HomeMy WebLinkAbout20240104Exhibit D1 - Copy of Washington Application.pdf
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BEFORE THE
WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
In the matter of the request of ) Application
AVISTA CORPORATION )
for an order establishing compliance ) Docket No.
with RCW 80.08.040 with respect to Proposed )
Issuance of up to $300,000,000 of additional
Debt Securities )
Avista Corporation (hereinafter called “Applicant”) hereby requests the Washington Utilities and
Transportation Commission enter a written order authorizing the Applicant to issue up to $300,000,000 of
Debt Securities. The Debt Securities will be issued via public offerings or private placements, 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 February 10, 2022, in Docket No. U-210944, of which $60,000,000 remains available for
issuance, for a total of $360,000,000.
The terms of the financing are described in more detail in Section 2 of this application.
The following information is furnished in support of this application, in accordance with the requirements of
RCW 80.08.040:
(1) A Description of the Purposes for Which the Issuance is Made, Including a Certification By
an Officer Authorized To Do So That the Proceeds From Any Such Securities Are For One
Or More of the Purposes Allowed By Chapter 80.08 RCW.
The Applicant will use the proceeds from the issuance of Debt Securities for one or more of the following
purposes:(a) investments in the Applicant’s utility plant facilities to enhance service and system
reliability, to replace aging infrastructure, and, generally, for the acquisition of property or the
construction, completion, extension or improvement of its utility facilities, and improvement or
maintenance of its utility service, all as contemplated in its then-current integrated resource plan as filed
with the Commission, (b) the retirement of maturing long-term debt, the repayment of short-term debt
and the discharge or refunding of other obligations, (c) the reimbursement of moneys actually expended
from income or from any other moneys in the treasury of the Applicant for any of the purposes described
in (a) and/or (b) above (to the extent permitted by RCW 80.08.030), (d) and or such other purposes as
may be permitted by law.
The purposes described in the preceding paragraph are allowed by RCW 80.08.030.
(2) A Description of the Proposed Issuance Including the Terms of Financing.
The Applicant proposes to offer, issue and sell the Debt Securities, in an aggregate principal amount not to
exceed $300,000,000 (addition to the authority previously granted by the Washington Utilities and
Transportation Commission for the issuance of debt securities under Order No. 01, entered February 10,
2022, in Docket No. U-210944, of which $60,000,000 remains available for issuance), maturing not less than
nine (9) months nor more than fifty (50) years from the date of initial authorization and delivery.
The Debt Securities could (1) be secured or unsecured, (2) bear interest at a fixed or floating rate and (3) be
sold in public offerings, in private offerings in accordance with Rule 144A under the Securities Act of 1933,
as amended, or in direct private placements, or issued to secure a term loan arrangement with lenders, issued
and delivered in exchange for outstanding debt securities of the Company and/or any combination of the
foregoing.
RECEIVED
Thursday, January 4, 2024 11:41AM
IDAHO PUBLIC
UTILITIES COMMISSION
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If 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 most utilities in the U.S., and can be offered in both
public offerings and private placement. FMBs are secured by the lien of the Mortgage and Deed of Trust,
dated as of June 1, 1939, as amended and supplemented by various supplemental indentures and other
instruments. This lien secures the FMBs, and the FMBs should have higher ratings by nationally recognized
rating agencies than unsecured debt. This higher credit rating should lead to a lower interest rate at the time
of issuance as compared to unsecure debt. See Exhibit B for most current indicative secured fixed interest
rate spreads.
Unsecured debt would not be secured by any lien on assets of the Company and, accordingly, should have
lower ratings by nationally recognized rating agencies rating than secured debt. Unsecured debt typically has
a higher interest rate at the time of issuance than secured debt. See Exhibit C for current indicative unsecured
fixed interest rate spreads.
If the Company issues Debt Securities with a fixed rate, the interest rate will not change through the life of
the Debt Securities.
If 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 the Secured Overnight Financing Rate (SOFR), commercial
paper and/or U.S. Treasury rates.
Underwriters or placement agents for the sale of Debt Securities 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 requests authority to issue Debt Securities, without further Commission approval, even if
total spreads exceed those shown in Exhibit B and Exhibit C so long as the coupon rate does not exceed 8.0
percent per annum in order to provide additional flexibility in the event spreads widen when the Applicant
decides to issue any Debt Securities.
(3) Statement As To Why The Transaction Is In the Public Interest.
The requested authority would provide part of the financing necessary to allow the Applicant to carry out the
purposes described in paragraph 1 above and, thus, to continue to conduct its operations as an electric and
gas utility company on a reliable basis for the benefit of its customers. Without such financing, the Applicant
could not continue to conduct its operations as such. Accordingly, the Applicant believes that 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.
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Dated 4th Day of January 2024.
AVISTA CORPORATION
By: /s/ Jason Lang
Jason Lang
Assistant Treasurer and Director of
Finance and Risk
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Exhibit A
Estimated Net Proceeds(1)
Total Percent of Total
Gross Proceeds $300,000,000 100.00%
Less: A ents/Underwriters
Compensation 2,625,000 0.875%
Proceeds Pa able to pplican 297,375,000 99.13%
Less: Other Issuance/Technical Services Expenses (2)(3)(4) 4,060,000 1.35%
Net Proceeds $293,315,000 97.78%
1 Assumes the issuance of First Mort a e Bonds.
2 Other Issuance/Technical Services Expenses for Each Issuance
Ratin a enc fees $300,000 to $500,000
Le al fees 300,000 to 500,000
Re ulator fees 50,000 to 75,000
ccountin fees 50,000 to 100,000
Printin 50,000 to 75,000
Miscellaneous expenses 80,000 to 120,000
TOTAL $830,000
$1,370,000
3 First Mort a e Bonds Estimated Issuance Fees and Expenses
Le al $75,000 To $150,000
Title Insurance 80,000 To 240,000
Count Filin Fees and Other 30,000 To 100,000
Total $185,000 $490,000
4
This will likely be done in multiple issuances. As such, we are estimating issuance/technical service
expenses for each issuance.
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Exhibit B
Secured-Rate Spreads
The following are maximum indicative 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 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 Less than or equal to
(>) (≤) (bps)
9M 1Y 185
1Y 2Y 190
2Y 3Y 195
3Y 4Y 200
4Y 5Y 205
5Y 7Y 210
7Y 8Y 215
8Y 9Y 220
9Y 10Y 230
10Y 15Y 265
15Y 20Y 240
20Y 25Y 245
25Y 30Y 245
30Y Or more 255
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Exhibit C
Unsecured Interest Rate Spreads
The following are maximum indicative 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 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 Less than or equal to
(>) (≤) (bps)
0Y 1Y 215
1Y 2Y 220
2Y 3Y 225
3Y 4Y 230
4Y 5Y 235
5Y 7Y 240
7Y 8Y 245
8Y 9Y 250
9Y 10Y 260
10Y 15Y 295
15Y 20Y 270
20Y 25Y 275
25Y 30Y 275
30Y Or more 285