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HomeMy WebLinkAbout20150914Application.pdf,iil $: 27 .,"r1 September 11,2015 State of ldaho ldaho Public Utilities Commission Statehouse Boise lD 83720 Attention: Jean D. Jewell, Secretary i: t, t ..ililr I, lr!. I -. AV A-tA-ts -ot Transmitted herewith are one executed and three conformed copies of an application for approval of security issuance. The application contains as much infonnation as is presently knorvn. lf other applicable data or documenE become available, they will be foruarded to your attention. A check in the amount of $1,000.00, the maximum fee is coming under separate cover. The Company requesB to receive an Order of Approvalftom the Commission by October 12,2015. l/Vhen complete, please send one (1) executed oopies of the Order of Approvalto: Richard N. Stevens, Director of Finance Avista Corporation East 1411 Mission Avenue Spokane WA 99202-2600 lf any questions arise or addiUonal infurmation is needed, please do not hesitate to contact Lauren Pendergraft at 509-495-2998. Sinerely, 0il*lnt@,v"a' Richard N. Stevens Director of Finance Enclosures BEFORE THE IDAHO PUBLIC UTIL]TIES COMMISSION ln the Matterof the APPtication of AVISTA CORPORATION for an Order authorizing the offering, issuance and sale of Debt Seeurities notto exceed $300,000,000 and issuance of cAsE r,rc. rttlil.11-l9o 1 1.635.000 shares of Sommon S.tock ) Application is hereby made to the ldaho Public Utilities Commission under the provisions of Section 61- ggi and 61-902, tdiho Code (Laws of 1951, Chapter 143) for an Order authorizing offering, issuance and sete by Avista Corporation (hereinafter cal!*d "Applicant') of up to $300 million of Debt Securities and issuance of up to 1,635,000 authorized but ut'iissued shares of its Common Stook effective $eptember 11 , 2015, The following information and specific exhibits are fumished in support thereof: {a} Name and addresq of prineipal business offiSg Avistra Corporation 1411 Easl Mission Avenue $pokane WA 99202-2600 Name qf reore,sentative for service: Mark Thies, Senior Mce President, CFO, and Treasurer (b) $kte and date of incorporation: lncoipor:ated Washington Tenitory (now tha State of Washington) on March 15, 1889. The term of incorporation is PerPetual. States in vvhich ou?lified to.{q bu$iness: Washington, ldaho, Montana, and Oregon. (c) Genqf.At descfjption of,Es.ilre.gs. p.fpperty. and territorv pervg{: The Applicant is a public utility which oums and operates property ir Eastem Washington, Norlhern ldaho, Westem Montana, and Centrsl and Southwest Oregon. The Applicant is engaged in the generation, transmission, distribution, and sale of electric energy, which it sells at retailto approxirnately 375,936 residential, commercial, and industrialcustomers in Eastern Washington and Northern ldaho, and at wholesale to public utilities, municipalities and others as of June 30, 2015. lts electric properti€s are operated as a unified system and are interconnec,ted with adjacent electric utilities. The eleetric energy sold by the Applicant is gefierated in power stations, vvhich it orvns in whole or in parl, or obtained by pur,chase or exchange frorn other utilities and governrnenial agencies. The Applicant is also engaged in the distribution and sale of natural gas to approximately 334,000 residential, cornmercial and industrial customers in Eastem Washington, Northern ldaho, and Central & $outhwest Oregon as of June 30, 2015. (d) Descriotion of securities. indebtedness or liabilities: Pursuant to Rule 142 at the Rules of Practice and Procedure, the Applicant hereby Files the application filed with the Washington Utilities and Transportation Comrnlesion as Exhibit "D'1u in lieu of the apptication required by Rule 141, Applicant further states that:(1) Applicant has pub{ished 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 ldaho Public Utilities Commission that are in general circulation in Applicant's ssrvice area. (2)Attached