20260406Direct Garlish.pdf

RECEIVED
APRIL 6, 2026
IDAHO PUBLIC
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION ) CASE NO. PAC-E-26-04
OF PACIFICORP D/B/A ROCKY )
MOUNTAIN POWER FOR APPROVAL OF ) DIRECT TESTIMONY OF
SALE OF WASHINGTON SERVICE AREA ) RICHARD J. GARLISH
AND ACCOUNTING ORDER )
ROCKY MOUNTAIN POWER
CASE NO. PAC-E-26-04
April 2026

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.
4 A. My name is Richard J. Garlish, and my business address
5 is 1407 West North Temple, Salt Lake City, Utah 84116 .
6 I am currently employed as the President of the Rocky
7 Mountain Power division of PacifiCorp.
8 Q. Please summarize your professional experience.
9 A. I have a Bachelor' s Degree in Liberal Arts from the
10 Evergreen State College in Washington and a Juris
11 Doctorate Degree from the University of Montana Law
12 School . I joined PacifiCorp in 2020, and before taking
13 my current position, I was Vice President of Government
14 Affairs and General Counsel for Rocky Mountain Power. In
15 that position, I was responsible for all legal and
16 governmental affairs matters . Prior to joining
17 PacifiCorp, I served as Senior Vice President and
18 General Counsel at Peak Reliability, held a number of
19 senior positions at Idaho Power Company, including
20 Senior Attorney, Director and General Manager, and
21 served as Senior Corporate Counsel at NorthWestern
22 Energy.
23 Q. What is the purpose of your testimony?
24 A. I provide an overview of PacifiCorp, including its
25 utility service in Idaho and Washington, and briefly
Garlish, Di 1
Rocky Mountain Power

1 describe the proposed sale to a newly formed affiliate
2 of Portland General Electric, Gem Sub LLC ("Gem") , of
3 PacifiCorp' s Washington service area and certain
4 Washington-based assets ("Service Area Transfer") . I
5 explain why PacifiCorp decided to sell its Washington
6 service area, and introduce the PacifiCorp witnesses
7 providing direct testimony in support of its Application
8 for Approval of Sale of Washington Service Area and
9 Accounting Order.
10 Q. Please summarize your testimony.
11 A. PacifiCorp agreed to transfer its Washington service
12 area and to sell certain Washington-based assets to
13 benefit both PacifiCorp and customers . The Service Area
14 Transfer represents a targeted and necessary step
15 towards strengthening PacifiCorp' s financial stability
16 by streamlining its operations, reducing its risk
17 profile, and adding a much-needed infusion of funds to
18 increase liquidity. These benefits produce a financially
19 stronger utility that directly benefits customers by
20 allowing continued access to capital . The Service Area
21 Transfer also benefits customers by providing a near-
22 term rate credit .
Garlish, Di 2
Rocky Mountain Power

1 II . BACKGROUND ON PACIFICORP
2 Q. Please provide a description of PacifiCorp' s operations .
3 A. PacifiCorp is an indirect, wholly owned subsidiary of
4 Berkshire Hathaway Energy Company. PacifiCorp provides
5 retail electrical service to approximately 2 . 1 million
6 retail electric customers in six western states .
7 PacifiCorp consists of two core business units : (1)
8 Rocky Mountain Power, which delivers electricity to
9 retail customers in Idaho, Utah, and Wyoming, and
10 (2) Pacific Power, which delivers electricity to retail
11 customers in Oregon, Washington, and California.
12 PacifiCorp serves its customers with an integrated
13 system of generation and transmission that spans ten
14 states and connects customers and communities across the
15 West . PacifiCorp owns, or has interests in, thermal,
16 hydroelectric, wind-powered, solar, and geothermal
17 generating facilities . PacifiCorp provides wholesale
18 transmission service under its open access transmission
19 tariff approved by the Federal Energy Regulatory
20 Commission and owns or has interests in approximately
21 17, 700 miles of transmission lines . PacifiCorp operates
22 two balancing authority areas—PacifiCorp Balancing
23 Authority Area East and PacifiCorp Balancing Authority
24 Area West—that together comprise the largest privately
25 owned and operated grid in the Western United States .
Garlish, Di 3
Rocky Mountain Power

