t$R8]',o*'
n5r:3 tluULRPQUESTER:
iTr;:+'coH*M1S$pON
REQUEST NO.:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO DATE PREPARED:
AVU.E. I 7-09/AVU.G -17 -05 WITNESS:IPUC RESPONDER:
Production Request DEPARTMENT:Staff-002(AVA) TELEPHONE:
EMAIL:
1y1412017
Mark Thies/Christopher Lopez
Patrick Ehrbar/Adele Pantusa
State & Federal Regulation
(s09) 49s-8620
p atri ck. ehrb ar @av istac o rp. co m
REQUEST:
Please provide the rationale and calculations for the $0.95M in non-offsetable credit.
RESPONSE:
In the Joint Application, Hydro One and Avista have proposed rate credits for Avista customers totaling
$31.5 million over 10 years, $22.0 million of which is offsetable by cost savings, as identified below.
AW-E-17-09 / Avt]-G-17-05
Two-Step Rate Credit Proposal
(in millions)
Annual Credit Annual Credit
Yean 1-5 Years 6-10 Total Credit
Total Credit
kss Offsetable Credit
Non-Offsetable Credit
$$$2.65
1.70
3.6s
2.70
31.50
22.00
$ 0.9s $ 0.9s $9.50
In determining the Rate Credit Hydro One considered the Puget Sound Energy merger, approved by the
Washington Utilities and Transportation Commission in DocketU-072375, using the total PSE rate
credit as a baseline. Hydro One calculated the total amount of Puget Sound Energy rate credits as a
percentage of PSE's annual revenue requirement to provide a basis for determining a similar level of
rate credits for Avista Utilities, a relatively smaller-sized utility. The PSE rate credits, as a percentage of
its annual revenue requirements, were applied to Avista Utilities' annual revenue requirement to
determine a similar level of total rate credits for Avista's customers in Washington, Idaho, and Oregon.
The Offsetable portion of the Rate Credit, represents the estimated immediate cost savings that will be
achieved post-closing, as described in witness Mr. Thies testimony on page 19, see Table No. l.
While Hydro One used the PSE transaction as a comparison when considering customer rate credits, the
circumstances of each utility at the time of the respective transactions are unique and the transaction
with Avista should be evaluated on its own merits.
500852745 v3
Page I of I
PRT'ILEG"o*'o',$*ilill1'ilffi il'3,1il;,il$Ri'#Iil?i"tT'DEFENSEAND
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED: lll08l20l7
AVU-E-I7-09 / AVU-G-I7-05 WITNESS: Mark ThiesIPUC RESPONDER: Annette Brandon
Production Request DEPARTMENT: State & Federal RegulationStaff-003(AVA) TELEPHONE: (509) 49s-4324
REQUEST:
Please provide a schedule showing each member of the Board of Directors and the amount paid to each
member in 2016 and 2017, including any costs for stock options. Please also include the reimbursed
costs for each member (travel, meals, etc.).
RESPONSE:
Please see Staff PR_003(AVA) Attachment A for a scheduling showing each member of the Board of
Directors and the amount paid to each member in20l6 and20l7.
r-,@
4.pU
SE
?n rr
=oq
(r)
?-n
:-*6)'{_c
-<noIoz
o{-No\|oo
=!mz
an{5z
1l --l>o<-t
=>mrzo1r(r>v--lmvt-
0,o.o"
cro)o-
='o
oa@@
o
0)
3ocf
E.e
oa
o
@
eo
-l0,xoo
aooo3do
@oox
6oco)
oo
=o,
aoox
aaco)
oo
{o-{
t-
o@CQOon1v0d'xo
E.
==(Da
o
o
o6
(DtoCL
A'
No
-lI
'noo
No
o
oo
=og
.Ttod
N5
o
oo
ooogr
-alot,
5
ofodfooo
9t
a'log
N
eo(,
@ooa
=ooe
o
-noo
N
oo3
P
o
'TtoE
N
C
1-
oo-=o
-no(t
N
oo
o30)loo
(o
-no
N
mfs.
a:f3of
0)
-no
f!f0)
oo
o
G0,
(o
o
3Eoo
oo
-oA'o.I6oo
vo
9.
o
o=
='noo
='o
ocoao
vog.
o
g
-(,oP<)o
4
"(noIoo
g
'(noPoo
@
'(,oIoo
g
iroPoo
6
N-(,oIoo
@
9o{(tIo
zE,mv@o2
,q
{
Jo
C)Pot{
@
oA-@
oivA
a
N\N
90{(,
@
b,5{b,@
@
O)(oio..1Nbo
zomvU,oz
o
N
-oG)
9o{(n
g
5(,
irJ(,
6
"Oloobo
g
'(,to9oo
@
"(,oobo
@
'OroP
o
4
-cnoIoo
6
o)\(,Poo
@
9D{(,Io<)
tp
Exm
,6
N(,
-o(rt
(oLot
@
())
-o@@(o\(,
a
b,5Jo)@
6
(o
io{Nbo
tD
FIm
q
(.)NLoIo)@
@
(ooo
b,(o
@
'oo9oo
oEnxm
@
'(,,oPoo
o
"(,oIoo
g
'(noobo
@
'(,oIoo
g
'(Jtoobo
6
'(,oobo
g
-@{OtPoo
trC7xm
4
oJo(o
gt
(r,{
6
-(,(r)
C,)l.)olo
@
N
itcO)5i(o
@
-o.!-.t
b)@
6
o)
-(o(o\tl$oo
4
N{i,
P(t)(r!
6
s(r)I(,(n
'(noIoo
g g
'(rtoF)oo
a
'(,roIoo
g
snooIoo
NinoIoo
6
(l)
-oNo
9o(,(/)
xmt-t-
g)
op
@
Ioto)
@
@(o-o
Ns,(o
to(oN
-l(rl
6
xmrI
4
.
"(,lao@I
6
..J
90(,
"(,oIoo
tn
Ioo
@
,(,oobo
@
'(noobo
@
'(,oobo
@
'(,1oobo
oo@of
A)
aof
g
i.noIoo
@
!soos)o
6\(,Po
xt-trz
0
o
-G.'oto)Io){
6
o
Jo
5@
b,@
@
N@@
90(,
@
'o
5
-.1b,@
6
o)
.@(o-lNt)o
xrtrz
q
N
-(n@5
isot
@
5o
90{(Jl
iul
{I(no,6)b,\.
6
N
-O)\l(o{:-(,
@
(,
i.JGd)
L,)5
@
b,5{
b)@
o
5A-@
o)!,(rlN
=€
,a
-ooqt
b(.t
o
O)
90(o-.1
o
'ooIoo
@
-(,
<>obo
@
'(noIoo
@
'ooP
@
'(noPoo
@
-(noIoo
3
=
o
N
-ot@56
-l@
a
5o
irJ
@
'(,oot)o
g
"ctr
obo
@
'6
Poo
@
'ooPoo
g
'('oIoo
@
-@{Olobo
1
ooo{
0
{!n
o)p
ot{
4
o
-oo{I
@
@
N
b,{
1.,@
4
-o,
5lo,@
6
o)(o
"@..tNbo
a
ooo{
@
"(,oobo
6
"Ot
oIoo
'o
I
o
6
'CnoIoo
6
'ooobo
6
-o.-l(,rIoo
@-{
zt-m
,U)
o
o)o,b,{
g
o.9-.1..1
$o
a
N
-t..1
tl(,
g
-o
5Jo)@
g
o)
so@-.1N)bo
U'{
=l.m
o
N
-@o
ioor
6
soo
-1(,
6
(,oobo
g
inoIoo
g,
(.,
!eot5!,o{
6
$(o(,
itc(,
@
'@
O)A
boN
a
'(rtoIoo
-(,
P
C)
6
'(,oobo
@
'OroPo
g
"otoobo
6
inoobo
4
.(1,
N!,oo
6
-@{OlIoo
-l
t-ov
o
aOj..oN!t(o(o
a
N
J.)g)(o(,
Lno
a
OJb
N
bo
6
-o,
I{
b,@
@
o)
-@@{Nbo
-{
t-on
,0
N
-(r!@(,tPN5
g
(,)(oI{O)
a
'ooPoo
e
'(,oo
o
@
'(,oobo
@
i,oPo
g
"(joobo
6
-@\l(,obo
=o
=z2
4o
\.
-(,t
6)6!
br{
a
oo-oo
NoL
@
ls\lNI(I@
a
I\t
b,@
4
o
-@(o-.tNbo
Eg
=zz
a
()
oIoo
6
-(nooobo
@
,(nooPoo
9)ooPoo
.5(noobo
@
"ooobo
I(,oobo
@
-O)ooI
o
g
--.t(,oobo
6
(,'ooobo
@
.$(j{s,oo
a
cooi\)o
9oo)o
-t
i
t-
gt
-o
s,(,\l(o\{
@
NILI\)@
i,,)(,
4
IoN:o
N
@
-.1oI--l
5
irN
-{o+
t-oo
T
6
N@N"(J|
5!o\lo
4
-(,co@!o
I
g
!\)@O)!,(n
I(,oIoo
@ 1o
\C'tj.l
o,{F{(n
1ln
-momo
zoo
Z'nomz-ttr
I
az-{
!vo<l)m
C:oz
2oom'I
mzam
ooozTomz-lt--{
ovmm
=mz-t
-1mvtra
aoo
{ooooo
o
o
o
=c
o
o.
fo
5'
oo
ao
r=n't
raooat
;
oof3oa
x
x
1'o@
!q
oo
.-.\
NO
N
DN)
1\)()
.AN
-to{otDcQoolodo'xoa
=.
q.
CL
o
N
CL
@oox
6o
s
oo.TI
oo
6'
!!.aJ0)6
ooo
do-
L
o
No
-.tI
o
eo
N
@oo
o
=oo*.
o
o
fco
oo4fIo
o
ll
A'
oo
o
0)
oo3P
=o
o
oo
o
=A)foo
G)
o
co
o
0)
o
mfs.
o
=3o
0)
o)
o.
qr
ro0)o.Iooo
Fog.
lo
oJg.
7o
g.
fo
o
oao=vog.
o
{o-t
No{oo
=!mzat,
-{6z
-o -l>o<-t
mlzO;SD--{mvr
o=&E
e-3
r=
=o5Ooci oa'ooD
o7\dY--0)xoo
aooo3ETo
oooxdo
A,
oo
3o
aoox
6o
0)
oo
a
-(o(oo!oNOt
4
"(,
O)o
-t()
@
N
90o(>
o,6oof
og
@of
sg6o
0)oao
a
N'(ro9oc)
@
90{(,Ioo
zomvaoz
tut
{
Jo
o)Po){
6
oi@
9pNI
6
N
-lN
9p{Ot
@
o,5:'to,@
6
O)!c(o\tNbc)
z(,
mvat,o2
o
G'Ig{Po@
6
N
9poo
@
(o
s)O)(o
@
i,oIoo
tno
b
6
"(,oo
t>o
a
-(,
oob
a
"(,
c)obo
6
'o
O)O)
b,..I
&
-(,)(/)(,P(j
(j
6
@-t(,I
@
Fxm
4t
No
"6ot
(oLqt
@
(,
.o)o(o@\(I
@
'o$^.J
bD@
@
o)oio{
l")oo
tr
Exm
4
N
-6)ogt
].t{@
@
s-.1
9iN
6
Nobo
g
?rtoIoo
tn
bo
@
-(,
I
6
"(,oIoo
6
"(noIoo
g
is(,obo
@
@
-t(,Ioo
(Dcvxm
4t
d,@'ro
P(tt{
4
CNtg)N
LTo
J$(o
O)+i
6
'oA{
b,6
@
o)p(o{Nb
@Cvxm
o
q,
"o5PN(.,
It
6o)N
O
LnoIoo
@
-(,(,op(r)(,
6
"o
o)o)
b){
@
oINo@tro)
xmrt-
Q
(oPa0
P(Do)
6
6
-@(,N(,)'@
@
'(r,
(o
Ie\.1(,
xmt-r
0
N
-or{g)
aoao
-(I
P
6
N@bo
tnoPo
@
tno
!o
6
"(rtoIoo
'O1
o!o
@
N'(noPoo
@
9p-.1(,Poo
xrtrz
g|
o(,
b)(no)
b,{
@
o.o
$
90O)@
@
N
bo(o
po
@
'o
5Jo)@
6
o!c(o...t
luo
xt-trz
a
(,\o)N{@
4
N'i\)
!\o
6
(/)5L@
@
tioobo
@
'(,oIoo
@
'(no9
o
4
'(,loIoo
=
=
o
{Poto)Po,{
@
No,\@
:.1
(/)
@
-oJN(rlP(,s
@
b)5\l
b,@
@
5I@o,!,orN
=E
,0
N(.,i,ot!\,{I
6
LN(,
i'Jo,
o
NPoo
6
ano
bo
@
LIoo:
t
Po
6
-(,
oIoo
@
90{(tobo
a
ooo-{
5
{
-or
g)Id){
@
(fo
bo..1I
@
6
N-o
-.,t
N@
a
'o
${
b,co
@
o,(o
io{Nbo
a
ooo-{
o
N
-(.,o,(,rI{gr
@
LN
i\J(I
Noi^
6
'(,oobo
@
'(,oPoo
@
iioIoo
@
"(,oobo
6
90..1(,Poo
at,{
zt-m
o
o
o)Po){
@
oO)
-l{
bco
a
lu-t-..t
9n(,
6
'o
5-.t
b,@
@
o,(o
io.-tNb<)
at,-|zt-m
.a
N
-oo,(r)J{G'
-(,oI
o
@
N
9poo
"@
o)5
bpo
6
ino
bo
@
'(roIoo
@
ir,oIoo
@
iJtoIoo
6
-(/)
N(,bo
90{crobo
{
rov
o
aoxoN!,t(o(o
@
N|)o)(o9'(ro
@
(^)'o
No
'o5{
b,co
O)I(o!Nbo
|-of,
o
N
-o,G'5!,(ngt
&
L(DI(!(,
6
N
90
o
6
tnoobo
6
tnoIoo
@
"(,oPoo
6
'(noIoo
6
9p{Chobo
Eo3
zz
gl
{
-(,r
o)Pg){
@
oo'@
Nos
@
N
-tNP(,6
@
'o
5{
b,@
@
O)I(o--tNbo
EI3
z
=
@
N5Nis(jNi;lo
g
N-@{Io(,
@
N
CNCoLco
@
N'co
o)
9r(,N
@
N'ooPoo
@
(,)
itloIoo
@
-$oloIoo
@
5tnoobo
@
I(noobo
@
I(noIoo
@
-|(noIoo
o
5-(,oIoo
@
(,'ooIoo
a
I
(l)..t
!no<)
@
@INo
9Do)CJ
-to-tr
o
\(,t{i,{6-to)
@
'o
(,'(r,
-lI-.1\.1
@
N5iN
9o(,(n
@
"|@N'I
N
@
{o.$_.1s
tnN
-lo--lroo
!
tu
rmomo
zooo
Iomz-ltr
I
I
-t!noamoC!oz
zaom-n
mzam
zooozT
Emz-tFr
=
ovmm
=mz-{
-{m7-a
ao
!nloo
5
oo=3ol
xx
oa
!q
No
@
roooIooo
nog.
=o
=g.
vo
g.
fo
o
ofo
no
p.
fo
@
|)oroIoo
a
-@-.1(,
s)oo
zom7U'oz
@
"(,ooobo
g
N
CNoPoo
@
@-t(,IoO
@txm
@
(,
-l(,obo
o
@at(,P<)o
@c7xm
xmrI
@
N'(,o
bo
@
90{(r
bo
xrtrz
3
=
6
9D\toobo
a
oooI
@
90{(j9oo
o{
zrm
.(,
N
snoo
90..1(,Poo
i
t-ov
@
o-t(,9oo
=o
=zz
@
-(,(,oobo
@
.5(,-.J(jbo
6
(,o
oIoo
-to-{r
(/)
o
=o{o
6-
oo.
o
oxo
6'
=6
9.fo
='@ox
o(,
N)O..4
\
-{o{
r
ocDctFon1-ip 6i'xo6
=.=oE
os
=
ooofoo.
ao!,
No
-.tI
aoox
oocA)foo-n
o,o=o
g_a=0)a
co
O)
Ao
@
@oA'a
oo4.
lc
o
\t
@o0)avo
do,
Co
o)
oo3E,
o
Co
O)
oo
o3o)
oo
o
o
o)
l]foloo
ro
O)
mfs.
of3o3
9r
o
o,
o.
o
C
CJ
o"
oo
ogr
Lq
(O
gloo)aoo
oEI
L
<-{
a
oa.gr
oo*
(o
Lc
oN(o
@ooaoo
og
{o-{rNo{oo
=!mzU'
Ioz
-o --1>o<-r
mrzo--{ -(,tv-lmvr
o=Rd*c
o*of
J=
=o-Ooci o
ooo*Qo:aoD
o)xoo
aoEo3
o
aoox
@aco)
oo
o,
C'
oo-6oc$
oo
q,
o,
'No\.1\5
olo
is
CN
6
oio(o
4
-(,oIoo
6
-(,
oIoo
a
-(,oobo
@
"(,oPoo
@
"ol
o9oo
@
'Ot
oIoo
a
'(noIoo
g|
{Jo
o)Po{
6
o.A@
coisI
g
N\No\(,
@
-o
$-.t
b,6
@
o,I(o-.1Nbo
20muooz
o
(.,
"@(n(o
bto
6
@oIo)(o
6
90(o(o
-o
ob
a
"(,oIo
@
tio
;-
@
'(,
C)ot)o
g
'(,oobo
o
'(ttoPoo
g
'(rtoo;^o
-(Io9oo
I
No
Jot,
@L(r,
6 g
'o5..1
I
@
@
o)(o'@
-lNbo
@
Exm
a
(.)o-ta
i,N
6
o)
:.J(D-{
@
@
io@
o
'(,oPoo
6
-o
o9oo
@
tioIoo
g
toobo
g
"(,oobo
@
'(rtoobo
g
-Cn
oobo
6
tnoPoo
0
o
-@(o
Io,{
@
.or(,(,
i.)(,o
6
J.)rc)O)i5@
@
'o,A!
b,@
@
o)I(o
-.1N
t>
@cvxm
0
(ot(o
Io)o)
6
@
-(o(,lNs,@
@
'(,
(oN!(n
,6
(.,
ieo,i(.,5
6
(r
$b)(j
6
@io(o
@
-(,
o9oo
6
'(,oIoo
e
'(,oIoo
@
'(,oIoo
g
-(,oobo
@
-(,
oobo
@
'(,oobo
0
oa,
b)oPo){
@
oI
A
90o)@
@
N
bo(o
9D(,
@
'o5-.1
b)o
@
o,It(o--lNbo
xrtr2
.6
-o(^,N3t5Ot
@
!,(,$
@
tr(o(o
@
"UroPoo
@
"cnoIoo
@
'(noPoo
o
"(noIoo
6
'('oPoo
6
-o
oIOo
@
-(,
oIoo
g)
{g)o(Dd)
b,{
@
NI-{@
:J
(,
@
(,is(,I(,+
@
'o
5:O)@
@
$5
ilc
9n(,N
=
=
4t
No\aoI.o
5-_tlso
@
9D
@
@
-o
oPoo
@
-(,oobo
@
'ooobo
'(noPoo
@
'(,oobo
-(,oPoo
@
-(,oot)o
4t
{
-gr
d)o)b,{
q
o.o@-{I
o
6
N,o
-.1N
bo
@
'o5{b,o
@
O)(o
io{Nbo
F
ooo{
a
(,,
-oNq)
1.'{5
6
$oo,
i.r(,
@
@io(o
6
-(,
oPoo
(,oPoo
@
'O!oIoo
@
tioobo
o
'(noobo
@
_Ol
oobo
6
-(noIoo
@
'(,roIoo
a
g,
o)g)o{
@
op{-.l
io
@
N\{!,(n
@
o,5--t
b,@
@
O)(o
?o\lNbo
an
zrm
0
G'
-q,o
F{N
o
(,l$I
o
@
ioO)I@(r)
@
9D(o(o
g
'(noIoo
@
"(t
oIoo
@
'(,oobo
@
toobo
6
-(,
oIoo
6
"(noIoo
-(,
oIoo
o
@:.1oN
3r(o(o
6
NN
tD(o!,(,o
@
s,o
i.,@
@
tD+{
b,@
@
O)!o(o..I
Noo
-{
ov
a
Noo\{I
C)
6
5@s
bD@
@
@io
@
-(,
o9oo
6
tnoIoo
6
-(rtoIoo
@
'(noIoo
4
"(rtoobo
@
-(,oobo
@
'(Io9oo
.q
{
"(,r(DIo){
6
o-ooNoL
@
ls-{NP(,co
6
'o5..1
b,@
a
o,I(o-.1t\)bo
=o3
zz
g)
N(t)x(,too-t@
6
(,'oo(,I
5
N@o,I(,N
a
{I(o
g
.(,cnoPoo
6
!,(Jroobo
@
I(,oIOo
@
o)boIoo
O)"ooIoo
@
O)'ooPoo
4
-5(,oIoo
a
l(,toobo
g
-(,(,loobo
@
-(,(,oIoo
4
-(jOloIoo
gt
\or{i,r{6\o
6
:
"cd{I-,1\l
6
N,s5N)
90(J(j
@
ioN!o
N
@
-{oI-.1A
tnN
-t
--t
roo
=!
