20081031Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER REDFORD
CO MMISSI 0 NER SMITH
COMMISSIONER KEMPTON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
DATE:OCTOBER 31, 2008
RE:VISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
ISSUE NOT TO EXCEED $83,700,000 OF DEBT; CASE NO. A VU-08-
On October 14 2008, Avista Corporation (Avista) filed a request to issue debt securities for
an aggregate amount not to exceed $83 700 000. The issuance is in connection with the refunding
or conversion of obligations related to pollution control bonds by the City of Forsyth, Montana.
The bonds support pollution control and solid waste disposal facilities at Colstrip Units 3 and 4.
The term interest rate period for the current bonds is scheduled to end December 30, 2008.
A vista will be required to repurchase and remarket the bonds. The terms, provisions and
conditions, including the interest rates, whether fixed or variable, and maturity, credit enhancement
and/or liquidity support will be negotiated at the time of issuance. The current pollution control
bond market may remain volatile making it more economic to redeem the bonds in December but
reissue new bonds later in 2009 when the market is more stable. In the interim, short-term
financing would be utilized to fund the repurchase.
The Company also requests authority to issue, redeem and reissue securities under this
authority without further Commission approval to allow additional flexibility. The issuance will
allow the Company greater flexibility to manage any remarketing provisions, level of funds and
minimize borrowing costs, thereby permitting the Company to better manage its debt and capital in
a more efficient and cost effective manner.
ST AFF RECOMMENDATION
Staff recommends approval of the requested $83.7 million debt securities to refund the
pollution control bonds. Staff also recommends the authority under this approval be continuing
DECISION MEMORANDUM - 1 -OCTOBER 31 , 2008
allow issuance, remarketing, redemption and reissuance of securities under this authority without
further approval. Staff recommends notification of issuances and standard reporting requirements.
COMMISSION DECISION
Does the Commission wish to approve the requested authority for $83.7 million debt for
pollution control bond refinancing with the recommended notification and reporting requirements?
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Terri Carlock
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DECISION MEMORANDUM - 2 -OCTOBER 31 , 2008