EX-4.7



 Exhibit 4.7 

HYDRO ONE LIMITED 

Unaudited Pro Forma Condensed Consolidated Financial Statements 

As at and for the three months ended March 31, 2018 and for the year ended December 31, 2017 

June 8, 2018 

  
 1 








 UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

Hydro One Limited (“Hydro One” or the “Corporation”), Olympus Holding Corp., Olympus Corp. and Avista Corporation (“Avista”)
entered into an agreement and plan of merger dated as of July 19, 2017 (the “Merger Agreement”). Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista (the “Merger”) for US$53 (approximately C$68 at the
exchange rate of C$1.2884 = US$1.00 on March 31, 2018) per Avista common share for an aggregate purchase price of approximately US$5,476 million (approximately C$7,056 million at the exchange rate of C$1.2884 = US$1.00 on
March 31, 2018), comprised of an equity purchase of approximately US$3,480 million (approximately C$4,484 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) and the assumption of approximately
US$1,996 million of Avista’s outstanding debt (approximately C$2,572 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018). 

Since the acquisition is to be paid in U.S. dollars, the actual amount paid, when measured in Canadian dollars may vary with a change to the exchange rate.
Hydro One has entered into a forward currency contract to partially mitigate the foreign exchange fluctuation risk. 
 The accompanying unaudited pro
forma condensed consolidated financial statements give effect to the proposed acquisition by Hydro One of Avista under the acquisition method of accounting. The unaudited pro forma condensed consolidated balance sheet gives effect to the
Merger as if it had closed on March 31, 2018. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2017 and the three months ended March 31, 2018 give effect to the Merger as if it had
closed on January 1, 2017. 
 The following unaudited pro forma condensed consolidated financial statements are based on Avista’s
historical unaudited consolidated financial statements as at and for the three months ended March 31, 2018 and audited consolidated financial statements for the year ended December 31, 2017 and Hydro One’s historical unaudited
consolidated financial statements as at and for the three months ended March 31, 2018 and audited consolidated financial statements for the year ended December 31, 2017 and present the effects of the Merger on the combined historical
financial statements of Hydro One and Avista. The unaudited pro forma condensed consolidated financial statements should be read together with the notes to the unaudited pro forma condensed consolidated financial statements and the
historical financial statements of Hydro One and Avista. 
 The unaudited pro forma condensed consolidated financial statements (referred to herein
as the pro forma financial information) are presented for illustrative purposes only and do not include, among other things, estimated cost synergies, adjustments related to restructuring or integration activities, further acquisitions or
disposals not yet known or probable, or impacts of Merger-related change in control provisions that are currently not factually supportable and/or probable of occurring. The pro forma financial information has been prepared based upon
available information and certain assumptions that Hydro One believes are reasonable in the circumstances, as described in the notes to the unaudited pro forma condensed consolidated financial statements. 

Additionally, the pro forma financial information presented, including allocation of the estimated purchase price, is based on preliminary estimates of
fair values of assets to be acquired and liabilities assumed. The actual amounts of acquired assets and assumed liabilities in the condensed consolidated financial statements upon the closing of the Merger will depend on a number of factors,
including the impact of additional information available, foreign exchange rates and the amount of net assets of Avista on the closing date of the Merger. Therefore, the actual purchase adjustments will differ from those used to prepare the pro
forma financial information, and the differences may be material. For example, the final purchase price allocation is dependent on, among other things, the finalization of asset and liability valuations. This final valuation will be based on the
actual net tangible and intangible assets and liabilities of Avista that exist as of the closing date of the Merger. Any final adjustments may change the allocation of purchase price, which could affect the fair values assigned to the assets and
liabilities, and may result in a change to goodwill, depreciation and amortization expenses and earnings per share. 
 The pro forma financial
information is presented for informational purposes only and is not necessarily indicative of what Hydro One’s actual financial condition or results of operations would have been had the Merger been completed on the date indicated, nor does it
purport to project Hydro One’s future financial position or results of operations for any future periods or as of any future date. Accordingly, the combined business, assets, results of operations and financial condition may differ
significantly from those indicated. 

  
 2 








 Hydro One Limited 

Unaudited Pro Forma Consolidated Balance Sheet 
 As at
March 31, 2018 
 (millions of Canadian dollars) (unaudited) 

 

																			
	 	  	Hydro One Limited	 	  	* Avista Corporation	 	  	Adjustments	 	 	Note	  	Hydro One Limited
Pro Forma Consolidated	 
	 Assets
	  				  				  				 		  			
	 Current assets:
	  				  				  				 		  			
	 Cash and cash equivalents
	  	 	28	 	  	 	34	 	  	 	3,326	 	 	3 (C),(J)	  			
		  				  				  	 	400	 	 	3 (C),(J)	  			
		  				  				  	 	977	 	 	3 (B),(J)	  			
		  				  				  	 	(4,484	) 	 	3 (A),(J)	  			
		  				  				  	 	(160	) 	 	3 (D),(J)	  			
		  				  				  	 	(30	) 	 	3 (I)	  	 	91	 
	 Accounts receivable
	  	 	588	 	  	 	217	 	  				 		  	 	805	 
	 Due from related parties
	  	 	243	 	  				  				 		  	 	243	 
	 Other current assets
	  	 	143	 	  	 	147	 	  				 		  	 	290	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
		  	 	1,002	 	  	 	398	 	  	 	29	 	 		  	 	1,429	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Property, plant and equipment
	  	 	20,069	 	  	 	5,693	 	  				 		  	 	25,762	 
	 Other long-term assets:
	  				  				  				 		  			
	 Regulatory assets
	  	 	3,105	 	  	 	769	 	  	 	151	 	 	3 (H)	  	 	4,025	 
	 Deferred income tax assets
	  	 	918	 	  				  	 	20	 	 	3 (B),(G)	  	 	938	 
	 Intangible assets
	  	 	365	 	  				  				 		  	 	365	 
	 Goodwill
	  	 	325	 	  	 	74	 	  	 	(74	) 	 	3 (A)	  	 	2,617	 
		  				  				  	 	2,292	 	 	3 (A)	  			
	 Other assets
	  	 	5	 	  	 	133	 	  				 		  	 	138	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
		  	 	24,787	 	  	 	6,669	 	  	 	2,389	 	 		  	 	33,845	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Total assets
	  	 	25,789	 	  	 	7,067	 	  	 	2,418	 	 		  	 	35,274	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 

  

