20040219Application.pdf

CONFORMED
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 $62.000.000
CASE NO.,AV(,( t(,tJ i/~
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Application is hereby made to the Idaho Public Utilities Commission under the provisions of Section 61-
901 and 61-902, Idaho Code (laws of 1951 , Chapter 143) for an Order authorizing offering, issuance
and sale by Avista Corporation (hereinafter called "Applicant") of up to $62 000,000 of subordinated
debentures, with fixed or variable rates, and any refunding, extension, renewal or replacement of any of
the foregoing (the "Subordinated Debentures
Avista Corporation
1411 East Mission Avenue
Spokane W A 99202-2600
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The following information and specific exhibits are furnished in support thereof:
(a) Name and address of principal business office:
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Name of representative for service:
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Diane C. Thoren, Assistant Treasurer
(b) State and date of incorporation:
Incorporated Washington Territory (now the State of Washington) on March 15, 1889. The term of
incorporation is perpetual.
States in which qualified to do business:
Washington , Idaho, Montana, Oregon and California.
(c) General description of business. property. and territory served:
The Applicant is a public utility which currently owns and operates property in Eastern Washington
Northern Idaho, Western Montana, Central & Southwest Oregon, and South lake Tahoe
California.
Applicant is engaged in the generation, transmission , distribution , and sale of electric energy, which
it sells at retail to approximately 325,000 residential, commercial, and industrial customers in
Eastern Washington and Northern Idaho, and at wholesale to public utilities, municipalities and
others. Its electric properties are operated as a unified system and are interconnected with
adjacent electric utilities. The electric energy sold by the Applicant is generated in power stations
which it owns in whole or in part or obtained by purchase or exchange from other utilities and
governmental agencies.
Natural gas is distributed and sold to approximately 298,000 residential, commercial and industrial
customers in Eastern Washington, Northern Idaho, Central & Southwest Oregon, and South lake
Tahoe, California.
(d) Description of securities. indebtedness or liabilities:
Pursuant to Rule 142 of the Rules of Practice and Procedure, the Applicant hereby Files the
application filed with the Washington Utilities and Transportation Commission as Exhibit "1" in
lieu of the application required by Rule 141. Applicant further states that:
CONFORMED
(1) Applicant has published or will have published within seven days of the date of filing this
Application a notice in those newspapers listed in Rule 24.19 of the Rules of Practice and
Procedure of the Idaho Public Utilities Commission that are in general circulation in
Applicant's service area.
(2) The original Trust Originated Preferred Securities, Series A, to be redeemed were issued
pursuant a Commission Order No. 26669 approving the authority to issue such securities in
Case No. WWP-96-1(November 1,1996).
(3) Proposed Order of Applicant is filed herewith as Exhibit "
CONFORMED
BEFORE THE
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
In the matter of the request of
AVISTA CORPORATION
for an order establishing compliance
with Chapter 80.08 RCW
Amended Application
Docket No.
Avista Corporation (hereinafter called "Applicanf') hereby requests the Washington Utilities and
Transportation Commission enter a written order establishing that the proposed offering, issuance and
sale by the Applicant of up to $62,000,000 of subordinated debentures, with fixed or variable rates , is in
compliance with the requirements of Chapter 80.08 RCW.
The following information is furnished in support of this application, in accordance with the requirements of
RCW 80.08.040:
(1) A Description of the Purposes for Which the Issuance is Made, Including a Certification By an
Officer Authorized To Do So That the Proceeds From Any Such Securities Are For One Or
More of the Purposes Allowed By Chapter 80.08 RCW.
The Applicant will utilize the proceeds of the proposed debt offering for lawful purposes as outlined in
RCW 80.08.030. Specifically, the Applicant will use the proceeds to redeem $60 million in aggregate
outstanding principal amount of the Company's 7.875% Junior Subordinated Deferrable Interest
Debentures, Series A, Due 2037 which will, in turn , cause the redemption of the Avista Capital I
875% Trust Originated Preferred Securities, Series A. The original Trust Originated Preferred
Securities, Series A, to be redeemed were issued pursuant a Commission order establishing
compliance with RCW 80.08.040 in Docket No. UE-961211 (October 30, 1996).
The undersigned certifies that she has read the foregoing information with respect to proposed use of
funds and knows the contents thereof and that the same are true to the best of her own knowledge or
belief.
Done at Spokane, Washington this 18th day of February, 2004.
By:Isl Diane C. Thoren
Diane C. Thoren
Assistant Treasurer
(2) A Description of the Proposed Issuance Including the Terms of Financing.
