20140317_4317.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
DATE:MARCH 14,2014
SUBJECT:AVISTA CORPORATION’S APPLICATION FOR AUTHORITY TO
ENTER INTO CREDIT FACILITIES UP TO 5500,000,000;
CASE NO.AVU-U-14-01.
On February 18,2014.Avista Corporation (Avista)applied for authority to enter into one
or more debt credit facilities up to $500,000,000 in total.The term of the facilities will be for
five years expiring in 2019 with an option to extend the term up to two years.The credit
facilities may include issuance of secured or unsecured bonds,notes or other indebtedness.It is
proposed that any guarantee of indebtedness may be refunded,extended,renewed or replaced
within the authorized timeframe.The requested authority will replace current facilities set to
expire in February 2017.
The proceeds will be used for one or more of the following purposes:(a)the Company’s
acquisition,construction,completion,extension or improvement of facilities,(b)the
improvement or maintenance of service,(c)retirement or exchange of one or more outstanding
stock,bond,or note issuances.(c)reimbursement to the treasury for funds previously expended,
and (d)for such other purposes as may be permitted by law.
The estimated fees and borrowing spreads wilL be based on the Company’s current senior
secured debt rating and current market information.Avista’s current senior secured debt ratings
are A-by Standard &Poors and A2 by Moody’s.This currently places Avista in Pricing Level I
where the facility fee would be 0.10%.Avista will only enter into transactions where the fees,
interest rates and expenses charged or incurred by Avista in connection with the transactions and
any refunding,extensions,renewals or replacements are competitive with market prices for
similar transactions.The Company’s Application is consistent with the previously authorized
notification and filing process if a rating falls below investment grade.
DECISION MEMORANDUM 1 MARCH 14,2014
The Company also requests authority to issue,refund,extend,renew or replace
indebtedness under the credit facility without further Commission approval.The issuance would
allow the Company greater flexibility to manage its daily cash funds and reduce borrowing costs,
thereby permitting the Company to better manage its debt and capital in a more efficient and cost
effective manner.
STAFF RECOMMENDATION
Staff recommends approval of the proposed credit facilities up to $500,000,000 in total.
Staff also recommends the authority be for five years with allowed extensions up to two
additional years.If the extensions are exercised,Staff recommends the Company be required to
file an informational letter notifying the Commission of any extensions under this authority.In
addition,it is recommended that the authority under this initial approval be continuing (without
further order required)for the five-year term plus any extensions provided Avista maintains
senior secured debt ratings that are investment grade,BBB-/Baa3 or at least Pricing Level V.
The terms of the current authority are consistent with these recommendations and are acceptable
to the Company.
COMMISSION DECISION
I.Does the Commission wish to approve Avista’s request to issue up to $500,000,000 in
one or more credit facility?
2.Does the Commission wish to authorize a term of five years with extensions up to two
years?
3.Does the Commission wish to require Avista file an informational letter if extensions
are exercised?
4.Does the Commission wish to allow its authority under this Order to be continuing
during the authorized term provided the senior secured debt rating levels remain investment
grade?
Tern Carlock
i:udmemosAvU-U-l4-l Debt credit Facility dm3 2014
DECISION MEMORANDUM 2 MARCH H,2014