20240531Direct N. Kobliha - Redacted.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. PAC-E-24-04
OF ROCKY MOUNTAIN POWER FOR )
AUTHORITY TO INCREASE ITS RATES ) DIRECT TESTIMONY OF
AND CHARGES IN IDAHO AND ) NIKKI L. KOBLIHA
APPROVAL OF PROPOSED ) REDACTED
ELECTRIC SERVICE SCHEDULES AND )
REGULATIONS )
ROCKY MOUNTAIN POWER
CASE NO. PAC-E-24-04
May 2024

1 I . INTRODUCTION AND QUALIFICATIONS
2 Q. Please state your name, business address, and present
3 position with PacifiCorp d/b/a Rocky Mountain Power (the
4 "Company,") .
5 A. My name is Nikki L. Kobliha and my business address is
6 825 NE Multnomah Street, Suite 1900, Portland, Oregon
7 97232 . I am currently employed as Senior Vice President,
8 Chief Financial Officer and Treasurer for PacifiCorp.
9 Q. Please describe your education and professional
10 experience.
11 A. I received a Bachelor of Business Administration with a
12 concentration in Accounting from the University of
13 Portland in 1994 . I became a Certified Public Accountant
14 in 1996 . I joined PacifiCorp in 1997 and have taken on
15 roles of increasing responsibility before being
16 appointed Chief Financial Officer in 2015 . I am
17 responsible for all aspects of PacifiCorp' s finance,
18 accounting, income tax, internal audit, Securities and
19 Exchange Commission reporting, treasury, credit risk
20 management, pension, and other investment management
21 activities .
22 II . SUMMARY AND PURPOSE OF TESTIMONY
23 Q. What is the purpose of your testimony?
24 A. My testimony supports Rocky Mountain Power' s overall
25 cost of capital recommendation, including the capital
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Rocky Mountain Power

1 structure and the cost of debt .
2 Q. Please summarize the purpose of your testimony.
3 A. Regarding the overall cost of capital recommendation, I
4 sponsor the Company' s proposed capital structure with a
5 common equity level of 50 . 00 percent and provide support
6 demonstrating why that level is appropriate at this time
7 and how this capitalization benefits customers .
8 I explain the changes in the Company' s credit
9 ratings since the last rate proceeding and the changes
10 to the Company' s financial metrics in 2023 . I discuss
11 the support needed to achieve Standard & Poor' s ("S&P")
12 and Moody' s credit metric thresholds to maintain the
13 Company' s credit rating. I summarize the financial plan
14 that has been established to provide the necessary
15 financial support for PacifiCorp at this time, including
16 the Company' s changes to its capital plan and the support
17 provided by Berkshire Hathaway Energy ("BHE") . I further
18 demonstrate why the requested capital structure is an
19 important component of that plan to support the
20 Company' s financial metrics . Finally, I explain why this
21 form of regulatory support benefits customers . I also
22 support the Company' s proposed cost of long-term debt of
23 5 . 08 percent and cost of preferred stock of 6 . 75 percent.
Kobliha, Di 2
Rocky Mountain Power

1 Q. What overall cost of capital do you recommend for the
2 Company?
3 A. The Company proposes an overall cost of capital of 7 . 69
4 percent . This cost includes the return on equity
5 recommendation of 10 . 3 percent as supported by the
6 direct testimony of Company witness Ann E . Bulkley and
7 the capital structure and costs set forth in Table 1 .
Table 1 : Hypothetical Overall Cost of Capital
Weighted
of Ave Cost
Component Total Cost o o
Long-Term Debt 49 . 990 5 . 080 2 . 540
Preferred Stock 0 . 010 6 . 75% 0 . 00%
Common Stock
Equity 50 . 00o 10 . 300 5 . 150
100 . 00o 7 . 69a
8 Q. What time period does your analysis cover?
9 A. The costs of the long-term debt and preferred stock are
10 measured over the 12-month period ending December 31,
11 2024 test period ("Test Period") in this proceeding
12 using an average of the five quarter-ending balances
13 spanning the 12-month period ending December 31, 2024,
14 based on known and measurable changes through December
15 31, 2024 . The capital structure for the Company in this
16 case is a hypothetical capital structure set at a level
17 expected to enable the Company to maintain its current
18 credit ratings . This is a departure from the Company' s
19 historical practice of basing the capital structure on
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Rocky Mountain Power

1 the average of the five quarter-ending balances, as
2 further discussed below.
3 III . PACIFICORP' S HISTORICAL CAPITAL STRUCTURES
4 Q. How does PacifiCorp' s historical actual capital
5 structure compare to what is currently authorized?
6 A. As shown in Table 2 below, the Company' s historical
7 equity ratio has remained relatively flat in the 2018
8 through 2023 time period, averaging just below 52
9 percent . In the Company' s last general rate case, the
10 Idaho Public Utilities Commission ("Commission")
11 approved a settlement that was silent on return on
12 equity, capital structure, and return on rate base. '
Table 2 : Historical Actual Capital Structure
As of 2018 2019 2020 2021 2022 2023
December 311:
Long-Term 47 . 89% 48 . 36% 48 . 49% 47 . 69% 46 . 69% 49 . 95%
Debt
Preferred 0 . 02% 0 . 02% 0 . 01% 0 . 01% 0 . 01% 0 . 01%
Stock
Common Equity 52 . 09% 51 . 62% 51 . 50% 52 . 30% 53 . 30% 50 . 04%
Total 100 . 00% 1 100 . 00% 1100 . 00% 100 . 00% 1100 . 00% 1 100 . 00%
' Five quarter-end average % Capital Structure for trailing
12-month period ending December 31 of each period.
1 In the Matter of Rocky Mountain Power's Application for Authority to
Increase its Rates and Charges in Idaho and Approval of Proposed Electric
Service Schedules and Regulations. Case No. PAC-E-21-07. Order No. 35277
(Dec. 30, 2021) .
Kobliha, Di 4
Rocky Mountain Power

1 Q. Is the Company proposing a capital structure that
2 differs from its forecast capital structure?
3 A. Yes . Through 2022, the Company managed to a capital
4 structure near 52 percent and it was not until the recent
5 events related to the 2020 wildfires that the equity
6 ratio dropped to 50 percent. As a result of incremental
7 wildfire liability accruals throughout 2023 and
8 settlements that were reached in December 2023, coupled
9 with the Company' s sizable capital expenditure plan, the
10 Company' s actual capital structure has become, and will
11 continue to be for the foreseeable future, more highly
12 leveraged and the Company' s financial risk has increased
13 significantly.
14 Table 3 presents the Company' s forecast capital
15 structure for 2024 and 2025 .
Table 3 : Forecast Capital Structure
Forecast as of December 2024 2025
311:
Long-Term Debt 56 . 060 55 . 570
Preferred Stock 0 . 01% 0 . 01%
Common Equity 43 . 930 44 . 420
Total 100 . 00% 100 . 00%
1 Five quarter-end average o Capital Structure
for 12-month period ending December 31 of each
period.
16 The result of these circumstances is that the Company
17 faces significant risk of a further credit ratings
18 downgrade at its forecast capitalization . Further, the
19 Company' s access to the capital markets is challenged as
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Rocky Mountain Power

1 a result of the risk associated with wildfires .
2 Therefore, the Company is seeking regulatory support
3 through a ratemaking capital structure that will provide
4 the necessary financial support for its current credit
5 ratings . Supporting the Company' s credit ratings, and
6 the ability to access capital in the market when it is
7 required, on reasonable terms, provides benefits to
8 PacifiCorp' s customers, particularly at a time when
9 significant capital investment is required in the system
10 to meet ongoing operational requirements and policy
11 objectives .
12 IV. PACIFICORP' S CREDIT METRICS
13 Q. What are PacifiCorp' s current credit ratings?
14 A. PacifiCorp' s current ratings are shown in Table 4 .
Table 4 : PacifiCorp Credit Ratings
Moody' s S&P' s
Senior Secured Debt A2 A
Issuer Baal BBB+
Outlook Stable Negative
15 Q. How does the maintenance of PacifiCorp' s current credit
16 rating benefit customers?
17 A. First, the credit rating of a utility has a direct impact
18 on the price that a utility pays and the ability to
19 attract the capital necessary to fund its current and
20 future operating needs . Many institutional investors
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Rocky Mountain Power