1 Q. Please briefly describe PacifiCorp' s services and
2 operations in Idaho.
3 A. In Idaho, PacifiCorp provides retail utility service to
4 over 90, 000 customers . Additionally, PacifiCorp has a
5 generation capacity of 83 megawatts in Idaho. Further,
6 PacifiCorp owns and operates 2, 506 miles of transmission
7 lines and 6, 270 miles of distribution lines in Idaho .
8 Q. Please briefly describe PacifiCorp' s services and
9 operations in Washington.
10 A. In Washington, PacifiCorp provides retail utility
11 service to approximately 137, 000 customers in five
12 counties, spanning approximately 2, 730 square miles .
13 This constitutes the Washington service area, which
14 PacifiCorp plans to sell to Gem through the Service Area
15 Transfer.
16 III . OVERVIEW OF SERVICE AREA TRANSFER
17 Q. Please provide a brief overview of the Service Area
18 Transfer.
19 A. As further detailed in the testimony of PacifiCorp
20 witness Joelle R. Steward and the other witnesses, Gem
21 will purchase PacifiCorp' s Washington service area,
22 along with select Washington-based generation,
23 transmission, and distribution assets . The base purchase
24 price for the Service Area Transfer is approximately
25 $1 . 9 billion. Upon regulatory approval and completion of
Garlish, Di 4
Rocky Mountain Power

1 the transfer, PacifiCorp will no longer provide service
2 as a public service company in the state of Washington.
3 The assets sold, as well as PacifiCorp' s obligation to
4 serve Washington customers, will transfer to Gem.
5 Importantly, in purchasing the Washington service area,
6 Gem alone will assume the role of service provider for
7 PacifiCorp' s Washington customers, who will instead
8 become customers of Gem.
9 Q. What Idaho law governs review of the Service Area
10 Transfer?
11 A. My understanding is that PacifiCorp' s sale of the
12 service area and certain Washington-based assets
13 requires approval pursuant to a commitment PacifiCorp
14 agreed to as part of the Idaho Public Utilities
15 Commission ("Commission") approval of MidAmerican Energy
16 Holding Company' s acquisition of PacifiCorp. PacifiCorp
17 committed to request Commission approval of any
18 "divestiture, spin-off, or sale of any integral
19 PacifiCorp function [ . ] "'
1 In the Matter of the Joint Application of MidAmerican Energy Holdings
Company (MEHC) and PacifiCorp DBA Utah Power & Light Company for an
Order Authorizing MEHC to Acquire PacifiCorp, Case No. PAC-E-05-08,
Order No. 29973 at 14 (Feb. 13, 2006) .
Garlish, Di 5
Rocky Mountain Power

1 Q. What must PacifiCorp demonstrate for the Commission to
2 approve the Service Area Transfer?
3 A. My understanding is that PacifiCorp has not previously
4 sought Commission approval of a proposed sale under this
5 merger commitment, and for that reason the Commission
6 has not yet identified an applicable legal standard for
7 approving PacifiCorp' s proposed Service Area Transfer.
8 However, it is my understanding that Idaho Code § 61-
9 328, applicable to property sales within Idaho, requires
10 a finding " (a) That the transaction is consistent with
11 the public interest; " and " (b) That the cost of and rates
12 for supplying service will not be increased by reason of
13 such transaction [ . ] "2 While Idaho Code § 61-328 does not
14 apply to the Service Area Transfer because the assets
15 included in the Service Area Transfer are located
16 outside of Idaho, 3 PacifiCorp' s filing meets the
17 requirements of that statute .
2 Idaho Code § 61-328 (3) (a) - (b) . Idaho Code § 61-328 (3) (c) requires a
finding that "the applicant for such acquisition or transfer has the
bona fide intent and financial ability to operate and maintain said
property in the public service." As presented in the Asset Purchase and
Service Area Transfer Agreement, Gem is a bona fide purchaser and
PacifiCorp represents that PGE, the parent company of Gem, is an
electric public utility with the financial ability to operate and
maintain the assets included in the Service Area Transfer for public
benefit.
3 See In the Matter of Rocky Mountain Power's Application for Approval
of the Transfer of Portions of the North Temple Property and Accounting
Order, Case No. PAC-E-24-06, Order No. 36336 at 5 (Sept. 30, 2024)
(" [T]he Company is not required to obtain approval from this Commission
to dispose of [its assets] because they are not located in Idaho.") .
Garlish, Di 6
Rocky Mountain Power

