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Home My WebLink About20080925IPC to DOE 1-1 - 1-28.pdfesIDA~POR~ An IDACORP Company BARTON L. KLINE Lead Counsel September 24, 2008 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilities Commission 472 West Washington Street P.O. Box 83720 Boise, Idaho 83720-0074 Re: Case No. IPC-E-08-10 General Rate Case Dear Ms. Jewell: Enclosed for filng please find an original and three (3) copies of Idaho Power Company's Response to the U.S. DOE's First Interrogatories and Production Requests to Idaho Power Company. In addition, also enclosed are four copies of a CD containing the Company's responses to production requests in which electronic/excel files were requested and also for ease of production of the information. Upon receipt of this filing, I would appreciate it if you would return a stamped copy of this letter for my file in the enclosed stamped, self-addressed envelope. Barton L. Kline Lead Counsel for Idaho Power Company BLK:csb Enclosures P.O. Box 70 (83707) 1221 W. Idaho St. Boise, ID 83702 BARTON L. KLINE, ISB #1526 LISA D. NORDSTROM, ISB #5733 DONOVAN E. WALKER, ISB #5921 Idaho Power Company P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-2682 Facsimile: (208) 388-6936 bkline(ëidahopower.com Inordstrom(ëidahopower.com dwalker(ëidahopower.com RECEIVED 1000 SEP 24 PM 14: 146 IDAHO PUßUQ.. N UTIUTIES COMM1SoiO. Attorneys for Idaho Power Company Street Address for Express Mail: 1221 West Idaho Street Boise, Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR ELECTRIC SERVICE. ) CASE NO. IPC-E-08-10 ) ) IDAHO POWER COMPANY'S ) RESPONSE TO THE U.S. DOE'S FIRST ) INTERROGATORIES AND ) PRODUCTION REQUESTS TO IDAHO ) POWER COMPANY CÙMES NOW, Idaho Power Company ("Idaho Power" or "the Company"), and in response to the U.S. DOE's First Interrogatories and Production Requests to Idaho Power Company dated September 3,2008, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 1 REQUEST NO. 1.1: Please provide copies of all responses to requests for information submitted by other parties to Idaho Power in this docket. This is an ongoing request. RESPONSE TO REQUEST NO. 1.1: Idaho Power Company has provided the U.S. Department of Energy with all responses to data requests that it has produced thus . far in this case. Confidential information has been provided to Mr. Cooke and Mr. Etheridge. Idaho Power wil continue to provide the U.S. Department of Energy with all future responses to data requests. This response to this Request was prepared by Donovan E. Walker, Corporate Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 2 REQUEST NO. 1.2: Please provide Exhibit Nos. 36-80 in native format (e.g., Excel, Word) with all links and formulas intact (if applicable). RESPONSE TO REQUEST NO. 1.2: Idaho Power hereby objects to this request in that the Department of Energy has been provided with both a hard copy and an electronic copy of all testimony, exhibits, and workpapers, as well as the initial pleadings for this case that were filed by the Company with the Commission. As stated in the cover letter accompanying these materials, the electronic copy utilizes a word- searchable format. The offcial copy of these documents is the hard copy that is filed with the Idaho Public Utilties Commission. Additionally, a blanket request for links and formulas in all Exhibit Nos. 36-80 is overly broad and unduly burdensome. This response to this Request was prepared by Donovan E. Walker, Corporate Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 3 REQUEST NO. 1-3: Please provide all workpapers in native format (e.g., Excel, Word) with all links and formulas intact (if applicable) that underlie and/or support Exhibit Nos. 36-80. RESPONSE TO REQUEST NO. 1-3: Idaho Power hereby objects to this request in that the Department of Energy has been provided with both a hard copy and an electronic copy of all testimony, exhibits, and workpapers, as well as the initial pleadings for this case that were filed by the Company with the Commission. As stated in the cover letter accompanying these materials, the electronic copy utilizes a word- searchable format. The offcial copy of these documents is the hard copy that is filed with the Idaho Public Utilities Commission. Additionally, a blanket request for links and formulas in all workpapers that underlie and/or support Exhibit Nos. 36-80 is overly broad and unduly burdensome. This response to this Request was by Donovan E. Walker, Corporate Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 4 REQUEST NO. 1-4: Referring to the direct testimony of Timothy Tatum at 21 :24 - 22:9: (a) Does Idaho Power have three distinct time-based production costing periods that are driven by customer loads? If the answer is yes, please provide all workpapers, studies, analyses, and documents supporting and/or underlying the identification and delineation of the costing periods. (b) For the base production costing period, please specify by month the daily hours that define the costing period. (c) For the intermediate production costing period, please specify by month the daily hours that define the costing period. (c) For the peak production costing period, please specify by month the daily hours that define the costing period. RESPONSE TO REQUEST NO. 1-4: (a) Yes. Idaho Power has identified time-differentiated costing periods for the purpose of planning and valuing its demand-side management programs. The costing periods used to determine the cost-effectiveness of demand-side management programs, in the Company's resource planning process, best ilustrate the costing periods referenced by Mr. Tatum in his testimony, pages 22 and 23. In this testimony, . Mr. Tatum describes how the concept of time-differentiated costing periods formed the basis for the 3CP/12CP cost-of-service method. A description of the time-differentiated costing periods used in the planning and valuing demand-side management programs is attached to this response and can be IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 5 found on page 68 of the 2006 Integrated Resource Plan Appendix D - Technical Appendix. (b&c) Attached to this response are two charts that detail the time of day, day of the week, and seasonality of each costing period. The three costing periods of base, intermediate, and peak referenced in Mr. Tatum's testimony are represented on the attached charts as off-peak, mid-peak, and on-peak, respectively, for the summer and non-summer seasons. These charts can also be found on pages 66 and 67 of the 2006 Integrated Resource Plan Appendix D - Technical Appendix. This response to this Request was prepared by Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 6 REQUEST NO. 1-5: For each of IPC's production resources assigned to Accounts 340-346, please provide in Excel format with all formulas and links intact the following by month for the past 36 months: (a) Name, in-service date, and nameplate or rated capacity. (b) Total hours of operation during each of IPC's base, intermediate, and peak production costing periods. (c) MWh of energy supplied during each of IPC's base, intermediate, and peak production costing periods. (d) Total operating costs during each of IPC's base, intermediate, and peak production costing periods. (e) All workpapers underlying and/or supporting these responses. RESPONSE TO REQUEST NO. 1-5: (a) The requested information is provided on the enclosed CD under the file name "NameplateCap _i nserviceDate.xls." (b) Please see the Response to Request No. 1-5(c). (c) The energy output information included with this response is not segmented into the base, intermediate, and peak production costing periods as requested; rather, the energy output for each generation resource is provided on an hourly basis on the enclosed CD. (d) The requested time-differentiated operating cost information is not available. (e) All workpapers underlying and/or supporting these responses are contained on the enclosed CD. