HomeMy WebLinkAbout20070814PAC to Monsanto 4-1 to 4-15.pdf~~~OUNTAIN ECE
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August 13 , 2007
Randall C. Budge
RACINE, OLSON, NYE, BUDGE &
BAlLEY, C~TERED
O. Box 1391; 201 E. Center
Pocatello, Idaho 83204-1391
RE:PAC-07-
Monsanto Data Request 'Set 4 (1-15)
201 'South Main, Suite 2300
Salt Lake City. Utah 84111
Please find enclosed PacifiCorp s responses to 4th Set Monsanto Data Request 4.1 - 4.15.
Provided on the enclosed CD are Attachments Monsanto 4.1-(1-2) and 4.4. Provided on
the enclosed Confidential CD is Confidential Attachment Monsanto 4.3.
If you have any questions, please feel free to ~all me at (801) 220-4975.
~~/
Brian Dickman, Manager
Regulation
Enclosures
Cc: James R. Smith
Maurice Brubaker
Richard Anderson
P AC-O7 -OS/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.1
Monsanto Data Request 4.
Please provide copies of all credit reports published by Standard & Poor s (S&P),
Moody s and Fitch Ratings forPacificorp, Rocky Mountain Power (RMP) and all
of Pacificorp' s affiliates issued over the last two years.
Response to Monsanto Data Request 4.
Please see Attachment Monsanto 4.1 -1 for credit reports published for PacifiCorp
over the last two years.
Please see Attachment Monsanto 4.1 -2 for credit reports published for
MidAmerican Energy Holdings Company for the last two years.
(Bruce N. Williams is expected to sponsor this response at hearing.
IDAHO
P A C- E-07 -
ROCKY MOUNTAIN POWER
MONSANTO DATA REQUESTS SET 4 (1-15)
ATTACHMENT MONSANTO 4.1 -(1-
ON THE EN CLOSED CD
PAC-O7-0S/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Please provide copies of all correspondence, presentations and all other materials
that Pacificorp or RMP have provided to credit and equity analysts over the last
two years.
Response to Monsanto Data Request 4.
Please see the confidential materials that were submitted in response to Monsanto
Data Request 2.51.
(Bruce N. Williams is expected to sponsor this response at hearing.
P AC- E-07 -05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.3
Monsanto Data Request 4.
Referring to page 24 of Dr. Hadaway s direct testimony, please provide a
complete copy of the publication titled
, "
Major Rate Case Decisions " issued by
Regulatory Research Associates, Inc. on April 3, 2007.
Response to Monsanto Data Request 4.
Please see Confidential Monsanto Attachment 4.3. This document is proprietary
and copyright-protected and is provided subject to the terms and conditions of the
protective agreement in this proceeding.
(Samuel C. Hadaway is expected to sponsor this response at hearing.
IDAHO
PAC-07-
ROCKY MOUNTAIN POWER
MONSANTO DATA REQUESTS SET 4 (1-15)
CO NFID ENTIAL A TT A CHME NT
MONSANTO 4.
ON THE ENCLOSED CONFIDENTIAL CD
P AC-07 -05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.4
Monsanto Data Request 4.
At page 23 of his direct testimony, Dr. Hadaway stated that RMP is strengthening
its equity component by equity infusions. Please identify the amount of equity
infusions included in RMP capital structure over the last two years.
Response to Monsanto Data Request 4.
Please see Attachment Monsanto 4.4.
(Bruce N. Williams is expected to sponsor this response at hearing.
IDAHO
P AC-07-
ROCKY MOUNTAIN POWER
MONSANTO DATA REQUESTS SET 4 (1-15)
ATTACHMENT MONSANTO 4.
0 N THE EN CLOSED CD
P AC-07-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
At page 28 of his direct testimony, Dr. Hadaway states that the 2002 analysts
growth rate projections are higher than the current expectations published by
Value Line. Has Dr. Hadaway prepared the same analysis using consensus
analysts' growth projections? If affirmative , please state the conclusions reached
by Dr.Hadaway, and provide copies of all study workpapers.
Response to Monsanto Data Request 4.
No.
(Samuel C. Hadaway is expected to sponsor this response at hearing.