	*	Translated from US$ to C$. See Note 5 


  
 3 








 Hydro One Limited 

Unaudited Pro Forma Consolidated Balance Sheet 
 As at
March 31, 2018 
 (millions of Canadian dollars) (unaudited) 

(Continued) 
  

																			
	 	  	Hydro One Limited	 	 	*Avista Corporation	 	 	Adjustments	 	 	Note	  	Hydro One Limited
Pro Forma Consolidated	 
	 Liabilities
	  				 				 				 		  			
	 Current liabilities:
	  				 				 				 		  			
	 Short-term notes payable
	  	 	989	 	 	 	64	 	 	 	400	 	 	3 (C)	  	 	1,453	 
	 Long-term debt payable within one year
	  	 	981	 	 	 	354	 	 				 		  	 	1,335	 
	 Accounts payable and other current liabilities
	  	 	911	 	 	 	444	 	 				 		  	 	1,355	 
	 Due to related parties
	  	 	37	 	 				 				 		  	 	37	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
		  	 	2,918	 	 	 	862	 	 	 	400	 	 		  	 	4,180	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Long term liabilities:
	  				 				 				 		  			
	 Long-term debt
	  	 	9,085	 	 	 	1,988	 	 	 	3,326	 	 	3 (C)	  	 	14,550	 
		  				 				 	 	151	 	 	3 (H)	  			
	 Convertible Debentures
	  	 	488	 	 				 	 	(488	) 	 	3 (B)	  			
	 Regulatory liabilities
	  	 	160	 	 	 	1,008	 	 				 		  	 	1,168	 
	 Deferred income tax liabilities
	  	 	72	 	 	 	599	 	 				 		  	 	671	 
	 Other long-term liabilities
	  	 	2,718	 	 	 	344	 	 				 		  	 	3,062	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
		  	 	12,523	 	 	 	3,939	 	 	 	2,989	 	 		  	 	19,451	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Total liabilities
	  	 	15,441	 	 	 	4,801	 	 	 	3,389	 	 		  	 	23,631	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Noncontrolling interest subject to redemption
	  	 	21	 	 				 				 		  	 	21	 
	 Equity
	  				 				 				 		  			
	 Common shares
	  	 	5,631	 	 	 	1,458	 	 	 	1,502	 	 	3 (B)	  	 	7,133	 
		  				 				 	 	(1,458	) 	 	3 (E)	  			
	 Preferred shares
	  	 	418	 	 				 				 		  	 	418	 
	 Additional paid-in capital
	  	 	55	 	 				 	 	92	 	 	3 (B)	  			
		  				 				 	 	7	 	 	3 (I)	  	 	154	 
	 Retained earnings
	  	 	4,181	 	 	 	820	 	 	 	(17	) 	 	3 (B)	  	 	3,875	 
		  				 				 	 	(92	) 	 	3 (B)	  			
		  				 				 	 	(37	) 	 	3 (I)	  			
		  				 				 	 	(820	) 	 	3 (E)	  			
		  				 				 	 	(160	) 	 	3 (D)	  			
	 Accumulated other comprehensive loss
	  	 	(7	) 	 	 	(12	) 	 	 	12	 	 	3 (E)	  	 	(7	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Shareholders’ equity
	  	 	10,278	 	 	 	2,266	 	 	 	(970	) 	 		  	 	11,573	 
	 Noncontrolling interest
	  	 	49	 	 				 				 		  	 	49	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Total equity
	  	 	10,327	 	 	 	2,266	 	 	 	(970	) 	 		  	 	11,622	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Total liabilities and equity
	  	 	25,789	 	 	 	7,067	 	 	 	2,418	 	 		  	 	35,274	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 

  

	*	Translated from US$ to C$. See Note 5 


  
 4 








 Hydro One Limited 

Unaudited Pro Forma Consolidated Statement of Operations 

For the three months ended March 31, 2018 

(millions of Canadian dollars, except earnings per share) (unaudited) 
  

																			
	 	  	Hydro One Limited	 	  	** Avista Corporation	 	  	Adjustments	 	 	Note	  	Hydro One Limited
Pro Forma Consolidated	 
	 Revenues
	  				  				  				 		  			
	 Distribution
	  	 	1,145	 	  				  				 		  	 	1,145	 
	 Transmission
	  	 	421	 	  				  				 		  	 	421	 
	 Utility revenues
	  				  	 	509	 	  				 		  	 	509	 
	 Other
	  	 	10	 	  	 	9	 	  				 		  	 	19	 
		  	  
	  
	 	  	  
	  
	 	  				 		  	  
	  
	 
		  	 	1,576	 	  	 	518	 	  				 		  	 	2,094	 
		  	  
	  
	 	  	  
	  
	 	  				 		  	  
	  
	 
	 Costs
	  				  				  				 		  			
	 *Purchased power
	  	 	751	 	  	 	196	 	  				 		  	 	947	 
	 Operation, maintenance and administration
	  	 	270	 	  	 	147	 	  	 	(3	) 	 	3 (D)	  	 	414	 
	 Depreciation and amortization
	  	 	197	 	  	 	57	 	  				 		  	 	254	 
	 Other expense (income)-net
	  				  	 	6	 	  				 		  	 	6	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
		  	 	1,218	 	  	 	406	 	  	 	(3	) 	 		  	 	1,621	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Income before financing charges and income taxes
	  	 	358	 	  	 	112	 	  	 	3	 	 		  	 	473	 
	 Financing charges
	  	 	88	 	  	 	30	 	  	 	48	 	 	3 (B),(F)	  	 	166	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Income before income taxes
	  	 	270	 	  	 	82	 	  	 	(45	) 	 		  	 	307	 
	 Income taxes
	  	 	42	 	  	 	14	 	  	 	(9	) 	 	3 (G)	  	 	47	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Net income
	  	 	228	 	  	 	68	 	  	 	(36	) 	 		  	 	260	 
		  	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 		  	  
	  
	 
	 Basic earnings per share
	  	$	0.37	 	  				  				 		  	$	0.38	 
	 Diluted earnings per share
	  	$	0.37	 	  				  				 		  	$	0.38	 

  

	*	Includes the cost of purchased natural gas for Avista Corporation 


	**	Translated from US$ to C$. See Note 5 


  
 5 








 Hydro One Limited 

Unaudited Pro Forma Consolidated Statement of Operations 

For the year ended December 31, 2017 
 (millions
of Canadian dollars, except earnings per share) (unaudited) 
  

																			
	 	  	Hydro One Limited	 	  	** Avista Corporation	 	 	Adjustments	 	 	Note	  	Hydro One Limited
Pro Forma Consolidated	 
	 Revenues
	  				  				 				 		  			
