20060216Application.pdf

Avista Corp.
1411 East Mission PO Box3727
Spokane, Washington 99220-3727 '
Telephone [phone]
Toll Free 800-727-9170
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February 15 , 2006
State of Idaho
Idaho Public Utilities Commission
Statehouse
Boise, ID 83720-5983
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Attention: Ms. Jean Jewell, Commission Secretary
RE:Application of A vista Corporation
Enclosed for filing with the Commission is the original and seven copies of the Company
Application of A vista Corporation for an Order Approving a Corporate Reorganization To Create
a Holding Company.
Please direct any questions regarding this filing to Liz Andrews at [phone].
Sincerely,
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Kelly Norwood
Vice President, State and Federal Regulation
A vista Corporation
Enclosures
c: See attached service list
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Kelly O. Norwood
Vice President State and Federal Regulation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, Washington 99220
Phone: [phone], Fax: [phone]
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of A vista
Corporation d/b/a A vista Utilities for an
Order Approving a Corporate Reorganization)
To Create a Holding Company,
AVA Formation Corp.
CASE NO. A VU-OS'- 0 (
CASE NO. AVU-01-.Qj
APPLICATION OF A VISTA CORPORA nON
I. INTRODUCTION
Pursuant to Title 61 , Idaho Code, Avista Corporation, doing business as Avista Utilities
(hereinafter A vista, Company or Applicant), at 1411 East Mission Avenue, Spokane, Washington
hereby applies for an order from the Idaho Public Utilities Commission (the "Commission ) for
authority to form a holding company in the manner and under the terms and conditions set forth in
this Application.
A vista believes that a holding company structure would allow the Company to better respond
to the changing business environment of the electric and natural gas utility industry, while providing
the opportunity to further insulate its utility business from its non-utility businesses. As discussed
below, the plan does not entail the transfer of any utility assets, nor would the Commission s existing
jurisdiction over Avista Utilities' assets be altered.
APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 1
II. GENERAL INFORMATION
Communications in reference to this Application should be addressed to:
Kelly O. Norwood
Vice President, State and
Federal Regulation
A vista Corporation
O. Box 3727
1411 E. Mission Avenue, MSC-
Spokane, Washington 99220-3727
Phone: [phone]
Facsimile: [phone]
kelly .norwood0)avistacorp. com
David J. Meyer
Vice President and Chief Counsel for
Regulatory and Governmental Affairs
A vista Corporation
O. Box 3727
1411 E. Mission Avenue, MSC-
Spokane, Washington 99220-3727
Phone: [phone]
Facsimile: [phone]
david.meyer0)avistacorp. com
Description of Business and Properties:
A vista Corporation, doing business as A vista Utilities, is a utility that provides service to
approximately 338 000 electric customers and 205 000 natural gas customers in a 26 000-square-
mile area in eastern Washington and northern Idaho. The largest community served in the area is
Spokane, Washington, which is the location of the corporate headquarters. A vista Utilities also
serves 92 400 natural gas customers in Oregon.
A vista Capital, Inc., is a wholly-owned subsidiary of A vista Corporation, and is the parent
corporation of A vista Corporation s non-regulated subsidiary investments and operations.
III. REORGANIZATION PROPOSAL
A vista proposes to modify its current corporate structure through the establishment of a
holding company (the "Reorganization
).
Under the Reorganization, a holding company (to be
1 The only exceptions relate to Avista Receivables, Inc., a special purpose subsidiary fonned in connection with the
sale of accounts receivable, and Spokane Energy, LLC, which was fonned for the purpose of implementing a long-
tenn capacity contract between Avista Utilities and Portland General Electric Company. At present, these entities are
directly owned by Avista Corporation.
APPLICA nON BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 2
named AVA Formation Corp. 2 ) would be formed as the parent corporation (the "Parent Company
or "A V A") of the existing regulated company Avista Corporation (to be renamed Avista Utilities
Inc.). The Parent Company would also be a Parent Company of A vista Capital, Inc., which would
continue to hold the non-regulated subsidiaries.
Attached to this application is Appendix , which shows a comparison of the current and
proposed structures. Currently the Utility is the corporate parent (Avista Corporation) and does
business as (dba) Avista Utilities. In the proposed structure, Avista Utilities would become a
separate company under the new holding company, AVA (or Parent Company). A vista Corporation
would no longer exist as an operating entity. A vista Capital, Inc. would remain a business entity and
would be owned by the new AVA holding company.
