20101022Application.pdf

Avi
141 PO Box 3727
Spokane. Washingtn 9937275I
8l727-9170 F~E\~~~~.~~~~~'iI'STA.
Corp.!HJ Q~ \ ß
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Idaho
Public Utilties Commission
tehouse
oise ID 83720
Avu -0 -ID-()~
Attention: Jean D. Jewell, Secretary
Transmitted herewith are one executed and three conformed copies of an
application for approval of security issuance. The application contains as much
information as is presently known. If other applicable data or documents become
available, they wil be forwarded to your attention. A check in the amount of
$1,000.00, the maximum fee is coming under separate cover.
The Company requests to receive an Order of Approval from the Commission by
November 22,2010. When complete, please send one (1) executed copies of the
Order of Approval to:
Diane C. Thoren
Treasurer
Avista Corporation
East 1411 Mission Avenue
Spokane WA 99202-2600
If any questions arise or additional information is needed, please do not hesitate to
contact Damien Lysiak at 509-495-2097.
Sincerely,~~
Diane Thoren
Treasurer
Enclosures
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 Debt Securities )not to exceed $150,000,000 )CASE NoA II u .. - to - 02-
Application is hereby made to the Idaho Public Utilties 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 $150,000,000 of Debt securities.
The following information and specifc exhibits are furnished in support thereòf:
(a) Name and address of principal business office:
Avista Corporation
1411 East Mission Avenue
Spokane WA 99202-2600
Name of representative for service:
on--N C)N ;C'\t~
Diane C. Thoren, Treasurer ::::
W(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, and Oregon.
(c) General description of business. propert, and territory served:
The Applicant is a public utility which owns and operates propert in Eastern Washington, Northern
Idaho, Western Montana, Central & Southwest Oregon.
The Applicant is engaged in the generation, transmission, distribution, and sale of electric energy,
which it sells at retail to approximately 355,604 residential, commercial, and industrial customers in
Eastern Washington and Northern Idaho, and at wholesale to public utilties, municipalities and
others. Its electric properties are operated as a unified system and are interconnected with
adjacent electric utilties. 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 utilties and
governmental agencies.
The Applicant is also engaged in the distribution and sale of natural gas to approximately 315,932
residential, commercial and industrial customers in Eastern Washington, Northern Idaho, and
Central & Southwest Oregon.
(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 Utilties and Transportation Commission as Exhibit "0-1" in
lieu of the application required by Rule 141. Applicant further states that:
(1) Applicant has published or wil have published within seven days of the date of filing this
Application a notice in those newspapers listed in Rule 141.08 of the Rules of Practice and
Procedure of the Idaho Public Utilties Commission that are in general circulation in
Applicant's service area.
EXHIBIT D.1
October 21, 2010
Mr. David Danner
Washington Utilties and Transportation Commission
P.O. Box 47250
Olympia, WA 98504-7250
Re: Planned Securities Issuance - Up to $150 millon Debt Securities Pursuant to RCW 80.08.040,
Commission Order is Requested.
Dear Mr. Danner,
Pursuant to RCW 80.08.040, Avista Corporation ("Avista") intends to issue up to $150 millon of
Secured Debt securities. The securities will be issued via public offerings, or private placement and are
expected to have terms which will exceed 9 months all depending on and subject to then-existing market
prices for similar transactions. The terms of the financing are described in more detail in Section 2 of this
application.
The following information is supplied in conformance with RCW 80.08.040:
(1) Description of the purposes for which the issuance wil be made:
Avista wil utilze the proceeds of the proposed debt offering for lawful purposes as outlined in RCW
80.08.030. Specifically, Avista anticipates using the proceeds from the issuance of the securities to
repay funds borrowed under its corporate credit facilty and/or refinance long term debt.
The undersigned certifies that she has read the foregoing information with respect to the 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 21st day of October, 2010.
By:
Diane C. Thoren
Treasurer
(2) Description of the proposed issuance, including the terms of financing
The Applicant proposes to offer, issue and sell the Debt for purposes authorized by law, in a total amount of
up to and including $150,000,000 and for terms which wil exceed 9 months.
