20060201Hearing Transcript Exhibits Vol I.pdf

ORIGINAL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ,JOINT
APPLICATTON OF MIDAMERICAN
ENERGY HOI,DINGS COMPANY (MEHC)
AND PACIFICORP DBA UTAH POWER &
I,IGHT COMPA}TY FOR AAI ORDER
AUTHORIZING MEHC TO ACQUIRE
PACIFICORP
CASE NO. PAC-E-05-B
EXHIBITS
(n
PLACE:Commission Hearing Room
472 West Washington StreetBoise, Idaho
DATE:,fanuary 17, 2006
VOLUME I Pages I - 1-1-3
HEDRIGK
COURT REPORTING
POST OFFICE BOX 578
BO|SE, |DAHO 83701
208-33G9208
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HEDRICK COURT REPORTING
P. O. BOX 5'lB, BOTSE, rD 83701
EXHIBITS
NUMBER PAGE
For the Joint l-icants:
2 MEHC Adoption of Prlor Commitments PremarkedAdmitted 39
3 Combined System Maps PremarkedAdmitted 39
4 MEC Base Load Plants PremarkedAdmitted 39
5 MEC Eacts and Eigures PremarkedAdmitted 39
6 MBC Energy Efficiency Comparisons PremarkedAdmitted 39
7.Letters from Communities PremarkedAdmitted 39
15.Stipulation and Idaho Commitments PremarkedAdmitted B6
For the Staff:
101 .Stipulation PremarkedAdmitted 108
]-02.Staff Recommended Modificatlon to
Idaho Commitments
Premarked
Admitted 108
01
25
EXHIB]TS
t
PacifiCorp
Exhibit No. 2, Page I of8
CASE NO. PAC-E-05-08
Witness: Brent E. Gale
MEHC Adoption of ScottishPower's Prior Commitments
Commitments Applicable to AII .Iurisdictions
Customer Service
Rezulatory Oversieht
PacifiCorp will maintain its own accounting system, separate from
MEHC's accounting system. All PacifiCorp financial books and records
will be kept in Portland, Oregon, and will continue to be available to the
Commission, upon request, at PacifiCorp's offices in Portland, Oregon,
Salt Lake City, Utah, and elsewhere in accordance with current practice.
(Witness Goodman)
MEHC and PacifiCorp will provide the Commission access to all books of
account, as well as all documents, data, and records of their affiliated
interests, which pertain to transactions between PacifiCorp and its
affi liated interests. (Witness Goodman)
MEHC, PacifiCorp and all affiliates will make their employees, officers,
directors, and agents available to testify before the Commission to provide
information relevant to matters within the jurisdiction of the Commission.
The Commission or its agents may audit the accounting records of MEHC
and its subsidiaries that are the bases for charges to PacifiCorp, to
determine the reasonableness of allocation factors used by MEHC to
assign costs to PacifiCorp and amounts subject to allocation or direct
charges. MEHC agrees to cooperate fully with such Commission audits.
(Witness Specketer)
MEHC and PacifiCorp will comply with all existing Commission statutes
and regulations regarding affiliated interest transactions, including timely
filing of applications and reports. (Witness Specketer)
PacifiCorp will file on an annual basis an affiliated interest report
including an organization chart, narrative description of each affiliate,
I.
A.
,
B
C.
D.
E.
F.
,
A. MEHC and PacifiCorp affirm the continuation of the existing customer
service guarantees and performance standards in each jurisdiction through
2009.
B. Penalties for noncompliance with performance standards and customer
guarantees shall be paid as designated by the Commission and shall be
excluded from results of operations. PacifiCorp will abide by the
Commission's decision regarding payments.
,
REVISED 8II7IO5 PacifiCorp
Exhibit No. 2, Page 2 of 8
cAsENO. PAC-E-05-8
Witness: Brent E. Gale
revenue for each affiliate and transactions with each affrliate. (Witness
Specketer)
PacifiCorp and MEHC will not cross-subsidize between the regulated and
non-regulated businesses or between any regulated businesses, and shall
comply with the Commission's then-existing practice with respect to such
matters. (Witness Specketer)
Due to PUHCA repeal, neither Berkshire Hathaway nor MEHC will be
registered public utility holding companies under PUHCA. Thus, no
waiver by Berkshire Hathaway or MEHC of any defenses to which they
maybe entitled under Ohio Power Co. y. FERC,954F.2d779 (D.C. Cr.),
cert. denied sub nom. Arcadia v. Ohio Power Co., 506 U.S. 981 (1992)
("Ohio Power"), is necessary to maintain the Commission's regulation of
MEHC and PacifiCorp. However, while PUHCA is in effect, Berkshire
Hathaway and MEHC waive such defenses. (Witness Specketer)
Any diversified holdings and investments (9,&., non-utilitybusiness or
foreign utilities) of MEHC and PacifiCorp following approval of the
transaction will be held in a separate company(ies) other than PacifiCorp,
the entity for utility operations. Ring-fencing provisions (i.e.., measures
providing for separate financial and accounting heatment) will be
provided for each of these diversified activities, including but not limited
to provisions protecting the regulated utility from the liabilities or
financial distress of MEHC. This condition will not prohibit the holding
of diversified businesses. (Witness Goodman)
PacifiCorp or MEHC will notify the Commission subsequent to MEHC's
board approval and as soon as practicable following any public
announcement ofl (l) any acquisition of a regulated or unregulated
business representing 5 percent or more of the capitalization of MEHC; or
(2) the change in effective control or acquisition of any material part or all
of PacifiCorp by any other firm, whether by merger, combination, transfer
ofstock or assets.
Within 30 days of receiving all necessary state and federal regulatory
approvals of the final corporate and affiliate cost allocation methodology,
a written document setting forth the final corporate and affiliate cost
methodology will be submitted to the Commission. On an on-going basis,
the Commission will also be notified of anticipated or mandated changes
to the corporate and affiliate cost allocation methodologies. (Witness
Specketer)
Any proposed cost allocation methodology for the allocation of corporate
and affiliate investments, expenses, and overheads, required by law or rule
to be submitted to the Commission for approval, will comply with the
following principles:(a) For services rendered to PacifiCorp or each cost category subject
to allocation to PacifiCorp by MEHC or any of its affiliates,
MEHC must be able to demonstrate that such service or cost
category is necessary to PacifiCorp for the performance of its
G
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K.
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,
2
,
REVISED 8II7IO5 PacifiCorp
Exhibit No.2, Page 3 of8
CASENO. PAC.E45.8
Witness: Brent E. Gale
regulated operations, is not duplicative of services alreadybeing
performed within PacifiCorp, and is reasonable and prudent.
(b) Cost allocations to PacifiCorp and its subsidiaries will be based on
generally accepted accounting standards; that is, in general, direct
costs will be charged to specific subsidiaries whenever possible
and shared or indirect costs will be allocated based upon the
primary cost-driving factors.(c) MEHC will have in place time reporting systems adequate to
support the allocation of costs of executives and other iilevant
personnel to PacifiCorp.(d) An audit trail will be maintained such that all costs subject to
allocation can be specifically identified, particularly with respect to
their origin. In addition, the audit trail must be adequately
supported. Failure to adequately support any allocated cost may
result in denial of its recovery in rates.(e) Costs which would have been denied recovery in rates had they
been incurred by PacifiCorp regulated operations will likewise be
denied recovery whether they are allocated directly or indirectly
through subsidiaries in the MEHC group.(f) Any corporate cost allocation methodology used for rate setting,
and subsequent changes thereto, will be submitted to the
Commission for approval if required by law or rule. (Witness
Specketer)
Financial Inteerity
PacifiCorp will maintain separate debt and, if outstanding, preferred stock
ratings. PacifiCorp will maintain its own corporate credit rating, as well
as ratings for each long-term debt and preferred stock (if any) issuance.
(Witness Goodman)
MEHC and PacifiCorp will exclude all costs of the transaction from
PacifiCorp's utility accounts. Within 90 days following completion of the
transaction, MEHC will provide a preliminary accounting of these costs.
Further, MEHC will provide the Commission with a final accounting of
these costs within 30 days of the accounting close. (Wifiress Goodman)
The premium paid by MEHC for PacifiCorp will be recorded in the
accounts of the acquisition company and not in the utility accounts of
PacifiCorp. MEHC and PacifiCorp will not propose to recover the
acquisition premium in PacifiCorp's regulated retail rates; provided,
however, that if the Commission in a rate order issued subsequent to the
closing of the transaction reduces PacifiCorp's retail revenue requirement
through the imputation of benefits (other than those benefits committed to
,
A.
B
C
,
J
,
REVISED 8lt7l05 PacifiCorp
Exhibit No. 2, Page 4 of 8
CASENO. PAC.E.O5-8
Witness: Brent E. Gale
in this transaction) accruing from the acquisition company (PPW Holdings
LLC), Berkshire Hathaway, or MEHC, MEHC and PacifiCorp will have
the right to propose upon rehearing and in subsequent cases a symmetrical
adjustment to recognize the acquisition premium in retail revenue
requirement. (Witness Goodman)
MEHC and PacifiCorp will provide the Commission with unrestricted
access to all written information provided to credit rating agencies that
pertains to PacifiCorp. (Witness Goodman)
PacifiCorp will not make any distibution to PPW Holdings LLC or
MEHC that will reduce PacifiCorp's common equity capital below 40
percent of its total capital without Commission approval. PacifiCorp's
total capital is defined as common equity, preferred equity and long-term
debt. Long-term debt is defined as debt with a term of one year or more.
The Commission and PacifiCorp may reexamine this minimum common
equity percentage as financial conditions or accounting standards change,
and may request ttrat it be adjusted. (Witness Goodman)
The capital requirements of PacifiCo.p, as determined to be necessary to
meet its obligation to serve the public, will be given a high priority by the
Board of Directors of MEHC and PacifiCorp. (Witness Goodman)
PacifiCorp will not, without the approval of the Commission, assume any
obligation or liability as guarantor, endorser, surety or otherwise for
MEHC or its affiliates, provided that this condition will not prevent
PacifiCorp from assuming any obligation or liability on behalf of a
subsidiary of PacifiCorp. MEHC will not pledge any of the assets of the
regulated business of PacifiCorp as backing for any securities which
MEHC or its affiliates (but excluding PacifiCorp and its subsidiaries) may
issue. (Witness Goodman)
Revenue Requirement Impacts
MEHC and PacifiCorp, in future Commission proceedings, will not seek a
higher cost of capital than that which PacifiCorp would have sought if the
transaction had not occurred. Specifically, no capital financing costs
should increase by virtue of the fact that PacifiCorp was acquired by
MEHC.
MEHC and PacifiCorp guarantee that the customers of PacifiCorp will be
held harmless if the transaction between MEHC and PacifiCorp results in
a higher revenue requirement for PacifiCorp than if the transaction had not
occurred. However, this hold harmless provision shall not apply to
incremental costs associated with cost-effective investments in renewable
and thermal generation, energy efficiency programs, demand-side
management programs, environmental measures, and transmission and
dishibution facilities approved by the Commission.
D
E.
F.
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,
A.
B
4
,
REVISED 8II7IO5 PacifiCorp
Exhibit No.2, Page 5 of8
CASE NO. PAC-E45.8
Witness: Brent E. Gale
Environment
A. PacifiCorp will continue its Blue Sky tariff offering in all states.B. PacifiCorp will continue its commitment to gather outside input on
environmental matters, such as through the Environmental Forum.
C. PacifiCorp will continue to have environmental management systems in
place that are self-certified to ISO 14001 standards at all PacifiCorp
operated thermal generation plants.
Communities
MEHC will maintain the existing level of PacifiCorp's community-related
confibutions, both in terms of monetary and in-kind contributions.
MEHC will continue to consult with regional advisory boards to enstre
local perspectives are heard regarding community issues.
Employees
MEHC will honor existing labor contracts with all levels of staff.
MEHC and PacifiCorp will make no changes to employee benefit plans
for at least rwo (2) years following the effective date of the Stock Purchase
Agreement.
Plannine
PacifiCorp will continue to produce Resource Plans every two years,
according to the then current schedule and the then current Commission
rules.
When acquiring new generation resources in excess of 100 MW,
PacifiCorp and MEHC will issue Requests for Proposals (RFPs) or
otherwise comply with state laws, regulations and orders that pertain to
procurement of new generation resources.
A.
B.
A.
B.
A.
B.
5
t IL State Specific Commitments
PacifiCorp
Exhibit No. 2, Page 6 of 8
CASE NO. PAC-8.05-08
Witness: Brent E. Gale
Utah
Customer Service
PacifiCorp will report call-handling results during wide-scale outages
against average answer speeds, hold times and busy indications.
Regulatory Oversieht
MEHC and PacifiCorp will provide notification of and file for
Commission approval of the divestiture, spin-off, or sale of any integral
PacifiCorp function. This condition does not limit any jurisdiction the
Commission may have.
PacifiCorp or MEHC will notify the Commission prior to implementation
of plans by PacifiCorp or MEHC: (l) to form an affiliate for the purpose
of transacting business with PacifiCorp's regulated operations; (2) to
commence new business transactions between an existing affiliate and
PacifiCorp; or (3) to dissolve an affiliate which has transacted substantial
business with PacifiCorp.
Idaho
Customer Service
A. MEHC/PacifiCorp will continue to make a dedicated Irigation Specialist
available in Rexburg and Shelley in the Idaho service territory. The
Irrigation Hotline will continue to be available daily from 7 AM to 7 PM,
with the number published in the phone directory.
B. Water Rights agreements will be abided by MEHC.
Oregon
Rezulatory Oversight
MEHC and PacifiCorp agree to the following provisions with respect to
information requests and resolution of disputes related to information
requests: (l) PacifiCorp and MEHC will provide Staff, upon request,
access to books and records of PacifiCorp and MEHC to the extent they
contain information specifically related to PacifiCorp, including Board of
Director's Minutes. This commitment will not be deemed to be a waiver
of PacifiCorp's or MEHC's right to seek a protective order for the
A.
A.
B
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PacifiCorp
Exhibit No. 2, Page 7 of 8
CASE NO. PAC-E-05-08
Witness: Brent E. Gale
information or to object to a request as overbroad, unduly burdensome or
outside the scope of the Commission's jurisdiction. (2) In the event of a
dispute regarding an information request, an Administrative Law Judge of
the Commission shall resolve the dispute by making a determination
whether or not the requested documents would be reasonably expected to
lead to the discovery of admissible evidence.
A.
Corporate Presence
A. The corporate headquarters of PacifiCorp will remain in Oregon
Washinston
Customer Service
MEHC and PacifiCorp agree that during the lS-day period to investigate
and report back to customers regarding billing and metering problems, it
will not take action by initiating collection remedies or disconnecting.
Wvomins
Customer Service
A.Penalties for noncompliance with performance standards and customer
guarantees that are not paid to customers will be paid to EnergyShare of
Wyoming.
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,
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,
PacifiCorp
Exhibit No. 2, Page 8 of 8
CASE NO. PAC-E-05-08
Witness: Brent E. Gale
IIL Administrative Commitments
Nothing in these acquisition commitments shall be interpreted as a waiver
of PacifiCorp's or MEHC's rights to request confidential treatment for
information that is the subject of any commitments.
Unless otherwise specified by Commission regulations, the Commission
shall give MEHC and PacifiCorp written notification of any violation by
either company of the commitments made in this application. If such
failure is corrected within ten (10) business days for failure to file reports,
or five (5) business days for other violations, the Commission shall take
no action. MEHC or PacifiCorp may request, for cause, an extension of
these time periods. If MEHC or PacifiCorp fails to correct such violations
within the specified time frames, as modified by any Commission-
approved extensions, the Commission may seek to assess penalties for
violation of a Commission order, against either MEHC or PacifiCorp, but
not both, as allowed under state laws and regulations.
A
B
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PacifiCorp
Exhibit No. 3, page 1 of4
CASE NO. PAC.E.O5.O8
Witness: Brent E. Gale
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Exhibil No. 3,page 2 of 4
CASE NO. PAC.E.O5-08
Witness: Brent E. Gale
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Exhibit No. 3, page 3 of4
CASE NO. PAC-E-05-08
Witness: Brent E. Gale
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CASE NO. PAC-E-05.08
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PaclllCorp
Exhibit No. 4, page 1 of 1
CASE NO. PAC.E.Os.O8
Witness: Brent E. Gale
I MEC Service Areas and Base Load Generating Facilities
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PacifiCorp
Exhibit No.5
CASE NO. PAC.E-05-08
Witness: Brent E. Galet
I
Facts at a Glance
Electric Operations (year-end 2OO4):
Total retail customers:
Iowa:
Illinois:
South Dakota:
Residential:
Small general service:
Large general service:
Other retail:
Average price per kilowatt-hour (residential)
Average price per kilowatt-hour (retail)
Average price per kilowatt-hour (industrial)
Average annual revenue per customer (residential)
Average annual revenue per customer (retail)
Accredited net generating capacity in MW
(owned)
Accredited net generating capacity in MW
(purchased)
Total accredited net generating capacity in MW
(owned and purchased)
Record summer peak load in MW - Aug. 20,2003
MEC Electric Operations Facts
697,611
609,725
84,t66
3,720
602,2L8
8L,O47
1,302
13,044
$0.0860
$0.0613
$0.0404
$766
$1,579
4,48L
4L6
4,997
3,935
t EXHIBIT
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PacifiCorp
Exhibit No. 6, Page I of 2
CASE NO. PAC.E-05-08
Witness: Brent E. Gale
,
MidAmerican Energy Company
EEP-95-3 2003 Actual and Planned Spending
Plan Actual Variance o/o Variance
t
A/C Load Control
Efficiency Plus
House Call/Energy Fitness
Low lncome
Smart Home
C&lNewConstruction
C/I HVAC&R
C/l Direct lncentive
C/l Lighting
lnterruptible Cu rtailment
C/l Custom
lnd. Process Optimization
Early HVAC Retirement
Trees
Assessments
$ 2,062,141
$ 1,072,360
$ 882,434
$ 529,099
$ 2,518,061
$ 1,252,543$ 231,425
$ 97,761
$ 261,428
$ 8,203,77s
$ 80,392
$ 49,553
$ 1,382,870
$ 100,000
$ 1,398,351
$ 2,662,251
$ 2,467,936
$ 3,487,377
$ 1,090,459
$ 6,245,821
$ 3,650,564$ 576,038
$ 477,173
$ 976,568
$ 6,746,128
$ 368,461
$ 828,978$ 318
$ 243,707
$ 1,425,153
$ 600,110
$ 1,395,576
$ 2,604,943
$ 561,359
$ 3,727,760
$ 2,398,021$ 344,613
$ 379,412
$ 715,140
$ (1,457,647)
$ 288,069
$ 779,425
$ (1,382,552)
$ 143,707$ 26,802
29.1Oo/o
130.14/"
295.2Oo/o
106.10olo
148.O40/o
191.450/o
148.91o/o
388.10olo
273.55"/o
-17.77o/o
358.33olo
1572.91o/o
-99.98"/"
143.71o/o
1.92o/o
$31 $11,124,738 55.29o/"
,
$20,'122,193
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PacifiCorp
Exhibit No. 6, Page 2 of 2
CASE NO. PAC-E-05-08
Witness: Brent E. Gale
Variance
MidAmerican Energy Company
EEP-03-1 2OO4 Actual & Planned Spending
Actual
o//o
Plan Variance
,
Residential Load Management
Residential Equipment
Residential Audit
Low lncome
Residential New Construction
Commercial New Construction
Nonresidential Equipment
Nonresidential Custom
Nonresidential Load Management
Small Commercial Energy Audit
Nonresidential Energy Analysis
Efficiency Bid
Trees
Assessments 000 $ 1,607',859
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2,941,000
3,295,000
2,457,OOO
2,075,000
4,132,0OO
3,885,000
1,350,000
400,000
6,685,000
645,000
669,000
939,000
400,000
$ 2,911,490
$ 2,838,210
$ 2,874,890
$ 1,369,729
$ 6,923,559
$ 3,959,724
$ 2,285,604
$ 633,354
$ 7,914,356
$ 345,162$ 407,275
$ 666,568$ 503,991
(29,510)
(456,790)
417,890
(706,2721
2,791,559
74,724
935,604
233,354
1,129,356
(299,838)
(261,7251
(272,4321
103,991
130,859
'1.0O"/"
-13.860/"
17.O1o/o
'34.O4"/o
67.56"/"
1.92"/"
69.30%
58.34o/"
16.890/o
-46.49yo
'39.12o/o
'29.O1"/"
26.OOY"
8.860/o
$
$
$
$
$
$
$
$
$
$
$
$
$
$1,477
$31,350,000 $35,140,770 $ 3,790,770 12.O9Yo
t
PacifiCorp
Exhibit No. 7, page I of 15CASE NO. PAC-8.05.08
Witness: Brent E. Gale
t
LETTERS FROM
MUNICIPAL UTILITIES
AND PUBLTC POWER DISTRICTS
t
t
nBv.zz.aas 7:59m1
r
W. J, Fdrmsr
Ptt idcot&CEO
Fto€({@) 563-5SSt
FE,('O2)56,.5145
[e-mail]
racrlrLorp
Exhibit No. 7, Page 2 of I 5
CASE NO. PAC-E.05.08
Witness: Brcnt E. Gale
N
T Nebraska Publtc Power District
"Alntp tlut clrorSrorr ncd nr"
t
May 24,2N5
Mr. David L. Sokol
Chairoan aod ChiefExecutive Officer
MdAmericao Energ Holtlings Company
302 South 36u Steet, Suite 400
Olnaha Nebraska 6813 l-3845
Dear David:
Congratulations atrd best wishes regarding )our r€c€nt arurourcerneut of tbc acguisition of
Pacificoqp. NPPD aprpreciates the long-standing and positive relationship we have with
MidAmerican Midamcric,an's willingness to workcollaborativelywith publicpowcr catitics $
the areas of cansoission and generation planning and joint oumership are importsat to lrs.
i
i
We're e6cited about the porcntial benefits the acquisition Day provide, especially as it relates tol
the opportunity to further dcvelop a trail$dssion model that can help address tbe cridcal issues i
wc face throughout our respective senrice areas, We look forward to workiqg with pur tcarn i"l
thatregard- i
Shcereln
M-\SHliam J. Felrman
Prcsident & CEO
Nebraska Public Power Distist
I GEIIERALOFTICE
1 414 15h SH / P.O. Box 490 rt Columbus, Nl 066024409
Tdcphonc ('O2) 5a46uat / FsI: (402) 56&s551
hlbrtu$i,rlppd.co0
25 tsus
uh\
t
t
Sincerely,
J",-*-L,(\
raclltuorp
Exhibit No.
CASE NO.
7,Page3ofl5
PAC-E_05-08
Witness:Brent E-
CSDAR Feus Urnrrms
The Poww of Sewbe.
Mry26,2005
Mr. David Sokol
Chairman and CEO
MidAmerican Energy Holdings Company
302 South 366 Street, Suite 400
Ornatt4 Nebraska 68 13 13845
DearMr. Sokol:
On behalf of Cedar Falls Utilities, I want to express our best wishes to your organization as you move
forward with the acquisition of Pacificorp.
As you know, Cedar Falls Utilities has enjoyed a long history of successful cooperation and parrrerships
with MEC and its predecessor companies. One of the most significant early partrerships brought about the
gronnd-b,reaking joint ownership of Cowrcil Bluffs #3 and the related 345 KV transrnission line.
By working together, MEC predecessor Iowa Power and CFU were able to overcome political, legislative
and industry challenges. Today, CB#3 remains one of the most successful economic generating units in the
U.S. Thejoint ownership model forged by Iowa Power and CFU was soon copied by Iowa Public Scrvice at
Neal 4, Iowa Illinois at Ottumwa, and others.
Our companies harrc cooperated in a unique joint dispatch arrangement since 1979. In 1984, CFU purchased
some Neal 4 generating capacity from IPS. The purchase kept the unit within the IPS dispatch group family
to the benefit ofboth organizations. At this time, a significant joint effort to solve transmission bottlenecks
at Quad Cities West is close to being finalized. Next month our Board is expected to give final approval for
our sale of e,nergy and capacity to the City of Hudson, again benefiting both CFU and MEC. We have also
identified areas for possible future cooperation on various tansmission and dispatch iszues.
Many more exanples of cooperation could be cited. At every opportrmity for more than 30 years, our
message to FERC and the Iowa Utilities Board has been that MEC is an honorable friend and parhrer. Most
recentln we have commended MEC's efforts to offer every municipal utility in Iowa an opportunity to
conhol its own power supply throughjoint ownership of Cormcil Bluffs #4. Our Electric Utility is taking
advantage of this important opportunity.
We look forward to continuing our producfive parhrership with MEC as your company expands through this
important acquisition.
