HomeMy WebLinkAbout20150601Thies Exhibit 2.pdf
DAVID J. MEYER VICE PRESIDENT AND CHIEF COUNSEL FOR
REGULATORY & GOVERNMENTAL AFFAIRS AVISTA CORPORATION P.O. BOX 3727 1411 EAST MISSION AVENUE SPOKANE, WASHINGTON 99220-3727
TELEPHONE: (509) 495-4316 FACSIMILE: (509) 495-8851 DAVID.MEYER@AVISTACORP.COM
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-15-05 OF AVISTA CORPORATION FOR THE ) CASE NO. AVU-G-15-01
AUTHORITY TO INCREASE ITS RATES ) AND CHARGES FOR ELECTRIC AND )
NATURAL GAS SERVICE TO ELECTRIC ) Exhibit No. 2 AND NATURAL GAS CUSTOMERS IN THE ) STATE OF IDAHO ) MARK T. THIES
)
FOR AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
Standard & Poor's Moody's
Last Upgraded
Credit Outlook
A+A1
A A2 First Mortgage Bonds
Secured Medium-Term Notes
A-First Mortgage Bonds A3
Secured Medium-Term Notes
BBB+Baa1 Avista Corp./Issuer rating
BBB Avista Corp./Corporate credit rating Baa2 Trust-Originated Preferred Securities
BBB-Baa3
INVESTMENT GRADE
BB+Trust-Originated Preferred Securities Ba1
BB Ba2
BB-Ba3
(1 The Company received an upgrade to its Corporate credit rating in March 2011 and to its First Mortgage Bonds in August 2011
Stable Stable
AVISTA CORPORATION
Long-term Securities Credit Ratings
March/August 2011(1)January 2014
Exhibit No. 2 Case Nos. AVU-E-15-05/AVU-G-15-01
M. Thies, Avista
Schedule 1, p. 1 of 4
Percent of ComponentAmounTotal Capital Cost Cost
Total Long-term Debt 1,493,000,000$ 50.0%(2)5.34% 2.67%
Common Equity 1,446,879,000$ 50.0%(2)9.90%(1)4.95%
Total 2,939,879,000$ 100%7.62%
Percent of Component
Amount Total Capital Cost Cost
Total Long-term Debt 1,393,000,000$ 49.6% 5.46% 2.71%
Common Equity 1,415,264,000$ 50.4% 9.80%(3)4.94%
TOTAL 2,808,264,000$ 100%7.65%
(1)Proposed return on common equity
(2)
(3)As approved by the Commission in Case AVU-E-12-08/AVU-G-12-07
The Company's actual percentage of debt and equity is 50.8% and 49.2%, respectively. The Company is
proposing a capital structure of 50% equity and 50% total long-term debt.
AVISTA CORPORATION
Cost of Capital
December 31, 2014
AVISTA CORPORATION
Proposed Cost of Capital
December 31, 2015
Exhibit No. 2 Case Nos. AVU-E-15-05/AVU-G-15-01
M. Thies, Avista
Schedule 1, p. 2 of 4
Principal
Line Coupon Maturity Settlement Principal Issuance SWAP Discount Loss/Reacq Net Yield to Outstanding Effective Line
No. Description Rate Date Date Amount Costs Loss/(Gain) (Premium) Expenses Proceeds Maturity 12/31/2015 Cost No.
(a) (b) ( c) (d) (e) (f) (g) (g) (h) (i) (j) (k) (l)
1 FMBS - SERIES A 7.530% 5/5/2023 5/6/1993 5,500,000 42,712 - - 963,011 4,494,277 9.359% 5,500,000 514,744 1
2 FMBS - SERIES A 7.540% 5/5/2023 5/7/1993 1,000,000 7,766 - - 175,412 816,822 9.375% 1,000,000 93,747 2
3 FMBS - SERIES A 7.390% 5/11/2018 5/11/1993 7,000,000 54,364 - - 1,227,883 5,717,753 9.287% 7,000,000 650,114 3
4 FMBS - SERIES A 7.450% 6/11/2018 6/9/1993 15,500,000 120,377 - 50,220 2,140,440 13,188,963 8.953% 15,500,000 1,387,715 4
5 FMBS - SERIES A 7.180% 8/11/2023 8/12/1993 7,000,000 54,364 - - - 6,945,636 7.244% 7,000,000 507,064 5
6 Trust Preferred 1.490%a 6/1/2037 6/3/1997 40,000,000 1,296,086 - - (1,769,125) 40,473,039 1.451% 40,000,000 580,492 6
7 FMBS - SERIES C 6.370% 6/19/2028 6/19/1998 25,000,000 158,304 - - 188,649 24,653,047 6.475% 25,000,000 1,618,863 7
8 5.45% SERIES 5.450% 12/1/2019 11/18/2004 90,000,000 1,192,681 - 239,400 88,567,919 5.608%90,000,000 5,047,001 8
9 FMBS - 6.25% 6.250%12/1/2035 11/17/2005 150,000,000 1,812,935 (4,445,000) 367,500 152,264,565 6.139%150,000,000 9,208,605 9
10 FMBS - 5.70% 5.700%7/1/2037 12/15/2006 150,000,000 4,702,304 3,738,000 222,000 - 141,337,696 6.120%150,000,000 9,179,674 10
11 5.95% SERIES 5.950%6/1/2018 4/3/2008 250,000,000 2,246,419 16,395,000 835,000 - 230,523,581 7.034%250,000,000 17,585,926 11
12 5.125% SERIES 5.125%4/1/2022 9/22/2009 250,000,000 2,284,788 (10,776,222) 575,000 2,875,817 255,040,618 4.907%250,000,000 12,268,615 12
13 3.89% SERIES 3.890%12/20/2020 12/20/2010 52,000,000 385,129 - - 6,273,664 45,341,207 5.578%52,000,000 2,900,581 13
