Website:
www.puc.idaho.gov
Avista
reorganization gets commission approval
The
Idaho Public Utilities Commission has approved Avista Corporation’s application
to conduct a corporate reorganization by creating a holding company to be known
as AVA Formation Corp.
Under
the reorganization, AVA Formation Corp. becomes the parent company of Avista
Utilities, which, in northern Idaho, serves about 115,000 electric customers
and 68,000 natural gas customers. The majority of the Spokane-based utility’s
customers are in Washington state.
The
commission agreed with findings of its staff that the reorganization should
reduce financial risk for the utility and improve its credit ratings. The
responsibility of the commission is 1) to determine if the transaction is in
the public interest, 2) to ensure that the cost and rates for supplying service
will not increase as a result of the reorganization and 3) to determine that
Avista Utilities has the bona fide intent and financial ability to operate and
maintain Avista’s Idaho operations.
The
recent repeal of the Public Utilities Holding Company Act of 1935, often
referred to as PUHCA, allows utilities that operate in multi-state
jurisdictions to form holding companies. The holding company structure will
provide additional protection for ratepayers by further separating the
regulated utility’s operations from the operations of other Avista subsidiaries
that are not regulated. The protections, referred to as “ring fencing,” are
designed to ensure that ratepayers dollars are not used to subsidize
unregulated subsidiaries of Avista and that ratepayers are protected from the
risks of Avista operating other non-regulated businesses.
Avista
stated in its application that the reorganization will not include the transfer
of utility assets and that Avista customers will not see any change in the
utility or its operations. Avista Utilities would continue to be subject to the
Idaho Public Utilities Commission on matters impacting its Idaho customers such
as rates and customer service.
Commission
staff said that a number of commitments in the stipulation between staff and
Avista address the need for ring-fencing around Avista Utilities, which will
prevent the utility arm of the business from being pulled into a parent
corporation bankruptcy proceeding. Those provisions include the maintaining of
separate books and records for each Avista entity as well as granting
commission staff full access to books and documents pertaining to the regulated
utility side as well as those of the unregulated Avista affiliates and parent
corporation. Both the parent corporation and Avista Utilities will be required
to report to staff and request commission approval when certain events occur,
such as procurement of loans, the spin-off of any entity, the dissolution of
business activities, dividend payment arrangements and changes in the credit
ratings of each agency.
Another
commitment prohibits Avista Utilities from making any dividend payments to the
parent corporation that would reduce Avista Utilities’ common equity capital
below 25 percent of its total adjusted capital without commission approval.
A full text of the
commission’s order, along with other documents related to this case, are
available on the commission’s Web site at www.puc.idaho.gov.
Click on “File Room” and then on “Electric Cases” and scroll down Case No.
AVU-E-06-01.
The commission’s order is final, but interested parties may petition the commission for reconsideration by no later than July 21. Petitions for reconsideration must set forth specifically why the petitioner contends that the order is unreasonable, unlawful or erroneous. Petitions should include a statement of the nature and quantity of evidence the petitioner will offer if reconsideration is granted.
Petitions can be delivered
to the commission at 472 W. Washington St. in Boise, mailed to P.O. Box 83720,
Boise, ID, 83720-0074, or faxed to 208-334-3762.