James R Krieg,
General Manager/CEO
cc: ToddRaba
t
UtilltyParkway,P,O.BoxT69. @atEalls, lowa506l3. PH:319-2661761 . Fax:[phone] o www.cfunet.net
PacifiCorp
Exhibit No. 7, page 4 of l5cAsE NO. PAC-E_05_08
Witness: Brent E. Galetl/luscstine Power ond Woter
3205 Cdor Sheel o Muscoline, lowo 52761-2201
563n63-263t
May 31, 2005
Mr. David L. Sokol
Chairman & CEO
MidAmerican Energy Holdings Co.
Suite 400
302 S.360'St.
Omaha, NE 68131-3845
Dear David:
Congratulations on your announced intent to acquire PacifiCorp.
I am certain the customers, employees, and other utilities that come in
contact with PacifiCorp wil! be well served by the new ownership.
I have no doubt that MidAmerican will apply the same attitude of
cooperation and suppoft for municipa! utilities and other potential
partners in serving the utility needs of customers in the PacifiCorp
areas.
Please let me know if we can be of service to you in any small
way as we go forward.
Sincerely
7 4
Joy D. Logel
GenerolMonoger
,
,
cr: Todd Raba, MEC
PacifiCorp
Exhibit No. 7, page 5 of I 5CASE NO. PAC-E.05-08
Witness: Brent E. Gale
J
ECONOMIC DEVELOPMENT LETTERS
t
t
facrnLorp
Exhibit No. 7, Page 6 of 15
CASE NO. PAC-E.05.08
Witness: Brent E. Gale
IOWA
1r,:, I changing
,
t
July 12,2005
Mr. Todd Raba
President
MidAmerican Energy Company
666 Grand Ave., P.O. Box 657
Des Moines, IA 50303 -0657
Dear Todd:
Congratulations on the recent announcement that MidAmerican Energy Holdings
Company intends to acquire PacifiCorp from Scottish Power. MidAmerican Energy
Company has been an outstanding partner with the State of Iowa on economic
development for decades, and I wish you the best of luck in completing this transaction.
Given your strong focus on improving the economic conditions in your service territory,
I'm sure you will bring an added level of economic development expertise to the six
states in which PacifiCorp operates.
I look forward to continuing the strong relationship between MidAmerican Energy
Company and the IowaDepartment of Economic Development. Please let me know if
there is anything I can do to assist your ongoing economic development efforts. Again,
good luck completing the transaction involving PacifiCorp.
Sincerely,
Mary
Acting Director
MKI-TKh
l0tIr,A DEPARTMETUT 0F EC0N0MIC DEVET0PMENT,
Mi*aelT.BlouioDimctor o 200EastGrandAvenrre,DesMo{nes.lowa50309 USAt Ph0ns515.242.47A0 r Faxbl5.242.il809 | wwur.iowafifechargirq.com
Exhibit No. 7, Page 7 of l5
CASE NO. PAC-8.05.08
D e pa rtment of To u ri s m a nd StXt?i'u'6lJE r?iiim e nt
Jnly Il,2005
Mr. Todd Rab4 President
MidAmerican Energy Company
666 Grand Avenue, P.O. Box 557
Des Molnes,'Iowh 50303-0657 "
DearTodd:
Congratulati.ons on the recent announcement that MidAmerican Energy Holdings
Company \ilill be acquiring PacificCorp. MidAmerican Energy Company has been an
outstanding parher with the State of South Dakota on numerous development projects. I
wish you the best of luck in completing this transaction. Given your strong focus on
improving the economic vitality in the footprint of your service area, I know that you will
be a strong partner for development in the six states in which PacificCorp operates.
MidAnrerican Encrgy has provided leadership not only to the utility industry but also to
the ongoing development of a vibrant business environment in southeastem South
Dakota Again, good luck completing lhe PacificCorp Eansactioq and I look forward to
many more yean; of a successful partrrership.
ol Ecuromic
Relalions
SDSICN.BE
South Dakota Arts Council
0lll Ciovemus th / Phne SD 5750t.?2ga
nuu f, 873"3131 il l${zl{66 h SI}.
tu; 00S773-6962
sda0state.d.us / darts.ug
South Dakota State
Historical Society
S Gos,us 0( / tlsre S0 5750t.2?t7
flmq il$II1.3458 / h( mll3t&,
Stistory.org
South [)akota Housing
0evelopment Authority
P0 hr 1237 / Piene. S0 5750t.t?3?
ftrooc mm.318l I fu: fl}llt}5t5i
sdldq.ory
,f!f,6'tfl{68
0mrkm.kmhmr
(lflice olTurrism
frchl"cmldfr.@coa/
rttltrlnlrtioar,com
,
Mayor
Donald P. Welvaert
619- l6Street
Molins lllinois 61265
Phone (309) 797{,434Fax: [phone]
t
,
cttY oF
MOLINEILL"UO'S
PacifiCorp
Exhibit No. 7, Page I of I 5
CASE NO. PAC.E.Os.O8
Witness: Brent E. Gale
Jare29,2005
Todd Rab4 President
MidAmerican Energy Company
666 Grand Ave,nue
Des Moines, LA 50303
Dear Mr. Raba:
I would like to write in encouragement of the announced purchase of PacifiCorp
by MidAmerican Energy Holding Company. MidAmerican has been a strong
partner in the redevelopment of Moline's core. I believe the communities of
PacifiCorp will benefit from having MidAmerican's managemert commitment to
community success.
MidAmerican Energy has been a steadfast supporter of our public/pirate
partnership. Renew Moline, since its inception over 15 years ago. This partnership
has completely transformed our old core industial area into a modern tourism
destination point and a pre,mier and office employment ce,lrter in the broader two
state region of westem Illinois and eastern Iowa. Nearly $300 million has been
investdin nerr buildings and public facilities in that time. It would not have
happened without Renew Moline and Renew Moline would not have happened
without your continued financial support as well as the ongoing participation of
your economic development staff.
I've learned how important it is for MidAmerican's economic development
progrturs to be built on stong community partnerships. I do not know what the
PacifiCorp economic development program is like, but if it ends up like
MidAmerican's then those commurities will have a "winner" for a utility.
Good luck in your acquisition.
Sincerely,
CITY OF MOLINE, ILLINOIS
?*
Donald P. Welvaert
Mayor
PacifiCorp
Exhibit No. 7, Page 9 of l5
CASE NO. PAC.E.O5-08
Witness: Brent E. Gale
=Bt,
TheVolce of lowa Business Since 19O3.
June 13,2005
Mr. Todd Raba, President
MidAmerican Energy Company
666 Grand Avenue
PO Box 657
Des Moines, IA 50303-0657
Dear Mr. Raba:
I was pleased to read about MidAmerican Energy Holding Company's recently
announced acquisition of PacifiCorp. Based on our Association's experience with
MidAmerican Energy Company, I'm sure PacifiCorp's businesses will be pleased with
the strong partrrership its new owners will be able to provide to them.
For many years, MidAmerican has been a vital and important business in [owa. Your
company has shown a strong and continuing commitment to improving the state's
business environment. MidAmerican's commitment is further demonstrated by your
ability to deliver electric rate stability to our members. That is a critical economic
development tool for Iowa.
The three rnajor generation-construction projects MidAmerican has initiated in the past
two years have also added jobs in the state. When completed, they will help assure that
Iowa businesses have adequate and reliable energy sources which will allow them to
grow into the future.
MidAmerican Energy has provided leadership not only to the Association of Business
and Industry, but also to the ongoing development of a vibrant business environment in
Iowa. I look forward to many more years of a successful partnership between our two
organizations.
Sincerely,
t
fuM
James D. Aipperspach
President
t ASSOCIATION OF BUSINESS AND INDUSTRY
904 Walnut Street o Suite 100 o Des Moines, lowa 50309-3503
515-280-8000 . 800€834224 o Fax24449O7 . Email [e-mail] . www.iowaabi.org
,
(4
,
]
PacifiCorp
Exhibit No. 7, Page I 0 of I 5
CASE NO. PAC.E.Os.O8
Witness: Brent E. Gale
THE gteatet DEs MorNEspartnership
i.---..-.------------------
June 14,2005
Todd Raba, President
MidAmerican Enerry Company
666 Grand Avenue
P.O. Box 657
Des Moines, LA 50303-0657
Dear Mr. Raba:
Congratulations on MidAmerican Enerry Holdings Company's recently announced
acquisition of PacifiCorp! I am confident the communities and businesses served by
PacifiCorp will see the same commitrnent to partnership that we experience with
MidAmerican Enerry Company here in the Des Moines area.
For many years, MidAmerican has supported the efforrs of the Greater Des Moines
PartrrerShip. Besides participating in and supporting taditional chamber of
cortrmerce activities, your employees are always there when we need them - as
leaders in our Choose Des Moines Communities and our Downtown Community
Alliance. Together, we have successfully athacted new businesses and expanded
many of our existing businesses in the Des Moines area. None of this could have
been accomplished without MidAmerican Energy Company.
I look forward to many more years of a successful partnership between our two
organizations.
Sincereln
1/t4ee
MarthaA. Willits
President & CEO
Thc Patlne$hiP Btilditg . 7oo Locust Sr. . Suita roo
Des Moires, IA 1qo9 , tcl 515-286-191o. fax y1-286-q97q
rn d!tmoln!3mclto.c..
PacifiCorp
Exhibit No. 7, page I I of I 5CASE NO. PAC.E-05.08
Witness: Brent E. Gale
,Mid lowa Growth
1 Partnership
UNITING OUR AREA IN ECONOMIC
DEVELOPTilENT
Calhoun * Hamilton * Hardin
Humboldt* Kossulfi ' Palo Alto
Pocahontas * Webster * Wright
t
July 7,2005
Mr. Todd Rabq President
MidAmerican Enerry Company
666 Grand Avenue
Des Moines, tA 50303
Dear Mr. Raba:
I read with interest of your announcement to PacifiCorp by MidAmerican Energy Holding Company.
I want to take this time to write my thoughs about MidAmerican Energy Company as I see it for
economic development in rural areas. I'm doing this in hopes that you can use these comments in
some way to benefit your acquisition.
Our organization covers a nine county area in norttr central lowa. Fostering economic development in
such an area today is challenging to say the least. Over the years, though, MidAmerican Energy has
been an outstanding partrer in helping guide us. Your economic development team comes to our aid
whenever called because we know that we can count on their professionalism in whatever our
underAking. Here are just a couple examples. Your staffhelped finance and facilitate a county-wide
economic development stratery then, brought it to the local community for implementation. When
the Iowa Departnrent of Economic Development announced a regional marketing initiative,
MidAmerican was among the first businesses to step forward and commit to sharing the required local
matching fund. Furthernore, yourteam committed to help guide us in the development of this new
and cxciting initiative.
In short, we just know that we can count on MidAmerican Energy to be a full partner with us. We
know that your staffworks in a broad range of communities and for them to take the time to work
with us in small-town rural Iowa is tnrly appreciated. I believe the rural areas in the PacifiCorp area
will have that same appreciation when they see what you will bring to them.
Keep up the good partnerships and good luck with your purchase.
O
President, Mid Iowa Crowth Partnership
Yankton Area Progressive Growth, Inc.
raulrruur p
ExhibitNo.7, Page l2 of l5
CASE NO. PAC-E-05.08
Witness: Brent E. Gale
I p.O. Box 588 o Yankton, South Dakota 57078. [phone] . Fax 605-665-?501
July 12,2005
IvIr. Todd Raba, President
MidAmerican Energy Company
666 Grand Avenue, P O Box 657
Des Moines, [A., 50303 -0657
DearTodd:
I was very pleased to hear your rece,nt announoement about the proposed acquisition of PacificCorp.
I would like to extend my support and encouragement to you as you wind your way through the
approval process.
When I served as a Yankton City Commissioner I knew ttrat ttre community eqioyed an excellent
relationship with MidAmerican Energy. It is my opinion that the cities in the PacificCorp service
area can expect a similar experience. Your employees have always been active participants in
commuity activities and volunteer organizations.
MidAmerican Energy has been the best of parhrers. Your company has gone beyond the basics of
supplying energy. Whether advising local firms and homeowners on how to save energy, checking
out gas leaks or suspected carbon monoxide problems with tremendous resporurc time, or planning
and constructing facilities that ensure qualrty service and room for grourth and development - your
folks have proven that MidAmerican is villing to go the extra mile.
As a professional economic developer I can attest that MidAmerican supports the communities that
' it senres with an economic development team that rivals that of many state economic development
offices. MidAmerican's economic development goup partners with our community in truly
meaningful ways. I am sur€ that the communities in PacifiCorp's service area will be equally
pleased when they become your partners.
Yankton's economic development corporation (Yankton Area Progressive Growth) and I look
forward to many years of partnership with MdAmerican in making Yankton a grcat place to live
and prosper.
Sincerely,
%"rz 4,^
Kurt E. Hauser
President
PacifiCorp
Exhibit No.7, Page l3 of I5
cAsE NO. PAC-E-05_08
Witness: Brent E. Cale
t
,
MAYOR. TTIOMAS P. HANAFAN
June 13,2005
Mr. Todd Raba, President
MidAmerican Energy
666 Crrand Avenue
Des Moines, IA 50303 -0657
Dear Todd:
I would like to extend my support on your company's recent announced acquisition of
PacifiCorp. This must be a very exciting time for your company and at the same time full
of many challenges.
Over the years, the City of Council Bluffs has had many positive experiences with
MdAmerican Energy and I believe that PacifiCorp communities will quickly realize the
commitment and partrership that MidAmerican Energy extends to the communities it
seryes. Your employees have always been counted on to be active participants in this
community and we look forward to that continued support.
The City of Council Bluffs is especially appreciative of the recent investment
MidAmerican Energy has chosen to make in Council Bluffs by building the new
generation facility. In addition to the economic development-related benefits of the
current constmction project, the City is proud to be involved in your company's efforts to
assune Iowa's energy future.
I would like to congratulate your company on ajob well done and would like to again
extend my support for your PacifiCorp acquisition.
Sincerely,
Tom
Bluffs
CITY OF COUNCIL BLUFFS. IOWA. 209 PEARL STREET .51503.4270
FAX [phone] TTY(7t2) 328-0390
"An Equl Op@rtunlty Employet"
O
&
Mayor-
PacifiCorp
Exhibit No. 7, Page 14 of I 5
CASE NO. PAC-E-os-o8
Witness: Brent E. Cale
ctTY clF WATEFILclCIT ICIWAtCtTy HALL . 7tS MULBERRY ST. . WATEHLOO, lA 50703 . [phone] FAX [phone]AG
June 13,2005
Mr. Dan Arens
MidAmerican Energy
260 Fairview Avenue
P.O. Box 600
Waterloo,Iowa 50704
Dear Dan:
Our community has benefited geatly from the services provided by
MidAmerican Energy and I want to add my support to theii acquisition of
PacifiCorp.
MidAmerican Energy Company is a complete energy partrer, going beyond
the fundamentals of supplying natural gas and electicity. They are
committed to providing outstanding service and to acting as an advocate for
their customers in the ever-changing market place. The acquisition of
PacifiCorp will provide a greater emphasis on customer satisfaction and
effrciency.
MidAmerican Energy has been a been an outstanding corporate citizen that
has parhered with the City in Waterloo in the following areas: joining in
economic development facilities, planning and.cooperation; providing energy
audi* were thousands of dollars in power costs have been saved by our
municipality; and working with the City of Waterloo in the replacement of
incandescent taffic lights with light emitting diodes (LED) by providing
rebates to the city for each LED installed.
The City of Waterloo looks forward to our continued relationship with
MidAmerican Energy and the additional opportunities the PacifiCorp
acquisition will provide for the City of Waterloo and for MidAmerican
customers.
Sincerely,
,
It'ltvor
I'lt\'l(ITHY J
HUril.tiY
('(tuNC'il.
Nllllr4llliRS
llE(:rNAl..l).\.
s('t lNrrn'
llianl I
cAR()1.\'N('oi c
l,Vrirti -'
IiL,C K
ct.,\lil*.
lVur'l .1
l()t.tN A.
Kl\( All)
l\anl I
It()N
t'Vl1l .l'lili
l'!,thl .i
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( ;til;l Ni.v( x )t)
11l-/ rrrir'
lltil('
( ;l_rNlJl;lis( )f\
1l-l rrrrir'
CZ^*L/T
Tim Huley, Mayor
City of Waterloo, Iowa
WE'RE WORKING FOR YOU!
An Equal Opportunlty/Atli.maliw Action Emplo,yer
JUL-OI-o5 .FRI OIISB P}I I{IDAI{ERICNN EI,IERGYguL Ul (VVV I Dr lr..rrlr I tt lltynrrl:lrivflt-slI:nut FA)( N0, 5152424399fn6 lw, .rtgJir.rqqug
PacifiCorp
Exhibit No. 7, page 15 of 15
CASE NO. PAC-E_05-08
Witness: Brent E. Gale
,
City of Dqvenport
ChorlcrW &ool(c. Moyor
ct [e-mail]?.lo.u3
J
tunc29,2D05
Mr, Todd Rtibr, Prclldont
MldAnsicaq Erorgy Conpany
666 Grond Avcnuo
DpsMoirus,IA.
DcarMr. Raba:
Congratdlatlolu on thcplurncdprrchrsc of PacifiCorptyMirlAmuican F,uergyHotdtng
ConDarry, If yon opctrtc tho PoclfiCorp utility as you do MidAmerlcan Enorgy, tho
cllstomerr and coaounltlcr tboro will inrarcnscly benefit.
Grur tho ycars MidArucrioan Energy and iB FEdecE$or cqmpaoy brs bceo a sbong
patncr with thc Ctty of Davespott io lts govth. Hom dowutown to the friues alcq
MiiLAmorican is coasi*tcnrly at ilrc tablc. For *auglo, in thc dox,ntryr, wlthout
hrdcr:hip from yournrraagclnpot lcarn, e S45m Frcc bloct office rud corrrcntlon
complcx would not bavo occumd. Oa ttc edgo of town, MidArnoEican BtepFd up to
loln tlrg Clry md Scoe Cqnty fn flmdloS 6c purchasc of land that is nonr a ftrlly
darclopcd 220 acrp indrrcMat perk Your cconomlc &rctropmont snlf condnues plsyint
e Yitll ple in lu rnerkctlng.
llfhcn wc rng cunridcdng au economlc dovcloprnent larlativq r? ss11 couot ot
MidAnerlcen to bc ons of oru stoager partDers. If you Utfng that ptllosophy 0o tho
cornmrmltice anil countics tn tbo utlllty you arcprrchastng, Uterr'fhoy wlll bc muchb*rcr
f6 lt and you wrll grtlsly Fospsr.
Gooal luck [n ;orrr cudcovor,
(Iados \lY. Brootc, Mayu
U6 Wesf rourth Stroet r povenport lowo 6280I
Telephone: 663{267701 Fox 558{2&672d IDDI 563.32&6t45
r,vww.cll yof dwqnporll owo.corn
r.,,whete the Miesislppt lhrcr Caebrolec!'
o
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o James M. Van Nostrand, ISB No. 7323
STOEL RIVES LLP
900 SW Fifth Avenuo, Suite 2600
Portland, OR 97204
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
Joint Counsel for MidAmerican Energy
Holdings Company and PacifiCorp dba Utah
Power & Light Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TIIE MATTER OF TIIE JOINT
APPLICATION OF MIDAMERICAN
ENERGY HOLDINGS COMPANY ANI)
PACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR AN ORDER
AUTHORIZING PROPOSEI)
TRANSACTION
CASE NO. PAC-E-05.8
STIPULATION
This Stipulation ("Stipulation") is entered into by and among PacifiCorp, doing business
as Utah Power A Light Company ("PacifiCorp"), MidAmerican Energy Holdings Company
("MEHC"), the Idaho Public Utilities Commission Staff("StafP), Monsanto Company
("Monsanto"), the tdaho Inigation Pumpers Association ("IIPA"), J.R. Simplot Company
("Simplot"), Community Action Parnrership Association of Idaho ("CAPAI"), and Idaho Power
Company ("Idaho Power")l (collectively refened to as the "Parties").
I, INTRODUCTION
I. The terms and conditions of this Stipulation are set forth herein. The Parties
agree that this Stipulation represents a fair, just and reasonable compromise of the issues raised
in this proceeding and that this Stipulation is in the public interest. The Parties, therefore,
I Although it is not a sigratory to this Stipulation, Idaho Power does not oppose either the settlement of this matter
or the terms of the Stipulation.
STIPULATION - Page 1
)
)
)
)
)
)
)
o
o EXHIBIT
Jht nf P,t)
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o recommend that the Public Utilities Commission ("Commission") approve the Stipulation and all
of its terms and conditions. Reference IDAPA 31.01.01,272,274.
II. BACKGROT'NI)
2, On July 15,2005, MEHC and PacifiCorp (sometimes hereinafter jointly refened
to as'oApplicants") filed an Application with the Commission seeking authorization pursuant to
Idaho Code $ 6l-328 authorizing a proposed transaction ("Transaction") whereby MEHC would
acquire all of the outstanding common stock of PacifiCorp and PacifiCorp would thereafter
become an indirect wholly owned subsidiary of MEHC. On August 17,20A5, Applicants
submitted a revised Application reflecting the impact of the enactment of the Energy Policy Act
of 2005, including the repeal of the Public Utility Holding Company Act of 1935.
3. On August 18, 2005, the Commission issued a Notice of Application and a Notice
of Revised Application.
4. Petitions to intervene in this proceeding were filed by Monsanto, [IPA, Simplot,
CAPAI, Idaho Power Company and IBEW Local 57. By various orders, the Commission
granted these interventions.
5, Pursuant to the Commission's Order No. 29867, representatives of the Parties met
on November 2 and engaged in initial settlement discussions with a view toward resolving the
Application in this case. Subsequent discussions were held on December 8.
Based upon the settlement discussions among the Parties, as a compromise of the
positions in this case, and for other consideration as set forth below, the Parties agree to the
following terms:
III. TERMS OF TIIE STIPULATION
6. Appendix A contains the complete list of Commitnents that Applicants
collectively and individually agree to make in exchange for the support of the Parties in this
proceeding (hereinafter referred to as o'Commihnents"). The Commitments are comprised of
general commitments applicable to all the states in which PacifiCorp's service territory extends
STIPULATION - Page?
o
o
ExhibitNo, l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o
o
and Idaho-specific commitments which apply only to the activities and operations of Applicants
within tdaho, By virtue of executing this Stipulation, the Applicants agree to perform all of the
Commitments set forth in Appendix A according to the provisions of each Comrnitment as set
forth therein.
7 , In the process of obtaining approvals of the Transaction in other states, the
Commitments may be expanded or modified as a result of regulatory decisions or settlements.
The Applicants agree that the Commission shall have an opportunity and the authority to
consider and adopt in Idaho any comrnitnents or conditions to which the Applicants agree or
with which the Applicants are required to comply in other jurisdictions, even if such
commitments and conditions are agreed to after the Cornmission enters its order in this docket.
To facilitate the Commission's consideration and adoption of the commitments and conditions
from other jurisdictions, the Parties urge the Commission to issue an order accepting this
Stipulation as soon as practical, but to reserye in such order the explicit right to re-open
Appendix A to add (without modification of the language thereof except such non-substantive
changes as are necessary to make the commitment or condition applicable to Idaho)
commitments and conditions accepted or ordered in another state jurisdiction, To provide input
to the Commission to faoilitate a prompt decision regarding the desirability or lack of desirability
for these out-of-state commitments and conditions to be adopted in Idaho, the Pades agree to
and recommend the following process:
o Within five calendar days after a stipulation with new or amended commitments
is filed by the Applicants with a commission in another state jurisdiction,
Applicants will send a copy of the stipulation and commitments to the Parties,
r Within five calendar days after a commission in another state jurisdiction issues
an order ttrat accepts a stipulation to which Applicants are a party or otherwise
imposes new or modified commitments or conditions, that order, together with all
commitments and conditions of any type agreed to by Applicants or ordered by
the commission in such otJrer state, will be frled with the Commission and served
o STIPULATION - Page 3
ExhibitNo. l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C, Moench
o
o
on all parties to this docket by the most expeditious means pragtical, Within ten
calendar days after the last such filing from the other states ("Final Filing"), any
pafly to the docket wishing to do so shall file with the Commission its response,
including its position as to whether any of the covenants, commitments and
conditions from the other jurisdictions (without modification of the language
thereof except such non-substantive changes as are necessary to make ttre
commitment or condition applicable to Idaho) should be adopted in Idaho.
r Within five oalendar days after any such response filing, any party to the docket
may file a reply with the Commission. The parties agree to support in their frlings
(or by representation of same by MEHC) the issuance by the Commission of an
order regarding the adoption of such commitments and conditions as soon as
practical thereafter, recognizing that the transaction cannot close until final state
orders have issued.
8. Not later than the Final Filing, MEHC and PacifiCorp will disclose to the Parties
any written commitments, conditions or covenants made in another state jurisdiction ftetween
the date of the filing of the Stipulation and the receipt of the last state order in the transaction
docket) intended to encourage approval ofthe transaction or avoidance ofan objectionthereto,
9. The Parties, by signing this Stipulation, acknowledge that the Applicants have
satisfied the standard under ldaho Code $ 6l-328 for approval of the Transaction and request
that the Commission issue its order approving the Application and this Stipulation, The Parties
encourage the Commission to enter a final Idaho approval order by February 28,2006.