14 5.55% SERIES 5.550%12/20/2040 12/20/2010 35,000,000 258,834 - - 5,263,822 29,477,345 6.788%35,000,000 2,375,887 14
15 4.45% SERIES 4.450%12/14/2041 12/14/2011 85,000,000 692,833 10,557,000 - - 73,750,167 5.340%85,000,000 4,538,871 15
16 4.23% SERIES 4.230%11/29/2047 11/30/2012 80,000,000 730,833 18,546,870 - 105,020 60,617,277 5.868%80,000,000 4,694,533 16
17 0.84% SERIES 0.840%8/14/2016 8/14/2013 90,000,000 515,369 (2,900,680) - - 92,385,311 -0.043%90,000,000 (38,508) 17
18 4.11% SERIES 4.110%12/1/2044 12/18/2014 60,000,000 427,439 (5,429,000) - - 65,001,561 3.650%60,000,000 2,190,000 18
19 Forecasted Issuance b 3.750%9/15/2045 9/15/2015 100,000,000 1,000,000 e 99,000,000 3.806%100,000,000 3,806,194
20 1,493,000,000 79,110,120 20
21 . 21
22 Repurchase c 7.74% 12/31/2017 6/30/2006 6,875,000 483,582 6,391,418 8.721%d 70,127 22
23 Repurchase c 5.72%3/1/2034 12/30/2009 17,000,000 1,916,297 15,083,703 6.661%d 159,446 23
24 Repurchase c 6.55% 10/1/2032 12/31/2008 66,700,000 3,709,174 62,990,826 7.034%d 324,360 24
25 1,493,000,000 79,664,053 25
26 26
27 Adjusted Weighted Average Cost of Long-term Deb 5.336%27
28 a Var. Rate Long-Term Debt, interest rate information comes from Exhibit No. 1 Page 4 28
29 b 29
30 c The coupon rate used is the cost of debt at the time of the repurchases 30
31 d The amounts are calculated using the IRR function 31
32 e The Compan forecasts issuance expenses of 1% based on historical costs 32
This is a projected issuance, whose maturity date and coupon rate may change depending on market conditions. Forecasted Rates are based on forward rates from Thomson Reuters analysis tools plus an estimated credit spread
AVISTA CORPORATION
Forecasted Cost of Debt Detail - Idaho
December 31, 2015
Exhibit No. 2 Case Nos. AVU-E-15-05/AVU-G-15-01
M. Thies, Avista
Schedule 1, p. 3 of 4
1 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Avg of
2 (a) (b) (b) ( c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (o)
3 Trust Preferred $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 $40,000,000 40,000,000$
4
5 Number of Days in Month 31 31 28 31 30 31 30 31 31 30 31 30 31
6 Forecasted Rates Trust Preferred*1.11% 1.11% 1.11% 1.14% 1.2639%** 1.2639%** 1.2639%** 1.4585%** 1.4585%** 1.4585%** 1.6555%** 1.6555%** 1.6555%**
7 Trust Preferred Interest Expense 38,185$ 38,185$ 34,490$ 39,150$ 42,130$ 43,534$ 42,130$ 50,237$ 50,237$ 48,617$ 57,023$ 55,183$ 57,023$ 596,124$
8
9
10 Coupon Maturity Settlement Principal Issuance Gain/Reacq Net Yield to Outstanding Effective
11 Description Rate Date Date Amount Costs Expenses Proceeds Maturity 12/31/2015 Cost
12 (a)(b)( c)(d)(e)(f)(g)(h)(i)(j)(k)
13 Trust Preferred 1.49% 6/1/2037 6/3/1997 40,000,000$ 1,296,086$ (1,769,125)$ 40,473,039$ 1.451% 40,000,000$ 580,492$
14
15 *Original issue principal amount was $50 million. The Company repurchased $10 million of the securities outstanding.
16 **Forecasted Rates are based on forward rates from Thomson Reuters analysis tools plus the 87.5 basis points pursuant to the debt agreement.
AVISTA CORPORATION
Cost of Long-Term Variable Rate Debt Detail
December 31, 2015
Exhibit No. 2 Case Nos. AVU-E-15-05/AVU-G-15-01
M. Thies, Avista
Schedule 1, p. 4 of 4
CONFIDENTIAL subject to Attorney’s Certificate of Confidentiality
Company’s planned capital expenditures and long-term debt issuances by year
Pages 1 of 1
Exhibit No. 2
Case Nos. AVU-E-15-05 & AVU-G-15-01
M. Thies, Avista
Schedule 2, p. 1 of 1
CONFIDENTIAL subject to Attorney’s Certificate of Confidentiality
Interest Rate Risk Management Plan
Pages 1 of 9
Exhibit No. 2
Case Nos. AVU-E-15-05 & AVU-G-15-01
M. Thies, Avista
Schedule 3, p. 1 of 9
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Electric & Natural Gas Rate Cases
Weighted Cost of Equity
*Source: SNL Financial. Rate Cases finalized July 1, 2014 through March 31, 2015.
Items added (red bars):
• Avista’s last approved return from the Idaho Commission.
• Avista’s proposed return in the current filing.
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Exhibit No. 2 Case Nos. AVU-E-15-05/AVU-G-15-01
M. Thies, Avista
Schedule 4, p. 1 of 1