20070305Compliance filing.pdf

Avista Corp.
1411 East Mission PO Box 3727
Spokane. Washington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
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Match 2, 2007
State of Idaho
Idaho Public Utilities Commission
Statehouse
Boise, ID 83720
Attention: Ms. Jean Jewell, Secretary
RE:A vista Corporate Reorganization to Create a Holding Company;
Case Nos. A VU-06-1 and A VU-06-
Pursuant to Order No. 30091 , in case Nos. A VU-06-1 and A VU-06-, enclosed for filing
with the Commission are an original and seven copies of the Final Order Accepting the
Settlement Stipulation and Approving the Corporate Reorganization to Create a Holding
Company, the Settlement Stipulation, and Appendix A Commitments And Conditions, for
Avista Corporation s Reorganization approved by the Washington Utilities and Transportation
Commission (WUTC) in Docket No. UE-060273 on February 28 2007.
This filing is in compliance with the requirement that a copy of any stipulation reached in
another jurisdiction, regarding Avista s corporate reorganization proposal to create a holding
company, be provided to the Commission and other parties within 5 calendar days.
Please direct any questions regarding this filing to Liz Andrews at [phone].
Sincerely,
~...
r.nroJ
Kelly Norwood
Vice President, State and Federal Regulation
Enclosures
(Service Date February 28, 2007)
BEFORE THE WASHINGTON STATE
UTILITIES AND TRANSPORTATION COMMISSION
In the Matter of the Application of DOCKET U-060273
. . . - - - . . . . . . . . . . . - . . . . - . . . - - . . . .
ORDER ACCEPTING SETTLEMENT
STIPULATION AND APPROVING
CORPORATE REORGANIZATION
TO CREATE A HOLDING
COMPANY
A VISTA CORPORATION D/B/A
A VISTA UTILITIES
ORDER 03
for an Order Approving a Corporate
Reorganization To Create a Holding
Company, AVA Formation Corp.
Synopsis: The Commission accepts the multiparty Settlement Stipulation as being in
the public interest and approves the corporate reorganization to create a holding
company.
MEMORANDUM
Background and Procedural History
On February 16, 2006, Avista Corporation d/b/a Avista Utilities (Avista) filed a
request for an Order Approving a Corporate Reorganization to Create a Holding
Company, AVA Formation Corp. (AVA).
The Washington Utilities and Transportation Commission (Commission) conducted a
prehearing conference on September 6, 2006, in Seattle, Washington, before
Administrative Law Judges C. Robert Wallis and Patricia Clark. This matter was
subsequently assigned to Judge Clark. In Order 01 , Prehearing Conference Order, the
Commission established a procedural schedule setting deadlines for the submission of
prefiled testimony and an evidentiary hearing and granted petitions to intervene filed
by Industrial Customers of the Northwest (ICNU) and Northwest Industrial Gas Users
DOCKET U-060273
ORDER 03
PAGE 2
(NWIGU).1 On October 20 2006, Avista timely submitted its direct case consisting
of the prefiled testimony and exhibits of three witnesses in support of its request.
On January 5 , 2007, Avista, the Commission s regulatory staff (Staffi, and the Public
Counsel Section of the Washington Office of Attorney General (Public Counsel) filed
a Settlement Stipulation and supporting narrative. The remaining two parties to this
proceeding, ICNU and NWIGU are not signatories to the Settlement Stipulation and
neither support nor oppose the settlement. A copy of the Settlement Stipulation is
attached to this Order as Appendix A and, by this reference, incorporated herein.
The stipulating parties also filed a request to suspend the current procedural schedule
in advance of the pending deadline to submit responsive testimony. The
Administrative Law Judge issued a procedural order suspending the remainder of the
procedural schedule and allowing the parties to submit a position statement regarding
whether the Commission should convene an oral hearing or whether this matter could
be heard on the written record. Staff filed a position statement on behalf of all
stipulating parties stating that they believed the Commission could hear this matter on
the basis of the written record unless there is Commission inquiry.
Procedural Matters: We grant the request of the stipulating parties to admit into
evidence the prefiled testimony and exhibits of A vista. We admit into evidence an
exhibit list identifying each document as well as the prefiled direct testimony and
exhibits submitted by A vista.
According to WAC 480-07-740(2), parties to a settlement agreement must file
supporting documentation demonstrating that the proposal is consistent with law and
the public interest and that it is appropriate for adoption. The supporting
documentation should include a narrative, a statement of the parties' views about why
the proposal satisfies their interests and the public interest, a summary of the legal
points that bear on the proposed settlement, and testimony in support of the proposal.
1 NWIGU's petition to intervene was deemed granted absent an objection showing cause for denial. No
party filed an objection to the petition.2 In formal proceedings, such as this case, the Commission s regulatory staff functions as an independent
party with the same rights, privileges, and responsibilities as any other party to the proceedings. There is
an ex parte wall" separating the Commissioners, the presiding ALl, and the commissioners ' policy and
accounting advisors from all parties, including Staff. RCW 34.05.455.
3 The exhibit list is received as Exhibit No. 1.
4 WAC 480-07-740(2)(a) and (b).
DOCKET U-060273
ORDER
PAGE 3
The settlement stipulation and supporting documentation complies with the
requirements of the regulation.
Party Representatives: David 1. Meyer, Vice President and Chief Counsel
Spokane, Washington, represents Avista. Donald Trotter, Senior Assistant Attorney
General, Olympia, Washington, represents Commission Staff. Judith Krebs, Assistant
Attorney General, Seattle, Washington, represents Public Counsel. Matthew Perkins
Davison Van Cleve, Portland, Oregon, represents the ICNU. Edward A. Finklea
Cable Huston Benedict Haagensen & Lloyd, Portland, Oregon, represents NWlGU.
II.Discussion and Decision
Terms of the Settlement Stipulation:5 Under the current corporate structure, A vista
Corporation d/b/a A vista Utilities is a utility offering electric and/or natural gas
service in eastern Washington, northern Idaho, Oregon, and Montana . Avista
Capital, the parent corporation of Avista s non-regulated subsidiary investments and
operations, is a subsidiary of Avista Corporation.
Avista proposes to form a holding company, AVA, that would be the parent
corporation of A vista and A vista Capital. 8 A vista has comparable cases pending
before the Oregon and Montana Commissions; the Idaho Commission and the Federal
Energy Regulatory Commission (FERC )have already approved the applications in
their jurisdictions.9 The Settlement Stipulation contains a "most favored nations
clause that would allow the Commission to consider and adopt any terms A vista
either agrees to or is required to comply with in other jurisdictions even if the terms
are established after entry of an order in Washington.
