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): May 20, 2008
AVISTA CORPORATION
(Exact name of registrant as specified in its charter)
| Washington | 1-3701 | 91-0462470 | ||
| (State or 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)) |
Section 7 – Regulation FD Disclosure
Item 7.01 Regulation FD Disclosure.
The information in this report 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.
On May 21, 2008, management of Avista Corporation (Avista Corp.) will be participating in meetings with investors and will provide a business update presentation at the 2008 Edison Electric Institute Annual Finance Committee Meeting in New York. A copy of the business update presentation is furnished as Exhibit 99.1.
As part of this update, Avista Corp. will be confirming earnings guidance for 2008. This 2008 earnings guidance was included in Avista Corp.’s first quarter of 2008 earnings release furnished on Form 8-K on April 30, 2008.
Any 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.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits |
| 99.1 | Business update presentation dated May 2008, which is being furnished pursuant to Item 7.01. |
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: May 20, 2008 | /s/ Marian M. Durkin | |
| Marian M. Durkin | ||
| Senior Vice President, General Counsel and Chief Compliance Officer | ||
 Avista Corp. Business Update EEI Finance Meeting May 2008 NYSE: AVA www.avistacorp.com Exhibit 99.1 |
 2 Company Overview Headquartered in Spokane, Wash. Core business is the utility Generates, transmits and distributes electricity and distributes natural gas Has one of the smallest carbon footprints in the United States Non-regulated Subsidiary Advantage IQ Provides utility, telecom and waste bill processing, payment and information services to multi-site companies Utility Service Territory Electric Customers 352,000 Gas Customers 311,000 |
 3 2008 Highlights New rates effective on January 1, 2008 Moody’s and S&P upgraded our corporate credit rating to investment grade
Filed General Rate Case in Washington on March 4, 2008 Electric rate increase of $36.6 million Natural gas rate increase of $6.6 million 46.3% equity ratio and 10.8% ROE Filed General Rate Case in Idaho on April 3, 2008 Idaho base rates last adjusted in October 2004 Electric rate increase of $32.3 million Natural gas rate increase of $4.7 million 47.9% equity ratio and 10.8% ROE |
 4 2008 Highlights continued … Issued $250 million of 5.95% first mortgage bonds on April 3, 2008 $273 million of 9.75% senior notes mature on June 1, 2008 Settled Oregon General Rate Case Rate increase of $2.28 million 50.0% equity ratio and 10.0% ROE Quarterly dividend increase of 10% Acquired the development rights for a 50 MW wind power site located south of Reardan,
Wash. Expected to be completed in December 2011. Capital budget continues to grow Approximately $200 million in 2008 |
 5 The economy in our service territory is well diversified and continues to
grow Healthcare, education, finance and tourism provide an important balance Strong commodity prices for wheat and metals have led to a resurgence in agriculture and mining Housing prices have continued to rise Spokane, Wash. ranked in the top 20 of all metropolitan areas in the United States for largest one-year percentage increase for all of 2007 Employment growth in the region continues to outpace the national average by a wide margin Employment Growth 12 months ending December 2007 (over previous December 2006) 0.9% 2.0% 2.2% 1.4% 4.0% 0% 1% 2% 3% 4% 5% U.S. Job Growth State of Washington Spokane MSA State of Idaho Coeur d'Alene MSA Metropolitan Statistical Areas (MSA) |
 6 Responsible Resources |
 7 Avista is Long Resources Through 2010* 2008-2017 Annual Available Resource Capability (in aMW) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Peakers Gas Dispatch Contracts Base Thermal Hydro Load w/ CI * Excludes new resources from the 2007 Integrated Resource Plan shown on next
page. |
 8 2007 Integrated Resource Plan Preferred Resource Strategy by 2017 350 MW of natural gas-fired plants 300 MW of wind 87 MW of conservation 38 MW of hydro plant upgrades 34 MW of other renewables Timing of Preferred Resource Strategy in MW 34 4 10 20 Other Renewables 38 9.5 9.5 9.5 9.5 Hydro Upgrades 87 11 10 10 10 10 9 7 7 7 6 Conservation 300 200 100 Wind 350 80 270 CCCT Total 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 |
 9 What Has Changed? Citizens Initiative 937 Renewables Mandate 3% Washington energy by 2012 9% Washington energy by 2016 15% Washington energy by 2020 Western governors sign agreement to reduce greenhouse gases (Washington, California, Oregon, Arizona, New Mexico) Washington HB 6001 limiting emissions to gas plant (kills coal) Federal CO 2 legislation in progress Avista develops global climate change policy (in draft stage) Higher capital costs for new generation 124.5 2020 73.5 2019 72.5 2018 71.2 2017 69.5 2016 22.6 2015 22.1 2014 21.7 2013 21.3 2012 Avista’s Requirement to Meet Mandate (aMW) Year |
 10 2008 Budgeted Utility Capital Expenditures $200 million JP Gas Storage Expansion $14.5 Other $22.7 IS/IT $12.6 Growth $43.0 AMR $5.0 Environmental $8.5 Gas $20.9 Generation $26.4 Electric T&D $46.4 |
 11 2009-2010 Forecasted Utility Capital Expenditures* $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 2009 2010 Environmental Gas Generation Growth IS/IT Other Electric T&D *Excludes capital expenditures for 50 MW wind project |