The Debt is to be issued in one or more transactions as market conditions permit. The debt shall be
secured and shall be sold in a public offering, in a private offering in accordance with Rule 144A under the
Securities Act of 1933, as amended, or in a direct private placement. A brief description of a secured fixed
rate debt transaction is set forth below.
i. Secured Fixed Rate Debt:
Page 1 of 4
EXHIBIT D.1
The issued Debt would be secured by First Mortgage Bonds. First Mortgage Bonds (FMBs)
have been the traditional debt financing vehicle utilzed by utilties in the U.S., and are
typically offered in public offerings but may be privately placed. FMBs place a lien on the
Mortgage and Deed of Trust, dated as of June 1, 1939 (the mortgage and deed of trust has
been amended and supplemented by various supplemental indentures since the inception
of the Mortgage and Deed of Trust). This lien acts as collateral for the bondholder and the
Debt should have a higher nationally recognized rating agency rating than if the Applicant
were to issue debt unsecured. This higher credit rating should lead to a lower coupon rate
at the time of issuance as compared to issuing unsecured debt.
The Applicant proposes to issue the Debt from time to time in either a public offerings or private
placements, for cash or in exchange for its outstanding securities. The Applicant anticipates that issuances
wil be secured fixed rate debt. Underwriters or placement agents wil be selected from a group of potential
candidates. The firm or firms selected to lead an offering under this authority wil be determined by the
Applicant's opinion of their abilty to assist the Applicant in meeting its objective of having the lowest total
cost for the Debt to be issued. This opinion is based upon the level of underwriting or placement fees, their
knowledge of the Applicant and its varied operations, and their abilty to market the Debt to achieve the
Applicant's financing and capital structure objectives. The Applicant requests that the pricing of the Bonds
fall within either the maximum spreads over treasuries provided in Exhibit B or the maximum all-in coupon
rate not to exceed 8.0 percent per annum. The Applicant believes that it is not sufficient to focus on credit
spreads alone, since high spreads may be offset by equally low treasury rates, resulting in a moderate to
low coupon rate. The Applicant requests authority to issue Debt without further notice to the Commission to
the extent spreads do not exceed the maximum total spreads over the Benchmark Treasury Yield provided
in Exhibit B or is issued with an all-in coupon rate not exceeding 8.0%. This provides additional flexibilty in
the event spreads widen when the Applicant decides to issue any Debt.
(3) Statement as to why the transaction is in the public interest:
As a public utiity, the Applicant is expected to acquire, construct, improve, and maintain sufficient
utilty facilties to serve its customers adequately and reliably at reasonable cost. The proposed
issuances of Debt are part of program to finance the cost of the Applicant's facilties taking into
consideration prudent capital ratios, earnings coverage tests, market uncertainties and the relative
merits of the various types of securities the Applicant could sell or other financing it could arrange.
Accordingly, the Applicant believes the requested authority is in the public interest.
Avista, having provided herewith all information and statements required by RCW 80.08.030, WAC 480-
100-242 (1 )-( 4 )and WAC 480-90-242 (1 )-(4), respectfully request an order affirm ing com pliance with such
requirements as part of this planned securities transaction.
If you have any question regarding this information please feel free to contact Damien Lysiak at (509)-
495-2097.
Sincerely,
Diane C. Thoren
Treasurer
Page 2 of4
Exhibit A
Estimated Net Proceeds(1)
Total
Gross Proceeds
Less: Agents/Underwriters
Com pensation
Proceeds Payable to Applicant
Less: Other IssuancelTechnical Services Expenses (2)(3)
Net Proceeds
$150,000,000
1,312,500
148,687,500
1,835,000
$146,852,500
1) Assumes the issuance of First Mortgage Bonds.
