UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington D.C. 20549 | ||
FORM 8-K | ||
CURRENT REPORT | ||
PURSUANT TO SECTION 13 OR 15(d) OF | ||
THE SECURITIES EXCHANGE ACT OF 1934 | ||
Date of Report (Date of earliest event reported): December 5, 2017 | ||
AVISTA CORPORATION | ||
(Exact name of registrant as specified in its charter) | ||
Washington | 1-3701 | 91-0462470 |
(State of other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) |
1411 East Mission Avenue, Spokane, Washington | 99202-2600 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant's telephone number, including area code: | 509-489-0500 | |
Web site: http://www.avistacorp.com | ||
(Former name or former address, if changed since last report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Section 7 – Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure.
On December 6, 2017, management of Avista Corporation (Avista Corp. or the Company) will be participating in meetings with investors and analysts in New York, New York. The same business update presentation will be used at all of the meetings. A copy of the business update presentation is furnished as Exhibit 99.1 and is available in the “Investors” section of Avista Corp.'s website at http://investor.avistacorp.com/events-and-presentations.
As part of this update, Avista Corp. expects to confirm earnings guidance for 2017. The 2017 earnings guidance was included in Avista Corp.'s third quarter of 2017 earnings release furnished on Form 8-K on October 31, 2017. The 2017 earnings guidance is subject to the risks, uncertainties and other factors set forth or referred to in such earnings release, the Company's annual report on Form 10-K for the year ended December 31, 2016 and the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2017.
The information in this report, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
The inclusion in this Current Report or in Exhibit 99.1 of a reference to Avista Corp.'s Internet address shall not, under any circumstances, be deemed to incorporate the information available at such Internet address into this Current Report. The information available at Avista Corp.'s Internet address is not part of this Current Report or any other report furnished or filed by Avista Corp. with the Securities and Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
AVISTA CORPORATION | ||
(Registrant) | ||
Date: | December 5, 2017 | /s/ Marian M. Durkin |
Marian M. Durkin | ||
Senior Vice President, General Counsel, | ||
Corporate Secretary and Chief Compliance Officer | ||
Positioned for performance:
An overview of Q3 2017 and beyond
December 2017
NYSE: AVA www.avistacorp.com
Exhibit 99.1
All forward-looking statements are Avista management’s present expectations of future
events and are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking statements.
For more information on such factors and uncertainties, consult Avista’s most recent form
10-K and 10-Q, which are available on our website at www.avistacorp.com
Disclaimer
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Avista to be acquired by Hydro One
Key
Transaction
Terms
Offer price of US$53.00 per Avista common share in cash
Represents a 24% premium to Avista’s closing price on July 18, 2017, of US$42.74
Equity purchase price of US$3.4 billion (C$4.4 billion)
Total enterprise value of US$5.3 billion ($C6.7 billion), including Avista debt assumed
Avista preserves corporate identity and maintains headquarters in Spokane
Timing
and
Approvals
Shareholder approval obtained at special meeting on Nov. 21, 2017
Filed for approval with all five state regulators and FERC
Requested regulatory decisions by August 2018
Proposed customer rate credit of $31.5 million over 10 years
Expect to file other regulatory approvals in 2018
Expected closing date in the second half of 2018
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Strong and stable utility core
Regulated electric and natural gas operations
Serves customers in Washington, Idaho and Oregon
Contributes about 95% of earnings
Regulated electric operations
Serves customers in City and Borough of Juneau
Avista Utilities
Alaska Electric Light
& Power Company
(AEL&P)
Long history of service, trust,
innovation and collaboration
Photo: Spokane River Upper Falls
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Steadily building long-term value
Reliably building value for our customers,
investors, communities and employees
Projecting long-term earnings and dividend growth of 4% to 5%
Avista Utilities
AEL&P
Strategic
Investments
5% to 6% rate base growth through utility capital investments
Upgrading infrastructure; grid modernization
Customer growth ~1%
Near-term earnings are challenged due to 2016 Washington rate order
Committed to reducing timing lag and aligning our earned returns with those
authorized
Moderate rate base growth through utility capital investments
Customer and load growth less than 1%
Developing platforms for future growth
□ Exploring data science and advanced analytics