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY-7 This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 8 REQUEST NO. 1-6: For each of IPC's production resources assigned to Accounts 310-316, please provide in Excel format with all formulas and links intact the following by month for the past 36 months: (a) Name, in-service date, and nameplate or rated capacity. (b) Total hours of operation during each of IPC's base, intermediate, and peak production costing periods. (c) MWh of energy supplied during each of IPC's base, intermediate, and peak production costing periods. (d) Total operating costs during each of IPC's base, intermediate, and peak production costing periods. (e) All workpapers underlying and/or supporting these responses. RESPONSE TO REQUEST NO. 1-6: (a) The requested information is provided on the enclosed CD under the file name "NameplateCap _I nserviceDate.xls." (b) Please see the Response to Request No. 1-6(c). (c) The energy output information included with this response is not segmented into the base, intermediate, and peak production costing periods as requested; rather, the energy output for each generation resource is provided on an hourly basis on the enclosed CD. (d) The requested time-differentiated operating cost information is not available. (e) All workpapers underlying and/or supporting these responses are contained on the enclosed CD. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 9 This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -10 REQUEST NO. 1-7: For each of IPC's production resources assigned to Accounts 330-336, please provide in Excel format with all formulas and links intact the following by month for the past 36 months: (a) Name, in-service date, and nameplate or rated capacity. (b) Total hours of operation during each of IPC's base, intermediate, and peak production costing periods. (c) MWh of energy supplied during each of IPC's base, intermediate, and peak production costing periods. (d) Total operating costs during each of IPC's base, intermediate, and peak production costing periods. (e) All workpapers underlying and/or supporting these responses. RESPONSE TO REQUEST NO. 1-7: (a) The requested information is provided on the enclosed CD under the file name "NameplateCap _lnserviceDate.xls." (b) Please see the Response to Request No. 1-7(c). (c) The energy output information included with this response is not segmented into the base, intermediate, and peak production costing periods as requested; rather, the energy output for each generation resource is provided on an hourly basis on the enclosed CD. (d) The requested time-differentiated operating cost information is not available. (e) All workpapers underlying and/or supporting these responses are contained on the enclosed CD. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 11 This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -12 REQUEST NO. 1.8: For each purchase whose cost is booked to Account 555.1, please provide in Excel format with all formulas and links intact the following by month for the past 36 months: (a) Transaction date, duration, type (for example, firm energy), total capacity and/or energy purchased, total cost, applicable pricing mechanism ($/MW, $/MWh, or some combination), and specific prices. (b) Total hours of purchase during each of IPC's base, intermediate, and peak production costing periods. (c) MWh of energy purchased (if applicable) during each of IPC's base, intermediate, and peak production costing periods. (d) Total purchase costs during each of IPC's base, intermediate, and peak production costing periods. (e) All workpapers underlying and/or supporting these responses. RESPONSE TO REQUEST NO. 1.8: The requested information is provided on the enclosed CD. The energy purchase information included with this response is not segmented into the base, intermediate, and peak production costing periods as requested; rather, the transaction information is provided on an hourly basis. This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -13 REQUEST NO. 1-9: For each purchase whose cost is booked to Account 555.2, please provide in Excel format with all formulas and links intact the following by month for the past 36 months: (a) Transaction date, duration, type (for example, firm energy), total capacity and/or energy purchased, total cost, applicable pricing mechanism ($/MW, $/MWh, or some combination), and specific prices. (b) Total hours of purchase during each of IPC's base, intermediate, and peak production costing periods. (c) MWh of energy purchased (if applicable) during each of IPC's base, intermediate, and peak production costing periods. (d) Total purchase costs during each of IPC's base, intermediate, and peak production costing periods. (e) All workpapers underlying and/or supporting these responses. RESPONSE TO REQUEST NO. 1-9: (a) The requested monthly purchase information is provided on the enclosed CD under the file name "DOE_1-9a.xls." Energy purchases booked to FERC Account 555.2, Co-generation and Small Power Production, are tracked on a monthly basis. As a result, "transaction date" is simply the monthly transaction date. The associated transaction "duration" and "type" are not available. (b,c & d)Energy purchases booked to FERC Account 555.2, Co-generation and Small Power Production, are tracked on a monthly basis. As a result, the requested time-differentiated information is not available. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -14 (e) All workpapers underlying and/or supporting these responses are contained on the enclosed CD, provided in response to item (a). This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 15 REQUEST NO. 1-10: Referring to the direct testimony of Timothy Tatum at 40:10-11 : (a) Please provide in Excel format with all formulas and links intact the 2008 marginal cost analysis. (b) Please provide all workpapers underlying and/or supporting the marginal cost analysis. RESPONSE TO REQUEST NO. 1-10: The requested information is included on the enclosed CD under the file name "2008MarginaICostSchedules.xls. " This response to this Request was prepared by Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -16 REQUEST NO. 1-11: Please provide in native format (e.g., Word) the direct testimony of all Idaho Power witnesses. RESPONSE TO REQUEST NO. 1-11: Idaho Power hereby objects to this request in that the U.S. Department of Energy has been provided with both a hard copy and an electronic copy of all testimony, exhibits, and workpapers, as well as the initial pleadings for this case that were filed by the Company with the Commission. As stated in the cover letter accompanying these materials, the electronic copy utilizes a word- searchable format. The offcial copy of these documents is the hard copy that is filed with the Idaho Public Utilities Commission. This response to this Request was prepared by Donovan E. Walker, Corporate Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -17 REQUEST NO. 1-12: Referring to Exhibit No. 53 at 36:258: (a) Please define and explain in detail "Adjustment to Revenue/Refunds." (b) Please provide the justification for IPC's functionalization and classification of these revenues. RESPONSE TO REQUEST NO. 1-12: (a) The revenue category "Adjustments to Sales Revenues/Refunds" is explained by Mr. Said in his testimony, pages 26 and 27. The calculation of the "Adjustments to Sales Revenues/Refunds" amount of $1,489,324 is detailed on Exhibit No. 52. (b) The revenue category "Adjustments to Sales Revenues/Refunds" is functionalized and classified in the same manner as general plant; that is, according to the combined functionalization and classification of production, transmission, and distribution plant investment. As Mr. Said describes in his testimony, pages 26 and 27, this adjustment was made to recognize the estimated revenue associated with load growth to be served by the plant additions. Since the additional plant is considered to be "general plant" in nature, the associated revenues were functionalized and classified in the same manner to match the revenue with the investment. The response to