1la
-momo
zo(,o
Iomz-tFr
I
Iz-t1'vo(n
moC--.toz
zo0mTmzam
zo
o
Tomz-{F---.t
onmm
=mz-l
-tmat-a
U)oo-(D
A'os
ao
R*s5
s
e
z
;
Lo
fxe.
@
a-,o3of
o
=
o
9.
Tog.
=o
o
o:ro
vo
9.
o
6
N-(,oobo
@
P{(nobo
2omvaoz
a
(,'ooIoo
6
J$OroIoo
e
@-t(,Ioo
@
Fxm
g
(,)\(,Ioo
@
@
-l(Iobo
t!
L7Im
6
.\l(no9oo
xml.I
&
N-(,oIoo
6
9D\1(,Poo
xrtrz
=
=
6
@\(,Ioo
7)
ooo-{
6
o-t(nIoo
@{
zt-m
6
-(,
Ns,oo
P{Or
bo
{
ov
0,
6
9D{('rIoo
E0
=zz
,@
)
!
-(nooobo
g
5
t^){!,oo
@
CNoboobo
-t
--{
r
xmrr
D.N
l\)(}
..A
{
rna*
3$,
oa
1'a
rmomo
zo
ozTEmz-tF-
I
I
-ttuoamo
-l6
zoomIm2am
zooozT6m
-tt--{
oumm
mz--{
=-tmvF-@
-{o-{r
o@cooon
!!6'xo
=.=oa
o
5
ooo
=oo.
oooNo{s
zo
No
aoN
(Dooa
oo*
o
zo
No
l!fo
oo
o
zo
No
oo3p
o
zo
No
co
oo
=.=o
zo
No
o
o3ofoo
o
zo
(o
m
=s.o
fof
9l
oo(,o
Co.
oof
o!L
o
l-No{oo
=.o
mzo
jo2
1' -l>o< -.{
mrzodF7-{mvt-
o=&E(r3or+
3+J=aq.-orocio@'o@
Eb-i sxoo
o)ooo3Eo
ct)oo7
aa
o,oo
=o)
aoox6o
s:fo(D
a
N
-(,r(.,Nt,gio
6
$N:J(,o
6
'(noobo
&
-(,
oobo
@
'(,oobo
q
{
Jo
O)Po){
6
o5tooiJI
6
N\No\(rl
a
b)5
:.1O)o
a
o)
-(o
--INt)o
zomv(t,o2
o
qt
.G'
gto
b,@
6
(ooott@
4
'(noIoo
@
'(,loobo
6
irloIoo
@
'(,oobo
Q
Noo-(,t
@LG)
g
(,
-O)o
!o-.1(,
g
b,s{b,@
-@{NOo
(p
Exm
o
N
-oooOt5L5
g
55!rOlO)
4
"otoobo
@
aioIoo
@
inoIoo
@
'(,oIoo
6
o
Jo(o
P<,,{
@
-(,(1,o,Ntno
@
N'<0
O)5i@
6
${
b,6
a
o,(o
io-.tNbo
tpC7xm
O
Tq)o
:.1Oto
NOlo
o
(o
-eto
PaOr
@
@
_@(,Ns,(o
6
'(D
@N-t(,
xm-t-
a
Nor(,
1\,o
g
5(,
9Dcoo
@
"(n
(fobo
6
'(,oobo
@
'(,oobo
0
oa,brg)o)b{
a
o
-@sco
o
a
N'o
@co
to
@
b,5{
b,@
q
O)(o
io-.1Nt)o
xt-tr2
,0
.G'@-.t
:,16{
6
o)NN
(.,
@
GoPo
6
"(,o
bo
6
"(,oobo
,o
{PO)(n
Po){
@
NI{(o
)I
())
g
o)is(,
P(,s
'6,
I{b,6
@
ss
?oq,!,(tN
=
E
a
[e-mail](r!
o
o..1
s,.-l(,
LnoIoo
a
toobo
e
"(,oIoo
0
{
-ctr
o)o)ol{
@
oIco-.1I
@
@
N'o{N
bo
@
'o5{
b)@
@
O)(o
io{I\)oo
a
o6o{
I
N
-5(.tNI{5
g
5N!oNo)
iioobo
g
'(,oobo
g
"(noobo
@
'(Ioobo
I
q,
oPo){
@
oo)\\.1}o
@
!\){-.t!,(tl
@
'o
5)to,@
g
o,!c(o-.tNbo
o-{
zt-m
,q
N:.rq,o)9!{
@
5{IO)o)
g
'(o
o)5bo)
@
i,oIoo
@
"(roIoo
@
'(noIoo
gt
(o{oNarr(o
aO
@
NN'C,,(o!,(Jro
6
o)b
N@
@
b,5{
b,@
@
O)I<o..,t
No
ro7
o
NNogtNLN
g
G'(o:{(n@
@
tios)oo
6
"(,roIoo
6
'(,oPoo
la
{
"oro)Po{
@
o9@NoL
g
N
-t,\,P(,
@
@
'o,5.tl
b,@
@
O)(o
io{Noo
=I
=z2
NN
"o
!o
a
u)\N!,-.1s
a
N-@
o)
sn(,N
6
-(,(,
I
-o,o
b
.s(,oobo
I(,oo
o
Iooobo
-O)ooP
@
-$(noIoo
,o
\Ot:'r(,{!o{dt
g
'o
_o)(D{P\l-.1
@
N$'$
N
9oo)or
@
+
boN
JN
@
.-loI!s
trN
-to--lr
c)
l
aoo
o){ooooCL
o
ATxo
=o
c=og.
fo
='aoox
ao
r=!.I),
Ioot
oo=3ol
x
l,o@
!qso
6
ooo
6o
o
Nooo?
TogNN
co
oo)
oI
Too6
@ooa
oo4.lo
noo5
f!)ol
o
o
Toos
oo3p
o
'noo5
co
=o6*
=o
aoo5
ooo
=oaoo
o
To!
mls.dl3ofo
qof
@
oo3!oo)
ogt
0f!
coa_ool
o
E
-o!,oI6oo
aoo,
fo
=g.
noo
='o
ocofoa
noo5'o
-.1o-{rNo
d)oo
='omzo
-{5z
1'
3m
-ta
-to-t
roc
v--.tm7-
Or&Eo=o-
3+'jdq-oogq@olFQoro-oxo
aooo3o6
aoo-
co)3oo
oc
aoo
cofo(D
n,
aoo
6coloo
-lo-{r
o@c90oaq6
o
!
f=9.o
o
'ooobo
-ooIoo
@
-o{obo
9o!os)oo
zomnaoz
t,
\t
'ooooo
6
o
'@o\tL
g
Nooob
@
'o
o,
tDN
o
loo,oi!o
zomnooz
N.}{A6lN
o
o!Po@
'ooIoo
0
6
,!{coI'ao(,
6
NJ\,o{
LoN
'oo
LoN
o,.A@o,p
No,
@
Fxm
oooNo(o
o
No@
'ooIoo
_o
oobo
'ooIoo
-ooPoo
'ooPoo
o.N
os)oo
90{oIoo
@
Fxm
-ooIoo
-o
o9oo
inoIoo
6
-oo9oo
@!oIoo
(DCnxm
o
{
(r,o)cr,or\.
g
oNLoIo
iso
@it@
'oo
erN
6
aA@oPNo
E
Lnxm
N
.qoI{Lo
@
AoI\'o
@
tho9oo
0
ao
-5ooPoo
@
NALoINo,
J.)(o{Ir'o
6
b)o
bN
o.A@oINo
xmrr
6
!oab,
g
'oo9oo
'oo9oo
'oo9oo
-oo9oo
-qooPoo
'o!9oo
!D!oIoo
xm-I
0
o
(.,Po@
-ooIoo
_o
o9oo
'ooIoo
_o
o9oo
'o{!,oo
@{oPoo
xrtrz
a
{Nino6b6
6
o-ooA'o
6
N
@:o
6
'oo
i,N
o}'oooi')o
x-trz
NI{
L
5o!oo@
6
o
-ools@5
@
P
5
6
'o
o,
'o
N
N{'o{s,oo
=€=
=
,
o)
itC'C'oo
ooP
N
-oo9oo
a
'ooPoo
q
"ooIoo
o{qIoo
a
ooo-{
o
o)
(nob,{
oJsooI@-.1
Ni5NNN
@
'oo
oN
o,5'o
o)oi$o
v
aoo-{
NN
bo@ooo
g
o@o-t6
&
ino9oo
"ooIoo
-oo9oo
'ooo
<)o
a
-ooIoo
@{qIoo
o{
zt-m
O
{o
aDIo){
Q
o-o(o5
bo5
No(o{i!o
6
,o
o
'(!
N
o)-5ooPNo
(o{
2|-m
N
-6oOloi$G
Nob,ao!tAo
oI@@
-ooNo@
_o
o9oo
-o
oIoo
_ooIoo
_uo9oo
Noo9oo
sD{oPoo
+
rov
.a
o5bN6u{
A-ooIo5
N\<oNAo
'oo
bN
o.A@o!DNo,
{
ron
oPo
_o
oobo
_q
oobo
'qoobo
90!oIoo
=o
=zz
I
6)Nb,o)(t)
6){
g
@-ooo,
lo
JeA{
:.J@@
6
b,o
i,N
6
o5'@ooisc,
=0
=2z
6o@o@
No-oo!,oo
@i!o:N@
4
Ji{Ao
i.J@
.sooPoo
g
-ooo9oo
-o,oo9oo
g
.AooIoo
+oo9oo
-o,ooIoo
6
.O)ooPoo
-sooobo
-5ooPoo
o-ooIoo
'o
!s,oo
oo\o9oo
-{o-i
r
g
-o
(.t{Lao
or
4
(oo{b
NL
NJso@a
b,
@
ob,
PNo
@
N:{o{!no)o
@
q6!'o,oIos
{o
-.1roo
t
U'+
t+!alooo
Boo=3o,
E
Tn
rmomo
zo
c)ozTomz+-
I
L
z--t
!a
am
C-toz
zo-mamzam
2o
ozTom2+tr
=I
oTmm
m2+3
-lma-a
!o@Ioo
@
o,J,
N}(3'..*.
0)'
{o-.t
t-No
ooo
=!mzo
-.t6z
1' -l>o<-{
mrzo1-u, it7-{m/
T
3ocl
=.
g.o
o
E
0oo-toxo
Do.o-
oo
la
od
oo
aoo63oo
aoo
coloo
c(o
aoo
@Eofoo
0)
aooxd@co)foo
{
-ooPoo
o
'@o{L
Noo!no
-oo
i,N
@
o,+@o,o
i\)o)
z0m7oo2
O
oo{6Ioo
g
NN
o:oN
e 4
b,o,
toN
@
O)Ioo,pNo
@
Fxm
{,
{
b)oobt{
g
oNAoo
i."
a
No,o
906@
6
-o
C)
aoN
(t
O)INo,
@Cnxm
€
-5ooP(,o
N5Los)No
g
!')@{P
o,
6
"oo
trN
o
ioo!PNo,
xmt-I
{Ie(rroIoo
o-ooA
tD
N'oo:@
o
'oa
LJN
o
ioo,INo
xrtr2
o
'6ootlo
g
o
-6
6N
@5
@
I
5
-oo
LoN
6
N
.-.1o-{o
b,o
=E
(,
(ni
(t,p(t){
oNo@po{
N
NNN
-oo
LJN
o
ioooieo,
F
ooo
-.1
{PoPo{
oo'(oA
bD5
4
No@:{No
-o
o,
CJN
oI(oo,oi!O)
o{
2t-m
oI'o
Nfoq{
6
A-o
o!,6!
@
N\oN!q
'o,o
i!N
o!ioO)
i.)o
{
rov
o,Nb,oobr{
@
.66o.o
J.)5{fo@
-oo
N
o,I@o,p
Nc,
=o
=2z
sr
-oo{L6.o
@@
.-.1o
NL
Nl.)ooPo
g
o'o
9iNo
N-{o--l9
O)
ooA
CD@I
@ -to-l-oo
=.I
-lo-{
|-
o@cQoo6
irt 6:'xo
=.J=!so
o
Nfo
aoo
d
cof
oToo
6'f!ra=oo
ooo
oo
Lc)o
No
oo
='
of2o6NT;
3Eaq?z?3
=oo
o
N
@ooa
=oo*a
o
N
l
=Eo
oo-.)
0)
N
r!a0)foo3o
3o
N
oo3p
3o
=o
N
oo
o
fo)I3o
o
N
co=
o
o
N
m)s.
l3olo
o
N
co
I
roA)oIdoo
vog.
lo
o=g.
7og,Jo
oEo
=o=no
9.fo
!,{s
'qoIoo
g
'qoIoo
_ooIoo
_ooIoo
'@{obo
@\oIoo
zomuaoz
N
-orNoFoo
'@{Ioo
-ooPoo
'ooIoo
'ooIoo
'ooIoo
'6oobo
!DNo9oo
_6{qIoo
@
Fxm
o
o
'6
@poo
@P{5
@oN@@
ooo;
a
o
!D!5
@
'ooobo
@
_q
oIoo
6
-o
oobo
6
'ooobo
'oo9oo
'ooPoo
-@-{oIoo
@cnxm
4
NoocIo)5
e
.A
os,o
'qoo'oo
tnoPoo
-oooIoo
tD{Ioo
-@!o9oo
xm-r
0
(,
'o\t6-t5
L@Ioo
@
!5
'o
oIoo
6
-ooIoo
'o
o9oo
'ooobo
@
'ooobo
'oo9oo
g
-ooIoo
'@{
sDoo
,o!oIoo
xrtrz
Noiso
t,
'o
@{L
@P!A
=€
No'5N
90{o
-oo
!no
a
os,{A
-ooobo
'o
oobo
troIoo
'ooIoo
@{oIoo
n
ooo-{
.5o6i.l
o
-o
@Io,5
@@\5
'ooobo
'ooIoo
-oo9oo
'ooIoo
'oos)oo
.o{oobo
a{
zrm
-@NNobo
-5o
90oo
@@!
-ooN
LDo
'oo9oo
_ooIoo
'ooIoo
'q
oobo
LToobo
i$oo9oo
-o!oIoo
{
rov
'ooobo
'ooIoo
-qoobo
@
_o
oobo
o
!oobo
=o
=zz
O
NoLN!n6
_o
o
90No
@
(p{5
Ns
i{
b!
i$ol$o{
os,
N!A
snN@
IooIoo
-oooIoo
!,ooIoo
IooIoo
looIoo
-o,oo9oo
.A6oIoo
-ooo9oo
e
-5oo9oo
.ooo9oo
a
'o
!9oo
o.o!oIoo
-{o-{-
o)o
t+!nlo
o
J3oJ
x
!a
-momo
zooozIomz-l
-
I
Iz-l!Toamoc+
z
zoomTmzam
zooozI
mz--{tr4
nmm
mz-t
=Ima
ra
!oa
!Poo
@
DN)
N)o
o,
!
-momo
zo
ozIomz+t-
I
oz{
!v
am
c-t
z
zoomTm2am
zoo
znomzI
tr+
o
mm
mzi
-tmnt-a
o(,t)
N)o
Jo)
-{o-.t-
o@cQoon1ve8'o
=.==q.o
o
5
=
ooo
do
aoENo
oo
ooo
coaooTo
6f!ra=o6
co
!
