20151016Decision Memo.pdf

TO:
FROM:
DATE:
SUBJECT:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER RAPER
COMMISSION SECRETARY
LEGAL
WORKING FILE
TERRJ CARLOCK
ocroBER 16,2015
AVISTA CORPORATION'S APPLICATION FOR AUTHORITY TO
oFFER,ISSUE AND SELL DEBT Up rO $300,000,000 AND ISSUE UP
TO I,635,000 SHARES OF AUTHORIZED BUT UNISSUED COMMON
STOCK; CASE NO. AvU-U-ls-0I
On September 14,2015, Avista Corporation (Avista) applied for authority to offer, issue
and sell up to $300,000,000 of debt securities and 1,635,000 shares of authorized but unissued
Common Stock under the Long-Term Incentive Plan. Avista also requests authority to refund,
extend, renew or replace the proposed debt securities without further Commission approval
provided specific tests are passed. One test is that the senior secured debt of Avista has
investment grade ratings from at least two nationally recognized rating agencies, BBB-/Baa3 or
at least Pricing Level V. The second test is that the all-in cost of the transaction including fees,
interest rates and expenses charged or incurred are competitive with market prices for similar
transactions.
The debt securities could be secured or unsecured with the stated interest rate(s) fixed or
floating. The debt maturities will be established with each issuance and will not be less than
nine (9) months nor more than thirty-five (35) years. The debt proceeds will be used for one or
more of the following purposes: (a) the improvement or maintenance of service, (b) the
discharge or refunding of obligations, (c) the reimbursement of moneys actually expended from
income or from the treasury of Avista to the extent permitted, or (d) other purposes approved by
the Commission or permitted by law. Staff does not believe it appropriate to issue stock to pay
dividends.
DECISION MEMORANDUM OCTOBER 16,2OI5
Consistent with standard reporting requirements established by prior orders, Avista will
frle the terrns of the proposed debt issuance(s) and any subsequent changes to the terms with the
Commission Staff This informational filing should be made seven days, or as soon as possible,
prior to the issuance. Avista will file with the Commission as soon as they become available and
update ifany changes occur the "Report ofSecurities Issued" and verified copies ofany
Agreement entered into pursuant to this order for these issuances.
The Long-Term Incentive Plan is an existing program approved by the Board of
Directors of Avista. The program grants awards to designated classes of eligible employees
within the prescriSed limits of the program. The awards may include Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Stock Awards, Perfonnance Awards,
Restricted Stock Units, Other Stock-Based Awards and Dividend Equivalent Rights. Shares
awarded under the plan can be subject to a vesting period and other performance measures.
Additional shares of authorized but unissued Common Stock periodically need to be approved
for the ongoing plan operation. The ratemaking treatment of the Long-Term Incentive Plan
awards is determined in rate cases.
Avista has paid the fees as required by ldaho Code $ 6l-905. Avista has agreed to extend
the effective date to allow Staffto complete its examination and coincide with Decision Meeting
dates.
STAFF RECOMMENDATION
Staffrecommends approval of the proposed debt authority up to $300,000,000. In
addition, it is recommended that the authority under this initial approval be continuing (without
further order required) provided Avista maintains senior secured debt ratings that are investment
grade, BBB-lBaa3 or at least Pricing Level V. Staff also recommends approval of the issuance
of up to 1,535,000 shares of authorized but unissued Common Stock under the Long-Term
Incentive Plan.
COMMISSION DECISION
l. Does the Commission wish to approve Avista's request to issue up to $300,000,000 in
one or more debt issuances?
DECISION MEMORANDUM ocroBER 16,20t5
2. Does the Commission wish to allow the debt authority under this Order to be
continuing during the authorized term provided the senior secured debt rating levels remain
investment grade?
3. Does the Commission wish to require Avista to make the identified reporting and
filing requirements?
4. Does the Commission wish to authorize the issuance of up to 1,635,000 shares of
authorized but unissued Common Stock under the Long-Term Incentive Plan?
TC AVU-U.15-01 Dcbl and Common dml0 2015
DECISION MEMORANDUM ocToBER 16,20t5