HomeMy WebLinkAbout20030303Application.pdf.- (' r 1 \ i C C. v (.; L:J
BEFORE THE IDAHO PUBLIC UTILITIES CO~QSION j
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IN THE MA TIER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR AN
ORDER AUTHORIZING THE ISSUANCE AND
SALE OF UP TO $300 000 000 OF APPLICANT'
(1) FIRST MORTGAGE BONDS , (2) SERIAL
PREFERRED STOCK, WITHOUT PAR VALUE AND (3) DEBT SECURITIES
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APPLICATION
Idaho Power Company (the "Applicant ) hereby applies for an Order from the
Idaho Public Utilities Commission (the "Commission ) under Title 61 , Idaho Code, Chapters 1
and 9, and Chapters 141 through 150 of the Commission s Rules of Practice and Procedure, for
authority to issue and sell from time to time (a) up to $300 000 000 aggregate principal amount
of one or more series of Applicant's First Mortgage Bonds , which may be designated as secured
medium-term notes (the "Bonds ), (b) up to $300 000 000 in gross proceeds to Applicant of one
or more series of its Serial Preferred Stock, Without Par Value (the "Preferred Stock") and (c) up
to $300 000 000 aggregate principal amount of one or more series of unsecured debt securities of
the Applicant (the "Debt Securities ); provided, however, that the total principal amount of the
Bonds , the gross proceeds to Applicant of the Preferred Stock and the principal amount of the
Debt Securities to be issued and sold hereunder shall not exceed $300 000 000. The Bonds
Preferred Stock and Debt Securities will be issued publicly pursuant to a shelf registration with
the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 , as
amended (the "Act"), or privately pursuant to an exemption from registration under the Act, as
set forth herein.
APPLICATION - 1
(a)The Applicant
The Applicant is an electric public utility, incorporated under the laws of the state
of Idaho, engaged principally in the generation, purchase, transmission, distribution and sale of
electric energy in an approximately 20 000 square-mile area in southern Idaho and eastern
Oregon. The principal executive offices of the Applicant are located at 1221 W. Idaho Street
O. Box 70, Boise, Idaho 83707-0070; its telephone number is (208) 388-2200.
(b)Description of Securities
The Bonds, Preferred Stock and Debt Securities will be registered with the SEC
on a Registration Statement filed in accordance with Rule 415 of the Act, as amended. Upon
filing the Registration Statement with the SEC, the Applicant will also file a copy of the
Registration Statement with the Commission in this case. This shelf registration of the Bonds
Preferred Stock and Debt Securities with the SEC will allow the Applicant to issue and sell one
or more series of the Bonds, Preferred Stock and Debt Securities on a continuous or delayed
basis if authorized by the Commission and the other state regulatory commissions having
jurisdiction over the Applicant s securities. This will enable the Applicant to take advantage of
attractive market conditions efficiently and rapidly. Under a shelf registration, the Applicant will
be able to issue the Bonds, Preferred Stock and Debt Securities at different times without the
necessity of filing a new registration statement. Applicant requests authority to issue the Bonds
Preferred Stock and Debt Securities over a period of two years from the date of the Commission
order approving this transaction.
APPLICATION - 2
Bonds
The Applicant proposes to issue and sell, from time to time, up to $300 000 000
aggregate principal amount of one or more series of the Bonds pursuant to the Indenture of
Mortgage and Deed of Trust, dated as of October 1 , 1937 between the Applicant and Bankers
Trust Company (now Deutsche Bank Trust Company Americas) (the "Trustee ) and RG. Page
(Stanley Burg, successor individual trustee), as trustees , as supplemented and amended (the
Mortgage ), and as to be further supplemented by one or more supplemental indentures relating
to the Bonds. The Applicant may enter into interest rate hedging arrangements with respect to
the Bonds, including treasury interest rate locks, treasury interest rate caps and/or treasury
interest rate collars. The Bonds will be secured equally with the other First Mortgage Bonds of
the Applicant.
After the terms and conditions of the issuance and sale of the Bonds have been
determined, Applicant will file a Prospectus Supplement(s) with the SEC if the Bonds are sold
publicly, setting forth the series designation, aggregate principal amount of the issue, purchase
price or prices, issuance date or dates, maturity or maturities, interest rate or rates (which may be
fixed or variable) and/or the method of determination of such rate or rates, time of payment of
interest, whether all or a portion of the Bonds will be discounted, whether all or a portion of the
Bonds will be issued in global form, whether interest rate hedging arrangements will apply to the
Bonds , repayment terms , redemption terms , if any, and any other special terms of the Bonds
which terms may be different for each issuance of the Bonds. The Applicant will also file a copy
of the Prospectus Supplement with the Commission.
APPLICATION - 3
The Bonds may be designated as secured medium-term notes. The medium-term
notes could have maturities from nine months to thirty years. Prior to issuing medium-term notes
publicly, the Applicant will file a prospectus supplement with the SEC setting forth the general
terms and conditions of the medium-term notes to be issued. Upon each issuance of the medium-
term notes pursuant to the Prospectus Supplement, the Applicant will file a Pricing Supplement
with the SEC providing a specific description of the terms and conditions of each issuance of the
medium-term notes. Applicant will also file a copy of the Prospectus Supplement and Pricing
Supplement with the Commission.
Applicant s outstanding First Mortgage Bonds are currently rated A-2 by Moody
Investors Service, A by Standard & Poor s Corporation, and A by Fitch IBCA. If the Bonds are
sold publicly, Applicant cannot predict whether they will be similarly rated. If the Bonds are sold
privately, the Bonds will probably not be rated.
Preferred Stock
Applicant proposes to issue and sell, from time to time, up to $300 000 000 of one
or more new series of its Serial Preferred Stock, Without Par Value. For a further description of
Applicant s Serial Preferred Stock, Without Par Value, reference is made to Applicant's Restated
Articles of Incorporation, as amended, a copy of which is filed herewith as Attachment I.