@
(!oA'a
oo*f
co
@
F
A'aao
oo
qo
!
o3o
o
co{
oo
o
foaoo
o
co{
Ilofoo
=o
co{
mas.6l3olo
co{
o
o
Co
o
oo-oI
ro0)oIdoo
vog.lo
-I
ailoovoo
=o
o
aoo
No
o
oJq.
voo.lo
oc0):lo=vo
o.)o
6
N(n-5
o
N!oo
!,
q
'6o9oo
'oos)oo
-oo
bo
g
-ooIoo
NoP !9oo
o\o9oo
zom1aoz
(,
_(>6oI6
@o,N
boo
9
q
oo9oo
'ooIoo
'ooobo
'ooIoo
'oo9oo
oIo{
@.N
o9
o
o\q
Poo
@
Fxm
a
N-ooo@{@
g
Gs9oO)
9
6
'ooIoo
'qoIoo
fnoIoo
@
'ooIoo
6
'ooIoo
.o!qobo
@Cvxm
a
o
oNN
5(rr
o
INo
!r@o
'oo9oo
'qoobo
6
'qoIoo
'oo9oo
_oooIoo
No
so@@
q
-@
!obo
@\oIoo
xmrI
N.9o@@
boo
@
9o@o
Ioo
'ooIoo
'qo9oo
'qoIoo
o
-ooot)o
No
90oo
a
,@{Ioo
g
o\oPoo
xt-trz
o
o'o
@oio6
oNl$
a
s,o@
oo
oa 'oo9oo
0)6
oa
oo
of
Nooobo
=
=
NNtoo
b,o
{@
-lo
!,oo
'ooIoo
oq
ol
_q
oIoo
inoobo
-@{oobo
n
aoo
5
N
-or@Noo@
!No
i.Jo sn@o
'oo9oo
'oo9oo
'ooIoo
'oo9oo
'oo9oo
@\q9oo
o+
zrm
N
-@oo@LN
5\lIo)o,
-o
@iu@o th
'oo9oo
'ooobo
'ooIoo
'q
oPoo
NoPo5
|)oo9oo
-o{uIoo
-{
rov
a
N
-5q
:.1rl{
@:o@
9o6
'oo9oo
'6oobo
'6oIoo
-ooPoo
-o!oobo
=o
=zz
4
No-o@oIos
.A
N:5{
N\
q
i.r@
snao
s,ooIoo
s,ooIoo
.oooIoo
a
'ooIoo
6
.Aoo9oo
-ooo9oo
Ioo9oo
.5ooPoo
@
.oooobo
,ooIoo
6
,@
..1
snoo
@
iuoIoo
-lo-i
r
ao
t=T
rv
a
oo
3o
x
!ooI{o
@
-to
t-No
ooo
='omzo
Ioz
1' -l>o<{
m-zoUi;v-tmn
T
or8Eo3o**8.
J=as"raodo6-o@*Qoro--{oxo
aooo3oo
aoo
cofoo
coE@aoo
aco
=oo
=n,
aoor6aen)
oo
{,
{
"oeobo
o
boo{L
@
I\)o(r,ob
@
o
LJN
o,
'@
o)o
i$o
2omvcrtoz
a
oo'-t65io6
e
Nl,
qfoN
'o
o,
oN
o,.A@O)INo
tr
Exm
{
ooob,\t
oN5oIo
6
N'oo
90oo
'oo
i,N
tl
a-s(oo,PNo,
@caxm
a
@.}6o€,oo
N55oPNO)
@
t\)o{N
6,
@
,o
o,o
N
o).A@o)INo)
xmrr
gt
{Pooobo
6
o
-@
@
b,
i.)o,o:.to
@
'oo
tN
t,
o!'@
o,PNo,
xrtrz
o
'@ol$@5
6
6
I
5
'o)o
@N
N:{o!
snoo
3
E
(r,
i,oobo
a
o
o)Po)\.1
@
(o
NooIo{
N!!\,NN
'oo
LDN
@
o).soO)oi$o
7
ooo{
0
{P
oIo){
6
oP(o!
co!
6
Noo:No
'oo
t,N
o,.s(ooo
i.ro
@{
2rrt
a
@5'oN@6{
sb,opo
@
Ie-.1@NLo
'oo
L,N
o)
_@
d,(,,
i$o,
-{
rov
s,
o
oooo{
6
@o'o
o).o
N's
-.1!'@
@
'o
o,
LoN
6)I@6,
9)No
=o
=zz
a
-oo{L@
o)
@
@Co
-..1o
N5
6
NNooob,
Po
@i!o
N:o{o
b)o
o
o6A,o
@
sDo
-to-{roo
='o
-lo-{
F
No
(noo
=!mzo
-{62
-o -{>o<-{
mrzo1-(,Fv-{mnr
Of
o*P
OJs+*!.=+ao-oocioaoofQo6'u* -..t
A)x
aooo3o(D
aoo
o
oo
coc
ooo
6
coloo
A,
U'oo
@-@cofo6
-.to{r
OEcQoqode
o
==foo
o
s
=
ooo
6o
oo6NooI
0oo
O)
co
='
of
!I
zo
t
@ooo
oo3lo
z
@
rlloaoo
o
zo
o
oo3p
o
z
o
oo
o
fofoo
o
zo
a
mfs.of3o5
ET
o
@
co
=o
roooso
o
voo3'o
o=g.
nog.lo
ocofo1
no
9.)o
4
A
@
i\)o
g
'oo
L,N
zomv@oz
0
N
-6ooo
-lo
@@IN
,ooIoo
'oo9oo
-ooobo
NooPoo
@{oobo
zom7aoz
g)
{
o6Poo
o'o
O{b
NooIo
g
Aioooi'ro
@
Exm
a
66{65io6
4
NN
o
:.JoN
'oo
tDN
@
Exm
a
N@oot,@@
@oNo@
'ooI
ooIoo
'6oIoo
-ooIoo
-o!os)oo
@\oIoo
6
:'too
6
,q
oobo
,o
oIoo
'ooPoo
-oo9oo
@\oobo
(DCvxm
o
{
(t)(n6)(n{
@
o!e5oI(,
N'o
otho
6
'o,o
iDN
o
-5@oPNo
@c7xm
0
N
-5(.,o,leolN
o,-s@oPNo
-ooo9oo
@\oIoo
xm|-
T
1t
(o.}oos,66
N5!oINo)
N'@
!rs
o)
6
'oo
t,DN
xmrro
-oNoIoo
5@IoN
,o
oobo
6
'ooIoo
@
'o
oIoo
.Noo9oo
@
!@@
'ooobo
'oo9oo
-oo9oo
Noo9oo
@\o9oo
x-trz
O
{!eGoobo
6
os,
oAtt
@
N'o
@
:.J@
6
'oo
LJN
6
o,A'o
o,INo
xrtrz
N.oooNb
@{oPoo
=
=
&
(n
oooi,o
@
o
'@
6N@5
'oo
tDN
N:Jo!6b,o
=
=
t5o
io6
No
90o
g
ol
6
ol
q
@of
ooPoo
,o
o9oo
-o
o9oo
-@!oIoo
a
coo-{
q
o
ct,o)
o){
6
o!$o@9)o{
N'5
5NNN
@
oo)
a,N
o,-!@oINo,
v
ooo{
NP@@
bo6
oqf
5
N
-5o{N5o
o{!
b,o
@
'ooIoo
@
'ooIoo
'ooIoo
-oo9oo
-@!oIoo
o{
zt-m
a
{P
oPo{
6
o.o@^bA
N'oofNo
@
'o,
O)
tDN
4
o,-5@o,INo
o{
2rm
:{6oo5
6
G59{o
-@
@N
'qos)oo
,o
oIoo
'ooIoo
-o
N
s^oo
-@!oobo
{
-o7
a
o5'o
N@i,{
6
-5o,opo
@
N\(oNLo
g
b,o
t,N
o.s@o,INo
{
ron
@o
qA
'ooIoo
'o
o9oo
-oo9oo
-@!oIoo
=o3
22
6
o,N'o
oro)
tD{
@
@s,oo)
Jo
6
Ni-{:@@
(,
'o,
o,
iDN
o
-oooieo
=o
=zz
NN
@@PIo
Nq.o!.oo
-s
@I@@
g
N{5!,N@
looobo
_o
os)oo
oo9oo
6
Iooobo
e
,oooPoo
o-ooPoo
6
.5ooIoo
o-ooIoo
-5o!!,oo
o-{oo9oo
-to-{
r
4
t,{L6
o)
4
oo\l'o
NL
NNoo@a
o,o
@i.)o
N
"..1o-.1o
b,o
g
o@-o
9,@5
{o-{roo
p
ao
l+!
,voot
BI=3I
a
!2s-momo
2
o
zIom2-l-
I
LIz-{
1'
oamoC-toz
zoomImz<tm
zooozTom2+t-fI
onmm
mz--t
imvtr(n
!o@e6oo
frs
N()..1
'S)a
o
I
5
PRr'ILEG"on'"*o*Iil['n'il[1ir-^'3iil1,il$$i',fi
$i?i^TIDDEFENSEAND
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED: 1110812017
AVU-E-17-09 / AVU-G-17-05 WITNESS: Mark ThiesIPUC RESPONDER: Annette Brandon
Production Request DEPARTMENT: State & Federal Regulation
Staff-004(AVA) TELEPHONE: [phone]
REQUEST:
Please provide a similar schedule for the Board of Director Costs expected post-merger
RESPONSE:
Following the closing, Avista's Board of Directors will have fewer non-employee members which will
result in lower costs, i.e., more of the directors will be employees of either Avista or Hydro One, and will
not receive separate compensation for their participation on the Avista Board. In addition, the Board will
be reduced from ten to nine members. The impact of these changes results in costs savings of
approximately $5 80,000,
Cost savings are primarily related to reduction in number of Board Members. The value of
compensation paid to Board Members is not anticipated to change and will remain similar to the amount
included in the Company's response to Staff_PR_003(AVA).
r\}
=fr,re.mr$ C)rog
- lr!
C:,
(j)
=-+*:
5-cO
=-(/}C}U'oz
PRIVILEGED AND CONFIDENTIAL - JOINT PROSECUTION AND DEFENSE AND
CONFIDENTIALITY AGREEMENT MATERIALS
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUzuSDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED:
AVU.E-I7-09 / AVU-G-17.05 WITNESS:IPUC RESPONDER:
Production Request DEPARTMENT:
Staff-005(AVA) TELEPHoNE:
1y0812017
Mark Thies
Gina Armstrong
Risk
(50e) 49s-4943
REQUEST:
Please provide a schedule by year showing the corporate credit rating, senior secured debt rates, and the
rating outlooks for each of the past five years.
RESPONSE:
See Staff PR_005(AVA) Attachment A.a\te
4vZ. rnsa
?- rn:t:q
(^)
-"-.1
'',F1
._j-m
) i '-i-|F5r)-.
zk4r
U'C)U'o
!-l
o
t-.1
ooo(Eo-
x!x
PCo
E
-c,(J(t,P
g
rooo
Id.o-
slI(!
tll
LNrioN
d)riON
rhJsd
I.J.JF
Fz
I.J.J
IJ.Jt!E,(9
F
=Fz
IJ.Jo
IIzo(J
oz
I.J.JVIz
IJ.JlJ-lJ.looz
zotrf(J
LUttloG.o-Fzo
I
-t
Fz
I.J.Jo
lJ-zo(J
oz
ot!(9trlJ
=&.6-
rloN
e*
EEE6
P!o:o6.!2- obe-Evl()otJ1
oo(uCP,Efo io6d
L_8E(J
3
OJ'f; q, o a, q.,&oc-o-o.(!(E(!(!-9!PPu ,Jl tt', ,J, VtE
l
(-! r'{ r-l rl ri(!(o(!(U(E(!(It(!(!(1,@cocooco
CNNNNN
E96
=(uEE
E5co(u
s*.=oEEt6
bo(uCP.Erob6Eo_P
8EU
ditii
oco@cooocococo@co co co co ocl
o o o q.,.9
-O-O-O-OPsEsg'E6 .,/l vt tll X
oi!oo
u
ooc
!ct!
'tr
o!c(!
IA
PRIVILEGED AND CONFIDENTIAL - JOINT PROSECUTION AND DEFENSE AND
CONFIDENTIALITY AGREEMENT MATERIALS
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED: 1110812017
AVU-E-17-09 / AVU-G-I7-05 WITNESS: Mark ThiesIPUC RESPONDER: Gina Armstrong
Production Request DEPARTMENT: RiskStaff-006(AVA) TELEPHONE: [phone]
REQUEST:
Please provide the detailed rating outlooks for each of the past three years.
RESPONSE:
See Staff PR_006(AVA) Attachment A.
h)@
Xfl}ErnHE
=5.-L -gq
C/O
vl----i r-1
i i11-ir;{
?'=.}(JJ3r
@r)u)oZ
S&F Gt*h*l
Ratings
HntinS$mirert.
Research Update:
Avista Corp. Outlook Revised To
Positive From Stable On Planned
Acquisition By Hydro One Ltd.
Pdmary Credit Analyat:
Safrna Ali, CFA, New York (1) 212-438-1877 [e-mail]
Secondary Contact:
Cerrit W Jepser. CFA, New York (l) 212-438-2529i [e-mail]
Tabk 0f eontents
Overview
Rating Action
Rationale
Outlook
Recovery Analysis I Issue Ratings
Ratings Score Snapshot
Related Criteria
Ratings List
Wi,V\,v S I AN{lA,lllAN{:lP{]il8S C{.}ili/nAItNUSnlBii.;}
' ) ,l .
Jl.['Y le, ]{}}7 r
Staff_PR_006(AVA) Attachment A Page 1 oI 42
Researeh Update;
Avista Corp. Outlook Revised To Positive From
Stable On Planned Acquisition By Hydro One Ltd.
*vervi*w
. Toronto, Ontario-based utility Hydro one Ltsd. (HOL) has entered into an
agreement bo acguire U. S. -based AvisEa Co:.p. (Avistsa) fo:: C$5 . ? biLlion
in an all-cash transaction.
r We are affirming our ratings on Avist.a, including rhe rBBBt i.geuer cred.ib
rating. and rewising the outlook to positive from $table.. rhe positive olrlook refl.ects the potenEial for higher ratings on Avista
i.f t,he acguisiti-on is compleued as proposed.
fiating &*ti*n
On July 79, 2A17, S6(P Global Ratlngs affirmsd its ratings, including the 'BBB'
iesuer crediL rating, on Avista. Corp. and revlsed the outlook to posiLive from
ctabl e .
katiCInalx
?he outlook revision on Avista reflecta the potential for higher ratinge upon
the completion of the acquieition by Hydro One Lld. (HOL). Poet-acguisition,
we wiLl view Avtsta a6 a highly sErat€gic subsidiarSr of HOL. Our asses$ment. is
based orr our view that. Avista will be an important member of the Hot group,
highly unlikely to be so1d, and integra)" to overall group st.rategy and
operations, Avist,a will- be a signiflca.nt caeh flow conlr"lbutor to Lhe group,
making up abouL 22* of consolidated 881?DA. We would also see a sEronE,
]^ong-t.erm commitment of supporb from HOL senior management in almnst all
circumstances.
Avistats highly sLrategic group sEatus woul"d resul-t in an tssuer credit rating
one noLch below uhe rating on HOt.
Our assessment of Avista''s busiuess risk reflects the strength and
contribution of its regul-ated electric and gas utility operaLions. AvisLa
eonducts vertieally integrated elecEric and natural gas di$Eribution utiliLy
openations in [faohinglon and Tdaho, e],ecLric operaLlons in Alaska, and gas
disl.ribution in Oregon. The company serves a toeal of about 700,000 customers
our !inancial- risk profile assec'smetlt on Avisba is based on financial ratlo
benchmarks that are more relaxed cornpared wiEh thoee used for typicaL
corporate issuers, This reflects Lhe mosEly steady cash flow frorn its
regulated utilicy opera'tions. Our: baee-caee scenario pr:oJects adjusted ful:ds
Ww*W,SIANDARDAN$PONH$N{:}M/f IAIINfi S{TlTCI
,; 'i riir:ii': ): rritri:i.i:ii:. '.' ,, ^r l,
Staff_P R_006(AVA) Attachment A
JUI.Y 19, ?.fi17 2
Page 2 ol 42
Researcb Update: Avista CorP. Outbok Repised To Posititrt Fron Stable On Planned Aequisitiew By Hydro Oue
Ltd.
from operations (S'f'O) t.o debt of roughly 16t-18t over Ehe next two years
Liquidity
we asse86 Avieta's liguldj.ry as adequate because in our view lts sourceE are
ll)<ely Co cover uoee by more than 1.1x over t.he next 12 rtonths and co m.eet
cash ouEflews, even in the eveni of a 10t decllne in EBI?DA" The asseEsmenl
also reflecEs ehe sompanyts generally prudenr rlsk management. sound
relabionships with banks, and a gene:ral1y satisfastory standinE in credit.
rnarkete.
Prlncipal 1 lquidlty sources :
r Cash FFO of abouc $355 millior; afld
r Revolving credlt faciltcy availabllity of $400 milIion.
Principal liquidity u6€$rr Debt maLurities, including ouEstandi.ng commercial paper, of about $11"0million;. Capital spending of about $410 million, and
r Dividends of about $95 million.
Outlrak
rhe poeitive oullook reflects t,he poLential for higher ratinge on Avista if
HOL compleces its acqulsttlon as proposed. Upon close of rlre transactton, we
will consider Avisra as a highly straceglc subsidiary of HoL, resulting in an
iesuer crediE rating on Avista Lhat Is one not.ch below our ralirrg on HOL.
Downside scenario
We do noE envision a lower ratlng on Alrista, buL we would revise Ehe outlook
to etable j.f the transaction fails to close or is cornpleted in a manner that
resulte ir more Lhan a one-notch downgrade of HOL.
Prior to Ehe compl.eLion of the acguioition, we could lower Ehe raEing on
Avlsta if its business rlEk weakeng maEerially or cr:edil measures dimjnlsh
such t,hat FFQ to debE {s consistently below 15&. This could occur due Eo
increased use of leverage Lo cover fuading shortfalls or adverse regulatory
decisions leading to incr:eaeed regulatory lag or a large defer:ral of cosEs.
Upside scerario
We could ralse our ratings on AvisEa by one notch following t,he acguisition lf
our issuer credit rating on liOL is 'A-t. Once HOL ovrns Avista. we will base
our issuer credit. rating on Avlsta on the group's crediL profi1.e, which would
Lypically be one noich lower.
We do not. conLemplate an upgrade on AvisLa before the acguisitlon is completed
given the companyts current buslness m.Lx, regul"atory risk, and financial
meagures in our ba$e-caee scenario"
!\AryW. 5I ANt]AROANDT'T}OR5,CE}MfiA]IN(jSONT CT
I t- ' l1:" , ir:'t r: r' ' ,
ri i: t rl:j:'i:l 'l ! 'r;:;"'J1,i.ti. . iriiiirlir: ' I i'i<l l. l
Staff_PR_006(AVA) Attachment A
JULY t9,2Ut7 3
Page 3 ol 42
Rcsearcb llpdate: Auistq CrrF, Outlook Repised To Posiltiue lrun Stable On ?lattned Actluisilian By llydxt Arc
Ltrl.