 12 Avista Utilities Regulatory Update Authorized 50.00% 10.00% 8.20% Oregon Natural Gas (settlement reached on February 22, 2008) 42.59% 46.00% Common Equity Level Return on Equity Rate of Return Jurisdiction and Service 10.40% 9.25% Idaho Electric and Natural Gas (implemented in September 2004) 10.20% 8.20% Washington Electric and Natural Gas (implemented in January 2008) $89 million $73 million $502 million $151 million $890 million Gas Gas Electric Gas Electric Oregon Idaho Washington Rate Base* * Rate base as of 12/31/07 |
 13 Oregon Gas General Rate Case Filed October 12, 2007 All-party settlement agreement reached on February 22, 2008 Increase will be implemented in two steps resulting in a total of $2.28 million
$866,000 in April 2008 Approximately $1.42 million in November 2008 based on completion of certain capital projects 51.2% 11.0% 8.98% 2.3% $3.0 M Original Request 50.0% Common equity ratio 10.0% Return on equity 8.2% Rate of return 1.82% % increase $2.28 M Amount Settlement Agreement |
 14 Washington Electric and Gas General Rate Case Primary Electric Revenue Requirement Factors Hydro Relicensing & Compliance Issues 30% Distribution & Other Expense 13% Increased Net Plant Investment (1) 36% Production & Transmission Expense 21% Increased Loads Mid Columbia Purchase Expenses Colstrip & Kettle Falls Thermal Fuel Expenses Distribution Operation & Maintenance Costs Administrative & General Expenses (1) Includes return on investment, depreciation and taxes, offset by the tax benefit of interest Spokane River Relicensing Montana Riverbed lease Settlement 46.3% 46.3% Common Equity Ratio 10.8% 10.8% Return on Equity 8.4% 8.4% Rate of Return 3.3% 10.3% % Increase $6.6 M $36.6 M Amount Natural Gas Electric Filed March 4, 2008 |
 15 Idaho Electric and Gas General Rate Case The last General Rate Case filed in Idaho was in February 2004 Hydro Relicensing & Compliance Issues 12% Distribution & Other Expense 8% Increased Net Plant Investment (1) 36% Production & Transmission Expense 48% Increased Loads Mid Columbia Purchases Colstrip & Kettle Falls Thermal Fuel Expenses (1) Includes return on investment, depreciation and taxes, offset by the tax benefit of interest Spokane River Relicensing Montana Riverbed Lease Settlement Primary Electric Revenue Requirement Factors Distribution Operation & Maintenance Costs Administrative & General Expenses General Upgrades – Hydro & Thermal Transmission Upgrades Distribution – 5 years of new customer growth & AMR Project 47.9% 47.9% Common Equity Ratio 10.8% 10.8% Return on Equity 8.74% 8.74% Rate of Return 6.5% 16.7% % Increase $4.7 M $32.3 M Amount Natural Gas Electric Filed April 3, 2008 |
 16 Advantage IQ |
 17 Advantage IQ Analyzes utility usage and provides cost-management services for national,
multi-site customers Management services include electricity, natural
gas, water/sewer, waste and telecom expenses Manage over $12.5B in expenses
for 410+ clients Currently process and pay 660,000 bills per month,
supporting 214,000+ sites nationwide Entertainment Fast Food Government Grocery Hospitality Industrial Medium Box Retail Small Box Retail Airlines Banking/Finance Big Box Retail Casual Dining Commercial Communications Convenience Stores Education |
 18 Financial Information Revenue $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 2005 2006 2007 Q1 2008 Net Income $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2005 2006 2007 Q1 2008 |
 19 Financial |
 20 Investment Grade Credit Rating BBB- Baa3 BBB- Senior Unsecured Debt BBB Baa2 BBB+ Senior Secured Debt BB+ Baa3 BBB- Corporate/Issuer Rating Fitch, Inc. Moody’s Standard & Poor’s Standard & Poor’s upgraded corporate credit rating and senior unsecured
debt from BB+ to BBB- on February 7, 2008 Upgraded Senior Secured from BBB- to BBB+ in September 2007 On December 20, 2007, received upgrade from Moody’s Investors Service
|
 21 6% 3% 4% 1% 25% 8% 2% 2% 6% 2% 14% 19% 9% $0 $50 $100 $150 $200 $250 $300 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Long-term debt outstanding April FMB's issuance Proposed 2008 debt issuances Debt Maturities by Year proforma December 31, 2008 |
 22 AVA Dividend Payment History $0.12 per share dividend initially paid Dec. 15, 1998 $0.12 $0.125 $0.130 $0.135 $0.140 $0.145 $0.150 $0.165 $0.100 $0.110 $0.120 $0.130 $0.140 $0.150 $0.160 $0.170 Dividend Increase Occurred Dividend Payment Trend |
 23 $0.72 $0.92 $1.46 $0.72 $0.47 -$0.05 $0.15 $0.35 $0.55 $0.75 $0.95 $1.15 $1.35 $1.55 $1.75 2004 2005 2006 2007 Q1 2008 Consolidated Earnings |
 2008 Earnings Guidance $(0.03)-$0.00 $0.10-$0.12 $1.20-$1.40 $1.35-$1.55 Other Advantage IQ Avista Utilities Consolidated |
 25 This presentation contains forward-looking statements, including
statements regarding our current expectations for future financial performance and cash flows, capital expenditures, our current plans or objectives for future operations, future hydroelectric
generation projections and other factors, which may affect the company in the future. Such statements are subject to a variety of risks, uncertainties and other factors, most of which are beyond our control and many of which could have significant impact on our operations, results of operations, financial condition or cash flows and could cause actual results to differ materially from those anticipated in such statements. The following are among the important factors that could cause actual