	 Distribution
	  	 	4,366	 	  				 				 		  	 	4,366	 
	 Transmission
	  	 	1,578	 	  				 				 		  	 	1,578	 
	 Utility revenues
	  				  	 	1,848	 	 				 		  	 	1,848	 
	 Other
	  	 	46	 	  	 	29	 	 				 		  	 	75	 
		  	  
	  
	 	  	  
	  
	 	 				 		  	  
	  
	 
		  	 	5,990	 	  	 	1,877	 	 				 		  	 	7,867	 
		  	  
	  
	 	  	  
	  
	 	 				 		  	  
	  
	 
	 Costs
	  				  				 				 		  			
	 * Purchased power
	  	 	2,875	 	  	 	681	 	 				 		  	 	3,556	 
	 Operation, maintenance and administration
	  	 	1,066	 	  	 	604	 	 	 	(39	) 	 	3 (D)	  	 	1,631	 
	 Depreciation and amortization
	  	 	817	 	  	 	223	 	 				 		  	 	1,040	 
	 Other expense (income)-net
	  				  	 	(9	) 	 				 		  	 	(9	) 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
		  	 	4,758	 	  	 	1,499	 	 	 	(39	) 	 		  	 	6,218	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Income before financing charges and income taxes
	  	 	1,232	 	  	 	378	 	 	 	39	 	 		  	 	1,649	 
	 Financing charges
	  	 	439	 	  	 	121	 	 	 	118	 	 	3 (B),(F)	  	 	678	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Income before income taxes
	  	 	793	 	  	 	257	 	 	 	(79	) 	 		  	 	971	 
	 Income taxes
	  	 	111	 	  	 	107	 	 	 	(23	) 	 	3 (G)	  	 	195	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Net income
	  	 	682	 	  	 	150	 	 	 	(56	) 	 		  	 	776	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 		  	  
	  
	 
	 Other comprehensive income
	  	 	1	 	  				 				 		  	 	1	 
		  	  
	  
	 	  				 				 		  	  
	  
	 
	 Comprehensive income
	  	 	683	 	  				 				 		  	 	777	 
		  	  
	  
	 	  				 				 		  	  
	  
	 
	 Basic earnings per share
	  	$	1.11	 	  				 				 		  	$	1.13	 
	 Diluted earnings per share
	  	$	1.10	 	  				 				 		  	$	1.13	 

  

	*	Includes the cost of purchased natural gas for Avista Corporation 


	**	Translated from US$ to C$. See Note 5 


  
 6 









	1.	DESCRIPTION OF THE ACQUISITION 

 Hydro One, Olympus Holding Corp., Olympus Corp. and Avista entered into
an agreement and plan of merger dated as of July 19, 2017 (the “Merger Agreement”). Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista (the “Merger”) for US$53 (approximately C$68 at the exchange rate
of C$1.2884 = US$1.00 on March 31, 2018) per Avista common share for an aggregate purchase price of approximately US$5,476 million (approximately C$7,056 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018),
comprised of an equity purchase of approximately US$3,480 million (approximately C$4,484 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) and the assumption of approximately US$1,996 million of Avista’s
outstanding debt (approximately C$2,572 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018). 
 The accompanying pro
forma financial information assumes that at closing, the Merger will be financed through the net proceeds from a C$1.54 billion common share equity issuance as further described below, with the balance funded through long-term debt as
further described below. 
 The common share equity is assumed to be issued through the conversion of the 4% convertible unsecured subordinated debentures
(“Debentures”) represented by instalment receipts that were issued by the Corporation on August 9, 2017 and that are convertible into common shares of Hydro One at a conversion price of C$21.40 per common share. Hydro One also
proposes to issue long term debt in the amount of US$2.6 billion (approximately C$3.35 billion) maturing over 5, 10 and 30 years respectively. 
 The
accompanying pro forma financial information assumes that the Debentures are issued and immediately converted in full into Hydro One common shares at the assumed closing date of the Merger. Therefore, the accompanying pro forma
financial information does not recognize interest costs associated with the Debentures. Hydro One anticipates that the closing of the Merger will occur in the second half of 2018. As a result, the Company has included the cost of financing the
Debentures as a pro-forma adjustment. Due to many factors, including the timing of regulatory approvals, the estimated closing period is subject to change which may change the amount of interest expense
incurred on the Debentures and the related income tax recovery. Interest costs associated with the Debentures are expected to be funded through operating cash flows. 
  

	2.	BASIS OF PRESENTATION 

 The accompanying pro forma financial information gives effect to the
proposed acquisition by Hydro One of Avista. The accompanying pro forma financial information has been prepared by management of Hydro One and is derived from the unaudited and audited consolidated financial statements of Hydro One as at and
for the three months ended March 31, 2018 and for the year ended December 31, 2017, respectively, and the unaudited and audited consolidated financial statements of Avista as at and for the three months ended March 31, 2018 and for
the year ended December 31, 2017, respectively. 
 The accompanying pro forma financial information uses accounting policies that are consistent
with those disclosed in Hydro One’s and Avista’s audited consolidated financial statements as at and for the year ended December 31, 2017 and unaudited consolidated financial statements as at and for the three months ended
March 31, 2018 and were prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma
consolidated statements of operations reflect the Merger as if it had closed on March 31, 2018 and January 1, 2017, respectively. The accompanying unaudited pro forma consolidated financial statements may not be indicative of the results
that would have been achieved if the transactions reflected therein had been completed on the dates indicated or the results which may be obtained in the future. For instance, the actual purchase price allocation will reflect the fair values, at the
purchase date, of the assets acquired and liabilities assumed based upon Hydro One’s evaluation of such assets and liabilities following the closing of the Merger and, accordingly, the final purchase price allocation may differ materially from
the preliminary allocation reflected herein. 
 The accompanying pro forma financial information should be read in conjunction with the description
of the Merger and the proposed financing thereof contained in documents filed by Hydro One with the securities regulatory authorities in Canada; the most recent audited and unaudited consolidated financial statements of Avista, including the notes
thereto; and the most recent audited and unaudited consolidated financial statements of Hydro One, including the notes thereto, all of which have been filed by Hydro One with the securities regulatory authorities in Canada. 

