20171227Application.pdf

ldaho Puoirc Utilities Commission
Otfice ol the Secretary
RECEIVED
DEC 2 6 2017
Boise, ldaho
December 27,2A17
State of ldaho
ldaho Public Utilities Commission
Statehouse
Boise lD 83720
Attention: Diane Hanian, Secretary Av tr - t.,t - I 1- o t
Avista Corporation filed a securities application on Decernber 26,2A17. ln that
application, the Company requested to receive an Order of Approval from the
Commission by January 30, 2418.
When complete, please send the executed copy of the Order of Approval to:
Patrice K. Gorton
Avista Corporation
1411 East Missicn Avenue
Spokane WA 99202-2600
lf any questions arise or additional information is needed, please do not hesitate to
contact Karrie Wilson at 509495-2U5.
$incerely
r.{''
Pat Gorton
Director of Finance
Enclosures
Aivmta
ln the Matter of the Application of )
AVISTA CORPORATION for an Order authorizing )
the offering, issuance and sale of Debt Securities )
not to exceed $500,000,000.
)
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Avtt- u- ,?- 0,
R E CE IVED
Z0li 0EC 26 At{ 8: 53
, t ;,1 r l._r.,rt j t-jLlC
CASE No. at-ti 177:s col,{lIlssl0N
Application is hereby made to the ldaho Public Utilities Commission under the provisions of Section 61-
901 and 61-902, ldaho Code (Laws of 1951, Chapter 143) for an Order authorizing offering, issuance
and sale by Avista Corporation (hereinafter called "Applicant") of up to $500 million of Debt Securities.
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:
Mark Thies, Senior Vice President, CFO, and Treasurer
(b) State and date of incorporation:
lncorporated 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, ldaho, Montana, and Oregon
(c) General description of business, oropertv. and territory served:
The Applicant is a public utility which owns and operates property in Eastern Washington, Northern
ldaho, Western Montana, and Central and Southwest Oregon.
The Applicant is engaged in the generation, transmission, distribution, and sale of electric energy,
which it sells at retailto approximately 379,317 residential, commercial, and industrialcustomers in
Eastern Washington and Northern ldaho, and at wholesale to public utilities, municipalities and
others as of September 30, 2017. lts 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 342,761
residential, commercial and industrial customers in Eastern Washington, Northern ldaho, and
Centraf & Southwest Oregon as of September 30,2017.
(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 ldaho Public Utilities Commission that are in general circulation in Applicant's
service area.
(2) Attached Exhibits:
Exhibit D-1 Copy of Washington Application
Exhibit D-2 Form of ldaho Order
Exhlbit D-l
BEFORE THE RECEIVED
WASHI NGTON UTILITI ES AND TRANSPORTATION COMMISSION
ln the mater of the request of )
AVTSTA CORPORATTON )
for an order establishing compliance )
with chaprer 80.08.040 Rcw )
201] DIC 26 Al{ B: 53
;l i; ; I ;llRt tr'i';;' ,-- 'l:: crjiiiiiSStOru
Application
Docket No.
Avista Corporation (hereinafter called "Applicant") hereby requests the Washington Utilities and
Transportation Commission enter a written order authorizing the Applicant to issue up to $500 million of
Debt Securitios. The Debt 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 requested authority to issue Debt Securities is in addition to the authority previously granted by the
Washington Utilitias and Transportation Commission for the issuance of debt secuilties under Order No,
02, entered October 29, 2015, in Docket No. U-151822, of vvhich $70,000.000 remains available lar
issuance.
The terms of the financing are described in more detail in Section 2 of this application.
The following inlormation is furnished in support of this applicatior, in accordanca with the requirements of
RCW 80.08.040:
(1) A Descriptlon of tlto Purporos for llYhich the leeuance lo [Uade, lncludlng a Certification By an
Offiser Authorizod To So $o That the Procsede From Any Such SaEuritiea Ars For One Or More
of the Purpoees Allowed By Chapter 80.08 RCW.
The Applicant will use the fundr from the proposed issuances for one or rnore of the following purposes: {a)The construction, completion, axtension, or improvement of its facilfties, or (b) the improvement or
maintenance of its service, or (c) the issuance of stock dividends, or (d) the discharge or refunding of its
obligations, or (e) the roimbursement of moneys actually axpended from income or from &e treasury of the
Applicant to the extent permitted by RCW 80.08.030, or (f) lor other purposes permitted by law.
The Applicant will utilize the proposed issuances for lawful purposes as outlined in BCW 89.08.030.
Speciflcally, the Applicant anticipates using the debt offering to repay fundg borowed under its corporate
credit facility and/or refinance long term debt.
(2) A Oeecrlptlon of the Propoeed k*uanca lncludlng the Terms of Financing.
