20051121MidAm-PAC response request 5.pdf

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. PACIFICORP
November 18 , 2005
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DONALD L. HOWELL, II
DEPUTY ATTORNEY GENERAL
IDAHO PUBLIC UTILITIES COMMISSION
472 W. Washington
Boise, Idaho 83702-5983
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RE:ID Docket No. PAC-05-
IPUC Staff Data Request (5)
Please find enclosed MidAmerican s and PacifiCorp's Responses to IPUC Data Request
(5).
If you have any questions, please call Andrea Kelly at [phone].
Sincerely,
rea elly
naging Director, PacifiCorp
Enclosures
cc:Jamie Van Nostrand/Stoel Rives
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P AC-05-08/PacifiCorp
November 18, 2005
IPUC Staff Data Request 5
IPUC Staff Data Request 5
Please provide a copy of the Applicants' responses to the following data requests
for review in Boise by November 21 2005:
Utah DPU
Data Request Nos. Responses 2., 2.4, 4., 4., 4.
Utah CCS
Data Request Nos. Responses 2., 2., 2.30, 2.81.
WUTC
Data Request No. Response 2.
Washineton PC
Data Request Nos. Responses 43 45.
Response to IPUC Staff Data Request 5
Please see Attachment IPUC 5 -1 and Confidential Attachment IPUC 5 -
IDAHO
P A C- E-O5-
MEHC/PPW
IPUC DATA REQUEST
ATTACHMENT IPU C 5 -
ON THE ENCLOSED CD
IDAHO
P A C- E-O5-
MEH C/pPW
IPUC DATA REQUEST
CONFIDENTIAL ATTACHMENT IPUC 5
ATTACHMENT IPUC 5 -
CO NFID ENTIAL (LEVEL YELLOW)
ON THE ENCLOSED CD
05-035-54/PacifiCorp
August 24, 2005
DPU 2nd Set Data Request 2.
DPU Data Request 2.
Please provide complete copies of analyses and reports prepared by investment
bankers or other consultants advising either ScottishPower, PacifiCorp,
MidAmerican Energy Holding Company, Berkshire Hathaway, or any subsidiary
or affiliate regarding the advisability or feasibility of the proposed transaction
between MidAmerican Energy Holding Company and PacifiCorp.
PPW's Response to DPU Data Request 2.
PacifiCorp has no responsive documents.
Scottish Power objects to this request to the extent that it may seek information
covered by the attomey-client and work product privileges. Scottish Power also
objects to this data request because it seeks extremely confidential, price and
transaction sensitive and commercially proprietary information. Subject to and
without waiving the foregoing objection, pursuant to Paragraph 1(D) of the
Protective Order issued by the Commission in this docket, Scottish Power
provides notice to the Division of Public Utilities that the documents requested
from Scottish Power constitute extremely confidential, price and transaction
sensitive and commercially proprietary information. Disclosure of this material
may give an undue advantage to competitors and speculative investors and
therefore, requires the highest level of confidential treatment. These documents
which include copies of the board minutes at which the proposed acquisition of
PacifiCorp by MEHC was discussed and any reports or analysis and/or
presentations that exist will be made available for review, upon advance notice, at
a convenient location in Utah. Please contact David Taylor at 801-220-2923 to
make arrangements to review the documents.
This response contains material that is extremely confidential and price and
transaction sensitive to Scottish Power and should not be disclosed directly or
indirectly to MEHC.
05-035-54/PacifiCorp
August 24, 2005
DPU 2nd Set Data Request 2.4 Supplemental
DPU Data Request 2.
Has PacifiCorp, or any affiliate or parent, prepared a study ofPacifiCorp assets
pursuant to F AS 142 anytime during the last 24 months? If so, please provide
complete copies of all such studies.
Supplemental Response to DPU Data Request 2.