  
 7 








 Certain amounts in the historical financial statements of Avista have been reclassified in the unaudited pro
forma balance sheet and statements of operations to reflect the presentation classifications in Hydro One’s consolidated financial statements. In addition the historical financial statements of Avista have been translated from U.S. dollars
to Canadian dollars to conform to the presentation currency of Hydro One. 
 Management believes the underlying assumptions used for the preparation of the
pro forma financial information provide a reasonable basis for presenting the significant financial effect directly attributable to the Merger. The pro forma adjustments used to prepare the pro forma financial information are
tentative and are based on currently available financial information and certain estimates and assumptions. The actual adjustments to the consolidated financial statements will depend on a number of factors. Therefore, it is expected that the actual
adjustments will differ from the pro forma adjustments used to prepare the pro forma financial information, and the differences may be material. 

The pro forma financial information presents the combined effect on the historical statements and provides the following resulting information: 

 

					
	Historical Information of Hydro One and Avista	  	Historical Dates and Giving Effect	  	Resulting Information
	Unaudited consolidated balance sheet	  	As of March 31, 2018	  	Unaudited pro forma condensed consolidated balance sheet, referred to as the unaudited pro forma balance sheet
			
	Audited consolidated statement of operations for the year ended December 31, 2017 and unaudited consolidated interim statement of operations for the three months ended March 31, 2018	  	For the year ended December 31, 2017; and for the three months ended March 31, 2018	  	 Unaudited pro forma condensed consolidated statement of operations, referred to as the unaudited pro forma statements of
operations
  
 Fair value adjustments to net assets acquired at March 31, 2018 have
been applied to the assumed Merger date of January 1, 2017 for purposes of the unaudited pro forma statements of operations (see note 3)


 Amounts in the notes to the unaudited pro forma consolidated financial statements are stated in Canadian dollars,
unless otherwise indicated. The accompanying pro forma financial information may not be indicative of the results that would have been achieved if the transactions reflected herein had been completed on the dates indicated or the results
which may be obtained in the future. 
  

	3.	PRO FORMA ASSUMPTIONS AND ADJUSTMENTS 

  

	 	A.	Pro forma Purchase Price and Purchase Price Allocation 

 At the date of preparation of
this pro forma financial information, certain pro forma adjustments have been made as identified herein; however, the fair values of Avista’s identifiable assets and liabilities to be assumed and the full impact of applying
acquisition accounting have not been fully determined. After reflecting the pro forma adjustments made herein, the excess of the purchase price consideration over the adjusted book values of Avista’s identifiable net assets has been
presented as goodwill. The Merger consideration in the unaudited pro forma financial information is based on the agreed net purchase price of US $53 per share (approximately C$68 using the exchange rate of C$1.2884 = US$1.00 on March 31,
2018). Since the acquisition is to be paid in U.S. dollars, the actual amount paid, when measured in Canadian dollars will vary. The assumed financing structure and partial mitigation of the foreign exchange fluctuation risk is outlined below. 

Avista is a public utility subject to regulation by state utility commissions. The retail electric and natural gas operations are subject to
the jurisdiction of various regulatory bodies, including the U.S. Federal Energy Regulatory Commission (FERC) for licensing of hydroelectric generation resources, and for electric transmission services and wholesale sales. The revenues and earnings
approved by the utility commissions are based on regulated rates of return that are applied to historic values of the regulated assets. Therefore, no fair value adjustments are expected to be made to property, plant and equipment and intangible
assets with respect to the regulated entities of Avista because all economic benefits and obligations associated with regulated assets beyond regulated thresholds accrue to Avista’s customers. 

  
 8 








 The following is the estimated net purchase price, estimated net funding requirements and assumed
financing structure for the Merger. These estimates have been reflected in the accompanying unaudited pro forma financial information. 
  

					
	 	  	 Using exchange
rates in effect on
March 31, 2018
(in
millions of
 Canadian dollars)
	 
	 Estimated Net Purchase Price
	  			
	 Estimated net purchase price, before assumed debt
	  	 	4,484	 
	 Assumed debt of Avista
	  	 	2,572	 
		  	  
	  
	 
	 Estimated purchase price
	  	 	7,056	 
	 Estimated Net Funding Requirements
	  			
	 Estimated net purchase price before assumed long-term debt
	  	 	4,484	 
	 Assumed debt of Avista
	  	 	2,572	 
	 Common share issuance costs and interest make whole payment (Note 3 (B))
	  	 	77	 
	 Net interest (after tax) paid on convertible debentures (Note 3 (B))
	  	 	26	 
	 Long term debt issuance costs (Note 3 (C))
	  	 	24	 
	 Estimated (after tax) transaction costs (Note 3 (D))
	  	 	160	 
	 Fair value of Avista share-based payments settled in cash (Note 3 (I))
	  	 	30	 
		  	  
	  
	 
	 Estimated net funding requirements
	  	 	7,373	 
	 Assumed Financing Structure
	  			
	 Assumed debt of Avista
	  	 	2,572	 
	 Gross proceeds from Convertible Debentures converted to common shares (Note 3 (B))
	  	 	1,540	 
	 Issuance of long term debt (Note 3 (C))
	  	 	3,350	 
	 (Excess) cash (Note 3 (J))
	  	 	(89	) 
		  	  
	  
	 
		  	 	7,373	 
		  	  
	  
	 

 This estimated purchase price is based on Avista’s outstanding shares at the purchase price of US$53 per
share converted at a foreign exchange rate of C$1.2884 = US$1.00 on March 31, 2018. The purchase price used for the purposes of calculating pro forma adjustments is based on exchange rates as described in Note 5 below and will differ
from this amount when exchange rates change. Hydro One entered into a forward currency contract in October, 2017 to partially mitigate the foreign exchange fluctuation risk of the purchase price that is denominated in U.S. dollars. 

Goodwill from the acquistion of Avista of C$2,292 is calculated as the difference between the net purchase price of C$4,484 million and
the estimated fair value of the net assets acquired of C$2,192 million. 
  

	 	B.	Assumed financing for the Merger contemplates the issuance, through the exercise of conversion rights under the Debentures, of approximately 72 million common shares of Hydro One at C$21.40 per share for
gross proceeds of approximately C$1.54 billion, which includes a base offering of approximately 65 million common shares for proceeds of C$1.4 billion plus the over-allotment of approximately 7 million common shares that was
exercised for proceeds of C$0.14 billion. Underwriting costs are 3.5% of gross proceeds in the aggregate which is approximately C$54 million and will result in a corresponding deferred tax asset of approximately C$14 million based on
Hydro One’s Canadian statutory income tax rate of 26.5%. 


