20230321_PACE2303_jt.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER HAMMOND
COMMISSIONER LODGE
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
CLAIRE SHARP
DATE:MARCH 21,2023
RE:IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN
POWER FOR AUTHORITY TO ISSUE AND SELL OR EXCHANGE NOT
MORE THAN $5,000,000,000OF DEBT,AND ENTER INTO CREDIT
SUPPORT ARRANGEMENTS;CASE NO.PAC-E-23-03
BACKGROUND
On February 27,2023,PacifiCorp,d/bla Rocky Mountain Power (the "Company"),filed
an Application requesting authorityto incur debt up to $5,000,000,000aggregate principal
amount at any one time.The Company also requests authority to enter into letters of credit
arrangements to provide additional credit support.The Company requests this additional
authority remain in effect through September 30,2028,so long as the Company's bond rating for
senior secured debt remains investment grade.Investment grade is BBB-or higher by Standard
&Poor's Rating Services ("S&P")and Baa3 or higher by Moody's Investors'Service,Inc.
("Moody's").The Company's current secured debt ratings are A+by S&P and Al by Moody's.
The requested authority will amend and supersede Order No.34831.(Case No.PAC-E-
20-15).Under its current authority,the Company has issued $2.1 billion of the $3.0 billion debt
authorized in Order No.34205.The securities will be issued in one or more tranches and will
consist of securities issued or exchanged as public or private placements in the form of secured
or unsecured debt.The maturity,other terms,and interest rate for each issue will be determined
at the time of issuance.The issuance(s)may be at a fixed rate set at the time of issuance or
variable interest rate based on a published index of short-term rates such as Treasury bills,
commercial paper,or the London Interbank Offered Rate ("LIBOR").Fees will be charged
DECISIONMEMORANDUM -]-MARCH 21,2023
based on the type of security issued,but are not expected to exceed 1%of the outstanding
balance on domestic notes.The Commission has previously authorized the Company to incur
the lien of PacifiCorp Mortgage in Case No.U-1046-15,Order No.22157.The variety of
funding options requested will allow the Company to evaluate the all-in cost of each option after
considering all associated fees,so the issuances result in lowest cost issuances.
The requested financing authority will provide funds for one or more utilitypurposes,
including the acquisition of property;the construction,completion,extension or improvement of
utility functions;the improvement of service;the discharge or lawful refunding of obligations
which were incurred for utility purposes;or the reimbursement of the Company's treasury for
funds used for the foregoing purposes.Over $1 billion worthof long-term debt will mature by
the time the requested authority expires.
The Company's Application Fee in the amount of $1,000 was being submitted under a
separate cover.Staff confirmed the Application Fee was correct and the Commission received
the Application Fee on March 8,2023.
STAFF RECOMMENDATION
Staff recommends the approval of the authority to incur up to $5 Billion debt for the
period through September 30,2028.The Company's prior commitments since Case No.PAC-E-
99-03 to a cost-test remains in effect-where foreign transactions will not be utilized for
ratemaking unless,and until,PacifiCorp can show that the all-in costs are not greater than the all-
in costs of similar domestic borrowings.
Staff recommends the commitments and terms from prior cases,up to and including Case
No.PAC-E-l4-05,Order No.33083 remain in effect.This includes,but is not limited to,that
PacifiCorp's senior secured debt rating will remain at investment grade and will follow the
established procedure of notification if the ratings are downgraded;and PacifiCorp will file
quarterly financing activity reports and credit rating reports,to the extent that they are not filed
with the MEHC Acquisition Case (Case No.PAC-E-05-08,Order No.29998).
DECISION MEMORANDUM -2 -MARCH 21,2023
COMMISSION DECISION
Should the $5 Billion authority for debt be approved?
Should the authority be approvedthroughSeptember 30,2028 with the existing terms
and conditions includingmaintaining the investment grade rating,continuing the additional
reporting requirements,providing the anticipated details of the transaction,and meeting the all-in
cost test commitment?
seph erry
Edmemos/PAC-E-23-03 Decision Memo
DECISIONMEMORANDUM -3 -MARCH 21,2023