20171129ICNU Third Set of Data Requests to Avista.pdf

TEL [phone] ● FAX [phone] ● [e-mail] Suite 400 333 SW Taylor
Portland, OR 97204
October 25, 2017 Via Electronic Mail
David J. Meyer, Esq. Patrick D. Ehrbar Avista Corporation PO Box 3727 1411 E. Mission Ave, MSC 27
Spokane, WA 99220-3727 [e-mail] [e-mail]
Re: Joint Application of Hydro One Ltd. and Avista Corporation for an Order Authorizing Proposed Transaction Docket U-170970
Dear Mr. Meyer and Mr. Ehrbar: Enclosed please find the Industrial Customers of Northwest Utilities’ (“ICNU”) Third Set of Data Requests to Avista Corporation (“Avista”) in the above-referenced matter. Avista has ten business days to respond to these Data Requests.
Please provide your responses by no later than November 8, 2017.
Thank you for your attention to this matter. If you have any questions, please do not hesitate to call.
Sincerely, /s/ Haley M. Thomas Haley M. Thomas

cc: U-170970 Service List
PAGE 1 – ICNU’S THIRD SET OF DATA REQUESTS TO AVISTA
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
BEFORE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
In the Matter of the Joint Application of HYDRO ONE LIMITED and

STRIAL
THIRD SET OF
AVISTA

Dated: October 25, 2017
Please provide responses to these Data Requests by November 8, 2017.

DATA REQUESTS
0030 Refer to Morris, Exh. SLM-1T at 7:3-5:
a. Is Scott Morris a shareholder of Avista?
b. As of July 18, 2017, how many shares of Avista stock did Mr. Morris own?
c. How many additional shares are available pertaining to stock options, and what is
the cost per share of exercising each option?
d. For all executives, inclusive, how many shares are owned outright by such Avista executives?
e. What incentives are being offered to Avista executives, should the acquisition by
Hydro One be approved? Please identify by executive and incentive offered.
0031 Refer to Morris, Exh. SLM-1T at 12:7:
a. Will Mr. Morris’s status change after one year, automatically, or does Hydro One need to take an affirmative action to replace Mr. Morris as CEO?
b. For involuntary removal, what action would be required, and by whom?