  
 9 








 Hydro One completed the sale of the Debentures on August 9, 2017 on an instalment basis. The
initial instalment was paid with gross proceeds of C$513 million and net proceeds of C$486 million after payment of half the aggregate underwriter fees of C$27 million. The convertible debentures balance of C$488 million on the
unaudited consolidated balance sheet of Hydro One as at March 31, 2018 is net of the unamortized debt issuance costs of C$25 million. 

Upon conversion of the Debentures from the initial instalment and the issuance of all the common shares of approximately C$1.54 billion,
as if the Merger had closed on March 31, 2018, the remaining underwriting fees, for an additional C$27 million and a make-whole interest payment of C$23 million would be paid in cash. The terms of the make-whole payment does not
extend beyond the anniversary date of August 9, 2018 and therefore would not be incurred as an expense if the transaction closed after August 9, 2018. 

Since the cash proceeds from the initial instalment were received on August 9, 2017, the pro forma adjustment to cash only reflects
the incremental cash proceeds on March 31, 2018 of C$977 million, which is also net of the remaining underwriting fees as well as the make-whole payment. The pro forma adjustment to common shares of approximately $1.502 billion
is net of the after tax underwriting fees of approximately $38 million and is reflected by the pro forma adjustment as incremental cash proceeds of C$977 million, the first instalment payment of $488 million, the recognition of
a deferred tax asset of $20 million and a resulting impact to retained earnings of $17 million. 
 The Debentures contained a
beneficial conversion feature at the time of issuance due to the conversion feature being in the money on the commitment date. The conversion feature is contingent on triggering of the final instalment payment at which time it becomes exercisable.
Pro forma adjustment in the amount of C$92 million has been included to reflect the beneficial conversion feature, assuming the date for payment of the final instalment was the assumed Merger date of March 31, 2018. 

Net interest costs since August 9, 2017 of C$36 million (and related tax effects of C$10 million) associated with the Debentures have
already been paid and reflected in the historical financial results of Hydro One.    Pro forma adjustments have been included with the unaudited pro forma condensed consolidated statement of operations for the year
ended December 31, 2017 and for the three months ended March 31, 2018 to remove the historical after tax interest costs incurred that reflect the assumed conversion of the Debentures into Hydro One common shares as if the Merger had closed
on January 1, 2017. 
  

	 	C.	Financing for the Merger includes the assumed issuance of long term debt maturing over 5, 10 and 30 years respectively for gross proceeds of approximately C$3.35B. Debt issuance costs in the aggregate of approximately
C$24 million have been recognized as a direct deduction to the long term debt. The maturity dates and other terms of the debt are current estimates only and will not be known until the debt is issued and could vary significantly from what is
proposed based on many factors including market conditions. 

 While assumed financing for the Merger is comprised of the
Debentures and long term debt as previously described, the assumed Merger on March 31, 2018 is estimated to require short-term borrowing via issuance of commercial paper of approximately C$400 million, given the cash and cash equivalents
balance on this date. This additional commercial paper issuance is expected to be termed-out subsequently, which is not reflected as an adjustment in the pro forma financial information. 

 

	 	D.	Transaction costs not yet incurred are estimated at approximately C$120 million and are composed of estimated investment banking, advisory, accounting and legal fees, bridge financing costs, an Avista foundation
donation that is considered to be directly related to the acquisition, and real estate transfer taxes. Change in control payments to employees are approximately C$50 million and represent estimated change in control liabilities as a result of
the Merger. These transaction related costs and the change in control payments in aggregate of approximately C$170 million (after tax of C$160 million) and are assumed to be paid in cash based on estimates by Hydro One management. These costs
have been included as a pro forma adjustment to cash and retained earnings on the unaudited pro forma balance sheet. They are not reflected in the unaudited pro forma statement of earnings on the basis that these expenses are
directly attributable to the Merger of Avista and are non-recurring in nature. 


  
 10 








 Pro forma adjustments to the statement of earnings include removal of the non-recurring historical transaction costs from operation, maintenance and administration of C$39 million and C$3 million for the year ended December 31, 2017 and for the three months ended
March 31, 2018, respectively. 
  

	 	E.	Elimination of Avista’s historical outstanding common shares, retained earnings and accumulated other comprehensive income as of March 31, 2018. 


 

	 	F.	Interest expense on the Company’s proposed issuance of long-term debt described in Note 3(C) above of C$143 million and C$35 million for the year ended December 31, 2017 and for the three months
ended March 31, 2018, respectively. 

 Pro forma adjustments to finance charges includes removal of the historical
net interest costs on the Debentures as described in Note 3(B) of C$22 million and C$14 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively. 

In October, 2017, Hydro One also entered into a deal-contingent foreign exchange forward contract to convert C$1.4 billion to U.S. dollars
at an agreed upon Canadian dollar forward rate per 1.00 U.S. dollars to economically mitigate a portion of the foreign exchange fluctuation risk on the purchase price that is denominated in U.S. dollars. Pro forma adjustments to finance
charges includes removal of the associated loss from this hedging contract of C$3 million and the gain of C$27 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively. 

 

	 	G.	Income taxes applicable to the pro forma adjustments for items with tax effect in the Canadian entities are calculated at the average tax rate of 26.50%. Income taxes applicable to the pro forma
adjustments for items with tax effect in the U.S. entities are calculated at the average tax rates of 36.69% and 23.05% for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively. 


 

	 	H.	Hydro One has recorded an adjustment to the fair value of Avista’s long term debt and recorded a regulatory offset of C$151 million in Regulatory Assets for the portion of the fair value adjustment to
long-term debt held within regulated operations. Hydro One views the regulatory offset upon consummation of the acquisition as a proxy for the regulatory asset that would be recorded in the event such debt was extinguished at an amount higher than
the carrying value. 

  

	 	I.	As described in the Merger Agreement, Hydro One agreed to exchange certain of Avista’s outstanding share-based compensation awards partially settled as a cash payment and the remainder settled by conversion to
equivalent Hydro One share-based compensation awards. Each award was measured at fair value on the date of the Merger with an aggregate value of C$37 million. 


 

	 	J.	Excess cash of C$89 million is after accounting for the net cash proceeds of C$460 million (C$486 million net of the after tax interest payments of C$26 million) that is already reflected in the
historical financial statements of Hydro One as described in Note 3(B). The aggregate pro forma adjustments to cash and cash equivalents of C$29 million on the unaudited pro forma consolidated balance sheet represents the excess
cash of C$89 million, net of the C$460 million already received, plus the C$400 million of short term borrowing as described in Note 3 (C). 