1 Q. Is the asset sale consistent with the public interest?
2 A. Yes . As Ms . Steward explains, the sale of the
3 Washington-based generation and transmission assets is
4 in the public interest and will not harm PacifiCorp' s
5 Idaho customers . In fact, the Service Area Transfer is
6 positive for customers because PacifiCorp will provide
7 a $9 . 0 million rate credit and customers will see other
8 quantifiable benefits, such as incremental wheeling
9 revenues, as discussed by Ms . Steward and PacifiCorp
10 witness Shelley E . McCoy. PacifiCorp witness Nikki L.
11 Kobliha also provides additional detail on the
12 calculation of the rate credit . Additionally, the
13 Service Area Transfer improves PacifiCorp' s system load
14 and resource balance, improves PacifiCorp' s financial
15 position and helps manage its risk, and relieves
16 PacifiCorp from the obligation to meet Washington' s
17 climate laws . Therefore, the Service Area Transfer is
18 consistent with the public interest .
19 IV. REASONS FOR THE SERVICE AREA TRANSFER
20 Q. Why did PacifiCorp decide to sell the Washington service
21 area?
22 A. The decision to transfer our Washington service area to
23 Gem was not an easy one and was largely motivated by an
24 effort to better manage risk and improve our financial
25 position by scaling down our multi-state system.
Garlish, Di 7
Rocky Mountain Power

1 A. Risk Management
2 Q. Can you explain how the Service Area Transfer helps
3 PacifiCorp manage risk?
4 A. Certainly. As I explained earlier, PacifiCorp operates
5 in six states, which has generally proven cost effective
6 and successful . However, operating in six states also
7 comes with its share of difficulties . For instance,
8 states are continuing to implement various policies that
9 do not necessarily complement one another, making it
10 increasingly difficult for PacifiCorp to plan for and
11 meet individual states' requirements .
12 Q. Can you provide an example of such a policy?
13 A. Yes . Take, for example, the Washington Climate
14 Commitment Act ("CCA") . PacifiCorp' s non-Washington
15 states, except California, oppose paying the costs
16 associated with the Chehalis plant' s compliance with the
17 CCA. As a result, PacifiCorp has been forced to absorb
18 approximately $45 million annually of the actual costs
19 of providing power from the Chehalis plant . This is
20 unsustainable and exacerbates the financial challenges
21 PacifiCorp now faces .
22 Q. To what extent does the Service Area Transfer scale down
23 PacifiCorp' s system?
24 A. By selling the Washington service area, PacifiCorp will
25 scale down its overall system load by approximately
Garlish, Di 8
Rocky Mountain Power

1 eight percent, allowing PacifiCorp to streamline
2 planning, financing, and operations of its multi-state
3 system to the benefit of its remaining customers,
4 including those in Idaho .
5 B. Financial Health Improvement
6 Q. Please summarize PacifiCorp' s current financial
7 position.
8 A. As detailed in Ms . Kobliha' s testimony, PacifiCorp has
9 been under extraordinary financial pressure in recent
10 years . Recently, on November 10, 2025, S&P Global
11 downgraded PacifiCorp' s credit rating from BBB to BBB-,
12 putting PacifiCorp' s credit at the lowest rating level
13 that is still considered investment grade . More
14 recently, S&P Global placed all of its credit ratings on
15 PacifiCorp on Negative Outlook, and Moody' s revised its
16 outlook of PacifiCorp from stable to negative . These are
17 the latest in a series of credit downgrades and updates,
18 stemming primarily from wildfire liability issues and
19 adverse regulatory outcomes . As a result of these
20 downgraded ratings, PacifiCorp' s borrowing costs have
21 increased and its access to capital has decreased, both
22 of which impede PacifiCorp' s near-term ability to make
23 the capital investments that are necessary to reliably
24 operate the system.
Garlish, Di 9
Rocky Mountain Power

