20160526Thies 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: [phone]
FACSIMILE: [phone]
[e-mail]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. AVU-E-16-03
OF AVISTA CORPORATION FOR THE )
AUTHORITY TO INCREASE ITS RATES )
AND CHARGES FOR ELECTRIC SERVICE ) Exhibit No. 2
TO ELECTRIC CUSTOMERS IN THE )
STATE OF IDAHO ) MARK T. THIES
)
FOR AVISTA CORPORATION
(ELECTRIC)
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 No. AVU-E-16-03M. Thies, Avista
Schedule 1, Page 1 of 4
Percent of Component
Amount Total Capital Cost Cost
Total Long-term Debt 1,543,000,000$ 50.0%(2)5.67% 2.83%
Common Equity 1,593,310,328$ 50.0%(2)9.90%(1)4.95%
Total 3,136,310,328$ 100%7.78%
Percent of Component
Amount Total Capital Cost Cost
Total Long-term Debt 1,493,000,000$ 50.7% 5.41% 2.74%
Common Equity 1,454,612,499$ 49.3% 9.50%(3)4.68%
TOTAL 2,947,612,499$ 100%7.43%
(1)Proposed return on common equity
(2)
(3)As approved by the Commission in Case AVU-E-12-08/AVU-G-15-01
The Company's actual percentage of debt and equity is 49.2% and 50.8%, resectively. The Company is
proposing a capital structure of 50% equity and 50 % total long-term debt.
AVISTA CORPORATION
Cost of Capital
December 31, 2015
AVISTA CORPORATION
Proposed Cost of Capital
December 31, 2016
Exhibit No. 2
Case No. AVU-E-16-03M. Thies, Avista
Schedule 1, Page 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 12/31/2016 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*1.858%a 6/1/2037 6/3/1997 40,000,000 1,296,086 - - (1,769,125) 40,473,039 1.816%40,000,000 726,428 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 4.11% SERIES 4.110%12/1/2044 12/18/2014 60,000,000 425,188 (5,429,000) - - 65,003,812 3.650%60,000,000 2,189,882 17
18 4.37% SERIES 4.370%12/1/2045 12/16/2015 100,000,000 561,757 9,383,299 - - 90,054,944 5.015%100,000,000 5,014,858 18
19 Forecasted Issuance b 4.500%10/1/2046 10/1/2016 140,000,000 1,400,000 e 138,600,000 4.562%140,000,000 6,386,118 19
20 1,543,000,000 86,889,230 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 1,543,000,000 87,443,163 25
26 26
27 Adjusted Weighted Average Cost of Long-term Debt 5.667%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 Company 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, 2016
Exhibit No. 2
Case No. AVU-E-16-03 M. Thies, Avista
Schedule 1, Page 3 of 4
1 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 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 29 31 30 31 30 31 31 30 31 30 31
6 Forecasted Rates Trust Preferred** 1.2892% 1.2892% 1.2892% 1.5898%**1.7240%** 1.7240%** 1.7240%**1.8213%** 1.8213%** 1.8213%** 1.9322%** 1.9322%** 1.9322%**
7 Trust Preferred Interest Expense 44,406$ 44,406$ 41,541$ 54,760$ 57,467$ 59,382$ 57,467$ 62,734$ 62,734$ 60,710$ 66,554$ 64,407$ 66,554$ 743,119$
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 12/31/2016 Cost
12 (a)(b)( c)(d)(e)(f)(g)(h)(i)(j)(k)
13 Trust Preferred 1.86% 6/1/2037 6/3/1997 40,000,000$ 1,296,086$ (1,769,125)$ 40,473,039$ 1.816% 40,000,000$ 726,428$
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, 2016
Exhibit No. 2
Case No. AVU-E-16-03M. Thies, Avista
Schedule 1, Page 4 of 4
Exhibit No. 2 
Case No. AVU‐E‐16‐03 
M. Thies, Avista 
Schedule 2, Page 1 of 1 
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 No. AVU‐E‐16‐03 
M. Thies, Avista 
Schedule 3, Page 1 of 9 
CONFIDENTIAL subject to Attorney’s Certificate of Confidentiality
Interest Rate Risk Management Plan
Pages 1 of 9