1 have fiduciary responsibilities to their clients, and
2 are typically not permitted to purchase non-investment
3 grade (i .e. , rated below BBB-/Baa3) securities or in
4 some cases even securities rated below a single A rating.
5 A further credit rating downgrade has the potential for
6 the Company' s Senior Secured Debt ratings to drop below
7 an A rating, thus further limiting the Company' s access
8 to capital . A solid credit rating directly benefits
9 customers by reducing the immediate and future borrowing
10 costs related to the financing needed to support
11 regulatory obligations .
12 Second, credit ratings are an estimate of the
13 probability of default by the issuer on each rated
14 security. Lower ratings equate to higher risks and
15 higher costs of debt . The Great Recession of 2008-2009
16 provides a clear and compelling example of the benefits
17 of the Company' s credit rating because the Company was
18 able to issue new long-term debt during the midst of the
19 financial turmoil . Other lower-rated utilities were shut
20 out of the market and could not obtain new capital .
21 Third, the Company has a near constant need for
22 short-term liquidity as well as periodic long-term debt
23 issuances . PacifiCorp pays significant amounts daily to
24 suppliers whom we count on to provide necessary goods
25 and services, such as fuel, energy, and inventory. Being
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Rocky Mountain Power

REDACTED
1 unable to access funds can risk the ability to provide
2 customers with energy, the successful completion of
3 necessary and critical capital infrastructure projects
4 and would increase the chance of outages and service
5 failures over the long term.
6 PacifiCorp' s creditworthiness, as reflected in its
7 credit ratings, will strongly influence its ability to
8 attract capital in the competitive markets and the
9 resulting costs of that capital.
10 Q. Please summarize the Company' s historical credit
11 metrics.
12 A. Confidential Table 5 below presents the Company' s cash
13 from operations pre-working capital divided by debt
14 ("CFO Pre-WC/Debt") and funds from operations divided by
15 debt ("FFO/Debt") metrics for the period from 2019
16 through 2024 . These are the key metrics relied upon by
17 Moody' s and S&P. As shown in this table, the Company' s
18 2023 actual metrics are in the low end of the target
19 range for Moody' s. The Company' s forecast metrics for
20 2024 are in the range for Moody' s and
21 range for S&P. These metrics are on the low
22 side but should be sufficient for the current credit
23 ratings of BBB+/Baa, as long as the Moody' s metrics start
24 to improve.
Kobliha, Di 8
Rocky Mountain Power

REDACTED
Confidential Table 5 : PacifiCorp' s Historical Credit
Metrics
2019 2020 2021 2022 2023 2024
Actual Actual Actual Actual Actual Forecast3
CFO Pre- 18 . 4% 18 . 2% 21 . 4% 21 . 0% _
WC/Debt
(Moody' s) 1
Moody' s 19-20% 19-20% 19-20% 19-20% -
Guidance
FFO/Debt 17 . 5% 17 . 4% 21 . 9% 22 . 2% _
(S&P) 2
S&P 14-16% 14-16% 14-16% 14-16% -
Guidance
1 For 2019 through 2022, CFO Pre-WC/Debt are from Moody' s .
For 2023 and 2024, Moody' s metrics are estimated by
PacifiCorp. All years reflect adjustments for wildfire
accruals, settlements, wildfire insurance and net power
costs .
2 For 2019 through 2022, FFO/Debt metrics are from S&P. For
2023 and 2024, S&P metrics are estimated by PacifiCorp and
reflect adjustments for wildfire accruals .
3 Metric calculations based on PacifiCorp' s proposed 50/50
capital structure in this case.
1 Q. Please summarize the credit rating agencies'
2 perspectives on the current business risk of PacifiCorp.
3 A. In June 2023, S&P downgraded PacifiCorp' s issuer credit
4 rating to BBB+ from A and lowered PacifiCorp' s senior
5 secured credit rating to A from A+. S&P also revised the
6 outlook on PacifiCorp to negative from stable . The
7 negative outlook on PacifiCorp reflects the likelihood
8 that S&P could lower the ratings of PacifiCorp by one or
9 more notches over the next 24 months . Furthermore, S&P
10 revised their assessment of PacifiCorp' s group status in
11 the BHE group to strategically important from core . This
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Rocky Mountain Power

1 was based on S&P' s belief that BHE would no longer
2 support PacifiCorp under all foreseeable circumstances .
3 A strategically important group rating raises
4 PacifiCorp' s credit rating by three notches over
5 PacifiCorp' s stand-alone credit profile of BB+. In that
6 report, S&P noted that:
7 To incorporate the increasing event risk
8 that may depress credit metrics over our
9 forecasts associated with the potential
10 litigations, we revised our financial
11 policy modifier to negative from neutral .
12 Overall, we assess PacifiCorp' s stand-alone
13 credit profile (SACP) to `bb+' , reflecting
14 our revised view of PacifiCorp' s business
15 risk profile and financial policy modifier.z
16 Following the wildfire settlements in December 2023,
17 S&P affirmed its rating of PacifiCorp at BBB+ with a
18 negative outlook. In that report, S&P noted that the
19 negative outlook:
20 ...reflects the likelihood that we can lower
21 its ratings over the next 24 months
22 depending on legal developments surrounding
23 wildfires in the company' s service
24 territory. Currently, we expect the
25 company' s funds from operations (FFO) to
26 debt to be 130 - 150 over our outlook
27 period. "3 S&P further noted that "we could
28 also lower ratings if the company' s stand-
29 alone FFO to debt consistently weakens to
2 S&P Global Ratings, Research Update: PacifiCorp Downgraded to BBB+,
Outlook Revised to Negative: Berkshire Hathaway Energy Co. Outlook Also
Negative, at 2 (June 20, 2023) .
3 S&P Global Ratings, Research Update: PacifiCorp Ratings Affirmed
Following Archie Creek Settlement; Outlook Negative, at 1 (Dec. 12, 2023) .
Kobliha, Di 10
Rocky Mountain Power

I below 130 or if PacifiCorp contributes to a
2 future significant wildfire.4
3 In November 2023, Moody' s downgraded PacifiCorp' s
4 senior unsecured issuer rating to Baal from A3 and its
5 first mortgage bond rating to A2 from Al . Moody' s noted
6 that it expected PacifiCorp' s CFO pre-WC to debt ratio
7 to be in the range of 16 to 17 percent beginning in 2024,
8 which is significantly below the original expected range
9 of 19 to 20 percent . Moody' s noted that the decline:
10 ...largely reflects the company' s plan to
11 build a cash reserve over the next five years
12 through the suspension of annual dividends
13 estimated at $700 million per year to secure
14 the funding of potential wildfire
15 liabilities through a combination of lower
16 capital expenditures, retaining more cash,
17 and operating with higher leverage. 5
18 Further, in December 2023, Moody' s noted that wildfire
19 risk was a significant risk for PacifiCorp and has a
20 substantial impact on its credit profile . 6
21 Q. What other factors will affect the Company' s capital
22 structure during the period when rates will be in effect?
23 A. In addition to the ongoing financing requirements of the
24 regular operations of the business, the Company has $9 . 1
25 billion in capital investments over the 2024 through
4 Id. , at 2.
5 Moody's Rating Action: Moody's downgrades PacifiCorp to Baal, outlook
stable, p. 1.
6 Moody's Investors Services, Credit Opinion, PacifiCorp, Update following
a downgrade to Baal, at 1 (Dec. 4, 2023) .
Kobliha, Di 11
Rocky Mountain Power

1 2026 timeframe . The Company' s planned investments
2 include approximately $1 . 0 billion related to wildfire
3 mitigation.
Table 6: Forecast Capital Expenditures
Capital Expenditures 2024 2025 2026
$, millions)
Total Capital Expenditures $3, 215 $2, 814 $3, 119
4 Q. What steps is the Company taking to improve its financial
5 metrics?
6 A. PacifiCorp has suspended its dividend for the period
7 from 2024 through 2028, which will improve retained
8 earnings and free up available cash that can be used to
9 fund the Company' s ongoing capital requirements . In
10 addition, the Company is reviewing its capital plans to
11 restructure the timing and scope of its capital
12 investments . Finally, the Company is proposing that the
13 Commission authorize an equity ratio of 50 percent .
14 Q. What is the projected effect of the Company' s proposal
15 on its financial metrics over the next several years?
16 A. As shown in Confidential Table 7 below, PacifiCorp' s
17 financial plan will support the coverage ratios over the
18 period from 2024 through 2026, with ratios in line with
19 a BBB+ rating. The financial plan builds cash, to cover
20 potential wildfire liabilities but may not be enough and
Kobliha, Di 12
Rocky Mountain Power