Exhibits: Exhibit D-l Gopy of Washington Applicalion Exhibit EI-2 Form of ldaho Order D-l WASHINGTON ln the matter of the reguest of AVISTA GORPORATION BEFORE THE UTILITIES AND TRA}ISPORTATION COMMISSION Application Docket I{o.for an order establishing compliance u{ith Chapter80.08.040 RCW, , ,,.,,,,,,,,, -.,,,,, } Avista Corporation (hereinafter called "AFFlicanP) hereby requests the Washington Utilitioe and Transportation eommission anter a writen order authorizing the Applicant to issue up to $300 million of Debt Securities and issuance of up to 1,635,000 authorized hut unissued shares of its Common Stock. The Debt Securities will be issued vla pubtic offerings, or prlvate placement, and are expected to havs tenns wtrich will exceed 9 months all dependlng on and subiect to then-existing market prices for similar transactions. The shares willbe issued und€rthe Applieanfs Long;Ierm lncentive Plan. The requested authcrity to issue Debt $ecuritles is in addition to the authority previously granted by the Washington Utillties and Transpcrtation Commission fur the issuance of debt securities under Order No. 02, entered August 24,2011, in Docket No, U"111176, of whioh $135,000,000 remains available for issuance. The requested Common Stock authori$ is in addition to the authority previously granted by the Washington Utilities and Transporiation Commis*ion for he offering, issuance and sale of Common Stock under Order No. 01, entered October 13, 2011, in Docket No. U-111687, of which 381,664 shares rernain available for award pursuant to the Company's long-term incentive plan, The terms of the financing are described in more detail in $ection 2 of this application. The fiollowing information is furnished in support of this application, in accodance with the reguirements of RCW 80.08.040: (1) A Descrtption of the Purposss for Whlch the l*suance ls llhde, lncluding a Certlfiea$on By an Officw Authorizod To Do So That the Proceod* From Any Such Securitles Are For Ore Or Morp of the Purpotet Altowed By ChapGrS0.08 ECW. The Applicant will use the funds ffom the proposed issuances for one or rnore of the following purposes: (a) The construction, completion, extension, or improvernent of its facilities" or (b) tha improvement or maintenance of its service, or (c) the issuance of stock dividends, or (d) the discharge or refunding of its obllgations, or (e) the reimbursement of moneys actually axpended from income or trom ihe treasury of the Applicant to &e extent permitted by RCW 80.08.030, or ($ for other purposes permitted hy law, The Applicant will utilize the proposed issuances for lawful purposes as outlined in RCW 80.08.030. Specifically, the Applicant anticipates using the debt offering to repay funds borrowed under its corporate credit facility and/or refinance long term debt and use the shares as an amployee incentive compensation program. (2) A Oeecription of the Prcposed trsuancs ltrcludlng tho Terms of Flnancing. De0f Secunfrbs; The Applicant proposes to offer, issue and sell the Debt Securities for purposes authorized by law, in an aggregate principal amount not tlc exceed $300,000,000, which maturity shall not be lesrs than nine (9) months nor more than thirty-five {35) years frorn the date of initialauthorization and delivery. The Debt Securities could be (1) secured or unsecured and (2) with the stated interest rate or rates thereon, which may be fixed or lloating all ol which could be sold in a public offering, in a private ofiering in acmrdance with Rule 144A under the Securities Act of 1933, as amended. or in a dirEcl private placement, or issued in a term loan anangement with lenders, or issued and delivered in exchange for outstanding debt sepurities of the Company and/or any oombination of the foregoing. Page 1 of6 D-l lf the Cornpany isoues secured d6bt it wur.rld do so by issuing First Mortgage Eonds (FMBs), FlvlBs have been the traditional debt financing vehicle utilized by utilities in the U.