Yes. Pursuant to Paragraph 1(D) of the Protective Order issued by the
Commission in this docket, Scottish Power provides notice to the Division of
Public Utilities that the documents requested from Scottish Power constitute
extremely confidential, price and transaction sensitive, and commercially
proprietary information. Disclosure of this material may give an undue advantage
to competitors and speculative investors and therefore, requires the highest level
of confidential treatment. These documents, which include the studies of
PacifiCorp assets pursuant to FAS 142 will be made available for review, upon
advance notice, at a convenient location in Utah. Please contact David Taylor at
801-220-2923 to make arrangements to review the documents.
This response contains material that is extremely confidential and price and
transaction sensitive to Scottish Power and should not be disclosed directly or
indirectly to MEHC.
05-035-54/PacifiCorp
August 22, 2005
DPU 2nd Set Data Request 2.
DPU Data Request 2.4
Has PacifiCorp, or any affiliate or parent, prepared a study ofPacifiCorp assets
pursuant to F AS 142 anytime during the last 24 months? If so, please provide
complete copies of all such studies.
Response to DPU Data Request 2.
Yes. Scottish Power objects to this request to the extent that it seeks information
covered by the attorney-client and work product privileges. Scottish Power also
objects to this request because it seeks highly confidential and proprietary
information. Without waiving this objection, information will be made available
upon agreement to special handling procedures for these highly confidential and
proprietary documents.
05-O35-54/PacifiCorp
October 5, 2005
DPU 4th Set Data Request 4.
DPU Data Request 4.
In the Scottish Power Board Minutes dated June 28, 2005 there is a section titled
Documents Produced to the Meeting." In the minutes there isa description of
each document and they are labeled "a-x , please provide a copy of each
document that was distributed at this Board Meeting that was under the section
Documents Produced to the Meeting.
PPW's Response to DPU Data Request 4.
Scottish Power objects to this request to the extent it may seek information
covered by the attorney-client and work product privileges. Scottish Power also
objects to this request because it seeks extremely confidential, price and
transaction sensitive and commercially proprietary information. Subject to and
without waiving the foregoing objection, Scottish Power responds that responsive
documents will be provided for review with the exception of the following: Item
t" is not being provided by Scottish Power because it is irrelevant to the
Commission s inquiry and relates only to future prospects of the continuing
Scottish Power group and item "h" is a document produced by PwC for which
PwC will seek a release letter before producing for review. Upon execution of the
release letter, Scottish Power will produce for review.
Pursuant to Paragraph 1(D) of the Protective Order issued by the Commission in
this docket, Scottish Power provides notice to the Division of Public Utilities that
the documents requested from Scottish Power constitute extremely confidential
price and transaction sensitive and commercially proprietary information.
Disclosure of this material may give an undue advantage to competitors and
speculative investors and therefore, requires the highest level of confidential
treatment. These documents will be made available for review, upon advance
notice, at a convenient location in Utah. Please contact Dave Taylor at (801)
220-2923 to make arrangements to review the documents.
This response contains material that is extremely confidential and price and
transaction sensitive to Scottish Power and should not be disclosed directly or
indirectly to MEHc.
05-035-54/PacifiCorp
October 5, 2005
DPU 4th Set Data Request 4.
DPU Data Request 4.
When were Morgan Stanley and UBS retained as advisors to Scottish Power with
regard to corporate strategy involving PacifiCorp? What was the scope of their
assignment? Please provide all documents, reports, and work papers associated
with the engagement of Morgan Stanley and UBS.
PPW's Response to DPU Data Request 4.
Pursuant to Paragraph 1(D) of the Protective Order issued by the Commission in
this docket, Scottish Power provides notice to the Division of Public Utilities that
the documents requested from Scottish Power constitute extremely confidential
price and transaction sensitive and commercially proprietary information.
Disclosure of this material may give an undue advantage to competitors and
speculative investors and therefore, requires the highest level of confidential
treatment. These documents will be made available for review, upon advance
notice, at a convenient location in Utah. Please contact Dave Taylor at (801)
220-2923 to make arrangements to review the documents.