Recovery Analysiel Isxue Ratingx
r AvisEa's firat,-mortgage bonds benefit from a first-priority lien on
gubsEancially a}l of the utiliEy's real property orened or subseguentrly
aequired, Collateral coverage of more than 1.5x eupports a recovery
rat.ing of ,1+r and an lssue rating two not.ches above Lhe issuer credit
raLing.. rJe raEe the preferred stock issued by AvisLa Capit,al If lwo noLches below
the iseuer credit rattng on AvlsEa Corp. to reflect, the dlEcretlonary
naEure of che dividend and t.he deeply subordlnaEed claim if a bankrupLcy
oecurs.r The short-Eerm rating on Avista Corp. is rA-2t based on our rBBBr issuer
credit raEing on the company.
&ntings Senre $n*pshrt
Corporate CrediL lating: BBBlPositive/A-Z
Buslness riekr Strong
. country risk: Very low
r Industry risk: Very low. compeEitlve position: Satisfactory
Financlal risk: SiEnifj.cant. Cash flow/Leverage: Signlficant
Anchor: bbb
Modlfiersr Diversification/Portfolio effect: Neutral (no impacE)
. capiEal atructure: Neutral (no impact)
r Financial policy: Neurral (no irnpact)
r Liquidity: Adequate (no impact). Management and governaace: Satiefactory ino impact)
. Coaparable rat.ing analysis: Neutral {no imp*cr}
Stand-al,one credit profile; bhb. Group credi.t profile: bbb
H"elated Criteria
o General CriEeria: Methodology For Linking l,ong-?errn And Shoru-rerm Rat.ings
, April 7, 2al7
r cr:lterla - Corporates - ceneral: Methodology And ABsumprions; Liquidity
Descripeors For Global Cor:porale Issuor6, Dee. 16, 201{
r Criltel:ia - Corporares - Generalr Cor:porat.e Met.hodology; Ratioe And
Adjustment.s, Nov, t 9, 2013
www srn$0AnnAilnp$0trs c0M/fiATtNfiSfilltl c'l
,,i ,,.i. 1il:l :.:tt i. t' ,',:1:tt:,.i | ,'j i ! i' .'lr
' , - ,i
Staff_PR_006(AVA) Attachment A
Jt.lt.Y 19,2ot7 4
Page 4 ot 42
Resettrch l)ltdate: Auis!* Curp. O*kxtk Rcrrise{, 7\) Pesitits brom Stablr Au Pknrccl Atquisition By llydro ()ne
I.td.
r Criteria - Csrporaees - Generalr Corporate Met,hodology, Nov. l-9, ?013
r Criteria * Corporates - UtlLiLies: Key Credit Factors For The Regulated
Utilities Industr:y, Nov. 19, 2AL1
. General Criteriar Group Rating Methodology, Nov. 19, 2013r General Crlceria: Counlry Risk AsseEEmenl Methodol"ogy And Assumptione,
lilov. L9, 2013. General CriLerla: Methodology: Industry Riek, Nov. 19, 2013
o Crtt.eria - Corporateg - UtiliEies: Collateral. Coverage 1\nd Issue NoLchiag
Rules For '1+ | And | 1' Recovery RafinEs On Senior g(}nds Secured By
Utility Real Prop€rcy, Feb, L4., 2013
. General Cr:iLeriar MefhodoloEyr Management And Governance Credit Factors
For Corporate Entities And Insurers, Nov. 1.3, z0l2
. ceneral Criteria: Use Of CreditWatch And outlooks, giept.. 14, ?009
r crlu,erla - Insurance - ceneral: Hybrid Capitel Handbook: September 2008
Edition, SepE. 15, 2008. Criteria - Corporates - Ceneralr 20oB Corporate Criteria: Rating Each
lssue, April 15, 2000
R*tings List
Raelngo Affirmed; OuEIook Aet.ion
To
Avist.a Corp.
Corporate Credit Rating
Ratings Affirmed
Avista corp.
Senior Secured
frecover:y Rabing
Avisla Capital 1I
Preferred Stock
WWIV'IANfiARDANl.T!.iORs COTJI''IAIIN(jSNIltf CT
,. ,..'. rli,,1:1i.,,::, ,..tiriirr.:: :;' ri.: l.-,
,i.,i irl '!'ii llifi ,i; tr,.iit .]i , i,''
Staff_PR_006(AVA) Attachment A
BBB/Foeit ive,/A - ?
From
BBB/Srable/A- 2
A-
1+
BB+
Certain rerms us.ed ln Ehis report, particularly cerf,aln adjectlve6 used to
express our view on raLing relevant factors, have epeclfic meanings ascribed
Lo Eherr in our critrerla, and should therefore be read in conjuncLion with such
crite::ia. please see Ratings CriLeria aL wwr.aEandardalrdpoors.corn for further
informatlon. CompleLe ratings inforrnatisn 1e avall-able Eo subscribers of
Raf ingsDlrece at wr*w.globalcreditportal "com and at vrvrw.spcapicalig.com. All
raeings affected by thls rating acE.lon can be found on the S&P Global Rafings'
public website at www.etandardandpoors.com. Use the R.at.ings search box located
in t.he l-ef t. colurnn.
,,LJt.Y r e, 2CI t7 "s
Page 5 of 42
Copyrrght S 201 7 by Standard & Poor's firancial Ssrr' icss ll C. All dghts lesr'lved
nfl lMptt[0 WA*RANnFS, lNCtUOlNS, BUT N0T l,tilrcO I0, ANY WARBANTITS 0f MfRCHAt{TABll.lft 0n f,INf lis tOB A PARTICUTAR PURP0SI 0R USf:, l'R[[$0M
rNOM 8UGS, SOfiWART TNROR$ OB I}[TTCI$, THAT lHF CONTIIIT'S TUNCTIONING W}IL BT UNINTTRRUPTTD Off THA] THE CONTENT \UIt OPEBATE WITH ANY
$OIIWAHE 0R HAngWARf C0Nf IGLIBAIICN ln no event $hall S&PPartres l* hable t0 sny party lor any dirert. rndirefl, incidenlsl. exernplary, csmpensalny, punilive,
oegkgance) rrr corrnectron wrth any uso ol the Contrnt evan il advrsed ol the i{ssibli(t' 0, surh damages
C.ed'Frel0ted ard olhsr amlwos. includinq ratin0s, and statem0nt$ in lh8 C0ilenl are rlst[mer$ of opinio$ as 0f th! date tf]ev ars axprssssd and rot statements 0l facl
S&P's oprnons, acalyses and ratir',g acknowlodgmenl decisroos td€sulibed belowl atc rtol (ecornmerdalrons to purchaso. hold. or sell any mcuntrcs 0{ lo make any
assignrnont. withdrar+al or susponsion of an acknowledgstenl an wefi as any liability for any rJrmage alloged to have beorr sullered on eccount lheraof
confiderrilalrty o{ cgrlarn n*n'puftlic infurmation lneervod in c0nns[ti0n wilh ea[h analylreaf process
nforrr8l$n about our ral[!gs feei rs &vailabl0 iJt www.$tandardandpootsrcrn/u$,atrng$fe0s,
STAN0ARI) & P00fi S, 58P ;ntl flAIINtSDIRtCI are regrstercd tradematks 0f Slandarcl & Poor's Frnarrcial Ssviees I l.C
WWW $rANnARnLNlll')O08$ ffil,|rfi AIIN0SI]lH{ CI
, .:a:!U i rt , ,,,, !i .,i..il;r..rli-;.
,i
Staff_PR_006(AVA) Attachment A
jllt.Y 19, 20t7 6
Page 6 of 42
$&P *tcbal
Ratings
RfrtinSf,[Iirsst.
$umrnary;
Avista Corp.
Primary Cr€dit Analyit:
Sa{ina Ali, CfA, New York (l) 212-43S.1877; sahna.ali@rpglobal:eom
Secondary Contacti
Gerrit W Jepsen, CFA, New York {1} 21?*438-2529; eerritjeps€n@$pglobal.com
Tablc 0f Cantents
Rationale
Outlook
Ow Base-Case Scenario
Business Risk
Financial Risk
Liquidity
Other Credit Considerations
Croup Influence
Recovery Analysis
Issue Ratings
Related Criteria And Research
WWW STANN^RIANNPOOIiS COM/AATNOSNBI TI .lt.}Nli. lv,2r)l? I
Staff_PR_006(AVA) Attachment A PageT ol42
Sumrnary
Avista Corp.
furiuei3 rusIil $'fl!flSt}
t)CORPORATE CREDIT
BBB/Stable/A-2
Vulnerable
Financlal ff *k: $lSlYlFlil&trl'
{}
Highly lewraged
Rationale
Exeellent
Minimrl
bbh
Anchor
a
bbb
oo-
bbb
Modiflers 6roup/Gov\
r Regulated, vertically integrated electric and natural
gas distribution utility.
r Non-utility operations are minimal (less than 5% of
consoiidated EBIT?A).
r Geographic and operational diversity with large
Washington focus,
. Fuel supply mix tilted toward hydroelectric power,
followed by natural gas.
r Regulatory mechanisms provide cash flow stability
when Avista purchases power during low-water
periods. but do not allow recovery of capital
investmenls betwee$ r8te cases.
wwvl srANnAfi 0ANff{rt}its (0M/rlAIrNiirif}r&r,cI
,. , . ,tt.):i, .. ;rli.i i,, 1,1, i, .,',!:;i:,:
'j,i{,:i,. r:!.! ; ...:, :.,r-iir.'i'
Staff_PR_006(AVA) Attachment A
r Capital spending of $400 million - $420 million
annually.
r Negative discretionary cash flow.
r Funding of capital expenditures through a healthy
combination of external funding and equity
issuance.
r ,4dequate liryidiry position provides a cushion due
to Avista's reliance on hydroelectric po$,er.
JUNri I 9,24t7 1.
Page 8 of 42
Suetn*sx Sixl* Strang iFtrranctal Rlxkl $tgut&c*at
Sumntary: Ayisld (.orp.
5&P Olobal Ratings'stable outlook on Avista Corp. refiects our expectation that over the next two years the
company will make efforts to better manage its regulatory risk, fund capital spending in a manner that does not
meaningfirlly increase leverage, preserve adequafe liquidity, and maintain comparable financial performance.
Under ourbase-case $cenario we expect funds from operations (FFO) to total debt to aysrage around l7%.
Downside scenario
We could lower the rating if business risk rises materially or credit measures diminish such that FFO to debt would
be consistently below 15s/0. This could occur due to increased use of leverage to cover funding shortfalls or adverse
regulatory decisions leading to increased regulatory lag or a large deferral.
Upside scenario
We do not contemplate an upgrade in the next tlAro years given the company's {uilent business mix, reguiatory risk
and financial position. Credit quality could strengthen if cash flow measures considerably improve, specifically
FFO to debt of more than 20% on a consistent basis. The company could accornplish this by paying down debt
with higher internally generated cash flour, increased equity issuances, asset diepositions or by boosting FFO
without adding debt,
Our Base-Case $cen*rio
. Effective management of regulatory risk especially
in Washington where Avista was denied a rate
increase.
. Capital spending of $400 million - $420 million
annualiy.
r Dividends of roughly $100 miltion annually.
r Regular recovery ofelectric and gas rates in
Washington, through surcharges and approval of
base rate reset, respectively.
r Average operation and maintenance expenses
consistent with historical levels.
2016A 30178 U01SI
FFO/totaldebt{o/o) 21 16.5-lE 15.6-18
DebI/EBITDA {x) 4.3 4. l-4.6 44.5
OcF/total debt (%) t6,9 l5-16 16.17.5
S&P Gtobal Ratings' adjusted frgures. A-Actual.
E*Estimate. FFO-Funds from operations.
OCF--Operating cash flow
Susiness $tisk: Sfrtxg
Avista's low business risk profile reflects the strength and contribution of its regulated electric and gas utitity
operations. Avista conducts vertically integrated electrie and natural gas distribution utility operations in Washington
and ldaho, electric oporations in Alaska, and gas distrJbution in Oregon. Although the cornpany operates in four states,
WWw SIr{NnAR[Ail0POOllS C0i/t/llAr$m$Ofi rtl
r, . 11.i; 1.i,..- rt ,:.i.f:,:..'r 'i i'1 il,ir.lr,
i t .i t. : ,',r:i, ;i i t i:r i
Staff_PR_006(AVA) Attachment A
JUNti 19,2tJ17 3
Page I of 42
ilutlook $tst'la
&*rgmptl*na I{*y *la*dre
Suntmon' : Artista (\ylt
Washington and ldaho are the key revenue drivers, with Oregon and Alaska contributing less than lOYo of revenues on
a combined basis. The custonter base of roughly 700,000 electric and gas customers has no meaningful industrial
concentration and demonstrates average growth prospects- The company has material exposure to hydro-electric
power (roughly 35% - 4A% of fuel supply mix), followed by gas-fired generation, both of which hetp to keep electricity
prices competitive eompared with the naliooal average but dependence on hydro power introduce$ fuel replacernent
risk in low water years, Recovery mechanisms are important to maintain operating cash flow after purchasing power
for customers when hydroelectric generation is lower than expected,
The company has an earnings mechanism in Washington subject to minimum thresholds and a deferral band which
helps it recover excess power costs while absorbing a portion of the difference, The company also has a porffsr cost
adjustment in ldaho. which allows 90% ofenergy cost differences to be deferred for future recovery. Purchased gas
mechanisms for gas distribution units in all three gas jurisdictions, along with hedging, mitigate gas price risk. These
regulatory mechanisms help avert large cost-adjustment requests and support the business risk pra{ile Decoupling
rnechanisms smooth out operating cash flow in all jurisdictions except Alaska,
Financial Risk; $ignificant
Wb assess Avista's financial risk prolile as signiftcant using linancial ratio benchmarks that are more relaxed compared
with those used for typical corporate issuers, given the mostly steady cash flow from regulated utility operations. Our
base case indicates that eapital spending, along with dividend payments, will lead to negative discrettonary cash flolv'
over the next few years, necessitating a reliance on extemal funding to pay for capital expenditures and dividends. Our
base-case scenario suggests lower linancial measures over fhe next fwo years, including funds frorn operations (FFO)
to debt of roughly 160/o - l8o/o, reflecting a rate increase denial in Wbshington earlier this year. The ftnancial measures,
although lower than full year 2016 results, remain in the middle range o[ our significant financial risk profile for 20 t 7
and 2018. Importantly, our lorecasts indicate the company will need to get timely base rate recoveries to keep
financial measures from slipping to the lower end of the financial profile (which may happen if rhey do not get the rate
increases recently requested as part ofgeneral rate ca$ss in Washinglon and ldaho), Our base case indicates an
expected supplemental ratio of operating cash flow to debt of about 15% to about l7%, supporting the significant
financial risk pro{ile asses$ment.
tiquidity: &d*quate
Avista has an adequate liquidity assessment because in our view its sources are likely to cover uses by more than I.Ix
over the nsxt l2 rnonths and to m€et cash outflows, even in the event of a l0% decline in EBITDA. The adequate
assessnrent also reflects the company's generally prudent risk management, sound relationships with banks, and a
generally satisfactory standing in credit markets.
\&ww srAf{DA{rnANnFOf.}Rs roM/ilATrNfi sunr:01 JUNH 19, t0l7 4
Staff_PR_006(AVA) Attachment A Page '10 of 42
. Cash FFO of about $355 million
r RevolvinS credit facility of $400 million,
r Debt maturities of roughly $110 million, including
short term debt
o Capital spending of about $410 million. Dividends of roughly $95 million.
0ther Cr*dit (unridmrati*ns
Othermodifiers have no impact on the ra$ng outcome.
ffroup lltf}$ens*
Avista is subject to our group rating methodology criteria" We view Avista as the parent and driver of the corporate
group" As a result, Avistab group and stand-alone credit profiles are the same at'bbb'.
Ree*vcry Analyrls
Avista's first-mortgage bonds benefit from a lirst-priority lien on substantially all of the utility's real property owned or
subsequently acquired" Collateral coverage ofmore ihan l.5x supports a recovery rating of'1+'and an issue rating two
notches above the issuer credit rating.
lssue Ratirugs
r We rate the preferred stock issued by Avista Capital Il two notches below the issuer credit rating to reflect the
discretionary narure of the dividend and the deeply subordinated clalm if a bankruptcy occurs.
r The short-term rating on Avista Corp. is'A-2'based on its issuer credit rating
Related Criteria And Research
Related Criteria
. Criteria - Corporates - General: Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers,
Dec" 16,2014
o Criteria - Corporates - Utilities: Key Credit Factors For The Regulated Utilities Induslry, Nov. 19. 2013
r Criteria - Corporates - General: Colporate Methodology: Ratios And Adjustments, Nov. 19, 2013
r Ceneral Criteria: Methodology: lndustry Rish Nov. 19, 2013
. Ceneral Criteria: Country RiskAsse.ssment Methodology And Assumptions, Nov. 19, 2013
r General Criteria: Group Rating Methodology, Nov. 19, ?013
r Criteria - Corporate$ - General: Corporate Methodology, Nov. 19,2013
r General Criteria: Methodology For Linking Short-Term And Long-Term Ratings For Corporate, Insurance. And
Sovereign trssuers, May 7,2013
WWW 5lANDAfioAN0P00HS IoM/IIAI lt'l6SDlR[tl
i '1,,i' i I i :r .l!1, iti, rr..i? ,, I 'r.r!:. l'
Staff_PR_006(AVA) Attachment A
JLINE re,2017 .5
Page 11 ol 42
Summtry: Avisto Corp.
