29031.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF THE WASHINGTON AVISTA COMPANY FOR AN ORDER AUTHORIZING (A) THE ISSUANCE, SALE, DELIVERY, AND/OR GUARANTEE OF DEBT SECURITIES, IN ONE OR MORE SERIES, WITH AN AGGREGATE STATED VALUE OF UP TO AND INCLUDING $250,000,000; (B) THE ISSUANCE, SALE, DELIVERY, AND/OR GUARANTEE OF CONSERVATION BONDS THROUGH THE USE OF A SPECIAL PURPOSE ENTITY, IN ONE OR MORE SERIES, WITH AN AGGREGATE STATED VALUE OF UP TO AND INCLUDING $60,000,000; AND (C) THE REFUNDING OF TAX-EXEMPT DEBT SECURITIES CURRENTLY OUTSTANDING, IN ONE OR MORE SERIES, WITH AN AGGREGATE STATED VALUE OF UP TO AND INCLUDING $85,000,000.
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CASE NO. WWP-U-97-1

ORDER NO.  29031
In Order No. 27153, the Commission granted Washington Water Power Company’s (dba Avista Corporation) Application requesting authorization to issue Debt Securities. Due to recent market developments and Avista’s ratings, Avista requests that Order No. 27153 be modified to include a “swap” feature for additional flexibility. The Commission, having fully considered the Application and exhibits attached thereto, and the Commission’s files and records pertaining to this Application, now makes the following Findings of Fact and Conclusions of Law:
FINDINGS OF FACT
Avista Corporation is a Washington corporation qualified to do business within the State of Idaho. 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 requests that the Feature to Enhance Debt or Tax-Exempt Securities language contained in the Application related to Order No. 27153 be modified to include the “swap” feature.
CONCLUSIONS OF LAW
Avista Corporation is an electric corporation within the definition of Idaho Code  61-119 and a public utility within the definition of Idaho Code  61-129.
The Idaho Public Utilities Commission has jurisdiction over this Application pursuant to the provisions of Idaho Code  61-901 et seq., and the Application reasonably conforms to Rules 141 through 150 of the Commission’s Rules of Procedure. IDAPA 31.01.01.141-150.
The issuance of an Order authorizing the proposed financing does not constitute agency determination/approval of the type of financing or the related costs for ratemaking purposes. The Idaho Public Utilities Commission does not have before it for determination, and therefore does not determine, any effect of the proposed transactions on rates to be charged by Avista for electricity to consumers in the State of Idaho.
The proposed issuance of the above-referenced securities by Avista under its various plans and programs, as authorized by this Order, will be for a lawful purpose in accordance with and permitted by the provisions of the governing statutes under which the Application is made, in that the proposed transaction is consistent with the public interest and necessary or appropriate for the proper performance by Avista of service as a public utility.
Avista shall file with the Commission all reports regarding each proposed transaction required under the Commission’s Rules of Procedure. Avista shall also provide the Commission within seven days of entering a swap, and retain through the term of the swap, documentation showing the all-in cost for the swap compared to the all-in cost for conventional financing mechanisms.
All lawful fees have been paid by Avista as provided by Idaho Code  61-905.
O R D E R
IT IS THEREFORE ORDERED that the Application seeking modification of Order No. 27153 to include a “swap” feature is hereby approved.
IT IS FURTHER ORDERED that in addition to the authority granted in Order No. 27153, from time to time Avista Corporation may be able to reduce its borrowing costs by issuing fixed- or floating-rate debt and entering into one or a series of interest rate swap (“swap”) contracts to convert fixed interest payments into favorable floating-rate payments or vice versa, or to convert floating-rate payments tied to one index (e.g., LIBOR) into floating-rate payments tied to another index (e.g., the Federal Reserve Composite Rate for commercial paper). Utilizing Swaps, when appropriate, will result in savings for ratepayers.
IT IS 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.
IT IS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9, Title 61, Idaho Code, or any act or deed done or performed in connection therewith shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any security authorized, issued assumed or guaranteed under the provisions of Chapter 9, Title 61, Idaho Code.
IT IS FURTHER ORDERED that Avista shall provide the Commission within seven days of entering a swap, and retain through the term of the swap, documentation showing the all-in cost for the swap compared to the all-in cost for conventional financing mechanisms.
IT IS 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 IS 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 Idaho Code  61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of May 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean J. Jewell
Commission Secretary

O:WWPU9701_ln

ORDER NO. 29031 -1-

Office of the Secretary
Service Date
May 21, 2002