A vista would maintain its books and records separate from AVA and the Commission
would have access to all books of account, data, and records of both entities as well as
information pertaining to transactions between A vista and its affiliated interests.
The Commission may audit those records to determine the reasonableness of the
5 The terms and conditions in the Settlement Stipulation are, in general, supported by Avista s prefiled
direct testimony.6 Settlement Stipulation at 2:'116.
Id.8 Settlement Stipulation at 2-3:'117.9 Settlement Stipulation at 6:'1119.
10 Settlement Stipulation at 6-II Settlement Stipulation, Appendix A at 1 :'111 and '112.
DOCKET U-060273
ORDER 03
PAGE 4
allocation factors used to assign costs to A vista.12 The proposed cost allocation
methodology must comply with principles established to ensure that the allocations
are reasonable and prudent. 13 An Intercompany Administrative Services Agreement
will be developed and filed with the Commission.14 AVA and A vista commit to use
asymmetrical pricing (lower of cost or market for transactions to A vista and higher of
cost or marketing for transactions from Avista) if the transaction involves a cost of
more that $100 000.
A vista and A V A agree to adhere to FERC' s Standards of Conduct and FERC' s rules
governing "shared employees." 16 Avista will maintain separate debt, preferred stock
and corporate credit ratings. I? In general rate proceedings , A vista agrees to not
advocate for a higher cost of capital than would be appropriate absent
reorganization.18 The capital requirements of A vista will be met by A V A and such
capital requirements will be given a high priority by the board of directors of AVA
and A vista.
Avista agrees to increase its actual utility equity component to 40 percent by June 30
2008, and failure to do so will result in use of the actual equity ratio in the next
general rate case after that date.2O A vista will not issue any dividends to AVA if its
common equity ratio is below 30 percent Total Adjusted Capital, without
Commission approval. 21 If A vista obtains a loan from AVA or any affiliate, in
subsequent general rate cases, A vista must demonstrate that the debt obligation
interest, terms, and conditions are comparable to or less than market.22 Avista and
AVA will enter into an agreement with ring-fencing provisions that insulate A vista
from an A V A bankruptcy.
The stipulating parties agree that the Commission should admit into evidence the
pre filed direct testimony and exhibits filed by A vista.
12 Settlement Stipulation, Appendix A at 1 :'11513 Settlement Stipulation, Appendix A at 2-3:'1110.
14 Settlement Stipulation, Appendix A at 2-3 :'111 oCt).
15 Settlement Stipulation, Appendix A at 3:'II10(g).16 Norwood, Exh. No. I at 7:14-16; Settlement Stipulation, Appendix A at 3:'1112.
17 Settlement Stipulation, Appendix A at 3:'1113
18 Settlement Stipulation, Appendix A at 4:'1114
19 Settlement Stipulation, Appendix A at 4:'1118.
20 Settlement Stipulation, Appendix A at 4:'1121; Norwood, Exh. No.
21 Settlement Stipulation, Appendix A at 5:'1122.
22 Settlement Stipulation, Appendix A at 7:'1133.
23 Settlement Stipulation, Appendix A at 7:'1134-35.
DOCKET U-060273
ORDER 03
PAGE 5
Decision: According to WAC 480-07-750, we may approve a settlement when doing
so is lawful, the terms are supported by an appropriate record, and when the result is
consistent with the public interest. We agree with the parties that it is in the public
interest to approve and adopt the Settlement Stipulation as our full resolution of the
issues pending in this proceeding. We discuss below our reasons for approval and if
there are any differences between our discussion and the Settlement Stipulation, the
latter controls.
Cost of Capital: Our first concern is whether the proposed corporate structure will
adversely impact the public utility's ability to attract capital at reasonable rates.
According to the Settlement Stipulation, A vista will maintain separate debt, preferred
stock, and corporate credit ratings.
A vista commits to increase its actual utility equity component to 40 percent by June
2008. If Avista fails to achieve that equity level, it agrees to use its actual equity
ratio in the next general rate case. A vista would be subject to a dividend restriction
that would prohibit it from issuing dividends, without Commission approval, to AVA
if its equity ratio is below 30 percent.
The proposed corporate structure does not appear to adversely affect, and may
improve, Avista s ability to attract capital at reasonable cost and risk. Avista will
maintain separate credit ratings which should shield the utility from the vagaries of
higher risk non-utility operations.
Cross-subsidization: The reorganization also raises the issue of whether A vista
would subsidize non-utility operations under the new corporate structure. To protect
against that situation, the Settlement Stipulation requires transactions between A vista
and AVA to allocate costs according to reasonable and prudent cost allocation
principles. The Intercompany Administrative Services Agreement is essentially a
cost allocation manual that must be filed with the Commission. The Commission has
the power to audit the books and records of both companies to ensure compliance
with cost allocation principles. A vista agrees to asymmetrical pricing which means
that the utility ratepayers always achieve the best price for transactions between
A vista and AVA.
DOCKET U-O60273
ORDER 03
PAGE 6
We conclude that the cost allocation standards and procedures and asymmetrical
pricing provisions coupled with Commission audit provisions, provide sufficient
safeguards to ensure that ratepayers do not subsidize non-utility operations.
Ring-fencing Provisions: Ring-fencing provisions are intended to isolate utility
operations from any negative financial impacts flowing from unregulated units: (1)
ensure that the utility maintains a strong credit rating and can attract capital; (2) to
prevent cross-subsidization of non-regulated ventures; and (3) to ensure regulators
access to timely and accurate information. 24
Therefore, the final issue presented by the corporate reorganization is whether A vista
is adequately insulated from the operations of the new parent company, AVA
protect its operations from adverse credit ratings, A V A bankruptcy, and other adverse
events attributable to or caused by the parent or an affiliated company. As proposed
Avista will be a separate legal entity.25 Avista will maintain its own books and
records?6 Within three months of closing the transaction, A vista and AVA will
obtain separate corporate credit ratings. If the ring-fencing provisions of the
Settlement Stipulation are inadequate to obtain a separate rating, A vista must notify
the Commission and propose additional ring-fencing provisions to obtain that separate
credit rating.
27 Avista and A V A will enter into an agreement that incorporates the
ring-fencing provisions of the settlement and file that agreement with the Commission
within three months of closing.28 In addition, AVA agrees to not acquiesce or seek
include Avista in any A V A bankruptcy so long as Avista is financially healthy.