De0l Sacunlies:
The Applicant proposes to offer, issue and sell the Debt Securities for purposes authorized by law, in an
aggregate principal amount not to exceed $500,000,000, which maturity shall not be less than nine {9) months
nor more than fifty (50) 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
ths Company andlor any combination of the foregoing.
lf the Company issues 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 can be offered in both public
offerings and private placoment. FMBs constitute 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 reoognized 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
Page 1 of5
time of issuance as compared to issuing ungecured debt. These Oabt Securities could have a fixed or floating
interest rate. See Exhiblt B for the securad fixed lnterest rate spreads.
ll the Company issues unsecured debt, the loan would not be collateralized by any lien on any specific asset
of the Company. lf theee Debt Securities are unsecured the creditors have a greater risk of not being able to
recover their loans made to tho 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 tha Applicant were to
issue secured debt. Unsecured dabt $pically has a higher interest rate st the time of issuance as compared
to issuing secured debt. These Debt Securities could hav€ a fixad or floating interest rate. $ee Exhibit C for
the unsecured fixed interest rate spreads.
lf the Company issues Oebt $ecurities with a fixed rate, the interest rate will not change through the lifs of
the Debt Securities.
lf the Company issues Debt Securities with a floating interest rate, the interest rate willreset periodically, such
as daity, weekly, monthly, quarterly, semi-anaually or annually. The most common indicas used for pricing
floating-rate Debt Securtties are based upon LIBOR, commercialpaper and Treasury bills.
The Applicant propose$ to issue the Debt $ecurities from time to time in either publie offerings or private
placements, for cash or in exchange for its outstanding securities. Undenpriters or placement agents will be
selected from a group of potential candidates. The firm or firms selected to be underwriters or placement
agentE in an offering under this aulhority will ba determined by the Applicant's opinion of their abill$ to assist
the Applicant in meeting its objectives for the Debt Securities to be issued. This opinion is based upon the
level of underuvriting or placement fees. their knowledge of the Applbant and its varied operations, and their
ability to market the Debt Securities to achisve tho Applicant's linancing and capital structure objectives. The
Applicant also requests aulhority to issue Debt $ecurities, without further Commission epproval, to the extent
total spreads meet thoee provided in Exhibit I and Exhibit C or is issued with an all-in coupon rste not
exceeding 8.0 percent per annum in order to provide additional flexibility in the event spreads widen wlren
the Applicant decides to issue any Debt.
(3) Statement Ae To t{lhy The Transactlon ls In the Public lntorest.
As a public utility. the Applicant is expected to acquire, construct. improve, and maintain $ufficient utility
facillties to servs it$ customers adequately and reliably at reasonable cosl The proposed issuances are part
of program to finance the cost of the Applicanfs facilities taking lnto consideralion prud*nt capital ratios,
earnings 6ov6rsge tests, market uncertaintiee and the relativs marits of the various types of eacurities the
Applicant could sell or otler linancing it could anange. Accordingly, the Applicant believes the requestad
authority is in the public interest.
(4) Text of a Dra[ Order Granting Appllcant'e Requeet for rn Ordar.
A copy of a draft order granting the Applicant's request for an order is attached hereto as "Exhibit D",
The undersigned, an authorized agent ol the Applicant, certifies under penalty of perjury under the laws of
the State of Washington that the foregoing is true and conect to the best of my knowledge and belief, and
that the proposed issuance of securities will be used for the purposes allowed by Chapter 80.08 RCW and
requests that the Washington Utilities and Transportation Commission issue its order affirming that the
applicant has complied with the requirements of RCW 80.08.040.
Mark Thies
Senior Vice
Traasurer
By:
Page 2 of 5
President. CFO, and
Oone at Spokane, Washington this 22no day of Dacember 2017.
AVISTA CORPORATION
Exhibit A
Legal
Title lnsurance
County Filing Fees and Other
Total
Estimated Nel Proceeds(rl
Total Percent of Total
Gross Proceeds
Less: Agents/Underwriters
Compensation
Proceeds Payable to Applicant
Less: Other lssuanceffechnical Servic*s Expengas (2x3)
Net Proceeds
(1) Assumes the issuance of First Mortgage Bonds.
(2)Other ls*uancerTechn lcal $ervicas Expenaes
Rating agency fees
Legalfees
Regulatory fees
Accounting fees
Printing
Miscellaneou$ expens€s
$500,000,000
4,375,000
100.00o/o
0.875%
495,625,000
3,125,000
99.'t250lo
0.62Ya
$492,500,000 98.50%
$300,000 to
300,000 to
50,000 to
50,000 to
50,000 to
80.000 t0
$500,000
500,000
75.000
100,000
75,000
120,000
(3)
TOTAL $830,000 $1,370,000
First illortgage Bonds Estimated lstuance Fees and Expenses
$75,000 ro
80,000 to
30,000 to
$185,000
$150.000
240,000
100.000
$490,000
Page 3 of 5
Exhibit.F
$ecured-Rate $pread*
The foltowing are maximum total spreads for various maturities over the applicable benchmark treasury yield.