Fdn*ip*l l,.iquidity Ur*a
Fair
Sttrwnury: Arista Corp
r Criteria - Corporates - Utilities: Collateral Coverage And Issue Notching Rules For'1+' And 'l' Recovery Ratings On
Senior Bonds Secured By Utiliry Real Property, Feb, 14, 2013r Oeneral Criteria: Methodology: Managernent And Governance Credit Factors For Corporate Entities And lnsurers,
Nov. I3,2012. General Criteria: Use Of CreditWatch And Outlooks, Sept. 14. 2009r Criteria - Insurance - General; Hybrid Capital Handbook September 2008 Edition, Sept. 15, 2008r Criteria - Corporates - Ceneral: 2008 Corporate Criteria: Rating Each Issue. April 15, 2008
F'inancial Risk
Bucinear Risk Profils Highly leveraged
Excellent bbb-/bb+
bb
Satisfactory b+
W!ak
Vulnerable bb-bb-bb-/b+b+
WWW tir ANUAtlt)/rtrt0p0nri$ fOM/iJAitNfi StllBf CT
,j
Staff_PR_006(AVA) Attachment A
JLINli 19,2417 6
b
b/b-
b-b
SigfiIfr*{ntMinimalModestlntermediare Aggressive
aas/aa+aa a+ ls a-bbb
bbtStronga+ /a tlh+aa/aa-a./bbb+
al a"bbb+bbb/bbb"bbb-/bb+bb
bbb/bbb.bbb.bb+bb bb^
bb+bb+bb bb-b+
Page'12 oI 42
Bus'iuoss And Financial Ri6k Matrix
CopFqkt 0 ?01 7 by $tandatd & Poor's [irlanctal Services l.t.C. All rrghts reseled
ol the Cont6nl, 0r lor ths $edur(y or rcaintananco of arry data rnput by the user The Content is rrovided on *n "as is' bnsh. S&P PARTIIS OlSCtAlM ANY AND &t fxPfi[SS
OB IMPI,|TI) WABRANTITS, INILUOINO, BUI NOT UMIIIO IO, ANY WAfiHANTIES OF MIRCHANTABIIITY OF !NNTSS TOff A PARTICUI,,AB PIJfiPt]ST OR USE, fBTEDOM
rNAT']! NUSS, iOTTWNii TNNONS OH DETTCIS, I}IAT I HI CIINTTNT'S ruNCTIONINO WIII BT UNIN TIH8UPTTO OB TIIAT THT C(]NIiNI WII,I, OPTBATE WITH ANY
n*gliqence, rn connectio$ with any use 0[ the Conl0nl even il advised of the possrhihty of such domagus
S&P's opinions, analyses and ratrng acknowledgmant d*citrons |described belowlars nol remmmendations lo purcha$e, holtl. or sell any securalies o, t{ malo any
assios{{leil, lvrthdrawol ur suspolsron 0f afi acknor.,'iedfmenl as wel, as Jny lultthty ltr any dar:raB0 atlsged lo have bmr, suffc{Dd on atcount thereol
torrfidcnti*lity of ccrtain non"pubfuc rlormalrod teeeivsd n cotlnffilion with sich analytmai prmous
i*fiumalron atrout ou[ raling6 fees rs arailatrle at www.standatdandpoffs.rolny'usratir,g$lees
SIANDARO & p00R'S, 3&P and EAIINGSDIRECT aro regrsfersd kadumarts ol Slamlard & Puot's Frnancial Srrrvrres llC
WVVW SIANOl\HDANBPOOf S IOMINATNGSOIRTCI
,t _!.1 .-
JUNE 19,2017 7
Staff_PR_006(AVA)Attachment A Page 13 oI 42
$&P frt*bal
Ratings
HntinssBirect.
R*search Update:
Avista Corp. Rating Affirmed At'BBB'
After Review; Outlook Stable
Primary Credit Analyot:
Gerrit W Jcpsen, CFA, New York lll212438-2529; [e-mail]
Saccndory Conttct;
Salina Ali, CIiA, New York (l) 212-438-1877; [e-mail]
Tahle Of Crntents
Overview
Rating Action
Rationale
Other Credit Considerations
Group Influence
Outlook
Ratings Score Snapshot
Recovery Analysis
Related Criteria And Research
Ratings List
Wl,lfW SrAN{}A8l}AlllIril{NlS C{]MillAl lNll$tlifi t tll
1.:" i: I i,l.'
MAY 26,20r6 r
Staff_PR_006(AVA) Attachment A Page 14 of 42
Research Update:
Avista Corp. Rating Affirmed At 'BBB'After
Review; Outlook Stable
Overvisrr
. We are affir:ming our crediL ratings on U.S. ineegrated eleccric and gas
uLtlity Avista Corp. aft,er a revlew" Th€$e include the 'BBE, issuer
crediL rating, lhe tA-' firet mortgage bond raEing with a recovery r:ating
of '1+r. and Ehe 'A-tt short-term rating. We revised Ehe liquidity
assessmenE Eo adequaEe from sgrong based on eurrenL estimates of uses
sueh as capi.t.al. epending, debt maturiLies, short-Lerm borrowings, and
dividend payments. The outlook remains sEable.r The stable ouulook reflects our expectation thaL Ehe company will
conhinue to effectively manage regulatory riske, fund capital spending in
a manner Lhaf does not meaningfully increase leveraEe, maintain adeguate
S.iguidity, and maintaln comparable financial performance. We also expect
no material increase in bueineee rlsk t.h!.ough expaneion lnbo nonuti).ity
operaEione. Under our baee-case scenario, we expect funds from operatione
to tot,al debt to average abouL 18*.
R*ting Actinrr
On May 25, 2OL6, S&P Global Raeings affirmed its racings on Avista Corp.,
including lhe rBBB' issuer cr:edlf r:aEing, Lhe 'A- t f irsf, mo!:Cgage b<lnd raling
lrith a recovery racing of t1+r, and thetA*2t shorL Eerm rating. The outlook
is st.able. In addiuion, we revised Ehe liquidity assessment Eo adequace from
strong.
Rationale
In our asoessment, Avistats business risk profil"e ie etrong, reflect.ing ite
lower-risk, vertically intsegrated electric and naEural gao dietribucion
uEili.ty operations in Hashington and ldaho, electric operations in ALaska, and
gas distrihution in Oregon. Although the corq)any operates in four saates, it
has fewer bhan 400,000 electric and about 330,000 natural gas cuEtomers wlCh
no meantngful i.ndusErial concentraE.ion. When needed, the util-ity reguests eost
recovery from regu)"aEor6. Becauee t.he uLiliLy has hydroelectrie power
exl]osure. recovery mechanisme are importanE lo maintain operaEing cash flovr
after purchaslng power for customers rrrheu hydroelectric generatlon is
unavailable. The company has some flexibilify in implemenLing incremenLal rate
changes tshrough iEs energy-recovery mechani.sm tn Washington and ehe power cnet
adJustment in ldaho, but the yeeovery of excess power costs is subjece to
mj.nimum threshalds and deferral bands. Purchased gas adjustmenrs for gas
distrihution units in al1 fhree gas juriadicLions, along with hedglrl9,
$ll,vw $IAilnAHnANDr'0Ons {:0M/ltATrN6s$rB[c]
:1"'
Staff_P R_006(AVA) Aft achment A
MAY 2ri,1016 2
Page 15 ot 42
Rese*rcb Upclate: Auista Corp, llatixg Affirrted A,t 'BBll' A{ter Reuiew; Authak Stahlt
mitigat.e ga6 prlce risk. ?hese he)-p averE large cost-adjustrnenf, requests and
EupporL Lhe business risk profile. oecouplinE mechanisms smooEh out operaeing
cash fLaw in a}l juris,dlction$ exceptr .A,laska.
our financial risk profile aeBessment of eignificarlt. takes into consideration
the most).y steady cash flows from the ut.ility business. Our baae case
lndlcaLes Ehat capibal spending aloag with dividend payments witl ]ead to
negaEive diseret.ionary caeh flow over the next few yeare. Avisu"a will need
external funding to cover the deficit because inrernally generated cash flow
is insufficient. Our base-case scenario suggesLs str<:nger financial neasures
over Lhe next t'wo years, including funds from operatione (FFO) to debt. of
roughly 18*, matnly benefiting from higher deferred taxe6 due to bonus
depreciation. Our base case indicates an expected rupplemental raLlo of
operaLing cash flow ro debt of abouL 1^6t to abouL Lgt, bolseering the
eignlfieanL financjal risk profile aosesenent.
Uquidity
AwisLa has an adequate fiquidiEy assessment because in our vJew its fiources
are likely to eover uses by more than l.Ix over the next 12 monLhs and to meol
cash outfl-owa, even vrlth a 10t decline in EBITDA. rhe adequaLe as$essmenf alsc)
reflectE the company's generally prudenE risk managemenr, sound rel-at,ionships
wtth banks, and a generally saListacborl, sranding in credir. markets. AvigLa
recenLly extended the maEur"ity of its credit facilities Lo 2021.
Principal liquidity sources:
r We esr,i.maEe FFo of about $350 million for the 12 monLhs ending March 31,
2017.r Revolving credic facility of $425 million.I Ca6h on hand of r:oughly $10 millton.
Principal liquidity uses:
. CapiEal spending of about $350 million for bhe 1-2 months ending March 31,
201,7.
e Dividends of roughly $85 miLl"ion for the IU months ending Mar.ch 31, 2Ol7.r DebL maturit.ies of about $195 mi11ion, including short-tern borrowinga.
We fate the preferred securities at Avista Capltal II f,wo noEches below the
issuer credit rating eo reflect the discretionary nature of tlre dJvidend and
the deeply subordinated c1aim if a bankruptcy occurs,
The shorts*term rahing an AvisEa is 'A-?' based on the issuer credit r:ating and
our assessment, of its liguidity ae Bt least, adequate.
Other Credit Csnsiderations
Other modifiers do not affecE, the rating outcome.
WWW STANNAfiNANOPONSS.[OM/RA]IN$SOIRI CI
t:,:i i :..: " :;,t .1,',i i;. ,i,lj i:::iirr
I'i,i ,:, l:iit. i.lti .at. tt l, it;.,1!'ll:i
Staff_PR_006(AVA) Attachment A
MAY 26,2016 3
Page 16 oi 42
.,
I
1
Researth Ulrclatt:: Auista Carlt. Ratiirg Affirunrd A, 'IltsB' Afttr Reuiew; ClrrtlooA Stcfi/e
Gr*up Influenee
Avist,a is subject to Ehe group rating meEhodol^ogy criteria. We view Avista as
Ehe parenf, Ehat drivee Ehe group crediE profj.le. As a resull, AvieL.a'a group
and stand-alone crediE profl).es are the same aL rbbb'.
Sutlsok
The stable oublook on Avista reflecUs our expectation that over rhe next two
years the company will contlnue to effecE.ively manage regu}atory r-iske, fund
caplt.aL spending such Ehat }everage does not meaningfully increaee, preserve
adequaEe liguidity, and maintain cornparable financjal perfor:mance- We also
expect no maLerial increase in business risk Ehrough expansion into nonutilify
operations. under our base-case scenarlo, we expecL FFo to totsal debt to
average about 188.
Downside $cenario
We could lower the ratlng in the next Ewo years if business risk maEertally
rises or credit measures dimihish such thab FFO t.o debt would be consisLenEly
]ess Ehan 15t. lhis could occur due to greater borrowinE or i-ncreased rate
lag, a large deferral, or adverse regnrlatory decisions.
Upside Bcenario
fn the next two years, we do not currently contemplat.e an upgrade given t.he
companyis current busi"nese rnix. Credit guality could strengthen if cash flow
{neasures considerably improve, speciflcally FFO to debt of more than 20t on a
coneistent basis. The company could accomplish this by paying down debt with
higher internally generated cash flnw or increased eguity, or by boosting FFo
r^,ithout adding debf .
Ratings Scorc Snapshot
Corporate Credit RaEingr BBBlstabl.e/A-Z
Business rigk; glrong
. Country risk: Very low
. rndustry risk: very 1o\{. CompeLitive position: satisfaclory
Financial riskr signifieant
r Cash flow/l,everage: Significant
Anchor: rbbbt
Modl f i ers
www $TANnAfi BANDfflrmS [:(MIRAT rNlisnfi 0il
' r,l, . ,i
e{AY 26, 2016 4
Staff_PR_006(AVA) Attachment A Page 17 ol 42
Research Updctt: A,vista Corl. Rnrirg Af{inued At '}llB' Afte.r Reuiew; Ortloo[ S*rble
r Diversification/PorEfolio effect: Neutral (no impact)r Capital sEructure: Neutral (no impacr)
. Financial policy: Neutral (no lnpacL)
. tiguidiLy: Adequate {no impact)
I Management and gover[anee: Saeisfaetory (no impacl]. Comparable rating anal"ysisr Neutral (no impaeL)
SEand-alone crediE profile: 'bbblr Group credit profile: 'bbb'
Recovery Analysis
AvisEa'e first morLgage bonds benefit from a flrst-priority lien on
subsLanLially all. of the ut.llityrs real- property owned or eubeequently
aequtred. Col]aLeral coveraEe of rnore than 1,5x EupporLB a reco\irery rating of
'1^+' and an ieeue rating two notcfiee above the issuer credit rating,
Related Crit*ri* And ft*senreh
o Methodol.ogy And AsgurnptJ,ons: Liguidicy Deecr"iptors For Global CorporaE.e
Issuers, Dec, 16, 2AL4. CounE!:y Risk Assesgment Methodology And AssumpLions, Nov. 19, 2013. Group Rating MethodologY, Nov. 19r 2013. I(€y Credlt FacEors For The Regulaued UEilitieo lndustry, Nov- 19, 2013
. eorporare Methodology, Nov. 19, 2013
. Corpof,:aEe Methodology: RaEios And Adjustments, No1/. 19, 2013
. Methodology; Industry Risk, Nov" 19, 2013
o Meu.hodol"ogy For Linking short-ferm And Long-Tezm Racing6 For CorporaEe,
Insurance, And Sovereign Issuers, May 7, 2013
r Col1ateral, Cover:age And Issue Notching Ru1es Por 'l+' And '1' Recovery
Raclnge on Senior Bond$ Secured By utility Real Properiy, Feb. 14,2013
. !*lanagement And Governance Credit Faetor6 For Carporat,e EntiLies And
f nsurers, Nov. 13, 2.01?
r Gener.al. Criteriar Uee Of CreditWatch And Outlooks, sept. 14, 2009
r Hybrld Capibal Handbook: September 2008 Edicion, sept. 15, 2008. 2008 Corporate Criteria: Rati,ng Each lssue, April 15, 20AB
fi.atings List
Ratj.ngs Affirmed
Avista Corp-
Corporate C:'ediL Ratlng
Senior Secured Ratj.ng
Recovery Rating
WWW SIANtlAITI)AIIOPOORS COMAATIN6SNIfi,ICI
.. i. ., .' j."' '.,
.:. 1.:it.::: t ii,,,,,.'.!,=- .", t.. \ t:;i ;'':a
Staff_PR_006(AVA) Attachment A
BBB/Srable/A-2
1+
CerEai$ term6 used in this report, particularly cerLaln adjecttves used to
expregs our vielr on rating relevant faetorc, have epecific meaninge ascribed
MAY ]6,2016 .5
Page 18 ol 42
Rcse<rrrlr Llpdate: Auista Corp, Rafiug Affirmed At 'BBB' After S.ctiett': Outl,Li.tk Stullle
to them in our criLeria, and shou1d t,herefore be read in conjunction with such
criEeria. Please see Ratings CriEeria at www.sEandardandpoors.com for fur:ther
informat.jon. CompleLe rati.ngs information is availab1e Eo subscribere of
RatingsDlrect at wwr*,globalcreditportal.eom and at www,spcapi.tal1g.com. A11
rat,ings affecEed by this r:ating action can be found on the S&P Global" Raeings
pubLic websiEe at www.st,andardandpooli$.com. Use Ehe RaLi.ngs searsh box located
in the left column.
I,VIVW STANOARLIANnPfl 0nS mltulillAlll,165LllBICI IVIAY 26, 2016 6
', ..j. , t.jt ',. ';', ,. r.l.:i.r:,
Staff_PR_006(AVA) Attachment A Page 19 of42
I
Copynght O 2017 by Standard & Poor's f noncial Servims LIC All tighls reserved
OB IMPI.IIO WARRANTIIS, IN[I.UOIN6. BUT N()T IIM O IO, ANY WAfifiA}'TItS OF MTRCHANTABIIIIY ON TJ'INISS T()N A PARTICUI.AR PUBPOSE ON UST" T8f[DOM
rE0M SUGS. S0rTl{AR[ [:ER0RS 0R O€FECIS. IHAI ltl[ g0NrtNI'S rUN[Il0NlNC WltL Bt Ul,ltNItHffUm[0 0n THAT THE C0NTINT Wtl 0PtRA'l[ WTH ANY
negligsncof in conncctiun w{i asy urie ut lhs Conlefi evsn il sdvi$od 0f the possrb,lily ol such dafiiagos.
S&P's oprnrons, aulyses and ratrng ackoowledgmed dacitions {descnbcd below} are nol recommendatror}s to purchase. h0ld, or sell any $ecurili8s 0r l0 r*a[€ aoy
sources it belioves to be rahable, S&P doer not perform an audrt and undsfinker no dulv ot due dihgen(e or ndependcilt verilcanon ol any rnlormation lt recetvos
cadr&Flialil,N, $, rofl;ltr n0n'prtdic rnfatmalirn rdceived n corlRe.fli0n wrth sach analylical procass.
filormaliofl aho,,rl our rrtlnqs fEBr is svaildble El wl/vrv,standardandp0or$.rom/usralrngsfeas.
SIAN0AHD & m0f{S, 5&P anrl ffATINGS0IHICI ore regrstered trademarks ol Standard & Poor'$ trnarcialSsrvi*s ltC
www sIANGARnANDr00nS,toMltiAllN$snrRrcl
'1, :..,:, il i...i:i: ir ii tri1i.,;, :;ii iiir;lij,l ;:ri
MAY f5, 201(r 7
.. i ,i ,,. , i l. i)1 :;,
Staff_PR_006(AVA)Attachment A Page 20 ot 42
@ s $TANtlAHt)&p00R's, RATTNGS STRVTCES
HcGRAW HItL FIilAT{CIAT
H*ting*$irsrt.
Summary:
Avista Corp.
Prirnary Clc.tit Analyst:
Cerrit W Jepsen, CFA, New York (l) 212-438-2529; [e-mail]
Secondary Contastl
Matthew L O'Neill, New York (U 2I2'438-4295; matthcwoneill@standardandpoors,com
Table Of fontents
Rationale
0utlook
Standard & Poor's Base-Case Scenario
Business Rlsk
Financial Risk
Liquidity
Other Credit Considerati ons
Group Influence
Ratings Score Snapshot
Recovery Analysis
Issue Ratings
Related Criteria And Researeh
TYWS. ETAJTDANDATDPOONS. COXI / E.I'TTTOSDInE C?
t[n$ ?9d* P].spAx** srelu$IvlLy f1]& t{sf* *tfift asrd$1'$$B{.;
x1,t s.)* n.Bsffir{t3u"rr0ra uxlun$ o?rip-*$-rsr rs*&l'ryf, s
Staff_PR_006(AVA) Attachment A
ilAY 19, ZOIS I
Page2l ol42
Sumrmary
Avista Corp.
Burincsr triek $Tn$N*.{}
Vulnerable Exeellcnt
Financlal RisI: $l&rollrlcAt*T
o
Highly leveraged Minimol
Katiorale
bbb
s
hhb
{}
bb&
s
CORPORAIE CREDIT RAT1NG
BBB/Stable./A-2
Anchor Modifiers Group/Gov\
r fugulated v*rfic*lly intesrated electric and narural
gas distribution utill ty.