results to differ materially from the forward-looking statements: weather conditions, including the effect of precipitation and temperatures on the availability of hydroelectric resources and the effect of temperatures on customer demand; changes in wholesale energy prices that can affect, among other things, cash needed to purchase electricity, natural gas for our
retail customers and natural gas fuel for electric generation, and the value of surplus energy sold, as well as the market value of derivative assets and liabilities; volatility and illiquidity in wholesale energy markets, including the availability and prices of purchased energy and demand for energy sales; the effect of state and federal regulatory decisions affecting our ability to
recover costs and/or earn a reasonable return including, but not limited to, the disallowance of costs that we have deferred; the potential effects of any legislation or administrative
rulemaking, including the possible adoption of national or state laws requiring resources to meet certain standards and placing restrictions on greenhouse gas emissions to mitigate concerns over global warming; the outcome of pending regulatory and legal proceedings arising out of the “western energy crisis” of 2000 and 2001, and including possible retroactive price caps and resulting refunds; the outcome of legal proceedings and other contingencies; changes in, and compliance with, environmental and endangered species laws, regulations, decisions and
policies, including present and potential environmental remediation costs; wholesale and retail competition including, but not limited to, electric retail wheeling and transmission
costs; the ability to relicense and maintain licenses for our hydroelectric generating facilities at cost-effective levels with reasonable terms and conditions; unplanned outages at any of our
generating facilities or the inability of facilities to operate as intended; unanticipated delays or changes in construction costs, as well as our ability to obtain required operating permits for present or prospective facilities; natural disasters that can disrupt energy production or delivery, as well as the availability and costs of materials and supplies and support services; blackouts or disruptions of interconnected transmission systems;
the potential for future terrorist attacks or other malicious
acts, particularly with respect to our utility assets; changes
in the long-term climate of the Pacific Northwest, which can affect, among other things, customer demand patterns and the volume and timing of streamflows to our hydroelectric resources; changes
in future economic conditions in our service territory and the United States in general, including inflation or deflation; changes in industrial, commercial and residential growth and
demographic patterns in our service territory; the loss of significant customers and/or suppliers; default or nonperformance on the part of any parties from which we purchase and/or sell capacity or energy; deterioration in the creditworthiness of
our customers and counterparties; our ability to obtain
financing through the issuance of debt and/or equity securities, which can be affected by various factors including our credit ratings, interest rates and other capital market conditions; the effect of any change in our credit ratings; changes in
actuarial assumptions, the interest rate environment and the actual return on plan assets for our pension plan, which can affect future funding obligations, costs and pension plan liabilities;
increasing health care costs and the resulting effect on health insurance provided to our employees and retirees; increasing costs of insurance, changes in coverage terms and our ability to obtain insurance; employee issues, including changes in collective bargaining unit agreements, strikes, work stoppages or the loss of key executives, as well as our ability to recruit
and retain employees; the potential effects of negative publicity regarding business practices, whether true or not, which could result in, among other things, costly litigation and a decline in our common stock price; changes in technologies, possibly
making some of the current technology obsolete; changes in tax
rates and/or policies; and changes in our strategic business plans, which may be affected by any or all of the foregoing, including the entry into new businesses and/or the exit from existing businesses. For a further discussion of these factors and other important factors, please refer to the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2007 and the company’s 10-Q for the quarter ended March 31, 2008. The forward-looking statements
contained in this news release speak only as of the date hereof. The company undertakes no obligation to update any forward-looking statement or statements to reflect events or
circumstances that occur after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to
predict all of such factors, nor can it assess the impact of each such factor on the company’s business or the extent to which any such factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Securities ratings are not recommendations to buy, sell or hold
securities. The ratings are subject to change or withdrawal at any time by the respective credit rating agencies. Each credit rating should be evaluated independently of any other ratings.
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