28345.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY TO ENTER INTO CERTAIN FINANCING TRANSACTIONS FOR THE REFUNDING OF (A) AMERICAN FALLS REFUNDING REPLACEMENT DAM BONDS AND (B) PORT OF MORROW POLLUTION CONTROL REVENUE BONDS )
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CASE NO. IPC-E-00-2

ORDER NO. 28345

On March 23, 2000, Idaho Power Company (Idaho Power) filed an Application requesting authority to enter into certain transactions for the refunding of two outstanding tax-exempt bond issuances, namely: (a) the $21,425,000 ($19,885,000 currently outstanding) American Falls Reservoir District, Idaho, American Falls Refunding Replacement Dam Bonds, 1990 Series A (the Outstanding American Falls Bonds), and (b) the $4,360,000 Port of Morrow, Oregon, Pollution Control Revenue Bonds Series 1978 (Idaho Power Company Boardman Project) (the Outstanding Port of Morrow Bonds). The Commission, having fully considered the Application and attached exhibits, its files and records relating to the Application and the applicable laws and rules, now makes the following:
FINDINGS OF FACT
The Commission has jurisdiction pursuant to Title 61, Idaho Code, Chapters 1 and 9.
Idaho Power is incorporated under the laws of the State of Idaho and is qualified to do business in the states of Oregon, Nevada, Montana and Wyoming, with its principal office in Boise, Idaho.
American Falls Refunding Bonds
Idaho Power proposes to enter into agreements with the American Falls Reservoir District (the District) whereby the District will issue and sell not to exceed $19,885,000 aggregate principal amount of one or more series of the American Falls Replacement Dam.
Refunding Bonds, Series 2000 (the American Falls Refunding Bonds) and use the proceeds (for the benefit of Idaho Power) to refund the Outstanding American Falls Bonds. The Outstanding American Falls Bonds were issued in the original principal amount $21,425,000 of which $19,885,000 is currently outstanding.
To the extent that the proceeds of the American Falls Refunding Bonds are not immediately applied to the refunding of the Outstanding American Falls Bonds, they may be temporarily invested by the trustee in high grade, short-term taxable securities.
The interest rate or rates may be fixed or variable for the initial issuance of the American Falls Refunding Bonds, and may be converted to fixed or variable rate(s) during the term(s) of said Bonds. Idaho Power will notify the Commission by letter within seven (7) days (or as soon as possible, if the required information is not available within seven (7) days) before the issuance of the American Falls Refunding Bonds of the likely range of interest rates and other terms for said Bonds.
Idaho Power states that the American Falls Refunding Bonds are to be issued on or before April 26, 2000, if possible, to meet the next redemption date for the Outstanding American Falls Bonds on May 1, 2000.
Idaho Power states that the American Falls Refunding Bonds will be issued pursuant to an indenture of trust, between the District and a trustee (the Trustee). The proceeds from the sale of the American Falls Refunding Bonds will be used, together with certain monies from Idaho Power, to refund the Outstanding American Falls Bonds. The American Falls Refunding Bonds will be payable from, and secured by a pledge of payments to be made by Idaho Power under the Falling Water Contract and Spaceholder Contract, as each may be supplemented, and a Guaranty Agreement between Idaho Power and the Trustee.
To achieve favorable ratings by national bond rating agencies for the American Falls Refunding Bonds, Idaho Power may collateralize said Bonds with its own First Mortgage Bonds, or it may enter into guarantees, pledges or other security agreements or arrangements to insure timely payment of amounts due in respect of the Refunding Bonds. Idaho Power may also enter into letter of credit, insurance or other arrangements with unrelated parties pursuant to which such parties may lend additional credit or liquidity support to the American Falls Refunding Bonds. The purpose of such additional credit or liquidity support would be to enhance the credit rating of the American Falls Refunding Bonds and thereby reduce the interest expense of said Bonds.
The American Falls Refunding Bonds will be sold on a negotiated public offering basis by the District to Banc One Capital Markets, Inc. and Seattle-Northwest Securities Corp. (the Underwriters) pursuant to a contract of purchase.
The Underwriters will receive a fee of not greater than 1.15% of the aggregate principal amount of the American Falls Refunding Bonds offered.
Port Of Morrow Refunding Bonds
Idaho Power proposes to enter into agreements with the Port of Morrow whereby the Port of Morrow will issue and sell not to exceed $4,360,000 aggregate principal amount of one or more series of the Port of Morrow Pollution Control Revenue Refunding Bonds (Idaho Power Company Project), Series 2000 (the Port of Morrow Refunding Bonds) and loan the proceeds from such sale to Idaho Power. The loan proceeds, together with certain monies from Idaho Power, will be used to refund the Outstanding Port of Morrow Bonds. The Outstanding Port of Morrow Bonds were issued in the original principal amount of $4,360,000, all of which remains outstanding.
To the extent that the proceeds of the Port of Morrow Refunding Bonds are not immediately applied to the refunding of the Outstanding Port of Morrow Bonds, they may be temporarily invested by the trustee in high grade, short-term taxable securities.
The interest rate or rates may be fixed or variable for the initial issuance of the Port of Morrow Refunding Bonds, and may be converted to fixed or variable rate(s) during the term(s) of said Bonds. Idaho Power will notify the Commission by letter within seven (7) days (or as soon as possible, if the required information is not available within seven (7) days) before the issuance of the Port of Morrow Refunding Bonds of the likely range of interest rates and other terms for said Bonds.
Idaho Power states that the Port of Morrow Refunding Bonds are to be issued after May 1, 2000 and before August 1, 2000.