10, The Parties submit this Stipulation to the Commission and recommend approval
in its entirety pursuant to IDAPA 31.01.01.274, Parties shall support this Stipulation before the
Commission, and no Party shall appeal any portion of this Stipulation or Order approving the
sarne. If this Stipulation is challenged by any person not a party to the Stipulation, the Parties to
this Stipulation reserve the right to cross-examine witnesses and put on such case as they deem
appropriate to respond fully to the issues presented, including the right to raise issues that are
o STIPULATION - Page 4
ExhibitNo, 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o incorporated in the settlements embodied in this Stipulation. Notrvithstanding this reservation of
rights, the Parties to this Stipulation agree that they will continue to support the Commission's
adoption of the terms of this Stipulation.
11. The Parties agree that this Stipulation represents a compromise of the positions of
the Parties in this case. Other than the above referenced positions and any testimony filed in
support ofthe approval ofthis Stipulation, and except to the extent necessary for a Party to
explain before the Commission its own statements and positions with respect to the Stipulation,
all negotiations relating to this Stipulation shall not be admissible in evidence in this or any other
proceeding regarding this subject matter.
12. Applicants acknowledge that the Commission's approval of the Stipulation, the
Commitments or the Joint Application shall not bind the Commission in other proceedings with
respect to the determination of prudence, just and reasonable sharacter, rate or ratemaking
treatment, or public interest of services, accounts, costs, investments, any particular construction
project, expenditures or actions referenced in these Commitments.
13. In the event the Commission rejects any part or all of this Stipulation, or imposes
any additional material conditions on approval of this Stipulation, each Party reserves the right,
upon written notice to the Commission and the other Parties to this proceeding, within 14 days of
the date of such action by the Commission, to withdraw from this Stipulation. In such case, no
Party shall be bound or prejudiced by the terms of this Stipulation, and each Party shall be
entitled to seek reconsideration of the Commission's order, file testimony as it ohooses, cross-
examine witnesses, and do all other things necessary to put on such case as it deems appropriate.
In such case, the Parties immediately will request the prompt reconvening of a prehearing
conference for purposes of establishing a procedural schedule for the completion of the case.
The Parties agree to cooperate in development of a schedule that concludes the proceeding on the
earliest possible date, taking into account the needs of the Parties in participating in hearings and
preparing briefs.
o
o STIPULATION - Page 5
Exhibit No. l5
Case No. PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
o
o
14. No Party shall be bound, benefited or prejudiced by any position ass€rted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as a waiver of the rights of any Party unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery. No Party shall bE deemed to have agreed that any
method, theory or principle of regulation or cost recovery employed in arriving at this Stipulation
is appropriate for resolving any issues in any other proceeding in the _future. No findings of fact
or conclusions of law other than those stated herein shall be deemed to be implicit in this
Stipulation.
15. Subject to Paragraph 16 of this Stipulation, the effective date of this Stipulation
shall be the date of the closing of the Transaction.
16. The obligations of the Applicants under this Stipulation are subject to the
Commission's approval of the Application in this docket on terms and conditions acceptable to
the Applicants, in their sole discretion, and the closing of the Transaction.
17. To the extend any of above reference frling dates falls on a weekend or a holiday,
the filing shall be due on the next business day.
o STIPULATION -Page 6
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
O Respecttully submitted tt i, /4llary of December 2005.
Idaho Public Utilities Commission Staff MidAmerican Energy Holdings Company
By By
Donald L.II C.
Deputy Attorney General Senior Vice President, Law
PacifiCorp Monsanto Company
D. Douglas Larson
Vice President, Regulation
Randall C. Budge
Racine, Olsou, Nye, Budge & Bailey,
Chartered
J.R. Simplot Company Community Action Partnership
Association of Idaho (CAPAI)
By
R. Scott Pasley
Assistant General Counsel
B
o
BradM. Purdy
Attorney at Law
Idaho Irrigation Pumpers Association
By
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey,
Chartered
N : PAC-E-0548_dh_Stipu lation
o
STIPULATION - Pase7
Rv Rw
ExhibitNo.l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o
O
Respectflrlly submittedthi, .!!$ay of Deoomber 2005.
Idaho PublicUtilities Commission Staff MidAmerlcatr Energy Holdlugs Company
By
Donald L. Howell tr
Deputy Attorney General
D.
Vice President, Regulation
J.R Simplot Company
B
R, Scott Pasley
Assistant General Counsel
Idaho Irrigation Pumpers Association
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey,
Chartered
N: PAC-E-05-08_dh_Stipulation
Mark C. Moench
S enior Vice President, Law
Monsanto Company
Randall C. Budge
Racine, Olson, Nye, Budge & Bailey,
Chartered
Community Actlon Partnership
Associatlon of Idaho (CAPAI)
B
Brad M. Purdy
Attorney at Law
o
STIPULATION - Page7
Elrr
t2/L4/06 tED 00120 FAI 208 a8g ?464
Donald L. Howell II
Deputy Attorney General
PacifiCorp
D. Douglu La$ou
Vico President, Regulation
J.R Siuplot Company
Aseistatrt Geaual
Idaho lrrigntlon Pumpors Assoeiadon
Eris L Olsen
Rssfits, Oleon, Nyg Budge & Bailey,
Ctsrt€red
N: PAC-E{5{ 8-dh-Stipulation
J R Slnplot Co-LeBaI Exhibit No. l5
Case No. PAC-B-05-8
Joint Applicants
Witness: Mark C, Moench
o
o
Respectfirlly submlttcd this ,Ufary of Deo€Eobcr 2005,
Idelo Publls Utllttisr Commbrioa Steff MldAnerlcu Erergy Eoldhgr Company
By
Mark C. Momch
Sernior Vise Preridmt, Law
Monsotrto Company
Randall C. Budge
Racinc, Olsor\ Nye, Budgo & Bailey,
Ctartaod
Communlty Acfi on Parhercnip
Aseodatlou of Idaho (CAPAD
BradM. hudy
AtomoyatLaw
o STIPULATION-Page 7
Bv
L2/LA/2006 18:17 FAtr 1 208 2$2 7352 Reclne Law
DoualdL. Howell II
Dcputy Attorney Geocral
PacifiCorp
D. Douglas tarsotr
Vice Prosideol Regulation
J.R' SimplotCompany
R- ScotPasiey
Assishnt Gonoral Cousel
Associutiou
L. Olsen tz o{
Racine, Olsou, Nye, Budge & Bailcy,
Chartered
N IAGE{548-&-Stipulution
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o Rcspccftlly submittcd this !-* *rof Dooerrber 2005.
ldaho Publlc Utilities Cornnlrrlon Stlff MHAuerlcsn Enerry Eoldhgr Company
By
MarkC. Moc,nch
Semior Vioc Ptosident, Law
Monsanto Company
t2*-ld-or
R Edoll C,
Raoinc, OlsarL Nye, Budge & Bailcy,
Chartpr€d
Communlty Actiou Ptrrtu€rship
Associetion of ldaho (CAP{)
Brad M. hrdy
Attomey atlawa
o STIPULATION -Page 7
n,,
Bv
Bv
Bv
BxhibitNo.l5
Case No, PAC-E-05-8
Joint Applicants
Wihess; Mark C. Moench
o
I
MEHC Acquisition of PaciliCorp
Idaho
Consolidated List of Commitments
Commitmentg Annlicable to AII States
1) MEHC and PacifiCorp affirm the continuation (through March 31,2008) of the
existing customer service guarantees and performance standards in each
jurisdiction. MEHC and PacifiCorp will not propose modifications to the
guarantees and standards prior to March 31, 2008. Refer to Commitment 45 for the
extension of this commitment through 201l.
2) Penalties for noncompliance with performance standards and customer guarantees
shall be paid as designated by the Comrnission and shall be excluded from results of
operations. PacifiCorp wi[ abide by the Commission's decision regarding payments
3) PacifiCorp will maintain its own accounting system, sepaxate from MEHC's
accounting system. All PacifiCorp frnancial books and records will be kept in
Portland, Oregon. PacifiCorp's financial books and records and state and federal
utility regulatory filings and documents will continue to be available to the
Commission, upon request, at PacifiCorp's offices in Portland, Oregon, Salt Lake
City, Utatr, and elsewhere in accordance with cunent practice.
4) MEHC and PacifiCorp will provide the Commission access to all books of account,
as woll as all documents, data, and records of their affiliated interests, which pertain
to tansactions between PacifiCorp and its affiliated interests or which are otherwise
relevant to the business of PacifiCorp. This commitment is also applicable to the
books and records of Berkshire Hathaway, which shall retain its books and records
relevant to the business of PacifiCorp consistent with the manner and time periods of
the Federal Energy Regulatory Commission's rEcord retention requirements that are
applicable to PacifiCorp's books and records.
5) MEHC, PacifiCorp and all affiliates will make their employees, offrcers, directors,
and agents available to testify before the Commission to provide information relevant
to matters within the jurisdiction of the Commission.
6) The Commission or its agents may audit the accounting records of MEHC and its
subsidiaries that aro the bases for charges to PacifiCorp, to determine the
reasonableness of allocation factors used by MEHC to assign costs to PacifiCorp and
amounts subject to allocation or direct charges. MEHC agrees to cooperate fully with
such Commission audits.
IDAI..IO COMMI]MENTS
CASE NO. PAC-8.05.8 I
o
ExhibitNo, 15
Case No. PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
o MEHC Acquisition of PaciliCorp
Ideho
Consolidated List of Commitmeuts
Commitments Annlicable to All States
1) MEHC and PacifiCorp affirm the continuation (ttuough March 31, 2008) of the
existing customer service guarantees and performance standards in each
jurisdiction. MEHC and PacifiCorp will not propose modifications to the
guarantees and standards prior to March 31, 2008. Refer to Commitment 45 for the
extension of this commitment though 2011.
2) Penalties for nonqompliance with performance standards and customer guarantees
shall be paid as designated by the Commission and shall be excluded from results of
operations. PacifiCorp will abide by the Commission's decision regarding payments
3) PacifiCorp will maintain its own accounting system, separate from MEHC's
aocounting system. All PacifiCorp frnancial books and records will be kept in
Portland, Oregon, PacifiCorp's frnancial books and records and state and federal
utility regulatory filings and documents will continue to be available to the
Commission, upon request at PacifiCorp's offices in Portland, Oregon, Salt Lake
City, Utah, and elsewhere in accordance with cwrent practice.
4) MEHC and PacifiCorp will provide the Commission aocess to all books of account,
as well as all documents, data, and records of their afliliated interests, which pertain
to tansactions between PacifiCorp and its affiliated interests or which are otherwise
relevant to the business of PacifiCorp. This commitment is also applicable to the
books and records of Berkshire Hathaway, which shall retain its books and records
relevant to the business of PacifiCorp consistent with the manner and time periods of
the Federal Energy Regulatory Commission's record retention requirements that are
applicable to PacifiCorp's books and records.
5) MEHC, PacifiCorp and all affiliates will make their employees, offrcers, directors,
and agents available to testi$ before the Commission to provide information relevant
to matters within the jurisdiction of the Commission.
6) The Commission or its agents may audit the accounting records of MEHC and its
subsidiaries that are the bases for charges to PacifiCorp, to determine the
reasonableness of allocation factors used by MEHC to assign costs to PacifrCorp and
amounts subject to allocation or direct charges. MEHC agrees to cooperate fully with
such Commission audits.
IDAHO COMMITMENTS
CASE NO, PAC.E.O5-8
o
1
o
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: MarkC. Moench
o
o
7) MEHC and PacifrCorp will comply with all applicable Commission statutes and
regulations regarding affiliated interest transactions, including timely filing of
applioations and reports,
8) PacifiCorp will file on an annual basis an affiliated interest report including an
organization chart, narrative description of each affiliate, revenue for each affrliate
and transactions with each affiliate.
9) PacifiCorp and MEHC will not cross-subsidize between the regulated and non-
regulated businesses or between any regulated businesses, and shall comply with the
Commission's applicable orders and rules with respect to such matters.
l0) Due to PUHCA repeal, neither Berkshire Hathaway nor MEHC will be registered
public utility holding companies under PUHCA. Thus, no waiver by Berkshire
Hathaway or MEHC of any defenses to which they may be entitled under Ohio Power
Co. v. F8RC,954F.2d779 (D.C. Cir,), cert, denled sub nom, Arcadia v. Ohio Power
Co,,506 U.S. 981 (1992) ('Ohio Power"), is necessary to maintain the Commission's
regulation of MEHC and PacifiCorp, However, while PUHCA is in effect, Berkshire
Hathaway and MEHC waive suoh deferises.
1l) Any diversified holdings and invesfrnents (q., non-utility business or foreign
utilities) of MEHC following approval of the transaction will not be held by
PacifiCorp or a subsidiary of PacifiCorp. Ring-fencing provisions for PPW Holdings
LLC will be the same as those in effect forNNGC Acquisitions, LLC. MEHC and' PacifiCorp will notiff the Commission of any changes in the ring-fencing provisions.
This condition will not prohibit MEHC or its affiliatss other than PacifiCorp from
holding diversifi ed businesses.
12) PacifiCorp or MEHC will notiff the Commission subsequent to MEHC's board
approval and as soon as practicable following any public announcement of: (l) any
acquisition of a regulated or unregulated business representing 5 percent or more of
the capitalization of MEHC; or (2) the change in effective control or acquisition of
any material part or all of PacifiCorp by any other firm, whether by merger,
combination, transfer of stock or assets.
l3) The Intercompany Administrative Services Agreement (IASA) will include the
corporate and affiliate cost allocation methodologies. The LASA will be filed with the
Commission as soon as practicable after the closing of the transaction, Approval of
the IASA will be requested if required by law or rule, but approval for ratemaking
purposes will not be requested in such filing. Refer to Commitment 14 (0.
Amendments to the IASA will also be filed with the Commission.
l4) Any proposed cost allocation methodology for the allocation of corporate and
affiliate investments, expenses, and overheads, required by law or rule to be
submitted to the Comrnission for approval, will comply with the following principles:
IDAI.IO COMMITMENTS
CASE NO. PAC-E-05-8
o
,)
ExhibitNo, l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
o
o
a) For services rendered to PacifiCorp or eeoh gost category subject to allocation to
PacifiCorp by MEHC or any of its affiliates, MEHC must be able to demonstrate
that such service or cost calegory is necessary to PacifiCorp for ttre performance
of its regulated operations, is not duplicative of servioes already being performed
within PacifiCorp, and is reasonable and prudent.
b) Cost allocations to PacifiCorp and its subsidiaries will be based on generally
accepted accounting standards;that is, in general, direct costs will be charged to
specific subsidiaries whenever possible and shared or indirect costs will be
allocated based upon the primary cost-driving factors.
c) MEHC and its subsidiaries will have in place positive time reporting systems
adequate to support the allocation and assignment of costs of executives and other
relevant personnel to PacifiCorp.
d) An audit trail will be maintained such that all costs subject to allocation can be
specifically identified, particularly with respect to their origin, In addition, the
audit trail must be adequately supported. Failure to adequately support any
allooated cost may result in denial of its recovery in rates.
e) Costs which would have been denied recovery in rates had they been ineurred by
PacifiCorp regulated operations will likewise be denied recovary whether they are
allocated directly or indirectly through subsidiaries in the MEHC group.
0Any corporate cost allocation methodology used for rate setting, and subsequent
changes thereto, will be submitted to the Commission for approval if required by
law or rule,
15) PacifiCorp will maintain separate debt and, if outstanding, prefened stock ratings.
PacifiCorp will maintain its own corporate credit rating, as well as ratings for each
long-term debt and prefened stock (if any) issuance,
16) MEHC and PacifiCorp will exclude all costs of the transaction from PacifiCorp's
utility accounts. Within 90 days following completion of the transaction, MEHC will
provide a preliminary accounting of these costs, Further, MEHC will provide the
Commission with a final accounting of these costs within 30 days of the accounting
close.
17) MEHC and PacifiCorp will provide the Commission with unresticted access to all
written information provided by and to credit rating agencies that pertains to
PacifiCorp,
l8) PacifiCorp will not make any distribution to PPW Holdings LLC or MEHC that
will reduce PacifiCorp's common equity capital below 40 percent of its total capital
without Commission approval. PacifiCorp will notifr the Commission if for any
reason its common equity capital is reduced to below 44 percent of its total capital for
a period longer than tluee consecutive months. PacifiCorp's total capital is definod as
common equity, preferred equity and long-term debt, Long-term debt is defined as
debt with a term of one year or more. The Commission and PacifiCorp may
reexamine these minimum common equity percentages as financial conditions or
accounting standards change, and PacifiCorp may request adjustments.
IDAI{O COMMI'I'MTJNTS
CASE NO. PAC.E.O5.8 J
o
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C, Moench
o
o
o
19) The capital requirements of PaoifiCorp, &s determined to be necessary to meet its
obligation to serye the public, will be given a high priority by the Board of Directors
of MEHC and PacifiCorp.
20) Neither PacifiCorp nor its subsidiaries will, without the approval of the
Commission, make loans or hansfer funds (other than dividends and payments
pursuant to the Intercompany Administrative Services Agreement) to MEHC or its
affrliates, or assume any obligation or liability as guarantor, endorser, surety or
otherwise for MEHC or its affiliates; provided that this condition will not prevent
PacifiCorp fiom assuming any obligation or liability on behalf of a subsidiary of
PacifiCorp. MEHC will not pledge any of the assets of the business of PacifiCorp as
backing for any securities which MEHC or its affrliates (but excluding PacifiCorp and
its zubsidiaries) may issue.
2l) MEHC and PacifiCorp, in future Commission proceedings, will not seek a higher
cost of capital than that which PacifiCorp would have sought if the transaction had
not occurred. Specifically, no capital financing costs should increase by virtue of the
fact that PacifiCorp was acquired by MEHC
22) MEHC and PacifiCorp guarantee that the customers of PacifiCorp will be held
harmless if the transaction between MEHC and PacifrCorp results in a higher revenue
requirement for PacifiCorp ttran if the hansaction had not occtrred; provided,
however, that MEHC and PacifiCorp do not intend that this commitment be
interpreted to prevent PacifiCorp from recovering prudently incurred costs approved
for inclusion in revenue requirement by the Commission.
23) PacifiCorp will continue a Blue Sky tariff offering in all states. PacifiCorp will
continue to support this offering through innovative marketing, by modifying the
tariffto reflect the developing green power market and by monitoring national
certification standards.
24) PacifiCorp will continue its commitrnent to gather outside input on environmental
matters, such as through the Environmental Forum,
25) PacifiCorp will continue to have environmental management systems in place that
are self-certified to ISO 14001 standards at all PacifiCorp operated thermal
generation plants.
26) MEHC will maintain at leastthe existing level of PacifiCorp's community-related
contributions, both in terms of monetary and in-kind contributions, The distribution
of PacifiCorp's community'related contributions among the states will be done in a
manner that is fair and equitable to each state.
27) MEHC will continue to consult with regional advisory boards to ensure local
perspectives are heard regarding community issues.
IDAI-IO COMMITMEN'IS
CASE NO. PAC.E-05-8 4
ExhibitNo. l5
Case No. PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
O
o 28) MEHC will honor PacifiCorp's oxisting labor contracts.
29) After the closing of the hansaction, MEHC and PacifiCorp will make no unilateral
changes to employee benefit plans prior to May 23,2007 that would result in the
reduction of employee benefits.
30) PacifiCorp will continue to produce Integra0ed Resource Plans according to the then
current schedule and the then current Commission rules and orders.
31) When acquiring new generation resources in excess of 100 MW and with a
dependable life of 10 or more years, PacifiCorp and MEHC will issue Requests for
Proposals (RFPs) or othenuise comply with state laws, regulations and orders that
pertain to procruement of new generation resources for PacifiCorp.
32) Nothing in these acquisition commitments shall be interpreted as a waiver of
PacifiCorp's or MEHC's rights to request confidential treahent for information that
is the subjeot of any commitments.
33) Unless another process is provided by statute, Commission regulations or approved
PacifiCorp tarif{ MEHC and PacifiCorp encourage the Commission to use the
following process for administering the commitments. The Commission should give
MEHC and PacifiCorp written notification of any violation by either company of the
commitments made in this applioation. If such failure is corrected within ten (10)
business days for failure to file reports, or five (5) business days for other violations,
the Commission should take no action. The Commission shall have the authority to
determine if the corrective action has satisfied or corrected the violation. MEHC or
PacifiCorp may request, for cause, an extension of these time periods. If MEHC or
PacifiCorp fails to correct such violations within the specified time frames, as
modified by any Commission-approved extensions, the Commission may seek to
assess penalties for violation of a Commission order, against either MEHC or
PacifiCorp, as allowed under state laws and regulations.
34) Transmission Inve$tqrent: MEHC and PacifiCorp have identified incremental
transmission projects that enhance reliability, facilitate the receipt of renewable
resources, or enable further system optimization, Subject to permitting and the
availability of materials, equipment and rights-of-way, MEHC and PacifiCorp
commit to use their best efforts to achieve the following transmission system
infrastructure improvementsl :
I While MEHC has immersed itself in the details of PacifiCorp's business activities in the short
time since the announcement of the transaction, it is possible that upon further review a particular
investment might not be cost+ffective, optimal for customers or able to be completed by the target date. If
that should occur, MEHC pledges to propose an altemative to the Commission with a comparable benefit,
The Commission may investigate the reasonableness of any determination by MEHC/PacifiCorp that one
or more of the identified transmission investments is not cost-effective or optimal for customers.
IDAHO COMMITMEN"TS
CASE NO. PAC-E-05-8 5
o
ExhibitNo. 15
Case No, PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
o
o
o
a) Pgth I Upgrade (-$78 million) - Increase Path C capacity by 300 MW (from S.E.
Idaho to Northern Utah). The target completion date for this project is 2010. This
project:o enhances reliability because it increases transfer capability between the east
and west conhol axeas,o facilitates the delivery of power from wind projects in Idaho, and. provides PacifiCorp with greater flexibility and the opportunity to consider
additional options regarding planned generation capacity additions.
b) Mona - Oquirrh (-$196 miiliqn) - Increase the import capability from Mona into
the Wasatch Front (from Wasatch Front South to Wasatch Front North). This
project would enhance the ability to import powsr from new resources delivered
at or to Mon4 and to import from Southern Califomia by "wheeling" over the
Adelanto DC tie. The target completion date for this project is 201 l. This
project:o enhances reliability by enabling the import of power from Southern Califomia
entities during emergency situations,r facilitates the acceptance of renewable resources, andr enhances further system optimization since it enables the further purchase or
exchange of seasonal resources from parties capable of delivering to Mona,
c) Walla Walla -Yakirgq or Mid-C (-$88 million) - Establish a link between the
"Walla Walla bubble" and the "Yakima bubble" and/or reinforce the link between
the "Walla Walla bubble" and the Mid-Columbia (at Vantage). Either of these
projects presents oppornrnities to enhance PacifiCorp's ability to ascept the output
from wind gonerators and balance the system cost effectively in a regional
environment. The target oompletion date for this project is 2010.
35) Other T.{qlrsmission and Distribution Matters.: MEHC and PacifiCorp make the
following commitments to improve system reliability:
a) investment in the Asset Risk Program of $75 million over the three years, 2007-
2009,
b) investment in local transmission risk projects across all states of $69 million over
eight years after the close of the transaction,
c) O & M expense for the Accelerated Distribution Circuit Fusing Program across
all states will be increased by $ 1.5 million per year for five years after the close of
the transaction, and
d) extension of the O&M investment across all states for the Saving SAIDI Initiative
for tluee additional years at an estimated cost of $2 million per year.
e) MEHC and PacifiCorp will support the Bonneville Power Administration in its
development of short-term products such as conditional firm. Based on the
outcome from BPA's efforts, PacifiCorp will initiate a process to collaboratively
design similar products at PacifiCorp. PacifiCorp will continue its Partial Interim
Service product and its tariff provision that allows transmission customers to alter
pre-scheduled transactions up to twenty rninutes bofore any hour, and will notify
IDAFIO COMMITM[iN:IS
CASE NO, PAC-11-05-8 6
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
a
o
parties to this proceeding if it proposes changes to these two elements of its
OATT.
36) Resional Transmissio-nj, MEHC recognizes that it can and should have a role in
addressing the critical importance of tansmission infrastrusture to the states in which
PacifiCorp seryes, MEHC also recognizes that some tmnsmission projects, while
highly desirable, may not be appropriate investments for PacifiCorp and its regulated
customers. Therefore, MEHC shareholders commit their resources and leadership to
assist PacifiCorp states in the development of transmission projects upon which the
states can agree. Examples of such projects would be RMATS and the proposed
Frontier tansmission line.