IV. REORGANIZATION PURPOSE
The holding company structure is a well-established form of organization for companies
engaging in multiple lines of business, and is increasingly prevalent in the utility industry. Many
utilities are organized under a public holding company structure and A vista is one of the few
investor-owned utilities in the Pacific Northwest that is not currently organized under a holding
company structure.
Other utilities in the Pacific Northwest have received approvals for similar holding company
structure reorganizations in recent years. For example, in 1998, the Idaho Power Company received
approval, with conditions, from the IPUC (Order No. 27348 in Case No. IPC-97-1l), and the
2 This name will be used in the interim for purposes of designating the holding company; A vista is in the process of
selecting a final name, and when selected, will notify the Commission and interested parties.3 The only exceptions would relate to A vista Receivables, Inc. and Spokane Energy, LLC, which would continue to
remain subsidiaries of Avista Utilities.
APPLICA nON BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 3
OPUC (Order No. 98-056 in Docket No. UM 877) oftheir application to form a holding company
and the execution of a Share Exchange Agreement. More recently, in 2001 , this Commission
approved PacifiCorp s internal corporate restructuring (Order No. 28836 in Case No. P AC-Ol-08).
The WUTC in 2000 also approved, with conditions, Puget Sound Energy s proposed corporate
reorganization to create a holding company structure. (See Docket No. UE-99l779) Avista
application, including the conditions set forth herein, is substantially identical to what was approved
for Idaho Power Company in Order No. 27348 , Case No. IPC-97-, and PacifiCorp s internal
corporate restructuring in Order No. 28836, Case No. PAC-0l-, above.
A vista did not pursue the formation of a holding company structure prior to this time due
primarily to the requirements of the Public Utility Holding Company Act of 1935 or "PUHCA."
PUHCA would have required A vista to significantly change its corporate structure to become a
registered holding company, and would have imposed significant reporting and accounting burdens
on the Company. The Company s multi-state operations would have made it very difficult, if not
impossible, to receive an exemption from PUHCA. However, with the recent repeal of PUHCA
1935 and the enactment of PUHCA 2005 , effective February 8, 2006, the distinction between
registered holding companies and exempt holding companies that existed under PUCHA 1935 is
eliminated, and the accounting and reporting requirements are reduced.
With this recent change, A vista considers it to be in the best interest of the Company, its
customers, and its shareholders, to change the corporate structure of A vista into a holding company
structure. This Reorganization would provide additional protection for ratepayers by "ring fencing
or further separating utility operations from the Company s other non-regulated businesses. Such
separation would further insulate A vista Utilities and its customers from the risks associated with
APPLICA nON BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 4
operating other businesses, while at the same time, permitting greater financing flexibility afforded
by a holding company structure.
The proposed Reorganization would not entail the transfer of Utility assets, nor would it
adversely affect the financial, technical, and managerial abilities of A vista Utilities. A vista
customers would see no change in the Utility or its operations, because the Utility would continue to
provide the same high-quality service as before the Reorganization. After the Reorganization, A vista
Utilities would continue to be subject to the same regulatory jurisdiction of the Commission as to
rates, service, accounting and other general matters of utility operations.
A vista employees currently reporting to A vista Corporation (dba A vista Utilities) would not
change after the Reorganization with the exception ofthe five senior Officers who would also report
to the new AVA holding company. The allocation of these Officers salaries and expenses as
appropriate between Avista s regulated and non-regulated businesses would follow the same
procedures as under the Company s current structure.
V. COMMITMENT TO A VISTA CUSTOMERS
A vista s Reorganization proposal is designed in a manner that fully protects the interests of
Avista Utilities ' customers. In fact, it further insulates customers from the risks associated with
Avista s unregulated operations.Avista s Reorganization proposal includes the following
protections for customers:
The cost of the formation of the Holding Company would not be included in future
A vista Utility ratemaking proposals.
APPLICATION BY A VISTA CORP FORFORMATION OF A HOLDING COMPANY
PAGE 5
A vista would continue to provide the Commission with access to information for the
Holding Company and all subsidiaries for audit purposes.
A vista would continue to maintain prudent utility operating standards.
A vista would continue to maintain internal controls that preclude "cross-subsidization
between the utility and other subsidiaries.
A vista would continue to assure segregation of operations among the utility and other
subsidiary entities, prevent co-mingling of assets, and would continue to comply with all
applicable statutes, rules, and Commission practices regarding property transfers, affiliated or
subsidiary transactions, and securities transactions.