$., and can be offered in both public offerings and private placemenl FMBs constitute a lien under the Mortgage and Deed of Trust, dated as of June t, 1939 (the mortgage and deed oJ trust has been amended and supplemented by various supplemental indanturcs since fie inception of the Mortgage and Deed of Trust). This lien acds as collaieral for the bondholder and the secured debt $hould have a hlgher 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 Oebt Securities could have a fixed or floating interest rate, $ee Exhibit B for the secured fixed interest rate spreads. lf the Company issues unsecured debt, the loan would not be csllateralizod by any lien on any spscific asset of the Company. If these Debt $ecuritias are unseeured the creditors have a grealer riEk of not being able to rscwer thEir loans rnade to the Company because they have to wait for the secu,red creditors to he paid first. Unsecurgd debt should have a lower netionally recognized reting sgency 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 eecured debt. These Debt $ecurities could have a fixed or floating interost rate. $ee Exhibit C for the unsecured fixed interest rate spneads. lf the Company issues Debt Securitie$ t/'/[th a fixed rate, the interest rate will not change through the life of the Debt Securitiee. lf the CompaRy issues D+bt $ecuritiae with a floating interest rate, the interest rate will re$et periodica}ly, such as daily, weekly, monthly, quar*rlf, eenri-a*nually or annually, The most common indises used for pricing floating-rate Debt $ecuritie$ firqba$ed upon LIEOB, comrnercial paper and Treasury bills' The Applicant proposes to issue the Debt Securities from time to time in either public offerings or privata placements, for cash or in exchange for its outstanding securities. Underwriters or placernent agents will be selacted from a group of potentiai candidates. The fiim or firms selected to be undemrlters or placemeflt agens in an offering under this authority wifl he determined by the Applicant's opinion sf their *bllity to assis{ the Applicant in meeting its objectives for the Debt Securities to be issued. This opinion is based upcn the level of underrrrriting or placemant fees, their knowledge of the Applican{ and its varied operatiuns, and their ability to market tha Dsbt $ecudties to achieve the Applicants financing and capiial strudure obiectives. The Applicant also requests authority to issue Debt Securities, without further Comrnission approval, to the extent total spreads meet those provided in Exhibit B and Exhibit C or is issued with an all- in coupon rate not exceeding 8,0 percent per annurn in order to provide additional {lexibility in the event spreads widen when the Applicant decides to issr.ie any Sebt [ong- Ierm I ncentive Plan: The Applicant proposes to issue up to 1,635,000 shares of authorized but unissued Common Stock under its Long-Term lncentive Plan ('LTIP'). This is in addition to the authodty previously granted by the Washington Utifities and Transportalhn Commission under Order No. 0'1, entered Octoher 13, 2011, ln Docket No. U-111687, of which 3$1,664 share$ remain aveilable for awards pursuant to the Company's long-term incentive plan; however, if the shares awarded in ?013 through 2015 do not becom* fully vested, the Company would have up to 1,521,705 shares available {includes authcrization from UE- 0518e5). The LTIP is administered by the Esard of Directors of the Appticant or a committee or cammittess appointed hy, and consisting of two or rnore mernbers of the Board of Directors of the Applicant. To the extent consistent with applicable law, the Board ef Birectors rnay authoriza ofle or rnore senior exesutivs officers af the Applicant to gr*nt awards to designated classes of eligible employees within he limib prescrihed by the Board of Directors. Such $hares were previously authorized by sharehslders at the annual meeting dated May 7,2015" $uch Arrards lssued under the LTIP may include, but are not