37) Reduced Cost of Debt: MEHC believes that PacifiCorp's inoemental cost of long-
term debt will be reduced as a result of the proposed transaction, due to the
association with Berkshire Hatlraway. Historically, MEHC's utility subsidiaries have
been able to issue long-term debt at levels below their peers with similar credit
ratings. MEHC commits that over the next five years it will demonstrate that
PacifiCorp's incremental long-term debt issuances will be at least a spread of ten
basis points below its similarly rated peers. MEHC's demonstration will include
information from a third party industry expert supporting its calculation and
conclusion. If MEHC is unable to demonshate to the Commission's satisfaction that
PacifiCorp has achieved at least a ten-basis point reduclion, PacifiCorp will accept up
to a ten (10) basis point reduction to the yield it actually incurred on any incremental
long-term debt issuancos for any revenue requirement calculation effective for the
five-year period subsequent to the approval of the proposed acquisition. It is
projected that this benefrt will yield a value roughly equal to $6.3 million over the
post-acquisition fi ve-year period.
38) Comorate Ovelhqad Chfrqes: MEHC commits that the corporate charges to
PacifiCorp from MEHC and MEC will not exceed $9 million annually for a period of
five years after the closing on the proposed transaction. (In FY2006, ScottishPower's
net cross-charges to PacifiCorp are projected to be $15 million.).
39) Future Generation Options; In Commitnent 31, MEHC and PacifrCorp adopt a
commitment to source future PacifiCorp generation resources consistent with the then
current rules and regulations of each state. In addition to that commitment, for the
next ten yoffi, MEHC and PacifiCorp oommit that they will submit as part of any
commission approved RFPs for resources with a dependable life greater than t0 years
and greater than 100 MW, --including renewable energy RFPs --a 100 MW or
more utility "owr/operate" alternative for the particular resource. It is not the intent
or objective that such alternatives be favored over other options. Rather, the option
for PacifiCorp to own and operate the resource which is the subject of the RFP will
enable comparison and evaluation of that option against other viable altematives. In
addition to providing regulators and interested parties with an additional viable option
for assessment, it can be expected that this commitment will enhance PacifiCorp's
ability to increase the proportion of cost-effective renewable energy in its generation
IDAHO COMMI'TMENTS
CASE NO, PAC.E-05-8 7
o
Exhibit No. l5
Case No, PAC-E-05-8
Joint Applicants
Witness: Mark C, Moench
a
o portfolio, based upon the actual experience of MEC and the "Renewable Energy"
commitment offered below
40) Renewable Energy: MEHC reaffirms PacifiCorp's comrnifinent to acquire 1400
MW of new cost-effective renewable resources, representing approximately 7% of
PacifiCorp's load. MEHC and PacifiCorp commit to work with developers and
bidders to bring at least 100 MW of cost-effective wind resources in service within
one year of the close of the ftansaction.
MEHC and PacifiCorp expect that the commitment to build the Walla-Walla and Path
C fiansmission lines will facilitate up to 400 MW of renewable resource projects with
an expected in-servioe date of 2008 -20I0. MEHC and PacifiCorp commit to actively
work with developers to identiff other ffansmission improvements that can facilitate
the delivery of sost-effeotive wind energy in PacifiCorp's service area.
In addition, MEHC and PacifiCorp commit to work constructively with states to
implement renewable energy action plans so as to enable PacifiCorp to achieve at
least 1400 MW of cost-effective renewable energy resources by 2015. Such
renewable energy resources are not limited to wind energy resources.
41) Coal Technolo$A MEHC supports and affrms PacifiCorp's commitment to. consider utilization of advanced ooal-fuel technology suoh as zuper-critical or IGCC
technology when adding coal-fu eled generation.
42) Greenhouse Gas Emission Bedlctiofr.;. MEHC and PacifiCorp commit to participate
in the Environmental hoteotion Agency's SF5Emission Reduction Partnership for' Electic Power Systems. Sulfur hexafluoride (SFo) is a highly potent greenhouse gas
used in the electric industry for insulation and sunent intemrption in electric
transmission and distribution equipment. Over a 100-year period, SFo is 23,900 times
more effective at trapping in&ared radiation ttran an equivalent arnount of CO2,
making it the rnost highly potent, known greenhouse gas, SF6 is also a tery stable
chemical, with an atmospheric lifetime of 3,200 years. As the gas is emitted, it
accumulates in the atnosphere in an essentially un-degraded state for many centuries,
Thus, a relatively small amount of SFo can have a significant impact on global
climate change. Through its participation in the SF6 partnership, PacifiCorp will
commit to an appropriate SFo emissions reduction goal and annually report its
estimated SF6 emissions. This not only reduces gteenhouse gas emissions, it saves
money and improves grid reliability. Sinoe 1999, EPA's SF6 partner companies have
saved $2.5 million from the avoided gas loss alone. Use of improved SFo equiprnent
and managemont praotices helps protect system reliability and efficiency.
Additionally, PacifiCorp will develop a strategy to identif and implement cost-
effective measures to reduce PacifiCorp's greenhouse gas emissions.
43) Emissioq Reductions from Coal:luele.d Generating Plants: Working with the
affected generation plant joint owners and with regulators to obtain required
approvals, MEHC and PaoifiCorp commit to install the equipment likely to be
necessary under future emissions control scenarios at a cost of approximately $812
IDAI.IO COMMI'TMENTS
CASE NO, PAC-N.05.8 8
o
ExhibitNo. l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
{million. Concurrent with any application for an air permit, MEHC and PaoifiCorp
will discuss its plans regarding this commitment with interested parties and solicit
input, While additional expenditures may ultimately be required as future emission
reduction requirements become better defined, MEHC believes these invesfinents in
emission control equipment are reasonable and environmentally benefioial. The
execution of an emissions reduction plan for the existing PacifiCorp soal-fueled
facilities, combined with the use of reduced-emissions coal technology for new coal-
fueled generation, is expected to result in a significant decrease in the emissions rate
of PacifiCorp's coal-fueled generation fleet. The investments to which MEHC is
committing are expected to result in a decrease in the SOz emissions rates of more
than 50%, a decrease in the NO* emissions rates of more tyLan40yo, a reduction in the
mercury emissions rates of almost 40%, and no increase expected in ttre COz
emissions rate.
44) Energv Effiqienqy and DSM Manaeement:
a) MEHC and PacifiCorp committo conducting a company-defined third-party
market potential study of additional DSM and energy efficiency opporturities
within PacifiCorp's service areas. The objective of the study will be to identify
opportunities not yet identified by the company and, if and where possible, to
recommend prograrns or actions to pursue those opportunities found to be cost-
effective. The study will focus on opportunities for deliverable DSM and energy
efficiency resources rather than technical potentials that may not be attainable
through DSM and energy efficiency efforB. On-site solar and combined heat and
power programs may be considered in the study. During the three-month period
following the close of the tansaotion, MEHC and PacifiCorp will consult with
DSM advisory groups and other interested parties to define the proper scope of
the study. The findings ofthe study will be reported back to DSM advisory
groups, commission staffs, and other interested stakeholders and will be used by
the Company in helping to dirwt ongoing DSM and energy efficiency efforts.
The study will be completed within fifteen months after the closing on the
transaction, and MEHC shareholders will absorb the first $1 million of the costs
of the study.
b) PacifiCorp further commits to meeting its portion of theNWPPC's energy
efficiency targets for Oregon, Washington and Idaho, as long as the targets can be
achieved in a manner deemed cost-effective by the affected states.
c) In addition, MEHC and PacifiCorp commit that PacifrCorp and MEC will
annually oollaborate to identi$ any incremental programs that might be cost-
effective for PacifrCorp customers. The Commission will be notified of any
additional cost-effective progftms that are identified.
45) Customer Service Standards: MEHC and PacifiCorp commit to continue customer
service guamntees and performance standards as established in each jurisdiction,
provided that MEHC and PacifiCorp reserve the right to request modifications of the
guarantees and standards after March 31, 2008, and the right to request termination
(as well as modification) of one or more guarantees or standards after 201 1. The
IDAHO COMMITMENTS
CASE NO, PAC.E.O5-8
$
9o
Exhibit No. 15
Case No. PAC-E-05-8
Joint Applicants
Wifiress: Mark C, Moench
a guarantees and standards will not be eliminated or modified without Commission
aPproYal.
46) Cpmmunity Involvement and Economic Developnlent: MEHC has significant
experience in assisting its communities with eoonomic development efforts. MEHC
plans to continue PacifiCorp's existing economic development practices and use
MEHC's experience to maximize the effectiveness of these efforts.
47) Corgorate Presence (All Staies).: MEHC understands that having adequate staffrng
and representation in each state is not optional. We understand its importance to
customers, to regulators and to states. MEHC and PacifiCorp commit to maintaining
adequate stafling and presence in each state, consistent with the provision of safe and
rel iable service and cost-effective operations.
48) IRP Stlk-eholder Process: PacifiCorp will provide public notice and an invitation to
encourage stakeholders to participate in the Integrated Resource Plan (IRP) process.
The IRP process will be used to consider Commitments 34,39,40,41 and44.
PacifiCorp will hold IRP meetings at locations or using oommunications technologies
that encourage. broad participation,
49) Repqrting op Stafus, of Commitnents: By June 1,2007 and each June I thereafter
through June l, 201I, PacifiCorp will file a report with the Comrnission regarding the
implementation of the Commitments. The report will, at a minirnum, provide a
description of the performance of each of the commitments that have quantifiable
results. If any of the cornmitments is not being met, relative to the specific terms of
the commitnent, the report shall provide proposed corrective msasuros and target
dates for completion of such measures, PacifrCorp will make publicly-available at
the Commission non-confidential portions of the report,
50) Pension Fundine Policv: PacifiCorp will maintain its current pension funding policy,
as described in the 2005 Actuarial Report, for a period of two years following the
close of the transaction.
I d q,h o-S pecifi c C o m mjEn_e_nts
I l. MEHCEacifiCorp will continue to make a dedicated Irrigation Specialist available
in Rexburg and Shelley in the Idaho service tenitory. The effectiveness of this
service will be reviewed at the end of the 2007 irrigation season to determine
whether it should be continued. The Irrigation Hotline will continue to be available
Monday through Saturday, except holidays, from 7 AM to 7 PM, with the number
published in the phone directory.
12, Water Rights agreements will be abided by MEHC and PacifiCorp.
I 3, MEHC and PacifiCorp will provide the Commission access to corporate minutes,
including Board of Director's minutes and all comrnittee minutes, along with any
3;
IDAI-IO COMMII'MENTS
CASE NO, PAC-E-05-8o 10
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witress; Mark C. Moench
a related source documents that are relevant to the business and risk analysis of
PacifiCorp. PacifiCorp and the Cornmission Staffwill establish an agreeable
procedure to review these confidential documents in Portland, Oregon, Salt Lake
City, Utatr or Boise,Idaho.
| 4, MEHC and PacifiCorp will provide the Commission access to operational, internal
and risk audit reports and documentation. PacifiCorp and the Commission Staffwill
establish an agreeable procedure to review these confidential documents and the
timeline to provide an annual listing of such audits.
I 5. A near-final draft agreement for PPW Holdings LLC that contains the ring-fencing
provisions of Commitment I I will be sent to the Commission Staff by January 15,
2006. The final signed agteement will be frled with the Commission within 30 days
after the close of the transaction.
I 6. Within 30 days of the close of the transaction, PacifiCorp will provide the
Commission with a written list of changes that were made to employee benefit
plans between the announcement of the transaction and the close of the transaction.
PacifiCorp and MEHC will provide 30 days' notice to the Commission prior to
merging PacifiCorp's pension with the pension plan of another MEHC business.
I 7 . Through December 3 I , 201 5, PaoifiCorp will provide the Commission notice when
it intends to increase the amount of dividend payments by l0% or more.
I 8. As pan of ilre DSM study in Commitment 44, PacifiCorp will also consider the
market potential associated with the expansion of existing programs, including the
Inigation and Monsanto load curtailment programs in Idaho. The study will
compare the cost effectiveness of DSM resources with comparable supply side
resources.
I 9. MBHC and PacifiCorp commit to maintain a bid evaluation methodology that
prudently compares any company owned and operated alternative to valid and
conforming bid proposals submitted in response to a supply-side RFP.
I 10. On January 31 , 2005, the Commission acoepted PacifiCorp's proposal to elirninate
its Network Performance Standard relating to Momentary Average Intemrption
Frequency Index (MAIFI) in light of the Company's commitment to develop an
acceptable alternative to MAIFI as soon as possible. The Company has developed
its proposed measurement plan and is scheduled t,o present to the Commission Staff
at its next reliability meeting (scheduled for December20,2005). Within 60 days
after this meeting, the Company will file the plan with the Commission, MEHC
and PacifiCorp comrnit to implement this plan and provide the results of these
calculations to Commission Staff and other interested parties in reliability review
meetings.
IDATTO COMMITMENTS
CASE NO, PAC.E.O5-8
3?
o 11
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
a
I 11. PaoifrCorp is required to apply to the Commission for approval of security
issuances pursuant to Idaho Code Title 61, Chapter 9. PacifiCorp will not seek an
exemption from this requirement for twelve months following the closing of this
transaction. Staffwill evaluate the "all-in-cost" of issuances for inclusion in rates
and as it relates to the Reduced Cost of Debt Commitment 37.
I 12, MEHC and PacifiCorp acknowledge that the Commitments being made by MEHC
and PacifiCorp are binding only upon them and their affiliates where noted (and
upon Berkshire Hathaway where specifically mentioned). In this proceeding
Applicants ere not requesting a delermination of the prudence, just and reasonable
character, rate or ratemaking teatment, or public interest of the investments,
expenditures or actions referenced in the Commitments. In other appropriate
proceedings, the parties may take positions regarding the prudence, just and
reasonable character, rate or ratemaking treatnent, or public interest of the
invesfrnents, expenditures or actions referenced in these Commitments as the parties
deem appropriate.
I 13. With respect to the Low Income Westherization Program managed by community
action agencies in Idaho, PacifiCorp commits to the following:
a) Within 30 days of completion of the tansaction, PacifiCorp will file proposed
revisions to its Sohedule 2l Tariff to effect a change in funding of conservation
measures from 50% of meastre oost to 10070 of measure cost when federal
matching funds are no longer available to fund measures at PacifiCorp
customer's premise, subject to the $150,000 annual flrnding limit in the tariff.
b) In PacifiCorp's next Idaho general rate case, PaoifiCorp will include in its direct
testimony an analysis of the costs and benefits of changing its current practice
of matching 50% of federal contributions to matching at a higher percentage
amount.
I 14, MEHC and PacifiCorp commit up to $20,000 annually for five years to match
Idaho customer and employee contributions to Lend-a-Hand. This contribution will
be recorded in non-utility accounts, When appropriate, MEHC and PacifiCorp
commit to work with low-income advocates and consumer $oups to evaluate
additional matching contributions.
I 15. MEHC commits to provide shareholder funds to hire a consultant to study and
design for possible implementation an arrearage management project for low-
income customers. PacifiCorp will provide a resource for facilitation of a working
group to oversee the project. The project will be developed by PacifiCorp in
conjunction with the ldaho Public Utilities Commission, the Utah Division of
Public Utilities, the Utah Committee for Consumer Services, low-income advocates
and other interested parties. The goals of the project will include reducing service
terminations, reducing refenalof delinquent customers to third party collection
agencies, reducing arrearages and collection litigation, and increasing voluntary
customer payments of arrearages. The amount of shareholder firnds for this study
will be up to $66,000 on a total company basis if all six PacifrCorp states elect to
t?
IDATIO COMMI'IMENTS
CASE NO. PAC.E-05-8o 12
ExhibitNo. l5
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C. Moench
{participate. If less than six states participate, the amount of the shareholder funds
will be reduced proportionally.
I 16. MEHC and PacifrCorp will provide notification of and file for Commission
approval of the divestiture, spin-0ff, or sale of any integral PacifiCorp function.
This condition does not limit any jurisdiction the Commission may have.
I 17. PacifiCorp or MEHC will notify the Commission prior to implementation of plans
by PacifiCorp or MEHC: (1) to form an affiliate for ttre purpose of transacting
business with PacifiCorp's regulated operations; (2) to commence new business
transactions between an existing affiliate and PacifiCorp; or (3) to dissolve an
affiliate which has transacted substantial business with PacifiCorp.
I 18. The premium paid by MEHC for PacifiCorp will be recorded in the accounts of the
acquisition oompany and not in the utility accounts of PasifiCorp. By this
oommitnent MEHC and PacifiCorp axe not agreeing or ottrerwise committing to
waive any arguments that they might have pertaining to a symmetrical expense
adjustment based on the regulatory theory of the matching principle in the event a
party in a proceeding bofore the Commission proposes an adjustment to
PacifiCorp's revenue requirement associated with the imputation of benefits (other
than those benefits committed to in this hansaction) accruing from PPW Holdings
LLC, MEHC, or affiliates. MEHC and PacifiCorp acknowledge that neither the
Commission nor any party to this proceeding is being asked to agree with or accept
any such arguments or to waive any right to assert or adopt such positions regarding
the prudenoe, just and reasonable character, rate or ratemaking impact or treatment,
or public interest as they dbem appropriate pertaining to this commitrnent.
I 19 PacifiCorp will provide semi annual reports to the Commission and Commission
Staff describing PacifiCorp's performance in meeting service standard
commitments, including both performance standards and customer guarantees.
I 20. PacifiCorp will provide to the Commission, on an informational basis, credit rating
agency news releases and frnal reports regarding PacifiCorp when such reports are
known to PacifiCorp and are available to the public.
I 21. MEHC commits that immediately following the closing of the fiansaction, the
acquiring company (PPW Holdings LLC) willhave no debt in its capital structure.
MEHC and PacifiCorp commit to provide the Commission 30 days prior notice if
PPW Holdings LLC ever intends to issue debt. MEHC and PacifiCorp
acknowledge that if PPW Holdings LLC does issue debt, the Commission has the
authority to consider whether additional ring-fencing provisions may be
appropriate.
I22. MEHC and PacifrCorp commit to form an IGCC Working Group, sponsored by
PacifiCorp to discuss various policy and technology issues associated with IGCC,
carbon capture, and sequestration. Working Group members would include i
IDAHO COMMITMENTS
CASE NO. PAC-E-05-8
tt
o l3
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witress: Mark C. Moench
I representatives from major stakeholder and regulatory groups, PacifiCorp and
MEHC officials, and others as appropriate. Some issues and challenges to
development that would be oonsidered by the Working Group would include:r the status of development of carbon sequestration policy and methods,
inoluding requirements for monitoring and verifying sequesfration options;r information sharing, so that, to the extent possible, all parties develop a shared
understanding of expected IGCC technology benefits, expected capital and
O&M costs, and potentialrisks;r information sharing to understand such terms and associated requirements
with concepts such as "carbon capfure ready" and o'permanent sequestation";r issues related to technology of and permitting for IGCC air emissions, waste
disposal, water use and site usage;. commercial terms and conditions associated wiilr IGCC plant development,
construction, and maintenance; andr implications of SB 26 on development of IGCC plants given the implications
of long development lead times, development costs, project risk, and cost
uncertainty,
The IGCC Working Group would meet periodically to discuss the above issues
and identiff possible solutions, and to stay abreast of the evolving technology and
commercial environment.
I 23. PacifiCorp agrees to include the following items in the 2006IRP:
a) a wind penetration study to reappraise wind integration costs and cost-effective
renewable energy levels; and
b) an assessment of transmission options for PacifiCorp's system identified in the
RMATS scenario I related to facilitating additional generation at Jim Bridger
and, on equal footing, new cost-effective wind resources.
124. Atthe time of the closing of the transaction, MEHC will file with the Commission a
letter from Berkshire Hathaway committing to be bound by Commitments 4 and 5
and any other commitments applicable to affiliates of MEHC.
I 25. The scope of the "most favored nation" commiunent contained in Section III of the
Stipulation will extend to and include any resolution or settlement prior to closing
of the transastion of any procedural, jurisdictional or federal law iszues or disputes
raised in Paci/iCorp vs. Rob Hurless, Case No. CV-04-031J, United States District
Court, District of Wyoming, regardless of the manner, context or proceeding in
which any such settlement or resolution paid in connection with such settlement or
resolution, to the extent such settlement or resolution includes any kind of ongoing
waiver, or agreement to litigate in state tribunals, of any federal preemption, filed
rate doctrine or similar federal issues, or any other limitation, condition or waiver of
federal jurisdiction or federal forum as it relates to state ratemaking (refened to
hereinafter as a procedural limitation clause ('PLC")). If any PLC is agreed to by
PacifiCorp in any such settlement or resolution, PacifiCorp agrees to identiff the
PLC in stand-alone language and MEHC agrees to include such PLC as a deemed
t"
IDAI{O COMMITMENI'S
CASE NO. PAC.E.O5-8a t4
ExhibitNo. 15
Case No. PAC-E-05-8
Joint Applicants
Witness: Mark C, Moench
{
commitment to the Wyoming transaction docket and by virtue of the most favored
nations clause referred to above, the PLC will be available for adoption in Idaho
pursuant to the procedures in the Stipulation,
I 26. MEHC and PacifiCorp will supplement the report filed with the Cornmission,
pursuant to Commitment 49 by inoluding information regarding the implementation
of eaoh of the Idaho-Specific Commiunents I 1 through I25.
N :PACE0508_Commitments_dh
IDAHO COMMI'TMENTS
CASE NO. PAC.E-05-8
o"
o l5
i:ilil\/[D
o
James M. Van Nostrand, ISB No. 7323
STOEL RIVES LLP
900 SW Fifth Avenue, Suite 2600
Portland, OR 97204
Telephone: [phone]
Fax: [phone]
Email: [e-mail]
i5 Pi,i 5: 03
Joint Counsel for MidAmerican Energy
Holdings Company and PacifiCorp dba Utah
Porver & Light Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
APPLICATION OF MIDAMERICAN
ENERGY HOLDINGS COMPANY AND
PACIFICORP DBA UTAH POWER &
LIGHT CO]\{PANY FOR AN ORDER
AUTHORIZING PROPOSED
TRANSACTION
CASE NO. PAC-E.05-8
STIPULATION
This Stipulation ("Stipulation") is entered into by and among PacifiCorp, doing business
as Utah Power & Light Company ("PacifiCorp"), MidAmerican Energy Holdings Company
("MEHC"), the Idaho Public Utilities Commission Staff ("Staff'), Monsanto Company
("Monsanto"), the Idaho Irrigation Pumpers Association ("llPA"), J.R. Simplot Company
("Simplot"), Community Action Partnership Association of Idaho ("CAPAI"), and Idaho Power
Company ("ldaho Power")l (collectively refened to as the "Parties").
I. INTRODUCTION
l. The terms and conditions of this Stipulation are set forth herein. The Parties
agree that this Stipulation represents a fair, just and reasonable compromise of the issues raised
in this proceeding and that this Stipulation is in the public interest. The Parties, therefore,
I Although it is not a signatory to this Stipulation, ldaho Power does not oppose either the senlement of this matter
or the terms of the Stipulation.
Exhibit No. l0l
Case No. PAC-E-05-8
T. Carlock, StaffSTIPULATI'N - Page I
1 yz^ros page 1 of 25
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o recommend that the Public Utilities Commission ("Commission") approve the Stipulation and all
of its terms and conditions. Reference IDAPA 31.01 .01.272,274.
II. BACKGROUND
2. On July 15,2005, MEHC and PacifiCorp (sometimes hereinafter jointly referred
to as "Applicants") filed an Application with the Commission seeking authorization pursuant to
Idaho Code $ 6l-328 authorizing a proposed transaction ("Transaction") whereby MEHC would
acquire all of the outstanding common stock of PacifiCorp and PacifiCorp would thereafter
become an indirecl r,r,holl), owned subsidiary of MEHC. On August 17 , 2005, Applicants '
submitted a revised Application reflecting the impact of the enactment of the Energy Policy Act
of 2005, including the repeal of the Public Utility Holding Company Act of 1935.
3. On August I 8, 2005, the Commission issued a Notice of Application and a Notice
of Revised Application.
4. Petitions to intervene in this proceeding were filed by Monsanto, IIPA, Simplot,
CAPAI, Idaho Power Company and IBEW Local 57. By various orders, the Commission
granted these interventions.
5. Pursuant to the Commission's Order No. 29867, representatives of the Parties met
on November 2 and engaged in initial settlement discussions u,ith a view toward resolving the
Application in this case. Subsequent discussions u'ere held on December 8.
Based upon the settlement discussions among the Parties, as a compromise of the
positions in this case, and for other consideration as set forth below, the Parties agree to the
following terms:
III. TERMS OF THE STIPULATION
6. Appendix A contains the complete list of Commitments that Applicants
collectively and individually agree to make in exchange for the support of the Parties in this
proceeding (hereinafler referred to as "Commitments"). The Commitments are comprised of
general commitments applicable to all the states in u'hich PacifiCorp's service territory extends
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page2 of 25
o
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STIPULATION - Page2
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and Idaho-specific commitments u'hich apply only to the activities and operations of Applicants
within ldaho. By virtue of executing this Stipulation, the Applicants agree to perform all of the
Commitments set forth in Appendix A according to the provisions of each Commitment as set
forth therein.