A vista would fairly allocate Holding Company costs (or corporate support costs)
among the utility and other subsidiaries.
Avista s current cost allocation procedures between Avista s regulated and non-regulated
businesses would not change after the Reorganization. Currently, there are transactions or costs for
services between the Utility and its subsidiaries that are accounted for appropriately under applicable
statutes and rules established by this Commission. For example, charges that relate to corporate
services provided to subsidiaries are directly billed to subsidiaries at cost.Examples of these
charges are salaries of officers or general office employees who spend time on corporate support
such as managerial functions, accounting, federal income tax filing, payroll, graphic services, etc.
The revenues and expenses associated with these types of transactions are reviewed by Commission
staff and other interested parties during rate cases. The basis of assigning costs between the Utility
and any of Avista s subsidiaries would remain unchanged through approval of the Reorganization.
APPLICATION BY A VISTA CORP FOR
FORMA nON OF A HOLDING COMPANY
PAGE 6
VI. REORGANIZATION PROCESS
The proposed activities and timeline for the Reorganization are as follows:
. A vista received authorization from A vista Corporation s Board of Directors on February
th to proceed with the Reorganization.
Avista will file applications during the week of February 13th requesting approval of the
Reorganization with the Idaho Public Utilities Commission, the Washington Utilities and
Transportation Commission, the Oregon Public Utility Commission, and the Montana
Public Service Commission.
Avista will file an application during the week of February 13th requesting approval of
the Reorganization with the Federal Energy Regulatory Commission (FERC).
. A vista will file a registration statement and proxy materials during the week ofF ebruary
13th with the Securities and Exchange Commission (SEC).
. A vista will assess requirements related to its currently outstanding debt and contract
obligations and seek consents from appropriate parties.
. A vista will seek shareholder approval of the Reorganization at the May 11 th annual
meeting of shareholders.
Following shareholder approval, all corporate and reorganization matters would be put in
place subject to, and conditioned on, obtaining state and federal regulatory approvals and
satisfaction of any other conditions identified by A vista.
Following receipt of all regulatory approvals, A vista would execute the "Plan of
Exchange" to form the Holding Company structure as described below.
Completion ofthe Reorganization would be expected by the end of 2006.
VII. PLAN OF SHARE EXCHANGE
1. The creation of the holding company would be accomplished under the terms and
conditions of a Plan of Share Exchange ("Plan of Exchange ) pursuant to Chapter 23B.ll of the
Revised Code of Washington. The Plan of Exchange has been approved by the Board of Directors of
A vista Corporation (A vista Utilities) and the Parent Company. (The Parent Company is referred to
as "A V A Formation Corp." in the Plan of Exchange.AVA was incorporated in the State of
Washington on February 10, 2006.
APPLICA nON BY A VISTA CORP FOR
FORMA nON OF A HOLDING COMPANY
PAGE 7
Under the terms of the Plan of Exchange, AVA would issue common stock in the same
number of shares as there are shares of A vista Corporation common stock outstanding. Each share
of A vista Corporation common stock would then be exchanged for one share of common stock in
A V A, except to the extent that any holders of A vista Corporation common stock are entitled to
dissent to the proposed transaction and receive payment of their shares pursuant to such dissenter
rights. After the share exchange is completed, the Parent Company would own all the common stock
of A vista Corporation and the former holders of the common stock of A vista Corporation would
hold the common stock of the Parent Company. The outstanding first mortgage bonds, unsecured
debt and preferred stock, and all other contracts and agreements to which A vista is a party, would
remain with A vista Utilities. A copy of the Plan of Exchange is attached as Appendix B to this
application.
2. A vista Capital, Inc., is a wholly owned affiliate of A vista Corporation, which holds the
stock of A vista Corporation s non-regulated affiliate investments.In conjunction with the
Reorganization, ownership of A vista Capital, Inc. would be transferred from A vista Corporation to
the Parent Company.
VIII. COMPLIANCE WITH IDAHO CODE TITLE 61
A vista Corporation submits this application to the Commission for approval based on the
Commission s general authority over public utilities within the state ofldaho under Title 61 ofthe
Idaho Code. Idaho Code 61-328 , requires Commission approval when a public utility proposes to
APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 8
transfer, directly or indirectly, control of property located in Idaho which is used in the generation
transmission, distribution or supply of electric power and energy to the public.
Idaho Code g 61-328(3) requires the following findings by the Commission for approval of a
transfer governed by the statute:
(a) That the transaction is consistent with the public interest;
(b) That the cost of and rates for supplying service will not be increased by reason of
such transaction; and
( c) That the applicant for such acquisition or transfer has the bona fide intent and
financial ability to operate and maintain said property in the public service.