□ Investing in emerging technologies
□ Current economics impact LNG opportunities
*LNG: Liquefied natural gas
Avista Utilities
Significant investments in utility infrastructure
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Diverse customer base
□ 30,000 square mile service territory
□ Service area population 1.6 million
– 377,000 electric customers
– 340,000 natural gas customers
Strong customer focus
□ 90% percent or better customer satisfaction
ratings every year since 1999
□ Developing key customer initiatives
Invested in our communities
□ More than $2 million per year in charitable
donations and over 48,000 volunteer hours
from our employees
Providing safe and reliable service for 128 years
Solid foundation and continued commitment to innovation
Information as of Dec. 31, 2016
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A responsible mix of generation
Hydro
49%
Biomass
2% Wind
4.5%
Coal
9.5%
Natural Gas
35%
Avista Utilities Electricity Generation Resource Mix*
Dec. 31, 2016
Strategy is to control a portfolio of resources that responsibly meet our long-term
energy needs
Filed electric Integrated Resource Plan in August; long resources until 2026
□ 2026 resource acquisitions include a mix of upgrades to our thermal fleet, demand response,
energy efficiency and a natural gas-fired peaker
Exceeds Washington state’s 15% Renewable Portfolio Standard for the next 20 years
Founded on clean, renewable hydropower
*Based on maximum capacity
Excludes AEL&P Post Falls Dam, Idaho
Projected
Investments to upgrade our systems
*Excludes projected capital expenditures at AEL&P of $7 million in 2017, $7 million 2018 and $13 million in 2019
5% to 6% rate base growth
$163 $148 $153
$190
$73
$71 $73
$50
$49 $69 $51
$52
$49 $49 $62
$53
$47 $46 $46
$47
$23 $22 $21 $13
$405 $405 $405 $405
2017 2018 2019 2020
Failed Plant &
Operations
Customer
Requested
Performance &
Capacity
Customer Service,
Quality
& Reliability
Mandatory &
Compliance
Asset
Condition
9
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Investing in our utility
Little Falls Plant Upgrade
Grid Modernization
Aldyl A Natural Gas
Pipe Replacement
Advanced Metering
Infrastructure (AMI)
Preserving and enhancing service reliability
Electric Vehicle Pilot
Program
Customer Facing
Technology
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Washington
May 26, 2017, filed an electric and natural gas rate request designed to increase annual electric revenues by $61.4 million
and annual natural gas revenues by $8.3 million, effective May 1, 2018.
• Dec. 1, 2017, filed updated revenue requirements in rebuttal testimony due to timing of capital projects.
Requests based on a 9.9% return on equity with a 50% common equity ratio.
Three-Year Rate Plan
New rates will take effect May 1, 2018, with annual increases in May 2019 and May 2020.
Power supply costs would be updated each year (on Rebuttal, only update power supply costs in Year 1).
No new general rate cases would be filed with new rates effective prior to May 1, 2021.
Driving Effective Regulatory Outcomes
Recovery of costs and capital investments
ELECTRIC NATURAL GAS
Filed
Revenue Increase
Filed
Base %
Increase
Rebuttal
Revenue
Increase
Filed
Revenue Increase
Filed
Base %
Increase
Rebuttal
Revenue
Increase
May 1, 2018 $61.4M 12.5% $54.4M $8.3M 9.3% $6.6M
May 1, 2019 $14.0M* 2.5% $13.5M $4.2M 4.4% $3.7M
May 1, 2020 $14.4M* 2.5% $13.9M $4.4M 4.4% $3.8M
*Excludes power supply adjustment
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Driving Effective Regulatory Outcomes
Recovery of costs and capital investments
Idaho
Oct. 19, 2017, filed multi-party settlement agreement designed to increase annual electric base revenues by $12.9 million,
or 5.2 percent, effective Jan. 1, 2018, and by $4.5 million, or 2.3 percent, effective Jan. 1, 2019.
For natural gas, the settlement agreement is designed to increase annual base revenues by $1.2 million, or 2.9 percent, effective Jan. 1, 2018, and
by $1.1 million, or 2.7 percent on Jan. 1, 2019.
Based on 50% equity ratio and 9.5% return on equity.
Settlement agreement is dependent on Idaho Public Utilities Commission approval.
Alaska
Nov. 15, 2017, all-party settlement agreement approved by Regulatory Commission of Alaska designed to increase base
revenues by 3.86% or $1.3 million, the level of interim rates that went into effect Nov. 23, 2016.
Previously approved additional $2.9 million annually from interruptible service will be decreased to $2.06 million annually; a one-time $0.9 million
credit will be credited back to customers through the Cost of Power Adjustment (COPA).
Based on a 58.18% equity ratio and an 11.95% return on equity.
Oregon
Sept. 13, 2017, received Commission approval of an all-party settlement agreement designed to increase annual natural gas base
revenues by 5.9% or $3.5 million.
Rate adjustment of $2.6 million was effective Oct. 1, 2017, and a second adjustment of $0.9 million was effective Nov. 1, 2017.
Based on 50% equity ratio and 9.4% return on equity.