7 . In the process of obtaining approvals of the Transaction in other states, the
Commitments may be expanded or modified as a result of regulatory decisions or settlements.
The Applicants agree that the Commission shall have an opportunity and the authority to
consider and adopt in Idaho any commitments or conditions to which the Applicants agree or
with which the Applicants are required to comply in other jurisdictions, even if such
commitments and conditions are agreed to after the Commission enters its order in this docket.
To facilitate the Commission's consideration and adoption of the commitments and conditions
from other jurisdictions, the Parties urge the Commission to issue an order accepting this
Stipulation as soon as practical, but to reserve in such order the explicit right to re-open
Appendix A to add (without modification of the language thereof except such non-substantive
changes as are necessary 1o make the commitment or condition applicable to ldaho)
commitments and conditions accepted or ordered in another state jurisdiction. To provide input
to the Commission to facilitate a prompt decision regarding the desirability or lack of desirability
for these out-of-state commitments and conditions to be adopted in Idaho, the Parties agree to
and recommend the following process:
. Within five calendar days afler a stipulation with new or amended commitments
is filed by the Applicants with a commission in another state jurisdiction,
Applicants will send a copy of the stipulation and commitments to the Parties.
. Within fir,e calendar da1's after a commission in another state jurisdiction issues
an order that accepts a stipulation to u,hich Applicants are a partl' or otheru'ise
imposes new or modified commitments or conditions, that order, together u'ith all
commitmcnts and conditions of any t1,pe agreed to bl,Applicants or ordered by
the commission in such other state, u,ill be filed with the Commission and served
Exhibit No. 101
Case No. PAC-E-05-8
STIPULATION - Page 3 T. Carlock, Staff
12120105 Page 3 of 25
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on all parties to this docket by the most expeditious means practical. Within ten
calendar days after the last such filing from the other states ("Final Filing"), any
party to the docker u'ishing to do so shall file with the Commission its response,
including its position as to whether any of the covenants, commitments and
conditions from the other jurisdictions (without modification of the language
thereofexcept such non-substantive changes as are necessary to make the
commitment or condition applicable to Idaho) should be adopted in Idaho.
o Within five calendar days after any such response filing. any party to the docket
may file a reply with the Commission. The parties agree to support in their filings
(or by represenlation of same by MEHC) the issuance b1,the Commission of an
order regarding the adoption of such commitments and conditions as soon as
practical thereafter, recognizing that the transaction cannot close until final state
orders have issued.
8. Not later than the Final Filing, MEHC and PacifiCorp u,ill disclose to the Parties
any written commitments, conditions or covenants made in another state jurisdiction (between
the date of the filing of the Stipulation and the receipt of the last state order in the transaction
docket) intended to encourage approval ofthe transaction or avoidance ofan objection thereto.
9. The Parties, by signing this Stipulation, acknowledge that the Applicants have
satisfied the standard under ldaho Code $ 6l-328 for approval of the Transaction and request
that the Commission issue its order approving the Application and this Stipulation. The Parties
encourage the Commission to enter a final Idaho approval order by February 28,2006.
10. The Parties submit this Stipulation to the Commission and recommend approval
in its entirety pursuant to IDAPA 31.01.01 .274. Parties shall support this Stipulation before the
Commission, and no Parly shall appeal any portion of this Stipulation or Order approving the
same. If this Stipulation is challenged b1,any person not a party to the Stipulation, the Pa(ies to
this Stipulation reserve tlie right 10 cross-examine u,itnesses and put on such case as they deem
appropriate to respond fulll,to the issues presented, including the right to raise issues that are
Exhibit No. 101
srtpuLATIoN - page 4 case No' PAC-E-05-8
T. Carlock, Staff
12120105 Page 4 of 25
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incorporated in the settlements embodied in this Stipulation. Notwithstanding this resen ation of
rights, the Parties to this Stipulation agree that they u'ill continue to support the Commission's
adoption of the terms of this Stipulation.
I I . The Parties agree that this Stipulation represents a compromise of the positions of
the Parties in this case. Other than the above referenced positions and any testimony filed in
support of the approval of this Stipulation, and except to the extent necessary for a Party to
explain before the Commission its own statements and positions u,ith respect to the Stipulation,
all negotiations relating to this Stipulation shall not be admissible in evidence in this or any other
proceeding regarding this subject matter.
12. Applicants acknowledge that the Commission's approval of the Stipulation, the
Commitments or the Joint Application shall not bind the Commission in other proceedings with
respect to the determination of prudence, just and reasonable character, rate or ratemaking
treatment, or public interest of services, accounts, costs, investments, any particular construction
project, expenditures or actions referenced in these Commitments.
13. In the event the Commission rejects any part or all of this Stipulation, or imposes
any additional material conditions on approval of this Stipulation, each Party resen,es the right,
upon written notice to the Commission and the other Parties to this proceeding, u,ithin 14 days of
the date of such action by the Commission, to withdraw from this Stipulation. In such case, no
Party shall be bound or prejudiced by the terms of this Stipulation, and each Party shall be
entitled to seek reconsideration of the Commission's order, file testimony as it chooses, cross-
examine 'r,itnesses, and do all other things necessary to put on such case as it deems appropriate.
In such case, the Parties immediately will request the prompt reconvening of a prehearing
conference for purposes of establishing a procedural schedule for the completion of the case.
The Parties agree 1o cooperate in development of a schedule that concludes the proceeding on the
earliest possible date, taking inlo account the needs of tlie Parties in participating in hearings and
preparing bricfs.
STIPULATION - Page 5
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 5 of 25
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14. No Party shall be bound, benefited or prejudiced by any position asserted in the
negotiation of this Stipulation, except to the extent expressly stated herein, nor shall this
Stipulation be construed as awaiverof the rights of any Party unless such rights are expressly
waived herein. Execution of this Stipulation shall not be deemed to constitute an
acknowledgment by any Party of the validity or invalidity of any particular method, theory or
principle of regulation or cost recovery. No Party shall be deemed to have agreed that any
method, theory or principle of regulation or cost recovery employed in arriving at this Stipulation
is appropriate for resolving any issues in any other proceeding in the future. No findings of fact
or conclusions of law other than those stated herein shall be deemed to be implicit in this
Stipulation
I 5. Subject to Paragraph I 6 of this Stipulation, the effective date of this Stipulation
shall be the date of the closing of the Transaction.
16. The obligations of the Applicants under this Stipulation are subject to the
Commission's approval of the Application in this docket on terms and conditions acceptable to
the Applicants, in their sole discretion, and the closing of the Transaction.
17. To the extend any of above reference filing dates falls on a weekend or a holiday,
the filing shall be due on the next business day,
STIPULATION - Page 6
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 6 of 25
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o Respectfull),submitted ttris /f aay of December 2005
Idaho Public Utilities Commission Staff MidAmerican Energ' Holdings Companl,
By
Donald L II
Deputy Attorney General
PacifiCorp
By
D. Douglas L'arson
Vice President, Regulation
J.R. Simplot Company
B
R. Scott Pasley
Assistant General Counsel
Idaho Irrigation Pumpers Association
By
Eric L. Olsen
Racine, Olson, N1,e, Budge & Bailey,
Chartered
N :PAC-E-05-08_dh_Stipulation
By
C.
Senior Vice President, Law
Monsanto Company
Randall C. Budge
Racine, Olson, N1,e, Budge & Bailey,
Chartered
Community Action Partnership
Association of Idaho (CAPAI)
By
Brad N,l. Purdy
Attorney at Law
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 PageT of 25
By
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STIPULATION - Page 7
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Respectfully submitted this I't Oay of December 2005.
Idaho Public Utilities Commission Staff l\{idAmerican Energl,Holdings Companl'
By
Donald L. Howell II
Deputy Attorney General
D
Vice President, Regulation
J.R. Simplot Company
B
R. Scott Pasley
Assistant General Counsel
Idaho Irrigation Pumpers Association
B
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey,
Chartered
N :PAC-E-05 -08_dh_Stipu lation
Mark C. Moench
Senior Vice President, Law
Monsanto Company
Randall C. Budge
Racine, Olson, Nye, Budge & Bailey,
Chartered
Communitl' Action Partnership
Association of Idaho (CAPAI)
Brad M. Purdy
Attorney at Law
Exhibit No. l0l
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 8 of 25
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STIPULATION - PageT
Elrr
L2/14/03 WED 09:20 FAX [phone]rt J R Slnplor Co-LeBal
Respectfuily submitted tUi, ,fa"y of Dccembcr 2005.
Idaho Public Utilities Commission Staff MidAmerican Energy Holdings Comprny
By
@ooz
o
Donald L. Howell II
Deputy Attorney General
PacifiCorp
D. Douglas Larson
Vi ce Presidart Regulation
J.R Simplot Company
R.
Assistant Gencral
Idaho Irrigation Pumpers Association
Eric L. Olsen
Racine, Olson, Nye, Budge & Bailey,
Ctrartered
N : PAC-E{5 { 8_dh_Stipulation
Mark C. Mocnch
Senior Vice Presjdent, Law
Monsanto egmFatr/
Randall C. Budge
Racine, Olso[ Nye, Budge & Bailey,
Chartered
Community Action Prrtnenhip
Association of ldaho (CAPAI)
Brad M. Prudy
Attorney at law
B
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Exhibit No. 101
Case No. PAC-E-O5-8
T. Carlock, Staff
12120105 Page 9 of 25
o
STIPULATION - PageT
Ek,
Respectfirlly submitted this -!*urof December 2005
o Idaho Public Utilities Commission Staff MidAmerican Enerry Holdings Company
B
B
B
Donald L. Howell II
Deputy Attorney General
PacifiCorp
By
Mark C. Moench
Senior Vice President, Law
Monsanto Company
Ir tL-14-ar
Randal C. Budge
Racine, Olson, Nye, Budge & Bailey,
Chartered
Community Action Partnership
Association of Idaho (CAPAI)
Brad M. Purdy
Attomey at Law
IBEW Local5T
B
Alan Herzfeld
Herzfeld & Piotrowski
Exhibit No. 101
Case No. PAC-E-O5-8
T. Carlock, Staff
12120105 Page 10 of 25
B
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D. Douglas Larson
Vice President, Regulation
J.R. Simplot Company
R. Scott Pasley
Assistant General Counsel
Association
L. Otsen ellLlo{
Racine, Olson, Nye, Budge & Bailey,
Chartered
N :PAC-E-05-08_dh_Stipulation
B
O
STiPULATION - PageT
l,lilr,,[0
MEHC Acquisition of PacifiCorp
Idaho
:i: jt; Fii 5:03o
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Consolidated List of Commitmcnts
Commitments Anrrlicable to All States
I ) MEHC and PacifiCorp affirm the continuation (through March 3 l, 2008) of the
existing customer service guarantees and performance standards in each
jurisdiction. MEHC and PacifiCorp will not propose modifications to the
guarantees and standards prior to March 31, 2008. Refer to Commitment 45 for the
extension of this commitment through 2011.
2) Penalties for noncompliance with performance standards and customer guarantees
shall be paid as designated by the Commission and shall be excluded from results of
operations. PacifiCorp will abide by the Commission's decision regarding payments
3) PacifiCorp u,ill maintain its own accounting system, separate from MEHC's
accounting system. All PacifiCorp financial books and records will be kept in
Portland, Oregon. PacifiCorp's financial books and records and state and federal
utility regulatory filings and documents u,ill continue to be available to the
Commission, upon request, at PacifiCorp's offices in Poaland, Oregon, Salt Lake
City, Utah, and elsewhere in accordance with cunent practice.
4) MEHC and PacifiCorp will provide the Commission access to all books of account,
as well as all documents, data, and records of their affiliated interests, which perlain
to transactions betu,een PacifiCorp and its affiliated interests or which are otherwise
relevant to the business of PacifiCorp. This commitment is also applicable to the
books and records of Berkshire Hathaway, u,hich shall retain its books and records
relevant to the business of PacifiCorp consistent with the manner and time periods of
the Federal Energy Regulatory Commission's record retention requirements that are
applicable to PacifiCorp's books and records.
5) MEHC, PacifiCorp and all affiliates will make their employees, officers, directors,
and agents available to testify before the Commission to provide information relevant
to matlers r.l,ithin the jurisdiction of the Commission.
6) The Commission or its agents may audit the accounting records of MEHC and its
subsidiaries that are the bases for charges to PacifiCorp, to determine the
reasonableness of allocation factors used by MEIIC to assign costs to PacifiCorp and
amounts subject to allocation or direct charges. MEHC agrees to cooperate fully u'ith
such Commission audits.
] DAI IO CON4 N4 I1.I\1 I]N1.S
CASI-l r.\O. PACI-I:-05-8
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page I I of 25
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7) MEHC and PacifiCorp will comply u,ith all applicable Commission statutes and
regulations regarding affiliated interest transactions, including timely filing of
applications and reports.
8) PacifiCorp will file on an annual basis an affiliated interest report including an
organization chart, narrative description of each affiliate, revenue for each affiliate
and transactions with each affiliate.
9) PacifiCorp and MEHC will not cross-subsidize between the regulated and non-
regulated businesses or between any regulated businesses, and shall comply with the
Commission's applicable orders and rules with respect to such matters.
10) Due to PUHCA repeal, neither Berkshire Hathaway nor MEHC will be registered
public utility holding companies under PUHCA. Thus, no waiver by Berkshire
Hathau,ay or MEHC of any defenses to which they may be entitled under Ohio Pou,er
Co. y,. FERC,954 F .2d 779 (D.C. Cir.), cert. denied sub nom. Arcadia v. Ohio Pou,er
Co.,506 U.S. 981 (1992) ("Ohio Pou,er '), is necessary to maintain the Commission's
regulation of MEHC and PacifiCorp. However, while PUHCA is in effect, Berkshire
Hathaway and MEHC waive such defenses.
I l) Any diversified holdings and investments (e.g., non-utility business or foreign
utilities) of MEHC following approval of the transaction will not be held by
PacifiCorp or a subsidiary of PacifiCorp. Ring-fencing provisions for PPW Holdings
LLC will be the same as those in effect for NNGC Acquisitions, LLC. Il,lEHC and
PacifiCorp will notiff the Commission of any changes in the ring-fencing provisions.
This condition will not prohibit MEHC or its affiliates other than PacifiCorp from
holding diversified businesses.
12) PacifiCorp or MEHC u,ill notify the Commission subsequent to MEHC's board
approval and as soon as practicable follorving any public announcement of: (l) any
acquisition of a regulated or unregulated business representing 5 percent or more of
the capitalization of II4EHC; or (2) the change in effective control or acquisition of
any material part or all of PacifiCorp by any other firm, whether by merger,
combination, transfer of stock or assets.
13) The Intercompany Administrative Services Agreement (IASA) u,ill include the
corporate and affiliate cost allocation methodologies. The IASA u,ill be filed with the
Commission as soon as practicable afler the closing of the transaction. Approval of
the IASA u'ill be requested if required by law or rule, but approval for ratemaking
purposes u,ill not be requested in such filing. Refer to Commitment 14 (l).
Amendments to the IASA u'ill also be filed with the Commission.
14) Any proposed cost allocation methodolog,y for the allocation of corporate and
affiliate investments, expenses, and overheads, required by law or rule to be
submitted to the Commission for approval, ra,ill comply u,ith the follou,ing principles:
o
IDAI IO C()N4 M Il'l\4L:N'fS
CASE NO. PAC-l:-05-8 2
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 12 of 25
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a) For sen'ices rendered to PacifiCorp or each cost category subject to allocation to
PacifiCorp by MEHC or any of its affiliates, MEHC must be able to demonstrate
that such service or cost category is necessary to PacifiCorp for the performance
of its regulated operations, is not duplicative of services already being performed
u'ithin PacifiCorp, and is reasonable and prudent.
b) Cost allocations to PacifiCorp and its subsidiaries will be based on generally
accepted accounting standards; that is, in general. direct costs u,ill be charged to
specific subsidiaries whenever possible and shared or indirect costs will be
allocated based upon the primary cost-driving factors.
c) MEHC and its subsidiaries will have in place positive time reporting systems
adequate to support the allocation and assignment of costs of executives and other
relevant personnel to PacifiCorp.
d) An audit trail will be maintained such that all costs subject to allocation can be
specifically identified, particularly rvith respect to their origin. In addition, the
audit trail must be adequately supported. Failure to adequately support any
allocated cost may result in denial of its recovery in rates.
e) Costs u'hich would have been denied recovery in rates had they been incurred by
PacifiCorp regulated operations will likewise be denied recovery whether they are
allocated directly or indirectly through subsidiaries in the MEHC group.
0Any corporate cost allocation methodology used for rate setting, and subsequent
changes thereto, will be submitted to the Commission for approval if required by
law or rule.
l5) PacifiCorp will maintain separate debt and, if outstanding, preferred stock ratings
PacifiCorp u,ill maintain its own corporate credit rating, as well as ratings for each
long-term debt and preferred stock (if any) issuance.
l6) MEHC and PacifiCorp will exclude all costs of the transaction from PacifiCorp's
utility accounts. Within 90 days following completion of the transaction, MEHC will
provide a preliminary accounting of these costs, Further, MEHC u,ill provide the
Commission with a final accounting of these costs within 30 days of the accounting
close.
17) MEHC and PacifiCorp will provide the Commission u,i1h unrestricted access to all
uritten information provided by and to credit rating agencies that pertains to
PacifiCorp.
l8) PacifiCorp u'ill not make any distribution to PPW Holdings LLC or MEIIC that
will reduce PacifiCorp's common equity capitalbelow 40 percent of its total capital
u'ithout Commission approval. PacifiCorp will notify the Commission if for an1,
reason its common equity capital is reduced to below 44 percent of its total capital for
a period longer than three consecutive months. PacifiCorp's total capital is defined as
common equity, preferred equity and long-term debt. Long-lerm debt is defined as
debt u'ith a term of one year or more. The Commission and PacifiCorp may
reexamine these minimum common equity percentages as financial conditions or
accounting standards change, and PacifiCorp may request adjustments.
I DAI IO COI\4 N4 I.I.N4 ENl"S
CASII N(). PACI-l:i-05-8 3
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 1 3 of 25
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1 9) The capital requirements of PacifiCo.p, as determined to be necessary to meet its
obligation to sen,e the public, will be given a high priority by the Board of Directors
of MEHC and PacifiCorp.
20) Neither PacifiCorp nor its subsidiaries will, without the approval of the
Commission, make loans or transfer funds (other than dividends and payments
pursuant to the Intercompany Administrative Services Agreement) to MEHC or its
affiliates, or assume any obligation or liability as guarantor, endorser, surety or
otherwise for MEHC or its affiliates; provided that this condition will not prevent
PacifiCorp from assuming any obligation or liability on behalf of a subsidiary of
PacifiCorp. MEHC will not pledge any of the assets of the business of PacifiCorp as
backing for any securities which MEHC or its affiliates (but excluding PacifiCorp and
its subsidiaries) may issue.
2l) MEHC and PacifiCorp, in future Commission proceedings, will not seek a higher
cost of capital than that u,hich PacifiCorp would have sought if the transaction had
not occurred. Specifically, no capital financing costs should increase by virtue of the
fact that PacifiCorp was acquired by MEHC.
22) MEHC and PacifiCorp guarantee that the customers of PacifiCorp rvill be held
harmless if the transaction between MEHC and PacifiCorp results in a higher revenue
requirement for PacifiCorp than if the transaction had not occurred; provided,
however, that MEHC and PacifiCorp do not intend that this commitment be
interpreted to prevent PacifiCorp from recovering prudently incuned costs approved
for inclusion in revenue requirement by the Commission.
23) PacifiCorp will continue a Blue Sky tariff offering in all states. PacifiCorp will
continue to support this offering through innovative marketing, by modifying the
tariff to reflect the developing green power market and by monitoring national
cer1ifi cation standards.
24) PacifiCorp u'ill continue its commitment to gather outside input on environmental
matters, such as through the Environmental Forum.
25) PacifiCorp u,ill continue to have environmental management systems in place that
are self-certified to ISO 14001 standards at all PacifiCorp operated thermal
generation plants.
26) MEIIC u'ill maintain at least the existing level of PacifiCorp's community-related
contributions, both in lerms of monetary and in-kind contributions. The distribution
of PacifiCorp's community-related contributions among the states will be done in a
manner that is fair and equitable to each state.
27) N4EI{C will continue to consult with rcgional advisory boards to ensure local
perspeclives are heard regarding community issues.o
I DA I ] O CO I\4 I\4 II'II4 [iI .\ I'S
CAS I: I .\ O. PACI-I:-05-8 4
Exhibit No. 101
Case No. PAC-E-O5-8
T. Carlock, Staff
12120105 Page 14 of 25
28)
2e)
I D AI {0 CON4N4 I"f I\4 IIN l-S
CASE NO. PAC-I:-05-8
MEHC will honor PacifiCorp's existing labor contracts.o
I
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After the closing of the transaction, MEHC and PacifiCorp will make no unilateral
changes to employee benefit plans prior to May 23,2007 that would result in the
reduction of employee benefits.
30) PacifiCorp will continue to produce Integrated Resource Plans according to the then
current schedule and the then current Commission rules and orders.
3 I ) When acquiring new generation resources in excess of 100 MW and with a
dependable life of l0 or more )'ears, PacifiCorp and MEHC will issue Requests for
Proposals (RFPs) or otherwise comply with state laws, regulations and orders that
pertain to procurement of new generation resources for PacifiCorp.
32) Nothing in these acquisition commitments shall be interpreted as a u,aiver of
PacifiCorp's or MEHC's rights to request confidential treatment for information that
is the subject of any commitments.
33) Unless another process is provided by statute, Commission regulations or approved
PacifiCorp tariff, MEHC and PacifiCorp encourage the Commission to use the
following process for administering the commitments. The Commission should give
MEHC and PacifiCorp written notification of any violation by either company of the
commitments made in this application. If such failure is conected within ten (10)
business days for failure to file reports, or five (5) business days for other violations,
the Commission should take no action. The Commission shall have the authority to
determine if the conective action has satisfied or corrected the violation. MEHC or
PacifiCorp may request, for cause, an extension of these time periods. If MEHC or
PacifiCorp fails to correct such violations rvithin the specified time frames, as
modified by any Commission-approved extensions, the Commission may seek to
assess penalties for violation of a Commission order, against either MEHC or
PacifiCorp, as allowed under state laws and regulations.
34) Transmission Investment: MEHC and PacifiCorp have identified incremental
transmission projects that enhance reliability, facilitate the receipt of renewable
resources, or enable further system optimization. Subject to permitting and the
availability of materials, equipment and rights-of-way, MEHC and PacifiCorp
commit to use their best efforts to achieve the following transmission system
infrastructure improvements I :
I While I\4EHC has immersed itself in the details of PacifiCorp's business activities in the short
time since the announcemenl of the transaction, it is possible that upon furlher review a parlicular
investment might not be cost-effective, optimal for customers or able to be completed by the target date, If
that should occur, MEHC pledges to propose an altemative to the Commission with a comparable benefit.
The Commission may investigate the reasonableness of any determination by MEIIC/PacifiCorp that one
or more of the identified transmission investnrents is not cost-effective or optimal for customers.
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120/05 Page i5 of 25
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a) Path C Uperade (-$78 million) - Increase Path C capacity by 300 MW (from S.E.
Idaho to Northern Utah). The target completion date for this project is 2010. This
project:
. enhances reliability because it increases transfer capability between the east
and west control areas,
. facilitates the delivery of power from wind projects in ldaho, and. provides PacifiCorp u'ith greater flexibility and the opportunity to consider
additional options regarding planned generation capacity additions.
b) Mona ' Oquirrh (-$ 196 million) - lncrease the import capability from Mona into
the Wasatch Front (from Wasatch Front South to Wasatch Front North). This
project would enhance the ability to import power from new resources delivered
at or to Mona, and to import from Southern California by "wheeling" over the
Adelanto DC tie. The target completion date for this project is 2011. This
project:
. enhances reliability by enabling the impo( of power from Southern California
entities during emergency situations,. facilitates the acceptance of renewable resources, and
. enhances further system optimization since it enables the further purchase or
exchange of seasonal resources from parties capable of delivering to Mona.
c) Walla Walla - Yakima or Mid-C (-$88 million) - Establish a link between the
"Walla Walla bubble" and the "Yakima bubble" and/or reinforce the link between
the "Walla Walla bubble" and the Mid-Columbia (at Vantage). Either of these
projects presents opponunities to enhance PacifiCorp's ability to accept the output
from wind generators and balance the system cost effectively in a regional
environment. The target completion date for this project is 2010.
