20190701Application.pdf

ln the Matter of the Application of
AVISTA CORPORATION for an Order authorizing
the offering, issuance and sale of Debt Securities
not to exceed $600,000,000.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION RE C E IVED
t0l9 JUL : I Al{ l0: l0
cASE rlo Av tr. u;.i?fr'trf-i.[?,hi8go*
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 the otfering, issuance
and sale by Avista Corporation (hereinafter called "Applicant") of up to $600 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 T. 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.
As a oublic utility Apolicant is qualified to do business in:
Washington, ldaho, Montana, and Oregon.
(c) General description of business. oroperty, and territorv served:
The Applicant is a public utility which owns and operates property in Eastern Washington, Northern
ldaho, Western Montana, and Centraland Southwest Oregon.
The Applicant is engaged in the generation, transmission, distribution, and sale of electric energy,
which it sells at retailto approximately 389,000 residential, commercial, and industrialcustomers in
Eastern Washington and Northern ldaho, and at wholesale to public utilities, municipalities and
others as of March 31,2019. 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 355,000
residential, commercial and industrial customers in Eastern Washington, Northern ldaho, and
Central & Southwest Oregon as of March 31,2019.
(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
\jch'bi f b-t
BEFORE THE
WASHI NGTON UTI LITI ES AN D TRANSPORTATION COMMI SSION
ln the matter of the request of )
AVTSTA CORPORATTON )
for an order establishing compliance )
with Chapter 80.08.040 RCW )
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 $600 million of
Debt Securities. 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 Utilities and Transportation Commission for the issuance of debt securities under Order No.
01, entered January 11, 2018, in Docket No. U-l71210, of which $195,000,000 remains available for
issuance.
The terms of the financing are described in more detail in Section 2 of this 'ion.
The following information is furnished in support of this application, in accu,.
RCW 80.08.040:
the requirements of
(1) A Description of the Purposes for Which the lssuance is Made, lncluding a Certiflcatlon By an
Officer Authorlzed To Do So That the Proceeds From Any Such Securltles Are For One Or More
of the Purposes Allowed By Chapter 80.08 RCW.
The Applicant will use the funds from the proposed issuances for one or more of the following purposes: (a)
The construction, completion, extension, or improvement of its facilitieE, 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 reimbursement of moneys actually expended from income or from the treasury of the
Applicant to the extent permitted by RCW 80.08.030, or (f) for other purposes permitted by 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.
(2) A Description of the Proposed Issuance lncluding the Terms of Financlng.
Debt Securities:
The Applicant proposes to offer, issue and sell the Debt Securities for purposes authorized by law, in an
aggregate principal amount notto exceed $600,000,000, which maturity shall not be less than nine (9) months
nor more than filty (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 1444 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.
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 publb
offerings and private placement. 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 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
Page 1 ofS
time of issuance as compared to issuing unsecured debt. These Debt Securities could have a fixed or floating
interest rate. See Exhibit B for the secured fixed interest rate spreads.
lf the Company issues unsecured debt, the loan would not be collateralized by any lien on any specific asset
of the Company. lf 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 C for
the unsecured fixed interest rate spreads.
lf the Company issues Debt Securities with a fixed rate, the interest rate will not change through the life of
the Debt Securities.
lf 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 LIBOR, commercial paper and Treasury bills.
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. Undenryriters 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 n>quests authority to issue Debt Securities, without further Commission 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 prercent 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 ls ln the Public lnterest.
As a public utility, the Applicant is expected to acquire, construct, improve, and maintain sufficient utility
facilities to serve its customers adequately and reliably at reasonable cost. The proposed issuances 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.
(4) Text of a Draft Order Granting Applicant's Request for an Order.
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 of the Applicant, certifies under penalty of perjury under the laws of
the State of Washington that the foregoing is true and correct 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.
Done at Spokane, Washington this 26th Day of June 2019.
Mark T. Thies
Senior Vice
Treasurer
By:
AVISTA CORPORAT]ON
Page 2 of 5
President, CFO, and
Exhibit A
Rating agency fees
Legal fees
Regulatory feers
Accounting fees
Printing
Miscellaneous expenses
Legal
Title lnsurance
County Filing Fees and Other
Total
Estimated Net Proceeds(1)
Total Percent of Total
Gross Proceeds
Less: Agents/Underwriters
Compensation
Proceeds Payable to Applicant
Less: Other lssuance/Technical Services Expenses (2x3)(1)
Net Proceeds
(1) Assumes the issuance of First Mortgage Bonds.
Other lssuance/Technical Services Expenees
$600,000,000
5,250,000
100.00%
0.875Yo
594,750,000
3,720,000
99.1250/o
0.620/o
$591,030,000 98.51o/o
(2)
$300,000 to
300,000 to
50,000 to
50,000 to
50,000 to
80,00q to
$500,000
500,000
75,000
100,000
75,000
120,000
TOTAL $830,000
(3)First Mortgage Bonds Estimated lssuance Fees and Expenses
$1,370,000
$75,000
80,000
30,000
To
To
To
$150,000
240,000
1 000
(4)
$18s,000 $490,000
This will likely be done as two separate issuances. As such, we are estimating technical service expenses
for each issuance.
Page 3 of 5
Exhibit B
Secured-Rate Spreads
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, 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
Maximum
Spread Over
Benchmark
Treasury
Yield
Greater than
(>)
9M
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Less than or equal to
(s)
LY
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Or more
(bps)
185
190
195
200
205
210
2L5
220
230
265
240
24s
245
25s
Page 4 of 5
Exhibit C
Unsecured lntereet Rate SPreads
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, as long as the all in Coupon rate doeE 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.
Maximum
Spread Over
Benchmark
Treasury
Debt Securities Maturity Period Yield
Greater than
(>)
OY
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
(bps)
2L5
224
22s
230
235
240
245
250
260
295
270
275
275
285
Less than or equal to
(s)
1Y
2Y
3Y
4Y
5Y
7Y
8Y
9Y
10Y
15Y
20Y
25Y
30Y
Or more
Page 5 of 5
Exhibit D-2
PROPOSED ORDER OF APPLICANT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
lN THE MATTER OF THE APPLTCATTON OF )
AVTSTA GORPORATTON FOR AN ORDER )
AUTHORIZING THE OFFERING, ISSUANCE AND }
SALE OF DEBT SECURTTTES NOT TO )
EXCEED $600,000,000 )
CASE NO.
ORDER NO.
On June 26,2019, 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 $600,000,000 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 $ 61-1 '19, 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,
TDAPA 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 July 31,2019, is hereby authorized to
offer, issue and sell up to and including $600,000,000 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 $
61626.
DONE by Order of the ldaho Public Utilities Commission at Boise, ldaho this 31$ day of July,
201L
, 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 $600 million of Debt
Securities effective July 31, 201 9.
Dated to Spokane, Washington, this 26th day of June, 2019.
AVISTA CORPORATION
Mark T ies
Senior Vice President, CFO, and Treasurer
STATE OF WASHINGTON
County of Spokane
l, Mark T. 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, andas to those matters he believes
them to be true.
By
)
)
)
SUBSCRIBED AND SWORN to before me this
26th day of June, 2019.
Notary Public for Washington
Mark T. Thies
Senior Vice President, CFO, and Treasurer
EDE
N0
PUBLIC
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