A vista commits to obtain a non-consolidation opinion from an independent law firm
finding that the ring-fencing around Avista should be sufficient to prevent Avista
from being pulled into an A V A bankruptcy.3D In addition
, the Plan of Share
Exchange requires A vista to obtain a favorable opinion from Heller Ehrman LLP
covering certain United States federal income tax matters.
24 Mergers and Ring Fencing Issues: An Oregon Perspective Oregon Public Utility Commissioner Ray
Baum presentation at the Technical Conference on Public Utility Holding Company Act of2005
December 7 2006.
25 Narrative Supporting Settlement at 8 '1129.
26 Settlement Stipulation, Appendix A at 1 'Ill.
27 Narrative Supporting Settlement at 8 '1129.28 Settlement Stipulation, Appendix A at 7'1134.
29 Settlement Stipulation, Appendix A at 8'1138.
30 Settlement Stipulation, Appendix A at 7'1135.3\ Malquist, Exh. No.7 at A-, Article IY(E).
DOCKET U-060273
ORDER 03
PAGE 7
The ring-fencing provisions in the Settlement Stipulation appear to fulfill the three
goals of such provisions. First, A vista would no longer be an operating division;
would be a separate corporation. As a separate corporation, A vista should be better
insulated from adverse financial actions of its affiliates than in the current corporate
structure. It would have its own credit rating, books and records, and capital
structure. Under the reorganization there would be no link between the non-regulated
businesses and A vista. Second, as previously discussed, the Settlement Stipulation
includes several measures to ensure that there are appropriate cost allocation
principles and standards in effect to ensure that Avista will not be subject to cross-
subsidization. Third, the Settlement Stipulation specifically provides that the
Commission will have access to the books and records of A vista and AVA.
Moreover, the Commission will have several opportunities to "test" the efficacy of
the ring-fencing provisions. First, if Avista and AVA cannot obtain separate credit
ratings within three months, they must notify the Commission and propose additional
provisions to separate the two entities. Second, the Commission will have the
opportunity to review the ring-fencing agreement between A V A and Avista. Third
A vista has committed to obtaining a non-consolidation opinion from an independent
law firm. The ring-fencing provisions should ensure that Avista is isolated from
negative financial impacts created by AVA or other affiliates.
Considering the foregoing, we conclude that the terms and conditions of the
Settlement Stipulation are consistent with the public interest. Moreover, given the
fact that the parties were willing to engage in settlement negotiations before
significant time and pecuniary resources were expended in the preparation of prefiled
responsive and reply testimony and exhibits and administrative review, both party and
Commission resources were conserved. Nonetheless, we specifically reserve the right
to invoke the "most-favored nations" clause in the Settlement Stipulation should we
conclude that another jurisdiction adopted a provision that we find beneficial and
consistent with the public interest in Washington.
FINDINGS OF FACT
Having discussed above in detail the evidence received in this proceeding concerning
all material matters, and having stated findings of fact and conclusions upon issues
and the reasons therefore, the Commission now makes and enters the following
summary of those facts, incorporating by reference pertinent portions of the detailed
findings:
DOCKET U-060273
ORDER 03
PAGE 8
(1)
(2)
(3)
Avista Corporation d/b/a Avista Utilities is engaged in the business of
furnishing electric and gas service within the state of Washington as a public
servIce company.
On February 16 2006, Avista Corporation d/b/a Avista Utilities filed a request
for an order approving a corporate reorganization to create a holding company,
AVA Formation Corp.
On January 5, 2007, Avista Corporation d/b/a Avista Utilities , the
Commission s regulatory staff, and the Public Counsel Section of the
Washington Office of the Attorney General filed a multiparty Settlement
Stipulation. The remaining two parties to this proceeding, Industrial
Customers of the Northwest and Northwest Industrial Gas Users are not
signatories to the Settlement Stipulation and neither support nor oppose the
settlement.
(4)The parties to the Settlement Stipulation requested that the prefiled direct
testimony of Avista Corporation d/b/a Avista Utilities be received in evidence.
CONCLUSIONS OF LAW
Having discussed above all matters material to this decision, and having stated
detailed findings, conclusions, and the reasons therefore, the Commission now makes
the following summary conclusions of law, incorporating by reference pertinent
portions of the preceding detailed conclusions:
(1)The Washington Utilities and Transportation Commission has jurisdiction over
the subject matter of, and parties to, this proceeding.
(2)The pre filed direct testimony and exhibits of A vista Corporation d/b/a A vista
Utilities should be received in evidence.
(3)The Settlement Stipulation and accompanying documents comply with the
requirements ofW AC 480-07-740(2).
DOCKET U-060273
ORDER 03
PAGE 9
(4)
(5)
The multiparty Settlement Stipulation meets the standard in WAC 480-07-750;
it is lawful, it is supported by an adequate record, and is consistent with the
public interest and should be accepted.
Subject to the conditions of the multiparty Settlement Stipulation, the
proposed corporate reorganization to create a holding company, A V A
Formation Corp., is consistent with the public interest and should be approved.
ORDER
THE COMMISSION ORDERS THAT:
(1 )The multiparty Settlement Stipulation filed by Avista Corporation d/b/a Avista
Utilities, the Commission s regulatory staff, and the Public Counsel Section of
the Washington Office of the Attorney General on January 5, 2007, is
accepted.
(2)Subject to the conditions in the multiparty Settlement Stipulation, the request
to create a holding company, AVA Formation, Corp., is approved.
(3)The request to receive in evidence the prefiled direct testimony and exhibits of
A vista Corporation d/b/a A vista Utilities is granted.
DATED at Olympia, Washington, and effective February 28, 2007.
WASHINGTON STATE UTILITIES AND TRANSPORTATION COMMISSION
MARK H. SID RAN, Chairman
PATRICK 1. OSHIE, Commissioner
PHILIP B. JONES, Commissioner
DOCKET U-060273
ORDER 03
PAGE 10
NOTICE TO PARTIES: This is a final order of the Commission. In addition to
judicial review, administrative relief may be available through a petition for
reconsideration, fIled within 10 days of the service of this order pursuant to
RCW 34.05.470 and WAC 480-07-850, or a petition for rehearing pursuant to
RCW 80.04.200 or RCW 81.04.200 and WAC 480-07-870.
BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION- COMMISSION
In the Matter of the Application of Avista
Corporation d/b/a A vista Utilities for an
Order Approving a Corporate
Reorganization To Create a Holding
Company, AVA Formation Corp.