  

	4.	PRO FORMA SHARES OUTSTANDING 

 Earnings per common share is calculated by dividing
earnings attributable to common shareholders by the weighted average number of common shares outstanding. 
 The calculation of the pro
forma earnings per common share, for the three months ended March 31, 2018 and for the year ended December 31, 2017, reflect the dilutive effects of the assumed conversion of the Debentures and the assumed issuance of approximately
2 million of Hydro One’s common shares arising from stock based compensation awards, as if the issuance of the common shares arising from outstanding stock based compensation awards had taken place on January 1, 2017. The basic
and diluted earnings per common share and basic and diluted weighted average number of common shares outstanding for the pro forma reporting period is determined as follows: 

  
 11 









									
	 	  	 For the year
ended
December

31, 2017
	 	  	 For the three
months
ended March

31, 2018
	 
	(Canadian dollars; Number of shares in millions)	  	 	 	  	 	 
	 Earnings per common share
	  	$	1.13	 	  	$	0.38	 
	 Diluted earnings per common share
	  	$	1.13	 	  	$	0.38	 
	 Shares outstanding
	  				  			
	 Weighted average shares of Hydro One Limited - basic
	  	 	595	 	  	 	595	 
	 Debenture converted common shares outstanding - basic
	  	 	72	 	  	 	72	 
	 Pro forma weighted average shares outstanding – basic
	  	 	667	 	  	 	667	 
	 Effect of dilutive options and other stock based compensation awards
	  	 	2	 	  	 	2	 
	 Pro forma diluted weighted average shares of Hydro One Limited
	  	 	669	 	  	 	669	 

  

	5.	CURRENCY TRANSLATION AND CLASSIFICATION ADJUSTMENTS 

 The assets and liabilities of Avista, which has a
US$ reporting and functional currency, are translated at the exchange rate of C$1.2884 = US$1.00 which was the rate published by Bloomberg as at March 31, 2018. Revenues and expenses in Avista’s statement of operations are translated to
Canadian dollars using the rates published by Bloomberg at an average exchange rate of C$1.2648 = US$1.00 for the three months ended March 31, 2018 and C$1.2983 = US$1.00 for the year ended December 31, 2017. 

Reclassifications were made to align the presentation of Avista’s financial statement amounts with Hydro One’s financial statement amounts in the
accompanying unaudited pro forma financial information. No material differences in accounting policies under US GAAP have been identified; however, a more detailed analysis will be completed after the Merger. 

  
 12 








 Avista Corporation 

Pro forma Consolidated Balance Sheet Reclassifications 

As at March 31, 2018 
 Unaudited 

 

																									
	 	  	Avista
Historical
(USD)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(CAD)	 	 	Reclassifications
(CAD)	 	 	Amount after
Reclassification
(CAD)	 	  	 	 
	(in millions)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 Assets
	  				 				 				 				 				  			
	 Current Assets:
	  				 				 				 				 				  			
	 Cash and cash equivalents
	  	 	26	 	 	 	8	 	 	 	34	 	 				 	 	34	 	  			
	 Accounts and notes receivable
	  	 	169	 	 	 	48	 	 	 	217	 	 				 	 	217	 	  			
	 Regulatory asset for energy commodity derivatives
	  	 	21	 	 	 	6	 	 	 	27	 	 	 	(27	) 	 				  	 	(1	) 
	 Materials and supplies, fuel stock and stored natural gas
	  	 	49	 	 	 	14	 	 	 	63	 	 	 	(63	) 	 				  	 	(1	) 
	 Other current assets
	  	 	45	 	 	 	12	 	 	 	57	 	 	 	90	 	 	 	147	 	  	 	(1	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total current assets
	  	 	310	 	 	 	88	 	 	 	398	 	 				 	 	398	 	  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Property, plant and equipment
	  				 				 				 	 	5,693	 	 	 	5,693	 	  	 	(2	) 
	 Net Utility Property:
	  				 				 				 				 				  			
	 Utility plant in service
	  	 	5,882	 	 	 	1,697	 	 	 	7,579	 	 	 	(7,579	) 	 				  	 	(2	) 
	 Construction work in progress
	  	 	165	 	 	 	48	 	 	 	213	 	 	 	(213	) 	 				  	 	(2	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total
	  	 	6,047	 	 	 	1,745	 	 	 	7,792	 	 	 	(7,792	) 	 				  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Less: Accumulated depreciation and amortization
	  	 	(1,629	) 	 	 	(470	) 	 	 	(2,099	) 	 	 	2,099	 	 				  	 	(2	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total net utlity property
	  	 	4,418	 	 	 	1,275	 	 	 	5,693	 	 	 	(5,693	) 	 				  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Other Non-current Assets:
	  				 				 				 				 				  			
	 Regulatory assets
	  				 				 				 	 	769	 	 	 	769	 	  	 	(3	) 
	 Other assets
	  				 				 				 	 	133	 	 	 	133	 	  	 	(4	) 
	 Investment in affiliated trusts
	  	 	12	 	 	 	3	 	 	 	15	 	 	 	(15	) 	 				  	 	(4	) 
	 Goodwill
	  	 	58	 	 	 	16	 	 	 	74	 	 				 	 	74	 	  			
	 Other property and investments-net and other non-current assets
	  	 	92	 	 	 	26	 	 	 	118	 	 	 	(118	) 	 				  	 	(4	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total other non-current assets
	  	 	162	 	 	 	45	 	 	 	207	 	 	 	769	 	 	 	976	 	  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Deferred Charges:
	  				 				 				 				 				  			
	 Regulatory assets for deferred income tax
	  	 	90	 	 	 	27	 	 	 	117	 	 	 	(117	) 	 				  	 	(3	) 
	 Regulatory assets for pensions and other postretirement benefits
	  	 	206	 	 	 	60	 	 	 	266	 	 	 	(266	) 	 				  	 	(3	) 
	 Other regulatory assets
	  	 	129	 	 	 	37	 	 	 	166	 	 	 	(166	) 	 				  	 	(3	) 
	 Regulatory assets for interest rate swaps
	  	 	151	 	 	 	44	 	 	 	195	 	 	 	(195	) 	 				  	 	(3	) 
	 Non-current regulatory asset for energy commodity
derivatives
	  	 	9	 	 	 	3	 	 	 	12	 	 	 	(12	) 	 				  	 	(3	) 
	 Other deferred charges
	  	 	10	 	 	 	3	 	 	 	13	 	 	 	(13	) 	 				  	 	(3	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total deferred charges
	  	 	595	 	 	 	174	 	 	 	769	 	 	 	(769	) 	 				  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			
	 Total assets
	  	 	5,485	 	 	 	1,582	 	 	 	7,067	 	 				 	 	7,067	 	  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  			