limited to, lnoenliuE Stock Oplicns, Nonqu*lified $tock Options, Stock Appreciaiion Rights, $tock Awards, Performance Awards, Reskicted $tosk Unile, Other Stock-Based Awards and Dividend Equivalent Rlg,hts. Awards may be granted singly, in combinatlon or in tandem so that the seftlemer* or payrnent of one automatieally reduces or cancels the Fage ? of 6 D-l other. Awards rnay also be made in combination or in tendem with, as alternatives to, or a$ the payment form for, grants or righB under any other employee or compensation plan of the Company. Shares awarded under the LTIP to eligible participants cen be granted subject to a vesting period and dher performance rneasures that determine he extent of vesting. To the extentthat previously awarded shares are not vested to the participants, the shares can be added beck to the LTIP program. t3) $tatament As To lllhy The Trenraction ls In the Public lntorcst, As a public utili$, the Applicant is expected to acquire, construct, improve, and maintain sufFrcient utility facillties to serve its customers adequately and reliably at reasonable cost. The proposed issuances are part of program to finance the cost of the Applicants facilities taking into consideration prudent capital ratios, earnings coveraga te$ts, markot uncertainties and the relative merits of the various $pes of securities the Applicant could sell or other linancing it cotrld anange. The LnF allows the Applicant to rctain its employees and other eligible partioipants. Accordingly, the Applicant believes the requested authority is in the public interest. (4) Text of a Drafr Order Granting Applicant's Reque*t for an Order. A copy of a draft order granting the Applicant's request for an order is attaohed hereto as *Exhibit D". The undersigned, an authorized agent of the Applicant oertifies under penalty of perjury under the laws of the State of Washingrton that Sre foregoing is true and correct to the best of my knowledge and belief, and that the proposed issuance of securities will be used forthe p{rrposes allornred by Chapter 80.08 RCW and requests that he Washington Utilities and Transportation Commission issue its order affirming that the applicant has complied with the requirements of RCW 80.08.040, Done *t Spokane, Washington this 11th day of September 2015. AVI$TACORPORATION By:&Mark Thies $enior Mce Fresident, CFCI, Treasurer Page 3 of6 , Gross Prooeeds Lsesr Ager*#l,lndenrrlters Cornpensatioh ProcBds Fayable b Applicant l-esE; Qths te*uanwffecfinflcal $ervlces ErycRsw ex* NetFr ('tl Aosures ttre issuarme otFinst liortgpgn Bordg Otlpr b*uensafTachnlcel $ortrise+ :Exfroriess ExhibirA Rating agency feer LegalhB Rqulatoryfues Accounting'feeg Frinting l@Barpoue axpefisas TCIThL Es{trnstod l{et Propsrds$} $-i Pefo$nt of T'o&1 r00.00% 0.875% 99.126% Ar82% 98.50%re ts00,000,000 , . z$Bf,ooCI 297,375,000. ,, r,s00tl00;* tags,s40so0 (3)fhrr moftgtrgtr Bondt Es$lrsted lrtusre Foes and Erpenses $3@,000 to S0,000 t0 50,000 to 80,000 to 5.0;000 to 80,@0 to $830,000 $s00,m0 500,m 75,000 'l0o,0m r5,000 1?9,000 $1,370,000 Legal S75,000 to TiBs Fsrrrance 80,m0 to County Filiry Fe€s and Other - ,. -0,q00 toTofral $185,ff)0 $tS0;000 21t0,000 19,q,m0 s490,@0 Page4 of0 D*l Exhibit 3 $ecured-Rate Spr*eds The following are rnaximum total spreads for various rneturities over the applicable benehrnark treasury yield. As stated in $ection 2 the Applicant requests authority to issue Debt Securities without further Commission approval if spreads exceed what is provided in this Exhibil as long as the all in Coupon rate does not exceed 8.0 percent per annum. Thls is meant to provide additional fiexibiiity in the er*Ent spreads widen when the Applicant decides to issue any debt. Maximum Spread Over Debt Securities Maturity Period Benchmark Tressury Yield Greater than (>) 9M 1Y 7Y 3Y 4Y 5Y 7Y 8Y 9Y 10Y 15Y 20Y 25Y 30Y Less than or equal to t<) 1Y 2Y 3v 4Y 5Y 7Y 8Y 9Y 10Y 1sY 20Y 25Y 30Y Or more (bps) 185 190 195 200 205 210 215 220 230 265 