REDACTED
1 further downward pressure could be placed on
2 PacifiCorp' s credit metrics .
Confidential Table 7 : PacifiCorp' s Projected Credit Metrics
$, billions 2024 2025 2026
Long-term Debt _
Issuances
Long-term Debt _
Maturities
Proposed Common -
Equity
FFO / Debt _
(Moody' s)
3 V. REGULATORY PRECEDENT FOR THE USE OF A HYPOTHETICAL
4 CAPITAL STRUCTURE
5 Q Is there precedent for regulatory support in the form of
6 a hypothetical capital structure that differs from the
7 Company' s actual capital structure?
8 A. Yes . There are several examples of regulatory
9 commissions providing regulatory support in the form of
10 a hypothetical capital structure that is composed of a
11 greater percentage of equity than a company' s actual
12 capital structure . In particular, the Washington
13 Utilities and Transportation Commission ("WUTC") , the
14 Utah Public Service Commission ("Utah Commission") , the
15 Regulatory Commission of Alaska ("Alaska Commission") ,
16 the Federal Energy Regulatory Commission ("FERC") and
17 the Louisiana Public Service Commission ("Louisiana
18 Commission") have all supported the financial integrity
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Rocky Mountain Power

1 of the utilities that they regulate using hypothetical
2 capital structures in certain circumstances .
3 Q. Please summarize the Washington precedent regarding the
4 use of a hypothetical capital structure.
5 A. In Docket Nos . UE-170485 and UG-170486, the WUTC
6 established that a "hypothetical capital structure
7 should be reserved for circumstances including, but not
8 limited to, financial hardship or tight capital market
9 conditions . "'
10 Q. Please summarize the Utah precedent regarding the use of
11 a hypothetical capital structure.
12 A. In Docket No. 99-035-10, the Company proposed a
13 hypothetical capital structure that was derived from the
14 average capitalization of comparable electric utilities
15 used to develop its return on equity recommendation. 8
16 The Company' s proposal was approved by the Commission
17 finding that "the Company' s sample of comparable firms
18 is a reasonable basis upon which to determine a
19 hypothetical capital structure . "9
7 Washington Utilities and Transportation Commission, Docket Nos. UE-
170485 and UG-170486 (consolidated) (April 26, 2018) . at 100.
8 Utah Public Service Commission, Docket No. 99-035-10, Order (May 24,
2000) .
9 Id.
Kobliha, Di 14
Rocky Mountain Power

1 Q. Please summarize the Alaska regulatory precedent with
2 respect to the use of a hypothetical capital structure
3 to support financial integrity.
4 A. The Alaska Commission has routinely authorized a
5 hypothetical capital structure in circumstances where
6 they determined that a company' s capital structure was
7 impaired. In particular, the Alaska Commission
8 authorized a hypothetical capital structure for
9 Anchorage Municipal Light and Power ("ML&P") in several
10 cases from Docket U-87-84 to Docket U-99-139 over which
11 time, the Alaska Commission increased ML&P' s equity
12 ratio significantly from 4 . 5 percent to 40 . 4 percent
13 equity. 10 In each case, the Alaska Commission determined
14 that the use of a hypothetical capital structure was
15 appropriate because the company' s equity ratio was
16 impaired. In 2005, Docket No. U-05-86, the company
17 indicated that at a 40 . 4 percent equity ratio, it was no
18 longer impaired and that it enjoyed investment-grade
19 bond ratings ."
loRegulatory Commission of Alaska, Docket No. U-10-31, Order No. 15 (August
22, 2011) (referencing Docket No. U-87-84) .
11 Id.
Kobliha, Di 15
Rocky Mountain Power

1 Q. Please summarize the FERC precedent regarding the use of
2 a ratemaking equity ratio that exceeds the company' s
3 actual equity ratio.
4 A. The FERC, through Order 679, established incentive rate
5 treatment for transmission investments that met
6 established criteria for transmission system
7 expansion.12 One of the incentives considered was the use
8 of a hypothetical capital structure, which has been
9 approved for transmission projects meeting the
10 established criteria.13 In a recent proceeding, Missouri
11 River Energy ("Missouri River") proposed the use of a
12 hypothetical capital structure, composed of 50 percent
13 debt and 50 percent equity to finance its investment and
14 ownership in the Big Stone Project . Missouri River noted
15 that the use of the hypothetical capital structure
16 proposed was needed to produce a debt service coverage
17 ratio that was consistent with Missouri River' s current
18 Moody' s rating and that absent the capital structure,
19 the financing of Big Stone Project would result in
20 downward pressure on the company' s credit rating. The
21 FERC approved the use of a hypothetical capital
22 structure as well as other incentives noting that the
12 FERC, Docket No. RM06-4-000, Order No. 679 (July 20, 2006) .
13 FERC, Docket No. ER23-2284-000, Order on Transmission Rate Incentives
(August 31, 2023) .
Kobliha, Di 16
Rocky Mountain Power

1 requested incentives were tailored to the risks and
2 challenges of the Big Stone Project and that the
3 hypothetical capital structure would help ensure the
4 maintenance of the company' s current credit rating. 14
5 Q. Please summarize the Louisiana Commission decision to
6 use a ratemaking equity ratio that is higher than the
7 company' s actual equity ratio.
8 A. In Docket No . U-17282, Order No. U-17282-C, Gulf States
9 Utilities Company proposed the use of an imputed equity
10 ratio of 40 percent, which was higher than the company' s
11 actual equity ratio of 35 percent. The Staff of the
12 Louisiana Commission agreed to this capital structure on
13 the basis that the 40 percent equity ratio was consistent
14 with the equity ratios of other utilities that had
15 investment grade first mortgage bonds . At that time,
16 Gulf States Utilities Company was not investment grade.
17 The Louisiana Commission authorized the use of the 40
18 percent equity ratio.15
14 Id. , at21.
15 Louisiana Public Service Commission, Docket No. U-17282, Order No. U-
17282-C at 5 (February 4, 2004) .
Kobliha, Di 17
Rocky Mountain Power

1 Q. Please summarize your conclusions regarding the
2 regulatory precedent for the use of a hypothetical
3 capital structure to support financial integrity.
4 A. While the Company' s actual capital structure is the most
5 appropriate capital structure to rely on in the normal
6 course of business operations, as it reflects the actual
7 financing of the ongoing operations of the business, it
8 is reasonable and appropriate to rely on a hypothetical
9 capital structure in circumstances where there is a need
10 to support a company' s credit ratings and overall access
11 to capital . Providing this level of regulatory support
12 helps to maintain the credit quality of the regulated
13 utility and ensures that the company has consistent
14 access to capital on reasonable terms, which provides
15 benefits to customers .
16 Q. How does PacifiCorp' s proposed hypothetical capital
17 structure compare with the capital structures of the
18 proxy group companies relied upon in Company witness Ann
19 Bulkley' s calculation of the cost of equity?
20 A. PacifiCorp' s proposed hypothetical equity ratio of 50
21 percent is well below the average equity ratio of the
22 utility operating companies of the proxy group used in
23 Company witness Bulkley' s analysis . As shown in Company
24 witness Bulkley' s Exhibit No. 17, the average equity
25 ratio for Company witness Bulkley' s proxy group
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Rocky Mountain Power

1 companies is approximately 53 . 43 percent and the range
2 is from 45 . 77 percent to 61 . 11 percent . Therefore,
3 PacifiCorp' s requested equity ratio is within the range
4 established by Company witness Bulkley' s cost of equity
5 study.
6 VI, FINANCING OVERVIEW
7 Q. How does PacifiCorp finance its electric utility
8 operations?
9 A. Generally, PacifiCorp finances its regulated utility
10 operations using a mix of debt and common equity capital .
11 The Company can maintain its common equity capital by
12 retaining its earnings or by receiving an equity
13 contribution from its investor. The debt portion of the
14 capital structure is supplied by the issuance of long-
15 term debt such as first mortgage bonds . The issuance of
16 long-term debt requires a credit rating and maintaining
17 the Company' s credit rating is critical in providing
18 constant and affordable access to the debt capital
19 markets . All of these factors assist in financing
20 expenditures like potential new generation resources and
21 associated transmission, plus wildfire mitigation
22 investments .
Kobliha, Di 19
Rocky Mountain Power

1 Q. How does PacifiCorp determine the levels of common
2 equity, debt, and preferred stock to include in its
3 capital structure?
4 A. As a regulated public utility, PacifiCorp has a duty and
5 an obligation to provide safe, adequate, and reliable
6 service to customers in its Idaho service area while
7 prudently balancing cost and risk. Major capital
8 expenditures are required in the near-term for new
9 investments to fulfill its service obligation, including
10 capital expenditures for new renewable and carbon free
11 generation resources, associated new transmission, and
12 wildfire mitigation investments . These capital
13 investments also have associated operating and
14 maintenance costs . In addition to capital investments,
15 the Company procures a significant amount of fuel and
16 energy to meet its customers electricity needs . In times
17 of extreme weather or in a wholesale market disruption,
18 this cost can be significant and, in some cases, is in
19 advance of recovery. The Company must have access to the
20 debt capital markets as well as access to lines of credit
21 and short-term debt to ensure that it has liquidity to
22 manage its estimated cash outflows . As part of its annual
23 business plan process, PacifiCorp reviews all of its
24 estimated cash inflows and outflows to determine the
25 amount, timing, and type of new financing required to
Kobliha, Di 20
Rocky Mountain Power

