20240402Decision Memo.pdf

DECISION MEMORANDUM
TO: COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: JOSEPH TERRY
MICHAEL DUVAL, DEPUTY ATTORNEY GENERAL
DATE: April 2, 2024
RE: IN THE MATTER OF ROCKY MOUNTAIN POWER'S APPLICATION
FOR AUTHORITY TO ISSUE AND SELL OR EXCHANGE NOT MORE
THAN $5,000,000,000 OF DEBT,AND ENTER INTO CREDIT SUPPORT
ARRANGEMENTS; CASE NO. PAC-E-24-03.
BACKGROUND
On March 13, 2024, PacifiCorp, d/b/a Rocky Mountain Power("Company"), filed an
Application requesting authority to incur debt up to $5,000,000,000 aggregate principal amount
at any one time. The Company also requests authority to enter into letters of credit arrangements
to provide additional credit support. The Company requests this additional authority remain in
effect through April 12, 2029, so long as the Company's bond rating for senior secured debt
remains investment grade. Investment grade is BBB- or higher by Standard&Poor's Rating
Services ("S&P") and Baa3 or higher by Moody's Investors' Service, Inc. ("Moody's"). The
Company's current secured debt ratings are A by S&P and A2 by Moody's.
The requested authority will amend and supersede Order No. 35723. (Case No. PAC-E-
23-03). Under its current authority, the Company has issued all of the $5 billion debt authorized
in Order No. 35723. The securities will be issued in one or more tranches and will consist of
securities issued or exchanged as public or private placements in the form of secured or
unsecured debt. The maturity, other terms, and interest rate for each issue will be determined at
the time of issuance. The issuance(s) may be at a fixed rate set at the time of issuance or variable
interest rate based on a published index of short-term rates such as Treasury bills, commercial
paper, or the London Interbank Offered Rate ("LIBOR"). Fees will be charged based on the type
DECISION MEMORANDUM - 1 - APRIL 2, 2024

of security issued but are not expected to exceed 1% of the outstanding balance on domestic
notes. The Commission has previously authorized the Company to incur the lien of PacifiCorp
Mortgage in Case No. U-1045, Order No. 22157. The variety of funding options requested will
allow the Company to evaluate the all-in cost of each option after considering all associated fees,
so the issuances result in lowest cost issuances.
The requested financing authority will provide funds for one or more utility purposes,
including the acquisition of property; the construction, completion, extension or improvement of
utility functions; the improvement of service; the discharge or lawful refunding of obligations
which were incurred for utility purposes; or the reimbursement of the Company's treasury for
funds used for the foregoing purposes. Over$1 billion worth of long-term debt will mature by
the time the requested authority expires.
The Company's Application Fee in the amount of$1,000 was received on March 26,
2024.
STAFF RECOMMENDATION
Staff recommends approval of the authority to incur up to $5 billion debt for the period
through April 12, 2029. The Company's prior commitments to a cost test in Case No. PAC-E-
99-03 remain in effect—where foreign transactions will not be utilized for ratemaking unless,
and until, PacifiCorp can show that the all-in costs are not greater than the all-in costs of similar
domestic borrowings.
Staff recommends the commitments and terms from prior cases, up to and including Case
No. PAC-E-14-05, Order No. 33083 remain in effect. This includes,but is not limited to,
PacifiCorp's senior secured debt rating will remain at investment grade and will follow the
established procedure of notification if the ratings are downgraded; and PacifiCorp will file
quarterly financing activity reports and credit rating reports, to the extent that they are not filed
with the MEHC Acquisition Case (Case No. PAC-E-05-08, Order No. 29998).
COMMISSION DECISION
Should the $5 Billion authority for debt be approved?
Should the authority be approved through April 12, 2029, with the existing terms and
conditions including maintaining the investment grade rating, continuing the additional reporting
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requirements, providing the anticipated details of the transaction, and meeting the all-in cost test
commitment?
J ph Arry
I:\Utility\UDMEM0S\PACE2403 Memo.docx
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