244 245 245 255 Page 5 of6 S-t Ext$hrt$ Ulr*sc*rcd llr&wrt.firtg Spryd* Tha bltsr*ing ara maximum toffil epreads for rnar-:l6us,rtffiturlfies over tfts eps ls heilefrnwlc tr6a$lry l8dd. Ar st*&d ln ffi,*on I 166 ffiieerrt rquB8te au{hodty t0 issrrs OeH Securttias wisrout furtfier Gommiscion Eppro\ftil lf $pr€ado €urcosd, r$hat is provided in tlds Exhlbit, aa lo*g aa,tha a[ h Co$on ra*b does net axceed &0 paoent pr annum. Thie ls m6ant to provide additional ftexibility in Srp evanl spreads wld$n when theApB{iaant d€cid€$ b i$6ue any debt Daht Seeurities Matur,Ity Psripd Maxnmum Spread Qver Benchrnarle Treasury. Yield Sreat6f tr,hsfi ltristlten orequalto (>) {E} OY lY1Y 2v2Y 3Y 3V ITY 4Y 5Y 5Y 7Y VY 8Y 8Y 9Y EV lOV 10Y 15Y 15Y 20Y 20Y zsY 25Y 30Y 30Y Or mois (hpi) a1$ aza 225 230 235 24U 2*5 250 2fiCI, ?95 a70 275 275 2E5 Pas6 I 6f6 Exhiblt D-2 FROPOSED ORDER OF APPLTCANT BEFORE THE IDAHO PUBLIC Ir{ THE MATTER OFTHEAPPLICATION OF } AVISTA CORPORATION FORAN ORDER ) AUTHORIZIHG THE OFFERING,ISSUANCE AND ) s&LE OF DEBT $ECURITIES NOT TO I EXCEED $300,000,000 AND 1,635,000 SHARES l QF Cori'rilOr'l sTocK., ,.,,, ,,,, , l I,JTILITIES COMMIS$ION CASE NO. oRDEn ilO. On September 11,2015, Avista Corporation (Avieta) filed an Application with the ldaho Public Utiliiies 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 and 1,635,000 siares of Cornrnon Stock under the Long-Term lncentive Plan . The Cornmission, having fully considered the Application and exhibits attached thereto, and all of the Commission's files and records pertaining to the Applicatlon, makes the following frndings of fact and conclusions of law, and enters this Order approving Avista's Application. THE APPLICATION Avista proposes to recelve authorization to offer, issue and sellthe Debt $ecurities including, without limitation, any refunding, extension, renewal or replacement of any of the Debt Securities and to receive authorization to issue up to 1,635,000 shares of euthorized but unissued Common $tock through its Long Term lncentive Plan. The net proceeds will be used for (ai the improvement or maintenance ol its service; (b) tre discharge or lawful refunding of its oHigations; (c) the reimbursement of moneys actually expended for said purposes frorn income or ftom other rnoneys in the treasury not $ecured by or obtained from the issue, assumpton or guarantee of securities; or (d) any other purpose approved by the Gommission or authorized by law. Avista requests authority to refund, extend, renew or replaee the proposed securities to allow for the greatesl flexibility in theirr use. No person has received or will be entitled to receive from Avista any fee (1) for services in connection with the consumrnation of the issuance and sale of the above*referenced eequrities, other than ks for underwriting, private placement, legal, accounting or similar prolessional or teehnical services, or (2) for services in securing underuriters, sellers or purchasers of the securities. Avista is a Washington corporation gualified to do business in the $tata qf ldaho. FINDINGS OF FACT AND coNctustoN$ oF LAw Avista is a public utility engaged in the generation, purchase, transmisEion, distribution and sale of electric energy and the purchase, distibution and sale of natural gas. Avista is a gas corporation within the definition of ldah;o Code $ 61-117 , an electric corporation within the definition at tdaho Code $ 61-1 19, and a public utility within the defini$on of ldaho Code $ 61-129, The Gommission has jurisdiction over this Exhlbit D-2 Application pursuant to the provisions ol ldaho Code $ 61-901, et seq. Tfre Cornrnission further finds that the Application reasonably conforms to Rules 141 through 150 of the Commission'e Rules of Procedure, rDApA 31.01.01. 