1 support these activities and provide for financial
2 results and credit ratings that balance the cost of
3 capital with continued access to the financial markets .
4 Q. Please explain PacifiCorp' s need for and sources of new
5 capital .
6 A. PacifiCorp has a constant need for additional capital to
7 maintain its existing transmission, distribution and
8 generation assets, to meet its customers' needs for new
9 cost-effective transmission and renewable or carbon free
10 generation, to mitigate wildfires by making significant
11 investments in new technology and hardening its
12 infrastructure, and for increased reliability, improved
13 power delivery, and safe operations . PacifiCorp also
14 needs new capital to fund long-term debt maturities .
15 PacifiCorp expects to spend approximately $9 . 1
16 billion in capital expenditures from 2024 through 2026
17 with significant investments in wildfire mitigation
18 efforts as well as renewable energy projects and related
19 transmission. This capital spending will require
20 PacifiCorp to raise funds by issuing new long-term debt
21 in the debt capital markets and retaining all its
22 earnings .
Kobliha, Di 21
Rocky Mountain Power

1 Q. Has PacifiCorp' s access to the credit markets changed
2 since the Company' s last rate proceeding?
3 A. Yes . PacifiCorp has had reasonable access to the capital
4 markets since the last rate proceeding, up until the
5 recent credit rating downgrade that resulted from the
6 wildfire liability in Oregon based on an unknown class
7 size . Since that time, the Company has maintained access
8 to capital, however, the costs of that capital have
9 increased, reflecting the risk associated with the
10 wildfire liability and the ongoing operational risk.
11 PacifiCorp spent a significant amount of time talking
12 with its investors in the December 2023 and early January
13 2024 timeframe leading up to its January 2024 long-term
14 debt offering to provide them a detailed update on our
15 plans to mitigate any further wildfire risk. Although
16 the transaction went well and PacifiCorp was able to
17 access the debt capital markets, some traditional
18 investors in PacifiCorp debt decided to not participate.
19 In addition to the measures to improve its metrics that
20 I discuss below, the Company is proposing regulatory
21 solutions related to the escalating wildfire liability.
22 Those solutions are addressed in Company witness
23 Joelle R. Steward' s testimony.
Kobliha, Di 22
Rocky Mountain Power

1 Q. How is BHE providing support to PacifiCorp to improve
2 its metrics?
3 A. PacifiCorp has consistently benefitted from its
4 affiliation with BHE because there is no dividend
5 requirement . While historically PacifiCorp has paid
6 dividends to BHE to manage the common equity component
7 of the capital structure, in sustained periods of
8 capital investment PacifiCorp is able to retain earnings
9 to help finance investments and forego dividend payments
10 to BHE . If PacifiCorp had publicly traded common equity,
11 it would have needed to pay a dividend that equates to
12 approximately 600 of its earnings in order to attract
13 the investors needed to fund its business . The
14 flexibility of not paying a dividend on a quarterly basis
15 in times of a significant capital investment cycle or in
16 times of distress, is a significant benefit . As
17 discussed previously, BHE has pledged that it will not
18 require a dividend from PacifiCorp over the next five
19 years, which will allow PacifiCorp to retain earnings to
20 help finance wildfire settlements and capital
21 investments .
22 Q. How has the Company revised its investment plans to
23 support its credit profile?
24 A. PacifiCorp has adjusted its capital investment plan over
25 the next five years, reducing the planned expenditures
Kobliha, Di 23
Rocky Mountain Power

1 in 2024 through 2026 by nearly $1 . 5 billion when compared
2 to previously forecasted amounts . In addition to
3 reducing the capital spending, which increases the
4 credit metrics, the Company has refocused its capital
5 plan in the next three years on wildfire mitigation
6 expenses to reduce the risk of wildfire events, and on
7 investment in the ongoing safety and reliability of the
8 service. In addition, the Company has adjusted the
9 timing of its investments that are required to continue
10 to transition to clean energy resources and renewable
11 resources . The adjustment in the timing of these
12 investments will provide better support for the
13 Company' s financial profile in the short term.
14 Q. Is PacifiCorp' s proposed hypothetical capital structure
15 a necessary component of the financial plan to reduce
16 the Company' s financial risk and support the Company' s
17 credit metrics?
18 A. Yes . The Company' s proposal, to rely on a hypothetical
19 capital structure that is composed of 50 percent debt
20 and 50 percent equity will demonstrate to the credit
21 rating agencies and the market that the Company has the
22 regulatory support needed to improve its financial
23 metrics to stabilize the outlook in the short term. The
24 combination of the suspension of the Company' s dividend
25 to BHE, the restructuring of its capital plan, and the
Kobliha, Di 24
Rocky Mountain Power

1 proposed capital structure will support PacifiCorp' s
2 current credit metrics . As shown in Confidential Table 7
3 above, this financial plan, including regulatory support
4 at a 50/50 capital structure will result in credit
5 metrics in the range expected by the rating agencies for
6 its current credit rating.
7 Q. What is the benefit to PacifiCorp' s customers of
8 providing support to the Company in the form of a
9 hypothetical equity ratio?
10 A. Solid credit metrics will reduce PacifiCorp' s financial
11 risk, which is necessary to access debt in the market on
12 reasonable terms . Simply stated, providing regulatory
13 support in the form of the proposed hypothetical capital
14 structure will reduce the Company' s risk profile and
15 result in lower overall financing costs for customers .
16 This is important because PacifiCorp is in the midst of
17 a period of major capital spending and investing in cost-
18 effective infrastructure to provide electric service
19 that is reliable, clean, and affordable . If PacifiCorp
20 does not have consistent access to the capital markets
21 at reasonable costs, these borrowings and the resulting
22 costs of building new facilities become more expensive
23 than they otherwise would be. The inability to access
24 financial markets can threaten the completion of
25 necessary projects, can impact safe and reliable system
Kobliha, Di 25
Rocky Mountain Power

1 operations, and result in a significant liquidity
2 challenge .
3 Q. How has the Company' s strong rating historically
4 benefitted customers?
5 A. PacifiCorp has historically been able to significantly
6 reduce its cost of long-term debt primarily through
7 obtaining new financings at very attractive interest
8 rates . The lower cost of debt has provided benefits to
9 customers through a lower overall rate of return and
10 lower revenue requirement .
11 In addition, higher-rated companies have greater
12 access to the long-term markets for power purchases and
13 sales . This access provides these companies with more
14 alternatives to meet the current and future load
15 requirements of their customers . Additionally, a company
16 with strong ratings will often avoid having to meet
17 costly collateral requirements that are typically
18 imposed on lower-rated companies when securing power in
19 these markets .
20 Q. What type of debt does PacifiCorp use in meeting its
21 financing requirements?
22 A. PacifiCorp has completed the majority of its recent
23 long-term financing using secured first mortgage bonds
24 issued under the Mortgage Indenture dated January 9,
25 1989 . Exhibit No. 1, Pro Forma Cost of Long-Term Debt,
Kobliha, Di 26
Rocky Mountain Power

1 shows that, over the test period, PacifiCorp is
2 projected to have an average of approximately $13 . 1
3 billion of first mortgage bonds outstanding, with an
4 average cost of 5 . 07 percent. Presently, all outstanding
5 first mortgage bonds bear interest at fixed rates .
6 Proceeds from the issuance of the first mortgage bonds
7 (and other financing instruments) are used to finance
8 the utility operation .
9 VII. FINANCING COST CALCULATIONS
10 Q. How did you calculate the Company' s embedded costs of
11 long-term debt and preferred stock?
12 A. I have calculated the embedded costs of debt and
13 preferred stock as an average of the five quarter-end
14 cost calculations spanning the test period, beginning
15 December 31, 2023, and concluding December 31, 2024 .
16 Q. Please explain the cost of long-term debt calculation.
17 A. I calculated the cost of debt by issue, based on each
18 debt series' interest rate and net proceeds at the
19 issuance date, to produce a bond yield to maturity for
20 each series of debt outstanding as of each of the five
21 quarter-ending dates spanning the Test Period. It should
22 be noted that in the event a bond was issued to refinance
23 a higher cost bond, the pre-tax premium and unamortized
24 costs, if any, associated with the refinancing were
25 subtracted from the net proceeds of the bonds that were
Kobliha, Di 27
Rocky Mountain Power