DO~KET UE~O60273
SETTLEMENT STIPULA nON
OVERVIEW
The Stipulation resolves all issues and should be approved
The Parties to this Settlement Stipulation agree that it represents a fair, just and
reasonable compromise of the issues raised in this proceeding, that this Settlement
Stipulation ("Stipulation ) is in the public interest, and it satisfies the Commission s "
hann to ratepayers" policy. The Parties further agree that the Commission should approve
this Stipulation with no material changes, in resolution of all issues in this docket.
Therefore, the Parties recommend the Commission approve Avista's Application for
reorganization under the terms set forth in this Stipulation. The Parties understand this
Stipulation is subject to Commission approval.
Parties to the Stipulation
This Stipulation is entered into, by and between Commission Staff, A vista
Corporation, doing business as A vista Utilities ("A vista"), and the Public Counsel Section of .
the Attorney General's Office ("Public Counsel"
The other parties to this docket are Intervenors Northwest Industrial Gas Users
(NWIGU) and the Industrial Customers of Northwest Utilities (ICND), who are not
STIPULATION -
signatories. However, NWIGU's counsel (Mr. Finklea) and ICND's counsel, Mr. Perkins,
respectively advised Commission counsel (Mr. Trotter) that NWIGU and ICND neither
support nor oppose this Stipulation. Consequently, this is a multiparty settlement, as that
term is defined in WAC 480-07-730(3). Slip. ~ 3.
Documents comprising the Stipulation
The Stipulation consists of this document entitled "Settlement Stipulation" and
Appendix A attached hereto, entitled "Commitments and Conditions.
II.NATURE OF A VISTA'S APPLICATION
On February 16 2006, Avista filed its "Application of Avista Corporation
Application ) with the Commission, seeking an order authorizing Avista to conduct a
corporate reorganization, including the formation of a holding company to be known as
A VA Formation Corp (hereinafter referred to as the_Reorganization ). This Commission
has jurisdiction over such request pursuant to R~W 80.12.
. Currently, Avista Corporation, doing business as Avista Utilities, is the utility
offering electric and/or natural gas service in eastern Washington, northern Idaho, Oregon
and Montana. A vista Capital is a subsidiary of A vista Corporation. A vista Capital currently
is the parent corporation of Avista Corporation s non-regulated subsidiary investments and
operations.
A vista proposes to form a holding company called A V A Formation Corp. ("A V A"). 1 ,
AVA would be the parent corporation of the existing regulated utility, which would be
t This name will be used in the interim for purposes of designating the holding company. When the new name
is publicly announced, A vista will notify the Commission and interested parties.
STIPULATION - 2
called Avista Corporation (doing business as Avista Utilities). Avista Corporation. would
become a separate company under the parent company, A VA.
A V A would also be the parent company of Avista Capital, Inc., which would
continue to hold the non-regulated subsidiary investments and operations, such as A vista
Energy, Advantage IQ (formerly Avista Advantage) and Avista Power.
ID.NATURE OF THE STIPULATION
The Stipulation is subject to Commission approval
This Stipulation is subject to Commission approval. The Parties understand and
agree that this Stipulation in no manner binds the Commission in ruling on the Application
until such a time as the Commission approves the Stipulation.
Commitments
Appendix A of this Stipulation contains the complete list of the commitments and
conditions (hereinafter referred to as "Commitments") A vista agrees to make and abide by to
ensure that the formation and future conduct of the holding company corporate structure
meets the Commission s "no harm to ratepayers" policy.2 By virtue of executing this
Stipulation, A vista agrees to perform all of the Commitments set forth in Appendix A
according t~ the provisions of each Commitment as set forth therein.
Certain of the Commitments are made by the new, to-be-formed parent corporation
A VA. A vista agrees it has authority to make these commitments on behalf of A V A, and that
upon its formation, A V A will be bound to abide by these commitments.
In re PacifiCorp and Scottish Power PIC. Docket UE-981627, 3rd Supplemental Order on PreheaTing
Conference (April 2, 1999) at 2-3.
STIPULA nON - 3
----
IV.THE PROCESS FOR APPROVING THE STIPULATION
The Parties recommend approval and agree to support the Stipulation
The Parties recommend the Commission approve this Stipulation in its entirety,
pursuant to WAC 480-07-740 and -750. The Parties agree to support this Stipulation before
the Commission. Each Party agrees it will not appeal any portion of this Stipulation or
Order approving the same, so long as no material changes are made to the Stipulation.
Hearing procedures
The Parties agree that within one business day of the date of execution of-this
Stipulation, Staff will file this Stipulation with the Commission on behalf of the Parties.
The transmittal letter will ask the Commission to suspend the existing procedural schedule
and schedule hearing dates to review the Stipulation.
The Parties understand the Commission has discretion, consistent with applicable
law, to determine the appropriate procedures for determining whether it will approve this
Stipulation.
Evidence
The Parties agree that the Commission should admit into evidence the direct case
filed by Avista in this docket.3 Additional evidence will be presented at a hearing on the
settlement to be scheduled by the Commission, or as otherwise directed by the Commission.
3 This evidence consists of the direct testimony and exhibits of Mr. Norwood (Exhibit - (KON-lT) and
Exhibits - (KNO-2) and - (KON-3) and Mr. Malquist (Exhibit - (MKM-I T) and Exhibits (MKM-
2) and - (MKM-3), and the direct testimony of Mr. Andrews (Exhibit - (EMA-IT).
STIPULA nON - 4
Effect of Commission approval without material changes
The Parties agree that if the Commission approves the Stipulation without material
change, this docket will be concluded, subject to any proceedings described in Part IV.F (~~
19-24) below ("'Most favored nations' provision
Effect of rejection or partial Commission approval of this Stipulation
In the event the Commission rejects any part or all of this Stipulation, or imposes any
additional material tenus as a condition of approval of this Stipulation, each Party has the
right to withdraw from this Stipulation. In order to withdraw, a Party must file a written
notice of withdrawal with the Commission and send a copy to the other Parties, within 14
calendar days of the date of such action by the Commission.
If a Party withdraws pursuant to the foregoing procedures, this Stipulation is not
effective, and no Party shall be bound or prejudiced by its tenus. In that event, each Party is
entitled to seek reconsideration of the Commission s order partially approving the
Stipulation, file testimony as it chooses, cross-examine witnesses, and do all other things
necessary to put on such case as it deems appropriate. The Parties immediately will request
the Commission to promptly convene a prehearing conference to establish a procedural
schedule for the completion of the case. The Parties agree to cooperate in development of a
schedule that concludes the proceeding on the earliest possible date, taking into account the
needs of the Parties to prepare for hearings, to participate in hearings and to prepare briefs.
However, after a Party withdraws, nothing in this Stipulation prevents two or more of the
Parties from filing a settl~ment of the types described in WAC 480-07-730.