PAGE 2 – ICNU’S THIRD SET OF DATA REQUESTS TO AVISTA
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0032 Refer to Morris, Exh. SLM-1T, beginning at 14:22:
a. Will Avista be providing Hydro One with expertise in any of the following: (i)
operations of large MW electric generation, (ii) operation of a natural gas utility,
including storage facilities, and (iii) recently implemented IT investments? If yes, please explain, as to each.
b. What comparative expertise will Hydro One be providing to Avista that Avista does not have current experience or expertise in?
0033 Refer to Morris, Exh. SLM-1T at 20:3-15:
a. Until such time that cost savings are embedded in base rates, will Avista shareholders ultimately be accruing those savings?
b. Assuming a minimum of $1.7 million is saved on costs each year, what is the total net cost to Hydro One over a ten-year period for ratepayer credits and other
donations provided to Washington at large, assuming any annual-type is
continued for ten years (i.e., some commitments are one-time payments)? Please show the calculation.
c. What was the gain to shareholders as of July 18, 2017, related to Hydro One’s proposed acquisition?
0034 Refer to Morris, Exh. SLM-1T at 22:12-13. Is it Avista’s position that approval of the
merger requires the WUTC to make a finding that Avista retail customers must experience a net benefit? Please explain.
0035 Refer to Morris, Exh. SLM-1T, beginning at 25:23. Please confirm all approvals that have been obtained to date.
0036 Refer to Christie, Exh. KJC-1T, beginning at 9:17:
a. How does this commitment translate into a specific number of staff?
b. Describe how this commitment will be tracked and numerically measured.
0037 Refer to Christie, Exh. KJC-1T, beginning at 10:11. How will this commitment be numerically measured to ensure this commitment is met?
0038 Refer to Christie, Exh. KJC-1T at 15:4-8. Does Avista have any specific proposals or
potential concepts that will demonstrate—if enacted, and for one or more customer classes—an expansion or enhancement of its demand management program? If yes, please describe.
0039 Refer to Christie, Exh KJC-1T, beginning at 17:20. The testimony reads “The transaction
is not designed to target the elimination of jobs, or cost cutting that may lead to a
PAGE 3 – ICNU’S THIRD SET OF DATA REQUESTS TO AVISTA
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
deterioration of customer service, customer satisfaction...” Does this mean that while not designed to occur, deterioration of customer service may yet still occur? If no,
please explain.
0040 Refer to Christie, Exh. KJC-2:
a.This exhibit seems to demonstrate that Avista is exceeding its service qualitystandard thresholds. Is it Mr. Christie’s position that in presenting this exhibit,that Avista, post-transaction, will meet the service quality thresholds or continue
Avista’s present performance level and exceed such thresholds, at least at the
present levels? If the latter, please identify the relevant service qualitycommitment.
b.What service quality commitment is offered in this transaction?
0041 Refer to Thies, Exh. MTT-1T at 16:28-29, which states, “Additional details of the
calculation of these savings are provided in my workpapers.” Please provide the page
number of these workpapers and/or exhibit numbers, for the additional detail referred to in testimony.
0042 Refer to Thies, Exh. MTT-1T, beginning at 22:8:
a.Why is Commitment No. 22 made at the level of Olympus Holding Corp. and not
Hydro One? Please explain.
b. Please explain why Commitment No. 19 is made at the level of Olympus HoldingCorp. and not Hydro One.
c.Please explain why Commitment No. 20 is made at the level of Olympus HoldingCorp. and not Hydro One.
d.Please explain why Commitment No. 23 is made at the level of Olympus Holding
Corp. and not Hydro One. For example, is the intent to allow Avista to subsidizeHydro One?
e.Please explain why Commitment No. 30 is made at the level of Olympus HoldingCorp. and not Hydro One. Will Hydro One not submit to the jurisdiction of the
relevant state courts?
f.Please explain why Commitment No. 41(b) is made at the level of OlympusHolding Corp. and not Hydro One.
g.Please explain why Commitment No. 46 is made at the level of Olympus HoldingCorp. and not Hydro One. For example, is the intent to allow Hydro One to make
changes to the ring fencing provisions, absent approval by the WUTC?
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DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0043 Refer to Thies, Exh. MTT-1T at 27:2-3:
a. Why does this commitment not include Hydro One?
b. Does Hydro One not pledge to ensure Avista’s pension fund will be adequately
funded in accordance with sound actuarial practice?
0044 Refer to Thies, Exh. MTT-1T at 27:4-7. Why is Hydro One not listed as being bound to ensure this commitment is met?
0045 Refer to Thies, Exh. MTT-1T at 27:8-11. Why is Hydro One not listed as being bound to
ensure this commitment is met?
0046 Refer to Thies, Exh. MTT-1T at 28:4-15:
a. What contractual role or responsibility will be specified by Hydro One to the independent director?
b. Since the text reads that the independent director of Olympus Equity LLC can be
the same as for Avista, does that mean that the role and interests the independent
director plays is the same for Olympus Equity as that for Avista? Please explain.
c. Why is the independent director not unique for Avista alone?
0047 Refer to Thies, Exh. MTT-1T, beginning at 28:21.
a. Please explain why the testimony refers to both Avista and Hydro One, but in the
commitment language document Hydro One is not listed.
b. Given that paragraph b of the non-consolidation opinion commitment speaks to Olympus Holding Corp., stating it will not seek to include Avista in a bankruptcy to consolidate the assets and liabilities of Avista with those of Olympus Holding Corp., why is it envisioned that the same independent director can serve for both
Olympus Holding Corp. and Avista?
c. What protection exists if a Hydro One bankruptcy claimant or Hydro One itself seeks to bring in the assets or liabilities of Avista? Please explain.
0048 Refer to Thies, Exh. MTT-1T at 33:2-10. Is Avista able to entertain and negotiate with entities interested in acquiring Avista during the pendency of this application for
approval? Please explain.
0049 Refer to Thies, Exh. MTT-4 at 6. Please provide (or identify, within the Document Room or filed material) the list of names for the board members of Hydro One, Olympus Holding Corp. and Olympus Corp.
PAGE 5 – ICNU’S THIRD SET OF DATA REQUESTS TO AVISTA
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0050 Refer to Thies, Exh. MTT-4 at 7, Sec. 2.1(d). Please provide a copy of Chapter 23B.13 of the WBCA.
0051 Refer to Thies, Exh. MTT-4 at 9, Sec. 2.3. Please separately identify all:
a. Outstanding performance awards; and
b. Restricted stock units by name or designee, and respective numbers of each restricted stock units or performance awards and monetary value, of each, excluding any applicable interest (if any) or amounts held for taxes payable.
0052 Refer to Thies, Exh. MTT-4 at 21, Sec. 3.17. Please provide (or identify, within the
Document Room or filed material) a copy of the opinion referenced that was prepared by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
0053 Refer to Thies, Exh. MTT-4, beginning at 24. Please explain Section 5.1, and the reasonableness of the dollar restrictions placed on Avista, with regard to:
a. Avista’s on-going business activities; and
b. The ability to enter into a new line of business.
0054 Refer to Thies, Exh. MTT-4 at 24, Sec. 5.1. If, for example, Avista identified a new significant opportunity to buy a renewable resource that costs 10 percent more than Avista had included in its budget, would these provisions exclude the action from taking
place? If no, why not?
0055 Refer to Thies, Exh. MTT-4 at 36, Sec. 5.8(c). Please explain the term “tail insurance” and what protection tail insurance provides.
0056 Refer to Thies, Exh. MTT-4 at 43, Sec.7.1. Please explain, in basic terms, the conditions by which Avista may terminate the agreement, other than mutual consent, and not be
obligated to pay the $103,000,000 Company Termination Fee.
0057 Refer to Thies, Exh. MTT-4 at 43, Sec. 7.1. If the applicants do not receive regulatory approvals, is the Parent required to pay Avista the Parent Termination Fee? Please explain.
0058 Refer to Thies, Exh. MTT-4 at 43, Sec. 7.1. If regulatory approvals are not obtained by
September 30, 2018, then can the Parent unilaterally extend the agreement for six months
(assuming the Parent has not breached its obligations)? If no, please explain.
0059 Refer to Thies, Exh. MTT-4 at 45, Sec. 7.3(d). Regarding the Company Termination Fee of $103,000,000:
a. Please provide any precedents, in utility merger acquisitions involving utilities
under WUTC jurisdiction, for a Company Termination Fee.
PAGE 6 – ICNU’S THIRD SET OF DATA REQUESTS TO AVISTA
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
b. Please provide any precedents, in utility merger acquisitions involving United States regulated utilities, where a Company Termination Fee (in the case of the
acquired company) is provided for.
0060 Refer to Thies, Exh. MTT-4 at 65 ¶ 2. Does that paragraph allow:
a. Hydro One to replace all Avista Board Members, except for the Avista CEO, with its own candidates? If no, why not?
b. Hydro One to not include Pacific Northwest residents as board members, for a
period of up to six months? If no, why not?
0061 Refer to Thies, Exh. MTT-4 at 65 ¶ 3. Does this allow Hydro One to replace the Chairman of the Board, Mr. Morris, after the first year? If no, why not?