1 issued. Each bond yield was then multiplied by the
2 principal amount outstanding of each debt issue,
3 resulting in an annualized cost of each debt issue.
4 Aggregating the annual cost of each debt issue produces
5 the total annualized cost of debt. Dividing the total
6 annualized cost of debt by the total principal amount of
7 debt outstanding produces the weighted average cost for
8 all debt issues .
9 Q. Please describe the changes to the amount of outstanding
10 long-term debt between December 31 , 2023, and December
11 31, 2024 .
12 A. Approximately $425 million and $166 . 5 million of the
13 Company' s fixed rate and variable rate long-term debt,
14 respectively, will mature during this period and I have
15 therefore removed this debt when appropriate in the
16 determination of the proposed average cost of debt . As
17 reflected in Exhibit No. 1, Pro Forma Cost of Long-Term
18 Debt, the Company added new fixed rate long-term debt
19 during the period, a five-, seven-, 10- and 30-year split
20 term offering totaling $3 . 8 billion was issued in
21 January 2024 .
Kobliha, Di 28
Rocky Mountain Power

1 Q. Regarding the total $3 . 8 billion of long-term issuances
2 in January 2024 , what were the interest rates, credit
3 spreads and all-in cost of debt for each of the new First
4 Mortgage bond series?
5 A. See Table 8 below for the summary details including the
6 United States ("U. S . ") Treasury Benchmark rates, credit
7 spreads and additions to the all-in spread for actual
8 issuance costs for each of the new approximate five-,
9 seven-, 10- and 30-year term first mortgage bond series
10 issuances from January 2024 .
Table 8 : $3 . 8 Billion PacifiCorp Long-Term Debt Issuance
$3 . 8b PacifiCorp Long-Term Debt Issuance in January
2024
% Cost of Debt Summary:
2029 2031 2034 2055
Bonds Bonds Bonds Bonds
Series First First First First
Mortgage Mortgage Mortgage Mortgage
Bonds Bonds due Bonds Bonds
due 2/15/31 due due
2/15/29 2/15/34 1/15/55
Principal $500m $700m $1, 100m $1, 500m
T-Rate
Benchmark 3 . 905% 3 . 928% 3 . 922% 4 . 092%
Treasury
Spread 1 . 200% 1 . 400% 1 . 550% 1 . 750%
Re-offer
Yield 5 . 105% 5 . 328% 5 . 472% 5 . 842%
Coupon Rate 5 . 100% 5 . 300% 5 . 450% 5 . 800%
+ Issuance
Costs 0 . 107% 0 . 090% 0 . 075% 0 . 064%
All-In %
Cost of
Debt 5 .212% 5 . 418% 5 . 547% 5 . 906%
Kobliha, Di 29
Rocky Mountain Power

1 Q. A portion of the securities in PacifiCorp' s debt
2 portfolio bears variable rates . What is the basis for
3 the projected interest rates used by PacifiCorp?
4 A. The Company' s variable rate long-term debt in this case
5 is in the form of tax-exempt debt. Exhibit No. 2,
6 Variable PCRB Rates, shows that on average, these
7 Pollution Control Revenue Bond securities have been
8 trading at approximately 85 percent of the 30-day London
9 Inter Bank Offer Rate ("LIBOR") for the period January
10 2000 through March 2024 (beginning with January 2022,
11 the Bloomberg One Month Short Term Bank Yield Index rate
12 replaced the 30-Day LIBOR as the referenced short-term
13 borrowing index rate) . Therefore the Company has applied
14 a factor of 85 percent to the forward One Month Bloomberg
15 Short Term Bank Yield Index rate at each future quarter
16 end spanning the test period and then added the
17 respective credit facility and remarketing fees for each
18 floating rate tax-exempt bond. Credit facility and
19 remarketing fees are included in the interest component
20 because these are costs that contribute directly to the
21 interest rate on the securities and are charged to
22 interest expense. This method is consistent with past
23 practices when determining the cost of debt in previous
24 Idaho general rate cases .
Kobliha, Di 30
Rocky Mountain Power

1 Q. How did you calculate the embedded cost of preferred
2 stock?
3 A. The embedded cost of preferred stock was calculated by
4 first determining the cost of money for each issue . I
5 began by dividing the annual dividend per share by the
6 per share net proceeds for each series of preferred
7 stock. The resulting cost rate associated with each
8 series was then multiplied by the total par or stated
9 value outstanding for each issue to yield the annualized
10 cost for each issue. The sum of annualized costs for
11 each issue produces the total annual cost for the entire
12 preferred stock portfolio. I then divided the total
13 annual cost by the total amount of preferred stock
14 outstanding to produce the weighted average cost for all
15 issues . The result is PacifiCorp' s embedded cost of
16 preferred stock.
17 A. Embedded Cost of Long-Term Debt
18 Q. What is PacifiCorp' s embedded cost of long-term debt?
19 A. The cost of long-term debt is 5 . 08 percent, as shown in
20 Exhibit No . 1, Pro Forma Cost of Long-Term Debt .
21 B. Embedded Cost of Preferred Stock
22 Q. What is PacifiCorp' s embedded cost of preferred stock?
23 A. Exhibit No. 3, Cost of Preferred Stock, shows the
24 embedded costs of preferred stock to be 6 . 75 percent.
Kobliha, Di 31
Rocky Mountain Power

1 VIII _ CONCLUSION
2 Q. Please summarize your recommendations to the Commission.
3 A. I respectfully request the Commission adopt PacifiCorp' s
4 proposed capital structure with a common equity level of
5 50 . 00 percent . This equity ratio is reasonable when
6 compared with the equity ratios of the proxy group
7 companies relied upon in Company witness Bulkley' s
8 testimony for the determination of the return on equity.
9 In addition, the authorization of this capital structure
10 sends an important message to the financial community
11 regarding the regulatory support for PacifiCorp. When
12 combined with the other elements of the Company' s
13 financial plan, including suspended dividends through
14 2028 to increase retained earnings and a restructuring
15 of the Company' s capital investments will provide the
16 necessary financial support and risk mitigation
17 necessary to support the Company' s credit metrics and
18 credit ratings . Reviewing PacifiCorp' s history
19 demonstrates that a financially strong company provides
20 positive financial benefits to customers in the form of
21 access to capital on reasonable terms, which is very
22 important at this point, where the capital investments
23 necessary to achieve the Company' s clean energy goals
24 are significant over the next several years . When
25 combined with PacifiCorp' s updated cost of long-term
Kobliha, Di 32
Rocky Mountain Power

1 debt of 5 . 08 percent and the cost of equity of 10 . 30
2 percent recommended by Company witness Bulkley, this
3 produces a reasonable overall cost of capital of 7 . 69
4 percent .
5 Q. Does this conclude your direct testimony?
6 A. Yes .
Kobliha, Di 33
Rocky Mountain Power

Case No. PAC-E-24-04
Exhibit No. 1
Witness : Nikki L. Kobliha
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Nikki L. Kobliha
Pro Forma Cost of Long-Term Debt
May 2024

Rocky Mountain Power
Exhibit No. 1 Page 1 of 2
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
PACIFICORP
Electric Operations
Pro-Forma i of i Debt Summary
months12 i i December I
AMOUNT (DISC)/PREM
LINE 5QE AVE ISSUANCE REDEMPTION NET PROCEEDS ANNUAL DEBT INTEREST ALL-IN ORIG LINE
NO. DESCRIPTION OUTSTANDING EXPENSES EXPENSES TO COMPANY SERVICE COST RATE COST LIFE NO.
1 1
2 Total First Mortgage Bonds $13,060,000,000 ($148,383,147) ($2,073,225) $12,909,543,628 $662,768,300 4.987% 5.075% 25.5 2
3 3
4 Subtotal-Pollution Control Revenue Bonds secured by FMBs $160,460,000 ($4,070,193) ($1,745,495) $154,644,312 $8,428,482 5.012% 5.253% 30.0 4
5 Subtotal-Pollution Control Revenue Bonds $24,400,000 ($225,000) ($428,469) $23,746,531 $1,280,024 5.068% 5.246% 29.9 5
6 Total Pollution Control Revenue Bonds $184,860,000 ($4,295,193) ($2,173,964) $178,390,842 $9,708,506 5.019% 5.252% 29.9 6
7 7
8 Loss on Long Term Debt Reacquistions,without Refunding $202,495 8
9 Total Cost of Long Term Debt $13,244,860,000 ($152,678,341) ($4,247,189) $13,087,934,470 $672,679,301 4.987% 5.079% 25.6 9
10 10