this request was prepared by Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY -18 REQUEST NO. 1-13: Referring to Exhibit No. 53 at 36:260: (a) Please provide the justification for IPC's classification of Account 447 revenues. (b) Please provide in Excel format Account 447 Opportunity Sales by month for the past 36 months showing for each transaction the total kWh sold, total revenue received, and whether the transaction was priced using a one- or. multi-part rate. RESPONSE TO REQUEST NO. 1-13: (a) FERC Account 447, System Opportunity Sales, was classified as energy- related and allocated on that basis in the Company's jurisdictional separation study and the class cost-of-service study. The revenues booked to Account 447 are revenues resulting from the sale of energy and, therefore, are allocated on that basis. (b) The requested information is provided on the enclosed CD with this response. All transactions included with this response were priced using a one-part rate. This response to this Request was prepared at the request and under the direction of Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, and in consultation with Barton L. Kline, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 19 REQUEST NO. 1-14: Referring to the direct testimony of Timothy Tatum at 55:5- 7 and the adverb currently used to introduce this sentence, does IPC plan to expand the coverage of the FCA to classes other than Residential and Small General Service? If the response to this question is other than an unqualified yes, please describe in detaillPC's plans to expand the FCA and any discussions that IPC has had in the past 12 months with any part in this case regarding the possible expansion of the FCA. RESPONSE TO REQUEST NO. 1-14: The Company has no plans to expand the coverage of the FCA to classes other than Residential and Small General Service. The response to this request was prepared by Timothy Tatum, Senior Pricing Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 20 REQUEST NO. 1-15: Provide copies of all Idaho Power credit rating reports since January 1,2007. RESPONSE TO REQUEST NO. 1-15: Please see enclosed CD. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 21 REQUEST NO. 1-16: Provide copies of all presentations to securities analysts by management for Idaho Power or IdaCorp since January 1, 2008. RESPONSE TO REQUEST NO. 1-16: Please see enclosed CD. This response to this Request was prepared by Steven R. Keen, Vice president and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 22 REQUEST NO. 1-17: Please identify the specific weights given to the various cost of equity studies in Dr. Avera's testimony. In particular, please indicate the relative weight given to his electric utility DCF study as opposed to his other cost of equity studies, in formulating his recommended range. RESPONSE TO REQUEST NO. 1-17: Dr. Avera did not apply a specific, mathematical weighting to the quantitative results of his alternative analyses in arriving at his recommended ROE range for Idaho Power. Rather, he considered the results of all his analyses, in light of his evaluation of current capital market conditions and investors' risk perceptions for electric utilities, in determining his conclusions and recommendations. This response to this Request was prepared by Willam E. Avera, FINCAP, Inc., in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 23 REQUEST NO. 1-18: Does Dr. Avera intend to submit a cost of equity update in this case? If so, please state when. RESPONSE TO REQUEST NO. 1-18: Currently, Dr. Avera has no specifc plans to update his analyses. This response to this Request was prepared by Willam E. Avera, FINCAP, Inc., in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 24 REQUEST NO. 1-19: Has Dr. Avera previously submitted cost of equity testimony for Idaho Power using a West Region electric utility proxy group? If so: (a) Please state the last case (year, docket number) when he did so; (b) The companies comprising that Proxy Group; and (c) The reason for changing his practice to a national proxy group. RESPONSE TO REQUEST NO. 1-19: (a) Federal Energy Regulatory Commission, Docket No. ER06-787 (2006). (b) Black Hils Corporation; Edison International; Hawaiian Electric Industries; IDACORP, Inc.; MDU Resources Group; PG&E Corporation; Pinnacle West Capital; PNM Resources; Puget Energy, Inc.; Sempra Energy; and Xcel Energy, Inc. (c) The ultimate goal of assembling a proxy group for purposes of performing the DCF analysis is to calculate a return for the utility in question that is analogous to returns on comparable investments with a similar risk profile. Geography can provide a reasonable basis on which to establish a proxy group when location is linked to investors' expectations of risk, but there is certainly no automatic requirement that proxy groups must be composed only of members in a single geographic region to be considered risk-comparable in the eyes of investors. In the case of Idaho Power Company and other western electric utilities, a regional approach was justified in light of investors' focus on the 2000-2001 western energy crisis. Since that time, however, concerns over the western energy crisis have waned, while risks facing electric utiities throughout the nation (e.g., energy cost volatility, rising costs and capital needs, regulatory lag, and environmental uncertainty) have come to dominate investors' risk evaluation. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 25 This response to this Request was prepared by Willam E. Avera, FINCAP, Inc., in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 26 REQUEST NO. 1.20: Please specify the exact criteria used by Dr. Avera for eliminating proxy company DCF cost of equity results as being either too high or too low. RESPONSE TO REQUEST NO. 1-20: Dr. Avera's evaluation of extreme low- and high-end outlers was explained in his direct testimony at pages 45-48. As Dr. Avera indicated there, low-end cost of equity estimates were evaluated against observable yields on triple-B rated public utility bonds. In light of the fundamental risk- return tradeoff principal, Dr. Avera concluded that cost of equity estimates below 8.0 percent, which were less than 110 basis points above the yields available on less-risky bonds, were extreme outliers and should be disregarded. Similarly, Dr. Avera evaluated high-end values against the balance of the remaining estimates and the 17.7 percent threshold adopted by FERC to exclude extreme outliers. This response to this Request was prepared by Willam E. Avera, FINCAP, Inc., in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 27 REQUEST NO. 1-21: Please specify all reasons why Dr. Avera selected Value Line as the source of the "beta" instead of using other publically-available sources of beta. RESPONSE TO REQUEST NO. 1-21: Because Value Line is perhaps the most widely available source of information on common stocks, Value Line's published beta values provide an important guide to investors' expectations. Value Line is also a well- recognized source in the investment and regulatory communities, and in Dr. Avera's experience, Value Line is the most widely referenced source for beta in regulatory proceedings. In addition, unlike some beta values, Value Line's estimates have the advantage of being already adjusted for the established tendency to regress towards the mean. This response to this Request was prepared by Wiliam E. Avera, FINCAP, Inc., in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 28 REQUEST NO. 1-22: Please list all public common stock issues during the last three years by IdaCorp. In each case, please include: (a) Date of issuance; (b) Net proceeds; and (c) Expenses associated with issuance (including underwriting fees). RESPONSE TO REQUEST NO. 1-22: Please see attached list of shares. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 29 REQUEST NO. 1-23: Please describe any plans for a public stock issuance within the next three years for IdaCorp. RESPONSE TO REQUEST NO. 1-23: Idacorp does not issue forward looking information in regard to public stock issuances. We have stated that we intend to keep our debt to equity ratio near its current level of approximately 50/50. Actual financial results and actual levels of cash expenditures wil drive the ultimate combination of new stock and debt issuances. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 30 REQUEST NO. 1-24: Provide all securities research analyst reports concerning Idaho Power or IdaCorp in the Company's possession (and not already provided in this case) issued since January 1,2008. RESPONSE TO REQUEST NO. 1.24: Please see enclosed CD. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 31 REQUEST NO. 1-25: Per Mr. Keen, pages 28-29, please identify the dollar amounts of debt obligation S&P and Moody's presently impute to Idaho Power for its long-term purchase power contracts for credit rating purposes. RESPONSE TO REQUEST NO. 1-25: S&P & Moody's do not provide Idaho Power with detailed information or any specific obligation amounts with respect to purchase power contracts. S&P has shared information that explains their methodology (see attached) while Moody's has not. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 32 REQUEST NO. 1-26: Please provide the American Falls and Milner debt balances at June 30, 2008. (S. Keen, page 38). RESPONSE TO REQUEST NO. 1-26: The outstanding debt balances are as follows: American Falls - $19,885,000 Milner - $9,572,727 This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 33 REQUEST NO. 1-27: Please identify any plans by Mr. Keen to update the year- end 2008 projected capital structure and cost of debt. As part of the response please indicate when the issuance of the $125 millon debt issuance and the refinancings of the Sweetwater and Humboldt auction bonds are likely to take place. RESPONSE TO REQUEST NO. 1-27: In filing the forecast test year, the intent was to utilize a fully forecasted test period with forecast data throughout. An update to selected sections of the forecast material for actual results without updating all correlative data could cause misleading results. With this perspective in mind, no update to the forecast capital structure was anticipated. In regard to the issuance of debt related to the Sweetwater and Humboldt auction bonds, some financing activity must be executed prior to the expiration of the current term loan agreement that is due March 31, 2009, and it is possible such financing will occur prior to December 31, 2008. Activities in the financial markets wil impact the timing and pricing of future financings related to the auction bonds making a definite time frame impossible to predict. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 34 REQUEST NO. 1-28: Please provide the Company's actual capital structure (excluding American Falls and Milner debt) at June 30,2006. RESPONSE TO REQUEST NO. 1-28: Provided on the attached documents is the Company's actual capital structure (excluding American Falls and Milner debt) at June 30, 2008, per date clarification with DOE's attorney Arthur Perry Bruder. This response to this Request was prepared by Steven R. Keen, Vice President and Treasurer, Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, and Lisa D. Nordstrom, Senior Counsel, Idaho Power Company. DATED at Boise, Idaho, this 2; day of September 2008. BARTOW~ Attorney for Idaho Power Company LISA D. NORDSTROM Attorney for Idaho Power Company DONOVAN E. WALKER Attorney for Idaho Power Company .. IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 35 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 2.i.r day of September 2008 I served a true and correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Weldon B. Stutzman Deputy Attorney General Idaho Public Utilties Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 Neil Price Deputy Attorney General Idaho Public Utilities Commission 472 West Washington P.O. Box 83720 Boise, Idaho 83720-0074 Industrial Customers of Idaho Power Peter J. Richardson, Esq. RICHARDSON & O'LEARY PLLC 515 North 2ih Street P.O. Box 7218 Boise, Idaho 83702 Dr. Don Reading Ben Johnson Associates 6070 Hil Road Boise, Idaho 83703 Idaho Irrigation Pumpers Association, Inc. Randall C. Budge Eric L. Olsen RACINE, OLSON, NYE, BUDGE & BAILEY, CHARTERED P.O. Box 1391 201 East Center Pocatello, Idaho 83204-1391 -- Hand Delivered U.S. Mail _ Overnight Mail FAX -- Email Weldon.stutzman(âpuc.idaho.gov -- Hand Delivered U.S. Mail _ Overnight Mail FAX -- Email Neil.price((puc.idaho.gov Hand Delivered -- U.S. Mail _ Overnight Mail FAX -- Email peter((richardsonandoleary.com Hand Delivered -- U.S. Mail _ Overnight Mail FAX -- Email dreading((mindspring.com Hand Delivered -- U.S. Mail _ Overnight Mail FAX -- Email rcb((racinelaw.net elo((racinelaw. net IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 36 Anthony Yankel Yankel & Associates, Inc. 29814 Lake Road Bay Village, Ohio 44140 Kroger Co. I Fred Meyer and Smiths Michael L. Kurt Kurt J. Boehm BOEHM, KURTZ & LOWRY 36 East Seventh Street, Suite 1510 Cincinnati, Ohio 45202 The Kroger Co. Attn: Corporate Energy Manager (G09) 1014 Vine Street Cincinnati, Ohio 45202 Kevin Higgins Energy Strategies, LLC Parks ide Towers 215 South State Street, Suite 200 Salt Lake City, Utah 84111 Micron Technology Conley Ward Michael C. Creamer GIVENS PURSLEY, LLP 601 West Bannock Street P.O. Box 2720 Boise, Idaho 83701-2720 Dennis E. Peseau, Ph.D. Utilty Resources, Inc. 1500 Libert Street SE, Suite 250 Salem, Oregon 97302 Hand Delivered -. U.S. Mail _ Overnight Mail FAX -. Email tony(ëyankel.net Hand Delivered -. U.S. Mail _ Overnight Mail FAX -. Email mkurt(ãBKLlawfirm.com kboehm(ãBKLlawfirm.com Hand Delivered -. U.S. Mail _ Overnight Mail FAX Email Hand Delivered -. U.S. Mail _ Overnight Mail FAX -. Email khiggins(ëenergystrat.com Hand Delivered -. U.S. Mail _ Overnight Mail FAX -. Email cew(ãgivenspursley.com mcc(ëgivenspursley.com Hand Delivered -. U.S. Mail _ Overnight Mail FAX -. Email dennvtemp(ãyahoo.com IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 37 Department of Energy Lot R. Cooke Arthur Perry Bruder Offce of the General Counsel United States Department of Energy 1000 Independence Avenue SW Washington, DC 20585 Routing Symbol GC-76 Hand Delivered U.S. Mail -l Overnight Mail FAX -l Email Lot.CookeCchg.doe.gov Arthur. BruderCchg. doe.gov Dwight D. Etheridge Exeter Associates, Inc. 5565 Sterrett Place, Suite 310 Columbia, MD 21044 Hand Delivered -l U.S. Mail _ Overnight Mail FAX -l Email detheridgeCcexeterassociates.com Community Action Partnership Association Of Idaho Brad M. Purdy Attorney at Law 2019 North 1th Street Boise, Idaho 83702 Hand Delivered -l U.S. Mail _ Overnight Mail FAX -l Email bmpurdyCchotmail.com Snake River Allance Ken Miler Snake River Alliance P.O. Box 1731 Boise, Idaho 83701 Hand Delivered -l U.S. Mail _ Overnight Mail FAX -l Email kmilerCcsnakeriverallance.org CltfJCL Barton L. Kline IDAHO POWER COMPANY'S RESPONSE TO THE U.S. DOE'S FIRST INTERROGATORIES AND PRODUCTION REQUESTS TO IDAHO POWER COMPANY - 38 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. IPC.E.08.10 IDAHO POWER COMPANY RESPONSE TO REQUEST NO. 1.4 Appendix D- Technical Appendix Idaho Power Company The following tables ilustrate the time of day and time of year costing period definitions usedin the peak static program screening analysis: SUMMER SEASON June 1 through August 35 Hour 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 SOFP = Summer Off-Peak SMP = Summer Mid-Peak SONP = Summer On-Peak PaQe 66 2006 Integrated Resource Plan ........... f" f'~,.rr,.,. ,-,.,. f' f"~ f' t- tl fl f',.,. ,. f' f' fA f! f4 fAff f!ffff, .. ~...... .. , , , . . . . . . . . . . . . . . . . . Idaho Power Company Appendix D- Technical Appendix NON-5UMMER SEASON September 01 through May 31 Hour 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 NSOFP = Non-Summer Off-Peak NSMP = Non-Summer Mid-Peak Market prices were developed within Aurora using the Preferred Portfolio as a resource basis (May Aurora _ 2006IRP _ P3 _ hrly _zone yrices _ 20yr So Idaho). The values beyond 20 years are extended by escalating the final year of the forward market price schedule for the additional years needed for the analysis using the Company's escalation rate of3.0% for capital investments. The costing period prices are calculated using the following method: · NSMP =; Average of heavy load prices ip January-May and September-December. · NSOFP = Average of light load prices in January-May and September-December. · SOFP = Average of light load prices in June-August. · SMP = Average of heavy load prices in June-August. · SONP = IPC variable energy and operating cost of a 162 MW Simple-Cycle Gas Turbine · Anual = IPC variable energy and operating cost of thermal coal plant 2006 Integrated Resource Plan Page 67 "ttt............ .. ~ . . ~ ~ ~ ~ ~ . , , . . , , . . . . . . ~ t, t ~" Idaho Power Company Appendix D- Technical Appendix Incremental Costs: The additional cost incured by choosing to select one option ov~r another. Total Installed Cost of Energy Effcient Option - Total Installed Cost of a Non-Energy Effcient Option = Incremental Cost Program Benefits Calculations To quantify the "benefit" portion of the calculation five costing periods were created for the year that are consistent with the IPUC approved rate schedule 19 tariff rate pricing periods. Each costing period contains a price that reflects the alternative cost of energy and capacity at the associated time period. The alternative cost represents the cost of energy resources that would most likely be the alternative at that time period. Each time segment has a different alternative cost associated with it depending on the expected price for that period. Two methodologies were developed, at the request of the IRP AC, to evaluate the potential benefits associated with alternative supply costs: peak oriented (gas tubine) and baseload oriented (thermal plant) resource alternatives. The peak alternative resource methodology employs five costing periods for each year to reflect the market dynamics impacting costs associated with different times of the day or seasonally. Each costing period contains a price that reflects the alternative cost of energy and capacity at the associated time period. The alternative cost represents the cost of energy resources that would most likely be an alternative including peak' plant or the market cost of energy depending upon the load profie associated with the program. Each time segment has a different alternative cost associated with it depending on the expected price for that period. The baseload alternative utilzed the capacity and variable cost associated with a thermal (coal plant) alternative which applied to all hours of the year. The results of the analyses showed all programs to be cost-effective under both the peak and the baseload alternative resource cost methodologies. All programs showed greater benefits associated using the peak resource alternative, however, the industrial efficiency program showed the showed highest benefits using the baseload analysis. This benefit differential is attbutable to the unque seasonal load profiles associated with each program. 2006 Integtáted Resource Plan Page 65 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-E-08-10 IDAHO POWER COMPANY RESPONSE TO REQUEST NO. 1-22 Original Issue Shares Detail For the period 7/1/05 .6/30/08o t PI o II Sh N P d Fa e an o ars ares et rocee s ees 07/27/05 Julv 2005 DRIP 62,703.81 2,002 62,394.81 309.00 08/30/05 AUQ 2005 DRIP 1,212,248.01 40,442 1,212,158.01 6,626.00 09/28/05 Sept 2005 DRIP 115,076.35 3,825 115,046.35 445.20 10/27/05 OCT 2005 DRIP 93,717.85 3,285 93,377.65 340.20 12/01/05 NOV 2005 DRIP 1,198,690.96 41,850 1,192,156.96 6,534.00 12/29/05 DEC 2005 DRIP 99,303.86 3,352 98,898.86 405.00 01/25/06 JAN 2006 DRIP 71,908.21 2,257 71,572.21 336.00 02/28/06 FEB 2006 DRIP 1,165,156.77 35,448 1,158,721.17 6,435.60 03/27/06 MAR 2006 DRIP 171,590.16 5,372 171,112.26 477.90 04/27/06 APR 2006 DRIP 73,207.96 2,200 72,884.56 323.40 05/30/06 MAY 2006 DRIP 1,140,403.88 34,262 1,134,105.68 6,298.20 06/28/06 June 2006 DRIP 66,123.50 1,966 65,702.90 420.60 07/25/06 July 2006 DRIP 56,041.65 1,517 55,720.65 321.00 08/30/06 August 2006 DRIP 1,115,902.22 29,140 1,109,613.62 6,288.60 09/25/06 September 2006 DRI P 108,221.24 2,828 107,886.44 334.80 10/27/06 October 2006 DRIP 62,553.88 1,574 62,232.28 321.60 11/30/06 November 2006 DRIP 1,091,932.39 27,350 1,085,723.59 6,208.80 12/07/06 CEP 2,389,589.04 60,700 2,389,589.04 24,134.32 12/08/06 CEP 1,417,946.40 36,000 1,417,946.40 14,320.80 12/11/06 CEP 117,149.70 3,000 117,149.70 1,183.20 12/15/06 CEP 449,000.04 11,600 449,000.04 4,534.44 12/18/06 CEP 2,159,505.39 55,507 2,159,505.39 21,808.72 12/19/06 CEP 1,800,536.60 46,000 1,800,536.60 18,183.80 12/20/06 CEP 2,458,008.31 63,158 2,458,008.31 24,824.36 12/21/06 CEP 2,954,667.15 76,500 2,954,667.15 29,842.85 12/22/06 CEP 3,165,742.08 82,400 3,165,742.08 31,971.20 12/26/06 CEP 2,858,088.94 73,853 2,858,088.94 28,869.14 12/27/06 CEP 1,082,351.30 27,800 1,082,351.30 10,822.54 12/27/06 December 2006 DRIP 62,147.94 1,594 61,843.14 304.80 01/25/07 January 2007 DRIP 75,923.48 2,076 75,616.88 306.60 03/02/07 February 2007 DRIP 1,088,030.38 31,524 1,081,881.58 6,148.80 03/28/07 March 2007 DRIP 115,009.88 3,379 114,670.28 339.60 04/25/07 April 2007 DRIP 75,781.22 2,173 75,440.42 340.80 05/30/07 May 2007 DRIP 1,073,192.36 32,605 1,067,118.56 6,073.80 06/26/07 June 2007 DRIP 151,250.82 4,761 150,872.82 378.00 06/28/07 CEP 4,538,462.40 144,000 4,538,462.40 45,840.96 06/29/07 CEP'3,502,396.95 110,500 3,502,396.95 35,371.05 07/02/07 CEP 5,247,133.71 164,957 5,247,133.71 53,000.68 07/03/07 CEP 2,586,582.07 80,543 2,586,582.07 26,120.09 07/25/07 Julv 2007 DRIP 79,253.21 2,534 78,902.21 351.00 08/28/07 CEP 822,189.11 25,089 822,189.11 8,304.46 08/29/07 CEP 2,132,953.06 65,800 2,132,953.06 21,542.92 08/30/07 AUQust 2007 DRIP 1,062,654.02 32,788 1,056,683.42 5,970.60 09/05/07 CEP 2,903,727.42 90,200 2,903,727.42 29,324.02 09/06/07 CEP 1,420,324.40 44,000 1,420,324.40 14,344.00 09/07/07 CEP 5,047,669.76 156,248 5,047,669.76 50,983.72 09/25/07 September 2007 DRI P 104,201.68 3,172 103,866.88 334.80 10/15/07 Sept 07 DRIP Correction 2,900.00 88 2,900.00 - 10/25/07 October 2007 DRIP 104,218.95 3,139 103,860.75 358.20 DOE request 1-22 11/30/07 November 2007 DRIP 1,056,907.53 29,954 1,050,960.33 5,947.20 12/28/07 December 2007 DRIP 80,590.77 2,265 80,267.37 323.40 01/25/08 January 2008 DRIP 87,141.16 2,705 86,855.56 285.60 02/29/08 February 2008 DRIP 1,038,817.95 34,854 1,032,985.35 5,832.60 03/25/08 March 2008 DRIP 174,307.26 5,318 173,941.26 366.00 04/25/08 April 2008 DRIP 128,932.83 4,023 128,616.63 316.20 05/30/08 May 2008 DRIP 1,059,907.14 34,531 1,054,087.74 5,819.40 06/25/08 June 2008 DRIP 128,959.94 4,221 128,623.34 336.60 Totals I 64,708,935.051 1,894,229 I 64,633,326.35 1577,887.17 I DOE request 1-22 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-E-08-10 IDAHO POWER COMPANY RESPONSE TO REQUEST NO. 1-25 Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements Primary Credit Analyst: David Bodek, New York (1) 212-438-7969; david_bodek(lstandardandpoors.com Secondary Credit Analysts: Richard W Cortright, Jr., New York (1) 212-438-7665; richard_cortright(lstandardandpoors.com Solomon B Samson, New York (11212-438-7653; sol_samson(lstandardandpoors.com Table Of Contents The Mechanics Of PPA Debt Imputation Risk Factors Ilustration Of The PPA Adjustment Methodology Short-Term Contracts Evergreen Treatment Analytical Treatment Of Contracts With All-In Energy Prices Transmission Arrangements PPAs Treated As Leases Evaluating The Effect Of PPAs ww.standardandpoors.com/ratingsdirect 1 (£ Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor's permission, ~i:l= Tprmc: nf 11~p./nii:r.;:imp.r nn thp'I;:~t n;:np. Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements For many years, Standard & Poor's Ratings Services has viewed power supply agreements (PPA) in the u.S. utility sector as creating fixed, debt-like, financial obligations that represent substitutes for debt-financed capital investments in generation capacity. In a sense, a utility that has entered into a PPA has contracted with a supplier to make the financial investment on its behalf. Consequently, PPA fixed obligations, in the form of capacity payments, merit inclusion in a utility's financial metrics as though they are part of a utility's permanent capital structure and are incorporated in our assessment of a utility's creditworthiness. We adjust utilities' financial metrics, incorporating PPA fixed obligations, so that we can compare companies that finance and build generation capacity and those that purchase capacity to satisfy customer needs. The analytical goal of our financial adjustments for PPAs is to reflect fixed obligations in a way that depicts the credit exposure that is added by PPAs. That said, PPAs also benefit utilities that enter into contracts with suppliers because PPAs wil typically shift various risks to the suppliers, such as construction risk and most of the operating risk. PPAs can also provide utilities with asset diversity that might not have been achievable through self-build. The principal risk borne by a utility that relies on PPAs is the recovery of the financial obligation in rates. The Mechanics Of PPA Debt Imputation A starting point for calculating the debt to be imputed for PPA-related fixed obligations can be found among the "commitments and contingencies" in the notes to a utility's financial statements. We calculate a net present value (NPV) of the stream of the outstanding contracts' capacity payments reported in the financial statements as the foundation of our financial adjustments. The notes to the financial statements enumerate capacity payments for the five years succeeding the annual report and a "thereafter" period. While we have access to proprietary forecasts that show the detail underlying the costs that are amalgamated beyond the five-year horizon, others, for purposes of calculating an NPV, can divide the amount ~eported as "thereafter" by the average of the capacity payments in the preceding five years to derive an approximate tenor of the amounts combined as the sum of the obligations beyond the fifth year. In calculating debt equivalents, we also include new contracts that will commence during the forecast period. Such contracts aren't reflected in the notes to the financial statements, but relevant information regarding these contracts are provided to us on a confidential basis. If a contract has been executed but the energy wil not flow until some later period, we won't impute debt for that contract until the year that energy deliveries begin under the contract if the contract represents incremental capacity. However, to the extent that the contract wil simply replace an expiring contract, we wil impute debt as though the future contract is a continuation of the existing contract. We calculate the NPV of capacity payments using a discount rate equivalent to the company's average cost of debt, net of securitization debt. Once we arrive at the NPV, we apply a risk factor, as is discussed below, to reflect the benefits of regulatory or legislative cost recovery mechanisms. Standard & Poor's RatingsDirect I May 7,2007 2 (9 Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor's permission, See Terms of Use/Disclaimer on the last page,j 3fr.\\,F Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements Balance sheet debt is increased by the risk-factor-adjusted NPV of the stream of capacity payments. We derive an adjusted debt-to-capitalization ratio by adding the adjusted NPV to both the numerator and the denominator of that ratio. We calculate an implied interest expense for the imputed debt by multiplying the Same utility average cost of debt used as the discount rate in the NPV calculation by the amount of imputed debt. The adjusted FFO-to-interest expense ratio is calculated by adding the implied interest expense to both the numerator and denominator of the equation. We also add implied depreciation to the equation's numerator. We calculate the adjusted FFO-to-total-debt ratio by adding imputed debt to the equation's denominator and an implied depreciation expense to its numerator. Our adjusted cash flow credit metrics include a depreciation expense adjustment to FFO. This adjustment represents a vehicle for capturing the ownership-like attributes of the contracted asset and tempers the effects of imputation on the cash flow ratios. We derive the depreciation expense adjustment by multiplying the relevant year's capacity payment obligation by the risk factor and then subtracting the implied PPA-related interest expense for that year from the product of the risk factor times the scheduled capacity payment. Risk Factors The NPVs that Standard & Poor's calculates to adjust reported financial metrics to capture PPA capacity payments are multiplied by risk factors. These risk factors typically range between 0% to 50%, but can be as high as 100%. Risk factors are inversely related to the strength and availability of regulatory or legislative vehicles for the recovery of the capacity costs associated with power supply arrangements. The strongest recovery mechanisms translate into the smallest risk factors. A 100% risk factor would signify that all risk related to contractual obligations rests on the company with no mitigating regulatory or legislative support. For example, an unregulated energy company that has entered into a tolling arrangement with a third-party supplier would be assigned a 100% risk factor. Conversely, a 0% risk factor indicates that the burden of the contractual payments rests solely with ratepayers. This type of arrangement is frequently found among regulated utilities that act as conduits for the delivery of a third party's electricity and essentially deliver power, collect charges, and remit revenues to the suppliers. These utilities have typically been directed to sell all their generation assets, are barred from developing new generation assets, and the power supplied to their customers is sourced through a state auction or third parties, leaving the utilities to act as intermediaries between retail customers and the electricity suppliers. Intermediate degrees of recovery risk are presented by a number of regulatory and legislative mechanisms. For example, some regulators use a utility's rate case to establish base rates that provide for the recovery of the fixed costs created by PPAs. Although we see this type of mechanism as generally supportive of credit quality, the fact remains that the utility wil need to litigate the right to recover costs and the prudence of PPA capacity payments in successive rate cases to ensure ongoing recovery of its fixed costs. For such a PPA, we employ a 50% risk factor. In cases where a regulator has established a power cost adjustment mechanism that recovers all prudent PPA costs, we employ a risk factor of 25% because the recovery hurdle is lower than it is for a utility that must litigate time and again its right to recover costs. We recognize that there are certain jurisdictions that have true-up mechanisms that are more favorable and frequent than the review of base rates, but stil don't amount to pure pass-through mechanisms. Some of these mechanisms www.standardandpoors.eom/ratingsdireet 3 ~ Standard & Poor's, All rights reserved. No reprint or dissemination without Standard & Poor's permission, See Terms of Use/Disclaimer on the last page, Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements are triggered when certain financial thresholds are met or after prescribed periods of time have passed. In these instances, in calculating adjusted ratios, we wil employ a risk factor between the revised 25% risk factors for utilities with power cost adjustment mechanisms and 50%. Finally, we view legislatively created cost recovery mechanisms as longer lasting and more resilient to change than regulatory cost recovery vehicles. Consequently, such mechanisms lead to risk factors between 0% and 15%, depending on the legislative provisions for cost recovery and the