20101015final_order_no_32096.pdf

Office of the Secretary
Service Date
October 15, 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR AN
ORDER AUTHORIZING THE OFFERING,
ISSUANCE AND SALE OF DEBT
SECURITIES NOT TO EXCEED $600,000,000 ORDER NO. 32096
CASE NO. AVU-IO-
On September 16, 2010, Avista Corporation (Avista) filed an Application with the
Idaho Public Utilities Commission requesting an Order authorizing A vista to enter into one or
more credit facilities of up to $600 000 000 with terms of up to five years, with possible
extensions not to exceed two additional years if the Applicant and the banks agree.
connection with the credit facilities, Avista requested 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 of such securities, and any refunding, extension, renewal or replacement of such credit
facilities or any of the foregoing (collectively, the "Credit Facilities ). The Credit Facilities will
replace existing credit facilities that will expire in April 2011. The Commission, having fully
considered the Application and exhibits, and all of the Commission s files and records pertaining
to the Application, makes the following findings of fact and conclusions of law, and enters this
Order approving Avista s Application.
THE APPLICATION
Avista proposes to receive authorization to enter into the Credit Facilities including,
without limitation, any refunding, extension, renewal or replacement of the credit facilities. The
net proceeds of the Credit Facilities 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.
No person has received or will be entitled to receive from Avista any fee (1) for
services in connection with the consummation of the above-referenced securities, other than fees
ORDER NO. 32096
for underwriting/arranging, legal, accounting or similar professional or technical services; or (2)
for services in securing lenders in the Credit Facilities.
The estimated fees and borrowing spreads will be based on the Company s current
senior secured debt rating and current market information. Avista s current bond ratings are
BBB+ by S&P and Baal by Moody s. This currently places Avista in Pricing Level III where
the facility fee would be 0.50%. A vista will only enter into transactions where the fees, interest
rates and expenses charged or incurred by A vista in connection with the transactions and any
refunding, extensions, renewals or replacements are competitive with market prices for similar
transactions.
The Company also requests authority to issue, refund, extend, renew or replace
indebtedness under the credit facility without further Commission approval. The issuance would
allow the Company greater flexibility to manage its daily cash funds and reduce borrowing costs
thereby permitting the Company to better manage its debt and capital in a more efficient and cost
effective manner.
Staff recommended approval of the proposed credit facilities up to $600 000 000 in
total. Staff also recommended the authority be for five years with allowed extensions up to two
additional years. If the extensions are exercised, Staff recommended the Company be required to
file an informational letter notifying the Commission of any extensions under this authority. In
addition, it is recommended that the authority under this initial approval be continuing (without
further order required) for the five-year term plus any extensions provided A vista maintains
senior secured debt ratings that are investment grade, BBB-/Baa3 or at least Pricing Level V.
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
Avista is a Washington corporation qualified to do business in the State of Idaho.
A vista 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. A vista is a gas
corporation within the definition of Idaho Code 9 61-117, 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 Commission has jurisdiction over this Application pursuant to the provisions of Idaho
Code 9 61-901 et seq. The Commission further finds that the Application reasonably conforms
to Rules 141 through 150 ofthe Commission s Rules of Procedure, IDAPA 31.01.01.141-150.
ORDER NO. 32096
Avista has paid all lawful fees as provided by Idaho Code 9 61-905.
The Commission finds that the proposed Credit Facilities is for a lawful purpose and
is within Avista s corporate powers.
The Commission further finds that the proposed transaction is in the public interest
and a formal hearing on this matter is not required.
The Commission s approval of the Credit Facilities 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 Credit Facilities does not constitute
Commission determination or approval of the type of financing or the related costs for
ratemaking 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 A vista for gas or
electric service to consumers in the State of Idaho.
ORDER
IT IS HEREBY ORDERED that Avista s Application for authority to make up to
$600 000 000 in aggregate principal amount at any one time outstanding of short-term
borrowings, for seven years 1 from the date of the credit agreement under the terms and
conditions and for the purposes set forth in the Application and this Order is granted. If the
extensions are exercised, A vista will notify the Commission by filing a letter stating the terms of
the extension.
IT IS FURTHER ORDERED that this authorization will remain in place for seven
years from the date of execution of the credit agreement, provided that the Company maintains at
least Pricing Level V as indicated in the application i.e. (BBB- or higher senior secured debt
rating, as indicated by Standard & Poor s Ratings Services, and a Baa3 or higher rating as
indicated by Moody s Investors' Service , Inc). If Avista s senior secured debt rating falls below
either such rating ("Downgrade ), the Company s authority to incur short-term borrowings
provided in this Order will not terminate, but instead such authority will continue for a period of
364 days from the date of the Downgrade Continued Authorization Period, provided that A vista:
(1) promptly notifies the Commission in writing of the Downgrade; and (2) files a supplemental
application with the Commission within fourteen (14) days after the Downgrade, requesting a
1 The seven-year authorization period consists of a five-year base term plus the option to extend for an additional
two years.
ORDER NO. 32096
Supplemental Order authorizing the Company to continue to make short-term borrowings as
provided in the Order, notwithstanding the Downgrade. Until the Company receives the
Supplemental Order, any short-term borrowings made by A vista during the Continued
Authorization Period will become due or mature no later than the final date of the Continued
Authorization Period. Subject to the foregoing provisions regarding a Downgrade and notice of
extension, no additional authorization is required to carry out this transaction and
Supplemental Order will be issued.
IT IS FURTHER ORDERED that Avista shall file the terms of the proposed
issuance(s) of securities in connection with the Credit Facilities, and any subsequent changes to
the terms with Staff upon issuance. This informational filing should be made seven (7) days, or
as soon as possible, after the closing of the Credit Facilities.
IT IS FURTHER ORDERED that Avista shall file, as soon as they become available
and update if any changes occur, the following:
(a) The "Report of Securities Issued " and
(b) Verified copies of any Credit Agreement entered
Order.
into pursuant to this
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
, 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 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 may petition for
reconsideration within twenty-one (21) days of the service date of this Order. Within seven (7)
ORDER NO. 32096
days after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code 9 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this IS#.
day of October 2010.
MARSHA H. SMITH, COMMISSION
~~.
MACK A. REDFORD, COMMISSIONER
ATTEST:~~A
D. Jewel
ommisslOn Secretary
ORDER NO. 32096