20190726Decision Memo.pdf

RE
DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
TERRI CARLOCK
DATE: JULY 26,2A19
AVISTA CORPORATION'S REQUEST FOR AUTHORIZATION TO
ISSUE AND SELL SECURITIES; CASE NO. AVU-U-19-02
On July 1,2019, Avista Corporation (Avista, Company) filed an Application requesting
authority to offer, issue, and sell up to $600,000,000 secured or unsecured Debt Securilies
(DebQ. This is in addition to previous authorizations approved by the Commission, of which
$195,000,000 remain. The correct filing fees were received on July 8,2019.
The Debt maturity will be established with each issuance and will be less than nine
months nor more than fifty years. The interest rate could be either fixed or floating, and will be
decided at the time of issuance. If the Company issues Debt rvith a floating rate, the interest rate
rvill be reset periodically based on an index, generally LIBOR, commercial paper, or Treasury
Bills. If the Company issues Deft with a flxed rate it rvill be at a rate based upon the maturity
period of that Debt. The spread over Treasurl, Yield ranges from I 85 basis points to 265 basis
points for Secured issuances and 215 basis points to 295 basis points for unsecured issuances.
Net proceeds from the sale of Debt rvill be used for (a) the improvement and 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
pu{pose approved by the Commission or authorized by law.
Consistent with standard reporting requirements established by prior orders, Avista will
file the terms of the proposed debt issuance(s) and subsequent changes to the terms with the
Commission Staff. This informational filing should be made seven days, or as soon as possible,
DECISION MEMORANDUM JULY 26,2019I
prior to the issuance. Avista will file with the Commission the "Report or Securities Issued" and
verified copies of any agreement entered into pursuant to this Order for these issuance as soon as
they become available and update if any changes occur.
Avista is rated Baa2by Moody's and BBB by S&P Global ratings. Staff has reviewed
and found that prudent use of these proposed issuances should have minimal risk to changing the
capital ratios signifi cantly.
STAFF RECOMMENDATION
Staff recommends the Commission approve the authority to issue an additional
$600,000,000 of Debt Securities. In addition, Staff recommends that the authority under this
initial approval be continuing (without further order required) provided Avista maintains senior
secured debt ratings that are investment grade (Baa3 for Moody's or BBB- for S&P or that the
all-in-coupon rate, including fees, does not exceed 8.0%.
Staff recommends the Commission order Avista to adhere to the standard reporting
requirements mentioned above.
COMMISSION DECISION
Does the Commission approve Avista Corporation's request for authority to issue an
additional $600.000,000 of debt securities?
Does the Comrnission 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 or the all-in-coupon rate, including fees, remains below 8.0%?
Does the Commission wish to require Avista to make the identified reporting filing
requirements?
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Udnrernos/AVU-U- t 9-02 dec nrcmcr
DECISION MEMORANDUM 1 JULY 26,2019