The Company believes the proposed Holding Company reorganization would meet each of
the findings above as required. As stated earlier, separation of A vista s non-utility businesses from
its regulated utility operations would further reduce the exposure ofthe utility to any adverse results
in its non-utility operations, thereby benefiting A vista Utilities ' customers , and is therefore consistent
with the public interest.
The cost of and rates for supplying electric service would not be increased by reason of the
proposed transaction. All costs incurred to accomplish the Holding Company structure would be
borne by the Company s shareholders, and Avista s rates would not increase as a result of the
transaction.
Finally, the Company would continue to have the bona fide intent and financial ability to
operate and maintain Avista s utility system in the public service. The proposed reorganization
would have no impact on the ultimate ownership or control of A vista Utilities. A vista Utilities
APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 9
would continue to own, operate and manage all of its facilities used in the generation, transmission
and sale of electricity. The Commission would continue to have the same regulatory oversight over
A vista Utilities that it currently has.
In summary, the proposed transaction meets the standards ofIdaho Code 61-328(3) because it
further reduces A vista Utilities ' exposure to adverse results in non-utility affiliate operations , would
not affect rates, and would not affect the Commission s oversight.
IX. REQUEST FOR APPROVAL
A vista respectfully requests approval of the proposed corporate reorganization whereby
A vista Utilities would become a subsidiary of AVA, which would own all ofthe common stock of
A vista Utilities. As noted above, the proposed Reorganization would allow A vista to implement a
corporate structure that would enable further separation of its regulated utility business from its non-
regulated businesses. This would enhance A vista s ability to respond to the changing industry
environment and would permit greater financing flexibility.
The proposed Reorganization is consistent with the public interest. Avista Utilities
customers would see no change due to this transaction. A vista Utilities would continue to own
operate, and manage all of its facilities used in the generation, transmission and sale of electricity and
the distribution of natural gas. The Reorganization would not affect the ability ofthe Commission to
regulate A vista Utilities.
The Company respectfully requests that the Commission issue an order authorizing the
Company to form a holding company structure in the manner and under the terms and conditions set
forth in this application.
APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 10
Dated at Spokane, Washington this ,s-J-i'day of February 2006.
A VISTA CORPORATION
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Kelly O. rwood
Vice President, State and Federal Regulation
APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE
VERIFICATION
STATE OF WASHINGTON)
County of Spokane
Kelly O. Norwood, being first duly sworn on oath, deposes and says: That he is Vice
President, State and Federal Regulation of A vista Corporation and makes this verification for and on
behalf of said corporation, being thereto duly authorized;
That he has read the foregoing Application, knows the contents thereof, and believes the
same to be true.
/P,
SIGNED AND SWORN to before me this 4L- day of February 2006, by Kelly O. Norwood.
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APPLICATION BY A VISTA CORP FOR
FORMATION OF A HOLDING COMPANY
PAGE 12
APPEND IX A
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PLAN OF SHARE EXCHANGE
THIS PLAN OF SHARE EXCHANGE (the "Plan of Exchange ), dated as of
February 10, 2006, is between Avista Corporation, a Washington corporation ("A vista
the corporation whose shares of common stock will be acquired pursuant to the exchange
provided for in this Plan of Exchange (the "Exchange ), and (A V A Corporation), a
Washington corporation ("A V A"), the acquiring corporation. Avista and A V A, together
are referred to in this Plan of Exchange as the " Companies.
RECITALS:
A. The authorized capital of A vista consists of (a) 200 000 000 shares of
common stock, without nominal or par value ("A vista Common Stock"), of which
593 873 shares were issued and outstanding as of January 15 2006, and (b)
10,000 000 shares of preferred stock, without nominal or par value ("A vista Preferred
Stock"), of which 280 000 shares were issued and outstanding as of January 15, 2006.
The number of issued and outstanding shares of A vista Common Stock is subject to
increase to the extent that additional shares are issued prior to the Effective Time (as
defined below).
B. AVA is a wholly-owned subsidiary of A vista, with authorized capital of (a)
200,000,000 common shares, without nominal or par value ("A V A Common Stock"), of
which one hundred (100) shares are issued and outstanding and owned by Avista, and (b)
000 000 preferred shares, without nominal or par value, none of which are issued.