This response contains material that is extremely confidential and price and
transaction sensitive to Scottish Power and should not be disclosed directly or
indirectly to MEHC.
05-035-54/PacifiCorp
October 5, 2005
DPU 4th Set Data Request 4.
DPU Data Request 4.
Please provide any documents, statements, analyses, reports or work papers
related to the deferred income tax expense and account balances and amounts
subsequent to calendar year 2004.
PPW's Response to DPU Data Request 4.
Projected deferred tax expense and accumulated deferred tax balances for years
2006 through 2014 from PacifiCorp s 10-year plan are highly confidential. This
information will be made available for inspection at PacifiCorp s offices in Salt
Lake City upon reasonable prior notice. Please contact Barry Bell at 801-220-
4985.
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2.10 MEHC
CCS Data Request 2.10 MERC
Income taxes. (a) Please confmn that the merger will have no impact on the
rights of parties concerning the ratemaking treatment of upstream tax savings and
costs, including potential refunds of amounts of income taxes included in
PacifiCorp s operating expenses paid by Utah ratepayers that were not paid to the
government. If this is not the case, explain fully. (b) Please provide the PacifiCorp
tax sharing or tax allocation agreements that were in effect during the period of
ownership by ScottishPower. (c) For the period November 1, 1999 through the
present, please provide the consolidated federal income tax returns filed by NA
General Partnership (ScottishPower s parent company for its United States
subsidiaries) and by PacfiCorp Holdings, Inc. (which became the parent company
ofScottishPower s U.S. consolidated group when NA General Partnership and
PacifiCorp Holdings, Inc merged). (d) For the period November 1, 1999 through
the present, please provide the amounts of income tax paid by PacifiCorp to
upstream holding companies. For each such payment, please clearly identify the
tax year (or if shorter than a full year, the tax return to which such tax payment
pertains).
MERC's Response to CCS Data Request 2.
Applicants object to this request insofar as it seeks information that is not relevant
and not reasonably calculated to lead to the discovery of admissable evidence.
Without waiving their objection, Applicants respond as follows:
(a)Applicants agree that the parties have the full opportunity to present their
legal and factual claims regarding tax issues in future rate case
proceedings. However, by stating this agreement, Applicants do not
waive any objections they may have to those claims (for example, but not
limited to, the right to assert that a party has not met its burden on an issue
or that a party s claim would amount to unlawful retroactive ratemaking).
Please refer to PPW's response to CCS Data Request 2.10 for parts (b) through
(d).
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2.10 PPW
CCS Data Request 2.10 PPW
Income taxes. (a) Please COnflliIl that the merger will have no impact on the
rights of parties concerning the ratemaking treatment of upstream tax savings and
costs, including potential refunds of amounts of income taxes included in
PacifiCorp s operating expenses paid by Utah ratepayers that were not paid to the
government. If this is not the case, explain fully. (b) Please provide the PacifiCorp
tax sharing or tax allocation agreements that were in effect during the period of
ownership by ScottishPower. (c) For the period November 1 , 1999 through the
present, please provide the consolidated federal income tax returns filed by NA
General Partnership (ScottishPower s parent company for its United States
subsidiaries) and by PacfiCorp Holdings, Inc. (which became the parent company
ofScottishPower s U.S. consolidated group when NA General Partnership and
PacifiCorp Holdings, Inc merged). (d) For the period November 1, 1999 through
the present, please provide the amounts of income tax paid by PacifiCorp to
upstream holding companies. For each such payment, please clearly identify the
tax year (or if shorter than a full year, the tax return to which such tax payment
pertains) .
PPW's Response to CCS Data Request 2.
b) See Confidential Attachment CCS 2.1 O(b )-1 on the enclosed confidential CD
for the Income Tax Allocation Policy dated April 1 , 2000.
