20210216_jt1rq.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
TERRI CARLOCK
DATE:FEBRUARY 11,2021
RE:PACIFICORP’S REQUEST TO EXTEND ITS SHORT-TERM DEBT
AUTHORITY FOR FIVE YEARS;CASE NO.PAC-E-21-02
BACKGROUND
On January 25,2021 PaciliCorp filed an Application requesting a five-year extension in
authority to borrow up to $1.5 billion in short-tent debt aggregate principal amount through
April 30,2026.This authority would extend the existing short-term debt authority that expires
April 30,2021,Order No.33476 (prior authorities under Orders Nos.32221,27457,28346,
28970,29374,and 29999).
As a condition for the live-year time period,PacifiCorp’s senior debt must maintain an
investment grade credit rating by both Standard and Poor’s Rating Services and Moody’s
Investor Services Inc.The other terms and conditions will not be changed.
The type of issue (promissory notes,commercial paper,or revolving credit)and terms of
issue,including interest rate,will be determined at the date of issue.The short-term debt may
include:1)unsecured short-term promissory notes to and borrow from U.S.or foreign
commercial banks (or their afliliates)under the following facilities:(a)not more than $1.5
billion in aggregate principal amount outstanding at any one time under one or more revolving
credit agreements and (b)not more than $1.5 billion in aggregate principal amount outstanding at
any time under other borrowing arrangements;and 2)commercial paper in the U.S.or foreign
countries in aggregate principal amount not to exceed $1.5 billon at any one time.
DECISION MEMORANDUM -I -FEBRUARY 11,2021
The extension will provide flexibility and allow PacifiCorp to utilize the time remaining
on two existing revolving credit agreements totaling $1.2 billion.Both credit agreements of up
to $600 million each have current termination dates of June 30,2022 with a one-year extension
option.
Proceeds from the debt issuances will be used for general utility purposes including
improvement or maintenance of service or facilities,construction purposes,acquisition of utility
property,discharge or refunding of existing issuances or to reimburse the Company’s treasury.
The Company’s application fee of$1,000 was submitted under a separate cover.Staff
confirmed the application fee was calculated correctly and the Commission received it on
February 03,2021.
STAFF DISCUSSION AND RECOMMENDATION
The requested authority,if approved,will be continuous and would remain in effect until
April 30,2026.As a condition of the continuous five-year term,PacifiCorp must maintain a
BBB-or higher senior secured debt rating by Standard and Poor’s Rating Services,and a Baa3 or
higher senior secured debt rating by Moody’s Investors’Service,Inc.PacifiCorp’s current
senior secured debt ratings are A by Standard and Poor’s,and Al by Moody’s.
If PaciliCorp’s senior secured debt ratings fall below the investment grade level
(“Downgrade”),it is recommended that PacifiCorp’s authority not terminate,but instead such
authority continue for a period of 180 days from the date of the Downgrade (“Continued
Authorization Period”)provided that PaciflCorp:
I.Promptly notifies the Commission in writing of the Downgrade;and
2.Files a supplemental application with the Commission within seven days after the
Downgrade requesting a supplemental order (“Supplemental Order”)authorizing
PacifiCorp to continue to incur debt as provided in this Order,notwithstanding the
Downgrade.Until PacifiCorp receives the Supplemental Order,any debt incurred
or issued by PaciflCorp during the Continued Authorization Period will become
due or mature no later than the final date of the Continued Authorization Period.
Staff recommends the authority be granted.The reasonableness of the interest rate and
all-in-cost will be evaluated as part of the review of issuance documents in this case and future
audits.
DECISION MEMORANDUM -2-FEBRUARY 11,2021
COMMISSION DECISION
Should the authority to borrow $1.5 billion in short-term debt be approved through
April 30,2026?Should the credit rating condition requiring investment grade for senior secured
debt be continued?
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UdmcmosfpAC-E-21 -02 Decision Memo
DECISION MEMORANDUM -3 -FEBRUARY 11,2021