* GeagrapNc and operationa! divenlty but larggly
Washi*gton focrrs,r tligher trydroele*tric power u$e.
r Regulatory meehanisms provide cash flow stebiliry
when pu.rchasing power during low water periodx.
lyUI.lV. STA!{DAND*ITDPOORi. CO'IT/ RATIXOSDInECT
'r**I$ Wfr$ lS,{9,&8{i} f3t-tt3$t$AtY ,'0* Xt$Xt, $rxe }\&lvl9Tri{rf{i.
r Hlev*ted cspltal *pending ov6r the next few years.
r Negatively ditrretionary cssh flnrv aft*r dividcnds.
r Consistent acee$$ to capital markets ro fund cxpital
spendi*g.
r A ostroRg" liquidity position thnt provides the utility
a cushion due ts its hydroeleerric pfilrer use.
t[AY t9, rolE z
,*$Y r{}fi ,$itlr$iTl{r&u'r}{}!{ $HLrrit
Staff_PR_006(AVA) Attachment
sYtiatl#.t$r, pG*rtrrf 3s.
A Page 22 of 42
I&**inx**,*l*li. St&ng Stnnu**sl Riqk $lgatfi *e*t
1
1
Sunmury: Avista (|<trP.
Tho stable outlook on Avista Corp. reflects our expectation aver the next two yearu lhat the company will continue
to e{Iectively manage regulatory risks, fund capital spending in a mirtnar that does not meaningfully increase
Ieverage, preserve adequate liquidity, and maintain comparahle tinsncial pertorrnanc*. Under our ba$e-case
scenario we expect funde fium operarions {FFO} to tota} debt to *veragr abrut 16%.
Downside scenario
We could lower the rating in the rext t'rry$ ye6r* if businer* rjsk ri'elt to nraterially rise or eredit measure$ dimini*h
such &at FFO to debt would be conr.istently below l3%. This could occur *s a re*ult of greater borrowing or
increased rate lag, a large deferral, or advarse rcgulatory derisirns.
Upside seenario
In the next tvro years, we do not currenlly conternplate an upgrade given ttre company's current br"l*inesr mix and
it* fncux nn regulated oper&tions. Credit quality could strrngfhen if ca*h flow m*asur*s considerahly irnpruv*"
*p*uilkally FFO to drbt of nrore than 13% on a sueh*ined basie lrr additisn" w* would expeft debt to EEITDA of
lese thsn 3.Sx. The cornpany can accomplish thie by paying down debt with higher intrrnally generated carh f1ow,
increased equity issuanca$, or arset d.ispositions.
Standard & Poor's Base-Case $cenari*
o Average capital spending of $360 million in 2015
and declining to $350 million for 2016.
r Dividends of roughly $85 million per year over the
forecasted period.
r Regular recovery of electric and gas rates through
respective surcharges.
r Average operation and maintenance expenses
consistent with historical levels.
r Negative discretionary cash flow indicating external
funding needs.
20raA l0l5E 20168
FFo/total deh f/o) 20.8 14.2-15.5 I5.7-16.5
DcbI/EBITDA (x) 4.5 4.2-4.6 3.8-4 2
ocF/toral debt {%) ?,4 I7-t8.5 17-18.5
Note: Standard & Poor's adjusted frgures. A-Actual.
E-Estimate. FFO-Funds from operations,
OCF-Operating cash flow.
Bu$inxss ldisk; $trrng
ln our assessment, Avista's business risk profile is "strong" based on what we consider the utility's "sarisfactory"
competitive position, "very loW induotry risk of the regulated utility industry. and "very low' country ri$t of the U.S.
where the company operates. The company's compet'itive position incorporates itp vertically integrated electric and
natural gas distribution utility operations in Washington and ldaho, eleetric operations in Alaska, and gas distribution
urww.srAxDanDAltDPoons,coil /narItsGSDInEcr
'rxr$ grnf [,BxfAxr] Hxtluslvxl.Y toJl tr$tn $lEt na!{rYn$il$.
I{AY lo, tot5 3
lrsr r(tR Bff,rsTxrSrlftoil uxttfs
Staff_PR_006(AVA) Attach ment
a?xttwrcr rf,*xry?ro.A Page 23 ol 42
CIutlcok $tabls
&**umpticn*K*yhft*tri**
Surwury: Auista Corp.
Ftnancial Risk $ignifi e*nt
We base our tinancial risk proiile assessment of "signi{icant' on the medial volatility financial ratio benchmarks. Our
assessment takes into consideration the mostly steady cash flows from the utiliry business. Our base case indicates
that capital spending along with dividend payrnents will lead to negative discretionary cash flqw over the next few
years. Exernal lunding will be needed to cover the delicit since tnternally generated cash {low is insufficient. Our
base-case scenario suggests mostly steady key credit measures for the next several years. including FFO to debt from
about 14% to 160/o. Our base case indicates thai the supplemental ratio of operating cash flow to debt is expected to
range from about lTYo to about 18.5%, bolstering the 'significant" financial risk profile a$sessment.
Liquidity: Strong
Avista has "strong" liquidity as our criteria define the term. We believe the company's liquidity sources are likely to
cover its uses by more than l.5x over the next 12 months and rernain above lx over the subsequent 12 months. We
expect the company to meet cash outflows even with a 30% decline in EBITDA,
r We estimate FFO of about $280 million in 2015 and
53l0 million in 2016.
r Revolving credit facility of $425 million in 20i5 and
2016.
Sther Credit Consideretifrn$
Other modihers have no impact on the rating outcome.
www,&lAxt tntlAlrDloong.coli[/nATrHGssInEcT
T'trs w$s faxp*r(s.f, xxcitl$I*f rY ri${ us$r {.,r4s ARlli$'r(s!*rr.
H$'r t {}s *B Brsyltt$trfl{r}i $}a Lrgs {}'r}{tr}ulr$ }f $!{*??€fi -
Staff_PR_006(AVA) Attachment A
. Capitsl spending of about $360 rnillion in 2015 and
$350 million in 2016.
r Dividends of roughly $85 million per yeflr in 201 5
and 2016.
EAr lgr 3016 t
Page 24 ot 42
in Oregon. Although the company operates irr four states, it has fewer than 400,000 electric and about 330,000 natural
gas customers with no meaningful industrial concentration. When needed. the utility requests through the regulatory
process to recover costs. Since the utility has hydroelectric power exposure, recovery mechanisms are important to
mitigate the need to purchase power for customers when the hydro power is unavaitable. The company has some
flexibility in implementing incremental rate changes through its energy recovery mechanism in Washington and the
porver cost adjustment in ldaho, but the recovery of excess power costs in Washington is more restrictive with
minimum thresholds and deferral bands. Purchased gas adjustments for gas distribution units in all three gas
jurisdictions, along with hedging, mitigate gas supply risk. We view these as important in avrrting large cost
adjustment requests and support the business ritk profile.
Frlnelpcl tiquidity Ssurca$Principrl Liquidity Uoes
I
I
Sttmmary; Auista Cot1t.
Group Influence
Avista is subject to the group rating methodology criteria. We view Avista as the parent that is also the driver of the
group credit protile. As a result, Avi$ta's group and stand-alone credit profiles are the same at'bbb'.
Ratings $ccre Snapshot
Corporate Credit Rating
BBB/Stable/A-2
Businem risk: Strong
r Country risk Very low
r Industry rlsk Very low
r Competitive position: Satisfactory
Financial risk Significant
o Cash Ilow/Leverage: Significant
Anchor: bbb
Modifiers
r Diversification/Portfolio effectr Neutral (no impact)
r Capital structure: Neutral (no impact)
r Financial policy: Neutral (no impact)
e Uquidity: Strong (no impact)
o Management and governance: Satisfactory (no impact)
r Comparable rating analysis: Neutral (no impact)
Stand-alone credit profile : bbb
r Group credit proftle: bbb
R***very Analysis
r Avista's first mortgage bonds benef* from a first-priorig lien on substantially all of the utility's rgal property owned
or subsequently acquired" Collateral coverageofmore than 1.5x supports a recovery rating of'l+'and an issue
rating two notches above the issuer credit rating.
Ix*us f{ating*
r We rate the preferred stock two notches below the issuer credit rating to reflect the discretiunary nature of the
dividend and the deeply subordinated clairn if a bankruptcy occurs.
Wllrw. $?AtrDANDAUI'?OORS.CODI / IATII{OSI'IBE CT
Ttrt$ wAs pnf,rAaus rItLUstvt.LY for usf,n orxn, liBsT*ono.
rroT rfl*. *trarft*rBrrTlox uilf,$s tlt$f,*tiltf, rf;xrn|TTEa.
Staff_PR_006(AVA) Attachment A
IEAY tg,3015 6
Page 25 ol 42
Su rnlrt it t1, : A t, i sttt Oar p.
Related Criteria And Researrh
Related Criteria
. Criteria - Corporates - General Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers,
Dec" 16.2014
r Criteria - Corporates - Utifities: Key Credit Factors For The Regulated Utiliti€s Industry Nov. lg, 2013r Criteria - Corporates - Ceneral: Corporate Methodology: Ratios And Adjustments, Nov. 19, 2013
r General Criteria; Methodology: Industry Risk, Nov. 19, 2013
. Criteria - Corporates - General Corporate Methodology, Nov, 19, 2013
. General Criteria: Methodology For Ltnking Short-Term And Long-Term Ratings For Corporate, Insurancq And
Sovereign Issuers, May 7, 2013
r Criteria * Corporates - Utilities: Collateral Coverage And lssue Notching Rules For'1+'And '1'Recovery Ratings On
Senior Bonds Secured By Utility Real Property, Feb. 14, 2013
r General Criteria: Methodology: Management And Governance Credit Factors For Corporate Entities And lnsurer$,
Nov. 13,2012r Criteria - Corporates - Ceneral 2008 Corporate Criteria: Rating Each Issue, April 15. 2008
Financial Risk Profile
Busin*ra RieL Profile Highly leveraged
fixcellent bbb-/bb+
Satisfactory
Weak
Vulhereble bb-bb-bb-/b+b+
ITll/U. STATIDAIIDAHDTOONS.CO}l / NATIIIO,$DIRE CT
?$ls wa* r&f}'s&f;s xxglrrstlrsLY rslt $grx stflA *nsil$'rxoxtt.
*s? troB &.f.sl*?&rslr?t&}I $rt{.sE (yr$Exrrllf rlifir6r??ao.
Staff_PR_006(AVA) Attachment A
trIAY t0, t0t5 0
bt
b+
Fair b
h/b"
b-b
$igri6cantMinimalModestIntermediate Aggressive
aaa/a +a0 u+ /a a-bbb
$trong bb,bEalss-a+ ls a-lbbb+btl+
a/ a^bbb+bbb/bbb-bbb./bb+bb
bbb/bbb-bbb-bb+bb bb-
bh+bb+bb bb.b+
Page 26 ol 42
r The short-tern raiing on Avista is 'A-2'based on the issuer credit rating and our assessment of its liquidity as at
least adequate.
Burincss And Sinrnsinl tixlc l$rtrix
Copyrrghl O20t7 tty Stantlarrl & Pr:of s Frnsnciill Servrres [tC. All nghts retcrved.
,nodi,irld, rowrss sr)gmoered. rcproduced 0r distnhltsd io any {orm fu any means. cr storod rn a datahasr rr rerrisval system, wrthour tho prior writlen pomisston 0l
ol ths Contsnt, or lor the sccunty or maintanarce ol arry data flpul by lhe $ser. The f,ontent is provrded or arr "ss is' basrs. S&P PAm,IS 0]SCLAIM ANY ANo AtL tXmESS
ofr lMPLl[0 WARRANTIS, lNct.U0ltl6, ffUT N0I tlMlT[o T0, ANY WAfiRANTIrS 0r MmChANIABIIIIY 0B rl]Nf SS ron A PARIICUI.AR fuBPoS[ 0B USf , rnf t.DoM
rfiOM 8UGS, SOM,VABE EB8OBS OR O[TT[IS, THAT THT CONIFNT'S FUNCIIONING Wt.{ BT UNNITSRUMIN OR II]AT TH( CONITNT Wtl OPERATI MIH ANY
S0nWARt of HARDWAHT C0Nf6[rFATl0N ln no event shall S&PParric$ he liabl0 l0 any party {or ar:y direrl, in{jtrect. ifdijental, eremplary. uornpenlet0ry. punrttve.
neghgorra) in cu*neetorr with any ure of thc ConEnl even il dvised 0l the possittility o[ such darnages.
S&P's opinions. analy$6s and ratin$ actnowlsdgmenl decisions {dsscribed below} arg ,r0( recommendalrons {0 purchase. hold, 0r sell any secsritres 0r l0 maks any
ssur(ss rl behe*es to bs raliable, S&Pdoae notpertorm an audit and undortales no dutyofdue dilgence or rnrlapendontvarificalron ol any rnlormalion i( re€aives
assrgnrnent, wi$drawal 0r suspe*sron ol an acknowledgrnefil as well as any tiahrlity for dry dafiage alle0ed t0 hBve tle8n ru{{sred 00 accirufl thBreol
c0ntrdorrtitlily 0t (e{tain nonlufulrt rrrfornratmil tecsi!'ed in L'0n0efli0n wrth eslh flrralylicai procuss.
mlormalmn about rrur rolings fecE is {vailable sl rirww.slandardandpo0rs"com/:usralirgslecr
SII\llOABfl & F00B'S, S&P and RATIN6S0IB[f,1 ara regislorad trademarks ol Stondard & Poois ftnancial $nrvicss tl"C
www" $ti,t{DtnDru[Droon8,c olr / f, Arl rosDIIf, cr
Tt{r} sai }aE}3}rt.$ *xcl,ttit}rxls ?sx t $Bx ollt* tt}rrf}oxs.
x{}T r&n nf,$*s"rrttuyr&ra $,al.rfg ott tigtf[ ftE]etfti0
Staff_P R_006(AVA) Attachment A
rtAY lt,10ti 7
Page27 of 42
M*onv's
INVESTORS SENVICE
Rating Action: Moody's Afflrme Avlsta Corp, at &*a"l; Sutlook $table
Global Credit Research - 19 Jul 2017
Approxlmately $1.5 Ellllon of Dabt Securities Affected
New York, July 19, 2017 -- Moody's lnveslors Service, ("Moody's") affirmed the ratings of Avisla Corp.,
including its Baal long-term issuer rating (see debt list below), following its announced agreement to be
acquired by the Canadian electric utility Hydro One, Lld. (HOL unrated). The outlook ls stable..
Outlook Actions;
..lssuer: Avista Corp,
.-.,Oullook, Remains Stable
Affirmations:
..lssuer: Avista Corp.
.... lssuer Rating, Affirmed Baal
....Multiple Seniority Mediurn-Term Note Program, A$irned {P)AZ
....Senior Secured Medium-Term Notes, Affirmed 42
....Senior Secured First Monsage Bonds, Affirmed A2
....Senior Secured Medium:Term Note Program, Atrirmed (P)A2
....Senior Unsecured Medium-Term Note Program, Aflirmed (P)Baal
RATINGS RATIONALE
'The affirmation of Avista's ralings reflecls our understanding thal the acquisition debt, lo be issued by Hydm
One, Ltd.. will be a direcl obligation of the larger, more divsr$o Canadian holding company and shsuld not
affecl Avista's slandalone financial profile" said Vice President Ryan Wobbrock.
On 19 July, HOL announced it had reached an agreement to acquira Avista Corp. for $53 per share in a $5,3
billion all-cash lransaction, including the assumption of roughly $1.9 billion of Avisla reported debt. The $53 per
share purchase price repr€senls a premium of around 24a/o lo Avista's 18 July closing price. HOL has
indicated that part of lh6 transaction financing will include the issuance of nearly $2.6 billion of HOL debt and
about CADI .4 billion of contingonl convertible dsbentures.
Moody's expects thal the transaction debt will be issuad directly by HOL, a much larger holding company, and
that it will not materially change Avista's financial or leverage melrics, Moody's also assumes that there will be
no significant change l,o Avista's regulated capital struclure and dividend policy, As such, we believe that
HOL's ownership will be credit neutral, based on current assumptions.
The acquisilion ls sublect to the approval ol Avista shareholders, various US state utitity regulatory
commissions (i.e,, the Washington Utilities and Transportation Gommission, the Oregon Public Utilities
Commission, the ldaho Public Utilities Commission, the Regulatory Commission of Alaska, aild the Montana
Public Service Commission), lhe Federal Energy Regulatory Commission, among others, and in compliance
wilh the Ha(-Scott-Rodino Act.
Avista's Baal senior unsecured rating and stable oullook reflects its primary business as a low-risk vertically
integrated eleclric and gas utility with supportive cost recovery mechanisms, such as electric and gas revenue
decoupling. Recent adverse regulatory events in Washinglon, Avista's primary jurisdiction, create som6
uncerlainty for the company going forward, but Avista's financial prcfilo can provide cushion to offset any
neqative effects over thg next 12-18 months.
Staff_PR_006(AVA) Attachment A Page 28 oi 42
i
i
Rating Outlook
The stabte rating outlook reflects our view that the pending acquisition by HOL will not materially affect the
credit quality of Avista. The outlook also incorporates a view that Avista will continue to benefit from
reasonably credit supportive regulation in its jurisdictions. especially its primary jurisdiction of Washington.
Factors that Could Lead to an Upgrade
The ratings for Avista could be upgraded if regulatory relationships in Washington improve and the company is
able to produce cash flow to debt metrics above 219o on a sustained basis, without the benefits from one-lime
adjustmBnts or temporary tax benefits.
Factors that Could Lead to a Downgrade
Avisla's ratings could considerod for downgrade if lete credit suppo{ive regulalcry relalionships rnaterializs
over a sustained period of time or if cash flow to debt metrics wero lo fall to 17Yo on a consistent basis, Also, if
the contribution of Avista's unregulated business were to increase significantly or its dividend payout increased
meaningfully to support the new parent company's acquisition debt.
The principal methodology used in these ratings was Regulated Electric and Gas Utililies published in June
2017. Please see lhe Rating Melhodologies page on www.moodys.com for a copy ol this methodology.
REGULATORY DISOLO8URES
For ratings issued on a program, saries or category/class of debt, this announcement provides certain
regulaiory disclosures in relation to each rating of a subseguently issued bond or note of the same series or
category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices, For ratings issued on a support provider, this
announcement provides certain regulatory disclosures in relation to the credit rating action on the support
provider and in relation to each parlicular credit rating action for sacuritiss that derive their credit ratings from
the support provider's credit rating. For provisional ratings, this announcemant provides certain regulatory
disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be
assigned subsequent to the final issuance of the debt, in each case where the transactioil structure and terms
have not changed prior to the assignment of the de$nitiva rating in a manner lhat would have affecled tle
rating. For further inlormation please see lh€ ratings tab on the lssuer/entity page for the respective issuer on
www.moodys"com.
