28670.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF AVISTA CORPORATION FOR AN ORDER AUTHORIZING THE OFFERING, ISSUANCE AND SALE OF SECURITIES NOT TO EXCEED $800,000,000.
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CASE NO. AVU-U-00-3

ORDER NO. 28670

On July 17, 2000, Avista Corporation (Avista) filed an Application with the Idaho Public Utilities Commission for an Order authorizing Avista to offer, issue and sell up to $500,000,000 of certain secured or unsecured bonds, notes and other evidences of indebtedness, including, without limitation, assumption of any obligation or liability as guarantor, indorser, surety or otherwise, in respect to the securities of any other person, firm, corporation, or affiliate of Avista, and any refunding, extension, renewal or replacement of any of the foregoing. Order No. 28491, issued August 24, 2000, granted the authority and exemption as long as Avista’s bond ratings do no fall further than two notches. On December 20, 2000, Avista filed a Supplemental Application requesting authority to increase the borrowing limit by $200,000,000 to $700,000,000 under Order No. 28491. In Order No. 28610 issued on January 19, 2001, the Commission granted the Supplemental Application with all other terms, reporting requirements and conditions of Order No. 28491 remaining in force. In this second Supplemental Application, Avista requests the Commission to modify the short-term borrowing limits contained in Order Nos. 28491 and 28610 by increasing the limit by $100,000,000 to $800,000,000.
The Commission, having fully considered the original and supplemental Applications, attached exhibits, its files and records relating to this Application and the applicable laws and rules, grants the second Supplemental Application.
FINDINGS OF FACT
Avista Corporation is a Washington corporation qualified to do business within the state of Idaho and is a public utility engaged in the generation, purchase, transmission, distribution and sale of electric energy and the purchase, distribution and sale of natural gas.
Avista requests authorization to offer, issue and sell certain secured or unsecured bonds, notes and other evidences of indebtedness, including, without limitation, assumption of any obligation or liability as guarantor, indorser, surety or otherwise in respect to the securities of any other person, firm, corporation, or affiliate of the Applicant, and any refunding, extension, renewal or replacement of any of the foregoing (hereinafter called the “Securities”). Although Order Nos. 28491 and 28610 authorized a borrowing limit of $500,000,000 and $700,000,000 respectively, the Supplemental Application requests a $100,000,000 increase to maintain a more flexible borrowing arrangement in light of the volatility in the power markets and the increased cost of natural gas. Avista is effectively requesting exemption under Idaho Code § 61-909 from further filing requirements for these securities.
Avista states in its original Application and/or Supplemental Application that the net proceeds will be used for one or more of the following purposes:
(a) The improvement or maintenance of its service;

(b) The discharge or lawful refunding of its obligations;

(c) The reimbursement of moneys actually expended for these purposes from income or from other moneys in the treasury not secured by or obtained from the issue, assumption or guarantee of securities; or

(d) Any other purpose approved by the Commission or authorized by law.
Avista stated that no person has received or will be entitled to receive any fee for services in connection with the consummation of the issuance and sale of the “Securities,” other than fees for legal, accounting or similar professional or technical services. Avista also stated that no person has received or will be entitled to receive any fee for services in securing underwriters, sellers or purchasers of these Securities.
CONCLUSIONS OF LAW
The Commission finds that Avista is a gas corporation within the definition of Idaho Code § 61-117, an electric corporation within the definition of Idaho Code § 61-119, and a public utility within the definition of Idaho Code § 61-129. Therefore, the Commission has jurisdiction over this Application pursuant to the provisions of Idaho Code § 61-901, et seq. The Commission further finds that the Application reasonably conforms to Rules 141 through 150 of the Commission’s Rules of Procedure (IDAPA 31.01.01.141-.150).
The Commission finds that the proposed issuance is for a lawful purpose and are within Avista’s corporate powers. However, this is only a general approval and is not a finding of fact or a conclusion of law that the particular use to which these funds are to be put is approved by this Order. The issuance of an order authorizing the proposed issuance does not constitute agency determination/approval of the type of financing or the related costs for rate making purposes. The Commission does not have before it for determination in this case and, therefore, does not determine the effect of issuance on rates to be charged by Avista for gas or electric service to consumers in the state of Idaho. The Commission further finds that the proposed transaction is in the public interest and a formal hearing on this matter would serve no public purpose.
All lawful fees have been paid by Applicant as provided by Idaho Code § 61-905.
O R D E R
IT IS HEREBY ORDERED that Avista Corporation be, and the same hereby is, authorized to offer, issue and sell up to $800,000,000 in Securities as described in the second Supplemental Application filed on March 9, 2001.
IT IS FURTHER ORDERED that the Applicant is hereby authorized to issue the Securities in the manner and for the purposes described in the Application with continuing authority to refund, extend, renew or replace the same without further order of the Commission, provided that the fees, interest rates and expenses charged or incurred in connection with any transactions entered into under the authority of this order, and any refunding, extension, renewal or replacement thereof, are competitive with market prices for similar transactions. Avista shall file the terms of the proposed Securities issuance(s) with Staff prior to issuance. This informational filing should be made seven (7) days, or as soon as possible, prior to the issuance. This authority shall grant exemption under Idaho Code § 61-909 from further filings for these securities with the authority remaining in force as long as Avista’s bond ratings do not fall more than two notches below the current ratings. The current senior unsecured ratings are BBB for Standard & Poor’s, Baa2 for Moody’s and BBB for Fitch. If the ratings do fall further than two notches, Avista will be required to present further evidence before this Commission to justify continuation of this authority.
IT IS FURTHER ORDERED that Avista shall file, as soon as they become available, the following:
(a) The “Report of Securities Issued”;
(b) Verified copies of any Agreement entered into pursuant to this order; and

(c) An annual verified statement setting forth in reasonable detail the outstanding balances and disposition of the proceeds during each year of the Agreements.

IT IS FURTHER ORDERED that the foregoing authorization is without prejudice to the regulatory authority of the Commission with respect to rates, utility capital structure, service, accounts, valuation, estimates for determination of cost or any other matter which may come before this Commission pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9, Title 61, Idaho Code, or any act or deed done or performed in connection therewith shall be construed to obligate the state of Idaho to pay or guarantee in any manner whatsoever any security authorized, issued assumed or guaranteed under the provisions of Chapter 9, Title 61, Idaho Code.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of the Avista’s exhibits or other material accompanying the Application for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. AVUU00-3 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order or in interlocutory Orders previously issued in this Case No. AVUU-00-3. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of March 2001.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

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ORDER NO. 28670 1

Office of the Secretary
Service Date
March 14, 2001