Rocky Mountain Power
Exhibit No. 1 Page 2 of 2
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
PACMCORP
Electric Operations
Pro-Forom Cost of Long-Term Debt Detail
December12 months ended
NET PROCEEDS TO COMPANY
PRINCIPAL AMOUNT (DISC)/PREM TOTAL PER$100
LINE INTEREST ISSUANCE MATURITY ORIG ORIGINAL 5QE AVE ISSUANCE REDEMPTION DOLLAR PRINCIPAL MONEY TO ANNUAL DEBT LINE
NO. RATE DESCRIPTION DATE DATE LIFE ISSUE OUTSTANDING EXPENSES EXPENSES AMOUNT AMOUNT COMPANY SERVICE COST NO.
(a) (b) (c) (d) (e) (f) (g) (h) (i) (7) (k) (1) (m)
I 1
2
3 3.600% Series due Apr 2024 03/13/14 04/01/24 10 $425,000,000 $170,000,000 ($1,440,066) ($777,230) $167,782,705 $98.696 3.757% $6,386,900 3
4 3.350% Series due Jul 2025 06/19/15 07/01/25 10 $250,000,000 $250,000,000 ($2,441,421) $0 $247,558,579 $99.023 3,466% $8,665,000 4
5 5.100% Series diue Feb 2029 01/05/24 02/15/29 5 $500,000,000 $400,000,000 ($2,018,174) $0 $397,981,826 $99.495 5.212% $20,848,000 5
6 3.500% Series due Jun 2029 03/01/19 06/15/29 10 $400,000,000 $400,000,000 ($2,874,181) $0 $397,125,819 $99.281 3.584% $14,336,000 6
7 2.700% Series due Sep 2030 04/08/20 09/15/30 10 $400,000,000 $400,000,000 ($2,876,791) $0 $397,123,209 $99.281 2.780% $11,120,000 7
8 5.300% Series diue Feb 2031 01/05/24 02/15/31 7 $700,000,000 $560,000,000 ($3,898,925) $0 $556,101,075 $99.304 5.418% $30,340,800 8
9 7.700% Series due Nov 2031 11/21/01 11/15/31 30 $300,000,000 $300,000,000 ($3,701,310) $0 $296,298,690 $98.766 7.807% $23,421,000 9
10 5.450% Series diue Feb 2034 01/05/24 02/15/34 10 $1,100,000,000 $880,000,000 ($6,617,389) $0 $873,382,611 $99.248 5.547% $48,813,600 10
11 5.900% Series due Aug 2034 08/24/04 08/15/34 30 $200,000,000 $200,000,000 ($2,614,365) $0 $197,385,635 $98.693 5.994% $11,988,000 11
12 5.250% Series due Jun 2035 06/08/05 06/15/35 30 $300,000,000 $300,000,000 ($3,992,021) ($1,295,995) $294,711,984 $98.237 5.369% $16,107,000 12
13 6.100% Series due Aug 2036 08/10/06 08/01/36 30 $350,000,000 $350,000,000 ($4,048,881) $0 $345,951,119 $98.843 6.185% $21,647,500 13
14 5.750% Series due Apr 2037 03/14/07 04/01/37 30 $600,000,000 $600,000,000 ($613,216) $0 $599,386,784 $99.898 5.757% $34,542,000 14
15 6.250% Series due Oct 2037 10/03/07 10/15/37 30 $600,000,000 $600,000,000 ($5,877,281) $0 $594,122,719 $99.020 6.323% $37,938,000 15
16 6.350% Series due Jul 2038 07/17/08 07/15/38 30 $300,000,000 $300,000,000 ($3,961,333) $0 $296,038,667 $98.680 6.450% $19,350,000 16
17 6.000% Series due Jan 2039 01/08/09 01/15/39 30 $650,000,000 $650,000,000 ($12,309,687) $0 $637,690,313 $98.106 6.139% $39,903,500 17
18 4.100% Series due Feb 2042 01/06/12 02/01/42 30 $300,000,000 $300,000,000 ($3,724,911) $0 $296,275,089 $98.758 4.173% $12,519,000 18
19 4.125% Series due Jan 2049 07/13/18 01/15/49 31 $600,000,000 $600,000,000 ($6,984,085) $0 $593,015,915 $98.836 4.193% $25,158,000 19
20 4.150% Series due Feb 2050 03/01/19 02/15/50 31 $600,000,000 $600,000,000 ($7,938,771) $0 $592,061,229 $98.677 4.227% $25,362,000 20
21 3.300% Series due Mar 2051 04/08/20 03/15/51 31 $600,000,000 $600,000,000 ($10,127,937) $0 $589,872,063 $98.312 3.388% $20,328,000 21
22 2.900% Series due June 2052 07/09/21 06/15/52 31 $1,000,000,000 $1,000,000,000 ($16,599,374) $0 $983,400,626 $98,340 2.982% $29,820,000 22
23 5.350% Series due Dec 2053 12/01/22 12/01/53 31 $1,100,000,000 $1,100,000,000 ($13,292,772) $0 $1,086,707,228 $98,792 5.431% $59,741,000 23
24 5.500% Series due May 2054 05/17/23 05/15/54 31 $1,200,000,000 $1,200,000,000 ($11,540,279) $0 $1,188,459,721 $99.038 5.565% $66,780,000 24
25 5.800% Series diue Jan 2055 01/05/24 01/15/55 31 $1,500,000,000 $1,200,000,000 ($17,985,513) $0 $1,182,014,487 $98.501 5.906% $70,872,000 25
26 4.974% Subtotal-Bullet FMBs 25 $12,960,000,000 ($147,478,681) ($2,073,225) $12,810,448,094 5.062% $655,987,300 26
27 27
28 6.710% Series G due Jan 2026 01/23/96 01/15/26 30 $100,000,000 $100,000,000 ($904,467) $0 $99,095,533 $99.096 6.781% $6,781,000 28
29 6.710% Subtotal-Series G MTNs 30 $100,000,000 ($904,467) $0 $99,095,533 6.781% $6,781,000 29
30 30
31 4.987% Total First Mortgage Bonds 26 $13,060,000,000 ($148,383,147) ($2,073,225) $12,909,543,628 5.075% $662,768,300 31
32 32
33 33
34 5.014% Converse 94 due Nov 2024 11/17/94 11/01/24 30 $8,190,000 $6,552,000 ($167,822) ($69,058) $6,315,119 $96.385 5,254% $344,242 34
35 4.982% Emery 94 due Nov 2024 11/17/94 11/01/24 30 $121,940,000 $97,552,000 ($2,619,397) ($1,540,614) $93,391,990 $95.736 5.265% $5,136,113 35
36 5.124% Lincoln 94 due Nov 2024 11/17/94 11/01/24 30 $15,060,000 $12,048,000 ($338,286) ($65,142) $11,644,572 $96.651 5.349% $644,448 36
37 5.048% Sweetwater 94 due Nov 2024 11/17/94 11/01/24 30 $21,260,000 $17,008,000 ($408,383) ($70,682) $16,528,935 $97.183 5.235% $890,369 37
38 4.964% Converse 95 due Nov 2025 11/17/95 11/01/25 30 $5,300,000 $5,300,000 ($132,043) $0 $5,167,957 $97.509 5.127% $271,731 38
39 5.068% Lincoln 95 due Nov 2025 11/17/95 11/01/25 30 $22,000,000 $22,000,000 ($404,262) $0 $21,595,738 $98.162 5.189% $1,141,580 39
40 5.012% Subtotal-Secured PCRBs 30 $160,460,000 ($4,070,193) ($1,745,495) $154,644,312 5.253% $8,428,482 40
41 41
42 5.068% Sweetwater 95 due Nov 2025 12/14/95 11/01/25 30 $24,400,000 $24,400,000 ($225,000) ($428,469) $23,746,531 $97.322 5.246% $1,280,024 42
43 5.068% Subtotal-Unsecured PCRBs 30 $24,400,000 ($225,000) ($428,469) $23,746,531 5.246% $1,280,024 43
44 44
45 5.019% Total PCRB Obligations 30 $184,860,000 ($4,295,193) ($2,173,964) $178,390,842 5.252% $9,708,506 45
46 46
47 REACQ ORG MAT 47
48 DATE DATE 48
49 8.375%Series A QUIDS 11/17/00 06/30/35 $107,887 49
50 8.55%Series B QUIDS 11/17/00 12/31/25 $84,084 50
51 Carbon'94 PCRB Series 02/18/16 11/01/24 $10,524 51
52 Long-Term Debt Reacquisition,without refunding amortization $202,495 52
53 53
54 4.987% Total Long-Term Debt 26 $13,244,860,000 ($152,678,341) ($4,247,189) $13,087,934,470 5.079% $672,679,301 54
55 55

Case No. PAC-E-24-04
Exhibit No. 2
Witness : Nikki L. Kobliha
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Nikki L. Kobliha
Variable PCRB Rates
May 2024