STlPULA nON - 5
i.-j
Most favored nations" provision
In the process of approving the Reorganization, other jurisdictions4 may include
terms5 that are not contained in this Stipulation. Accordingly, this Stipulation may be
expanded or modified as a result of regulatory decisions or settlements in those other
jurisdictions.
A vista agrees that the Commission shall have an opportunity and the authority to .
consider and adopt in Washington any terms to which Avista agrees or with which Avista is
required to comply in any other jurisdiction, even if such tenns are established after the
Commission enters its order approving the Stipulation in this docket.
To facilitate the Commission s consideration and adoption of such terms from other
jurisdictions, the Parties urge the Commission to issue an order accepting this Stipulation as
soon as practicable, but to expressly reserve in such order the right to re-open this
Stipulation to add (without modification of the language thereof except such non-substantive
changes as are necessary to make the term applicable to Washington) terms accepted or
ordered in another jurisdiction.
The Parties recommend the following process related to potential additional terms
originating from regulatory proceedings in other jurisdictions:
4 The Oregon and Montana commissions have yet to act on A vista's Reorganization applications. On June 30
2006 , the Idaho Public Utilities Commission issued an order approving Avista's reorganization application
based on a settlement in that state. In re Application of Avista Corporation, dba Avista Utilities for an Order
Approving a Corporate Reorganization to Create a Holding Company, A V A Formation Corp., Case A VU-
06-1 and A VU-O6-1 (Order 3009l). The Federal Energy Regulatory Commission has also issued its Order
Authorizing Disposition of Jurisdictional Facilities" on April 18, 2006. 1 I5 FERC 62,080.
5 "Terms" is broadly used to refer to provisions, conditions, commitments, covenants, elements etc.
STIPULATION - 6
. -=---:,
i..--J
Within five calendar days 'after a stipulation with new or amended terms is
filed by A vista with an agency in another jurisdiction, A vista will send a copy
of the stipulation and terms to the Commission and the Parties.
Within five calendar days after an agency in another jurisdiction issues an
order that accepts a stipulation to which A vista is a party or issues an order
that otherwise imposes new or modified terms, the applicable order, together
with all commitments and conditions of any type agreed to by A vista or
ordered by the agency in such other jurisdiction, will be filed with the
Commission and served on the Parties by the most expeditious means
practical. Within fifteen calendar days after receiving the last such filing
from the other jurisdiction ("Final Filing ), any Party wishing to do so shall
file with the Commission its response filing, inCluding its position as to
whether any terms from the other jurisdiction (without modification of the
language thereof except such non-substantive changes as are necessary to
make the term applicable to Washington) should be adopted in Washington
or whether such term would have an adverse impact on the Washington
jurisdictional activities of Avista.
Within five calendar days after any such response filing is filed, any Party to
the docket may file a reply with the Commission. The Parties agree to
support in their filings the issuance by the Commission oran order regarding
the adoption of such terms as soon as practical thereafter, recognizing that the
Reorganization cannot close until final orders from all relevant jurisdictions
STlPULA nON ~ 7
~---J
. .
have been issued. If the Commission adopts any such term, and the term is
material, each Party has the right to withdraw from the Stipulation according
to the procedures in Part IV.E (~~ 17-18) above.
Not later than the Final Filing, A vista will disclose to the Parties any written terms
made in another state jurisdiction (between the date of the filing of the Stipulation and the
receipt of the last order from an agency in a Reorganization docket) that were intended to
encourage approval of the Reorganization or avoid an objection thereto.
The Parties believe other jurisdictions will complete their review of the
Reorganization in time sufficient for this process to be complete by July 31, 2007. The
parties therefore encourage the Commission to use its best efforts to complete, the foregoing
process by that date.
EFFECTIVE DATE, APPROVAL DEADLINE, EXECUTION
AND OTHER MATTERS
Effective date
The effective date of this Stipulation shall be the date of the completion of the
Reorganization, provided the Commission has approved this Stipulation by th~t date. The
anticipated date of completion of the Reorganization is on or before July 31 , 2007.
Approval deadline
The Commission should approve the Stipulation as soon as practical, subject only to
the procedure under the "most favored nations" procedures discussed in Part IV.F (~~ 19-24)
above. As rioted there, the Parties believe other jurisdictions will complete their review of
the Reorganization in time sufficient for the "most favored nations" process to be complete
STIPULA nON - 8
by July 31 , 2007. The parties therefore encourage the Commission to use its be~t efforts to
complete the approval process by that date.
Execution of the Stipulation
This Stipulation is considered executed when all Parties sign the Stipulation. A
designated and authorized representative may sign the Stipulation on a Party's behalf. The
Parties may execute this Stipulation in counterparts. If the Stipulation is executed in
counterparts, all counterparts shall constitute one agreement. A faxed signature page
containing the signature of a Party is ~cceptable as an original signature page signed by that
Party. Each Party shall indicate the date of its signature on the Stipulation.
Integrated Agreement
The Parties have agreed to this Stipulation as an integrated document. This
Stipulation is the Parties' entire agreement on all matters set forth herein , and it supersedes
any and all prior oral and written understandings or agreements in this docket.
The Stipulation will not be construed against any Party as the drafter
The Parties acknowledge that this Stipulation is the product of negotiations and
compromise and shall not be construed against any Party on the basis that it was the drafter
of any or all portions of this Stipulation.
No precedent
Nothing in this Stipulation (or any~upporting testimony, presentation or briefing)
shall be cited or construed as precedent or as indicative of a Party's position on a resolved
issue, or asserted or deemed to mean that a Party agreed with or adopted another Party'
STIPULATION - 9
L..-:...,
. ---=.
legal or factual assertions in this proceeding. The limitation in this paragraph shall not apply
to any proceeding to enforce the terms of this Stipulation.
No Party shall be bound, benefited or prejudiced by any position asserted in,the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are
expressly waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery.
No Party shall be deemed to have agreed that any method, theory or principle of
regulation or cost recovery employed in arriving at this Stipulation is appropriate for
resolving any issues in any other proceeding in the future.
Inadmissibility of negotiations
The Parties agree this Stipulation represents a compromise of the positions of the
Parties in this case. Except to the extent necessary for a Party to explain before the
Commission its own statements and positions with respect to the Stipulation, each party
agrees it will not offer into evidence any negotiations relating to this Stipulation in this or
any other proceeding regarding this subject matter. Each Party agrees that such evidence is
not admissible and each Party agrees to oppose the admission of such evidence. This
paragraph does not apply to non-privileged, publicly available documents.