supply function borne by the utility. Legislative guarantees of complete and timely recovery of costs are particularly important to achieving the lowest risk factors. Illustration Of The PPA Adjustment Methodology The calculations of the debt equivalents, implied interest expense, depreciation expense, and adjusted financial metrics, using risk factors, are ilustrated in the following example: Example Of Power-Purchase Agreement Adjustment ($O)Assumption Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Cash from operations 2,000,000 Funds from operations 1,500,000 I nterest expense 444,000 Directly issued debt Short-term debt 600,000 long-term due within one year 300,000 long-term debt 6,500,000 Shareholder's Equity 6,000,000 Fixed capacity commitments 600,000 600,000 600,000 600,000 600,000 600,000 4,200,000* NPV of fixed capacity commitments Using a 6.0% discount rate 5,030,306 Application of an assumed 25%1,257,577 risk factor Implied interest expense~75,455 Implied depreciation expense 74,545 Unadjusted ratios FFO to interest (xl 4.4 FFO to total Debt (%)20.0 Debt to capitalization (%)55.0 Ratios adjusted for debt imputation FFO to interest (x)§4.0 FFO to total debt (%)**18.0 Debt to capitalization (%)n 59.0 'Thereafter approximate years: 7, Hhe current year's implied interest is subtracted from the product of the risk factor multiplied by the current year's capacity payment. §Adds implied interest to the numerator and denominator and adds implied depreciation to FFO "Adds implied depreciation expense to FFO and implied debt to reported debt. , ,Adds implied debt to both the numerator and the denominator, FFO--Funds from operations. NPV--Net present value. Standard & Poor's RatingsDirect I May 7, 2007 4 ~ Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor's permission. See Terms of Use/Disclaimer on the last page. Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements Short-Term Contracts Standard & Poor's has abandoned its historical practice of not imputing debt for contracts with terms of three years or less. However, we understand that there are some utilities that use short-term PPAs of approximately one year or less as gap filers pending the construction of new capacity. To the extent that such short-term supply arrangements represent a nominal percentage of demand and serve the purposes described above, we wil neither impute debt for such contracts nor provide evergreen treatment to such contracts. Evergreen Treatment The NPV of the fixed obligations associated with a portfolio of short-term or intermediate-term contracts can lead to distortions in a utility's financial profile relative to the NPV of the fixed obligations of a utility with a portfolio of PPAs that is made up of longer-term commitments. Where there is the potential for such distortions, rating committees wil consider evergreen treatment of existing PPA obligations as a scenario for inclusion in the rating analysis. Evergreen treatment extends the tenor of short- and intermediate-term contracts to reflect the long-term obligation of electric utilties to meet their customers' demand for electricity. While we have concluded that there is a limited pool of utilities whose portfolios of existing and projected PPAs don't meaningfully correspond to long-term load serving obligations, we wil nevertheless apply evergreen treatment in those cases where the portfolio of existing and projected PPAs is inconsistent with long-term load-serving obligations. A blanket application of evergreen treatment is not warranted. To provide evergreen treatment, Standard & Poor's starts by looking at the tenor of outstanding PPAs. Others can look to the "commitments and contingencies" in the notes to a utility's financial statements to derive an approximate tenor of the contracts. If we conclude that the duration of PPAs is short relative to our targeted tenor, we would then add capacity payments until the targeted tenor is achieved. Based on our analysis of several companies, we have determined that the evergreen extension of the tenor of existing contracts and anticipated contracts should extend contracts to a common length of about 12 years. The price for the capacity that we add wil be derived from new peaker entry economics. We use empirical data to establish the cost of developing new peaking capacity and reflect regional differences in our analysis. The cost of new capacity is translated into a dollars per kilowatt-year (kW-year) figure using a weighted average cost of capital for the utility and a proxy capital recovery period. Analytical Treatment Of Contracts With All-In Energy Prices The pricing for some PPA contracts is stated as a single, all-in energy price. Standard & Poor's considers an implied capacity price that funds the recovery of the supplier's capital investment to be subsumed within the all-in energy price. Consequently, we use a proxy capacity charge, stated in $/kW, to calculate an implied capacity payment associated with the PPA. The $/kW figure is multiplied by the number of kilowatts under contract. In cases of resources such as wind power that exhibit very low capacity factors, we wil adjust the kilowatts under contract to reflect the anticipated capacity factor that the resource is expected to achieve. We derive the proxy cost of capacity using empirical data evidencing the cost of developing new peaking capacity. ww.standardandpoors.eom/ratingsdireet 5 t£ Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor's permission. See Terms of Use/Disclaimer on the last page.~;;j!.r'Y¡ Standard & Poor's Methodology For Imputing Debt For U.S. Utilities' Power Purchase Agreements We wil reflect regional differences in our analysis. The cost of new capacity is translated into a $/kW figure using a weighted average cost of capital and a proxy capital recovery period. This number wil be updated from time to time to reflect prevailing costs for the development and financing of the marginal unit, a combustion turbine. Transmission Arrangements In recent years, some utilities have entered into long-term transmission contracts in lieu of building generation. In some cases, these contracts provide access to specific power plants, while other transmission arrangements provide access to competitive wholesale electricity markets. We have concluded that these types of transmission arrangements represent extensions of the power plants to which they are connected or the markets that they serve. Irrespective of whether these transmission lines are integral to the delivery of power from a specific plant or are conduits to wholesale markets, we view these arrangements as exhibiting very strong parallels to PPAs as a substitute for investment in power plants. Consequently, we wil impute debt for the fixed costs associated with long-term transmission contracts. PPAs Treated As Leases Several utilities have reported that their accountants dictate that certain PPAs need to be treated as leases for accounting purposes due to the tenor of the PPA or the residual value of the asset upon the PPA's expiration. We have consistently taken the position that companies should identify those capacity charges that are subject to operating lease treatment in the financial statements so that we can accord PPA treatment to those obligations, in lieu of lease treatment. That is, PPAs that receive operating lease treatment for accounting purposes won't be subject to a 100% risk factor for analytical purposes as though they were leases. Rather, the NPV of the stream of capacity payments associated with these PPAs wil be reduced by the risk factor that is applied to the utility's other PPA commitments. PPAs that are treated as capital leases for accounting purposes wil not receive PPA treatment because capital lease treatment indicates that the plant under contract economically" belongs" to the utility. Evaluating The Effect Of PPAs Though history is on the side of full cost recovery, PPAs nevertheless add financial obligations that heighten financial risk. Yet, we apply risk factors that reduce debt imputation to recognize that utilities that rely on PPAs transfer significant risks to ratepayers and suppliers. Additional Contacts: Arhur F Simonson, New York (1) 212-438-2094; arthuuimonsonlWstandardandpoors.com Arleen Spangler, New York (1) 212-438-2098; arleen_spanglerlWstandardandpoors.com Scott Taylor, New York (1) 212-438-2057; scotuaylorlWstandardandpoors.com John W Whitlock, New York (1) 212-438-7678; john_whitlocklWstandardandpoors.com Standard & Poor's RatingsDirect I May 7,2007 6 (Q Standard & Poor's. All rights reserved. No reprint or dissemination without Standard & Poor's permission, See Terms of Use/Disclaimer on the last page. Copyright (Ç 2007, Standard & Poor's, a division of The McGraw-Hili Companies, Inc. (S&P). S&P and/or its third party licensors have exclusive proprietary rights in the data or information provided herein, This data/information may only be used internally for business purposes and shall not be used for any unlawful or unauthorized purposes. 