See Confidential Attachment CCS 2.1 O(b )-2 on the enclosed confidential CD
for the Amended Tax Allocation Agreement dated April 1, 2004.
c) Pursuant to Paragraph 1 (D) of the Protective Order issued by the Commission
in this Docket, PacifiCorp provides notice to the Committee of Consumer
Services that the consolidated federal income tax returns filed by NA General
Partnership and PacifiCorp Holdings, Inc. for the tax periods 3/31/2000
through 3/31/04 constitute highly sensitive documents. These documents will
be made available for review upon advance notice at PacifiCorp s Utah office.
Please contact Barry Bell at [phone] to make arrangements to review
the documents.
d) See Attachment CCS 2.1Od on the enclosed CD.
Please refer to MEHC's response to CCS Data Request 2.10 for part (a).
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2.
CCS Data Request 2.
Reference page 21 of the Direct Testimony of Gregory Abel and Exhibit GEA-
page 4.
Provide the studies and analyses in which PacifiCorp and/or MEHC
evaluated the specific pollution control equipment to be installed at each
ofPacifiCorp s coal-fueled units.
Specify the cost of each of the pollution control commitments listed in the
table on page 21 of Mr. Abel's testimony.
Specify the reductions in SO2, NOx, and mercury emissions expected to
be achieved by each of the pollution control equipment commitments
listed in the table on page 21 of Mr. Abel's testimony.
Provide the correspondence, studies, analyses and other documents and
analyses that show that these commitments are the appropriate or optimal
plan and investments to be made to reduce emissions from PacifiCorp
coal-fueled generating plans.
Provide the correspondence, studies, analyses and other documents which
form the basis for the belief that implementation of these pollution control
measures will cost approximately $812 million.
Provide the correspondence, studies, analyses and other documents which
form the basis for the conclusion that implementation of this plan will
result in a decrease in the SO2 emissions rates of more than 50%, a
decrease in the NOx emissions rates of more than 40%, a reduction in the
mercury emissions rates of almost 40%, and no increase in the expected
CO2 emissions rates.
MERC's Response to CCS Data Request 2.
See Confidential Attachment CCS 2.29 f on the enclosed Confidential CD.
Please refer to PPW's response to CCS Data Request 2.29 for parts (a) through
(e).
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2.
CCS Data Request 2.
Reference page 21 of the Direct Testimony of Gregory Abel and Exhibit GEA-
page 4.
Provide the studies and analyses in which PacifiCorp and/or MEHC
evaluated the specific pollution control equipment to be installed at each
ofPacifiCorp s coal-fueled units.
Specify the cost of each of the pollution control commitments listed in the
table on page 21 of Mr. Abel's testimony.
Specify the reductions in SO2 NOx, and mercury emissions expected to
be achieved by each of the pollution control equipment commitments
listed in the table on page 21 of Mr. Abel's testimony.
Provide the correspondence, studies, analyses and other documents and
analyses that show that these commitments are the appropriate or optimal
plan and investments to be made to reduce emissions from PacifiCorp
coal-fueled generating plans.
Provide the correspondence, studies, analyses and other documents which
form the basis for the belief that implementation of these pollution control
measures will cost approximately $812 million.
Provide the correspondence, studies, analyses and other documents which
form the basis for the conclusion that implementation of this plan will
result in a decrease in the SO2 emissions rates of more than 50%, a
decrease in the NOx emissions rates of more than 40%, a reduction in the
mercury emissions rates of almost 40%, and no increase in the expected
CO2 emissions rates.
PPW's Response to CCS Data Request 2.
a-e Applicants object to this request to the extent that it seeks the production
of documents protected by the attorney-client privilege or the work product
doctrine. Without waiving their objections, Applicants respond as follows:
Pursuant to Paragraph 1 (D) of the Protective Order issued by the Commission in
this Docket, Applicants provide notice to the Committee of Consumer Services
that the documents sought constitute highly sensitive documents and will be
made available for review, upon advance notice, at PacifiCorp s Salt Lake
office. Please contact Barry Bell at [phone] to make arrangements to
review the documents.