35) Other Transmission and Distribution Matters: MEHC and PacifiCorp make the
following commitments to improve system reliability:
a) investment in the Asset Risk Program of $75 million over the three years ,2007-
2009,
b) investment in local transmission risk projects across all states of $69 million over
eight years after the close of the transaction,
c) O & M expense for the Accelerated Distribution Circuit Fusing Program across
all states rvill be increased by $1.5 million per )'ear for five 1'ears after the close of
the transaction, and
d) extension of the O&M investment across all slates forthe Saving SAIDI Initiative
for three additional 1'ears at an estimated cost of $2 million per year.
e) MEHC and PacifiCorp rvill support the Bonneville Pou'er Administration in its
development of short-term products such as conditional firm. Based on the
outcome from BPA's efforts, PacifiCorp u,ill initiate a process to collaboratively
design similar products at PacifiCorp. PacifiCorp u'ill continue its Partial Interim
Service product and its tariff provision that allows transmission customers to alter
pre-scheduled transactions up to twenty minutes before any hour, and will notify
IDAIIO C()\4 I\4 IT[\,Il :N'l'S
CA S 11 r'r- O. PACI-I:-05-8 6
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 16 of 25
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parties to this proceeding if it proposes changes to these two elements of its
OATT.
36) Reqional Transmission: I\4EHC recognizes that it can and should have a role in
addressing the critical impoftance of transmission infrastructure to the states in which
PacifiCorp serves. MEHC also recognizes that some transmission projects, while
highly desirable, may not be appropriate investments for PacifiCorp and its regulated
customers. Therefore, MEHC shareholders commit their resources and leadership to
assist PacifiCorp states in the development of transmission projects upon which the
states can agree. Examples of such projects would be RMATS and the proposed
Frontier transmission line.
37) Reduced Cost of Debt: MEHC believes that PacifiCorp's incremental cost of long-
term debt will be reduced as a result of the proposed transaction, due to the
association with Berkshire Hathaway. Historically, MEHC's utility subsidiaries hat,e
been able to issue long-term debt at levels below their peers with similar credit
ratings. MEHC commits that over the next five years it will demonstrate that
PacifiCorp's incremental long-term debt issuances will be at least a spread of ten
basis points belorv its similarly rated peers. lr4EHC's demonstration will include
information from a third party industq, expert supporting its calculation and
conclusion, If MEHC is unable to demonstrate to the Commission's satisfaction that
PacifiCorp has achieved at least a ten-basis point reduction, PacifiCory will accept up
to aten (10) basis point reduction to the yield it actually incurred on any incremental
long-term debt issuances for any revenue requirement calculation effective for the
fir,e-year period subsequent to the approval of the proposed acquisition. It is
projected that this benefit will yield a value roughly equal to $6.3 million over the
post-acquisition five-year period.
38) Corporate Overhead Charees: MEHC commits that the corporate charges to
PacifiCorp from MEHC and MEC will not exceed $9 million annually for a period of
five years after the closing on the proposed transaction. (ln FY2006, ScottishPower's
net cross-charges to PacifiCorp are projected to be $ l5 million.).
39) Fulure Generation Options: In Commitment 31, MEHC and PacifiCorp adopt a
commitment to source future PacifiCorp generation resources consistent with the then
current rules and regulations of each state. In addition to that commitment, for the
nexl ten years, MEHC and PacifiCorp commit that they *'ill submit as part of an1,
commission approved RFPs for resources with a dependable life greater than l0;,ears
and greater than 100 MW, --including reneu'able energy RFPs --a 100 MW or
more utility "own/operate" alternatil'e for the particular resource. It is not the intent
or objective that such alternatives be favored over other options. Rather, the option
for PacifiCorp to ow'n and operate the resource which is the subject of the RFP will
enable comparison and evaluation of that option against other viable alternatives. In
addition to providing regulators and interested parties u,ith an additional viable option
for assessment. it can be expected that this commitment will enhance PacifiCorp's
ability to increase the proportion of cost-effective renewable energy in its generation
I DAI IO CO IU N,IITT\4 []N,I.S
CASI NO. PACI-11-05-8 7
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page17 of 25
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portfolio, based upon the actual experience of MEC and the "Renewable Energy"
commitment offered below.
40) Renewable Energv: MEHC reaffirms PacifiCorp's commitment to acquire 1400
MW of new cost-effective renewable resources, representing approximately 7% of
PacifiCorp's load. MEHC and PacifiCorp commit to work with developers and
bidders to bring at least 100 MW of cost-effective wind resources in service within
one year of the close of the transaction.
MEHC and PacifiCorp expect that the commitment to build the Walla-Walla and Path
C transmission lines will facilitate up to 400 MW of renewable resource projects with
an expected in-sen,ice date of 2008 -2010. MEHC and PacifiCorp commit to actively
work with developers to identi$ other transmission improvements that can facilitate
the delivery of cost-effective rvind energy in PacifiCorp's service area.
ln addition, MEHC and PacifiCorp commit to u'ork constructively with states to
implement reneu,able energy action plans so as to enable PacifiCorp to achieve at
least I 400 MW of cost-effective renewable energl, resources by 201 5. Such
reneu,able energy resources are not limited to'*,ind energy resources.
41) Coal Technoloqy: MEHC supports and affirms PacifiCorp's commitment to
consider utilization of advanced coal-fuel technology such as super-critical or IGCC
technology when adding coal-fueled generation.
42) Greenhouse Gas Emission Reduction: MEHC and PacifiCorp commit to participate
in the Environmental Protection Agency's SF6 Emission Reduction Partnership for
Electric Pou'er Systems. Sulfur hexafluoride (SFo) is a highly potent greenhouse gas
used in the electric industry for insulation and current interruption in electric
transmission and distribution equipment. Over a 1O0-year period, SFo is 23,900 times
more effective at trapping infrared radiation than an equivalent amount of COz,
making it the most highly potent, known greenhouse gas. SF6 is also a very stable
chemical. with an atmospheric lifetime of 3.200 years. As the gas is emitted, it
accumulates in the atmosphere in an essentially un-degraded state for many centuries.
Thus, a relatively small amount of SF6 can have a significant impact on global
climate change. Through its participation in the SFo partnership, PacifiCorp will
commit to an appropriate SF6 emissions reduction goal and annually report its
estimated SFo emissions. This not only reduces greenhouse gas emissions, it saves
money and improves grid reliability. Since 1999, EPA's SF6 partner companies have
saved $2.5 million from the avoided gas loss alone. Use of improved SF6 equipment
and management practices helps protect system reliabilitl, and efficiency.
Additionally, PacifiCorp r,,,ill develop a strategy to identifl,and implement cost-
effective measures to reduce PacifiCorp's greenhouse gas emissions.
43)Emission Reducti ons from Coal-Fueled Generatine Plants: Working r,r,ith the
affected generation plant joint o\\'ners and with regulators to obtain required
approvals, MELIC and PacifiCorp commit to install the equipment likely to be
necessar), under future emissions control scenarios at a cost of approximately $812
IDAI IO COI\4 M II'I\4 I|NI'S
CASI: N(). PAC-l-.-05-8 8
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
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million. Concunent with any application for an air permit, MEHC and PacifiCorp
will discuss its plans regarding this commitment with interested parties and solicit
input. While additional expenditures may ultimately be required as future emission
reduction requirements become better defined, MEHC believes these investments in
emission control equipment are reasonable and environmentally 5sr.6cial. The
execution of an emissions reduction plan for the existing PacifiCorp coal-fueled
facilities, combined with the use of reduced-emissions coal technology for new coal-
fueled generation, is expected to result in a significant decrease in the emissions rate
of PacifiCorp's coal-fueled generation fleet. The investments to which MEHC is
committing are expected to result in a decrease in the SOz emissions rates of more
than 5002, a decrease in the NO* emissions rates of more than 40%, a reduction in the
mercury emissions rates of almost 4002, and no increase expected in the COz
emissions rate.
44) Enerqy Efficiency and DSM Management:
a) MEHC and PacifiCorp commit to conducting a company-defined third-party
market potential study of additional DSM and energy efficiency opportunities
within PacifiCorp's senice areas. The objective of the study will be to identify
opportunities not yet identified by the company and, if and where possible, to
recommend programs or actions to pursue those opportunities found to be cost-
effective. The study will focus on opportunities for deliverable DSM and energ),
efficiency resources rather than technical potentials that may not be attainable
through DSM and energy efficiency efforts. On-site solar and combined heat and
power programs may be considered in the study. During the three-month period
following the close of the transaction, MEHC and PacifiCorp will consult with
DSM advisory groups and other interested parties to define the proper scope of
the study. The findings of the study will be reported back to DSM advisory
groups, commission staffs, and other interested stakeholders and will be used by
the Company in helping to direct ongoing DSM and energy efficiency effofts.
The study will be completed u,ithin fifteen months after the closing on the
transaction, and MEHC shareholders will absorb the first $l million of the costs
of the study.
b) PacifiCorp further commits to meeting its portion of the NWPPC's energy
efficiency targets for Oregon. Washington and ldaho, as long as the targets can be
achieved in a manner deemed cost-effective by the affected states.
c) In addition, I\,IEHC and PacifiCorp commit that PacifiCorp and MEC will
annually collaborate to identifl, any incremental progranrs that ntight be cost-
effective for PacifiCorp customers. The Commission u,ill be notified of any
additional cost-effective programs that are identified.
4s)Customer Service Standards: N4EHC and PacifiCorp commit to continue customer
service guarantees and performance standards as established in each jurisdiction,
provided that II4EHC and PacifiCorp reser\/e the right to request modifications of the
guarantees and standards after March 31, 2008, and the right to request termination
(as u,ell as modification) of one or more guarantees or standards afler 201L The
I DAI IO COI\4 N4 II'N4 IJNI'S
CASE NO. PAC-l:-0-5-8 9
Exhibit No. 101
Case No. PAC-E-O5-8
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guarantees and standards u'ill not be eliminated or modified u'ithout Commission
approval.
46) Communitv lnvolvement and Economic Development: MEHC has significant
experience in assisting its communities u,ith economic development efforts. MEHC
plans to continue PacifiCorp's existing economic development practices and use
MEHC's experience to maximize the effectiveness of these efforts.
47) Corporate Presence (All States): MEI{C understands that having adequate staffing
and representation in each state is not optional. We understand its importance to
customers, to regulators and to states. MEHC and PacifiCorp commit to maintaining
adequate staffing and presence in each state. consistent with the provision of safe and
reliable sen,ice and cost-effective operations.
48) IRP Stakeholder Process: PacifiCorp will provide public notice and an invitation to
encourage stakeholders to participate in the Integrated Resource Plan (lRP) process.
The IRP process will be used to consider Commitments 34, 39,40,41 and 44.
PacifiCorp will hold IRP meetings at locations or using communications technologies
that encourage broad participation.
49) Reporting on Status of Commitments: By June 1,2007 and each June I thereafter
through June I ,2011, PacifiCorp will file a report with the Commission regarding the
implementation of the Commitments. The report will, at a minimum, provide a
description of the performance of each of the commitments that have quantifiable
results. If any of the commitments is not being met, relative to the specific terms of
the commitment, the report shall provide proposed corrective measures and target
dates for completion of such measures. PacifiCorp will make publicly-available at
the Commission non-confidential portions of the report.
50) Pension Fundine Polic-r,: PacifiCorp will maintain its cunent pension funding policy,
as described in the 2005 Actuarial Report, for a period of two years following the
close of the transaction.
I L lr4EHC/PacifiCorp u,ill continue to make a dedicated Irrigation Specialist available
in Rexburg and Shelley in the Idaho service territory. The effecti\/eness of this
service u,ill be revieu,ed at the end of the 2007 i.ligation season to determine
u,hether it should be continued. The Irrigation Hotline rvill continue to be available
Monday through Saturday, except holidays, from 7 AM to 7 PM, with the number
published in the phone director,v.
| 2. S/ater Rights agreements will be abided by MEHC and PacifiCorp.
I 3. MEIIC and PacifiCorp rvill provide the Commission access to corporate minutes,
including Board of Director's minutes and all committee minutes, along u'ith any
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I DAI IO COI\4 N4 I"f l\4 I :N'l'S
CASl : n-O. PA[]-l:-05-8
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
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related source documents that are relevant to the business and risk analysis of
PacifiCorp. PacifiCorp and the Commission Staff will establish an agreeable
procedure to review these confidential documents in Portland, Oregon, Salt Lake
City, Utah or Boise, ldaho.
| 4. MEHC and PacifiCorp will provide the Commission access to operational, internal
and risk audit reports and documentation. PacifiCorp and the Commission Staff will
establish an agreeable procedure to review these confidential documents and the
timeline to provide an annual listing of such audits.
I 5. A near-final draft agreement for PPW Holdings LLC that contains the ring-fencing
provisions of Commitment I I will be sent to the Commission Staff by January 15,
2006. The final signed agreement will be filed with the Commission within 30 days
after the close of the transaction.
I 6. Within 30 days of the close of the transaction, PacifiCorp will provide the
Commission with a uritten list of changes that rvere made to employee benefit
plans between the announcement of the transaction and the close of the transaction.
PacifiCorp and MEHC will provide 30 days' notice to the Commission prior to
merging PacifiCorp's pension with the pension plan of another MEHC business.
l7 . Through December 31,2015, PacifiCorp rvill provide the Commission notice when
it intends to increase the amount of dividend pa),ments by l0% or more.
I 8. As part of the DSM study in Commitment 44, PacifiCorp rvill also consider the
market potential associated u'ith the expansion of existing programs, including the
Irrigation and Monsanto load curtailment programs in ldaho. The study will
compare the cost effectiveness of DSM resources with comparable supply side
resources.
I 9. MEHC and PacifiCorp commit to maintain a bid evaluation methodology that
prudently compares any company ou,ned and operated alternative to valid and
conforming bid proposals submitted in response to a supply-side RFP.
I 10. On January 31, 2005, the Commission accepted PacifiCorp's proposal to eliminate
its Network Performance Standard relating to Momentary Average Interruption
Frequency Index (I\4AIFI) in light of the Company's commitment to develop an
acceptable alternative to MAIFI as soon as possible. The Company has developed
its proposed measurement plan and is scheduled to present to the Commission Staff
at its next reliability meeting (scheduled for December 20,2005). \\rithin 60 days
after this meeting, the Compan), \\'ill file the plan with the Commission. MEHC
and PacifiCorp commit to implement this plan and provide the results of these
calculations to Commission Staff and other interested parties in reliability review
meetings.
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CIASI'I t .\ O. PACI-l:i-05-8
Exhibit No. 101
Case No. PAC-E-O5-8
T. Carlock, Staff
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I I l. PacifiCorp is required to apply to the Commission for approval of security
issuances pursuant to Idaho Code Title 61, Chapter 9. PacifiCorp u'ill not seek an
exemption from this requirement for twelve months following the closing of this
transaction. Staff rvill evaluate the "all-in-cost" of issuances for inclusion in rates
and as it relates to the Reduced Cost of Debt Commitment 37.
I 12. MEHC and PacifiCorp acknowledge that the Commitments being made by MEHC
and PacifiCorp are binding only upon them and their affiliates where noted (and
upon Berkshire Hathaway where specifically mentioned). In this proceeding
Applicants are not requesting a determination of the prudence, just and reasonable
character, rate or ratemaking treatment, or public interest of the investments,
expenditures or actions referenced in the Commitments. In other appropriate
proceedings, the parties may take positions regarding the prudence, just and
reasonable character, rate or ralemaking treatment, or public interest of the
investments, expenditures or actions referenced in these Commitments as the parties
deem appropriate.
I 13. Witli respect to the Low Income Weatherization Program managed by community
action agencies in Idaho, PacifiCorp commits to the following:
a) Within 30 days of completion of the transaction, PacifiCorp will file proposed
revisions to its Schedule 21 Tariff to effect a change in funding of consenation
measures from 50% of measure cost to 100% of measure cost when federal
matching funds are no longer available to fund measures at PacifiCorp
customer's premise, subject to the $150,000 annual funding limit in the tariff.
b) In PacifiCorp's next Idaho general rate case, PacifiCorp u,ill include in its direct
testimony an analysis of the costs and benefits of changing its current practice
of matchin g 50% of federal contributions to matching at a higher percentage
amount.
I 14. MEHC and PacifiCorp commit up to $20,000 annually for five years to match
Idaho customer and emplol,ee contributions to Lend-a-Hand. This contribution will
be recorded in non-utility accounts. When appropriate, MEI{C and PacifiCorp
commit to work u,ith lou.income advocates and consumer groups to evaluate
additional matching contributions.
I 15. MEHC commits to provide shareholder funds to hire a consultant to studl, and
design for possible implementation an arrearage management project for low-
income customers. PacifiCorp u'ill provide a resource for facilitation of a u,orking
group to oversee the project. The project will be developed by PacifiCorp in
conjunction u'ith the Idaho Public Utilities Commission, the Utah Division of
Public Utilities, the Utah Committee for Consumer Services, low-income advocates
and other interesled parties. The goals of the project will include reducing service
terminations, reducing referral of delinquent customers to third party collection
agencies, reducing arrearages and collection litigation, and increasing voluntary
customer payments of arrearages. The amount of shareholder funds for this study
will be up to $66,000 on a total company basis if all six PacifiCorp states elect to
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IDAI I0 CO\4 M Il'N4 L:N1"S
CIAS E NO. PACI-I:.-05-8
Exhibit No. 101
Case No. PAC-E-O5-8
T. Carlock, Staff
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participate. If less than six states participate, the amount of the shareholder funds
u,ill be reduced proportionally.
I 16. MEHC and PacifiCorp will provide notification of and file for Commission
approval of the divestiture, spin-off, or sale of any integral PacifiCorp function.
This condition does not limit any jurisdiction the Commission may have.
I 17. PacifiCorp or MEHC will notify the Commission prior to implementation of plans
by PacifiCorp or MEHC: (1) to form an affiliate for the purpose of transacting
business with PacifiCorp's regulated operations; (2) to commence new business
transactions between an existing affiliate and PacifiCorp; or (3) to dissolve an
affiliate u'hich has transacted substantial business u,ith PacifiCorp.
I 18. The premium paid by MEHC for PacifiCorp will be recorded in the accounts of the
acquisition company and not in the utility accounts of PacifiCorp. By this
commilment, MEHC and PacifiCorp are not agreeing or otherwise committing to
rvaive any arguments that they might have pertaining to a symmetrical expense
adjustment based on the regulatory theory of the matching principle in the etent a
party in a proceeding before the Commission proposes an adjustment to
PacifiCorp's revenue requirement associated u,ith the imputation of benefits (other
than those benefits committed to in this transaction) accruing from PPW Holdings
LLC, MEHC, or affiliates. MEHC and PacifiCorp acknou,ledge that neither the
Commission nor any party to this proceeding is being asked to agree with or accept
any such arguments or to waive any right to assert or adopt such positions regarding
the prudence, just and reasonable character, rate or ratemaking impact or treatment,
or public interest as they deem appropriate pertaining to this commitment.
I l9 PacifiCorp will provide semi annual reports to the Commission and Commission
Staff describing PacifiCorp's performance in meeting service standard
commitments, including both performance standards and customer guarantees,
I 20. PacifiCorp will provide to the Commission, on an informational basis, credit rating
agency neu's releases and final repofts regarding PacifiCorp when such reports are
known to PacifiCorp and are available to the public.
I 21 . I\4EHC commits that immediately follou,ing the closing of the transaction, the
acquiring company (PPW Holdings LLC) will have no debt in its capital structure.
MEHC and PacifiCorp commit to provide the Commission 30 days prior notice if
PPW Holdings LLC ever intends to issue debt. MEHC and PacifiCorp
acknorvledge that if PPW Holdings LLC does issue debt, the Commission has the
authority to consider whelher additional ring-fencing provisions may be
appropriale.
| 22. MEHC and PacifiCorp commit to form an IGCC \\rorking Group, sponsored b1'
PacifiCorp to discuss various policy and technology issues associated u'ith IGCC,
carbon capture, and sequestration. Working Group members would include
IDAI IO COI\4 N4 I'l'N4 l :Nl-S
CASIi NO. I'AC-lr-05-8
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
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representatives from major stakeholder and regulatory groups, PacifiCorp and
MEHC officials, and others as appropriate. Some issues and challenges to
development that u,ould be considered by the Working Group would include:
o the status of development of carbon sequestration policy and methods,
including requirements for monitoring and verifying sequestration options;. information sharing, so that, to the extent possible, all parties develop a shared
understanding of expected IGCC technology benefits, expected capital and
O&M costs, and potential risks;. information sharing to understand such terms and associated requirements
with concepts such as "carbon capture ready" and "permanent sequestration";. issues related to technology of and permitting for IGCC air emissions, waste
disposal, water use and site usage;
o commercial terms and conditions associated with IGCC plant development,
construction, and maintenance; and
. implications of SB 26 on developmenl of IGCC plants given the implications
of long development lead times, development costs, project risk, and cost
uncertainty.
The IGCC Working Group would meet periodically to discuss the above issues
and identify possible solutions, and to stay abreast of the evolving technology and
commercial environment.
I 23. PacifiCorp agrees to include the follou'ing items in the 2006 IRP:
a) a u,ind penetration study to reappraise wind integration costs and cost-effective
renewable energy levels; and
b) an assessment of transmission options for PacifiCorp's system identified in the
RMATS scenario I related to facilitating additional generation at Jim Bridger
and, on equal footing, new cost-effective wind resources.
124. At the time of the closing of the transaction, MEHC u,ill file with the Commission a
letter from Berkshire Hathaway committing to be bound by Commitments 4 and 5
and any other commitments applicable to affiliates of MEIIC.
I 25. The scope of the "most favored nation" commitment contained in Section III of the
Stipulation u,ill extend to and include any resolulion or settlement prior to closing
of the transaction of any procedural, jurisdictional or federal la'*,issues or disputes
raised in PacdiCorp vs. Rob Hurless, Case No. CV-04-031J, United States District
Court. District of Wyoming, regardless of the manner, context or proceeding in
u'hich any such setllement or resolution paid in connection u'ith such settlemenl or
resolution, to the extent such settlement or resolution includes any kind of ongoing
waiver, or agreement to litigate in stale tribunals, of any federal preemption, filed
rate doctrine or similar federal issues, or any other limitation, condition or waiver of
federaljurisdiction or federal forum as it relates to state ratemaking (referred to
hereinafler as a procedural linritation clause ("PLC")). If any PLC is agreed to by
PacifiCorp in any such settlement or resolution, PacifiCorp agrees to identifl'the
PLC in stand-alone language and MEI-IC agrees to include such PLC as a deemed
Exhibit No. 101
Case No. PAC-E-05-8
T. Carlock, Staff
12120105 Page 24 of 25
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commitment to the W1'oming transaction docket and by virtue of the most favored
nations clause referred to above, the PLC will be available for adoption in Idaho
pursuant to the procedures in the Stipulation.
I 26. MEHC and PacifiCorp will supplement the report filed with the Commission,
pursuant to Commitment 49 by including information regarding the implementation
of each of the Idaho-Specific Commitments I I through I25.
N : PACE0508_Commitments_dh
I D A I-l O CO I\4 I"'4 ll'l\4 IlnN l'S
CASE NO. PAC-I:.-05-8
Exhibit No. 101
Case No. PAC-E-OS-8
T. Carlock, Staff
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11) a)
Staff Recommended
Modification to Idaho Commitments
Januarv 2006
Any diversified holdings and investments (e.9., non-utility business or foreign
utilities) of MEHC following approval of the transaction rvill not be held by
PacifiCorp or a subsidiary of PacifiCorp. This condition rvill not prohibit
MEHC or its affiliates other than PacifiCorp froni holding diversified
businesses.
b)Ring-fencing provisions for PPW Floldings LLC ,'vill inclLrde the provisions in
Appendix 1. These provisions have been derived from those in effect for
NNGC Acquisition, LLC as of Decenrber l, 2005.
17)MEHC and PacifiCorp will provide the Commission lvith unrestricted access
to all written information provided by and to credit rating agencies that
pertains to PacifiCorp or MEHC. Berksliire Hatliaway and MEHC will also
provide the Commission witl-r urrestricted access to all written infonnation
provided by and to credit rating agencies that pertains to MEIfC's subsidiaries
to the extent such infonnation may potentially impact PacifiCorp.
l8) a)MEHC and PacifiCorp commit that PacifiCorp'uvill not make any dividends to
PPW Holdings LLC or MEHC that will reduce PacifiCorp's comrnon equity
capital below the following percentages of its Total Capital withor"rt
Conrmission approval :
48.25% fi'orn the date of the close of the transaction tluor.rgh
December 31,2008;
47 .25% from January 7, 2009, thror-rgh December 31 , 2009;
46.25% from January 1,2010 through December 31,2010;
45.25% from January 1,201I tluough December 31, 201 i;
44.00% after Decernber 31,2011.
b)PacifiCorp's Total Capital is defined as collllnon equity, preferred equity and
Iong-temr debt. Long-tenn debt is defined as debt with a temr of more than
one year. For pLrrposes of calculating the numerator of the percentage,
con1r1lor1 equity will be increased by 50% of the remaining balance of
preferred stock that r.vas in existence prior to the acquisition of PacifiCorp by
MEHC. PacifiCorp and MEHC will work rvith Conrmission staff to detemine
a percentage of common equity credit to apply to prefered stock issued by
PacifiCorp after the accl-risitiorr of PacifiCorp by MEFIC. In tl-re absence of
such an agreement between Commission staff and the Companies, MEHC and
Snpplen-rental Exhibit No. 102
Case No. PAC-E-05-8
T. Cat'lock, Staff
ll13106 Paee 1 of 2i
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General Commitments Applicable to All States:
4c
o PacifiCorp agree to treat new issuances of prefen'ed stock as 1009/o debt,
unless a Commission order approves a different percentage.