  

	1	Regulatory asset for energy commodity derivates plus materials, supplies, fuel stock and stored natural gas of $90 million to Other current assets 


	2	Net utility property of $5,693 million to Property, plant and equipment 


	3	Deferred charges of $769 million to Regulatory assets 


	4	Investment in affiliates trusts and other property and investments-net and other non-current assets of $133 million to Other assets



  
 13 








 Avista Corporation 

Pro forma Consolidated Balance Sheet Reclassifications 

As at March 31, 2018 
 Unaudited 

(Continued) 
  

																									
	 	  	Avista
Historical
(USD)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(CAD)	 	 	Reclassifications
(CAD)	 	 	Amount after
Reclassification
(CAD)	 	 	 	 
	(in millions)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Current liabilities:
	  				 				 				 				 				 			
	 Accounts payable
	  	 	67	 	 	 	20	 	 	 	87	 	 	 	357	 	 	 	444	 	 	 	(5)	 
	 Current portion of long-term debt and capital leases
	  	 	275	 	 	 	79	 	 	 	354	 	 				 	 	354	 	 			
	 Short-term borrowings
	  	 	50	 	 	 	14	 	 	 	64	 	 				 	 	64	 	 			
	 Energy commodity derivative liabilities
	  	 	10	 	 	 	3	 	 	 	13	 	 	 	(13	) 	 				 	 	(5)	 
	 Income taxes payable
	  	 	16	 	 	 	4	 	 	 	20	 	 	 	(20	) 	 				 	 	(5)	 
	 Accrued interest
	  	 	30	 	 	 	9	 	 	 	39	 	 	 	(39	) 	 				 	 	(5)	 
	 Accrued taxes other than income taxes
	  	 	45	 	 	 	13	 	 	 	58	 	 	 	(58	) 	 				 	 	(5)	 
	 Deferred natural gas costs
	  	 	31	 	 	 	9	 	 	 	40	 	 	 	(40	) 	 				 	 	(5)	 
	 Current portion of pensions and other postretirement benefits
	  	 	11	 	 	 	3	 	 	 	14	 	 	 	(14	) 	 				 	 	(5)	 
	 Current unsettled interest rate swap derivative liabilities
	  	 	25	 	 	 	7	 	 	 	32	 	 	 	(32	) 	 				 	 	(5)	 
	 Current regulatory liability for excess deferred income taxes
	  	 	26	 	 	 	8	 	 	 	34	 	 	 	(34	) 	 				 	 	(5)	 
	 Other current liabilities
	  	 	83	 	 	 	24	 	 	 	107	 	 	 	(107	) 	 				 	 	(5)	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Total current liabilities
	  	 	669	 	 	 	193	 	 	 	862	 	 				 	 	862	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Long-term debt and capital leases
	  	 	1,491	 	 	 	431	 	 	 	1,922	 	 				 	 	1,922	 	 			
	 Long-term debt to affiliated trusts
	  	 	52	 	 	 	14	 	 	 	66	 	 				 	 	66	 	 			
	 Long-term regulatory liabilities
	  				 				 				 	 	1,008	 	 	 	1,008	 	 	 	(6),(7),(9)	 
	 Regulatory liability for utility plant retirement costs
	  	 	288	 	 	 	83	 	 	 	371	 	 	 	(371	) 	 				 	 	(9)	 
	 Pensions and other postretirement benefits
	  	 	200	 	 	 	58	 	 	 	258	 	 	 	(258	) 	 				 	 	(8)	 
	 Deferred income taxes
	  	 	465	 	 	 	134	 	 	 	599	 	 				 	 	599	 	 			
	 Regulatory liability for excess deferred income taxes
	  	 	414	 	 	 	119	 	 	 	533	 	 	 	(533	) 	 				 	 	(7)	 
	 Other non-current liabilities, regulatory liabilities and
deferred credits
	  	 	148	 	 	 	42	 	 	 	190	 	 	 	154	 	 	 	344	 	 	 	(6),(8)	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Total liabilities
	  	 	3,727	 	 	 	1,074	 	 	 	4,801	 	 				 	 	4,801	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Equity:
	  				 				 				 				 				 			
	 Avista Corporation Shareholders’ Equity:
	  				 				 				 				 				 			
	 Common stock
	  	 	1,132	 	 	 	326	 	 	 	1,458	 	 				 	 	1,458	 	 			
	 Accumulated other comprehensive loss
	  	 	(10	) 	 	 	(2	) 	 	 	(12	) 	 				 	 	(12	) 	 			
	 Retained earnings
	  	 	636	 	 	 	184	 	 	 	820	 	 				 	 	820	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Total Avista Corporation shareholders’ equity
	  	 	1,758	 	 	 	508	 	 	 	2,266	 	 				 	 	2,266	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Total equity
	  	 	1,758	 	 	 	508	 	 	 	2,266	 	 				 	 	2,266	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			
	 Total liabilities and equity
	  	 	5,485	 	 	 	1,582	 	 	 	7,067	 	 				 	 	7,067	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 			

  

	5	Current liabilities of $357 million to Accounts payable and other current liabilities 


	6	Other non-current liabilties, regulatory liabilities and deferred credits of $104 million to Long-term regulatory liabilities 


	7	Regulatory liability for excess deferred income taxes of $533 million to Long-term regulatory liabilities 


	8	Pensions and other postretirement benefits of $258 million to Other long-term liabilities 


	9	Regulatory liablity for utility plant retirement costs of $371 million to Long-term regulatory liablities 


  
 14 








 Avista Corporation 

Pro forma Consolidated Statement of Operations Reclassifications 

For the three month period ended March 31, 2018 

Unaudited 
  

																							
	 	  	Avista
Historical
(USD)	 	 	Foreign
Exchange
Impact	 	  	Avista
Historical
(CAD)	 	 	Reclasses
(CAD)	 	 	Amount after
Reclassification	 	 	 
	(in millions)	  	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 
	 Operating Revenues:
	  				 				  				 				 				 	
	 Other
	  				 				  				 	 	9	 	 	 	9	 	 	(1)
	 Utility revenues
	  	 	402	 	 	 	107	 	  	 	509	 	 				 	 	509	 	 	
	 Non-utility revenues
	  	 	7	 	 	 	2	 	  	 	9	 	 	 	(9	) 	 				 	(1)
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Total operating revenues
	  	 	409	 	 	 	109	 	  	 	518	 	 				 	 	518	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Operating Expenses:
	  				 				  				 				 				 	
