20110628Application.pdf

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20" JUN 28 AM 10: 20
~~'i'V'STA.
Corp.
Idaho
Public Utilities Commission
tehouse
oise ID 83720
-Avù -u -Ll-Òl
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 will 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
August 1,2011. 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 )
AVIST A CORPORATION for an Order authorizing )
the offering, issuance and sale of Debt Securities )not to exceed $300,000,000 )CASE NOA-VO-~e-t (-0 L
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 $300,000,000 of Debt Securities
effective August 2, 2011.
The following information and specific exhibits are furnished in support thereof:
(a) Name and address of principal business office:
Avista Corporation
1411 East Mission Avenue
Spokane WA 99202-2600
Name of representative for service:
Diane C. Thoren, 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, and Oregon.
(c) General description of business, property, and territory served:
The Applicant is a public utility which owns and operates property 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 358,545 residential, commercial, and industrial customers in
Eastern Washington and Northern Idaho, and at wholesale to public utilities, municipalities and
others as of March 31, 2011. 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.
The Applicant is also engaged in the distribution and sale of natural gas to approximately 319,088
residential, commercial and industrial customers in Eastern Washington, Northern Idaho, and
Central & Southwest Oregon as of March 31,2011.
(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 "D-1" in
lieu of the application required by Rule 141. Applicant further states that:
(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 141.08 of the Rules of Practice and
Procedure of the Idaho Public Utilities Commission that are in general circulation in
Applicant's service area.
Exhibit D-1
(insert form of Washington application)
Exhibit D-2
(insert form of Order)
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
$300,000,000 of Debt Securities, effective August 2, 2011.
Dated to Spokane, Washington, this 2ih day of June, 2011.
AVISTA CORPORATION
By ~- (J~~
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.
Q.- O..dL
Diane C. Thoren, Treasurer
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Notary Public for Washington
Exhibit D-1
June 27, 2011
Mr. David Danner
Washington Utiliies and Transportation Commission
P.O. Box 47250
Olympia, WA 98504-7250
Re: Planned Securities Issuance - Up to $300 milion 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 $300 million 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 will utilize 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 faciliy 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 2ih day of June, 2011.
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 Securities for purposes authorized by law, in an
aggregate principal amount not to exceed $300,000,000, which maturity shall not be less than nine (9)
months nor more than thirty-five (35) years from the date of initial authorization and delivery.
The Debt Securities could be (1) secured or unsecured and (2) with the stated interest rate or rates thereon,
which may be fixed or floating all of which could 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,
or issued in a term loan arrangement with lenders, or issued and delivered in exchange for outstanding debt
securities of the Company and/or any combination of the foregoing.
If the Company issues the secured debt it would do so by issuing First Mortgage Bonds (FMBs). FMBs
have been the traditional debt financing vehicle utilized by utilities in the U.S., and are typically offered in
Exhibit D-1
public offerings but may be privately placed. FMBs constitutes a lien under 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 secured 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 interest
rate at the time of issuance as compared to issuing unsecured debt. These Debt Securities could have a
fixed or floating interest Tate. See Exhibit L for the secured fixed interest rate spreads.
If the Company issues unsecured debt, the loan would not be collateralized by any lien on any specific
asset of the Company. If these Debt Securities are unsecured the creditors have a greater risk of not being
able to recover their loans made to the Company because they have to wait for the secured creditors to be
paid first. Unsecured debt should have a lower nationally recognized rating agency rating than if the
Applicant were to issue secured debt. Unsecured debt typically has a higher interest rate at the time of
issuance as compared to issuing secured debt. These Debt Securities could have a fixed or floating interest
rate. See Exhibit M for the unsecured fixed interest rate spreads.
If the Company issues Debt Securities with a fixed rate, the interest rate will not change through the life of
the Debt Securities.
If the Company issues Debt Securities with a floating interest rate, the interest rate will reset periodically,
such as daily, weekly, monthly, quarterly, semi-annually or annually. The most common indices used for
pricing floating-rate Debt Securities are based upon L1BOR, commercial paper and Treasury bils.
