20221213Decision Memo.pdf

RE
DECISION MEMORANDUM
TO COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
CLAIR SHARP
DATE: DECEMBER13,2022
IN THE MATTER OF AVISTA CORPORATION'S APPLICATION FOR
AN ORDER AUTHORIZING THE ISSUANCE OF AN ADDITIONAL
$250,000,000 IN SHORT-TERM SECURITIES; CASE NO. AVU-U-22-02
On December 13, 2022, Avista Corporation ("Avista" or "Company") applied for
immediate authority to enter into additional debt facilities up to $250,000,000 in total. These
facilities will consist of: (1) a term loan facility in the initial amount of $100,000,000 with an
option to request an additional $50,000,000 ("Bridge Loan"); (2) a $50,000,000 increase to its
existing unsecured revolving credit facility ("Accordion Loan"); and (3) a $50,000,000 bilateral
uncommitted letter of credit facility ("LC Facility"). The term of the facilities is expected to
expire in less than 12 months from the date of issuance. Staff calculated the filing fee to be
$1,000. The Commission has not received the appropriate filing fee as of December 13, 2022.
The requested authority will be in addition to the current facilities authorized in Order
No. 34995 (Case No. AVU-U-21-01) set to expire in2026. Due to the cold weather, several
days prior to the application gas and power prices have been 5 to 8 times higher than normal.
The EIA daily spot prices for December 13, 2022 are $39.03 per MMBtu for natural gas and
$347.50 per MWh for electricity. For reference natural gas was $4.05 per MMBtu and $65 per
MWh for electricity in the same time frame for 2021. The increased prices have led to
significant margin calls that have placed significant pressures on the Company's liquidity.
The proceeds will be used for one or more of the following purposes: (a) the Company's
acquisition, construction, completion, extension, or improvement of facilities; (b) the
improvement or maintenance of service; (c) retirement or exchange of one or more outstanding
DECISION MEMORANDUM I DECEMBER13,2022
stock, bond, or note issuances; (d) reimbursement to treasury for funds previously expended; and
(e) for such purposes as may be permitted by law.
The estimated fees and borrowing spreads are not expected to be materially different
from the existing rates. These are based off the Company's current senior secured debt rating
and current market information. Avista's current senior secured debt ratings are A- by Standard
& Poors and ,A'3 by Moody's. Avista will only enter into transactions where fees, interest rates
and expenses charged or incurred by Avista in connection with the transactions and any
refunding, extensions, renewals, or replacements are competitive with market prices for similar
transactions. The Company's Application is consistent with the previously authorized
notification and filing process if a rating falls below investment grade.
Idaho Code $61-903 states that the Company may issue securities payable at periods of
not more than 12 months after the date of issuance without an order from the Commission, if the
total short-term securities do not exceed 5o/o of the total authorized securities the Company has
outstanding, and those securities are not converted to securities with a payable period exceeding
12 months. The Bridge Loan is expected to mature in less than 4 months following the date of
issuance. The Accordion Loan is a revolving credit facility and expected to be similar to the
current facility. The LC Facility is expected to have a term of less than one year. The entire
request is for short term debt. The Company had $1,898,370,000 in long term debt and
$1,380,152,000 in stock for the year ending 2021. This request exceeds 5o/o of the Company's
total authorized securities. The Application complies withthe majority of IDAPA 31.01.01.141.
However, due the urgency of this situation, the Company has not filed a statement of public
notice as required under IDAPA 31.01.01.141.08.
STAFF RECOMMENDATION
The urgency of this situation makes it in the public interest that this Application is
approved quickly. Therefore, Staff recommends that the Commission waive both the public
notice requirement in TDAPA 31.01.01.141.08 and the requirement that payment of the fee is
prior to the Order being issued per Idaho Code $61-905. The Commission has authority to waive
parts of Chapter 9 per ldaho Code $61-909 if the Commission finds that it is in the public interest
to do so. Delaying approval of this authority could have more negative effects on ratepayers
DECISION MEMORANDUM -2-DECEMBER 13,2022
than the risks of non-compliance. In addition, the Application does comply with most of the
requirements in Idaho Code Chapter 9 and IDAPA 31.01.01.141.
Staff recommends approval of the proposed increase to short term credit facilities of up to
$250,000,000 in total.
In addition, it is recommended that the Company file with the Commission any ratings
changes that occur over the next year.
COMMISSION DECISION
Does the Commission wish to waive the public notice requirement in Rule 141 as well as
the requirement that payment be made before the order is issued as required in Idaho Code
$61-90s?
Does the commission wish to approve Avista's request for authority to issue an additional
$250,000,000 in short term debt?
Does the Commission wish to order the Company to file with the Commission any credit
rating changes that occur over the next year?
Udmemos/AW -U -22 -02 Decision Memo
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DECISION MEMORANDUM -J-DECEMBER 13,2022