The Applicant proposes to offer, issue and sell up to and including $62,000,000 of Subordinated
Debentures. The Subordinated Debentures would be offered, issued and sold to a Delaware statutory
trust (the "Trust"), and the Trust would offer, issue and sell Trust Preferred Securities (the "Preferred
Securities ) to third party investors. The terms of the Subordinated Debentures correspond to those of
the Preferred Securities. The Preferred Securities will have a fixed interest rate not to exceed 7% for
the first five years, then the Preferred Securities can be redeemed or reissued with either a fixed or
floating interest rate. The term of the Subordinated Debentures and the Preferred Securities will be in
the range of 30 to 40 years.
Distributions will initially be paid at a rate not to exceed 7% per annum, payable semiannually in
arrears, for the period from the date of original issuance of the Preferred Securities, which is expected
to be in the next few months, through a five year period. If the Preferred Securities are not redeemed
the Company and the Trust will have the option to remarket the Preferred Securities prior to expiration
of the original five-year period to establish a new fixed rate with respect to the Preferred Securities.
Any new rate so established will be in effect for such period as the Company and the Trust determine
in connection with the remarketing, provided that the period must be for a duration of at least six
months. The period may not extend beyond the final maturity of the Subordinated Debentures. Prior to
the expiration of any period, the Company and the Trust will have the option to again remarket the
Preferred Securities to establish a new rate for a new period.
CONFORMED
If the Preferred Securities are not redeemed and if the Company and the Trust elect not to remarket
the Preferred Securities prior to expiration of the initial period or any subsequent period, or if they are
unable to successfully remarket all Preferred Securities tendered for sale in a remarketing, distributions
on the Preferred Securities will thereafter be payable at a variable rate reset quarterly equal to the Initial
Credit Spread, plus the adjustable rate, which will be the greater of (i) the 3-month LlBOR Rate; (H) the
10-year Treasury Rate; or (Hi) the 30-year Treasury Rate. A variable rate will be in effect until the
Company and the Trust subsequently remarket Preferred Securities to again establish a fixed rate for a
new period.
Rating agencies have historically classified similar Subordinated Debentures as preferred securities for
balance sheet purposes, while the distributions paid to the special purpose entity (Le. the Trust) by the
Applicant have been considered debt service payments for tax purposes. The payment of distributions
on the Preferred Securities are guaranteed by the Applicant under a limited guaranty. The guarantee
typically covers accrued and unpaid distributions from the Trust as well as the liquidation value of the
securities. The terms of the Subordinated Debentures and the Preferred Securities, and the fixed or
floating distribution rate will be negotiated and determined, by market conditions at the time of
issuance.
(3)Statement As To Why The Transaction Is In the Public Interest.
The issuance of the requested authority allows the Applicant the maximum flexibility in managing its
funds and reducing borrowing costs. The proposed authority would allow the Applicant to better
manage its debt and capital in the most efficient and cost effective manner. Accordingly, Applicant
believes the requested authority is in the public interest.
(4) Text of a Draft Order Granting Applicant's Request for an Order, Including A Disk Containing the
Proposed language in a Format Acceptable to the Commission.
BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
In the matter of the request of
AVISTA CORPORATION
for an order establishing compliance)
with Chapter 80.08 RCW
Docket No.
ORDER
On February 18, 2004, Avista Corporation ("Applicant") filed its application before the Washington
Utilities and Transportation Commission in this matter for an order establishing that a proposed
offering, issuance and sale by the Applicant of up to $62,000,000 of subordinated debentures with fixed
or variable rates. is in compliance with the requirements of Chapter 80.08 RCW.
Background
On February 18, 2004, the Applicant. filed an application with the Commission under the provisions of
Chapter 80.08 RCW for an order establishing compliance with the requirements of that statute in
connection with the Applicant's proposed offering, issuance and sale of Securities for purposes
permitted by law, in forms necessary or convenient to its operations, in a total amount of up to and
including $62,000,000 and for terms which may exceed 364 days.
The Applicant has filed certain information with the Commission as required under RCW 80.08.040 and
has requested the Commission to enter an order that the Applicant and the proposed offering, issuance
and sale of Securities by the Applicant is in compliance with the requirements of Chapter 80.08 RCW.
CONFORMED
FINDINGS
THE COMMISSION FINDS:
1. The Applicant, Avista Corporation, a Washington corporation, is a public service company subject to the
jurisdiction of this Commission under the provisions of Chapter 80.08 RCW.
2. As to form, the application herein meets the requirements of Chapter 80.08 RCW and the rules and
regulations of the Commission adopted pursuant thereto.
3. The application in this Docket contains (a) a description of the purposes for which the proposed
Securities will be issued along with certification by an authorized officer that the proceeds from this
financing will be used for the purpose allowed by Chapter 80.08 RCW; (b) a description of the proposed
issuance, including the terms of financing; and (c) a statement as to why the proposed transactions are in
the public interest.
4. An order finding the application and the proposed offering, issuance and sale of Securities by the
Applicant is in compliance with the requirements of Chapter 80.08 RCW should be entered.
