20111013final_order_no_32381.pdf

Office of the Secretary
Service Date
October 13,2011
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF AVISTA )CORPORATION’S APPLICATION FOR )CASE NO.AVU-U-11-02
AUTHORITY TO ISSUE UP TO 5,500,000 )SHARES OF AUTHORIZED BUT )ORDER NO.32381
UNISSUED COMMON STOCK )
On September 16,2011,Avista Corporation applied to the Idaho Public Utilities
Commission under Idaho Code §§61-901 and 61-902 for an Order authorizing Avista to offer,
issue,and sell up to 5,500,000 shares of authorized but unissued Common Stock,without par
value (“Common Stock”).under one or more methods.
The Commission,having fully considered Avista’s Application (including its attached
exhibits)and the record in this matter,enters this Order approving the Application as noted
below.
THE APPLICATION
Avista proposes to issue up to 4,500,000 shares of Common Stock through methods
including,without limitation,periodic offering programs,direct sales,or underwritten
transactions.See Application at 1.Avista also proposes to issue up to 1,000,000 shares of
Common Stock through the Company’s Long-Term Incentive Plan.Id.
Avista says any shares sold under periodic offering programs will be subject to
pricing limitations.First,the price per share received by Avista,before agent commission,will
not be less than $0.25 below the last price at which Avista’s Common Stock was reported in the
record of composite quotations published in the Wall Street Journal on the trading day
immediately preceding the day for the fixing of such price.Second,the price per share received
by Avista,after any agent commission,will not be less than 100%of the book value per share of
Avista’s Common Stock as of the last day of the most recently ended calendar quarter.See
Application Exhibit D-1 at 1-2.
Avista says any shares sold under direct sales and underwritten transactions will be
based on current market conditions.See Application Exhibit D-1 at 2.
Avista says it will use the resulting proceeds for one or more of the following
purposes:(a)to improve or maintain its service;(b)to discharge or refund its obligations;(c)to
ORDER NO.32381 1
reimburse moneys actually expended for such purposes from Avista’s income or other moneys in
its treasury not secured by or obtained from the issue,assumption,or guarantee of securities;(d)
to acquire property.or to construct.complete,extend or improve its facilities;(e)to issue stock
dividends;or (f)for any other purpose approved by the Commission or authorized by law.See
Application Exhibit D-1 at 1 and Exhibit D-2 at I.
Avista says the requested authority will allow it to maintain and/or improve its debt to
equity ratio over time by issuing additional Common Stock under periodic offering programs,
direct sales or underwritten transactions,and to retain its employees and other eligible
participants in the Company’s Long-term Incentive Plan.See Application Exhibit D-1 at 2.The
proposed issuance and redemption of maturing debts also will allow the Company to reduce its
borrowing costs and increase flexibility with future refinance options and otherwise manage its
funds.See Application Exhibit D-l at 2 and Exhibit D-2 at 2.
Avista represents that no one has received or will be entitled to receive from Avista
any fee for services in (a)connection with the consummation of the issuance and sale of the
proposed securities,other than fees for underwriting,private placement,legal,accounting or
similar professional or technical services,or (b)securing underwriters,sellers or purchasers of
the securities.See Application Exhibit D-2 at 1.
STAFF REVIEW
Commission Staff reviewed Avista’s Application.Staff observed that the proposed
methods of Common Stock issuance provide an opportunity for Avista to reduce underwriting
costs and provide flexibility in meeting its financing requirements.Consistent with prior Orders,
Staff does not believe it is appropriate for Avista to issue stock to pay dividends.Staff otherwise
recommended the Commission approve the requested Common Stock issuance authority.Staff
further recommended that,consistent with prior Orders,the Commission require Avista to file
status reports with the Commission reflecting pertinent quarterly financial information to include
the following:(a)Debt to Equity Ratio;(b)Enterprise Value;(c)Net Income Available to
Common Stock;and (d)Common Shares Outstanding.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Commission finds that Avista is a Washington corporation that is qualified to do
business in Idaho.The Company is a public utility engaged in the generation,purchase,
transmission,distribution and sale of electric energy and the purchase,distribution,and sale of
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natural gas.The Company 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 §6 1-129.The Commission has jurisdiction over this Application
pursuant to the provisions of Idaho Code §61-901,et seq.