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NY 10041; (1) 212.438,9823 or bye-mail to:research_requestl?standardandpoors.com. Copyright (Ç 1994-2007 Standard & Poor's, a division of The McGraw-Hili Companies, All Rights Reserved. ww.standardandpoors.com/ratingsdirect 7 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-E-08-10 IDAHO POWER COMPANY RESPONSE TO REQUEST NO. 1-28 IDAHO POWER COMPANY ACTUAL COMPOSITE COST OF CAPITAL SUMMARIZED June 30, 2008 Capitalization (1 )(2)(3)(4)(5) Line Capitalization Structure Embedded Weighted No Amount Percent Cost Cost 1 Long-term Debt 1,115,460,000 49.800%5.889%2.933% 2 Preferred Stock 0 0.000%0.000%0.000% 3 Common Equity 1,124,419,949 50.200%10.600% *5.321% 4 Total Capitalization $2,239,879,949 100.000%8.254% Note: * 10.6% was the "imputed" rate of return 2005 Idaho PUC rate case. Actual ROE for the period ended 6/30/2008 was 6.9% (Annualized - unaudited). DOE 1-28 9/23/2008 IDAHO POWER COMPANY COMPOSITE COST OF CAPITAL AT ALLOWED RATE OF RETURN - DETAILED June 30, 2008 Capitalization (1)(2)(3)(4)(5) Line Capitalization Structure Embedded Weighted No Amount Percent Cost Cost Long - term Debt: 1 First Mortgage Bonds $945,000,000 2 Pollution Control Re-.nue Bonds 170,460,000 3 Other Long-term Debt 0 4 Total Long-term Debt 1,115,460,000 49.800%5.889%2.933% 5 Preferred Stock 0 0.000%0.000% Common Equity 6 Common at Par (Line 12)97,877,030 7 Premium less Expense (Line 13 - Line 14)579,660,511 8 Other Comprehensive Income (Line 18)(7,332,825) 9 Retained Earnings (Lines 15 +16 + 17 + 19)454,215,234 10 Total Common Equity 1,124,419,949 50.200%10.600% *5.321% 11 Total Capitalization $2,239,879,949 100.000%8.254% NOTES: * 10.6% was the "imputed" rate of return 2005 Idaho PUC rate case. Actual ROE was 6.9%. Detailed Trial Balance as of June 30, 2008: 12 13 14 15 16 17 18 19 Account 201000 207200 214200 215 Total 2161 Total 216 Total 219 Total APB 28 Tax Adjustment Balance (97,877,030) (581,757,435) 2,096,925 (1,543,966) (52,102,947) (402,071,496) 7,332,825 (1,503,175) 20 Change in Retained Earnings - 216000 21 Sub Earnings - 216115 22 APB 28 Tax Adjustment Total Net Income 41,873,494 (1,371,066) (1,503,175) 38,999,252 DOE 1-28 9/23/2008 ID A H O P O W E R C O M P A N Y EF F E C T I V E E M B E D D E D C O S T O F LO N G - T E R M D E B T Ac t u a l R a t e s a s o f 6 / 3 0 / 0 8 (1 ) (2 ) (3 ) (4 ) (5 ) (6 ) (7 ) (8 ) (9 ) (1 0 ) (1 1 ) (1 2 ) (1 3 ) (F o r m u l a ) (( 4 ) + ( 6 ) - ( 7 ) - ( 6 ) - ( 9 ) ) (( 4 ) * ( 1 1 ) ) (( 1 2 ) / ( 1 0 ) ) Ne t An n u a l Li n e Da t e o f Pn n c i p a l A m o u n t Un d e r w n t e r Ex p e n s e Pr o c e e d s In t e r e s t Ef f e c t i v e No Cl a s s a n d S e r i e s Is s u e Is s u e d Ou t s t a n d i n g Pr i c e Pr e m i u m Di s c o u n t Co m m i s s i o n of Is s u e Re c e i v e d Ra t e Re q u i r e m e n t s Co s t Ac c u n t Fi r s t M o r t g a g e B o n d s : 1 7. 2 0 % S e r i e s , d u e 2 0 0 9 . . . . 11 / 2 3 / 9 9 60 , 0 0 0 60 , 0 0 0 10 0 . 0 0 0 0. 0 0.0 50 0 . 0 16 2 . 6 79 , 3 1 7 . 2 7. 2 0 0 % 5, 7 6 0 . 0 7. 2 6 2 22 1 1 2 9 2 6. 6 0 % S e r i e s , d u e 2 0 1 1 . . . . 03 / 0 2 / 0 1 12 0 , 0 0 0 12 0 , 0 0 0 10 0 . 0 0 0 0. 0 0.0 75 0 . 0 12 1 . 3 11 9 , 1 2 6 . 7 6. 6 0 0 % 7, 9 2 0 . 0 6. 6 4 6 22 1 1 3 1 3 4. 7 5 % S e r i e s , d u e 2 0 1 2 . . . , 11 / 1 5 / 0 2 10 0 , 0 0 0 10 0 , 0 0 0 96 . 9 4 6 0. 0 1,0 5 2 . 0 62 5 . 0 44 1 . 2 97 , 6 6 1 . 6 4. 7 5 0 % 4, 7 5 0 . 0 4. 6 5 3 22 1 1 3 2 4 6. 0 0 % S e r i e s , d u e 2 0 3 2 . . . . 11 / 1 5 / 0 2 10 0 , 0 0 0 10 0 , 0 0 0 99 . 4 5 6 0. 0 54 4 . 0 75 0 . 0 44 1 . 2 96 , 2 6 4 . 6 6. 0 0 0 % 6, 0 0 0 . 0 6. 1 0 6 22 1 1 3 3 5 4. 2 5 % S e r i e s , d u e 2 0 1 3 . . . . 05 / 1 3 / 0 3 70 , 0 0 0 70 , 0 0 0 99 . 4 6 5 0. 0 37 4 . 5 43 7 . 5 20 3 . 7 66 , 9 6 4 . 3 4. 2 5 0 % 2, 9 7 5 . 0 4. 3 1 3 22 1 1 4 0 6 5. 5 % S e n e s , d u e 2 0 3 3 . . . . 05 / 1 3 / 0 3 70 , 0 0 0 70 , 0 0 0 99 . 9 4 6 0. 0 36 . 4 52 5 . 0 3, 6 1 0 . 2 65 , 6 2 6 . 4 5. 5 0 0 % 3, 6 5 0 . 0 5. 6 6 6 22 1 1 3 5 7 5. 5 % S e n e s , d u e 2 0 3 4 . . . . 03 / 2 6 / 0 4 50 , 0 0 0 50 , 0 0 0 99 . 2 3 3 0. 0 36 3 . 5 37 5 . 0 14 9 . 4 49 , 0 9 2 . 1 5. 5 0 0 % 2, 7 5 0 . 0 5. 6 0 2 22 1 1 4 5 6 5. 6 7 5 % S e n e s , d u e 2 0 3 4 . . . . 06 / 1 6 / 0 4 55 , 0 0 0 55 , 0 0 0 96 . 6 4 0 0. 0 74 6 . 0 41 2 . 5 17 3 . 3 53 , 6 6 6 . 2 5. 6 7 5 % 3, 2 3 1 . 3 6. 0 2 1 22 1 1 1 6 9 5. 3 0 % S e r i e s , d u e 2 0 3 5 . . . . 06 / 2 6 / 0 5 60 , 0 0 0 60 , 0 0 0 99 . 3 1 9 0. 0 40 6 . 6 45 0 . 0 3, 3 9 9 . 7 55 , 7 4 1 . 7 5. 3 0 0 % 3, 1 6 0 . 0 5. 7 0 5 22 1 1 3 4 10 6.3 0 % S e r i e s , d u e 2 0 3 7 . , 06 / 2 2 / 0 7 14 0 , 0 0 0 14 0 , 0 0 0 99 . 6 0 1 0. 0 27 6 . 6 1, 0 5 0 . 0 45 0 . 0 13 6 , 2 2 1 . 4 6. 3 0 0 % 6, 6 2 0 . 0 6. 3 6 1 22 1 1 4 1 11 6. 2 5 % S e n e s , d u e 2 0 3 7 . , 10 / 1 6 / 0 7 10 0 , 0 0 0 10 0 , 0 0 0 99 . 7 3 2 0. 0 26 6 . 0 75 0 . 0 47 7 5 96 , 5 0 4 . 5 6. 2 5 0 % 6, 2 5 0 . 0 6. 3 4 5 22 1 1 4 2 11 To t a l F i r s t M o r t g a g e B o n d s 94 5 , 0 0 0 94 5 , 0 0 0 4, 0 9 3 . 6 6,6 2 5 . 0 9, 6 5 0 . 3 92 4 , 4 3 1 . 1 55 , 4 6 6 . 3 6. 0 0 2 % Po l l u t i o n C o n t r o l R e v e n u e B o n d s : 12 Sw e e t w a t e r S e r i e s 2 0 0 6 , d u e 2 0 2 6 . . . . . . . . . . ( a ) 10 / 0 3 / 0 6 11 6 , 3 0 0 11 6 , 3 0 0 10 0 . 0 0 0 0. 0 0.0 52 3 . 4 5, 5 7 1 . 6 11 0 , 2 0 4 . 6 5. 2 6 1 % 6, 1 1 6 . 6 5. 5 5 2 22 1 3 1 6 13 Po r t o f M o r r w S e n e s 2 0 0 0 , d u e 2 0 2 7 . . ( b ) 05 / 0 7 / 0 0 4, 3 6 0 4, 3 6 0 10 0 . 0 0 0 0. 0 0.0 50 . 0 11 9 . 4 4, 1 9 0 . 6 3. 0 8 2 % 13 4 . 4 3. 2 0 7 22 1 3 1 1 14 Hu m b o l d t S e n e s 2 0 0 3 , d u e 2 0 2 4 . . . . . . . . . . . . . ( c ) 10 / 2 2 / 0 3 49 , 6 0 0 49 , 6 0 0 10 0 . 0 0 0 0. 0 0.0 25 2 . 2 1, 4 6 5 . 7 46 , 0 6 2 . 0 4. 5 5 2 % 2, 2 6 7 . 1 4. 7 1 5 22 1 3 1 2 15 T o t a l P o l l u t i o n C o n t r o l R e v e n u e B o n d s 17 0 , 4 6 0 17 0 , 4 6 0 - 0.0 62 5 . 6 7, 1 5 6 . 9 16 2 , 4 7 7 5 6, 5 2 0 . 3 5. 2 4 4 16 T O T A L D E B T C A P I T A L . . . . . . . . . . . $1 , 1 1 5 , 4 6 0 $ 1 , 1 1 5 , 4 6 0 . 0 $4 , 0 9 3 . 6 $7 , 4 5 0 . 6 $1 7 , 0 0 7 . 3 $1 , 0 6 6 , 9 0 6 . 5 $6 4 , 0 0 6 . 5 5. 6 6 9 % (a ) - T h e r a t e s h o w n i s t h e Y T D e f f e c t i v e r a t e o n t h i s v a n a b l e r a t e s e c u n t y . R a n g e o f i n t e r e s t r a t e s f o r 2 0 0 6 - 3 . 1 9 % - 1 0 . 0 0 % . (b ) - T h e r a t e s h o w n i s t h e Y T D e f f e c t i v e r a t e o n t h i s v a n a b l e r a t e s e c u n t y . R a n g e o f i n t e r e s t r a t e s f o r 2 0 0 6 - 1 . 4 5 % - 4 . 5 0 % . (c ) - T h e r a t e s h o w n i s t h e Y T D e f f e c t i v e r a t e o n t h i s v a r i a b l e r a t e s e c u r i t y . R a n g e o f i n t e r e s t r a t e s f o r 2 0 0 6 - 3 . 1 9 % - 5 . 9 1 % . NO T E : A m e r i c a n F a l l s D a m B o n d a n d M i l n e r D a m N o t e a r e g u a r a n t e e s . T h e s e i n s t r u m e n t s a r e e x c l u d e d i n r a t e m a k i n g c a l c u l a t i o n s a n d t h e r e f o r e a r e o m i t t e d f r o m t h i s s c h e d u l e . DO E 1 - 2 8 9/ 2 3 1 2 0 0 8