Alaska Electric Light & Power Company
(AEL&P)
Growing the utility core
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Oldest regulated electric utility in Alaska, founded in 1893
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Serves 17,000 electric customers in the City and Borough of
Juneau, meeting nearly all of its energy needs with hydropower
One of the lowest-cost electric utilities in the state
Approved capital structure of 58.18% equity ratio and an
authorized return on equity of 11.95%
Diversifying our utility footprint
Juneau, Alaska
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Strategic Investments
Developing platforms for future growth
LNG opportunities continue to be impacted by current market
economics
□ Salix (subsidiary)
– Generation – substitution for diesel
– Marine and rail fueling
□ Plum Energy
– Small LNG project investments
Targeted investments
□ Energy Impact Partners
– Private equity fund that invests in emerging technologies,
services, and business models throughout electric supply chain
with a collaborative, strategic investment approach
□ TROVE
– Leverage AMI, consumer and other data through predictive
analytics to create utility value
□ Spirae
– Microgrid and distributed energy resource management platform
Creating new growth platforms
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Financial
Performance Metrics
Prudent Balance Sheet and Liquidity
Debt
53.6%
Equity
46.4%
Consolidated Capital Structure
Sept. 30, 2017
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Additional long-term debt maturities beyond 2027 not shown
*Excludes debt maturities of $15 million at Alaska Energy and Resources Company in 2019
$161.1 million of available liquidity at Avista Corp. as of Sept. 30, 2017
In August, priced $90 million of Avista Corp. first mortgage bonds with a coupon of
3.91% and maturity date of December 2047. Expect to issue in December 2017.
In the fourth quarter, expect to issue up to $70 million of common stock in order to fund
planned capital expenditures and maintain an appropriate capital structure
$273
$90
$52
$250
$14
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
No significant maturities until 2018
($ millions)
*
$1.85
$3.10
$1.97
$2.15
2013 2014 2015 2016 2017
Guidance *
Continuing Operations Ecova (DiscOp)
$1.75-$1.90
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Continued long-term earnings growth
Total Earnings per Diluted Share
Attributable to Avista Corporation
Business Segments Q3 2017 Q3 2016
Avista Utilities $0.08 $0.20
AEL&P $0.01 $0.01
Other $(0.02) $(0.02)
Diluted EPS $0.07 $0.19
* 2017 earnings negatively impacted by Washington order
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2017 Earnings Guidance
Original Revised*
Avista Utilities $1.71 $1.85 $1.71 $1.80
AEL&P $0.10 $0.14 $0.10 $0.14
Other $(0.01) $0.01 $(0.06) $(0.04)
Consolidated $1.80 $2.00 $1.75 $1.90
Guidance Assumptions
Our outlook for Avista Utilities assumes, among other variables, normal precipitation, temperatures and
hydroelectric generation for the remainder of the year.
Our outlook for AEL&P assumes, among other variables, normal precipitation, temperatures and hydroelectric
generation for the remainder of the year.
Our guidance range for Avista Utilities encompasses expected variability in power supply costs and the
application of the ERM to that power supply cost variability.
The midpoint of our original guidance range for Avista Utilities included $0.07 of expense under the ERM; which
was within the 90 percent customers/10 percent shareholders sharing band. Our current expectation for the
ERM is a benefit position within the $4 million deadband, an improvement of $0.07 to $0.09 per diluted share
from our original guidance.
Revised 2017 Guidance
*Avista Utilities guidance was revised to include expected acquisition transaction costs of $0.20-$0.25 per
diluted share, partially offset by lower resources costs, operating expenses and net financing expenses.
Other businesses guidance was revised due to renovation expenses at one of our subsidiaries and the
recognition of our portion of net losses from our equity investments.
*Current quarterly dividend of $0.3575 annualized
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Dividend growth expected to keep pace with long-term earnings growth
Attractive and growing dividend
$1.22
$1.27
$1.32
$1.37
$1.43*
2013 2014 2015 2016 2017*
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A solid investment
Strong and responsible core utility
□ Investing substantially to modernize infrastructure and
upgrade systems
□ Steady returns and attractive dividend yield
□ One of the greenest utilities in the U.S.*
□ Committed to reducing current regulatory timing lag
Focus on utility growth
□ Selective acquisitions
□ Developing new products and services and supporting
economic development throughout service area
Positioning for the future
□ Leverage AMI data through applied analytics, gain
insight into leading-edge energy solutions
□ Track record of innovation (e.g. Itron, ReliOn, Ecova)
*Source: Benchmarking Air Emissions of the 100 Largest Power Producers in the United States,
NRDC, July 2016
Photo: Cabinet Gorge Dam
Reliably building value for
our customers, investors,
communities and employees
We welcome your questions
Company Contact
Lauren Pendergraft, Investor Relations Manager
509-495-2998
Lauren.pendergraft@avistacorp.com
www.avistacorp.com
Photo: Huntington Park, Spokane, Wash.
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