Deadlines
This Stipulation contains certain filing deadlines. If any such deadline falls on a
weekend or a holiday, the filing is due the next business day.
STIPULATION - 10
'--'--'-"----
Publicity
Each Party agrees to provide all other Parties the right to review in advance of
publication any and all announcements or news releases that any other Party inteJ,lds to make
about the Stipulation (with the right of review to include a reasonable opportunity to request
changes to the text of such announcements). Each Party also agrees to include in any news
release or announcement a statement to the effect that the Commission Staffs
recommendation to approve the Stipulation is not binding on the Commission itself
Respectfully submitted this day of January,,2007.
COMMISSION STAFF
Donald . Trotter
Senior Counsel, Office of the Attorney General
Counsel for Washington Utilities and Transportation Commission Staff
Date: l(.oS(ot
A VISTA CORPORATION
David J. Meyer
Attorney
Vice President and Chief Counsel of Regulatory and Governmental Affairs for Avista Corp.
Date:
STiPULA nON - i
o1i05/2007 15:51 FAX 509 495 AVISTA CORP
-.,
ftjOO1/002
I. .PubliCity
Each Party agrees to provide aU other P~es the right to revi~w in advance
publication any and all announcements or news releases that any other Party intends IO make
about the Stipulation (with me right of review to include a reasonable opportunity to request
changes to the text of such announcements). Each Party also agrees to include in any news
release or announcement a statement to the effect that the Commission Staffs
recommendation to approve the Stipulation is not binding on the Commission itself.
Respectfully submitted this day of January, 2007.
COMMISSION STAFF
DonaJd T. Trotter
Senior Counsel, Office of the A~omey General
Counsel for Washington Utilities and Transportation Commission StaffDate:
AVISTA CORPORATION
'7-
Davi eyer
Attorney
Vice Preside~ and 9rlef Counsel of Regulatory
and Governmental Affairs for A vista Corp.
Date: / /0 / d
? '
STIPULATION - 11
L-)
PUBLIC COUNSEL SECTION
By
~~~
6cr VJ~ fV'
le&pkb..-..w\h''~r-
Judith ebs l~j(O1-Assistant Attorney General, Office of the Attorney General
Public Co/illsel Section
Date: \( c::Jf"( 0'9-
STIPULATION - 12
APPENDIX A
COMMITMENTS AND CONDITIONS
A VISTA CORPORATE REORGANIZATION
TO FORM A HOLDING COMPANY
ODocket UE-O60273)
1.)A vista Corporation, doing business as A vista Utilities (hereinafter "A vista
Utilities ) will maintain its own books and records, separate from the books
and records of A V A Formation Corp. (herinafter "A VA"). The assets of
A vista Utilities and AVA and their subsidiaries or affiliates will be separately
accounted for. Avista Utilities' financial books and records and state and .
federal utility regulatory filings and documents will continue to be available to
the Commission, upon request.
A V A and A vista Utilities will provide the Commission and other parties
, this Docket upon request, access to all books of account as well as all
documents, data, and records of their affiliated interests, which pertain to
transactions between A vista Utilities and its affiliated interests or which are
otherwise relevant to the business of Avista Utilities.
A V A, A vista Utilities and all affiliates will make their employees, officers
directors and agents available to testify before the Commission to provide
infonnation relevant to matters within the jurisdiction of the Commission.
A V A and A vista Utilities agree that one of its independent directors on each
Board of Directors will have had prior experience with respect to the
operation, fmancial analysis or regulation of the regulated gas or electric
utility industry.
The Commission or its agents may audit the accounting records of A V A and
its subsidiaries that are the bases for charges to A vista Utilities, to determine
the reasonableness of allocation factors used by A V A to assign costs to A vista
Utilities and amounts subject to allocation or direct charges. A VA agrees to
cooperate fully with such Commission audits.
A vista Utilities will file on an annual basis a copy of any affiliated interest
report filed in other jurisdictions.
AVA and.Avista Utilities will comply with all applicable Commission statutes
, and regulations regarding affiliated interest transactions, including timely
filing of applications and reports.
;.-.--
A vista Utilities and A VA will not cross-subsidize between the regulated and
non-regulated businesses or between any regulated businesses, and shall
comply with the Commission s applicable orders and rules with respect to
such matters.
Nothing in these Conditions prevents A vista Utilities from having its own
subsidiaries. However, no A VA holding (i.e., a subsidiary held directly by
A VA or a subsidiary held indirectly by A V A, such as a subsidiary of an AVA
subsidiary) shall be conveyed to Avista Utilities or a subsidiary of Avista
Utilities, without prior Commission approval.
10.Any proposed cost allocation methodology for the allocation of corporate and
affiliate investments, expenses, and overheads, required by law or rule to be
submitted to the Commission for approval, will comply with the following
principles:
a. For services rendered to Avista Utilities or each cost category subject to
allocation to A vista Utilities by AvA or any of its affiliates, A VA must be
able to demonstrate that such service or cost category is necessary to
A vista Utilities for the perfonnance of its regulated operations, is not
duplicative of services already being perfonned within Avista Utilities
and is reasonable and prudent
b. Cost allocations to A vista Utilities and its subsidiaries, will be based
generally accepted accounting standards; that is, in general, direct costs
will be charged to specific subsidiaries whenever possible and shared or
indirect costs will be allocated based upon the primary . cost-drivingfactors.
c. AVA and its subsidiaries will have in place accounting systems adequate
to support the allocation and assignment of costs of executives and other
relevant personnel to A vista Utilities.
d. An audit trail will be maintained such that all, costs subject to allocation
can be specifically identified, particularly with respect to their origin.
addition, the audit trail must be adequately supported. Failure to
adequately support any allocated cost may result in denial of its recovery
in rates.
e. Costs which would have been denied recovery in rates had they been
incurred by A vista Utilities regulated operations will likewise be denied
recovery whether they are allocated directly or indirectly through
subsidiaries in the A V A group.
f. Any corporate cost allocation methodology used for rate setting, and
subsequent changes thereto, will be submitted to the Commission for
11.)
12.
approval if required by law or rule. An Intercompany Administrative
Services Agreement (IASA) will be developed that will include the
corporate and affiliate cost allocation methodologies. The IASA will be
filed with the Commission as soon as practicable after the closing of the
transaction. Approval of the IASA will be requested if required by law or
rule, but approval for ratemaking purposes will not be requested in such
filing. Amendments to the IASA will also be fIled with the Commission.
g. A V A and Avista Utilities commit to use asymmetrical pricing (i., lower
of cost or market for transactions to A vista Utilities and higher of cost or
market for transactions from A vista Utilities) for affiliate charges or costs
if a readily identifiable market' for the goods, services or assets exists, and
if the transaction involves a cost of more than $100 000.