After the terms and conditions of the issuance and sale of the Preferred Stock have
been determined, Applicant will file a Prospectus Supplement(s) with the SEC if the Preferred
Stock is sold publicly, setting forth the series designation, aggregate amount of the issue
purchase price or prices , retirement date or dates , if any, sinking fund provisions , if any, dividend
rate or rates (which may be fixed or variable) and/or the method of determination of such rate or
APPLICATION - 4
rates, time of payment of dividends, redemption terms, if any, and any other special terms of the
Preferred Stock, which terms may be different for each issuance of the Preferred Stock.
Applicant will also file a copy of the Prospectus Supplement with the Commission.
Applicant's outstanding Preferred Stock are currently rated Baa2 by Moody
BBB by Standard & Poor , and BBB+ by Fitch IBCA. If the Preferred Stock is sold publicly,
Applicant cannot predict whether it will be similarly rated. If the Preferred Stock is sold
privately, it will probably not be rated.
Debt Securities
The Debt Securities will be unsecured obligations of the Applicant and will be
issued under an existing or a new unsecured debt Indenture of the Applicant. A form of any new
Indenture will be included in the Registration Statement which will be filed with the Commission
as stated above. The Applicant will supplement the Indenture in the future to further specify the
terms and conditions of each series of Debt Securities. Such amendments will be filed with the
SEC and will also be filed with the Commission. The Applicant may enter into interest rate
hedging arrangements with respect to the Debt Securities, including treasury interest rate locks
treasury interest rate caps and/or treasury interest rate collars.
After the terms and conditions of the issuance and sale of the Debt Securities have
been determined, Applicant will file a Prospectus Supplement(s) with the SEC if the Debt
Securities are sold publicly, setting forth the series designation, aggregate principal amount of the
issue, purchase price or prices, issuance date or dates, maturity or maturities, interest rate or rates
(which may be fixed or variable) and/or the method of determination of such rate or rates, time of
payment of interest, whether all or a portion of the Debt Securities will be discounted, whether
APPLICATION - 5
all or a portion of the Debt Securities will be issued in global form, whether the interest rate
hedging arrangements will apply to the Debt Securities, repayment terms, redemption terms, if
any, and any other special terms of the Debt Securities, which terms may be different for each
issuance of the Debt Securities. Applicant will also file a copy of the Prospectus Supplement
with the Commission.
Applicant s outstanding unsecured senior debt is currently rated A3 by Moody
investors Service BBB+ by Standard & Poor s Corporation, and A- by Fitch IBCA. If the Debt
Securities are sold publicly, Applicant cannot predict whether they will be similarly rated. If the
Debt Securities are sold privately, the Debt Securities will probably not be rated.
(c)Method of Issuance
The Bonds , Preferred Stock and Debt Securities may be sold by public sale or
private placement, directly by the Applicant or through agents designated from time to time or
through underwriters or dealers. If any agents of the Applicant or any underwriters are involved
in the sale of the Bonds , Preferred Stock or Debt Securities, the names of such agents or
underwriters, the initial price to the public, any applicable commissions or discounts and the net
proceeds to the Applicant will be filed with the Commission. If the Bonds are designated as
medium-term notes and sold to an agent or agents as principal, the name of the agents, the price
paid by the agents, any applicable commission or discount paid by the Applicant to the agents
and the net proceeds to the Applicant will be filed with the Commission.
Agents and underwriters may be entitled under agreements entered into with the
Applicant to indemnification by the Applicant against certain civil liabilities, including the
liabilities under the Act.
APPLICATION - 6
(d)Purpose of Issuance
The net proceeds to be received by the Applicant from the sale of the Bonds
Preferred Stock and/or Debt Securities will be used for the acquisition of property; the
construction, completion, extension or improvement of its facilities; the improvement or
maintenance of its service; the discharge or lawful refunding of its obligations; and for general
corporate purposes. To the extent that the proceeds from the sale of the Bonds, Preferred Stock
and Debt Securities are not immediately so used, they will be temporarily invested in short-term
discounted or interest-bearing obligations.
(e)Propriety of Issue
Applicant believes and alleges the facts set forth herein disclose that the proposed
issuance and sale of Bonds, Preferred Stock and Debt Securities are for a lawful object within the
corporate purposes of Applicant and compatible with the public interest, are necessary or
appropriate for, or consistent with, the proper performance by Applicant of service as a public
utility and will not impair its ability to perform that service, and are reasonably necessary or
appropriate for such purposes.
(f)Financial Statements; Resolutions
Applicant has filed herewith as Attachment IT its financial statements consisting of
its (a) Actual and Pro Forma Balance Sheet and Notes to Financial Statements, (b) Statement of
Capital Stock and Funded Debt, (c) Commitments and Contingent Liabilities , (d) Statement of
Retained Earnings and (e) Statement of Income.
APPLICATION - 7
certified copy of the resolutions of Applicant s Directors authorizing the
transaction with respect to this Application is filed as Attachment III.
(g)
Proposed Order
Applicant has filed as Attachment IV a Proposed Order for adoption by the
Commission if this Application is granted.
(h)Notice of Application
Notice of this Application will be published in those newspapers in the
Applicant's service territory listed in Section 24.19 of the Commission s Rules within seven (7)
days of the date hereof.
PRA YER
WHEREFORE, Applicant respectfully requests that the Idaho Public Utilities
Commission issue its Order herein authorizing Applicant to issue and sell for the purposes herein
set forth up to $300 000 000 aggregate principal amount of one or more series of its Bonds, up to
$300 000 000 in gross proceeds to Applicant of one or more series of its Preferred Stock, and up
to $300 000 000 aggregate principal amount of its Debt Securities; provided, that the total
principal amount of the Bonds, gross proceeds to Applicant of the Preferred Stock and the
principal amount of the Debt Securities to be issued and sold shall not exceed $300 000 000.
DATED at Boise, Idaho this Z~y of February, 2003.
IDAHO POWER COMPANY
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By: Isl Darrel T. Anderson
Vice President, CFO & Treasurer
APPLICATION - 8
(CORPORATE SEAL)
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Secretary
Idaho Power Company
1221 W. Idaho Street
O. Box 70
Boise, Idaho 83707-0070
VERIFICATION
Darrel T. Anderson, declare that I am the Vice President, CFO and Treasurer of
Idaho Power Company and am authorized to make this Verification. The Application and the
attached exhibits were prepared at my direction and were read by me. I know the contents of the
Application and the attached exhibits, and they are true, correct and complete to the best of my
knowledge and belief.