Rocky Mountain Power
Exhibit No.2 Page 1 of 4
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
Indicative Forward PCRB Variable Rates
For Quarter End Periods for Year Ending December 31,2024
Historical Forecast
Floating Rate Floating
Forward 1 Mo PCRB/30 Day Rate
BSBY Index LIBOR' PCRB
(a) rot
12/31/2023 5.271%'
3/31/2024 4.277%'
6/30/2024 5.37% 85% 4.560%
9/30/2024 5.29% 85% 4.499%
12/31/2024 5.22% 85% 4.440%
5QE Ave 4.609%
30 Day LIBOR' Floating Rate PCRB/
Daily Ave PCRBS Daily Ave LIBOR
(a) (b) mv(a)
tan-00 5.81% 3.33% 57%
F6-00 5.89% 3.62% 62%
Mar-00 6.05% 3.68% 61%
Apr-00 6.16% 4.02% 65%
May-00 6.54% 4.89% 75%
tan-00 6.65% 4.35% 65%
Jul-00 6.63% 3.99% 60%
Aug-00 6.62% 4.09% 62%
Sep-00 6.62% 4.50% 68%
Oct-00 6.62% 4.36% 66%
Nov-00 6.63% 4.33% 65%
Dec-00 6.68% 4.14% 62%
lan-01 5.88% 3.10% 53%
F6-01 5.53% 3.59% 65%
Mar-01 5.13% 3.18% 62%
Apr-01 4.82% 3.72% 77%
May-01 4.16% 3.38% 81%
lun-01 3.92% 3.03% 77%
Jul-01 3.82% 2.65% 69%
Aug-01 3.64% 2.36% 65%
Sep-01 3.17% 2.42% 76%
Oct-01 2.48% 2.18% 88%
Nov-01 2.13% 1.79% 84%
Dec-01 1.96% 1.64% 84%
Jan-02 1.81% 1.49% 82%
F6-02 1.85% 1.39% 75%
Mar-02 1.89% 1.46% 77%
Apr-02 1.86% 1.58% 85%
May-02 1.84% 1.67% 91%
Jan-02 1.84% 1.58% 86%
Jul-02 1.83% 1.49% 81%
Aug-02 1.80% 1.49% 83%
Sep-02 1.82% 1.69% 93%
Oct-02 1.81% 1.84% 102%
Nov-02 1.44% 1.66% 115%
Dec-02 1.42% 1.57% 110%
Jan-03 1.36% 1.40% 103%
F6-03 1.34% 1.43% 107%
Mar-03 1.31% 1.45% 111%
Apr-03 1.31% 1.52% 115%
May-03 1.31% 1.56% 119%
Jan-03 1.16% 1.38% 119%
Jul-03 1.11% 1.12% 102%
Aug-03 1.11% 1.16% 104%
Sep-03 1.12% 1.24% 111%
Oct-03 1.12% 1.24% 111%
Nov-03 1.13% 1.36% 121%
Dec-03 1.15% 1.32% 114%
Jan-04 1.11% 1.21% 110%
F6-04 1.10% 1.17% 107%
Mar-04 1.09% 1.20% 110%
Apr-04 1.10% 1.27% 115%
May-04 1.10% 1.29% 117%
Jan-04 1.25% 1.28% 102%
Jul-04 1.41% 1.26% 89%
Aug-04 1.60% 1.40% 88%
Sep-04 1.78% 1.49% 83%
Oct-04 1.90% 1.72% 91%
Nov-04 2.19% 1.65% 75%
Dec-04 2.39% 1.67% 70%
tan-05 2.49% 1.78% 72%
F6-05 2.61% 1.88% 72%
Mar-05 2.81% 1.95% 69%
Apr-05 2.97% 2.50% 84%
May-05 3.09% 2.93% 95%
tan-05 3.25% 2.39% 74%
Jul-05 3.43% 2.28% 67%
Aug-05 3.69% 2.44% 66%
Sep-05 3.78% 2.55% 68%
Oct-05 3.99% 2.66% 67%
Nov-05 4.15% 2.93% 71%
Dec-05 4.36% 3.10% 71%
Jan-06 4.48% 3.02% 67%
F6-06 4.58% 3.13% 68%
Mar-06 4.76% 3.11% 65%
Apr-06 4.92% 3.45% 70%
May-06 5.08% 3.52% 69%
Jan-06 5.24% 3.74% 71%
Jul-06 5.37% 3.60% 67%
Aug-06 5.35% 3.53% 66%
Sep-06 5.33% 3.61% 68%
Oct-06 5.32% 3.57% 67%
Nov-06 5.32% 3.62% 68%
Dec-06 5.35% 3.70% 69%

Rocky Mountain Power
Exhibit No.2 Page 2 of 4
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
Indicative Forward PCRB Variable Rates
For Quarter End Periods for Year Ending December 31,2024
Historical Forecast
Floating Rate Floating
Forward 1 Mo PCRB/30 Day Rate
BSBY Index LIBOR' PCRB
(a) rot
12/31/2023 5.271%'
3/31/2024 4.277%'
6/30/2024 5.37% 85% 4.560%
9/30/2024 5.29% 85% 4.499%
12/31/2024 5.22% 85% 4.440%
5QE Ave 4.609%
30 Day LIBOR' Floating Rate PCRB/
Daily Ave PCRBS Daily Ave LIBOR
(a) (b) mv(a)
Jan-07 5.32% 3.64% 68%
F6-07 5.32% 3.63% 68%
Mar-07 5.32% 3.64% 68%
Apo-07 5.32% 3.79% 71%
May-07 5.32% 3.90% 73%
Jun-07 5.32% 3.76% 71%
Jul-07 5.32% 3.66% 69%
Aug-07 5.52% 3.76% 68%
Sep-07 5.48% 3.84% 70%
Oct-07 4.98% 3.56% 72%
Nov-07 4.75% 3.53% 74%
Dec-07 5.00% 3.25% 65%
Jan-08 3.95% 3.02% 76%
F6-08 3.14% 2.86% 91%
Mar-08 2.80% 3.79% 135%
Apr-08 2.79% 2.23% 80%
May-08 2.63% 1.93% 73%
Jun-08 2.47% 2.77% 112%
Jul-08 2.46% 4.12% 168%
Aug-08 2.47% 3.03% 123%
Sep-08 2.94% 4.57% 155%
Oct-08 3.87% 4.89% 126%
Nov-08 1.68% 2.34% 139%
Dec 08 1.01% 1.02% 101%
Jan-09 0.39% 0.70% 181%
F6-09 0.46% 0.68% 147%
Mar09 0.53% 0.66% 124%
Apr-09 0.45% 0.63% 140%
May-09 0.35% 0.53% 153%
Jun-09 0.32% 0.45% 143%
Jul-09 0.29% 0.41% 142%
Aug-09 0.27% 0.43% 158%
Sep-09 0.25% 0.40% 161%
Oct-09 0.24% 0.39% 159%
Nov-09 0.24% 0.37% 157%
Dec-09 0.23% 0.38% 165%
Jan-10 0.23% 0.32% 138%
F640 0.23% 0.32% 137%
Mar-10 0.24% 0.32% 135%
Apr-10 0.26% 0.35% 134%
May-10 0.33% 0.34% 101%
Jun-to 0.35% 0.33% 93%
Jul-10 0.33% 0.30% 90%
Aug-10 0.27% 0.31% 115%
Sep-10 0.26% 0.31% 119%
Oct-10 0.26% 0.27% 106%
Nov-10 0.25% 0.27% 107%
Dec-10 0.26% 0.29% 110%
Jan-11 0.26% 0.26% 100%
Feb-11 0.26% 0.26% 98%
Mar-11 0.25% 0.24% 96%
Apr-11 0.22% 0.24% 106%
May-11 0.20% 0.20% 100%
Jun-11 0.19% 0.12% 62%
Jul-11 0.19% 0.07% 38%
Aug-11 0.21% 0.18% 83%
Sep-11 0.23% 0.18% 78%
Oct-11 0.24% 0.17% 69%
Nov-11 0.25% 0.18% 70%
Dec-11 0.28% 0.18% 62%
Jan-12 0.28% 0.18% 64%
Feb12 0.25% 0.22% 86%
Maz-12 0.24% 0.20% 84%
Apr-12 0.24% 0.25% 104%
May-12 0.24% 0.22% 90%
Jun-12 0.24% 0.19% 78%
Jul-12 0.25% 0.17% 68%
Aug-12 0.24% 0.16% 68%
Sep-12 0.22% 0.18% 81%
Oct-12 0.21% 0.20% 93%
Nov-12 0.21% 0.20% 95%
Dec-12 0.21% 0.15% 71%
Jan-13 0.21% 0.10% 51%
1`643 0.20% 0.13% 63%
Mar-13 0.20% 0.13% 66%
Apr-13 0.20% 0.18% 92%
May-13 0.20% 0.18% 90%
Jun-13 0.19% 0.11% 57%
Jul-13 0.19% 0.08% 43%
Aug-13 0.18% 0.09% 47%
Sep-13 0.18% 0.09% 49%
Oct-13 0.17% 0.10% 61%
Nov-13 0.17% 0.13% 78%
Dec-13 0.17% 0.14% 82%

