20021028_302.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RANDY LOBB
WELDON STUTZMAN
DAVE SCHUNKE
BEVERLY BARKER
BILL EASTLAKE
LOU ANN WESTERFIELD
RON LAW
TONYA CLARK
WORKING FILE
FROM:TERRI CARLOCK
DATE:OCTOBER 25, 2002
SUBJECT:ACIFICORP REQUESTED AUTHORITY TO ISSUE COMMON
STOCK; CASE NO. P AC-02-
RECOMMEND: APPROVAL
PacifiCorp requests authority to issue and sell up to 50 million shares of common stock over
time. PacifiCorp requests that the authority remain effective until all shares have been issued. The
shares would be issued to the parent company, PacifiCorp Holdings, Inc. The purchase price would
not be less than the book value of the common stock as valued on the last day of the month prior to
each issuance. The book value was $9.84 at June 30, 2002.
The proposed stock issuances are part of an overall plan to strengthen the balance sheet and
increase equity. Proceeds will be utilized for general utility purposes including improvement or
maintenance of service or facilities, construction purposes, acquisition of utility property, discharge or
refunding of existing issuances, notes payable or to reimburse the Company s treasury.
ST AFF DISCUSSION AND RECOMMENDATION
PacifiCorp requests the common equity authority be continuous and remain effective until the
shares are completely issued. Currently PacifiCorp s ratings for Senior Secured Debt are "A3" by
DECISION MEMORANDUM OCTOBER 25 , 2002
Moody s and "A" by Standard & Poors , each with a negative outlook. At June 30, 2002
PacifiCorp s capital structure consisted of 41.4% common equity, 1.5% preferred stock and 57.1
long-term debt. A scenario was presented where PacifiCorp would immediately issue 30 million
shares of common stock with the proceeds used to repay Notes Payable - Commercial Paper of
$181.5 million. This issuance would increase the equity ratio to 43., with 1.5% in preferred stock
and 54.8% in long-term debt. I recommend the authority be granted and to remain effective until
fully issued. The required fees have been paid.
COMMISSION DECISION
Should authority to issue common stock be approved?
Should the authority be effective until fully issued?
j~Jl~ CvdocJe
Terri Carlock
udmemos/TC/P AC/paceO24
DECISION MEMORANDUM OCTOBER 25, 2002