WITNESS my hand and seal of Idaho Power Company this 21~day ofFebruary, 2003.
T-
Isl Darrel T. Anderson
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SUBSCRIBED AND SWORN to before me this O\"~ay of February, 2003.
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Public for Idaho
Residing at Boise, Idaho
My Commission Expires: to -
APPLICA nON - 9
ATTACHMENT II(a)
IDAHO POWER COMPANY
BALANCE SHEET
As of September 30, 2002
ASSETS
Electric Plant:
In service (at original cost).................................................................
Accumulated provision for depreciation........................................
In service - Net.........................................,....................................
Construction work in progress............................................................
Held for future use..............................................................................
Electric plant - Net.........................................................................
Investments and Other Property:
Nonutility property.........................,....................................................
Investment in subsidiary companies ..................................................
Other..................................................................................................
Total investments and other property.................................................
Current Assets:
Cash and cash equivalents (A)..........................................................
Receivables:
Customer......................................................................................
Allowance for uncollectible accounts.............................................
Notes.............................................................................................
Employee notes ...........................................................................
Related party.................................................................................
Other.............................................................................................
Accrued unbilled revenues.................................................................
Materials and supplies (at average cost)............................................
Fuel stock (at average cost)...............................................................
Prepayments......................................................................................
Regulatory assets associated with income taxes...............................
Total current assets......................................................................
Deferred Debits:
American Falls and Milner water rights..............................................
Company owned life insurance..........................................................
Regulatory assets associated with income taxes...............................
Regulatory assets - PCA...........,........................................................
Regulatory assets - other...................................................................
Other........................................................'.........................................
Total deferred debits..........................................................................
TotaL..................................................................................................
(A) See Statement of Adjusting Journal Entries.
Actual
043 566,304
278,568 264)
764,998,040
263,888
335 078
865,597.006
Adiustments
300,000 000
300,000 000
The accompanying Notes to Financial Statements are an integral part of this statement
050 389
20,576,816
17.332.118
38,959,323
163,442
652 835
516,892)
988 276
514 914
753,816
789,523
28,742,437
842 008
646,740
33,784 150
853,118
229,214 367
585,000
35,440,064
311 782 923
176 273,769
889,686
46.095.321
634.066.763
After
Adjustments
043 566,304
278,568 264 )
1,764 998 040
98,263 888
335 078
865.597.006
050,389
20,576,816
332 118
959,323
315 163,442
70,652,835
516,892)
988 276
514 914
20,753,816
789 523
28,742,437
842 008
646 740
33,784,150
14,853,118
529 214 367
585 000
35,440 064
311 782 923
176,273,769
889 686
095 321
634.066.763
767,837,459 $ 300,000,000 $067 837,459
IDAHO POWER COMPANY
BALANCE SHEET
As of September 30,2002
CAPITALIZATION AND LIABILITIES
Common Shares
Authorized
Common Shares
Outstanding
Equity Capital: 50 000 000 37 612 351
Common stock ........................."...........,.,.........................................
Preferred stock ..........................,.............,.........................................
Premium on capital stock......................."..........................................
Capital stock expense........................................................................
Retained earnings..............................................................................
Accummulated other comprehensive income.....................................
Total equity capital.............."........................................................
Long-Term Debt:
First mortgage bonds (A)",.............",................................................
Pollution control revenue bonds ........................................................
Other long-term debt..,..................,...................................................
American Falls bond and Milner note guarantees .............................
Unamortized discount on long-term debt (Dr)....................................
Total long-term debt...............................,..............................'......
Current Liabilities:
Long-term debt due within one year...................................................
Notes payable........,.........................................................................
Accounts payable ..............................................................................
Notes and accounts payable to related parties..................................
Taxes accrued....................................................................................
Interest accrued.................................................................................
Deferred income taxes.......................................................................
Other..................................................................,...............................
Total current liabilities...................................................................
Deferred Credits:
Regulatory liabilities associated with accumulated deferred
investment tax credits ....................,.............................................
Deferred income taxes.......................................................................
Regulatory liabilities associated with income taxes ...........................
Regulatory liabilities-other..................................................................
Other...........................................,...............................................,......
Total deferred credits................,...................................................
TotaL....................................................................,.................,.....,
(A) See Statement of Adjusting Journal Entries.
Actual Adjustments
After
Adjustments
030,878 $
53,985,100
361,874 913
724,027)
336 128 388
980 195)
030 878
985,100
361 874 913
724 027)
336 128 388
980 195)
837 315,057 837 315 057
470,000 000
170,460,000
120 254
585,000
(842 223)
300 000,000 770,000,000
170,460,000
120 254
585,000
(842 223)
672 323,031 300,000 000 972 323 031
107 084 021
133 300,000
533,427
110,888 847
36,295,498
19,569,756
853,118
336,755
107 084 021
133 300 000
533,427
110 888 847
295,498
19,569,756
853 118
336 755
481,861,422 481 861,422
68,831 560 831 560
588,190,654 588,190,654
785 011 785,011
055,837 055,837
71,474 887 71,474 887
776,337 949 776 337 949
767,837,459 300,000,000 067,837,459
The accompanying Notes to Financial Statements are an integral part of this statement
IDAHO POWER COMPANY
STATEMENT OF ADJUSTING JOURNAL ENTRIES
As of September 30, 2002
Giving Effect to the Proposed issuance of
Short-term notes
Cash...................................................,.............................................'300,OOO,()OCJ
Notes Payable........,......................................
......................................................
To record the proposed issuance of short-term notes and receipt of cash.
30U,OOO,OOO
IDAHO POWER COMPANY
CLASSIFICATION OF ELECTRIC UTILITY PLANT AND ACCUMULATED
PROVISION FOR DEPRECIATION AND AMORTIZATION
As of September 30, 2002
Classification of Electric Plant
Electric Utility Plant
1. Electric plant in service:
(a) Intangible plant.....................................
(b) Steam plant..........................................
(c) Hydro production plant.........................
(d) Other production plant.........................
(e) Transmission plant...............................
(f) Distribution plant..................................
(g) General plant................".....................
