20060524_1559.pdf

DECISION MEMORANDUM
TO:CO MMISSI 0 NER KJELLAND ER
CO MMISSI 0 NER SMITH
COMMISSIONER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
DATE:MAY 22, 2006
RE:IDAHO POWER COMPANY'S REQUEST TO REFUND $116 300,000
SWEETWATER COUNTY, WYOMING POLLUTION CONTROL
REVENUE REFUNDING BONDS - CASE NO. IPC-06-14.
On April 27, 2006, Idaho Power Company (Idaho Power) filed an Application requesting
authority to enter into financing transactions to refund up to $116 300 000 aggregate principal
amount of Sweetwater County, Wyoming Pollution Control Revenue Refunding Bonds for air
and water pollution control facilities at the Jim Bridger generating plant. Idaho Power proposes
to refund the Series 1996A, 1996B and 1996C bonds to secure a lower average interest cost. The
maturity date will be July 15 2026, the same maturity date as for the current outstanding bonds.
As with other issuances, Idaho Power will file by letter seven days or as soon as possible
prior to issuance the likely range of interest rates and the other terms of issuance. All final
documents will also be filed. The interest rate may be fixed or variable and may be convertible.
Idaho Power expects the refunding bonds to be issued on or before July 15 , 2006. Idaho Power
may enter into guarantees, pledges, letters of credit, insurance or other agreements to insure
timely payment, lend credit or liquidity support, or enhance the credit rating for the bonds and
thereby reduce interest expense.
Idaho Power requests an Order authorizing Idaho Power Company to 1) enter into
contracts of purchase, loan agreements, letter of credit agreements, insurance agreements
security agreements and such other agreements or arrangements as reasonably necessary to
refund up to $116 300 000 aggregate principal amount of Sweetwater County, Wyoming
Pollution Control Revenue Refunding Bonds. Idaho Power also requests that the redemption
premium on the Series 1996A bonds, the underwriter s fees and costs of issuance of the
DECISION MEMORANDUM - 1 -MAY 22, 2006
Refunding Bonds be treated as unamortized debt expense amortized over the life of the
Refunding Bonds. This accounting treatment is appropriate and consistent with prior practice.
The purpose of the refunding is to reduce interest costs, Staffwill evaluate the all-in cost
effectiveness of the refunding in the next rate case for ratemaking purposes after the issuance(s)
are made and the terms are known.
Fees have been paid.
STAFF RECOMMENDATION
Staff recommends approval to refund up to $116 300 000 aggregate principal amount of
Sweetwater County, Wyoming Pollution Control Revenue Refunding Bonds, Series 1996A
1996B, and 1996c.
Staff recommends acknowledgement of the accounting treatment and amortization of the
issuance costs with the reservation that the determination for inclusion in rates is appropriately
considered in the next rate case.
COMMISSION DECISION
Does the Commission approve the request to refund up to $116 300 000 aggregate
principal amount of Sweetwater County, Wyoming Pollution Control Revenue Bonds?
Does the Commission approve the agreement that Idaho Power will file by letter seven
days or as soon as possible prior to issuance the terms of issuance and file all final documents?
Does the Commission wish to acknowledge the accounting treatment and amortization of
the issuance costs but reserve any ratemaking determination for the next rate case?
Terri Carlock
TC\ipceO6.l4SweetwaterPCB.DM5.22.
DECISION MEMORANDUM - 2 -MAY 22, 2006