20230523_AVUU2301_jtcs.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
FROM:JOSEPH TERRY
CLAIRE SHARP
DATE:MAY 23,2023
RE:AVISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
ENTER INTO CREDIT FACILITIES UP TO $600,000,000;
CASE NO.AVU-U-23-01
BACKGROUND
On May 4,2023,Avista Corporation ("Avista")applied for authorityto enter into one or
more debt facilities up to $500,000,000 in total with an option to increase by an additional
$100,000,000 to $600,000,000.The term of the facilities will be for five years expiring in 2028
with an option to extend the term 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 authorized time frame.The
Commission received the appropriate filing fee on May 15,2023.
The requested authority will replace the current facilities authorized in Order No.34995
(Case No.AVU-U-21-01)set to expire in 2026.The primary reason for this Application is
changing the London Interbank Offered Rate ("LIBOR")that was previously approved to the
Secured OvernightFinancing Rate ("SOFR")rate in this credit facility.As of May 12,2023,the
SOFR 30-day rate was 4.901%while the LIBOR 1 month rate was 5.405%.
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 -MAY 23,2023
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 previously authorized
notification and filing process if a rating falls below investment grade.
The Company also requests authorityto 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.Staff
also recommends the authority be for five years.Staff recommends both the extension of an
additional $100,000,000and up to two additional years 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 (withoutfurther 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 $500,000,000 in one
or more credit facilities?
Does the Commission wish to authorize a term of five years?
DECISION MEMORANDUM -2 -MAY 23,2023
Does the Commission wish to authorize extensions of up to $100,000,000and up to two
additional years with the requirement that Avista files an informational letter if extensions are
exercised?
Does the Commission wish to allow its authorityunder this Order be continuingduring
the authorized term provided the senior secured debt rating levels remain investment grade?
seph erry
Udmemos/AVU-U-23-01 Decision Memo
DECISIONMEMORANDUM -3 .MAY 23,2023