S 60 919111
760044 704
620.537 149
49.107 099
474 772 255
881 030 211
197.610.224
----
2. Electric plant held for future use.......................................................
3, Construction work in progress..........................................................
Total electric utility plant....................................................
Classification of Accumulated Provision for Depreciation and Amortization
Applicable to Electric Plant
Accumulated provision for depreciation of electric plant ...........................
Accumulated provision for amortization of electric plant ...........................
Total accumulated provision for depreciation
and amortization...............................................................
044 020 753
335 078
98.263 888
144 619 719
255 107 011
23,692 262
278,799.273
The accompanying Notes to Financial Statements are an integral part of this statement
IDAHO POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
As of September 30, 2002
1. Property Plant and Equipment:
The cost of additions to utility plant in service represents the original cost of contracted
services , direct labor and material, allowance for funds used during construction and indirect
charges for engineering, supervision and similar overhead items. Maintenance and repairs of
property and replacements and renewals of items determined to be less than units of property
are expensed to operations. The Company records repair and maintenance costs associated
with planned major maintenance as these costs are incurred. For property replaced or
renewed the original cost plus removal cost less salvage is charged to accumulated provision
for depreciation while the cost of related replacements and renewals is added to property, plant
and equipment.
2. Depreciation
All utility plant is depreciated using the straight-line method at rates approved by regulatory
authorities.
3. Revenues
In order to match revenues with associated expenses, the Company accrues unbilled revenues
for electric services delivered to customers but not yet billed at month-end.
4. Cash and Cash Equivalents
For purposes of reporting cash flows , cash and cash equivalents include cash on hand and
highly liquid temporary investments with maturity dates at date of acquisition of three months or
less.
5. ReQulation of Utility Operations
The Company follows SFAS No. 71
, "
Accounting for the Effects of Certain Types of
Regulations," and its financial statements reflect the effects of the different rate making
principles followed by the various jurisdictions regulating the Company. The economic effects of
regulation can result in regulated companies recording costs that have been or are expected to
be allowed in the ratemaking process in a period different from the period in which the cost
would be charged to expense by an unregulated enterprise. When this occurs, costs are
deferred as assets in the balance sheet (regulatory assets) and recorded as expenses in the
periods when those same amounts are reflected in rates. Additionally, regulators can impose
liabilities upon a regulated company for amounts previously collected from customers and for
amounts that are expected to be refunded to customers (regulatory liabilities).
6. ManaQement Estimates
The preparation of financial statements In conformity with accounting principles generally
accepted in the United States of America, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
7. Financinq:
The Company has regulatory authority to incur up to $350 million of short-term indebtedness.
The Company also has a $200 million 364-day revolving credit facility that expires in March
2003 , under which the Company pays a facility fee on the commitment quarterly in arrears
based on its corporate credit rating. Commercial paper may be issued subject to the regulatory
maximum , up to the amount supported by the credit facilities. At September 30, 2002 , short-
term borrowing under this facility totaled $133 million. The Company repaid $100 million of
NOTES TO FINANCIAL STATEMENTS (Continued)
floating rate notes in September 2002 using short-term borrowings from IDACORP which are
payable on November 15 , 2002. The Company plans to replace this intercompany debt with
external financing.
The Company currently has a $200 million shelf registration that can be used for first mortgage
bonds , including medium-term notes, unsecured debt or preferred stock. At September 30
2002 none had been issued.
In March 2002 , $50 million of First Mortgage Bonds 8.75% Series due 2027 were redeemed
early using short-term borrowings.
8. Income Taxes
The Company follows the liability method of computing deferred taxes on all temporary
differences between the book and tax basis of assets and liabilities and adjusts deferred tax
assets and liabilities for enacted changes in tax laws or rates. Consistent with orders and
directives of the Idaho Public Utilities Commission (IPUC), the regulatory authority having
principal jurisdiction , the Company s deferred income taxes (commonly referred to as
normalized accounting) are provided for the difference between income tax depreciation and
straight-line depreciation computed using book lives on coal-fired generation facilities and
properties acquired after 1980. On other facilities, deferred income taxes are provided for the
difference between accelerated income tax depreciation and straight-line depreciation using tax
guideline lives on assets acquired prior to 1981. Deferred income taxes are not provided for
those income tax timing differences where the prescribed regulatory accounting methods do
not provide for current recovery in rates. Regulated enterprises are required to recognize such
adjustments as regulatory assets or liabilities if it is probable that such amounts will be
recovered from or returned to customers in future rates.
The State of Idaho allows a three percent investment tax credit upon certain qualifying plant
additions. Investment tax credits earned on regulatory assets are deferred and amortized to
income over the estimated service lives of the related properties. Credits earned on non-
regulated assets or investments are recognized in the year earned.
Tax Accounting Method Change
During the third quarter ended September 30 , 2002 the Company filed its 2001 federal income
tax return and adopted a change to our tax accounting method for capitalized overhead costs.
The old method allocated such costs primarily to construction of plant, while the new method
allocates such costs to both construction of plant and the production of electricity.
The Company adopted this method change during 2002 to take advantage of new tax rules
enacted or promulgated during the first half of 2002. The key rule changes include: an
announcement in January that this method change qualifies for the automatic change
procedures; the signing in March of an economic stimulus bill that expanded the loss carryback
period from two years to five years; and the announcement in March that the full effects of
method changes could be absorbed in the year of change. These new rules provided sufficient
incentive to adopt the method change with the Company s 2001 tax return, filed in September
2002.
The tax accounting method change has been recorded as a decrease to income tax expense
for the third quarter ended September 30, 2002 of $31 million , attributable to 2001 and prior
years and is consistent with prior regulatory treatment. The 2002 effects of the method change
have been included as a $3 million decrease to income tax expense for the third quarter ended
September 30, 2002.
NOTES TO FINANCIAL STATEMENTS (Continued)
9. Allowance For Funds Used Durinq Construction (AFDC)
AFDC, a non-cash item, represents the composite interest costs of debt, and a return on equity
funds, used to finance construction. While cash is not realized currently from such allowance, it
is realized under the rate making process over the service life of the related property through
increased revenues resulting from higher rate base and higher depreciation expense.
