20020415Idaho Power's Legal Principles Applicable to Energy Cost Bonding_Securitization.pdf

LARRY D.RIPLEY ISB #965IdahoPowerCompany
P.O.Box 70
Boise,Idaho 83707
Telephone:[phone]
FAX Telephone:[phone]
Attorney for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise,Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.IPC-E-02-02OFIDAHOPOWERCOMPANYFORAN)ENERGY COST FINANCINGORDER AND )LEGAL PRINCIPLESAUTHORITYTOINSTITUTEANENERGY)APPLICABLE TO ENERGYCOSTBONDCHARGE.)COST BONDING/
)SECURITIZATION
Idaho Power Company,by and through its counsel,Larry D.Ripley,Senior
Attorney,herewith submits its position concerning certain legal principles applicable to the
Company's Application for an energy cost financing order and authority to institute an
energy cost recovery charge.
The Minimum Threshold
Under the Securitization Act,a public utility seekingto recoverenergycostamounts(as defined in Idaho Code §61-1502(5))through an issuance of energy cost recovery bonds must firstestablisha"trigger"amount.The amount,expressedin cents/kWhforanelectricutility,becomes the utility's threshold for issuingenergycostrecoverybonds(as explainedbelow).The utilityinitiatestheprocessbyfilingaproposedtriggeramountwiththeCommission.The Commissionthen approves or disapprovesthe
LEGAL PRINCIPLES APPLICABLE TO ENERGY COST BONDING/SECURITIZATION,Page 1
proposed amount.The amount establishedthroughthis procedure
is referred to as the "Minimum Threshold."
Once the Minimum Threshold is established for a public utility,theCommissionmaynotissueanenergycostfinancingorderinfavorofthatutilityunlessthesumofthreeamounts(each expressedincents/kWh for an electric utility)exceeds the Minimum Threshold.In the case of a public utility whose underlying adjustmentcharge
is a PCA charge,the three amounts are:
(a)the utility's then-existingPCA charge;
(b)any then-existingenergy cost bond charge already in place(i.e.,O for a first-time issuer);and
(c)the amount the utility identifies,in its applicationfor anenergycostfinancingorder,as the additional PCA thatwouldberequiredabsenttheproposedissuanceofenergycostrecoverybonds.
The Public Interest Standard
The Securitization Act contemplatesthe Commissiondeterminingthatasecuritizationisinthepublicinterestbeforedecidingtoauthorizeasecuritization.Specifically,a public utility whoseunderlyingadjustmentchargeisaPCAtoissueenergycostrecoverybondsmayissueenergycostrecoverybondsiftheCommissiondeterminesthatthepublicinterestwouldbebetterservedby:
(a)the utility's recovery of the utility's energy cost amounts,including the PCA amounts it proposes to securitize,throughtheissuanceofenergycostrecoverybondsoverthetermofthosebonds
rather than by:
(b)the utility's recovery of those PCA amounts over a one (1)year period assuminga conventional financing of thoseamounts.
Amortization and Legal Maturities
Under the Securitization Act,energy cost recovery bonds musthaveanexpectedmaturitydatenotlaterthanfive(5)years afterthedateofissuance.In addition,to the extent practicable,thebondsmustbescheduledtorepayprincipalinapproximatelyequalamountsovertheirterm.
LEGAL PRINCIPLESAPPLICABLE TO ENf RGY COST BONDING/SECURITIZATION,Page 2
The energy cost recovery bondholders will receive an amortizationscheduleindicatingthepaymentsofprincipalexpectedtobemade
on each interest paymentdate.The last scheduled principal
payment must occur within the five (5)year limit.In addition,to the
extent practicable,the schedule will provide for paymentsin equal
amounts over the term of the bonds.The energy cost bond charge
is to be set and periodically adjustedwith the aim of making
principal paymentsin accordance with the amortization schedule.
However,a bond would not be in default if paymentsare not made
in accordance with its amortization schedule.A default occurs only
if payment in full is not made on the bond before its legal maturity
date.The legal maturity date is generallylater than the lastscheduledprincipalamortizationdate.Under the Securitization
Act,energy cost recovery bonds must reach legal maturity no laterthanseven(7)years after they are issued or two (2)years after
scheduled amortization.
Dated at Boise,Idaho,this 15th day of April,2002.
LARRVD.RIPLEY *
Attorneyfor Idaho Power Company
LEGAL PRINCIPLES APPLICABLE TO ENERGY COST BONDING/SECURITIZATION,Page 3
CERTIFICATE OF SERVICE
I HEREBY CERTIFYthat on this 15th day of April,2002.I served a trueandcorrectcopyoftheaboveandforegoingLEGALFRINCIPLESAPPLICABLETOENERGYCOSTBONDING/SECURITIZATIONupon the followingnamed parties by themethodindicatedbelow,and addressed to the following:
Lisa D.Nordstrom x Hand DeliveredDeputyAttorneyGeneralU.S.MailIdahoPublicUtilitiesCommissionOvernight Mail472W.WashingtonStreet FAXP.O.Box 83720
Boise,Idaho 83720-0074
R.Scott Pasley Hand DeliveredAssistantGeneralCounselxU.S.MailJ.R.SimplotCompany OvernightMail999MainStreetFAXP.O.Box 27
Boise,Idaho 83702
Peter J.Richardson Hand DeliveredRichardson&O'Leary,PLLC U.S.Mail99EastStateStreet,Suite 200 OvernightMailP.O.Box 1849 FAXEagle,Idaho 83616
William M.Eddie Hand DeliveredLandandWaterFundoftheRockiesxU.S.MailP.O.Box 1612 OvernightMailBoise,Idaho 83701 FAX
RRY D.R(PL
CERTIFICATEOF SERVICE