Please refer to MEHC's response to CCS Data Request 2.29 for part (t).
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2.30
CCS Data Request 2.
Reference page 19, lines 20-, of the Direct Testimony of Gregory Abel. Please
provide the correspondence, studies, analyses and other documents in which
PacifiCorp and/or MEHC examined or evaluated the economic and/or reliability
benefits of committing now to install new and upgraded emissions control
equipment as compared to waiting to install the controls.
Response to CCS Data Request 2.
Applicants object to this request to the extent that it seeks the production of
documents protected by the attorney-client privilege or the work product doctrine.
Without waiving their objections, Applicants respond as follows.
Pursuant to Paragraph 1 (D) of the Protective Order issued by the Commission in
this Docket, Applicants provide notice to the Committee of Consumer Services
that the documents sought constitute highly sensitive documents and will be made
available for review, upon advance notice, at PacifiCorp s Salt Lake office.
Please contact Barry Bell at [phone] to make arrangements to review the
documents.
05-035-54/PacifiCorp
August 25, 2005
CCS 2nd Set Data Request 2'
CCS Data Request 2.
Please provide the November 2004 ScottishPower Board of Directors
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strategic
review ofPacifiCorp as a result of its performance and the significant investment
it required.
Response to CCS Data Request 2.
Scottish Power objects to this request to the extent it may seek information
covered by the attorney-client and work product privileges. Scottish Power also
objects to this request because it seeks extremely confidentiaL price and
transaction sensitive and commercially proprietary information. Subject to and
without waiving the foregoing objection, Scottish Power responds that the review
in question culminated in the presentations to the Scottish Power Board of
Directors which took place on May 22, 2005 and was supported by financial
analysis. Pursuant to Paragraph 1(D) of the Protective Order issued by the
Commission in this docket, Scottish Power provides notice to the Committee of
Consumer Services that the documents requested from Scottish Power constitute
extremely confidential, price and transaction sensitive and commercially
proprietary information. Disclosure of this material may give an undue advantage
to competitors and speculative investors and therefore, requires the highest level
of confidential treatment. These documents, which include a copy of the May 22
2005 Scottish Power Board minutes and supporting financial analysis, will be
made available for review, upon advance notice, at a convenient location in Utah.
Please contact Barry Bell at [phone] to make arrangements to review the
documents.
This response contains material that is extremely confidential and price and
transaction sensitive to Scottish Power and should not be disclosed directly or
indirectly to MEHC.
UE-051090/PacifiCorp
September 20, 2005
WUTC Staff Data Request 2
WUTC Staff Data Request 2
Referring to the pre-filed direct testimony of Gregory E. Abel, Exhibit (GEA-l T),
page 9-, lines 19-23 and 1-, respectively, please provide all studies, analyses
memoranda, internal reports, electronic messages or other documentation relied
upon by Mr. Abel to determine that the price paid for PacifiCorp is fair to
shareholders ofMEHC and Berkshire Hathaway.
MERC's Response to WUTC Staff Data Request 2
MEHC objects to this data request on the grounds that it is overly broad
and unduly burdensome, and vague and indefinite, to the extent that it requests
all studies, analyses, internal reports, memoranda, electronic messages or other
documentation relied upon by Mr. Abel...." Without waiving these objections
MEHC provides the following response regarding the documents upon which it
relied.
Please Note:The documents responsive to this request are BIGBL Y
CONFIDENTIAL and price- and transaction-sensitive to MEHC, and should not
be disclosed, directly or indirectly, to PacifiCorp or ScottishPower or any other
person or entity. Disclosure of such information would result in irreparable
fInancial harm and expense to MEHC. The responsive documents, which are
described below, are available for inspection at the offices of Applicant's counsel
in Seattle, Washington. Please contact Jamie Van Nostrand at [phone] to
make arrangement for this inspection.