PAC-O7-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
On page 28 of Dr. Hadaway s testimony, he references utility growth
expectations. Please explain if Dr. Hadaway believes that the utilities' sustainable
growth rates can exceed the growth rate of the U.S. economy, as measured by the
GDP, over long periods of time.
Response to Monsanto Data Request 4.
No. As explained on pages 26-28 of his testimony, Dr. Hadaway believes that the
long-term GDP growth rate is a better proxy for investors' long-term growth rate
expectations, as required for the constant growth DCF model, but he does testify
that utilities' sustainable growth rates can exceed the long-term growth rate of the
S. economy.
(Samuel C. Hadaway is expected to sponsor this response at hearing.
P AC- E-07 -05/Rocky Mountain Power
August 13 , 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
At page 29, Dr. Hadaway states that his constant growth DCF results did not meet
the risk premium reasonableness checks and he excluded them from his final DCF
range. Please state how the DCF range and the ROE recommendation would
change if Dr. Hadaway includes his constant growth DCF results.
Response to Monsanto Data Request 4.
It depends on what is meant by the word "includes." If such low ROE estimates
were mechanically averaged with the other DCF estimates, the average would.
lower. Dr. Hadaway does not endorse such an approach.
(Samuel C. Hadaway is expected to sponsor this response at hearing.
PAC-07-05/Rocky Mountain Power
August 13 , 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Referring to page 4 of Mr. Williams' direct testimony, please provide the Fitch
report issued when RMP was downgraded in January 2006.
Response to Monsanto Data Request 4.
Please see the Fitch Ratings report "FITCH LOWERS PPW SR UNSECURED
DEBT TO 'BBB+'; OUTLOOK STABLE" dated 31 January, 2006 submitted in
response to Monsanto Data Request 4.
(Bruce N. Williams is expected to sponsor this response at hearing.
P AC-07-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
On page 5 of his direct testimony, Mr. Williams identifies the amount of equity
infusion the company received in 2006; Please identify the following: (1) equity
infusions over the last two years, and (2) the planned/budgeted equity infusion
into RMP over the next two years.
Response to Monsanto Data Request 4.
Please see response to Monsanto data request 4.4 for information concerning
equity infusions over the last two years.
As to planned/budgeted equity infusions into RMP over the next two years,
PacifiCorp is presently expecting an additional $50 million equity infusion during
2007. Additional equity infusions will be determined as part ofPacifiCorp
budgeting and planning process which is currently underway.
(Bruce N. Williams is expected to sponsor this response at hearing.
PAC-07-05/Rocky Mountain Power
August 13,2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
On page 8 of Mr. Williams' direct testimony, he states that RMP relies on
purchased power contracts. Please provide all workpapers deriving the off-
balance amount of purchased power debt equivalence.
Response to Monsanto Data Request 4.
The question mischaracterizes the testimony of Mr. Williams.
He did not state "that RMP relies on purchased power contracts." Mr. Williams
testimony as stated on Page 8 lines 3-9 is that "Rating agencies and financial
analysts consider Purchase Power Agreements (PPAs) to be debt-like and will
impute debt and related interest when calculating financial ratios. For example
Standard & Poor s will adjust published results and add in debt and interest
resulting from purchase power agreements when assessing the Company
creditworthiness. They do so in order to obtain a more accurate assessment of a
company s financial commitments and fixed payments.
The amount of PP A imputed debt that Mr. Williams cites on line 16 is sourced
from Standard & Poor s March 21 , 2006 publication "Mid-American
Acquisition OfPacifiCorp - Implications For PacifiCorp s Bondholders" (see
page 2 of that report provided in response to Monsanto data request 4.1.)
PacifiCorp believes that Standard & Poor s calculated the amount of imputed debt
based on information provided by PacifiCorp which is included in respon~e to
Monsanto data request 4.
Please also see the responses to Monsanto 4., 4.11 and 4.12.
(Bruce N. Williams is expected to sponsor this response at hearing.
P AC- E-07 -05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Referring to page 8 of Mr. Williams' direct testimony, please provide a copy of
all credit reports issued by the major credit rating agencies that discuss RMP'
off-balance sheet (OBS) debt and its impact on the company s financial ratios.