Before December 31 , 2009, neither A vista Utilities nor any of its subsidiaries
will enter into any electric or natural gas commodity transactions, either
physical or financial, with AVA or its other affiliates or subsidiaries
including Avista Energy and Avista Power. This Condition does not affect
any other existing or future limitations on Avista Utilities' energy transactions
or trades imposed by the Commission or otherwise.
A vista Utilities and A V A agree, as a condition of the transaction, to adhere to
FERC's Standards of Conduct (18 C.R. Part 358, as promulgated by Order
No. 2004, with modifications made by Order No(s) 2004-A and 2004-
governing relationships of, and the sharing. of information between, A vista
Utilities' transmission function with any energy and marketing affiliates , and
to adhere, as well, to any Code of Conduct governing relationslllps between
the wholesale merchant function of A vista Utilities and any affiliated power
marketer (as set forth in Avista's market-based rate schedule on file with
FERC). A vista Utilities and A VA also agree, as a condition of the
transaction, to adhere to FERC's rules governing "shared employees" with
respect to the merchant and transmission function, includi~g maintaining a list
that identifies such shared employees. By agreeing to abide by these federal
regulations as a condition of the transaction, A vista Utilities and A V A agree
that they will not seek an exemption from such rules pursuant to 18 C.R. 9
358.1 (d), without prior Commission approval. The website at
www.oatioasis.com/avat/index.htmi FERC Standards of Conduct " then
Organizational Charts") provides access to Avista Utilities ' departmental
organizational charts and identifies shared employees within those
departments.
13.A vista Utilities will maintain separate debt and, if outstanding, preferred stock
ratings. A vista Utili~ies will maintain its own corporate credit rating, as well
as ratings for each long-term debt and preferred stock (if any) issuance.
14.
15.
16.
17.
=:....,.,..
--J
A vista Utilities and A VA will not advocate for a higher cost of capital as
compared to what Avista Utilities' cost of capital would have been , absent the
reorganization.
Within three months of closing of the transaction, A V A and A vista Utilities
commit to obtain from one or more rating agencies written confirmation that
A vista Utilities will have its own corporate credit rating, separate and apart
from AVA, as well as separate ratings for each long-term debt and preferred
stock (if any) issuance, and that it will not otherwise be consolidated with
A VA for ratings purposes. If the ring-fencing provisions of this stipulation
are insufficient for purposes of obtaining a separate rating for A vista Utilities
A V A and A vista Utilities will so notify the Comnlission and propose and
implement, upon Commission approval, such ad~itional ring-fencing
provisions that are sufficient to secure separate corporate ratings for AVA and
A vista Utilities.
A V A and A vista Utilities will exclude all costs of the formation of the
Holding Company from Avista Utilities' utility accounts.
A V A and Avista Utilities will provide the Commission and other parties to
this Docket upon request, with unrestricted access to all written information
provided by and to credit rating agencies that pertains to A vista Utilities or
A V A. A V A will also provide the Commission, and other parties to this
Docket upon request, with unrestricted access to all written information
provided by and to credit rating agencies that pertains to A V A's subsidiaries
to the extent such information may potentially impact Avista Utilities.
18.The capital requirements of A vista Utilities, as determined to be necessary to
meet its obligation to serve the public, will be given a high priority by the
Board of Directors of AVA and Avista Utilities.
19.A vista Utilities agrees to request the Commission order described in RCW
80.08.040(4) for transactions subject to RCW 80.08 that Avista Utilities enters
into following the effective date of the Reorganization.
20.Nothing in these restructuring commitments shall be interpreted as a waiver of
A vista Utilities' or A VA's rights to request confidential treatment for
information thatis the subject of any commitments.
21.)Recognizing the importance of increasing the equity component of its capital
structure, A vista Utilities agrees that it will increase the actual utility equity
component to 40% by June 30, 2008. Should it fail to do so, Avista Utilities
agrees that in the next general rate case filed by it after June 30, 2008, it will
use the most current actual utility equity ratio (derived from the most recent
calendar quarter), in lieu of a hypothetical capital structure. To the extent that
A vista Utilities incurs increased power supply or purchased gas costs that are .
22.
23.
24.
, -----=..
'-.J
not recovered in retail rates in a timely manner, it would impair Avista
Utilities' ability to build equity. Accordingly, the calculations to detennine
whether the target is met will be adjusted for any additional deferred power
supply or purchased gas costs recorded on its books after January 1 , 2007
which have been approved for recovery, but over a period longer than
proposed by the Company. The calculations to determine whether the target
has been met will also be adjusted for any' changes to Generally Accepted
Accounting Principles (GAAP) effective subsequent to December 15 2006.
A VA and A vista Utilities commit that A vista Utilities will not make any
dividends to A V A if A vista Utilities' common equity ratio is below 30% of its
Total Adjusted Capital, without Commission approval. A V A and Avista
Utilities also agree that A vista Utilities will not make any dividends to AVA
that will reduce A vista Utilities' common equity capital below 30% of its
Total Adjusted Capital, without Commission approval. At such time as the
actual utility equity component reaches 40% (see Condition 21, above), Avista
Utilities will notify the Commission should any dividends to A V A reduce
Avista Utilities' common equity below 35% of its Total Adjusted Capital.
The notice will explain the principal causes of the situation. These
percentages will be adjusted, as necessary, to account for any changes to
Generally Accepted Accounting Principles (GAAP) effective after December
15,2006, as well as for the treatment of deferred power supply or purchased
gas costs, as referenced in Condition 21, above. For purposes of calculating
the numerator of the percentage, common equity will not include any portion
of Avista Utilities preferred stock issued and outstanding., Avista -Utilities
Total Adjusted Capital is defined as common equity, preferred equity, long-
term debt, short-term debt and ,capitalized lease obligations.
Through December 31, 2016, Avista Utilities will provide notice to the
Commission
, -
and to other parties to this Docket upon request, when it
increases the amount of any dividend payment by 10% or more over the
previously-paid dividend.
In the event of a credit rating downgrade of A vista Utilities, A vista Utilities
will give notice to the parties in this Docket and schedule a meeting with Staff
within one month of the downgrade to discuss the reason for the downgrade
and Avista Utilities' plans going forward.
25.On or before April 1 , 2008, and on or before every anniversary date thereafter
A vista Utilities will file with the Commission, and will provide to other
parties to this Docket upon request, an annual report for the preceding
calendar year, in which it describes its 'compliance with Conditions 21 -22 and
, concerning the equity component of the capital structure and payment of '
dividends.