10. Requlatorv Issues
Wind Down of Power Marketing
IDACORP announced on June 21 , 2002 that IE would wind down its power marketing
operations. The announcement stated that IE would not seek new electric customers; would
limit its maximum value at risk to less than $3 million; would target a reduction of working
capital requirements to less than $100 million by the end of 2003; and would reduce its
workforce by approximately 50 percent. IE planned to continue its natural gas marketing
operations in Houston and was evaluating growth opportunities in the natural gas mid-stream
markets through an office established in Denver. On November 5, 2002 , IDACORP announced
that it was terminating further evaluation of growth opportunities in the mid-stream natural gas
markets. The announcement stated that IE would close its Denver office by year-end, affecting
five employees, and because of its link to the natural gas platform, would shut down its natural
gas trading operation in Houston by March 2003, affecting six employees. The announcement
concluded that IE's continued wind down of its electric trading operations would result in
additional work-force reductions at IE's Boise operations through mid-2003.
Beginning August 1 , 2002, IPC resumed the function of buying and selling wholesale electricity
to support its utility operations. IPC conducted electricity marketing until June 2001 when those
operations were transferred to IE.
In connection with the wind down of power marketing at IE , certain matters were identified that
require resolution with the FERC or the Idaho Public Utility Commission (IPUC).
Matters that need to be resolved with the FERC include:
a utility such as IPC is entitled to transmission priority for its retail customers , while
transmission for trading transactions must be purchased under the utility s open access
tariff on the same basis as third parties. It appears that in some transactions this
distinction was not observed;
certain transactions between a utility and an affiliate are required to have prior FERC
approval. Such prior approval was not sought for some electricity transactions between
IE and IPC, such as spinning reserves and load following services , which are common
industry services; and
although IPC informed the FERC before IE was split off from IPC that it intended to move the
utility s power marketing business to IE, IPC's power marketing contracts were assigned without
formally obtaining the requisite prior approval of the FERC.
IE and IPC voluntarily contacted the FERC in September 2002 to discuss these matters. The
FERC requested certain documents and other information most of which IE and IPC have
supplied. IE and IPC expect to make additional filings with the FERC in November 2002 which
will include requests for approval of certain electricity transactions, the assignment of certain
contracts between IPC and IE and termination of the Electricity Supply Management Services
Agreement entered into between IPC and IE in June 2001.
Should the FERC conclude that its regulations or rate schedules were not complied with , it has
significant discretion as to the appropriate remedies, if any. The FERC's remedial authority
includes the authority to require refunds, to order equitable relief, to suspend the authorization
to sell wholesale power at market-based rates , and, in some instances, to impose monetary
penalties.
NOTES TO FINANCIAL STATEMENTS (Continued)
In an IPUC proceeding that has been underway since May 2001 , IPC and the IPUC staff have
been working to determine the appropriate compensation IE should provide to IPC as a result
of transactions between the affiliates since February 2001. Similar state regulatory issues
relating to the period prior to February 2001 were resolved by the parties involved and
approved by the IPUC by Order No. 28852 issued on August 28, 2002. In that order, the IPUC
approved lPG's ongoing hedging and risk management strategies. This formalized lPG'
agreement to implement a number of changes to its existing practices for managing risk and
initiating hedging purchases and sales. In Order No. 29102, the IPUC directed IPC to present
a resolution or a status report to the IPUC no later than December 20 , 2002 on additional
compensation due to the utility for the use of its transmission system and other capital assets
by IE and any remaining transfer pricing issues.
The companies do not believe that resolution of these transactions will have any adverse
impact on retail customers or a material adverse effect on ongoing operations. However
because it cannot be predicted at this point what regulatory actions might be taken or when, it
cannot be determined what effect there may be on earnings and whether it will be material.
As previously disclosed , the filing made with the FERC on May 14, 2001 , with respect to the
pricing of real-time energy transactions between IPC and IE , is still under review by the FERC.
For the period June 2001 through March 2002 , IE paid IPC approximately $6 million, which was
calculated based upon the pricing methodology for the period that was most favorable to IPC.
This amount was credited to ratepayers through the Power Cost Adjustment (PCA). An
additional $1 million has been paid to IPC for the period April 2002 through July 2002 based
upon the same pricing methodology. However, until the FERC takes final action on this filing,
rates for real-time transactions between IE and IPC are subject to adjustment.
Deferred Power Supply Costs
Idaho: Our PCA mechanism provides for annual adjustments to the rates charged to Idaho
retail customers. These adjustments, which typically take effect in May, are based on forecasts
of net power supply expenses. During the year, the difference between actual and forecasted
costs is deferred with interest. The balance of this deferral, called a true-up, is then included in
the calculation of next year s PCA adjustment.
On May 13, 2002, the IPUC issued Order No. 29026 related to the 2002-2003 PCA rate filing.
The order granted recovery of $255 million of excess power supply costs, consisting of:
$209 million of voluntary load reduction and power supply costs incurred between
March 1 , 2001 and March 31 , 2002.
$28 million of excess power supply costs forecasted for the period April 2002-March
2003.
$18 million of unamortized costs previously approved for recovery beginning October 1
2001. The amount authorized in October 2001 totaled $49 million. This order spreads
the remaining October rate increase , which would have ended in September 2002
through May 2003.
The order also:
Denied recovery of $12 million of lost revenues resulting from the irrigation load
reduction program , and $2 million of other costs we sought to recover.
Authorized recovery over a one-year period for all but $12 million of the $255 million of
allowed deferred costs. In June 2002, the IPUC issued Order No. 29065 deferring an
additional $4 million applicable to certain industrial customers. The $16 million will be
recovered during the 2003-2004 PCA rate year, and we will earn a six percent carrying
charge on the balance.
NOTES TO FINANCIAL STATEMENTS (Continued)
Denied our request to issue $172 million in Energy Cost Recovery Bonds , which would
have spread the recovery of that amount over three years.
Discontinued the IPUC-required three-tiered rate structure for residential customers.
Authorized a separate surcharge to collect approximately $3 million annually to fund
future conservation programs.
The IPUC had previously issued an order disallowing the lost revenue portion of the irrigation
load reduction program. We believe that the IPUC's order is inconsistent with an earlier order
that allowed recovery of such costs and we filed a Petition for Reconsideration on May 2 , 2002.