As stated in Seotion 2 tho Applicant requests authori$ to issue Debt Securities without further Commission
approval if spreads exceed what is provided in this Exhibit, 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.
Debt Securities Maturity Period
Maximurn
Spread 0ver
Benchmark
Treasury
Yield
Greater than Less than or equal to
{>)
9M
1Y
2Y
3Y
4Y
5Y
7v
8Y
9Y
10Y
15Y
20Y
25Y
30Y
(bps)
185
190
195
200
205
210
2L5
220
230
265
240
245
245
255remoOr
(s)
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Page 4 of 5
Exhibit C
Unsecured lnterest Rate Sproads
The following are maximum totalspreads for various maturities over the applicable benchmark trea$ury yield.
As stated in $ection 2 the Applicant requests authority to iesue Debt Securities without further Cammission
approval if spreads exceed what is provided in this Exhibit, as long as the all in Coupon rate doe$ not exceed
8.0 percent per anflum. This is meant to provide additional flexibility in the event spreads widen when the
Applicant decides to issue any debt.
Maximum
Spread Over
Benchmark
Treasury
Debt Securities Maturity Period Yield
Greater than Less than or equal to
(>)
OY
lv
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
(bps)
215
220
225
230
235
240
245
250
260
29s
270
275
275
285
(<l
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Or more
Page 5 of 5
PROPOSED ORDER OF APPLICANT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
REC E IVED
?illl0[C 25 Al{ B: 53
Il,\: ll, ;ruSLlcr-il.l'i ri:!' C0MMISSI0N
CASE NO. AV U - 'l-r- r Z- o I
tN THE MATTER OF THE APPLICATION OF )
AVTSTA CORPORATION FOR AN ORDER )
AUTHORTZTNG THE OFFERING, ISSUANCE AND )
SALE OF DEBT SECURTTIES NOT TO )
EXCEED $500,000,000a )
ORDER NO.
On December 22,2017, Avista Corporation (Avista) filed an Application with the ldaho Public
Utilities Commission (Commission) requesting an Order authorizing the offering, issuance and sale by
Avista of up to $500,000,000 of secured fixed or variable rate Debt. 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 Debt Securities including,
without limitation, any refunding, extension, renewal or replacement of any of the Debt Securities. The net
proceeds will 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 ldaho.
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 ldaho Code $ 61-117, an electric corporation within the definition of ldaho Code $ 61-119, and
a public utility within the definition of ldaho Code $ 61-129. The Commission has jurisdiction over this
Exhibit D-2
Application pursuant to the provisions of ldaho Code S 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,
|DAPA 31 .01.01. 141-1 50.
The Commission finds that the proposed issuance is for a lawful purpose and is within Avista's
corporate powers.
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 ldaho. 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 ldaho Code $ 61-905.
ORDER
lT lS HEREBY ORDERED that Avista Corporation, as of December 22,2017 , is hereby authorized
to offer, issue and sell up to and including $500,000,000 in Debt.
lT lS 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.
lT lS 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 lssuance.
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 into pursuant to this Order.
lT lS 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.
Exhibit D-2
lT lS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9, Title 61,
ldaho Code, or any act or deed done or performed in connection therewith shall be construed to obligate
the State of ldaho to pay or guarantee in any manner whatsoever any security authorized, issued,
assumed or guaranteed under the provisions of Chapter 9, Title 61 ldaho Code.
lT lS 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 lS 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 ldaho Code $
61-626.
DONE by Order of the ldaho Public Utilities Commission at Boise, ldaho this XXth day of MONTH,
2018
, COMMISSIONER
, COMMISSIONER
, COMMISSIONER
ATTEST:
Commission Secretary
WHEREFORE, the Applicant respectfully requests the ldaho Public Utilities Commission for an Order
authorizing Avista Corporation (hereinafter called "Applicant") to issue up to $500 million of Debt
Securities effective December 22, 2017 .
Dated to Spokane, Washington, this 22nd day of December, 2017.
AVISTA CORPORATION
Mark Thies
Senior Vice President, CFO, and Treasurer
STATE OF WASHINGTON
County of Spokane
l, Mark Thies, being duly sworn, under penalty of perjury deposes and says: That he is Treasurer
of AVISTA CORPORATION; that he 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 he believes them to
be true.
Mark Thies
Senior Vice President, CFO, and Treasurer
SUBSCRIBED AND SWORN to before me this
22nd day of December,2017.
Notary Public for Washington
)
)
)
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