For any affected socurities or raled entities receiving direct credit suppo( from the primary entity(ies) of this
credit rating action, and whose ratings rnay change as a result of this credit rating action, the associated
regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following
disclosures, if applicable to jurtsdiction: Ancillary Services, Disclosure to rated entity, Disclosure from raled
entity,
Regulatory disclosures conlained in this press releaso apply to the credit rating and, if applicable, the relatod
rating outlook or rating review,
Please sse wrrw,moodys.com for any updates on ehanges to the lead rating analyst and to the Moody's legal
entaty that has issued the rating.
Plsaso see lhe ratlngs tab on the is$uer/Bntity page on www.moodys.corn for additional regulalory disclosures
for each credit rating-
Ryan Wobbrock
Vice President - Senior Analysl
lnfrastructure Finance Group
Moody's lnvestors Service, lnc,
250 Greenwich Street
New York, NY 10007
u.s.A.
JOURNALIST$: 1 212 553 0376
Cllent Service:1212 553 1653
Staff_PR_006(AVA) Attachment A Page 29 ol 42
I
Jim Hempstead
MD - Utilitles
lnfra$tructuro Finance Group
JOURNALISTS: 1 21? 553 0376
Client Service:1212 553 1653
Releasing 0ftice:
Moody's lnvostors $ervice, lnc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service:1212 553 1653
Moonv's
INVESTORS STRVICI
CI 2017 Moody's Corporation, Moody's lnvestors Service, lnc., Moody's Analytics, lnc. and/or their licensors and
affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUEO BY MOOSYS INVESTOR$ SERVICE,INC. AND ITS RATIHGS
AFFILTATES ('MIS") ARE MOOaIY'S CURRENT OPltillONS oF THE RELATIVE FUTURE CREDIT
RISI( OF EI{TITIES, CREDN COMiJIITMENTS, OR DEBT OR DEBT.LIKE SEGURITIES, AND
MOODY'S PUBLICATIONS MAY INCLUOE MOODY's CURRENT OPINIONS OF THE RELATTVE
FUTURE CRED]T R}SK OF ENNTES, CREDIT COITIITiITMENTS, OR DEBT OR DEBT.LIKE
SECURMES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET
ITS CONTRACTUAI" FINANCIAL OBLIGATIONS AS THEY COME DUE ANO ANY ESTIMATED
FINANCIAL LOSS IN THE EVET'IT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY
OTHER RISK, INCLUDING BUT NOT LIMITED TO; LIOUIDITY RISK, MARKET VALUE RISK, OR
PRTCE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INGLUDED IN IT'IOODY'S
PUBLICATIONS ARE HOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S
PUBLICATIONS [,IAYALSO IHCLUDE QUANTITATTVE MOOEL€ASED ESTIMATES OF CREDIT
RISX AND RELATEO OPINIONS OR COMMENTARY PUBL]SHED BY MOODY'S ANALYTICS, INC.
CREDIT RATINGS AND MOODY'S PUBLICATIONS DO HOT CONSTITUTE OR PROVIDE
INVESTMEI{T OR FINANCIAL AOVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS
ARE NO? AND DO NOT PROVIDE RECOMITIENDATIONS TO PURCHASE, SELL, OR HOLD
FARTICULAR SECURITTES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS
COITIMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR.
MOODY'S ISSUES ITS CREDTT RANNGS AND PUBLISHES MOODY'E PUBLICATIONS WTH THE
EXPECTATIOI.I AND UITIDERETANDING THAT EACH INVESTOR WILL, WITH DUE CARE, IIiAKE
ITS OWN STUDYAND EVALUATION OF EAGH SEGURITYTHAT IS UNDER CONSIOERATION FOR
PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL
INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE
MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION.
IF IN DOUET YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALLINFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO,
COPYRIGHT LAW. AND NONE OF SUCH INTORMATION MAY BE COP]ED OR OTHERWISE
REPRODUCED, REPACKAGED, FURTHER TRANSMITTED. TRANSFERRED. DISSEMI NATED,
REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEOUENT USE FOR ANY SUCH PURPOSE. IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON
WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
All information contained herein is obtained by MOODY'S frorn sources believed by it to be accurate and
reliable. Because of the possibility of human or mechanical error as well as other faclors, however, all
information contained hsrein is provided .AS lS" without warranty ol any kind. MOODY'S adopts all necessary
measures so lhat the infonnation il uses in assigning a crodil rating is of sufficient quality and from sources
Staff_PR_006(AVA) Attachment A Page 30 of 42
Il
I
I
1
MOODY'S considers to be reliabla including, when appropriate, independent third-party sources. However,
MOODYS is not an auditor and cannot in every instanco lndependenlly verify or validate information receivsd
in the rati*g process or in preparing the Moody's publications,
To the extent permitted by law, MOODY'S and its directors, officers, ernployees, agents, representatives,
licensors and suppliers disclaim liability to any person or entig for any indirecl, special, consequenlial, or
incidental losses or damages whatsoever arising from or in conneclion with the inlormation contained herein or
the use of or insbilily to use any such inforrnation, even if MOODY'S ar any of its directors, officers, employaes,
agenls, represrntalives, licensors or suppliers is advised in advance of the possibility of such losses or
damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage
arising where the relevant financial instrument is not the subject of a particular credit rating assigned by
M00DY'S.
To the exlent permitted by law, MOODYS and ils directors. ofllcers, employees, agents, representatives,
licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any
person or entity, induding but not limited to by any negligence (but excluding fraud, willful misconduct or any
other type of liability thal, for lhe avoidance of doubt, by law cannot be excluded) on the part of, or any
contingency within or beyond the control of, MOODY'S or any of its directors, office$, employees, agents,
representatives. Iicensorc or suppliers, arising from or in connection with the information contained herein or the
use of or inabilig to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER
OP}NION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER
WHATSOEVER.
Moody's Investors Service, lnc., a wholly-owned credit ratlng agency subsidiary of Moody's Corporation
fMCO"), hereby discloses that most issuers of debt securitlos (inctuding corporate and municipal bonds,
debentures, notes and commercial paper) and prefenod stock rated by Moody's lnvestors Service, lnc. have,
prior to assignment of any rating, agreed to pay to Moody's lnvestors Service, lnc. for appraisal and rating
services rendered by it fees ranging lrom $1 ,500 to approximately $2,500,000, MCO and MIS also maintaln
policies and procedurss to address the independencg ol MIS's ratings and ra$ng processes. lnformation
regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities
who hold ratings frorn MIS and have also publlcly reported to the SEC an ownership interest in MCO of more
than 5olo, is posted annually at www.mooely$,mm under the heading'lnvestor Relations - Corporate
Governance - Director and Shareholder Affiliation Policy."
Addilional terms for Australia only: Any publication into Australia of this document is pursuanl to the Australian
Financial Servlces Licanse of MOODY'S affiliate, Moody's lnveslors Service Pty Limitod ABN 61 003 399
657AFSL 336969 and/or Moody's Analytics Auslralia Pty Ltd ABN 94 105 1 36 972 AFSL 383569 (as
applicable). This documenl is intended to be provided only to'\ruholesale clients" within the meaning of section
761G of the Corporations Act ?001. By conlinuing to access this document from within Australia, you represenl
to MOODY'S that you are, or are accessing the documenl as a represenlative of, a \,vholesale cliont" and that
neither you nor lhe entity you represent will directly or indirectly disseminate this document or ils contents to
"retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an
opinion as to the credit$rorthiness of a debt obligation of the issuer, not on the equity securities of lhe issuer or
any form oF security that is avallable to retail investors. ll would be reckless and inappropriate for retail investors
to use MOODY'S credit ratings or publications when making an investment decision. tf in doubt you should
conlact your financial or other professional adviser.
Additional tenns 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 whollpowned credit rating agency subsidiary ol
MJKK, MSFJ is not a Nationally Rocognized Statistical Rating Organization ("NRSRO'). Therefore, credit
ratings assigned by MSFJ are Non-NRSR0 Credit Ratings. Non-NRSRO Credit Ratings are assigned by an
sntity that is not a NRSRO and, conseguently, the rated obligalion will not qualily for certain types of lreatment
undor U.S. laws. MJKK and MSFJ are credit rating agencies registored wilh the Japan Financial Services
Agency and their registration nurnbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJXI( or MSFJ (as applicable) hereby disclose that most issuers of debt securitres (including corporate and
municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as
Staff_PR_006(AVA) Attachment A Page3l o142
to
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
Staff_PR_006(AVA) Attachment A Page 32 o'f 42
lNVfr$r#R$ SgXvt(s
&,{*mnvb
CREDIT OPINISN
'11 March 2016
{Jpdat*
Avista Corp.
A Verticalty lntegrated Etectric and 6as Utitity
Sumrnary Rating Ratianale
Avista's Baal issuer rating reflects its primary business as a lowrisk vertically integrated
electnc and gas utility with :lrong financial metrics. Ihe rating is underpinned by supportive
regulatory jurisdictions, which provide important cost recovery mechanisms such as electric
and gas revenue decoupting.
Avista has some unregulated exposure in addition to its ownership of regulated utilrty Alaska
flectric Light and Power {A[LP, Baa3 stabte), which provide marginal operational and cash
flow diversity, but remain neutral in terms of affecting the ratings of Avista.
Exhbit 1
Avista'c CFO prc-WC to debt is consittcntly in the high+eens.
x(rah{lr ldH artrsrrr'd
BATIRC$
,(11111A r:..J*i'
ccrit*(xt
i,,.,.
Plr,tese?the i,lli*gtr{.atim at lhe ud ol tbt tepott
lw awle iafornation.
lbn
rr-)":, I I II
Soure Mo@'s lntestots Seilkc
Staff_PR_006(AVA) Attachment A Page 33 of 42
ft*te this R*seerch }}
'i i ! ',l :
ilgsst's ttivr$To*t $f; *vttt lNrftASTAU(?U*{ At{S FEOltfr T fi HAHCI
Cr*dit $trcnglhr
p Low-risk utility in supponive regutatory jurisdictions
> Core utitity business in Washington provides stable cash flow
Cr*dit (hall*nger
> High dividend payout ratio
n Eying long-term growth potential outside r:f rate-regulated, core busines:
Rating Outlnnk
The stable outlook incorporates our view that Avista's financiat proiile will maintain CFO prg-\./V6 to debt in tlre high-teene ran€e
and that it wilt (ontinue to receive suppo(ive cost recovery kom ils regulators, I he stabte outlook also incorporntes a view thal
unregulated operationr witl remain betow l5% of consolidated earnings and cash ftow, and that the cornpany's financiat policy wtll
maintain a relatiwly even mix of debt and equity in its capital structure.
Factsrs th*t Could L*ad t* an Upgrad*
The ratings for Avista coutd be upgraded if the company were able to prodLrce CtO pre-WC to debt above ?0% on a susr.ainable ba:is,
without the benetits frorn one-lime a<ljustrnents.
Factors that Could Lead tu a Dawngmd*
Avista'r ratings could be negatively irnpacted if the lev*t of regutatory support wanes, if the contribution ol its unregulated business
were to increase disproportionately to those of its regulated operations, or if CFO pre-WC to debt were to falt to 15% for a sustainable
period.
Key lndi*ators
[rhiblr e
ItlY $r",Aldirors
Avlsta Corp.
12i:u2015 1?l31lZA1{1Zl3I/e0t3 12,!1112012 12l)1/2t11
CIO pre-WC + lnterest I lntereJt 5,Tx 5.0x
2P.7Yo
44.6%
lll AU ratiui alo brx{ ao 'AdJffit*d' tiMa}t d€ti and iffo}porare Moqdyi Cigb.l Sl.nd.ald Adj{rtmcnr! for Non-Fintrr(nl corp{ritnnr
swr{.g Moo.h' t lnwftprs Seryice
s.?x 4.4\4.8x
ls.3%
47.4%
Staff_PR_006(AVA) Attachment A Page 34 ol 42
19 3%
16.2%
46.7%
MOOSY't TNVtSTORS STRVTCE rr{f RA$T&u{Tun[ AHp Ffr ol[cT fi H&H{r
Detailed Rating Consid*rations
REC[NT RICULATORY DECISIONIS ART CREDIT POSMVE
the primary credit driver for Avrsta is the degree of regulatory tupport and eost recovery altowed by its regutatory authorities, and
particularly vra the Washington Utrtities and Transportation Commission (WUTC), which regulates roughly 60% of the company's
revenue, We view the WUTC to be generally supporlive to credit, while having improved (ost recovery provilionr in the tast few years.
[or example, in December 2014, the WUTC allowed Avista to implement elefiric and gas decoupling meehanisms which enhances
the timety recovery of fixed costs for the utility and provides for stable and predictable gross margin and cash flow in the face of
declining use, irr addition to attrition adjustments for ongoing rates, 'l'his has been particularly hetpful for Avista, since energy delivery
to customers has fatten in both electric and gas $€gments for 2015.
More reeently, the WUIC allowrd a $10.8 miltion gas revenue lncrease in January; however, the commis:ion also ordered the compiny
to reduce electric rates by $8.'l million. The rate reduction was mainty driven by lower commodity and pow,er prices compared to the
time when Avista made its original filing, As such, we view the WUTC order as immaterial to Avista's credit profile, since fuel and power
costs do not generate margin and the rate reduction is not a result of unsupportive regulatory treatrnent.
Fotlowing the elecrric rate decrease, Avista filed a rate cate with a t\ar&-step electric and gas rate increase proposal through the 18
months ending June 2018. Avista's request includes around 550 mitlion of electric and approaching 56 million of gas annual rate
increases" Avista wilt also be offgetting some of the customer rate impacts through energy recovery mechanism (ERM) rebates. The
filing is primarily driven by capitat investments lor maintainlng and upgrading its system.
ln Oregon, the Oregon Pub[c Utilities Commrssron {OPUC) approved a $4 5 million gas rate increase on March 3, 2016, based <lrr a
9.47o return on equity. While relativcty minor rn lerms of scale, the decrsion is credit positive since Avista is now allowed to imptement
a revenus-per-custorner decouplrng mechanism.
ln ldaho, the ldaho Pubtic Utitities Commissron {IPUC) authorized /ivista lust under 52 mrllion ol electric and just over $Z mitlion of
gas rate increases, effective January 1, 20'16, with an allowed RO€ of 9 5%. ln addition to the settlement, the company was authorized
electric and gas decoupling mechanisms, as well.
STRCINC CAsI.I TLOW METRICs CITT5[T HI(]i] PAYOUT AND sHARE REPURC}]As[S MADI J 2014
Avista's key financiat metrics, such as cash flow from operations before the changes in working capital (CIO pre-WC) to debt, have
bean very stable over the past frve years, at around]9Yo. The rtrengt.h and consislency of Avista's financral metrics provides an offset
to a dividend payout ratio that is clos* to 70% and the repunhase o[ $80 mitlron worth of common stock rn 70]4, Despite these credit
nogative financ.ial po{icies, Avista eontiriues to maiiltain a linancial profile rn-hne with Baal integrated peers, who have averaged just
over 20% CIO pre-WC to debt and 15% Cf O pre-WC less dividsnds to <Jebr over thc past live years; both are consistent with the
tevels produced by Avi:ta over this time
Avista's 5376 mrllion ol C[0 in 2015 is signif icantly hrgher than historical periods, psrtty due lo: higher depreciatron and amorlization
from additional plant-rn-service and a fult year of A[LP on AvistB't consolidated books; non-cash pension expense exceedrng cash plan
contributions by around $25 miltion; and a 535 nrillion swing in power and naturat gas cost deferrats, While the asset additions will
contrnue to boost depreciation and amortrzation, we expect the pension and deferrals for power and fuel costs to reverse over time,
as the conrpany's recovery rnechanirms [rue-up the temporary mismatch between the (osts Avista incurred and rates charged to
customers.
We expect for Avista's ongoing margin and cash flow lo remain around 5300 mittion due to margin-stabilizing decoupting mechanisms
in Washington, ldaho and Oregon This would result in about 17ofo of Avista's total ad;usted debt at Decemb*r 2015.
APPITITI TOR CROWT}.I MAY INTRODUCT CRIATTR RISK OVT.R TH[ IONfr-TfRM
Avista management has indicated an interest ln creating new growth ptatlorms through a non-utility :ubsidiay, Sahx, lnc (not rated),
a subsidiary of Avista Caprtal, lnc. (not rated, a wholly-owned subsidiary ol Avista). Salix was formecl to exptore oppofiunities to
extend natural *as use beyond traditional pipetine supplied markets, via expansion ol tiquefied natural gas (LNC) servic* throughout
Staff_PR_006(AVA) Attachment A Page 35 of 42
the region. Avista's $rategy is premised on the low-price and abundant supply of natural gas, whrch could give t NC an e(onoffii(
advantage over other competing fuets. However, this strategy has slowed given the steep dectinet in oil prices over [he tast 18 months
For now, u(e expect that the management will take srnatl, measured approaches to the development of its unregLrlated business,
Currently, we do not view lalix as a negative to Avista's credit profile: however, il Salix grows to be a larger portior] of earnings and
cash flow, or exhibit more business risk, it has the potentiat of negatively hurting the credit profile for Avista.
The current nature o{ Avista's capital plan is viewed posilively, since the (ompany is long power and primarily focused on basic system
improvements; but, if othe.r non-traditional areas are targeted forgrowth oppor"tunities, this could have the potefitiat lo raise the risk
profile of the company.
Liquidity Analysis
Avista's external tiqtridity source consists of a $,100 million senior se<ured revolving credit [acility, which expires in April 2019. As of
December 31, 2015, there were 5149 million of cash borrowings, leaving $250.4 mittion of available liquidity underthe line of credit.
Since Avista currently has unsecured investment grade ratings kom two nationslly recognized ra{ing agencies, Lhe company has
rhe option to request the banks to relinquish the exirting First Mortgage Bond collaterat position, but it has chosen not to do so for
economir reasons. Despite the collateral staying in place at Avista's dirretion, the secur:ed natur€ of the rredir facilities sornewhat
constrains Avista's liquidity flexibility, in our opinion, since the typicot investmert grade issuer (having an unsecured facitity) can use
collateral as an option to improve bank sredit access during periods of unloreseen linuidity strers.
The facitity has a 5100 mitlion accordion thature and is subject to gnd pricing. The 5400 miltion facility does not contain any material
adverse change language for borrowings but does so to access the $]00 million accordion feature^ The facitity atso includes a debt to
rapitalizatiein covenant not to exceed 657o As of Decernber 2015, the company had suf f icient headroonr availaLrle under the debt to
capitatiration covenant.
AEL&P has a $25 mittion line of credit which expires in November 2019 and has a consotidated debt to capitalization covenant of
67.5%- As of Dece mber 3i, 2015, the full amounl wal available for bonowing and Ail"&.p wat in {ornpliance with its covenant.