1 Q. Can you explain how the Service Area Transfer helps
2 PacifiCorp improve its financial health?
3 A. Yes . The Service Area Transfer is a critical part of
4 PacifiCorp' s plan to stabilize its financial position
5 and build investor confidence . The Service Area Transfer
6 provides the cash and liquidity necessary to support
7 PacifiCorp' s operations as a large public utility,
8 eliminates PacifiCorp' s ongoing losses from Chehalis
9 relating to Washington' s CCA, and relieves PacifiCorp
10 from its obligation to make the required capital
11 expenditures necessary for reliability and Clean Energy
12 Transformation Act compliance in Washington. Further,
13 the Service Area Transfer yields a gain on the sale
14 attributable to the goodwill value of the business that
15 can be shared between PacifiCorp and its customers .
16 Q. Why is PacifiCorp' s financial health important for
17 customers?
18 A. In short, a financially healthy utility can access
19 capital at a lower cost . One more downgrade will result
20 in PacifiCorp being below investment grade . Utilities
21 are not designed to operate below investment grade for
22 a sustained period of time because the industry is
23 capital intensive and regulatory lag can put pressure on
24 cash flows . In concrete terms, another downgrade will
25 significantly increase the collateral required for
Garlish, Di 10
Rocky Mountain Power

1 PacifiCorp to transact in the wholesale energy and
2 natural gas markets and a lack of liquidity could require
3 suspension of PacifiCorp' s hedging program, thereby
4 increasing power cost volatility for customers . Lack of
5 liquidity and an inability to access capital may also
6 require prioritization of capital projects, which could
7 affect PacifiCorp' s ability to interconnect new
8 customers requiring significant system upgrades, invest
9 in new transmission or generation resources, or invest
10 in the existing transmission and distribution system.
11 These are a handful of the more direct and observable
12 impacts that could result from another downgrade (i . e. ,
13 from a financially unhealthy utility) and it is these
14 types of impacts that PacifiCorp is working to avoid
15 through actions like the Service Area Transfer.
16 V. RELATED PROCEEDINGS
17 Q. Are there any related proceedings in other
18 jurisdictions related to the Service Area Transfer?
19 A. Yes . In addition to approval from this Commission, the
20 Service Area Transfer requires approval from the Federal
21 Energy Regulatory Commission and PacifiCorp' s other
22 state regulators .
Garlish, Di 11
Rocky Mountain Power

1 VI . INTRODUCTION OF PACIFICORP WITNESSES
2 Q. How is PacifiCorp supporting its application?
3 A. PacifiCorp is presenting the following direct
4 testimony in support of its application:
5 • Joelle R. Steward, Senior Vice President,
6 Regulation , provides detailed information on the
7 asset sale and Service Area Transfer, explains how
8 the Service Area Transfer is consistent with the
9 public interest, and discusses key aspects of the
10 transaction documents .
11 • Nikki L. Kobliha, Senior Vice President of Finance,
12 provides PacifiCorp' s financial information
13 relevant to the asset sale and Service Area
14 Transfer, and discusses the calculation of the
15 regulatory gain attributable to the goodwill value
16 of the business, the proposed assignment of
17 goodwill value to customers, and the calculation of
18 customer rate credits .
19 • Michael G. Wilding, Vice President of Energy Supply
20 Management ("ESM") , explains how PacifiCorp and Gem
21 will transition service in Washington, and
22 demonstrates that the asset sale and Service Area
23 Transfer does not harm resource adequacy and
24 reliability for Idaho customers .
25 • Ramon J. Mitchell, Managing Director of ESM Finance
26 and Net Power Costs ("NPC") , presents PacifiCorp' s
27 forecast NPC incorporating the asset sale and
28 Service Area Transfer.
29 • Shelley E. McCoy, Director of Revenue Requirement,
30 presents PacifiCorp' s revenue requirement
31 incorporating the Service Area Transfer and
32 addresses cost allocation issues .
33 VII . CONCLUSION
34 Q. What is your recommendation for the Commission?
35 A. I recommend that the Commission approve the sale of the
36 Washington-based generation and transmission assets
Garlish, Di 12
Rocky Mountain Power

1 included in the Service Area Transfer, whereby Gem will
2 also purchase PacifiCorp' s Washington service area and
3 certain Washington-based assets .
4 Q. Does this conclude your direct testimony?
5 A. Yes .
Garlish, Di 13
Rocky Mountain Power