ORDER
THE COMMISSION ORDERS:
1. The application filed by Avista Corporation, and the proposed offering, issuance and sale of the
Securities by Avista Corporation as described in the application is in compliance with the requirements of
Chapter 80.08 RCW.
2. Avista Corporation shall file, as soon as available:
a. The Report of Securities Issued required by WAC 480-146-230.
b. Verified copies of any agreement entered into in connection with any transaction pursuant to this
order.
3. This order shall in no way affect the authority of this Commission over rates, service, accounts
valuations, estimates or determination of costs, or any matters whatsoever that may come before it, nor
shall anything herein be construed as an acquiescence in any estimate or determination of costs , or any
valuation of property claimed or asserted.
DONE at Olympia, Washington, and effective this day of 2004.
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
Carole Washburn
Secretary
CONFORMED
Wherefore, the undersigned, an authorized agent of the Applicant, requests that the Washington Utilities
and Transportation Commission issue its order affirming that the applicant has complied with the
requirements of RCW 80.08.040.
The undersigned certifies, under penalties of perjury as provided in RCW 9A.72.085, that she has read
the foregoing application and knows the contents thereof and that the same are true to the best of her own
knowledge or belief.
Done at Spokane, Washington this 18th day of February, 2004.
A VISTA CORPORATION
By:Isl Diane C. Thoren
Diane C. Thoren
Assistant Treasurer
CONFORMED
Exhibit D-
PROPOSED ORDER OF APPLICANT
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 $62.000.000
CASE NO.
ORDER NO.
On February 18, 2004, Avista Corporation (hereinafter called "Applicant") filed an Application with the
Idaho Public Utilities Commission for an Order authorizing the offering, issuance and sale by the
Applicant of up to $62 000,000 of subordinated debentures , with fixed or variable rates, and any
refunding, extension , renewal or replacement of any of the foregoing (the "Subordinated Debentures
The Commission , having fully considered the Application and exhibits attached thereto, and all of the
Commission s files and records pertaining to this Application, now makes the following Findings of Fact
and Conclusions of law:
FINDINGS OF FACT
Avista Corporation is a Washington corporation qualified to do business within the State of Idaho. The
Applicant 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.
The Applicant proposes to receive authorization to offer, issue and sell certain subordinated debentures,
with fixed or variable rates, and any refunding, extension, renewal or replacement of any of the foregoing
(the "Subordinated Debentures
The net proceeds will be used for (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 said 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.
CONFORMED
No person has received or will be entitled to receive from the Applicant any fee (1) for services in
connection with the consummation of the issuance and sale of the above-referenced securities, other
than fees for underwriting, legal, accounting or similar professional or technical services, or (2) for
services in securing underwriters, sellers or purchasers of the securities.
CONCLUSIONS OF LAW
The Applicant is an electric corporation within the definition of Idaho Code 9 61-119 and a public
utility within the definition of Idaho Code 9 61-129.
The Idaho Public Utilities Commission has jurisdiction over this application pursuant to the
provisions of Idaho Code 9 61-901 et seq., and the Application reasonably conforms to Rules 141
through 150 of the Commission s Rules of Procedure (IDAPA 31.01.01.141-150).
The proposed offering, issuance and sale of the Subordinated Debentures is for a lawful purpose
and are within Applicant's corporate powers. 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 9 61-905.
CONFORMED
ORDER
IT IS THEREFORE ORDERED that Avista Corporation be, and the same hereby is, authorized to
offer issue and sell the Subordinated Debentures as described in the application.
IT IS FURTHER ORDERED that the Applicant is hereby authorized to issue the
Subordinated Debentures 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 then-existing market prices for similar transactions.
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 or determination of costs 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 payor 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
Applicant'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 may petition for reconsideration
within twenty-one (21) days of the service date of this Order. Within seven (7) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code
61-626.
CONFORMED
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this day of
2004.
DENNIS S. HANSEN, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
PAUL KJElLANDER, COMMISSIONER
ATTEST:
Myrna J. Walters
Commission Secretary
CONFORMED
WHEREFORE, the Applicant respectfully requests the Idaho Public Utilities Commission for an
Order authorizing Avista Corporation (hereinafter called "Applicant") to issue up to and including
$62 000,000 of the Subordinated Debentures.
Dated to Spokane, Washington, this 18th day of February, 2004.
AVISTA CORPORATION
By /sl Diane C. THoren
Diane C. Thoren, Assistant Treasurer
STATE OF WASHINGTON
County of Spokane
Diane C. Thoren , being duly sworn, under penalty of perjury deposes and says: That she is
Assistant Treasurer of AVISTA CORPORATION; that she has read the foregoing application and knows
the contents thereof; and that the same is true of her own knowledge and belief, and as to those matters
she believes them to be true.
Isl Diane C. Thoren
Diane C. Thoren, Assistant Treasurer
SUBSCRIBED AND SWORN to before me this
18th day of February, 2004.
Notary Public for Washington