20050408Final Order No 29753.pdf

Office of the Secretary
Service Date
April 8, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. FOR
AUTHORITY TO REFINANCE THE IDAHO
WATER RESOURCES DEVELOPMENT
REVENUE BONDS, SERIES 1994, IN THE
AMOUNT OF $19,975 000
ORDER NO. 29753
CASE NO. UWI-05-
On March 31 , 2005 , United Water Idaho Inc. filed a request for authority to refinance
the Idaho Water Resources Development Bonds, Series 1994, by issuance of up to $19 975 000
of Water Resource Development Bonds, Series 2005, at a lower interest rate. After reviewing
the Application and Staff s recommendation, the Commission in this Order approves the
Company s Application as more fully discussed below.
THE APPLICATION
The Company requests authority to: (1) execute and deliver to the Idaho Water
Resource Board (Board) a loan agreement with respect to the proceeds of a sale of up to
$19 975 000 of Water Resource Development Revenue Bonds, Series 2005, under an Indenture
of Trust between the Board and Wells Fargo Bank Northwest, N., as trustee; (2) enter into an
agreement with the Board and one or more underwriters for the purchase, on a negotiated basis
of the Series 2005 Bonds; (3) enter into an agreement for bond insurance; and (4) enter into any
and all other agreements that would be required with respect to the foregoing request.
The securities are Idaho Water Resource Development Revenue Refunding Bonds
Series 2005 , in the principal amount of $19 975 000, to be issued on or about April 26, 2005 and
which are due on April 1 , 2035. The coupon rate for the tax-exempt bonds is estimated at 4.
which will be finally fixed at the time of issuance. There are provisions for optional redemption
in full or in part after March 1 , 2012. The principal underwriter, Edward D. Jones Company,
expects to market the securities to individual investors with an underwriting commission of 3%
of par. The costs of issuance are estimated to be as follows:
ORDER NO. 29753
Principal Amount Issued $19 975 000.
Underwriter s Fee $599 250.
Idaho Water Resource Board $159 278.41
Bond Insurance $234,416.
Financial Advisor $30 000.
Bond Counsel $40 000.
Underwriter s Counsel $30 000.
Trustee 000.
Company Counsel 000.
Rating Agencies $16 000.
Ernst & Young $10 000.
Printing, etc.$25 000.
Total Costs 145 945.
Net Proceeds $18 827 054.
According to the Application, the proceeds from the securities will be used to refund
and prepay the outstanding principal amount of Water Resource Development Revenue Bonds
Series 1994, issued by the Board on behalf of United Water s predecessor, Boise Water
Corporation. The Series 1994 Bonds were used to finance the costs of facilities owned by
United Water and used for the public distribution of water. Refinancing of the Series 1994
Bonds will result in significant savings, allowing the Company to provide service to its
customers at a lower cost of capital. The estimated annual pre-tax savings of the refinance
$280 369.
STAFF REVIEW
Staff has reviewed the Company s Application and recommended approval of the
refinancing. The outstanding balance 0 f $19 975 000 is current! y at a stated coupon interest rate
of 6.4% with a final maturity date of October 1 , 2024. The Idaho Water Resources Development
Revenue Refinancing Bonds, Series 2005 , are estimated to be at a coupon interest rate of 4.7%.
Underwriting fees will be 3% with the expected issuance costs totaling approximately $1.2
million. The pre-tax savings on a total company basis are estimated at $280 000. The Series
2005 Bonds allow for partial or full redemption on or after March 1 , 2012. To assure that a
ORDER NO. 29753
lower interest rate is received, Staff supports the expedited treatment of the Company
Application and recommends approval of the refinancing. Additionally, Staff recommended that
United Water file all loan and underwriting agreements when finalized.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
United Water Idaho Inc. is a water corporation within the definition of Idaho Code
61-125 and is a public utility within the definition of Idaho Code ~ 61-129. The Idaho Public
Utilities Commission has jurisdiction over this matter pursuant to the provisions of Idaho Code
~~ 61-901 et seq.
After examining the Application and Staff s comments, the Commission finds that an
evidentiary hearing in this matter is not required. The Commission further finds that the
proposed transaction is consistent with the public interest and United Water proper
performance of its duties as a public utility.
The Commission also finds that the general purposes to which the funds will be
utilized are lawful purposes under the public utilities law and are compatible with the public
interest. However, this approval of the general purposes to which the funds will be put to use is
neither a finding of fact nor a conclusion of law that any particular project, program, or future
cost recovery is authorized. Approval in this Order shall not be construed to approve any
particular use of the funds which United Water may benefit by the approval in this Order.
The Commission further finds that the issuance of this Order authorizing the
proposed financing does not constitute agency determination/approval of the type of financing or
the related costs for ratemaking purposes. The Commission expressly reserves the ratemaking
implication from these loans until an appropriate future proceeding.
United Water has paid the fee required by Idaho Code ~ 61-905.
ORDER
IT IS HEREBY ORDERED that the Application of United Water Idaho Inc., for
authority to: (1) execute and deliver to Idaho Water Resource Board a loan agreement with
respect to the proceeds of a sale of up to $19 975 000 of Water Resource Development Revenue
Bonds, Series 2005 , under an indenture of trust between the Board and Wells Fargo Bank N.
(2) enter into an agreement with the Board and one or more underwriters for the purchase on a
negotiated basis of the Series 2005 bonds; (3) enter into an agreement for bond insurance; and
(4) enter into any and all other agreements that would be negotiated and required at a later date
ORDER NO. 29753
with respect to the foregoing (provided all agreements are filed with the Commission) is hereby
approved.
IT IS FURTHER ORDERED that United Water Idaho Inc., shall file with the
Commission all loan, underwriting, and bonding agreements associated with this transaction
including but not limited to: (a) verified copies of any agreement entered into in connection with
the borrowing pursuant to this Order; (b) verified copies of any credit support arrangement
entered into pursuant to this Order; (c) a verified statement setting forth in reasonable detail the
disposition of the proceeds of the borrowing made pursuant to this Order; and (d) a verified
statement setting forth in detail all fees and expenses to be paid in connection with the proposed
Issuance.
IT IS FURTHER ORDERED that this authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, services, accounts, evaluations
estimates, or determination of costs, or any other matter that may come before this Commission
pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Idaho
Code Title 61 , Chapter 9, or any act or deed done or performed in connection with this Order
shall be construed to obligate the State of Idaho to payor guarantee in any manner whatsoever
any funds authorized by the Commission.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of United Water s exhibits or other material accompanying the Application for any
purpose other than issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
ORDER NO. 29753
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this '8
day of April 2005.
. /- .
LJ)~ .
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~BI
C~ission Secretary
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ORDER NO. 29753