	 Purchased power
	  				 				  				 	 	196	 	 	 	196	 	 	(2)
	 Operating, maintenance and administration
	  				 				  				 	 	147	 	 	 	147	 	 	(2)
	 Depreciation and amortization
	  				 				  				 	 	57	 	 	 	57	 	 	(2)
	 Other expense
	  				 				  				 	 	6	 	 	 	6	 	 	(4)
	 Utility operating expenses:
	  				 				  				 				 				 	
	 Resource costs
	  	 	154	 	 	 	42	 	  	 	196	 	 	 	(196	) 	 				 	(2)
	 Other operating expenses
	  	 	78	 	 	 	21	 	  	 	99	 	 	 	(99	) 	 				 	(2)
	 Depreciation and amortization
	  	 	45	 	 	 	12	 	  	 	57	 	 	 	(57	) 	 				 	(2)
	 Taxes other than income taxes
	  	 	31	 	 	 	8	 	  	 	39	 	 	 	(39	) 	 				 	(2)
	 Non-utility operating expenses:
	  				 				  				 				 				 	
	 Other operating expenses
	  	 	7	 	 	 	2	 	  	 	9	 	 	 	(9	) 	 				 	(2)
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Total operating expenses
	  	 	315	 	 	 	85	 	  	 	400	 	 	 	6	 	 	 	406	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income from operations
	  	 	94	 	 	 	24	 	  	 	118	 	 	 	(6	) 	 	 	112	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Finance charges
	  				 				  				 	 	30	 	 	 	30	 	 	(3)
	 Interest expense
	  	 	25	 	 	 	6	 	  	 	31	 	 	 	(31	) 	 				 	(3)
	 Capitalized interest
	  	 	(1	) 	 				  	 	(1	) 	 	 	1	 	 				 	(3)
	 Other expense (income)-net
	  	 	4	 	 	 	2	 	  	 	6	 	 	 	(6	) 	 				 	(4)
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income before income taxes
	  	 	66	 	 	 	16	 	  	 	82	 	 				 	 	82	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income tax expense
	  	 	11	 	 	 	3	 	  	 	14	 	 				 	 	14	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Net income
	  	 	55	 	 	 	13	 	  	 	68	 	 				 	 	68	 	 	
		  	  
	  
	 	 	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	

  

	1	Non-utility revenues of $9 million to other revenue 


	2	Utility operating expenses and non-utility operating expenses of $400 million to operating expenses 


	3	Net interest of $30 million to finance charges 


	4	Other expense (income)-net of $6 million to operating expenses 


  
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 Avista Corporation 

Pro forma Consolidated Statement of Operations Reclassifications 

For the year ended December 31, 2017 
 Unaudited

  

																							
	 	  	Avista
Historical
(USD)	 	 	Foreign
Exchange
Impact	 	 	Avista
Historical
(CAD)	 	 	Reclassifications
(CAD)	 	 	Amount after
Reclassification	 	 	 
	(in millions)	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Operating Revenues:
	  				 				 				 				 				 	
	 Other
	  				 				 				 	 	29	 	 	 	29	 	 	(1)
	 Utility revenues
	  	 	1,423	 	 	 	425	 	 	 	1,848	 	 				 	 	1,848	 	 	
	 Non-utility revenues
	  	 	23	 	 	 	6	 	 	 	29	 	 	 	(29	) 	 				 	(1)
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Total operating revenues
	  	 	1,446	 	 	 	431	 	 	 	1,877	 	 				 	 	1,877	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Operating Expenses:
	  				 				 				 				 				 	
	 Purchased power
	  				 				 				 	 	681	 	 	 	681	 	 	(2)
	 Operating, maintenance and administration
	  				 				 				 	 	604	 	 	 	604	 	 	(2)
	 Depreciation and amortization
	  				 				 				 	 	223	 	 	 	223	 	 	(2)
	 Other income-net
	  				 				 				 	 	(9	) 	 	 	(9	) 	 	(4)
	 Utility operating expenses:
	  				 				 				 				 				 	
	 Resource costs
	  	 	525	 	 	 	156	 	 	 	681	 	 	 	(681	) 	 				 	(2)
	 Other operating expenses
	  	 	332	 	 	 	100	 	 	 	432	 	 	 	(432	) 	 				 	(2)
	 Depreciation and amortization
	  	 	17 1	 	 	 	51	 	 	 	222	 	 	 	(222	) 	 				 	(2)
	 Taxes other than income taxes
	  	 	107	 	 	 	32	 	 	 	139	 	 	 	(139	) 	 				 	(2)
	 Non-utility operating expenses:
	  				 				 				 				 				 	
	 Other operating expenses
	  	 	25	 	 	 	8	 	 	 	33	 	 	 	(33	) 	 				 	(2)
	 Depreciation and amortization
	  	 	1	 	 				 	 	1	 	 	 	(1	) 	 				 	(2)
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Total operating expenses
	  	 	1,161	 	 	 	347	 	 	 	1,508	 	 	 	(9	) 	 	 	1,499	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income from operations
	  	 	285	 	 	 	84	 	 	 	369	 	 	 	9	 	 	 	378	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Finance charges
	  				 				 				 	 	121	 	 	 	121	 	 	(3)
	 Interest expense
	  	 	95	 	 	 	29	 	 	 	124	 	 	 	(124	) 	 				 	(3)
	 Interest expense to affiliated trusts
	  	 	1	 	 				 	 	1	 	 	 	(1	) 	 				 	(3)
	 Capitalized interest
	  	 	(3	) 	 	 	(1	) 	 	 	(4	) 	 	 	4	 	 				 	(3)
	 Other expense (income)
	  	 	(7	) 	 	 	(2	) 	 	 	(9	) 	 	 	9	 	 				 	(4)
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income before income taxes
	  	 	199	 	 	 	58	 	 	 	257	 	 				 	 	257	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Income tax expense
	  	 	83	 	 	 	24	 	 	 	107	 	 				 	 	107	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	
	 Net income
	  	 	116	 	 	 	34	 	 	 	150	 	 				 	 	150	 	 	
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	

  

	1	Non-utility revenues of $29 million to other revenue 


	2	Utility operating expenses and non-utility operating expenses of $1,508 million to operating expenses 


	3	Net interest of $121 million to finance charges 


	4	Other expense (income) of $9 million to operating expenses 


  
 16