C. The Boards of Directors of the Companies deem it desirable and in the best
interests of the Companies and the shareholders of A vista that, at the Effective Time,
each share of A vista Common Stock be exchanged for one share of A VA Common
Stock, with the result that A V A becomes the owner of all outstanding shares of A vista
Common Stock and that each holder of shares of A vista Common Stock shall
automatically become the holder of an identical number of shares of A V A Common
Stock, all on the terms and subject to the conditions set forth below.
D. The Boards of Directors of the Companies have each adopted this Plan of
Exchange. The Board of Directors of A vista has voted A vista s shares of A V A Common
Stock to approve, and recommended that the shareholders of A vista approve, this Plan of
Exchange pursuant to the Washington Business Corporation Act, Title 23B, Revised
Code of Washington, as amended (the "Act"), and specifically Section 23B.l1.030 of the
Act.
NOW, THEREFORE, the Companies agree as follows:
ARTICLE I
This Plan of Exchange shall be submitted to the holders of A vista Common Stock
for approval as provided by Section 23B.11.030 of the Act. The affirmative vote of at
least two-thirds (2/3) of the outstanding shares of Avista Common Stock shall be
necessary to approve the Plan of Exchange.
ARTICLE II
Subject to the terms and conditions of this Plan of Exchange, the Exchange shall
become effective immediately following the close of business on the date of filing with
the Secretary of State of the State of Washington (the "Secretary of State ) of articles of
share exchange pursuant to Section 23B.II.O50 of the Act (the "Articles ), or at such
later time and date as may be stated in the Articles (the time and date at and on which the
Exchange becomes effective, the "Effective Time
ARTICLE III
At the Effective Time:
(1) Each share of Avista Common Stock issued and outstanding
immediately prior to the Effective Time shall be automatically exchanged for one share
of AVA Common Stock, which share shall be fully paid and nonassessable.
(2) A V A shall acquire and become the owner and holder of each issued
and outstanding share of A vista Common Stock so exchanged.
(3) Each share of A V A Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and shall constitute an
authorized but unissued share of AVA Common Stock.
(4) Each right to receive shares of Avista Common Stock and each
unexpired and unexercised option to purchase shares of A vista Common Stock (each, an
A vista Grant") under an A vista executive compensation or employee benefit plan
(each, an "A vista Plan ), whether vested or unvested, shall, pursuant to an amendment to
each such A vista Plan, become the right to receive an equal number of shares of A V
Common Stock or an option to purchase, at the same price per share specified in such
A vista Grant, that number of shares of AVA Common Stock equal to the number of
shares of A vista Common Stock that could have been purchased immediately prior to the
Effective Time (assuming full vesting), as the case may be, under the Avista Plans. Each
Avista Grant shall be subject to the same terms and conditions as are set forth in the
Avista Plans.
Plan of Exchange, Page of
(5) Each share of A vista Common Stock held under the A vista Direct
Stock Purchase and Dividend Reinvestment Plan (the Dividend Reinvestment Plan
immediately prior to the Effective Time shall automatically be exchanged for an equal
number (including fractional and uncertificated shares) of shares of A V A Common
Stock, and shall continue to be held under the Dividend Reinvestment Plan.
B. Each fonner holder of shares of A vista Common Stock shall be entitled to
receive only (1) shares of AVA Common Stock in exchange for such A vista Common
Stock as provided in this Plan of Exchange or (2) payment of the fair value of such shares
of Avista Common Stock under Chapter 23B.13 of the Act.
C. As of the Effective Time, AVA shall become a participating employer of
the A vista Plans as in effect immediately prior to the Effective Time. The A vista Plans
shall be appropriately amended to provide for the issuance and delivery of A V A
Common Stock on and after the Effective Time on substantially the same tenns as A vista
Common Stock would have been issuable thereunder immediately prior to the Effective
Time.
D. As of the Effective Time, AVA shall succeed to the Dividend Reinvestment
Plan as in effect immediately prior to the Effective Time, and the Dividend Reinvestment
Plan shall be appropriately amended to provide for the issuance and delivery of AVA
Common Stock on and after the Effective Time.
E. As of the Effective Time, the Rights Agreement, dated as of November 15
1999 , between Avista and the Bank of New York as successor Rights Agent, as amended
shall terminate and each preferred share purchase right granted pursuant to this Rights
Agreement shall expire.