On August 29, 2002 , the IPUC issued Order No. 29103 denying the Petition for
Reconsideration. As a result of this order, approximately $12 million was expensed in
September 2002. We still believe we should be entitled to receive recovery of this amount and
have asked the Idaho Supreme Court to review the IPUC's decision.
Oregon: We filed an application with the Oregon Public Utility Commission (OPUC) to begin
recovering extraordinary 2001 power supply costs in our Oregon jurisdiction. On June 18
2001 , the OPUC approved new rates that would recover less than $1 million over the next year.
Under the provisions of the deferred accounting statute, annual rate recovery amounts were
limited to three percent of our 2000 gross revenues in Oregon. During the 2001 session , the
Oregon Legislature amended the statute giving the OPUC authority to increase the maximum
annual rate of recovery of deferred amounts to six percent for electric utilities. We
subsequently filed on October 5, 2001 , to recover an additional three percent extraordinary
deferred power supply costs. As a result of this filing, the OPUC issued Order No. 01-994
allowing us to increase our rate of recovery to six percent effective November 28, 2001.
Deferred power supply costs consist of the following (in thousands of dollars):
September 30 December 31
2002 2001
Oregon deferral 284 866
Idaho PCA current deferral:
Deferral for 2001-2002 rate year 78,395
Deferral for 2002-2003 rate year 003
Irrigation load reduction program 69,586
Astaris load reduction agreement 18,449 62,247
Irrigation and small general service deferral for
recovery in the 2003-2004 rate year 876
Industrial customer deferral for recovery in the
2003-2004 rate year 690
Idaho PCA true-up:
Remaining true-up authorized October 2001 36,500
Remaining true-up authorized May 2001 895
Remaining true-up authorized May 2002 124 972
Total deferral 176,274 304,489
NOTES TO FINANCIAL STATEMENTS (Continued)
FMC/Astaris Settlement Agreement
On January 8, 2002, the IPUC initiated an investigation to examine the load reduction rates
contained in our Voluntary Load Reduction (VLR) Agreement with FMC/Astaris. This VLR
Agreement amended the Electric Service Agreement (ESA) that governed the delivery of
electric service to FMC/Astaris' Pocatello plant, which ceased operations late in 2001. On June
2002, we, along with FMC/Astaris, signed and filed a proposed Stipulation and Settlement
Agreement (Agreement) with the IPUC and on June 10, 2002, the IPUC approved the
Agreement in Order No. 29050 which included the following provisions:
The VLR payments that we would have made to FMC/Astaris through May 2003 were
decreased $5 million, reducing overall payments to $37 million. Approximately 90
percent of this reduction will flow through the PCA mechanism as a reduction in costs
to Idaho retail customers.
FMC/Astaris agreed to dismiss, with prejudice , a declaratory judgment action
concerning the FMC/Astaris contract that it had previously filed against us in the Fourth
Judicial District for the State of Idaho.
FMC/Astaris will pay us approximately $31 million through March 2003 to settle the
ESA.
Garnet Power Purchase Agreement
We had entered into a power purchase agreement (PPA) with Garnet Energy LLC (Garnet), a
subsidiary of Ida-West Energy (Ida-West), a subsidiary of IDACORP , to purchase energy
produced by Garnet's to-be-built natural gas generation facility. A hearing before the IPUC was
scheduled for July 23,2002 on our application for an order approving the PPA and an
accounting order authorizing the inclusion of power supply expenses associated with the
purchase of capacity and energy from Garnet in the PCA.
Prior to the hearing date , Garnet informed us that there was a substantial likelihood that it
would be unable to obtain the financing at acceptable terms necessary to construct the facility.
Garnet further advised that there might be alternative financing arrangements that could allow
Garnet to obtain financing within the constraints of the PPA. However, pursuing alternative
financing arrangements would require additional time. As a result we sought a continuance in
the hearing scheduled for July 23 2002. Ida-West has capitalized approximately $11 million
related to the Garnet facility as of September 30, 2002.
On July 24, 2002, the IPUC issued its ruling effectively closing the proceeding involving our
petition to enter into a PPA with Garnet. We were directed to return in 90 days with a report on
the status of Garnet's progress in obtaining financing for the project and how we propose to
meet future power requirements if the Garnet facility is not built. On October 30, 2002, we
submitted our compliance report to the IPUC, which included (1) Ida-West's notification that due
to the dramatic changes in the electricity industry, financing the project on acceptable terms
under the PPA was impracticable, (2) Ida-West's offering of three alternatives to allow the
project to go forward and (3) our revised plan for meeting future load requirements absent the
PPA associated with the Garnet project including wholesale power purchases , energy
exchanges , obtaining certain transmission rights or constructing or acquiring generation
resources located in our service territory.
Application to Defer Extraordinary Costs Associated With Security Measures
In November 2001 , we filed an application requesting the IPUC to issue an accounting order
authorizing the deferral of extraordinary costs associated with increased security measures
subsequent to the events of September 11 , 2001. The additional or extraordinary security
measures are needed to help ensure the safety of our employees and to protect our facilities.
In March 2002 the IPUC issued Order No. 28975 directing the following related to these costs:
NOTES TO FINANCIAL STATEMENTS (Continued)
Costs in excess of $11 000 per month are to be deferred in a regulatory asset account.
Such costs incurred in 2001 are to be amortized over a five-year period beginning in
January 2003. Costs deferred in each subsequent year are to be amortized beginning
in January of the next calendar year.
Deferred costs are to receive the appropriate carrying charge.
Costs are to be allocated among our various jurisdictions and affiliates.
The IPUC deferred making a final decision regarding final allocation of deferred
security expenses to other affiliates and sharing with shareholders until such time as
the IPUC conducted its prudence review of the expenses.
At September 30 2002, $1 million of extraordinary security costs had been deferred.
IDACORP Energy and Idaho Power Company Agreement
We entered into an Electricity Supply Management Services Agreement (Agreement) with IE in
June 2001. The IPUC is currently assessing issues associated with this Agreement. While
some of the issues likely became moot with the decision to wind down IE's trading operation
the IPUC staff has indicated its desire to continue to review whether adequate compensation
has been provided to our customers as a result of transactions with IE after February 2001.
