20210330_jt1jo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
TERRI CARLOCK
DATE:MARCH 25,2021
RE:AVISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
ENTER INTO CREDIT FACILITIES UP TO $500,000,000;CASE NO.
AVU-U-21-01
On March 10,2021,Avista Corporation ("Avista")applied for authority to enter into one
or more debt facilities up to $500,000,000 in total.The term of the facilities will be for five
years expiring in 2026 with an option to extend the term for 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,renewed or replaced within the authorizedtime
frame.The Commission received the appropriate filing fee on March 15,2021.
The requested authoritywill replace the current facilities authorized in Order No.34604
(Case No.AVU-U-20-01)set to expire in 2026.Shortly after the authorization granted from the
Commission in Order No.34604,the financial markets became extremely chaotic to a point that
Avista found it more advantageous to extend their previous agreement with the lender for one
year rather than to create a new agreement.Now that the financial markets have steadied,Avista
finds itself in a better position to create a new credit agreement.To maintain better
synchronicity between the credit agreements and Commission authorization the Company
elected to file this case.
The proceeds will be used for one or more of the followingpurposes:(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;(d)reimbursement to treasury for funds previously expended;and
(e)for such purposes as may be permitted by law.
DECISION MEMORANDUM -1 -MARCH 25,2021
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 A3 by Moody's.This currentlyplaces Avista in Pricing Level
III where the facility fee would be 0.125%.Avista will only enter into transactions where 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 previouslyauthorized
notification and filing process if a rating falls below investment grade.
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 flexibilityto 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 extensions up to two additional years
be allowed.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 Pricing level V.The terms
of this current authority are consistent with these recommendations and are acceptable to the
Company.
COMMISSION DECISION
Does the Commission wish to approve Avista's request to issue up to $500,000,000in
one or more credit facilities?
Does the Commission wish to authorize a term of five years with extensions up to two
years?
DECISION MEMORANDUM -2 -MARCH 25,2021
Does the Commission wish to require Avista file an informational letter if extensions are
exercised?
Does the Commission wish to allow its authority under this Order be continuing during
the authorized term provided the senior secured debt rating levels remain investment grade?
A Joseph Terry
Udmemos/AVU-U-21-01 decision memo
DECISION MEMORANDUM -3 -MARCH 25,2021