Avista Corp. announced that it has signed a definitive agreement to acquire Alaska Energy and Resources Company (AERC), a privately-held company based in Juneau, Alaska. When the transaction is complete, AERC will become a wholly-owned subsidiary of Avista Corp.

The purchase price at closing will be $170 million, less the assumption of debt and other customary closing adjustments. The transaction will be funded through the issuance of Avista common stock to the shareholders of AERC. The transaction is expected to close by July 1, 2014, following the receipt of necessary regulatory approvals and the satisfaction of other closing conditions. We expect that the addition of AERC to Avista Corp. will be slightly negative to earnings in 2014, and that it will contribute positively to earnings in 2015.

The primary subsidiary of AERC is Alaska Electric Light and Power Company (AEL&P), the oldest regulated electric utility in Alaska. In 2012, AEL&P had annual revenues of $42 million and a total rate base of $111 million. AEL&P, with 60 fulltime employees, serves approximately 15,900 customers in the city and borough of Juneau. The utility has a firm retail peak load of approximately 80 Megawatts (MW) and serves nearly 100 percent of its load with 102.7 MW of renewable hydroelectric generation capacity. The utility has 93.9 MW of diesel generating capacity to provide back-up service to all firm customers when necessary.

In addition to the regulated utility, AERC owns the AJT Mining subsidiary, which is an inactive mining company holding certain mining properties.

"AEL&P's 120-year culture of service and community partnership is a great long-term fit with Avista Corp. We have found the company to have similar cultural values and focus on providing safe, reliable service to its customers that Avista has held dear for nearly 125 years. We look forward to working with AEL&P'S highly skilled and dedicated management and employees, and to being part of the Juneau community," said Avista Corp. Chairman, President and Chief Executive Officer Scott Morris. "This agreement reflects Avista's strategy to expand and diversify energy assets and deliver long-term value to the customers, communities and investors we serve."

"AERC's board of directors wanted to find a qualified utility buyer that would focus on providing reliable and competitively priced electric service, be a contributing member of the Juneau community and provide an environment for AEL&P employees to continue to realize job satisfaction and accomplishment," said Tim McLeod, AEL&P president and general manager. "Avista, whose corporate culture is remarkably similar to that of AEL&P, satisfies these needs very well."