Similar issues arising prior to February 2001 were resolved by IPUC Order No. 28852. IPUG
Order No. 29102 requires that the remaining IPC/IE compensation and transfer pricing issues
be brought to resolution or that a status report be filed by December 20, 2002.
A preliminary review of uncompensated amounts for transactions between IE and IPC occurring
after February 2001 showed that the amount that IE would pay to IPC could be approximately
$6 million.
11. Other Accounting Policies:
Debt discount, expense and premium are being amortized over the terms of the respective debt
issues.
ATTACHMENT II(b)
IDAHO POWER COMPANY
The following statement as to each class of the capital stock of applicant is as of September 30
2002, the date of the balance sheet submitted with this application:
Common Stock
(1) Description - Common Stock, $2.50 par value; 1 vote per share
(2) Amount authorized - 50 000,000 shares ($125 000 000 par value)
(3) Amount outstanding - 37,612 351 shares
(4) Amount held as reacquired securities - None
(5) Amount pledged by applicant - None
(6) Amount owned by affiliated corporations - All
(7) Amount held in any fund - None
Applicant's Common Stock is held by
IDACORP, Inc., the holding company of
Idaho Power Company. IDACORP, Inc.'s
Common Stock is registered (Pursuant to
Section 12(b) of the Securities Exchange Act
of 1934) and is listed on the New York and
Pacific stock exchanges.
4% Preferred Stock
(1) Description - 4% Preferred Stock, cumulative, $100 par value;
20 votes per share
(2) Amount authorized - 215,000 shares ($21 500 000 par value)
(3) Amount outstanding - 139 851 shares
(4) Amount held as reacquired securities - None
(5) Amount pledged by applicant - None
(6) Amount owned by affiliated corporations - None
(7) Amount held in any fund - None
Applicant's 4% Preferred Stock is registered
as part of a class pursuant to Section 12(g)
of the Securities Exchange Act of 1934.
Series Serial Preferred Stock , $100 Par Value
(1) Description - 7.68% Series Serial Preferred Stock, cumulative
$100 par value; 1 vote per share
(2) Amount authorized - 150,000 shares ($15,000 000 par value)
(3) Amount outstanding - 150,000 shares
(4) Amount held as reacquired securities - None
(5) Amount pledged by applicant - None
(6) Amount owned by affiliated corporations - None
(7) Amount held in any fund - None
Applicant's 7.68% Series Serial Preferred
Stock is registered as part of a class
pursuant to Section 12(g) of the Securities
Exchange Act of 1934.
Serial Preferred Stock, Without Par Value
(1) Description - Serial Preferred Stock, without par value
(2) Amount authorized - 3,000,000 shares
(3) Amount outstanding - Amount outstanding - 250 000 shares, 7.07% Series, cumulative
$100 stated value, non-voting shares
(4) Amount held as reacquired securities - None
(5) Amount pledged by applicant - None
(6) Amount owned by affiliated corporation - None
(7) Amount held in any fund - None
Applicant's Serial Preferred Stock is
registered as part of a class pursuant to
Section 12(g) of the Securities Exchange Act
of 1934.
Provisions of the Articles of Incorporation
authorize the Board of Directors to fix
dividend rates and redemption prices for the
authorized but unissued Serial Preferred
Stock.
For a full statement concerning the terms and provisions relating to the Common, 4% Preferred
and Serial Preferred Stocks of applicant, reference is made to the Applicant's Articles of Incorporation
presently on file with the Commission.
IDAHO POWER COMPANY
The following statement as to funded debt of applicant is as of September 30, 2002 , the date of
the balance sheet submitted with this application.
First Mortgage Bonds
Description
(3)
Amount
Outstanding
(1 )
FIRST MORTGAGE BONDS:
85 % Series due 2002 , dated as of Oct 2, 1996 , due Oct 1 , 2002
6.40 % Series due 2003, dated as of May 1 , 1993, due May 1 , 2003
% Series due 2004, dated as of Mar 25, 1992, due Mar 15, 2004
83 % Series due 2005, dated as of Sep 9, 1998 , due Sep 9, 2005
38 % Series due 2007 , dated as of Dec 1 , 2000, due Dec 1 , 2007
20 % Series due 2009 , dated as of Nov 23, 1999 , due Dec 1 , 2009
60 % Series due 2011 , dated as of Mar 2, 2001 , due Mar 2, 2011
5 % Series due 2023 , dated as of May 1 , 1993, due May 1 , 2023
$27 000,000
80,000 000
000 000
000,000
80,000,000
80,000 000
120 000 000
000 000
$577 ,000 000
(2) Amount authorized - Limited within the maximum of $900 000,000
(or such other maximum amount as may be fixed by supplemental
indenture) and by property, earnings, and other provisions of
the Mortgage.
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount of sinking or other funds - None
For a full statement of the terms and provisions relating to the respective Series and amounts of
applicant's outstanding First Mortgage Bonds above referred to, reference is made to the Mortgage and
Deed of Trust dated as of October 1 , 1937, and First to Thirty-Fifth Supplemental Indentures thereto, by
Idaho Power Company to Bankers Trust Company and R. G. Page (Stanley Burg, successor individual
trustee), Trustees, presently on file with the Commission, under which said bonds were issued.
IDAHO POWER COMPANY
Pollution Control Revenue Bonds
(A) Variable Rate Series 2000 due 2027:
(1) Description - Pollution Control Revenue Bonds , Variable Rate Series
due 2027, Port of Morrow, Oregon , dated as of May 17 , 2000, due
February 1 , 2027.
(2) Amount authorized - $4 360 000
(3) Amount outstanding - $4 360 000
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
(B) 8.30% Series 1984 due 2014:
(1) Description - Pollution Control Revenue Bonds, 8.30% Series
due 2014, County of Humboldt, Nevada, dated as of
December 20 , 1984 due December 1 , 2014 (secured by
First Mortgage Bonds, Pollution Control Series A)
(2) Amount authorized - $49,800 000
(3) Amount outstanding - $49,800 000
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
(C) 6.05% Series 1996A due 2026:
(1) Description - Pollution Control Revenue Bonds, 6.05% Series 1996A
due 2026, County of Sweetwater, Wyoming,
dated as of July 15, 1996, due July 15, 2026
(2) Amount authorized - $68 100,000
(3) Amount outstanding - $68 100 000
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
(D) Variable Rate Series 1996B due 2026:
(1) Description - Pollution Control Revenue Bonds, Variable Rate 1996B
Series due 2026 , County of Sweetwater, Wyoming, dated
as of July 15, 1996, due July 15, 2026.