Due Diligence Materials. Available for inspection are the memoranda prepared
by MEHC in conjunction with the due diligence review ofPacifiCorp. The
memoranda, prepared by members ofMEHC's in-house due diligence team,
address various aspects ofPacifiCorp s operations. While the materials do not
comprise all of the documents gathered, reviewed or generated in the due
diligence process, they are a culmination ofMEHC's due diligence efforts
provide a concise summary of the due diligence process, and represent the work
product that was provided to MEHC's senior management.
Also available for inspection is a PowerPoint presentation entitled "Project
Apollo: Management Presentation." This presentation summarizes the above-
mentioned memoranda.
A key to the code names used in the materials is provided hereafter.
Saturn = Scottish Power pic
Mercury = MidAmerican Energy Holdings Company
Venus = PacifiCorp
Apollo = Name given to the project
UE-051090/PacifiCorp
September 20, 2005
WUTC Staff Data Request 2
On the basis of attorney-client and work product privileges, MEHC does
not plan to produce certain of the documents that were originally included in the
binder of materials. MEHC has noted where the documents were withheld from
the binder at the original position of each such privileged document.
Fairness Opinion Materials.Finally, MEHC is making available for
inspection the 3-page "fairness opinion" (cover page plus 2-page letter) issued by
the Houlihan, Lokey, Howard & Zukin investment banking firm.
UE-051090/PacifiCorp
September 9, 2005
PC Data Request 43
PC Data Request 43
(Ref: Stock Purchase Agreement, p. 20) Please provide a complete copy of the
Seller Parent Disclosure Letter.
MERC's Response to PC Data Request 43
This document is considered "highly confidential" by MEHC and it will be
provided for review at the offices ofPacifiCorp once arrangements are made for
viewing the document. Such arrangements can be made by contacting Jamie Van
Nostrand ofStoel Rives at [phone].
Responder: Gregory E. Abel
Witness: Gregory E. Abel
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UE-051090/PacifiCorp
September 9, 2005
PC Data Request 45
PC Data Request 45
(Ref: Abel Testimony, p. 13, ll. 7-10) Mr. Abel indicates that although the
Company will not earn a return on its acquisition premium, if PacifiCorp is able
to earn its allowed return, that will be a fair return.
a) If $1.2 Billion of the $9.4 Billion sales price is an acquisition premium
over book value and PacifiCorp is allowed and earns a 10.3% return on
equity (the most recent electric utility equity return award in Washington),
the resultant equity return on the purchase price to MEHC would be
98% (($9.4B-$1.2B)/$9.4B x 10.3%). Is an 8.98% return on the market
price ofPacifiCorp reasonable? Why, or why not?
b) In determining the value of PacifiCorp, what DCF discount rate was
used to determine the present value of the Company s future cash flows?
Please provide support for your response from the analysis of the
investment bankers that assisted MEHC in preparing its bid for
PacifiCorp.
MEHC's Response to PC Data Request 45
a. Applicants do not agree that an 8.98% return on equity would be
reasonable as a return on equity authorized in the context of a rate
proceeding. A fair return should be equal to that required by investors in
securities of commensurate risk. That return should also be sufficient to
pernrit PacifiCorp to attract capital on reasonable terms and maintain its
credit rating.
Applicants do not endorse the method used in this request to relate the
acquisition premium and rates of return. The amount of the acquisition
premium must be evaluated in the context of the transaction as a whole.
Strategic considerations important to MERC are described in the Direct
Testimony of Gregory E. Abel. Financial factors are also discussed in the
Direct Testimony of Patrick J. Goodman.
b. The information responsive to part "b" is Highly Confidential. Please
contact Jamie Van Nostrand ofStoel Rives, at [phone], to make
arrangements for inspection of this information.
Responder: Gregory E. Abel
Witness: Gregory E. Abel