ARTICLE IV
The filing of the Articles with the Secretary of State and the consummation of the
Exchange are subject to satisfaction of each of the following conditions precedent:
A. The approval by the holders of A vista Common Stock provided for in
Article I of this Plan of Exchange;
B. the receipt of such orders, authorizations, approvals, waivers or disclaimers
of jurisdiction from the Washington Utilities and Transportation Commission, the Idaho
Public Utility Commission, the Montana Public Service Commission, the Oregon Public
Utility Commission, the Federal Energy Regulatory Commission, and all other regulatory
bodies , boards or agencies as are or may be required in connection with the Exchange and
related transactions, which orders, authorizations, approvals, waivers and disclaimers
shall remain in full force and effect, and shall not include, in the sole judgment of the
Board of Director of Avista, unacceptable conditions;
Plan of Exchange, Page of
C. the effectiveness of a registration statement under the Securities Act of
1933 , as amended, relating to AVA Common Stock to be issued in the Exchange;
D. the approval by the New York Stock Exchange for the listing of the AVA
Common Stock to be issued in the Exchange; and
F. the receipt by A vista of a favorable opinion of Heller Ehrman LLP covering
certain United States federal income tax matters.
ARTICLE V
Following the Effective Time, each holder of an outstanding certificate or
certificates that represented shares of A vista Common Stock immediately prior to the
Effective Time may, but shall not be required to, surrender such certificates to AVA'
transfer agent for cancellation and reissuance of a new certificate or certificates in such
holder s name or for cancellation and transfer, and each such holder or transferee shall be
entitled to receive a certificate or certificates representing the same number of shares of
AVA Common Stock as the shares of A vista Common Stock previously represented by
the certificate or certificates surrendered. Until so surrendered or presented for exchange
or transfer, each outstanding certificate that, immediately prior to the Effective Time
represented Avista Common Stock shall be deemed and shall be treated for all purposes
to represent the ownership of the same number of shares of AVA Common Stock as
though such surrender or exchange or transfer had taken place. The holders of A vista
Common Stock at the Effective Time shall have no right at and after the Effective Time
to have any shares of A vista Common Stock transferred on the stock transfer books
Avista (such stock transfer books being deemed closed for this purpose at the Effective
Time), and each record of a holder of outstanding certificate( s) that represented shares of
A vista Common Stock immediately prior to the Effective Time shall be recorded as
representing the ownership by such holder of the same number of shares of AVA
Common Stock in the stock transfer books of AVA at the Effective Time.
ARTICLE VI
A. This Plan of Exchange may be amended, modified or supplemented, or
compliance with any provision of this Plan of Exchange may be waived, at any time prior
to the Effective Time (including, without limitation, after receipt of the affirmative vote
of holders of A vista Common Stock as provided in Article I above), by the mutual
consent of the Boards of Directors of A vista and A V A, so long as such amendment
modification, supplement or waiver would not, in the sole judgment of the Board of
Directors of A vista, materially and adversely affect the shareholders of A vista.
B. This Plan of Exchange may be terminated and the Exchange and related
transactions abandoned at any time prior to the Effective Time (including, without
limitation, after receipt of the affinnative vote of holders of Avista Common Stock as
Plan of Exchange, Page of
FEB~13~2oott hu~ t~~tl~f?~~E~~ r:l\J:.vU l1Vl:HtH~ REG BUS
9~rrm~ --- .-- ----~OO3
provided in Article I above), lithe Board of Directors of Avista determines, in its sole
judgment, that consummation of the Exchange would for any reason be inadvisable or not
in the best interests of Avista or its shareholders.
.....
EXECUTED by each of the Companies, pursuant to authorization and approval
given by its Board ofDirectOTs, as of the date first above written.
AVISTA CORPORATION AVA FORMA nON CORP.
By: ~f;/'6 ary.; . ly
Its hairman, President & CEO
ay: fil:~Its esident
Plan of E:cchange. Page 015
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I have served Avista Corporation s Application requesting
authorization for corporate reorganization , by mailing a copy thereof, postage prepaid tothe following:
Jean 0 Jewell, Secretary
Idaho Public Utilities Commission
Statehouse
Boise, 1083720-5983
Scott Woodbury
Deputy Attorney
Idaho Public Utilities Commission
472 W. Washington
Boise , 10 83702-0074
Conley Ward
Givens Pursley LLP
601 W. Bannock Street
PO Box 2720
Boise, 1083701-2720
Pam Mull
Associate General Counsel
Potlatch Corporation
601 Riverside Ave., Suite 1100
Spokane , W A 99201
Dated at Spokane , Washington this 15th day of February 2006.
Patty Ols
Rates Coordinator