Response to Monsanto Data Request 4.
The question mischaracterizes the testimony of Mr. Williams. His testimony on
page 8 concerns Purchase Power Agreements and the treatment by rating agencies
and financial analysts that these contracts are debt like in nature. Neither
PacifiCorp nor Rocky Mountain Power have "off balance sheet debt"
As to the rating agency treatment of Purchase Power Agreements, please see
credit agency reports that were submitted in response to Monsanto data request 4-
1 For example, the Standard & Poor s report dated March 21 2006. In addition
please see Exhibits No.8 and No.9 to the testimony of Mr. Williams which
further detail Standard & Poor s treatment of Purchase Power Agreements.
Please also see the responses to Monsanto data requests 4.10 and 4.12.
(Bruce N. Williams is expected to sponsor this response at hearing.
PAC-07-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Referring to page 8 of Mr. Williams' direct testimony, please provide the
following: (1) the S&P report that estimated RMP's off-balance sheet (OBS)
additional debt of$537 million related to the Company s purchased power
agreements, and (2) an excel workpaper prepared by Pacificorp or RMP that
derives this OBS debt equivalent.
Response to Monsanto Data Request 4.
(1) Please see responses to Monsanto data requests 4., 4.10 and 4.11.
(2) There is no excel work paper prepared by PacifiCorp or RMP that derives the
$537 million of off-balance sheet adjustments as that calculation was performed
by Standard & Poor
(Bruce N. Williams is expected to sponsor this response at hearing.
P AC-07-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Please provide a copy ofRMP's five-year capital expenditure, capital funding,
and total capital requirement budget.
Response to Monsanto Data Request4.
The requested year-by-year detail from the PacifiCorp 2006 10-year plan is
extremely confidential, price and transaction sensitive, and commercially
proprietary. The information will be made available for review at the company
offices but cannot be copied and cannot be removed from the company
premises. Please contact Brian Dickman at 801-220-4975 to make arrangementsto review this document.
(It has not been determined who will sponsor this response at hearing.
PAC-07-05/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Please estimate RMP's jurisdictional credit rating financial metrics using S&P'
methodology based on RMP's current and proposed rates. Provide all workpapers
on electronic spreadsheets with all formulas intact.
Response to Monsanto Data Request 4.
PacifiCorp is unable to estimate RMP's jurisdictional credit rating financial
metrics using S&P's methodology based on RMP's current and proposed rates.
PacifiCorp has not undertaken such an exercise.
(Bruce N. Williams is expected to ~ponsor this response at hearing.
PAC-07-0S/Rocky Mountain Power
August 13, 2007
Monsanto 4th Set Data Request 4.
Monsanto Data Request 4.
Referencing Mr. McDougal's direct testimony at page 4, line 7, the witness
references an adjustment of $3.6 million as a result of the rate mitigation cap.
Please provide a written description of how the results of the Revised Protocol
Jurisdictional cost study are adjusted downward to reflect the rate mitigation cap
in the class cost of service study as filed by Mr. Tucker. Provide any workpapers
used in the class cost of service to reflect the rate mitigation cap.
Response to Monsanto Data Request 4.
The Revised Protocol rate mitigation cap results in an adjustment only to the
revenue requirement calculated by Mr. McDougal. The cap limits the revenue
requirement to the lesser of the Rolled-In revenue requirement times 101.67% or
the Revised Protocol revenue requirement. In this case, 101.67% of the Rolled-
revenue requirement resulted in an increase of $18,466,550 while the Revised
Protocol revenue requirement resulted in an increase of $22 027 818. The
Company filed the case requesting the lower amount, which represented a $3.
million decrease from the full Revised Protocol revenue requirement. This
calculation is shown on page 1.0 of Mr. McDougal's Exhibit No. 11.
The final revenue requirement increase of $18,466,550 is then input into the class
cost of service model. This amount already incorporates all adjustments made to
the revenue requirement, and so no additional adjustments are necessary in the
cost of service study.
(Steven R. McDougal and Mark E. Tucker are expected to sponsor this response
at hearing.