Avista’s Application reasonably conforms to Rules 141 through 150 of the
Commission’s Rules of Procedure (IDAPA 31.01.01.141-150).and Avista has paid all fees
required by Idaho Code §6 1-905.
The proposed issuance is for a lawful purpose,is within Avista’s corporate powers,
and is generally compatible with the public interest.However,the Company’s proposal to issue
Common Stock for purposes of paying dividends is not in the public interest.Dividends are a
payment of return on or return of investment,and issuing stock to make these dividend payments
is not appropriate.
The proposed issuance provides an opportunity for Avista to reduce underwriting
costs and provides flexibility in meeting its financing requirements.
The method of issuance is proper.
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
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 Avista for gas or electric service to
consumers in the State of Idaho.
ORDER
IT IS HEREBY ORDERED that Avista’s Application for authority to offer,issue,
and sell up to 5,500,000 shares of Common Stock consisting of up to 4,500,000 shares through
periodic offering programs,direct sales,or underwritten transactions,and up to 1,000,000 shares
of Common Stock through the Company’s Long-Term Incentive Plan,is granted subject to the
following limitations:
I.With regard to shares offered,issued,or sold through periodic offering programs,
the price per share received by Avista,before agent commission,must not be less than $0.25
below the last price at which Avista’s Common Stock was reported in the record of composite
ORDER NO.32381 3
quotations published in the Wall Street Journal on the trading day immediately preceding the day
for the fixing of such price.Second,the price per share received by Avista,after any agent
commission,must not be less than 100%of the book value per share of Avista’s Common Stock
as of the last day of the most recently ended calendar quarter;and
2.Avista shall not issue Common Stock for purposes of paying dividends.
IT IS FURTHER ORDERED that Avista shall file the following as they become
available:
1.The “Report of Securities Issued”required by 18 C.F.R.§34.10.
2.Verified copies of any agreement entered into in connection with the
Company’s sales and issuances of the Shares.
IT IS FURTHER ORDERED that Avista must file a status report with the
Commission reflecting pertinent quarterly financial information to include the following:(a)
Debt to Equity Ratio,(b)Enterprise Value,(c)Net Income Available to Common Stock,and (d)
Common Shares Outstanding.
IT IS FURTHER ORDERED that the issuance of this Order does not constitute
acceptance of Avista’s exhibits or other material accompanying this Application for any purpose
other than the issuance of this Order.
IT IS FURTHER ORDERED that nothing in this Order or any act or deed performed
in connection with this Order shall be construed to obligate the State of Idaho to pay or guarantee
in any manner whatsoever any security authorized,issued,assumed or guaranteed under the
provisions of this Order.
IT IS FURTHER ORDERED that this authorization is without prejudice to the
Commission’s regulatory authority regarding rates,service,accounts,evaluation estimates or
determination of costs or any other matter which may come before the Commission pursuant to
its jurisdiction and authority as provided by law.
THIS IS A FLNAL ORDER.Any person interested in the Order (or in issues decided
by this Order)may petition for reconsideration within twenty-one (21)days of the service date of
this Order with regard to any matter decided in this Order and in this case.Within seven (7)days
after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §61-626 and 62-619.
ORDER NO.32381 4
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this ,i,
day of October 2011.
J4 ilZ
PAUL KJELIANIR,PRESIDENT
I I ——
MACK A.REDFORD,COMMISSIONER
tJ4tL
ATTEST:
Jan D.Jewell
Commission Secretary
O:AVUU-1 1-O2kk
MARSHA H.SMITH,COMMISSIONER
ORDERNO.32381 5