141-'t 50. The Commission finds thatfte proposed issuance is for a lawfr.rl purpose and is within Avista's corporate powers. The Commission further finds that the proposed ffansactisn is in the public interest and a formal hearing on this matter is not required. The Commission's approval of &e 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 cons{tute 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 ior gas or electric sarvice to consumers in tte State of ldaho, The Commlssion furfier finds that the proposed transaction is in the public interest and a formal hearing on this matter is not required. Avista has paid all lawfulfees as provided by ldaha Code $ 61-905. ORDER lT lS HEREBY ORDERED thatAvista Corporation, as of September 11, 2015, is hereby authorized to offer, issue and sell up to and includlng $300,000i000 in Debt Securities and issue up to 1,635,000 shares of aulhorized but unissued Common Stock $rough its LongFTerm Incentive Program, lT lS FURTHER ORDERED thatAvista is hereby authorized to issue the Securities in the manner and for the purposes described in the Application, with continuing authority to refund, extend, renew or replace the same without further oder of the Commission provided that the fees, interest rales and expenses charged or incuned in conneclion with any transactions entered into underthe autrori$ 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 frorn at least tlvo nalionally recognized ratin g agefi cies. ,T lS FURTHER ORDERED that Avista shall file the terms of the proposed issuance(s) of the $ecurities and any subsequent changes to *re terms with St*ff upon issuance. This iniurmational filing should be made seven (7) days, or as soon as poseible, priorto the lseuance. lT lS 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 lssued," and (b) Verified copies of any Agreement entered inlo pursuant to this Order. lT lS FURTHER ORDERED thatthe foregoing authorketion is without prejudice to the regulatory authorlty of the Commission with respect to rates, utility capital structure, servics accounts, valuation, estimaEs fordetermination of costor any other matterwhich may come bebrethis Commission pursuant to its jurisdiction and authoriff a provided by law, Exhibit E-2 lT tS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9, Title 6'1, ldaho Code, or any act or deed done or performed in connection herewith shall be construed to obligate the $tate of ldaho to pay or guarantee in any manner whatsoever any securi$ authorized, issued, assumed or guaranteed under the provisions of Chapter 9, Titb 61 ldaho Code. lT lS FURTHER ORDERED that issuance sf 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 lS A FINAL ORDER. Afly parson interested in this Order may petiUon for reconsideration within twenty-one (21) days of the service date of Sris Order. \Alithin seven (7) days afier any percon has petitioned for reconsidoretion, any other person may cross-petition fcr reconsideration. $ee /daho Code $ 61€26. DONE by Order of the ldaho Public Utilities Commission at Boise, ldaho Sris XXth dayof MONTH, 2015 . COMMISSIONER , COI\4MISSIONER , COMMISSIONER ATTEST: Commission Secretary WHEREFORE, the Applicant re$pectfully requests the ldaho Publie Utilities Commission for an Order authorizing Avista Corporation (hereinaftercalled "Applicanf') to issue up to $300 million of Debt $ecurities and issuance of up to 1,635,000 authorized but unissued shares of its Common Stock, eflective September 11, ?015. Dated to Spokane, Washington, this 11th day of September, 2015. AVISTA CORPORATION ,r -, ] Mark Thies $enior Vice President, CFO, and Treasurer STATE OF WASHINGTON County of Spokane l, Mark Thies, being duly sworn, under penalty of perjury deposes and saye: That he is Treasurer of AVI$TA CORPORATION; that he has read the foregoing application and knows the contents thareof; and that the same is true of her own knowledge and beliei, and as tro those matters he believes thern to be Sue. Senior Vice Presideflt, CFO, and Treasurer SUB$CRIBED AND SWORN to betore rne this 1lth day of September, 2015. ) ) ) .-'"*.1,,1,*'#,s -..is' ?i.- -!. fir NOTARY $i E ? gi FUBU0 j* it*ifr$ Notary Public for Washington