Idaho Power states that the Port of Morrow Refunding Bonds will be issued pursuant to an indenture of trust, between the Port of Morrow and a trustee. Pursuant to loan agreements between the Port of Morrow and Idaho Power, the proceeds from the sale of the Port of Morrow Refunding Bonds will be loaned to Idaho Power to pay for the refunding of the Outstanding Port of Morrow Bonds. Under the loan agreements, Idaho Power will be obligated to pay absolutely and unconditionally, to the extent sufficient funds are not already in the possession of the trustee, the principal of, interest on, and premium, if any, on the Port of Morrow Refunding Bonds as well as certain fees and expenses associated with the transactions. The Port of Morrow’s full faith and credit will not be pledged to the payment of the Port of Morrow Refunding Bonds.
To achieve favorable ratings by national bond rating agencies for the Port of Morrow Refunding Bonds, Idaho Power may collateralize said Bonds with its own First Mortgage Bonds, or it may enter into guarantees, pledges or other security agreements or arrangements to insure timely payment of amounts due in respect of the Port of Morrow Refunding Bonds. Idaho Power may also enter into letter of credit, insurance or other arrangements with unrelated parties pursuant to which such parties may lend additional credit or liquidity support to the Port of Morrow Refunding Bonds. The purpose of such additional credit or liquidity support would be to enhance the credit rating of the Port of Morrow Refunding Bonds and thereby reduce the interest expense of said Bonds.
The Port of Morrow Refunding Bonds will be sold on a negotiated public offering basis by the District to Banc One Capital Markets, Inc. and Seattle-Northwest Securities Corp. (the Underwriters) pursuant to a contract of purchase.
The Underwriters will receive a fee of not greater than 1.15% of the aggregate principal amount of the Refunding Bonds offered.
CONCLUSIONS OF LAW
Idaho Power is incorporated under the laws of the State of Idaho and is duly authorized to do business in the states of Oregon, Nevada, Montana and Wyoming.
The Commission does not have before it for determination and, therefore, does not determine the effect of the refunding transactions proposed in Idaho Power’s Application on the rates to be charged by Idaho Power for electric service to consumers in the State of Idaho.
The proposed refunding transactions are for a lawful purpose and are within Idaho Power’s corporate powers. The proposed transactions are in the public interest, and a formal hearing on this matter would serve no public purpose.
All fees have been paid by Idaho Power in accordance with Idaho Code § 61-905.
O R D E R
IT IS THEREFORE ORDERED that Idaho Power Company is granted authority to: (1) Enter into contracts of purchase, supplemental falling water and spaceholder agreements, guaranty agreements, letter of credit agreements and security agreements and such other agreements or arrangements as may be reasonably necessary in connection with the issuance by the American Falls Reservoir District for the benefit of the Applicant of $19,885,000 aggregate principal amount of American Falls Refunding Bonds; and assume liability as guarantor, pledgor, surety or otherwise (including issuance of Idaho Power’s First Mortgage Bonds) with respect to the payment of the principal of, interest on, and premium, if any, on the American Falls Refunding Bonds; and to record the redemption premium for the American Falls Refunding Bonds and the underwriter’s fee and cost of issuance of said Bonds as prepaid falling water costs and to amortize these amounts over the life of the American Falls Refunding Bonds, as prepaid falling water costs and as an additive to the Applicant’s expense for payments under the falling water contract; and
(2) Enter into contracts of purchase, loan agreements, letter of credit agreements and security agreements and such other agreements or arrangements as may be reasonably necessary in connection with the loan by the Port of Morrow to the Applicant of the proceeds of up to $4,360,000 aggregate principal amount of Port of Morrow Refunding Bonds; and assume liability as guarantor, pledgor, surety or otherwise (including issuance of Idaho Power’s First Mortgage Bonds) with respect to the payment of the principal of, interest on, and premium, if any, on the Port of Morrow Refunding Bonds; and to record the underwriter’s fee and cost of issuance of the Port of Morrow Refunding Bonds as prepaid costs and to amortize these amounts over the life of said Bonds.
This authority shall be for the purpose of effecting the refunding of the Outstanding American Falls Bonds and Outstanding Port of Morrow Bonds, under the terms and conditions of, and as set forth in Applicant’s Application.
IT IS FURTHER ORDERED that Idaho Power notify the Commission by letter within seven (7) days (or as soon as possible, if the required information is not available within seven (7) days) before the issuance of the American Falls Refunding Bonds or Port of Morrow Refunding Bonds of the likely range of interest rates and other terms for the securities.
IT IS FURTHER ORDERED that Idaho Power, as soon as possible after completion of the transactions, shall file final copies of all documents designated in its Application.
IT IS FURTHER ORDERED that nothing in this Order shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any security authorized, issued, assumed or guaranteed under the provisions of this Order.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory authority of this Commission with respect to rates, services, accounts, evaluation, estimates or determination of costs, or any other matter which may come before this Commission pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that the issuance of this Order does not constitute acceptance of Idaho Power Company’s exhibits or other material accompanying this Application for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory orders previously issued in this Case No. IPC-E-00-2 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this Order or in interlocutory orders previously issued in this Case No. IPC-E-00-2. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration. See Idaho Code § 61-626.

DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this day of April 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

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ORDER NO. 28345 1

Office of the Secretary
Service Date
April 17, 2000