26.
27.
28.
29.
- ,
A vista Utilities. is required to apply to the Commission for approval of
security issuances pursuant to RCW Chapter 80.08. Avista Utilities will not
seek an exemption from this requirement for twelve months following the
closing of this transaction. Staff will evaluate the "allMinMcost" of issuances
for inclusion in rates and the cost of any debt issuance recognized for
ratemaking will not be higher than it otherwise would have been without the
corporate reorganization.
A V A and A vista Utilities will provide the Commission and other parties to
this Docket upon request, access to corporate minutes including Board of
Director s minutes and all committee minutes, along with any related source
documents that are relevant to the business and risk analysis of A vista
Utilities. A vista Utilities and the party requesting access will establish an
agreeable procedure to review these confidential documents in Spokane,
Washington.
A V A and A vista Utilities will provide the Commission, and other parties to
this Docket upon. request, access to operational, internal and risk. audit reports
and documentation. A vista Utilities and the party requesting access will
establish an agreeable procedure to review these confidential documents upon
request.
A V A and A vista Utilities will notify the Commission, and other parties to this
Docket upon request, of all publicly announced proposals for divestiture, spin-
off, or sale of any integral A vista Utilities ftmction. A V A and A vista Utilities
will also file for Commission approval of divestiture, spin-off, or sale of any
integral A vista Utilities function, which is subject to WUTC jurisdiction. This
condition does not limit any jurisdiction the Commission may have.
30.A vista Utilities or A V A will notify the Commission, and other parties to this
Docket upon request, prior to implementation of plans by A vista Utilities or
AVA: (I) to form an affiliate for the purpose of transacting business with
Avista Utilities' regulated operations; (2) to commence new business
transactions between an existing affiliate and Avista Utilities; or (3) to
dissolve an affiliate which has transacted substantial business with Avista
Utilities.
31.)A vista Utilities or A V A will notify the Commission, and other parties to this
Docket upon request, subsequent to AVA's or Avista Utilities' board approval
and as soon as practicable following any public announcement of: (I) any
acquisition of a regulated or unregulated business representing 5 percent or
more of the capitalization of A V A; or (2) the change in effective control or
acquisition of any material part or all of Avista Utilities by any other firm,
whether by merger, combination, transfer of stock or assets.
32.
33.
34.
- 35.
Upon request, Avista Utilities will provide to the Commission, and other
parties to this Docket on an infonnational basis, credit rating agency news
releases and final reports regarding A vista Utilities when such reports are
known to A vista Utilities and are available to the public.
A V A and Avista Utilities commit that in the event that Avista Utilities obtains
a loan from its parent company or any affiliated company, A vista Utilities
will, in any subsequent rate proceeding demonstrate that the debt obligation
interest, tenns, and conditions are comparable to or less than what A vista
Utilities could h~lVe obtained in the market at the time the debt was obtained
by A vista Utilities, that the loan is on reasonable tenns and without markup to
the holding company s cost of funds, and that the debt procurement will not
interfere with any ring-fencing mechanisms that secure the utility.
A V A and A vista Utilities will enter into an agreement that incorporates the
ring-fencing provisions set forth herein, which 'agreement shall be binding
upon A V A and A vista Utilities, and their respective Boards of Directors. This
agreement will be filed with the Commission within three months of closing
of the transaction. A V A and A vista Utilities commit that no amendments,
revisions or modifications will be made to this agreement or any ring-fencing
provisions without prior Commission approval for the . sole purpose of
addressing the ring-fencing provisions.
Within three months of closing of the transaction, A V A commits to obtain a
non-consolidation opinion that demonstrates that the ring-fencing around
A vista Utilities is sufficient to prevent A vista Utilities from being pulled into
an A V A bankruptcy. A V A commits to promptly file such opinion with the
Commission. If the ring-fencing provisions of this agreement are insufficient
to obtain a non-consolidation opinion, A V A agrees to promptly undertake the
following actions:
Notify the Commission of this inability to obtain a non-
consolidation opinion.
Propose and implement, upon Commission approval, such
ring-fencing provisions that are sufficient to prevent A vista
Utilities from being pulled into an A V A bankruptcy.
Obtain a non-consolidation opinion.
36.Unless another process is provided by statute, Commission regulations or
approved Avista Utilities' tariff, A V A and Avista Utilities encourage the
Commission to use the following process for administering the commitments. '
The Commission should give A V A and A vista Utilities written notification of
any violation by either company of the commitments made in this application.
If such failure is corrected within ten (10) business days for failure to file
37.
--"'----'------,'
reports, or five (5) business days for other violations, the Commission should
take no action. The Commission shall have the authority to determine if the
corrective action has satisfied or corrected the violation. A V A or A vista
Utilities may request, for cause, an extension of these time periods. If A VA
or A vista Utilities fails to correct such violations within the specified time
frames as modified by any Commission-approved extensions, the
Commission may seek to assess penalties for violation of a Commission order
against either A VA or A vista Utilities, as allowed under state laws and
regulations.
The Applicants agree that the Commission shall have an opportunity and the
authority to consider and adopt in Washington any commitments or conditions
to which the Applicants agree or with which the Applicants are required to
comply in other jurisdictions, even if such commitments and conditions are
agreed to after the Commission enters its order in this docket. To facilitate the
Commission s consideration and adoption of the commitments and conditions
from other jurisdictions, the Parties urge the Commission to issue an order
accepting this Stipulation as soon as practical, but to reserve in such order the
explicit right to re-open to add commitments and conditions accepted or
ordered in another state jurisdiction.
38.A V A and A vista Utilities acknowledge and agree that the. Commission retains
its authority over A vista Utilities in the event of either voluntary or
involuntary bankruptcy proceedings affecting either A V A or A vista Utilities,
and that such authority is not preempted by applicable bankruptcy laws. Such
Commission authorities are acknowledged to expressly include regulation of
the issuance of securities (RCW 80.08), the mortgage or pledge of assets
(RCW 80.12), and the disposition or sale of assets by A vista Utilities (RCW
80.12). Notwithstanding any bankruptcy, reorganization, or other insolvency
proceedings with respect to Av A, AVA agrees it shall not acquiesce, petition
or otherwise invoke or cause A vista Utilities to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against Avista Utilities under any federal or state bankruptcy, insolvency
or similar law, or ordering the winding up of the affairs of or the liquidation
Avista Utilities (and will oppose, to the extent permitted by law, any such
process), so long as Avista Utilities remains otherwise financially healthy.