MEHC and PacifiCorp commit that PacifiCorp will not make any dividends to
PPW Iloldirigs LLC or \4EHC that r.vill reduce PacifiCorp's comrnon equity
capital below 35% of its Total Adjusted Capital r,vithor-it Comrnission
approval. For purposes of calculating the numeratol of the percentage,
common equity will not include any portion of PacifiCorp preferred stock
issued and outstanding. PacifiCorp's Total Adjr-rsted Capital is defined as
coruron equity, preferred equity, long-term debt, sirort-term debt and
capitalized I ease ob li gati ons.
The Commission, on its own motion or at tire request of any par1y, may
reexamine the rninirnum common equity percentages as financial conditions
or accounting standards warrant.
fThis Commitment number has intentionally been left blantrr. Commitment 22
is not available if astate selects Oregon-Specific Comrnitrnent 0 12 as Staff
recommends in Idaho-Specific Commitment No. I 31.]
fThis Cornrnitment number has intentionally been left bian]<. Cornmitment 37
is not available if a state selects Oregon-Specific Commitment 0 14 as Staff
recomrrends in Idaho-Specific Comrnitment No. I 32.]
fThis Commitment number has intentionally been left blank. Cornmitment 38
is not available if a state selects Oregon-Specific Commitments 0 9 and 0 i 1
as Staff recommends in Idaho-Specific Commitrnent Nos. I 28 and I30.]
PacifiCory rvill provide public notice and an invitation to encourage
stakeholders to participate in the Integrated Resource Plan (IRP) process. The
IRP process u,ill be used to consider Commitrnents 34, 39, 40, 41, 44 and 52.
PacifiCorp u'i11 hold IRP meetings at iocations or using communications
technologies that encourage broad participation.
Subject to, and in consideration for, dismissal of all existing proceedings and
no cofllmencement of an1, future state regulatory proceeding against
PacifiCorp involving or arising from the SEC PUIHCA Audit Reporl of
ScottishPower dated May 1 7,2004, MEHC will contribute to PacifiCorp, at
no cost to PacifiCorp, MEHC's stock ou,nership in tire Intermountain
Geotlrermal Company and the associated steam rights (approximately 7)Yo of
the total rights) to tl.re stearn resources sen'ing PacifiCorp's Blundell
geothermal plant and terminate MEHC's and Intermountain Geothermal
Companl,'s rigirts and obligations under the contracts. II4EHC will assist
PacifiCorp in determining the cost-effectiveness of acquiring the remaining
30% of the rights. No more than six months after the close of the transaction,
MEHC rvill provide parttes a clear and complete disclosure statement that
Supplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, Sttff
111ilh6 Pr,re ? r'rf ll
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d)
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37)
38)
48)
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details any potential liabiiities and risks, identifled by or for MEHC,
associated with the ownership rights of MEHC in Intenlountain Geothermal
MEHC also conrrnits that PacifiCorp customers r.r,ili not be hanned fi'om the
contribution to PacifiCorp of the lntermountain Geothermal steam resources
and stock.
Upon ciosing, MEHC and PacifiCorp commit to irnmediately evaluate
increasing the generation capacity of the Blundell geothermal faciiity by the
amount detennined to be cost-effective. Such evaluation shall be summarized
in a report and filed with the Commission concunent wrtir the filing of
PacifiCorp's next IRP. This incremental amount is expecteci to be at least 1i
IviW anci maybe as much as 100IvIW. A11 cost effective increases in B1undell
capacity, completed before .Ianuary 1,2015, should be counted toward
satisfaction of PacifiCorp's 1400 It4W renewable eriergy goal, in an amount
equal to the capacity of geothermal energy actually added at the plant.
Suppler.uental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, Staff
111ill\6 P:r"e 3 ol?l
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Idaho-S pecifi c Commitments:
Modified or added as a result of Oregon-Specific Conllitments
MEHC and PacifiCorp commit to a total contribution level for Idaho low
income bill payment assistance in the amormt of $40,000 annually, for a
five year period beginning .Iuly I , ?006. The contributions may be
comprised of contributions from corporate, employee, other sources, and
customer donations. The corporate contribution will be recorded in non-
utility accounts. Before the end of the five-year period, N{EHC and
PacifiCorp commit to work with low income advocates and customer
gloups to evaluate additional contributions.
r 1s (o 2i)MEHC commits to provide shareholder funding to hire a consultant to
study and desigr for possible implementation of an an'earage rranagement
project for low income customers that could be made applicabJe to Idaho
and other states that PacifiCorp serves. PacifiCorp wiil provide a resource
for facilitation of a working goup to oversee the project. The study shall
commence no later than 180 days after close of tire transaction and be
completed, througir the issuance of a formal report to the Commission, no
later than 365 days after close of the transaction. MEHC recognizes that
such a proglam may have to be tailored to best fit the unique lorn,-income
envirorment of each individual state. The project will be developed by
PacifiCorp in conjunction with the relevant regulatory and governrnental
agencies, low-income advocates, and other interested parties in each state
that is interested in participating. The goals for the project will include
rediLcing service temrinations, reducing referral of delinquent customers to
third party collection agencies, reducing collection litrgation and reducing
arreara-qes and increasing rroluntary customer pal.ments of arrearages. The
costs of this study q,ill be at least $66,000 on a total company basis paid
for by shareholders. If less than six states participate, the amount of the
shareholder funds u,ill be reduced proporlionally.
r 21 (O 15)
a)MEHC comrnits that inmediately follor,ving the closirig of the transaction,
the acquiring company (PPW Holdings LLC) will have no debt in its
capital structure. MEHC and PacifiCorp conunit that the consolidated
capital structure of PPW Holdings LLC will not contain common equity
capital below the following percentages of its Total Capital as defined in
Commitment 18b:
48.25o,/u frorn the date of the close of the transaction tlrougir
December 31, 2008;
47.25% fi'orrr January 1.2009 throughDecember 31,2009;
46.25% frorn.Ianuary 1,2010 through December 31,2010;
45.25% fi'om January 1,2011 through December 31,2071;
44.00% afler December 31, 201 i.
SLrpplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, Staff
1 i 1i lcl6 Pr,re -t r'r l- ? I
o
o
o
b)
c)
I24 (O 5)
r26 (O 7)
r27(O8)
a)
MEHC and PacifiCorp conunit that the consolidated capital stmcture of
PPW Holdings LLC will not contain comrnon equity capital t'relorv 35% of
its Total Adjusted Capital as defined in Commitment 18c.
MEHC u,ill provide the Commission 30 days prior notice if PPW
Holdings LLC intends to issue debt. MEHC and PacifiCorp ackrowledge
that if PPW Holdings LLC does issue debt, tlie Commission has the
authority to consider additional ring-fencing plovisions that may be
appropriate.
Berkshire Hathai.vay aciinowieciges the Commitrnents ma,ie by tufEFiC and
PacifiCorp and will not irnpede satisfaction of the Cornmitments.
Berlishir:e Hathavvay acknou,ledges that it is bound by Commitments 4, 5
and 17 and that it is subject to Commitments that are applicable to the
affiliates of PacifiCorp and MEHC; provided, horvever, that Berkshire
Hathau'ay does not guarantee or agree to be responsible for perfonnance
of Commitments made by MEHC and PacifiCorp.
MEHC and PacifiCorp commit to $142.5 million (total cornpany amount)
of offsetable rate credits as reflected in Appendix 2 and as described in the
following Commitmentsl2T through I 31 (0 8 through 0 12). These rate
credits rvill be reflected in rates on tire effectit,e date of new rates as
determined by the Commission in a general rate case. The rate credits will
tenlinate on December 31, 2010, to the extent not previously offset,
unless otirerwise noted. The rate credits in Commitments I 27 and I31 (0 8
and 0 12) are subject to deferred accounting as specified therein. Where
total company values are referenced, the amount allocated to Idaho will
equal the Idaho-allocated arnount using Conulrission-adopted allocation
factors.
MEHC and PacifiCorp commit to reduce the amual non-fuel costs to
PacifiCorp customers of the West Valley lease by $0.a 17 million per
month (total company) or an expected $3.7 million in 2006 (assuming a
Marclr 31,2006 transaction closing), $5 million in2007 and $2.1 million
in 2008 (the lease terminates May 31,2008), which shall be the amounts
of the total company rate credit. Beginning with the flrst montir afler the
close of the transaction to purchase PacifiCorp. Idaho's share of tire
monthiy rate credit wili be deferred for the benefit of customers and
accrlre interest at PacifiCorp's authorizedraLe of return. (This
comrnitment is reflected in Row 1 of Appendix 2.)
Supplemental Exhibit No. 102
Case No. PAC-E-O5-8
T. Carlocli, Staff
1 13106 Pase 5 of 21
o
o
o
b)
i28(Oe)
a)
b)
r 2e (o 10)
a)
This commitment is offsetable, on a prospective basis, to the extent
PacifiCorp demonstrates to the Commission's satisfaction. in the context
of a general rate case, that such West Valley non-fuel cost savings:
i) are reflected in PacifiCorp's rates, and,
ii) there are no offsetting actions or agreements by MEHC or PacifiCorp
for whicir value is obtained by PPM or an affiliated company, r,vhich,
directly or indirectly, increases the costs PacifiCorp would otherwise
incur.
MEHC and PacifiCorp wiil hoi<i cr-rstomers iranliess for increases in costs
retaiired by PacifiCorp that were previously assigned to affiliates relating
to management fees. The total conrpan\r amount assigned to PacifiCorp's
affiliates is $1.5 million per year, u,hich is the atnotint of the total
company rate credit. This commitment expires on December 31, 2010.
This Commitment is in lieu of Commitment 38, and a state must choose
betrveen this Commitment I28 (0 9) and Commitment 38. (The
conrmitment is reflected in Rorv 2 of Appendix 2).
This commitment is offsetable to the extent Paci{iCorp demonstrates to the
Commission's satisfaction, in the context of a general tate case the
following:
i) Corporate allocations fi'om MEHC to PacifiCorp included in
PacifiCorp's rates ale less than $7.3 million;
ii) Costs associated with functions previously carried out by parents to
PacifiCorp and previously included in rates har.,e not been shifted to
PacifiCorp or otherwise included in PacifiCorp's rates; and
iii) Costs have not been shifted to operational and maintenance accounts
(FERC accounts 500-598), custonter accounts (FERC accounts 901-905),
custonrer serv'ice and informational accounts (FERC accounts 907-910),
sales acconnts (FERC accounts 911-916), capital accounts, deferred debit
accounts, deferred credit accounts, or other regulatory accounts.
MEHC commits to use an existing, or forn a new, captive jnsurance
company to provide insurance coverage for PacifiCotp's operations. The
costs of forrning such captive r,vill not be reflected in PacifiCorp's
regulated accounts, nor allocated directly or indirectly to PacifiCorp. Such
captive shall be comparable in costs and services to that previously
provided through ScottishPou,er's captive insurance company Dornoch.
MEHC further commits that insurance costs incurred by PacifiCorp from
the captive insurance company for equivalent coverage for calendar years
2006 through 2010, inclusive, will be no more than $7.4 million (total
company). Oregon Cornmission Staff has valued the potential increase in
PacifiCorp's total compan)'revenue requirernent fi'om the loss of
Supplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, StafT
1l1il(16 P;r"e 6 rrf ? l
o
o
o
b)
r 30 (o 11)
a)
b)
I31 (O 12)
a)
Scottish-Por.ver's captive insurance affiliate as $4.3 rnillion annually, u,hich
shall be the amount of the total company rate credit. This conunitment
expires on December 31, 2010.
This commitment is offsetable if PacifiCorp demonstrates to the
Comrnission's satisfaction, in the context of a generai rate case, the costs
included in PacifiCorp's rates for such insurance coverage is not more
than $7.4 million (total company). (This commitment is reflected in Row 3
in Appendix 2.)
MEHC and PacifiCorp rvill hold customers hanniess for increases in costs
resulting fi'om PacifiCorp corporate costs previously billed to PPM and
other former affiliates of PacifiCorp. Oregon Comrnission Staff has valued
the potentiai increase in total company revenLre recluirement if these costs
are not eliminated as $7.9 million annually (total cornpany) tluough
December 31, 2010 and $6.4 million annr.rally (total company) from
January 1,2011 thougir December 31, 2015, which shall be the amounts
of the total company rate credit. This conrmitment shall expire on the
earlier of December 31, 2015 or when PacifiCorp demonstrates to the
Commission's satisfaction, in the context of a general rate case. that
corporate costs previously billed to PPIvI and other former affiliates l-rave
not been included in PacifiCorp's rates. This Commitment is in lieu of
Commitment 38, and a state must choose behveen this Commitment I30
(O 11) and Conrmihnent 38.
This commitment is offsetable to the extent PacifiCorp demonstrates to
the Cornmission's satisfaction. in the context of a general rate case, that
corporate costs previously billed to PPM and other former affiliates have
not been included in PacifiCorp's rates. ('fhe comrnitment is reflected in
Row 4 of Appendix 2.)
MEHC and PacifiCorp commit that PacifiCorp's total cornpany A&G
costs will be reduced by $6 million annually based on the A&G categories,
assumptions. and values contained in Appendix 3 titled, "UM 1209 A & G
Stretch". The amount of the total company rate credit is $6 miliion per
year. Tiris commitment expires December 31, 2010. Beginning with the
first month after the close of the transaction, Idaho's share of the $0.5
miliion rnonthly rate credit u,ill be defen ed for the benefit of customers
and accrue interest at PacifiCorp'5 authorizedrate of return. This
Commitment is in lieu of Commitments 22 and U 23 from the Utah
settlement, and a state must choose betrn een this Con'rmitment I 31 (O 12)
and Commitments 22 and U 23.
SLrpplemental Exhibit No. 102
Case No. PAC-E-O5-8
T. Carlock. Stal'f
111310(t P;rge 7 o1'21
o
o
o
b)
I 32 (O 14)
a)
b)
The credit u,illbe offsetabie. on a prospective basis, by the amount that
PacifiCorp demonsti'ates to the Cornmission's satisfaction. in a general
rate case, that total company A&G expenses included in PacifiCorp's rates
are lower than the benchmark and irave not been shifted to other regulatory
accounts. The 2006 benchmark r,viil be $228.8 rniilion. Subsequent
benchmarks shall equal the 2006 bencilnark multiplied by the ratio of the
Globai Insi girt' s Lltility Cost Infonlation S en ice (rCIS)-Administrative
and General - Total Operations and Maintenance lndex (INDEX CODE
Series JEADGOI\,I), for the test period divided by the 2006 index value. If
another index is adopted in a future PacifiCorp case, that index will
replace the aforementioned index and will be used on a prospective basis
only. If this occurs, the benchmalk for future years u,iii eqr-rai the
benchmark frorn the rate case in which anew index was adopted multiplied
by the ratio of the new index for the test period divided by the index value
for the first year that the index is adopted.
ln the event of a ratings dou,nsrade by hvo or nlore rating agencies of
PacifiCorp's senior long-term debt that occlrrs within 12 months al1er the
Comnission approves the Transaction or issues an order adopting
acquisition commitments fi-om other PacifiCorp states, r,r,hichever, comes
later (the "Baseline Date"), and at ieast one such agency identifies issues
related to MEHC's accluisition of PacifiCotp as a cause of the ratings
dowrigrade, the assumed yield for any incremental debt issued by
PacifiCorp after the downgrade will be reduced by 10 basis points for eacir
notch that PacifiCorp is downgraded below PacifiCorp's rating on the
Baseline Date. Such adjr"rstment will continue until the debt is no longer
outstanding. In the case where one rating agency issues a rating
downgrade, but not two or more rating agencies, denoted as a split rating,
the adjustment shail be J basis points for each notch. The adjustrnent
imposed by this commitment will be eliminated for debt issuances
following the ratings upglade of PacifiCorp equai to the rating on the
Baseline Date. Tiris Cornmitment is in lieu of Commitment 37 , and a state
must choose between this Commitrnent I 32 (O 14) and Commitment 37 .
In the event that debt issued by PacifiCorp within 12 months after the
Baseline Date is recalled and refinanced, PacifiCorp agrees to hold
customers iranlless, for the terrn of the debt, as compared to the revenLie
requirements pursuant to subparagraph a) and its basis point reductions, of
the originally financed debt.
MEHC comnits that no amendments, r'evisions or modifications u,illbe
made to the ring-fencing provisions of Corulitment 1 1 b) u,itirout prior
Comrnission approval for the sole pr-upose of addressing the ring-fencing
provisions.
Supplenrental Exhibit No. 102
Case No. PAC-E-O5-8
T. Carlock, Staff
1113106 Pase 8 of 21
o
I 33 (O 16)
o
r 3s (o i8)
o 136 (r 26)
i 34 (O 17)Within three montirs of closing of the tmnsaction, MEHC com:nits to
obtain a non-collsolidation opinion that demonstrates that the ring fencing
alound PPW Holdings LLC is sufficient to prevent PPW Holdings LLC
and PacifiCorp fi'om being pulled into an MEHC banlauptcy. MEHC
commits to promptlv file such opinion with the Commission. If the ring-
fencing provisions of this agreement are insr-rfficient to obtain a l1or1-
consolidation opinion, MEHC agrees to prornptly urdedake the follorving
actions:
Notify the Commission of this inability to obtain a non-consolidation
opinion.
b)Propose and impiement, upon Commission approval, such ring-fencing
provisions that ale sufficient to prevent PPW Holdings LLC from being
pulled into an MEHC bankruptcy.
c)Obtain a non-consolidation opinion.
MEHC and PacifiCorp commit that PacifiCorp u,ili not make any
dividends to PPW Holdings LLC ol N{EIIC if PacifiCorp's unsecured debt
rating is BBB- or lower by S & P or Filch (or Baa3 or lower by Moody's),
as indicated by tu,o of the three rating asencies.
a)
MEHC and PacifiCorp u,iil supplement the reporl filed u,ith the
Commission, pursuant to Commitment 49 by including information
regarding the implementation of each of the Idaho-Specific Commitments
IltiuougJrl35.
Supplenrental Exhibit No. 102
Case No. PAC-E-O5-8
T. Carloclt, Staff
1/1il16 Prse I nl? I
o
o APPEI\iDL\ 1
PPW HOLDNGS LLC zuN Gf.'ENCING PRO\IISIONS
Purposes.
(a)The purposes of the Company are to eneage in the following activities
1. to purcha-se and orvn 100% of the capital stock in PacifiCory
("PacifiCorp"; and any equity hterest thereil, an "Equity Interest");
2. in connection s,rth tire purchase of the Equity lnterest. to ne_qotiate,
authorize, execute, deliver and perform documents rncluding, but not iirnited to, tirat
certain Assignment and Assumption of Stock Piiichase Agi'eeinent betrveen the lr4ember
and the Company pursuant to whicir the Member u,ill assign to the Companl, ai1 of the
Member's rights and obligations under that certain Stock Purchase Agteement, betrveen
the Member and the other persons parties thereto. dated as of IvIa1, 23,2005 and anv otiter
agreement or document contemplated therebl, (the "Transaction Documents"); and
3. to do such other lhings and carry on any other actii,ities, and only
such things and activities. which rhe Boald, defined hereil, detemines to be necessarl,,
convenient or incidentalto any of the foregoing pulposos. and to have and exelcise all of
the power and rights conferred upon lirnited liability con:.pa:ries for:red pursuant to the
Act in furtherance of the foregoing.
(b) The Companl,, by or through one or mole Ofricers of the Company. may
enter into and perform the Transaction Documents and all documents, agreements. certifcates or
financing statements contemplated thereby or related thereto. v,ith such final terms and
provisions as the Officer or Officers of the Company executing the same shall appro\/e, his or
their execution thereof to be conclusive evidence of his or such approval, a1i q,ithout any furlirer
act, vote or approrral of the Member, the Board of Directors or aly other Officer notlithstanding
any other provision of thris Agreement, the Act or applicable law, rule or regulation. A11 actions
taken by the Member, any Director or Officer on behalf of the Company or on behalf of an;" of
its affiiiates prior to the date hereof, to effect the transactions contemplated by the Transaction
Documents or the fom:ation of the Company, are hereby ratified, approved and conflrmed in al1
respects. Sirnultaneousiy u,ith or follou,ing the execution of this Agreement the Compaly rnay
enter into each of the Transaction Documents rvith such hnal terms and provisions as the Officer
or Officers of the Company executing the same shali approrie, his or theu' execution thereof to be
conclusive evidence of his or their approval.
? IVI rn q opman fri^4^^B5v^uvre.
(a) Board of Directors. The business and atTairs of PPW Holdings, LLC (the
"Company") shall be managed by or under the direction of a board of one or more Directors (the
"Board"); provided that from and after the purchase of an equitl,interest in PacifiCorp (an
"Equify Interest"), and for so long as the Company'shall ou,n an Equity Interest, one of tire
members of the Board shall be an Independent Director.
7
o
Supplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock. Stalf
1 117106 P:rt,e 1 0 r-rf ) I
o
Pcrtlndi-1 5310? 1 .3 005 1 8-< l -00004
o
o
A:r "Independent Director" shall mean a member of rire Boald lvho is not at the
time of i:ritial appointment, or at any time u,hile senrmg on the Board. and has not been at any
time during the preceding fir,e (5) years: (a) a member, stoclJrolder, director (except as such
lndependent Director of the Company,), offi.cer, employee, paruler, attornel, or counsel of tire
Company or an)/ affiliate of the Companlr; @) a creditor, customer other than a consumer,
supplier or other person u,ho iras derived i, *y one of the preceding (5) calendar years re\/enues
from its activities with the Company or any affiliate of the Company (except as such
Ildependent Director); (c) a person related to or employed by any person described in clause (a)
or ciause (b) above, or (d) a trustee, conserv'ator orreceiver for the Company or any affiiiate of
the Comran-y. As used in this definition. "affiliate" shall have the raeaning given to such temr
under Rule 405 under the Secudties Act of 1933, as amended.
Except as othen4/ise provirieci in tiris Seciion i(a) rrrirh respect to the inciepencient
Director, MidAmerican Energy Holdings Companl,lti:e "Member") by unanimous rrote or
unanimous wrjtten consent, may determine at any time in its sole and absoiute ciiscretion, tire
number of Directors to constitute the Board. The initial number of Directors shall be tq,o. At the
time of tire purchase of an Equit), Interest by the Company, if one of the Directors is not then a
qualified lndependent Director. the number of Directors on the Board shall be automatically
increased by one, such additional position to be filied as .soon as practicable by an Lrdcpendent
Director selected by a majoritl, v61. of all of tire Directors then in office. Each Director elected,
designated or appointed shall hoid office untii a successor is elected and qualified ol until sr,rch
Director's eariier death, resignation or removal. Each Director shall be a "manager" u,ithin the
meaning of the Limited Liability Compa:ry Act of the State of Delau,are (tire "Act"),
(b) Powers. Subject to this Section 1, the Board shall have the pou,er to do
any and all acts necessary, conr.enient or incidental to or for the furtherance of the purposes
described herein, including all powers, statutory or othemise, Except as provided in the
certificate and subject to Section 2(e), the Board has the authority to bind the Company by a
majority of the votes held by flie Directors. For purposes of voting. each Dilector shall have one
rrote,
(c) Quorunt; Acts of the Board. At all meetings of the Board, a nrajority of
the Directors shall constitute a quorum for the transaction of business and, except as olireru,ise
provided in any other provision of this Agreement or in tire certificate of incoi-poratioii, the act of
a majority of the votes held by the Directors present at any meeting at u'hich there is a quonnn
sirail be the act of the Board. In tire case of an act lt'hich requires tire unanimous t,ote of the
Directors and/or the vote of the Independent Director, only the presence at the subject meeting of
all of the Directors, inchiding the Independent Director, shall constitute a quorum. If a quorum
shall not be present at any meeting of the Board, the Directors present at such meeting ma1,
adjoum tire meeting from time to time, u,ithout s'ritten notice other than aru:rouncement at the
meeting, untii a quorum shail be present.