Rocky Mountain Power
Exhibit No.2 Page 3 of 4
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
Indicative Forward PCRB Variable Rates
For Quarter End Periods for Year Ending December 31,2024
Historical Forecast
Floating Rate Floating
Forward 1 Mo PCRB/30 Day Rate
BSBY Index LIBOR' PCRB
(a) rot
12/31/2023 5.271%'
3/31/2024 4.277%'
6/30/2024 5.37% 85% 4.560%
9/30/2024 5.29% 85% 4.499%
12/31/2024 5.22% 85% 4.440%
5QE Ave 4.609%
30 Day LIBOR' Floating Rate PCRB/
Daily Ave PCRBS Daily Ave LIBOR
(a) (b) mv(a)
Jan-14 0.16% 0.12% 74%
F6-14 0.16% 0.11% 74%
Mar-14 0.15% 0.11% 73%
Apo-14 0.15% 0.13% 87%
May-14 0.15% 0.12% 80%
Jun-14 0.15% 0.10% 67%
Jul-14 0.15% 0.09% 61%
Aug-14 0.16% 0.09% 61%
Sep-14 0.15% 0.09% 55%
Oct-14 0.15% 0.08% 55%
Nov-14 0.15% 0.09% 59%
Dec-14 0.16% 0.08% 50%
Jan-15 0.17% 0.06% 38%
Feb-15 0.17% 0.06% 36%
Mar-15 0.18% 0.06% 35%
Apr-15 0.18% 0.09% 50%
May-15 0.18% 0.15% 79%
lun-15 0.19% 0.13% 69%
Jul-15 0.19% 0.10% 55%
Aug-15 0.20% 0.09% 46%
Sep-15 0.20% 0.09% 47%
Oct-15 0.19% 0.10% 50%
Nov-15 0.21% 0.09% 45%
Dec-15 0.35% 0.08% 24%
Jan-16 0.43% 0.09% 20%
F646 0.43% 0.08% 20%
Mar-16 0.44% 0.19% 45%
Apr-16 0.44% 0.41% 94%
May-16 0.44% 0.41% 93%
Jun-16 0.45% 0.43% 95%
Jul-16 0.48% 0.43% 89%
Aug-16 0.51% 0.49% 96%
Sep-16 0.53% 0.71% 134%
Oct-16 0.53% 0.77% 146%
Nov-16 0.56% 0.58% 103%
Dec-16 0.71% 0.66% 93%
Jan-17 0.77% 0.69% 89%
F647 0.78% 0.66% 84%
Mar-17 0.93% 0.71% 77%
Apr-17 0.99% 0.90% 91%
May-17 1.01% 0.82% 81%
Jun-17 1.17% 0.83% 71%
Jul-17 1.23% 0.85% 69%
Aug-17 1.23% 0.79% 65%
Sep-17 1.23% 0.87% 71%
Oct-17 1.24% 0.93% 75%
Nov-17 1.29% 0.96% 75%
Dec-17 1.49% 1.25% 84%
Jan-18 1.56% 1.35% 86%
Feb-18 1.60% 1.10% 69%
Mar-18 1.80% 1.32% 73%
Apr-18 1.90% 1.75% 92%
May-18 1.95% 1.46% 75%
Jun-18 2.07% 1.33% 64%
Jul-18 2.08% 1.10% 53%
Aug-18 2.07% 1.53% 74%
Sep-18 2.18% 1.56% 72%
Oct-18 2.29% 1.60% 70%
Nov-18 2.32% 1.69% 73%
Dec-18 2.45% 1.70% 69%
Jan-19 2.51% 1.43% 57%
F649 2.49% 1.64% 66%
Mar-19 2.49% 1.67% 67%
Apr-19 2.48% 1.90% 77%
May-19 2.44% 1.72% 70%
Jun-19 2.40% 1.79% 74%
Jul-19 2.31% 1.45% 63%
Aug-19 2.17% 1.45% 67%
Sep-19 2.04% 1.48% 72%
Oct-19 1.88% 1.41% 75%
Nov-19 1.74% 1.18% 68%
Dec-19 1.75% 1.34% 77%
Jan-20 1.67% 1.10% 66%
Feb-20 1.64% 1.21% 74%
Mar-20 0.92% 2.68% 292%
Apr-20 0.68% 0.85% 124%
May-20 0.19% 0.27% 139%
Jun-20 0.18% 0.19% 102%
Jul-20 0.17% 0.21% 125%
Aug-20 0.16% 0.17% 106%
Sep-20 0.15% 0.16% 108%
Oct-20 0.15% 0.17% 116%
Nov-20 0.14% 0.17% 121%
Dec-20 0.15% 0.15% 100%

Rocky Mountain Power
Exhibit No.2 Page 4 of 4
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
Indicative Forward PCRB Variable Rates
For Quarter End Periods for Year Ending December 31,2024
Historical Forecast
Floating Rate Floating
Forward 1 Mo PCRB/30 Day Rate
BSBY Index LIBOR' PCRB
(a) rot
12/31/2023 5.271%'
3/31/2024 4.277%'
6/30/2024 5.37% 85% 4.560%
9/30/2024 5.29% 85% 4.499%
12/31/2024 5.22% 85% 4.440%
5QE Ave 4.609%
30 Day LIBOR' Floating Rate PCRB/
Daily Ave PCRBS Daily Ave LIBOR
(a) (b) (b)/(a)
Jan-21 0.13% 0.11% 85%
F6-21 0.11% 0.06% 56%
Mar-21 0.11% 0.07% 70%
Apr-21 0.11% 0.10% 91%
May-21 0.10% 0.11% 113%
Jun-21 0.09% 0.07% 76%
Jul-21 0.09% 0.05% 54%
Aug-21 0.09% 0.04% 46%
Sep-21 0.08% 0.04% 50%
Oet-21 0.09% 0.08% 92%
Nov-21 0.09% 0.08% 89%
Dec-21 0.10% 0.11% 106%
Jan-22 0.08% 0.08% 95%
Feb-22 0.10% 0.19% 184%
Mar-22 0.32% 0.37% 115%
Apr-22 0.47% 0.52% 112%
May-22 0.83% 0.76% 91%
Jan-22 1.32% 0.85% 64%
Jul-22 1.92% 0.93% 49%
Aug-22 2.36% 1.77% 75%
Sep-22 2.84% 1.78% 62%
Oct-22 3.32% 2.46% 74%
Nov-22 3.85% 2.14% 56%
Dec-22 4.21% 3.18% 76%
Jan-23 4.41% 2.58% 58%
Feb-23 4.62% 3.40% 74%
Mar-23 4.75% 3.18% 67%
Apr-23 4.94% 3.21% 65%
May-23 5.10% 3.41% 67%
Jun-23 5.19% 3.63% 70%
Jul-23 5.26% 3.32% 63%
Aug-23 5.38% 3.72% 69%
Sep-23 5.39% 3.88% 72%
Oct-23 5.38% 3.86% 72%
Nov-23 5.41% 3.75% 69%
Dec-23 5.43% 5.01% 92%
Jan-24 5.37% 4.11% 76%
Feb-24 5.37% 4.02% 75%
Mar-24 5.37% 4.02% 75%
Average 85
'Beginning with Jan 2022,the Bloomberg 1-Month Short Term Bank Yield
rSoume:Bloomberg L.P.(4/30/24)
'Actual Wt Ave Quarter-End PCRB Remarketing Rate

Case No. PAC-E-24-04
Exhibit No. 3
Witness : Nikki L. Kobliha
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Nikki L. Kobliha
Cost of Preferred Stock
May 2024

Rocky Mountain Power
Exhibit No.3 Page 1 of 1
Case No. PAC-E-24-04
Witness:Nikki L.Kobliha
PACIFICORP
Electric Operations
MonthsCost of Preferred Stock
12 i i December 31,2024
Total Par
Annual or Stated Net Net %of
Line Issuance Call Dividend Shares Value Premium& Proceeds Gross Cost of Annual Line
No. Description of Issue Date Price Rate O/S O/S (Expense) to Company Proceeds Money Cost No.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)
1 Serial Preferred,$100 Par Value 1
2 7.00%Series (a) None 7.000% 18,046 $1,804,600 (b) $1,804,600 100.000% 7.000% $126,322 2
3 6.00%Series (a) None 6.000% 5,930 $593,000 (b) $593,000 100.000% 6.000% $35,580 3
4 4
5 Total Cost of Preferred Stock 6.753% 23,976 $2,397,600 $0 $2,397,600 6.753% $161,902 5
6 6
7 7
8 (a)These issues replaced an issue of The California Oregon Power Company as a result of the merger of that Company into Pacific Power&Light Co. 8
9 (b)Original issue expense/premium has been fully amortized or expensed. 9
10 10