Avista's next material debt maturitirs or(ur in August 2016 when 590 million of first mortgage bonds is due. AERC's next nraturity is in
2019 when its S15 mitlion term loan is scheduted to expire
Profile
Avista Corp. is primarity a regulated electric and gas utility servicing around 375,000 electric and 335,000 gas customers in
Washington, ldaho and Oregon. Avista also owns Ataska Energy and Resources Company (AiRC; not rated), parent of Alaska ilectric
Light and Power Company (AttP; Baa3) which serves around 17,000 etectric customers in Juneau, Alaska.
Avisra's uritiry operatton: are prrmarity regulared by the Washington [rrilities and Transportation (ommission (WUTC), ldaho
Pubtic Utitities Commission (IPUC) and the Oregon Public Utility Conrmisrion tOpUC) AE LP's rstes art regulated by the Re.gulatory
Commission of Alaska {RCA)
Staff_PR_006(AVA) Attachment A Page 36 of 42
!,roo0Y's tHvrSIoRi sERvtc{${rlASTXu(It}*e Ahr }&$J({T F$*ANCI
MOGDY'S INVES'SNS SEftVI([ruriA$TRutrril*t efi B raslx,(T f lxANc[
Rating F{*thod*l*gy and $cnresard Fa*tnru
[.xhibir 3
*$lirx rra$sr{
Ayi$ta Corp.
nE8ulated tlecttic and C€s Utilities Industry 6rid llllzl Crrrent
FY I?/31/20r5
Moody's 12-18 i,lonth Fomerd View
As Date Puhlished [3]
Score
A
Baa
Baa
Baa
A
A
f actor 'l :Fremawork Mearure 5corr Mearure
.lrrdiciat underpinrin8t of the
Baa Baa
Ra(es and Bae
tactor 3
8aa
Ceneration and fud A
Iactor 4 : Flnancial
{.5x " 4.9x
'r9.8%15% -'t9%
Year 15.3%1196 - r5%
45% . 50%
6rid-lndlceted
Holdco 0
geal
Enal
It| All ratior ore based o|! 'Adiuiied' finrncial dita and in(orpnrate Moody'r CIob.t tt.nd.rd Adrurtmentt lor Non-FinarEiit CorPotation5.
l?l Ar ol l?llu?ors;
lll Ih( rlpr*rcntr Hoodyls forward vieu. not the vie{ oflhp issu( and unler: notcd in lhr terl, does hot in(oporat€ li8nifitail Bcquisition! and divprtitur€r.
5 a,$ cr. Mo ody' t lf, veato{, 5Prvic?
ftatings
0utlook Stabte
lssuer
Senior
MTN
AA
Baa
Bia
8aa
A
8ia
A
5.3r
8na
Eaa 8aa
8aa
Baal
0 0 0
Baal
Baal
8aa1
A?
Firrr
AVtSlA CORP. CArrrAL n
t&ta? Moul!" lnrettdn service
of
CFO lnierBsl Year
YenrCfO pre.Wc / Dcbt
Staff_PR_006(AVA) Attachment A Page 37 ol 42
A
Out[0ok Stable
lHrm$lau{fuBfi Ailtr ret}]s{T Hf-tANet
it ' : 1 .i
l,
..1 , :i, i t t L
1
ii
i. :. j
, il
I
,I
il ,
I
1 I, L
Ittl,ORI NUi4Stf{ r, r1', ,
Mor:r:vi
tf*v[5T0x! sERvtc€
Staff_PR_006(AVA) Attachment A Page 38 of 42
M
Moopv's
INVESTOR5 SE(VICE
Rating Action: Moady's Aesigtts Baa3 Issuer Rating to Alaska Electric Light &
Power 6ompany; Outlspk $table
GlobalCredit Resuarclr - }'? Jul2tl1$
New York, July 27, 201 5 - Moodt's lnvestors Service, ("MooOyls"l today assigned a Baa3 lssuer Rating to
Alaska Electrlc Light and Power Company {AELP), a subsidiary of Alaska Energy and Resources Company
(not rated), which is a subsidiary of Avista Corporation (Baal stable). The raling outlook is stable.
RATINGS RATIONALE
'The Baa3 lssuer Rating for AELP reflects strong regulatory support provided by the Regulatory Oomnrission
of Alaska (RCA), which helps to offset AELP's weak financial metrios and small size" said Assistant Vice
President Ryan Wobbrock. "The RCA's track record of allowing sufficienl revenue increases to recover cosls
and allowing high retums (e.9., AELFs current '12.875e/" allowed ROE and 53.8'lo eQuity layer) providas the
loundation for an inveslment grade credit profile that offsets AELP's other weaknesses" Wobbrock added.
AELP's investment grade credit profile balances the generally low-risk naturo ol a rate regulaled utility
company with weak cash flow to debt metrics of around 10026, its materially small size and concenlration risks.
For example, following Avista's recapitalization of AELP, CFO pre-WC to debt has fallen to 11%, which is more
reflective of a non-investmenl grade metric. We expect this level of financial performance over lhe nexl ssveral
years, as AELP constructs new general'ron facilities but also anticipate a slow gradual improvement in this
m€tric as annual amortization payments are made on a portion of AELP's long-term debt. ln terms of
concentration risk, about trivo thirds of AELP's 420 gigawatt hours of 2014 generation production cqrnes from a
slngle facility, the 78 megawatt Snettisham Hydroelectric Project, which provides AELP power under a power
purchase agreemenl,
Avista's ownership, while not a direcl benefit to AELP's credit profile, is seen as a posilive rating factor sinco
Avista is a relatively conservative slratogic owner and any potential equity Eupport for AELP could be provided
(wlth regulatory approval), without causing financial duress to Avista. At lhe same time, the existence of a $15
million term loan at A€RC adds additio*al indebtedness requirements for AELP, since AELP is the only
operating company to service lhe intermediate holding company debl.
What Could Change the Rating - Up
AELP could be upgraded if it wsr€ able to produce CFO pre-W0 to debt in lhe mid-teens for a sustained
period.
What Could Change the Rating - Down
Weak financial metrics are expeclod to persist beyond the next 12 - 18 month ratlng horizon; however, AELP's
rating could be downgraded during its four year construction period if CFO pre-WC to debt remains below '10%
on a standalone prospective basis. Additionally, AEIP could be downgraded if regulatory treatment from the
RCA becomes less credit supportive, or if the company experiences a prolonged operaUonal difiicutty.
Alaska Electric Light and Power Company (AELP; Baa3 stable) is a vertically integrated electric utility that
services just under 16,500 customers in Juneau, Alaska. AELP is the primary oporating subsidiary oJ Alaska
Energy and Resources Company (AERC, nol rated), an intermediate holding company and subsidiary of
Avista Corp. (Avista; Baal stable). AELP's utility operations are primarily regulated by the RCA, with certain of
its generation facilities being regulated by the Federal Energy Regulatory Commission (FERC).
The principal methodology used in this rating was Regulated Electric and Gas Utilities published in December
2013. Please see the Credit Polrcy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, $eries or category/class of debl, lhis announcement provides certain
regulatory disclosures in relation to eaeh rating of a subsequently issued bond or note of lhe same series or
Staff_PR_006(AVA) Attachment A Page 39 of 42
categorylclass of debt or pur$uant to a program for which lha ratings are derived exclusively from existlng
ratings in accordance with Moodfs rating practces. For ratings issued on a supporl provider, this
announcement provides certain regulalory disclosures in relation to the rating action on the support provider
and in relation to each particular rating action for securities that derive their credit ratings from the support
provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in
relation to the provisional rating assigned, and in relation to a detinitive rating that may be assigned
subsequenl to the final issuance of the debt, in each case where the transaclion structure and terrns have not
changed prior to the assignment of the definitive rating in s manner that would hava affected the raling. For
further information please see the ratings tab on the issuerlentity page for the respective issuer on
www.moodys.com.
For any affected securities or rated entitios receiving direct credit support from tha primary entity(ies) of this
rating aclion, and whose ratings may change as a result of this rating action, the associated ragulatory
disclosures will be those of the guarantor antity. Exceptions to this approach exist for the following disclosures,
if applicable to iurisdlction: Ancillary Services, Disclosure lo rated entity. Disclosure from rated entity,
The follnwing information supplements Disclosure 10 ("lnformation Relating lo Conflicls of lntorest as requirsd
by Paragraph (aXl XiiXJ) of SEC Rulo 179-7') in the regulalory disclosures made at the ratings tab on lhe
issuerlentity page on www.moodys.corn for each crodil rating:
Moody's was not paid for services other than determining a credit r:ating in lhe mosl recently ended fiscal year
by the person thal paid Moody's to determine this credit raling.
Rogulatory disclosures contained in thls press release apply to the credit rating and, if applicable, the related
rating outlook or rating review.
Please seo www.moodys.com for any updates on changes to the lead rating analyst and to ths Moody's legal
entity that has issued the raling.
Please see the ratings tab on the issuerlentity page on www.moodys.com for additional regulatory disclosures
for each credil rating.
Ryan Wobbrock
Asst Vice Presidenl - Analyst
lnfrastructure Finance Group
Moody's lnvestors Service. lnc.
250 Greenwich Street
New York, NY 10007
u.s.A.
JOURNALIST$: 21 2-553-0376
SUBSCRIBERS: 21 2-553-1653
William L. Hess
MD - Utilities
lnfrastructure Finance Group
JOURNALISTS: 2 1 2-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's lnvestors Service, lnc.
250 Greenwich Slreel
New York, NY 10007
u.s.A.
JOU RNALISTS: 21 2-553-0376
SUBSCRIBERS; 21 2-553-1 653
Moot>v's
INVESTSRS 5EftVI(E
A 2017 Moody's Corporation, Moody's lnvestors Service, lnc., Moody's Analytics, lnc. and/or their licensors and
affiliatos (collectively,'MOODY'S"). All rights reserved.
Staff_PR_006(AVA) Attachment A Page 40 ol 42
i
CREOIT RATINGS ISSUED BY IIiOOUY'S INVESTORS SERVICE, INC. AND ITS RATINGS
AFFILIATES ("MIS"} ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT
RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT,LIKE SECURITIES, AND
MOODY'S PUBLICATIONS MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE
FUTURE CREDIT RISK OF ENTITIES, GREDIT COUIMITMENTS, OR DEBT OR DEBT.LIKE
SECURITIES. MOODY'S DEFINES CREDIT RISK AS THS RISX THATAN ENTIW II'IAY NOT MEET
ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE ANg ANY ESTIMATED
FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY
OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR
PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S
PUBLICATIONS ARE NOT STATEMENTS OF CURRE''JT OR HISTDRICAL FACT, MOODY's
PUBLICATIONS MAY ALSO INCLUDE SUANilTANVE IT{ODEL-BASED ESTIMATES OF CREDIT
RISKAND RELATED OPINIONS ORCOMMENTARY PUBLISHED BY MOODY'S ANALYTICS,INC.
CREDIT RATINGS AND MOODY,S PUBLICATIOITIS DO NCT CONSTITUTE OR PROVIDE
INVESTiIENT OR FINANCIAL ADVICE, Af{D CREOIT RATINGS ANCI MOODY'S PUBLICATIONS
ARE NOT AND DO NOT PROVIDS RECOMITfiEI.IOATION$ TO PURCHASE, SELL, OR HOLD
PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUELICATIONS
COIIiII,IENT ON THE SUITABILITY OF AN INVESTTTI|ENT FOR AHY PARTICULAR INVESTOR.
MOODY'S ISSUES ITS CREOIT RATINGS AND FUBUSHES IIIOODY'S PUBLICATIONS WTH THE
FXPECTATION AND UNDER$TANDING TTIAT EACH INVESTOR WILL, WITH DUE CARE, MAKE
ITS OWN STUDY AND EVALUATIOhI OF EACH SECURITY THAT I$ UNDER CONSIDERATION FOR
PURCHASE, HOLBIilG, OR $ALE.
MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDEO FOR USE BY RETAIL
INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE
MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION,
IF IN DOUBT YOU SHOULD CONTACT YOUR FINANGIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS FROTECTED 3Y LAW, INCLUDING BUT NOT LIMITED TO,
COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE
REPRODUCED, REPACI{AGED, FURTHER TRAN$IUITTED. IRANSFERRED, DISSEMINATED,
REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE. IN
WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON
W]THOUT MOODY'S PRIOR WRITTEN CONSENT.
All in{orrnalion contained herein ls oblained by MOODY'S lrom sources believed by it to be accurate and
reliable. Because of the possibility of human or mechanical error as well as other factors, howevor, all
information contained herein is provided'AS lS" without warranty of any kind. MOODYS adopts all necessary
measures so that the information it uses in assigning a credit rating is of suffic.ient quality and from sources
MOOOY'S considers to be reliable including, when appropriate, independent third-party sources. However,
MOOOY'S is not an auditor and cannot in every instance independenlly verifo or validate information received
in tho rating process or in preparing the Moody's pullications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives,
licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or
incidental losses or damages whatsoever arising {rom or in connection with the information contained herein or
the use of or inability to use any such information, even lf MOODY'S or any of its directors, officers, ernployees.
agants, representatives, licensors or suppliers is advised in advance of the possibility of such losses or
damages, including but not limited to: (a) afiy loss of present or prospective profits or (b) any loss or damage
arising where the relevant financial instrument i$ not the subject of a particular credit rating assigned by
MOODY'S.
To the extent permitted by law, MOODY'S and ils directors, sfficers, ernployess, agents, reprosentalives,
liconsors and suppliers disclaim liability lor any diract or compensatory losses or darnages causod to any
psrson or entity, including but not lirnited to by any negligence (but excluding fraud, willful misconduct or any
other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any
contlngency within or beyond the control o[, MOODY'S or any of its dlrectors, officers, employees, agents,
reprosenlatives, licensors or suppliers, arising from or in connection wilh the information conlained herein or the
use of or inability lo use any such information.
Staff_PR_006(AVA) Attachment A Page 4'l ol 42
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY. TIMEI-INESS, COMPLETENESS.
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OT ANY SUCH RATING OR OTHER
OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER
WHATSOEVER.
Moody's lnveslors Service, lnc.. a wholly-owned credit rating agency subsidiary of Moody's Corporation
(-MCO"), hareby discloses thal mo$t issuers of debt securities (lncluding corporato and municipal bonds,
debentures. notes and commercial paper) and prefened stock rated by Moody's lnvestsrs Service, lno. have,
prior to assignment of any rating, agreed to pay to Moody's lnvestors Service, lnc. for appraisal and rating
seryices rendered by it fees ranging from $1 ,500 to approximatoly $2,500,000. MCO and MIS also maintain
policies and procedures 1o address lhe independence ol MIS's ratings and rating procassos. lnformation
regarding csrtain affiliations that may exist between directors of MCO and rated entities, and between entrties
who hold ratings from MIS and have also publicly reported to lhe SEC an ownarship interest in MCO of rnore
than 5%, is posted annually at $sM.r0$#J][S-qffn under the heading "lnvestor Relations - Corporate
Govemance - Director and Shareholder A$iliation Policy,'
Additianal terms for Australia only: Any publlcalion inlo Australia of this document is purcuanl to the Australian
Financial Services License of MOODY'S affiliate, Moody's lnveslors Servico Pty Limited ABN 61 003 39S
657AFSL 336S69 and/or Moody's Analytics Australia Pty Ltd ABN 94 '105 136 972 AFSL 383569 (as
applicable). This dosurnenl is intended to be provided only to "wholesale clients" within the meaning of section
761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent
to MOODY'S lhat you are, or are accessing the document as a representative of, a "wholesale client' and that
neilher you nor the enlity you represent will directly or indireclly disseminate this document or its contants to
"retail clisnts" within the meaning of section 761G of the Corporalions Act 2001 . IvIOODY'S credit rating is an
opinion as to the creditworthiness of a debt obligation oJ the is*uer, nol on tha equity securities of the issuer or
any form of socurity that is available to rotail investors. lt would be reckless and inappropriate for rotail investors
to use MOODY'S credit ratings or publications when making an investmenl decision. lf in doubt you should
contact your tinancial or olher professional adviser.
Additional terms for Japan only: Moody's Japan K.K. ('MJKK") is a wholly-owned credit rating agency subsidiary
of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings lnc., a wholly-owned
subsidiary of MCO. Moody's SF Japan K.K. {"MSFJ) is a wholly-owned credit rating agency subsidiary cf
MJKK. MSFJ is not a Nationally Recognized Slati$ticalRatinE Organization ("NRSRO"). Therefore, credit
ratings assigned by M$FJ are Non-NRSRO Credit Ratings. Non-NRSR0 Credit Ratings are assigned by an
entity that is not a NRSRO and, consequenlly, the rated obligation will not qualify for certain types of treatment
under U.S, laws, MJKK and MSFJ are credil rating agencies registered with the Japan Financial Services
Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respeclively.
MJKK or MSFJ (as appticable) hereby disclose that most issuers of debt securitios (including corporate end
r^nunicipal 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 Japanase regulatory requirements.
Stafi_PR_006(AVA) Attachment A Page 42 ol 42
PRIVILEGED AND CONFIDENTIAL - JOINT PROSECUTION AND DEFENSE AND
CONFIDENTIALITY AGREEMENT MATERIALS
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO DATE PREPARED: lll21l201l
AVU-E-17-09 / AVU-G-17-05 WITNESS: Patrick D. EhrbarIPUC RESPONDER: Jennifer S. Smith
Production Request DEPARTMENT: State & Federal RegulationStaff-007(AVA) TELEPHONE: [phone]EMAIL: [e-mail]
REQUEST:
Please provide a detailed list and description of all costs the Company expects to be allocated from
Hydro One, or other corporate entities in each of the first five years following the merger? In the
following five years?
RESPONSE:
As discussed in Mr. Ehrbar's testimony, as well as in the Joint application on page32, to the extent
Avista employees dedicate time and incur costs related to the operations of Hydro One, such costs would
be directly assigned and billed to Hydro One, and would not be borne by Avista's customers. Likewise,
should Hydro One employees dedicate time and incur costs associated with Avista's operations, such
costs would be directly assigned and billed to Avista and would be subject to review and approval by the
Commission prior to being recovered in retail rates. Any such costs would not be allocated. Please see
Ehrbar Exh. 7, Schedule 3, or Appendix 7 to the Joint Application, for a copy of the protocol for the
direct assignment of costs between the two companies.
Avista and Hydro One have just started to engage in high-level discussions to begin to identify possible
future opportunities from shared processes, and have not yet identified specific costs that would be
directly assigned, and at this time are unable to provide a detailed list of such costs.
l\t
=
..46Errrf\) f)tom
lEe:lE Il!
€,3
GJ
."|,::
--f f_l*: --,
L l--
5-mlgF
ulc>aoz.
Page I of I