(d) P.entoyal of Dtrectors. Llnless otherwise resh-icted by lau,, an)/ Director or
the entire Board may be removed, y,ith or u,ithout cause) by the h4ember, aiid subject to Section
2, any \racancy caused b), an), such remot,ai ma1,be fiiled by action of the l\{ember. In the et,ent
of the removal of the Iridependent Director or other event tirat causes the Lrdependent Director to
cease to be an Independent Director on the Board, no action requiring the vote of the
Supplemental Exhibit No. i02
Case No. PAC-E-05-8
T. Carlocii, Stalf
l llil(16 Puue I 1 nf rl
o
Portind3-1i3702 I .3 005 1 85 1-00004
o
o
Independent Director sha11 take piace until such time as a repiaceilent Independent Director is
eiected to the Board by the lt4ember,
(") Linitatiotts on ihe ContpanT,'5 .4ctit,ities
1, This Section 2(e) is being adopted in order to qualifl, the Compauv
as a "special purpose entity" and so long as the Company holds or owns an Equitl,
Interest. this Section 2(e) shall govern the activities of the Company notq,ithstandine an1,
other provision of this Agreement,
2. So long as the ComFany holds or o-wns an Equiqy lnterest, the
Board shaii cause the Companl, to rjo or cause to be ,lone aii 'Lilngs llecessar-", to preser-ve
^."J 1-^-.^ j-^ G,I1 f^..^^ ^-J ^ff^^t :.- ^-.i^i^-^^ -i-L+- /^L^4^- ^- j -+^+.,+^-.,r ^*l4rlu N(.clJ rrl 1url .tules auu EIltruL .tLl g^lnLOllLg, 1r_:l11LD \utld.rLtrr dlru SL4LULUJ v ) aLJ
franchises. At all tii-nes, i;.nless othem,ise provided in that certain Stock Purci-,ase
Agreement, befween the lr4elrber and tlie otlier persoiis parties tliereto, dated as of lvlay
23, 2OO5 and any otirer agreement oL document contempiated thereby (the "Transaction
Documents"), the Board shall cause the Company to:
maintain its orvn separate books and recorfu, financial statements,
and bank accor:ats;
b)except for ta-r a:rd accounting puqposes, at aii times hold itself out
to the pubiic as a legal entity separate from the N{ember and any
other Person and not identifv itself as a division of anv other
Pe.rson;
c)have a Board, the composition of which in sum is unique from that
cf any other Person;
file its or4.n tax returns, if any, as may be required under applicabie
Iarn,, and pay any taxes required to be paid under appiicable larv;
e) not comminele its assets u,itir assets of any other Person;
0 conduct its business in its orvn name and hold all of its assets in its
own name;
g) pay its ou,n liabilities only out of its ou,n funCs;
h)maintain an arm's length relationship ri.ith its affiliates, including
its lt4ember;
i) ftorn its ou,n funds, pay the salaries of its ou,n emplol'ees:
j)not hold out its credit as being availablc" to satisfy'the obligations
of otliers;
Supplenrental Exhibit No. 102
Case No. PAC-E-O5-8
T. Carlock, Stnl'f
1 l1i106 Puge l 2 ol2l
a)
d)
o
Portlnd3- I -i3702 1.3 0051 S51 -00004
o k)maintain its ov'n office and telephone ]jne separate and aparr from
its affiliates. altlior-rgh it mar,lease space from an affiliate and share
a phone line rvith an afiiliate, having either a separate number or
extension, and in fi:rlherance thereof allocate fair11, 3n6 reasonabll,
any overhead for shared offi.ce space;
use separate stationery, invoices and checks brearing its orvn name;
not pledge its assets for the beneirt of any other Person;
r)
m)
n)
o
correct any l,:.nou,n misuncierstanding regarding its separate
i l --+i+,-luvllLlL_), ,
o)maintain adequate capital and an a,lequate niimbei of empioyees in
liglrt of its conter::rplated biisiness piiqposes; and
p)not acquire any obligations ol securities of the N,Iember or its
affriiates, other than an Equity Interest.
Failure of the Company to comply'"r,ith any of the foregoing covenants shal1 not affect the status
of the Company as a separate legal entit-v" or the iinrited liablIity of rhe Ir4ember or the Directors.
3. So long as the Company holds or owns an Equity Interest and
unless otherwise provided in the Transaction Documents, the Compan), shall not:
a) become or remain iiable, directly or contingentll,, in counection
wiflr any indebtedness or other liability of any other person or
entity. u,hether by guarantee, endorsement (other than
endorsements of negotiable instruments for deposit or collection in
the ordinary course of business), agreement to purchase or
repurchase, agreernent to suppl,v or advance funds, or otheru'ise;
b)grant or permit to exist any Lien, encumbrance, claim, security
interest, pledge or otirer right in favor of an)/ person or entity in the
assets of the Company or any interest (u,'hether legal, t-reneficial or
otirern ise) in any thereof;
c)engage, directl1, or indirec1l1,, in any business other thzrn as
permitted to be performed Lmder the Compan)/'s limited liability
company operating agreement;
d)make or perrnit to remain outstanding any loan or advance to, or
own or acquire (a) indebtedness issried by an1' other person or
entity, or (b) any stock or securities of or interest in, an1, person or
entity, otirer than the Equity Interest;
e)enter into, orbe aparlyto, anytrairsactionw'ith any of its afiiliates,
except (A) nr the ordinary course of business, (B) pursuant to tbe
Supplemental Exhibit No
Case No. PAC-E-05-E
T;,9r1"*,t'1'l-
o
Poitlnd3-I 53701.1 .-1 OC-s I851-00001 102
o
o
reasonabierequirements andpurposes of its business and iC; upon
fair and reasonable terms (and, to the extent material. pursuanl to
v,ritten agreements)) that are consistent $,ith market terms of an]'
such tr-ansactions entered into b1, unaffiliated parties;
make any chan*ge to its name or principal business or Lrse of a:ry
tlade names. fictitious narnes, assurned names or "doing business
as" names.
4. So long as the Company holds or o\\/lrs an Equity Interest, none of
the Cornpany, the Member or the Board shali be authorized or empo\.vered. nor shali they
peririit tiie Compani', -withoiii the prior i:narimous u'ritten consent of aii of the Dl;-;ctcrs
on the Boarci, inciuciing the Independent Director, (a) to consoiiriate, merge, d.issoive,
liquidate or sell all or substantiaiiy ali of the Company's assets or (b) to institute
proceedings to have the Company adjudicated banirrupt or insolr,ent, or consent to the
institution of banknrptcy or iruolvency proceedings against the Company or file a
voiuntary petition seeking, or consent to, reor-eanization or reiief u,ith respect to the
Company under any applicabie federal or state lar.v relatin-q to ba:riauptcy, or consent to
appointment of a receiver, liquidator, assignee, hustee, sequestrator (or other simila:'
official) of the Cornpany or a substanlial part of i1s propertl,, or make an1,' assignment for
the benefit of creditors of tlie Compau1,, or admit in rvnting the Compan),'s inability to
pay its debts generallv as they become due, or to the fuliest extent pennitted by lau,, to
take an), action in furtherance of any such action. Moreoirer, the Board malr n61\,ote on,
or authorize the taking ol any of the foregoing actions unless there is at least one
Independent Director then sen.ing in such capacity.
O Limitations on Distribufiorzs. So long as the Company owns or irolds an
Equiry Lrterest, the Company shall not permit PacifiCorp to deciare or make an1,
Distribution to the Company or any other person that owns or holds an Equity lnterest,
unless, on the date of such Distribution, either:
1. at the time and as a result of such Distribution, PacifiCorp's
Leverage Ratio does not exceed 0.65:1 and PacifiCorp's Interest Coverage Ratio is not
less than 2.5:1; or
2. (if PacifiCorp is not in compliance with the foregoing ratios) at
such time, PacifiCorp's senjor unsecured long tenn debt rating is at least BBB (or its then
equivalent) u,ith Standard & Poor's Ratings Group and Baa2 (or its then equivalent) with
Ir4oody's lnvestors Sen,ice, Inc.
For purposes of tiris Section 2(f), tire foiiowing terms shaii be ciefined as follows:
"Capitalized Lease Obligations" rreans all lease obLigations of PacifiCorp and
its Subsidiaries which, under GAAP, are or u,ill be required to be capitalized, in eacir
case taken at the arnount tirereof accounted for as indebtedness in conformity u'ith such
principles.
Supplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlocli, Staff
1l11l(\(, D..ca 'l .1 nf II
0
o
Ponlni3-1 i3702t.3 005 i 8i I -00004
o
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"Consoiidated Current Liabilities" mean"s the consoiidated current liabilities of
PacrfiCorp and its Subsidiaries, but excluding the curent porlion of long term
Indebtedless *,hich , ,ouid otheru,ise be included therein, as determined on a
consolidated basis in accordance lvith GAAP.
"Consoiidated Debt" uleans. at an1, time, the sum of tire aggregate outstanding
principal amount of all Indebtedness for Borrorved Money (including, *,ithout iimitation,
the principal conrponent of Capitalized Lease Obli-eaiions, but excluding Cunency,
Ltterest Rare or Commoditi,Agreements and ali Consohdated Cun'ent Liabiiities) of
PacifiCor.o and its Subsidiaries, as determiled on a consolidated basis in confomri['u,ith
GAAP.
"Consolidated EBITDA" means. for an1, period, the sum of the amounts for sucir
period of PacifiCorp's (i) ConsolidatedNet Operating Income, (ii) Consoiidated lnterest
Expense, (iii) income taxes and deferred ta.res (other than income taxes (either positive or
negative) atlributable to exn'aordinary and non-recurring gains or losses or saies of
assets), (iv) depreciation expense, (v) amodization expense, and (r,i) all other non-cash
items reducing Consoiidated Net Operating Income, less ailnon-cash items increasing
Consolidated Net Operating Inc.orne, all as determined on a consoLidated basis in
confonnity with G{A.P; provided, that to the extent PacifiCorp has an1, Subsidiary t]:at is
not a wholly oumed Subsidiary, Consolidated EBITDA shall be reduced by an amount
equai to the Consol.idated |iet Operating Income of such Subsidiary rnultiplied by the
quotient of (A) the number of shares of outstanding common stock of such Subsidiar),not
orvned on the iast day of such period by PacifiCorp or any SubsidiarJ/ of PacifiCorp
divided by (B) the total number of shares oioutstanding common stock of such
Subsidiary on the last day of such period.
"Consoiidated Interest Expense" nleans, for any period, the aggregate amount
of interest in respect of Indebtedness for Borrou'ed \4oney (including amortization of
original issue discount on any Indebtedness and the interest portion on any deferred
paynent obligation, calcr-rlaied rn accordance with the effective interest method of
accounting; and a1l commissions, discounts and other fees and charges owed rvith lespect
to bankers' acceptance financing) and the net costs associated u,ith Interest Rate
Agreements and all but the principal component of rentals in respect of Capitahzeri Lease
Obligations, paid, accrued or scheduled to be paid or to be accrued by PacifiCo4r and
each of its Subsidjaries during such period, exciuding, however, any amount of sr-rch
jlterest of anv Subsidiary of PacifiCcrp if the net operating income (or ioss) of such
Subsidiary is excluded from the calculation of Consolidated Net Operating Income for
such Subsidiarl,pursuant to clause (ii) of the definition thereof (but oniy in the same
proportion as the net operating income (or loss) of such Subsidiarl, is excluded'), less
consoLidated interest incorne. ali as detennined on a consolidated basis in conformitv
with G,A,AP; prot,ided that, to tire extent that PacifiCorp has any Subsidiary that rs not a
wholly owned Subsidiary, Consolidated Interest Expense sha1l be reduced by an arnount
equal to such interest expense of such Subsidiarl, mulripiied by the quotient of (A) the
nurnber of shares of outstanding common stock of such Subsidiary not ou,ned on tlie last
da}, of such period by PacifiCorp or an)/ Subsidiarl, of PacifiCo4r divided by (B) tire total
SLrpplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlocl<, Stal'f
l llilll(\ Proe I5 of 1l
o
Portln<i3-i 537021.3 O051 85 I -00004
.o
o number of shares of outstanding common stock of srich Subsidiary on the last da1, of such
period.
"Consolidated Net Operating Income" means) for ani, period. the aggregate of
the net operating income (or loss) of PacifiCorp arld its Subsidiaries for such period, as
deterrnined on a consolidated basis in confomity r.vith G.A-AP; provided that the
following items shall be excluded from any calcuiation of Consolidated Net Operating
Income (rvithout duplication): (i) the net operating income (or Joss) of an1, person (other
than a Subsidiari) in u,hich any other person has a joint interest, except io the extent of
the amount of dividends or other dish'ibutions actually paid to PacifiCorp or another
Subsidiary of PacifiCory dunng such period; (ii) the net operating income (or loss) of anlz
Subsidiary to the extent that the cieciaration or pa1,::nent of <iiyi<iencis or simiiar
distributions by sucir Subsidiary cf such net operating income is not at the time pennitted
by flre operation of the terms of its charler or any agreement, instruunent, judgment,
decree, order, stafute, mle or governmental re_sulation or license; and (iii) all
extraordinary gains and extraordinaly losses.
"Currenc1,. lnterest Rate or Commodity Agreements" mealts an agreement or
tra:rsaction invoh,ing any cr.urency. interest rate or energy pdce or rrolumetric s\,vap, cap
or collar arrargement, fomard exchange transaction, option, t ,arrant, forvvard rate
agreernent, ftih:res contract or other derivative insh'ument of any kind for the hedging or
maragement of foreign exchange, interest rate or energy price or volumetric risks, it is
being understood, for purposes of this definition, that the term "energ)," shall inciude,
u,ithout iimitation, coal, eas, oil and electricity.
"Distribution" means any ciividend. dish-ibution or palment (including by u,ay of
redemption, retirement, return or repa],rnent) in respect of shares of capital stock of
PacifiCorp.
"Indebtedness" means, with respect to PacifiCorp or any of its Subsidiaries at
any date of deteminarion (n'ithoiit duplication), (i) all Indebtedness fbi Boror',,od
Money, (ii) all obligations in respect of letters of credit or other similar insur:ments
(inciuding reimbursement obligations with respect thereto), (iii) all obligations to pay the
deferred and unpaid purchase price of properly or services, which purchase price is due
more than six months after the date of placing such property in sen ice or taking delivery
and title thereto or the completion of such services, except trade payables, (ir,) all
CzpitaLued Lease Obiigations, (r,) a1i indebtedness of other persons secured by a
.mortgage, charge, iien, pledge or other securitl, interest on any asset of PacifiCorp or an-y
of its Subsidiaries, whether or not such indebtedr:ess is assumed provided, that the
amount of such lndebtedness shall be the lesser of (A) the fair martet value of sucir asset
at such dale of dete.rmilation, and (B) the amount of the secnred indebtedness, (r,i) all
indebtedness of other peisons of tire tlpes specified in the preceding clauses (i) through
(.), to the extent such indebtedness is quaranteed by* PacifiCorp or any of its Subsidiaries,
and (i,ii) to the extent not otherq/ise included in tiris deflnition, obligations under
Sr.rpplerrental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock. Stalf
l/li/Ofi P.rr,,. l/rrrf ll
,
PortLrd3- 1 537021.3 0051 851 -00()04
"GAAP" means generaliy accepted accountinq principles jn the United States as
ilr effect from time to time.
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Currency, Interest Rate or Commooity Agreements. The amount of hdebtedness aI an)/
date shail be the outstanding balance at such date of all unconditional obligations as
described above and. upon the occurrence of the contingencl'giving rise to the
obligation, the ma.rimum liability of any contingent obiigations of the tlpes specifie d in
the preceding ciauses (i) throu-eh (vii) at such date; prot'ided, that the amount outstanding
at any time of anl, hdebtedness issued u,ith original issue discount is the face amount of
such lndebtedness iess the remaining unamorlized portion of the original issue discount
of such lndet,tedness at such time a; detemrined in conformity u,ith GAAP.
"fndebtedness for Borron'ed l\1[oney" means any indebtedness (ia,hether being
principal, premium, interest or otirer amounts) for (i) money borrowed, (ii) paltnent
obiigations unrier or in respect of any iracie acceptarrce or tracie acceptance ci-eciii, or (iii)
il1y ne1ar, bonds, debentures, debenture stock, loan stocli or other debt securities offereri,
issued or distributed rvhether by u,ay of public offer, private placement, acquisition
consideration or orhen /ise and whether issued for cash or in r.vhole or in part for a
consideration other than cash; provi.ded. hotuever, in each case that such term shall
exoiude any iudebtedness relating to any accounts receivable securjtizations.
"Interest Coverage Ratio" means, with respect to PacifiColp on any
Measurement Date, the ratio of (i) the aggregate amount of Consolidated EBITDA of
PacifrCoqp for the four fiscal quarters for q,hich financial infonnation in respect thereof is
available inmediatell,prigr to such Nleasurement Date to (ii) the aggregate Consolidated
Interest Expense during such four fiscal quailers.
"Lel,erage Ratio" means the ratio of Consolidated Debt to Totai Capital,
calculated on the basis of the most recentll' availabie consolidated balance sheet of
PacrfiCorp and its consolid.ated Subsidiaries (provided that such baiance sheet is as of a
date not n-rore than 90 da1's prior to a Measurement Date) prepared in accordance u,ith
GAAP.
"l\feasurement Date" means the record date for any Dish'ibution.
"Subsidiarl," means, u,ith respect to any person, any corporation, association,
partnership, limiteC liabi1it1, compani,' or otirer busi.ness ontity of w'hicl: 50o,./c cr moi'e of
the total voting power of shales of capital stock or other interests (including parhre.rship
interests) entitled (without regard to the occurence of any contingency) to vote in the
election of directors, managers! or trustees thereof is at the same time oq,ned, directil, 61
indirectl1,, by(i) suchperson, (ii) suchperson and one orrnore Subsidiaries of such
person, or (iii) one or more Subsidiaries of such person.
"Totai Capitai" of any person is riefineri to mean, as of any ciate, the sum
(without duplication) of (a) Indebtedness for Borrou,ed lv'lone1,. and (b) consolidated
stockholder's equity of sucir person and its consolidared Subsidiaries."
3. IndependentDirector
From the time an Independeirt Director is initially appoiated and for so long as the
Company holds or o\4rns an Equi[,'Interest, the Companl'shall at all tirnes have at least one
portind3-1537021.3 00sr85r-00004 Supplenreutal Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, Stafl
t
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lndependent Director u'ho, ercept as provided in Section 2(a), u,i11 be appointed b1l the lr4embgl
To the fullest extent permitted bv Section 18- 1 101(c) of the Act, the Independent Director shali
colsider only tir.e ilterests of tlie Company, ilcludin-q its respective creditors, in acting or
oIhen4'ise voting on 0re matters that come before them. No Independent Director sha11 at an1,
time sen,e as trustee in bankruptcy for any affiliate of tlie Compani'.
4. Enforcement b1, Independent Director
Notu,ithstanding any other provision of the Company's limited iiabilitl,operadng
aqreement, tire l4ember agrees that such agreement constitutes a legal, valid and binding
aEreement of the N4ember, and is enforceabie against the }viember by the Inciepencient Director,
in n.^^^-..,.-^-,,-i.L i+" +o,-o Tr a;-I;ti^n +Le Tnr1aaon.lprf T-\.i--^i^-.L.',l.1 l-.o r- i-far.l=lttr du9ulu4ltug wILII ILD LutlrD. ur a.uulLtull, LttL lruvPLLtuLuL ult rru drt rLr(v,ruvu
benefrciary of the agreement.
5. Dissoiution.
(a) The Company shall be dissolr,ed, and its affairs shail be u,ound up onl1,
upon the entry of a decree ofjudicial dissolution under Section 18-802 of the Act; and shall not
drssoh,e prior to the occurence of such event, provided, hortr,e\rer, to the fullest extent pennitted
by law,, the Member and the Directors shall not rnake an appiication under Section 18-802 of the
Act so long as the Company holds or o\\/ns an Equity Interest.
(b) So iong as the Company orvns or holds an Equity Interest, the tr{ember
shall cause the Company to have, at a1l times, at least one person rvho shall automatically
becoine a rnember having 0?'o economic interest in the Company (the "Springing Member")
upon ihe dissolution of the Member or upon the occun-ence of any other event that causes iire
Jv{ernber to cease being a rnember of the Company. Upon the occurrence of any such event, the
Company shall be continued without dissolution and the Spnnging Member shall, without any
action of any person or entity, automaticaily and simuitaneously become a member of the
Company having a 0% economic interest in the Company and the Personal Representative(s) (as
defi:red i,n the Act) of the N{ember shall automaticaliy become an unadmitted assigree of the
Member, being entitled thereby only to the distributions to which the h{ember u,as entjtled
hereunder and any other right conferred thereupon by the Act. In order to implement the
admission cf the Spdnging lr,{ember as a member of the Company, the Springing }{ember has
executed a counterpart to this Agreement as of the date hereof. Pursuant to S ection 1 8-3 0 i of tire
Act, the Springing l\4ernber shall not be required to make any capital contributions to the
Cornpany and shall not receive any limited iiabiiity compan),interest in the Company. Prior to
its admission to the Company as a member of tlie Cornpany pursuant to this Section 24(b). the
Springing hzlember shali hai,e no interest (economic or othem,ise) and is not a mernber of the
Company.
(") Notu'ithstandin-e an1, other provision of this Agreernent, the Banleuptcl; 6,1
a \4ember sha11 not cause the Member to cease to be a member of the Cornpany and upon the
occlrn'ence of such an event, the business of the Company sha1l continue u,ithout dissolution.
Notrvithstanding any other provision of this Agreement, the lt{ember u'aives any right thel'might
have under Section 18-801(b) of the Act to aglee in u,riting to dissolve the Company upon the
Banl:ruptcv of a N{ember or the occurence of an1' other event that causes such jvleniber to cease
Sr"rpplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, StalT
1 I 1 1 l(\f. P'r rrr- I Sl ,rf 1 I
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Portlncii- I 53?021.3 t)05 1 85 I 40004
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o to be a member of the Compa:r5,. '(BankruptcS"' means, rvith respect to a lvlernber. if the
I,Iember (i) makes a:r assignment for the benefit of creditors, (ii) f,1es a voiuntar'\,prerition in
barrlruptcy, (iii) is adjudged a bantrupt or insolvent, or has entered against itself an order for
reiiel in an1, bank-Lrptcy or insolvencl, proceeding, (ir,) files a petition or ans\\,er seeking for
itself any reorganization, a:rargeneent. composition, readjustment, liqr-ridation. dissolution or
sinriiar reiief under any statute, 1aw or regulation, (r,) files an anslver or other pleading admifting
or faiiing to contest the material allegations of a petition filed against it in an1, proceeding of this
nature, (vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver or iiquidator
of the Member or of all or an)/ substantial parl of its pr opefiies, or (r,ii) l2C dai,s aftel the
corrlnencement of any proceedinq aqainst the ir4emLrer seeking reorgaruzation, arrangem.e.nt,
composition. readjustmen! liquidation, dissolution, or simiiar reiief under any statute. law or'
reguiation. if the proceeciin_es have not been riismisseci, or if r.r,itirin 90 ciays after the
appcintrnent, without the X4ember's consent or acquiescence, of a hustee, receiver or liquidator
of tire Member or of ali or anl1 substantial part of its properties, the appoinrment is not vacated or
stayed, or u,ithin 90 days after the expiration of any such stay, the appointmenl is not vacated.
\\rith respect to the Member, the foregoine definition of "Bankruptc1," fu intended to repiace and
shall supersede tire definjtion of "banJ'ruptc/'set fortir in Sections 18-i01(i) ar:d 18-304 of the
Act.
(d) In the event of dissolution. the Company shall conduct oniy such activities
as are necessary to rn,ind up its affairs (including the saie of the assets of the Companyil an
orderly rnarurer), and the assets of the Ccrnpany shall be applied in the manner, and in the order
of priority, set forth in Section 18-804 of tire Act. Upon completion of the u,inding up process,
the Board shall cause the execution and filing of a Cerlificate of Cancellation in aocordance i,vrth
Section 1E-203 of the Act.
6. Amendments.
Neither this Agreement nor tbe Certificate may be modifled, altered,
supplemented or amended (each such event being refen-ed to as a "Change") except pursuant to
a wriften agreement executed and delivered by the Member. So long as the Company holds or
o\ /ns an Equity I-nterest and PacifiCorp or any subsidiary thereof has anv debt outstanding that is
rated by Standard & Poor's, Moody's Lrvestors Sen,ice, or by Fitch Ratings (each, a "Rating
Agency"), no Change shail take effect unless (i) each Rating Agency raiing such debt shali have
delivered a written confinr:ation that such Cirange will not result in the downgrade or u,iflidrawal
of an1, such rating asiigned b;, it to such debt, and (ii) the Independent Director shall have
approved the Change in a vote of Directors if the Change relates to Section 1, Section 2(i) or
Section 3; provided that none of the conditions identified in either of clause (i) or (ii) hereof
neeCs be satisfied if the Change is designed to: (x) cure any ambiguitl,or intemal inconsistencl,
in tiris Agreement or the Cerlificate or (1) convert or supplement any provision hereof in a
manner consistent rvith the intent of thrs Agreement or tire Cerrificate.
Supplemental Exhibit No. 102
Case No. PAC-E-05-8
T. Carlock, Stal'f
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Case No. PAC-E-05-8
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Suppler-uental Exhibit No' 102
Case No. PAC-E-05-8
T. Carlocii, Staff
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