The Applicant proposes to issue the Debt Securities from time to time in either public offerings or private
placements, for cash or in exchange for its outstanding securities. The Applicant anticipates that issuances
will be issued as described in section (h) of this application. Underwriters or placement agents will be
selected from a group of potential candidates. The firm or firms selected to be underwriters or placement
agents in an offering under this authority will be determined by the Applicant's opinion of their ability to
assist the Applicant in meeting its objectives for the Debt Securities 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 ability to market the Debt Securities to achieve the Applicant's financing and capital structure
objectives. The Applicant also requests authority to issue Debt Securities without further Commission
approval to the extent total spreads provided in Exhibit B or Exhibit C or is issued with an all-in coupon rate
not exceeding 8.0 percent per annum in order to provide additional flexibility 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 utility, the Applicant is expected to acquire, construct, improve, and maintain sufficient
utiliy facilities 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 facilities 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 affirming compliance 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
2
Exhibit A
Estimated Net Proceeds(1)
Total
Gross Proceeds
Less: Agents/Underwriters
Com pensation
Proceeds Payable to Applicant
Less: Other Issuance/Technical Services Expenses (2)(3)
Net Proceeds
$300,000,000
2,625,000
297,375,000
1,860,000
$295,540,000
1) Assumes the issuance of First Mortgage Bonds.
2) Other Issuance/Technical Services Expenses
Rating agency fees $300,000 to $500,000
Legal fees 300,000 to 500,000
Regulatory fees 50,000 to 75,000
Accounting fees 50,000 to 100,000
Printing 50,000 to 75,000
Miscellaneous expenses 80,000 to 120,000
TOTAL $830,000 $1,370,000
3) First Mortgage Bonds Estimated Issuance Fees and Expenses
Legal
Title Insurance
County Filing Fees and Other
Total
$75,000 to
80,000 to
30,000 to
$185,000
$150,000
240,000
100,000
$490,000
3
Exhibit D-1
Percent of Total
100.00%
0.875%
99.125%
0.62%
98.50%
Exhibit B
Secured..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 Securities without further
Commission approval if spreads exceed what is provided in this Exhibit, in as long as the all in Coupon rate
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 Less than or equal to
(;i) (::)9M LYLY 2Y2Y 3Y3Y 4Y4Y 5Y5Y 7Y7Y 8Y8Y 9Y9Y iOYloy 15Y15Y 20Y20Y 25Y25Y 30Y30Y Or more
4
Maximum
Spread Over
Benchmark
Treasury
Yield
(bps)
185
190
195
200
205
210
215
220
230
265
240
245
245
255
Exhibit C
Unsecured Interest 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 Securities without further
Commission approval if spreads exceed what is provided in this Exhibit, in as long as the all in Coupon rate
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 Less than or equal to(~) (::)OY LYLY 2Y2Y 3Y3Y 4Y4Y 5Y5Y 7Y7Y 8Y8Y 9Y9Y ioyiOY 15Y15Y 20Y20Y 25Y25Y 30Y30Y Or more
5
Maximum
Spread Over
Benchmark
Treasury
Yield
(bps)
215
220
225
230
235
240
245
250
260
295
270
275
275
285
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 DEBT SECURITIES NOT TO )EXCEED $300,000,000 )
CASE NO.
ORDER NO.
On June 27, 2011, 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 $300,000,000 of secured fixed or variable rate debt securities (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 flexibility in
their use.
No person has received or will 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 underwriting, private placement, legal, accounting or similar professional or technical services, or
(2) for services in securing underwriters, 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
Avjsta 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
EXHIBIT D-2
The Commission finds that the proposed issuance is for a lawful purpose and is within Avista's
corporçite powers. The proposed issuance and redemption of mçituring debts provide an opportunity for
Avista to reduce borrowing costs and increase flexibility with future refinance options.
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 determination/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 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, as of August 2, 2011, is hereby authorized to
offer, issue and sell up to and including $300,000,000 in Debt Securities, all as described in the Application
filed on June 27, 2011.
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 fie 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
EXHIBIT D.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 XXth day of MONTH,VY.
, COMMISSIONER
, COMMISSIONER
, COMMISSIONER
ATTEST:
Commission Secretary
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