2)Other IssuancelTechnical Services Expenses
Rating agency fees
Legal fees
Regulatory fees
Accounting fees
Printing
Miscellaneous expenses
$300,000 to
300,000 to
50,000 to
50,000 to
50,000 to
80,000 to
TOTAL $830,000
3) First Mortgage Bonds Estimated Issuance Fees and Expenses
Legal
Title Insurance
County Filng Fees and Other
Total
$75,000 to
80,000 to
30,000 to
$185,000
$500,000
500,000
75,000
75,000
75,000
120,000
$1,345,000
$150,000
240,000
100,000
$490,000
EXHIBITD.1
Percent of Total
100.00%
0.875%
99.125%
1.22%
97.90%
Page 3 of 4
Exhibit B
Secured Fixed-Rate Spreads
EXHIBIT D-1
The following are maximum total spreads for various maturities over the applicable benchmark treasury
yield. As stated in Section 2 the Applicant requests authority to issue Debt without further Commission
approval if spreads exceed what is provided in this Exhibit, in as long as the cost to maturity does not
exceed 8.0 percent per annum. This is meant to provide additional flexibility in the event spreads widen
when the Applicant decides to issue any Debt.
Greater Than
(~)
OY
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Maximum Spread Over
Benchmark TreasuryLess than or equal to Yield(§ (bps)1Y 2252Y 2303Y 2354Y 2405Y 2457Y 2508Y 2559Y 26010Y 26515Y 28020Y 29025Y 29530Y 300Or more 310
Page 4 of 4
EXHIBIT D-2
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 $150,000,000 )
CASE NO.
ORDER NO.
On October 21, 2010, Avista Corporation (Avista) filed an Application with the Idaho Public Utilities
Commission (Commission) requesting an Order authorizing the offering, issuance and sale by Avista of up
to $150,000,000 of secured fixed rate bonds (the Securities). The Commission, having fully considered the
Application and exhibits attached thereto, 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 offer, issue and sell the Securities including, without
limitation, any refunding, extension, renewal or replacement of any of the Securities. The net proceeds wil
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. Avista requests
authority to refund, extend, renew or replace the proposed securities to allow for the greatest flexibilty in
their use.
No person has received or wil be entitled to receive from Avista any fee (1) for services in
connection with the consummation of the issuance and sale of the above-referenced securities, other than
fees for underwiting, private placement, legal, accounting or similar professional or technical services, or
(2) for services in securing underwiters, sellers or purchasers of the securities. Avista is a Washington
corporation qualified to do business in the State of Idaho.
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
Avista 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 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. 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.
Page 1 of 3
EXHIBITD.2
The Commission finds that the proposed issuance is for a lawful purpose and is within Avista's
corporate powers. The proposed issuance and redemption of maturing debts provide an opportunity for
Avista to reduce borrowing costs and increase flexibilty with future refinance options. This debt authority,
however, may not be used to fund stock dividends.
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 issuance 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 determinationlapproval 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 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 is not required. Avista
has paid all lawful fees as provided by Idaho Code § 61-905.
ORDER
IT IS HEREBY ORDERED that Avista Corporation be, and the same hereby is authorized to offer,
issue and sell up to and including $150,000,000 in Securities, all as described in the Application filed on
October 21, 2010.
IT iS FURTHER ORDERED that Avista 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 the
Order, and any refunding, extension, renewal or replacement thereof, are competitive with market prices
for similar transactions and the senior secured debt has investment grade ratings from at least two
nationally recognized rating agencies.
IT IS FURTHER ORDERED that Avista shall file the terms of the proposed issuance(s) of the
Securities 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, prior to the Issuance.
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 Agreement entered into pursuant to this Order.
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
Page 2 of 3
EXHIBITD.2
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) days after any person has
petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code §
61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this DAYth day of
MONTH 2010.
, COMMISSIONER
, COMMISSIONER
, COMMISSIONER
ATTEST:
Commission Secretary
Page 3 of3
WHEREFORE, the Applicant respectfully requests the Idaho Public Utilties Commission for an
Order authorizing Avista Corporation (hereinafter called "Applicant") to issue up to and including
$150,000,000 of Debt Securities.
Dated to Spokane, Washington, this 21th day of October, 2010.
AVISTA CORPORATION
By CJ.~_~~J2~
Diane C. Thoren, Treasurer
STATE OF WASHINGTON
County of Spokane
Diane C. Thoren, being duly sworn, under penalty of perjury deposes and says: That she is
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.ci-,c.~
Diane C. Thoren, Treasurer
SUBSCRIBED AND SWORN to before me this
21st day of October, 2010.
Rw t4 QCvruP
Notary Public for Washington
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