(2) Amount authorized - $24 200,000
(3) Amount outstanding - $24 200 000
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
IDAHO POWER COMPANY
Pollution Control Revenue Bonds
(E) Variable Rate Series 1996C due 2026:
(1) Description - Pollution Control Revenue Bonds, Variable Rate 1996C
Series due 2026, County of Sweetwater, Wyoming, dated
as of July 15, 1996, due July 15, 2026.
(2) Amount authorized - $24 000 000
(3) Amount outstanding - $24 000,000
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
For a full statement of the terms and provisions relating to the outstanding Pollution
Control Revenue Bonds above referred to, reference is made to (A) copies of Trust Indenture by
Port of Morrow, Oregon , to the Bank One Trust Company, N. A, Trustee, and Loan Agreement
between Port of Morrow, Oregon and Idaho Power Company, both dated May 17 , 2000 , under
which the Variable Rate Series 2000 bonds were issued, (B) copies of Loan Agreement between
Idaho Power Company and Humboldt County, Nevada; Indenture of Trust between Humboldt
County, Nevada and Morgan Guaranty Trust Company of New York; Escrow Agreement between
Humboldt County, Nevada and Bankers Trust Company and Idaho Power Company; Placement
Agreement between Humboldt County, Nevada and Bankers Trust Company; all dated December
, 1984; agreement among Idaho Power Company, Bankers Trust Company, as Remarketing
Agent, Goldman, Sachs & Co., and Kidder, Peabody & Co. Inc. dated May 20 1986; Pledge
Agreement between Idaho Power Company and Morgan Guaranty Trust Company of New York
dated May 1 , 1986; under which the 8.30% Series bonds were issued and (C) (D) (E) copies of
Indentures of Trust by Sweetwater County, Wyoming, to the First National Bank of Chicago,
Trustee, and Loan Agreements between Idaho Power Company and Sweetwater County,
Wyoming, all dated July 15, 1996 , under which the 6.05% Series 1996A bonds, Variable Rate
Series 1996B bonds and Variable Rate Series 1996C bonds were issued.
IDAHO POWER COMPANY
Rural Electrification Association Notes
(A) 2.0% and 5.0% Series due 1998-2023:
(1) Description - REA Notes, 2.0% and 5.0% interest
rate with various maturity dates (secured by
property).
(2) Amount authorized - Various Amounts
(3) Amount outstanding - $1 204 275
(4) Amount held as reacquired securities - None
(5) Amount pledged - None
(6) Amount owned by affiliated corporations - None
(7) Amount in sinking or other funds - None
For a full statement of the terms and provisions relating to the outstanding Rural Electrification
Association Notes above referred to, reference is made to the Restated Mortgage and Security
Agreement dated as of May 1 , 1992 , and Agreement between the United States of America and Idaho
Power Company dated May 1 , 1992.
ATTACHMENT II(e)
IDAHO POWER COMPANY
Commitments and ContinQent Liabilities:
Commitments under contracts and purchase orders relating to the Company s program for construction
and operation of facilities amounted to approximately $6 million at September 30, 2002. The
commitments are generally revocable and are subject to reimbursement of manufacturers' expenditures
incurred and/or other termination charges.
The Company is currently purchasing energy from 66 on-line cogeneration and small power production
facilities with contracts ranging from 1 to 30 years. Under these contracts the Company is required to
purchase all of the output from these facilities. During the fiscal year ended December 31 , 2001, the
Company purchased 728 155 MWh at a cost of $45 million.
From time to time the Company is a party to various other legal claims, actions and complaints not
discussed below. The Company believes that it has meritorious defenses to all lawsuits and legal
proceedings in which it is a defendant and will vigorously defend against them although the Company is
unable to predict with certainty whether or not it will ultimately be successful. However, based on its
evaluation, the Company believes that the resolution of these matters will not have a material adverse
effect on its consolidated financial position , results of operations or cash flows.
Other Legal Proceedings
Truckee-Donner Public Utility District: IDACORP Energy (IE) has received notice from Truckee-
Donner Public Utility District (Truckee), located in California, asserting that IE was in purported breach of
and that Truckee has the right to renegotiate certain terms of, the Agreement for the Sale and Purchase
of Firm Capacity and Energy in place between the two entities. Generally, the terms of the contract
provide for IE to sell to Truckee 10 megawatts (MW) light load energy and 20 MW heavy load energy for
the term January 1 , 2002 through December 31 , 2002 at $72 per megawatt hour (MWh) and 25 MW flat
energy for the term January 1 , 2003 through December 31 2009 at $72 per MWh.
On May 30, 2002, IE filed a lawsuit against Truckee in the Idaho State District Court in and for the County
of Ada. IE seeks a declaration that it is not in breach of the contract, injunctive relief requiring Truckee to
make payments pursuant to the terms of the contract and to raise its rates as stipulated in the contract.
The lawsuit has been removed to the United States District Court for the District of Idaho. On August 15
2002 , Truckee answered the complaint, denying the material allegations, and asserted various
counterclaims against IE, IPC and IDACORP , in which it contends that these entities were in breach of
the contract, inter alia, incident to the sale of surplus energy for Truckee, and by failing to provide firm
backing for the capacity and associated energy provided pursuant to the contract. On September 23,
2002 , IE, IPC and IDACORP filed a reply to the counterclaim , denying the material allegations of
Truckee s counterclaim. Trial of the lawsuit is scheduled to commence September 8, 2003.
On July 23 , 2002, Truckee filed a complaint against IPC, IE and IDACORP with the FERC seeking relief
under its long-term power contract for the purchase of wholesale electric power from IPC and IE.
The complaint requests that the FERC, among other matters , (1) reform or terminate the contract under
Section 206 of the Federal Power Act, (2) order refunds, (3) assert exclusive jurisdiction over the rate
issues and exercise primary jurisdiction to consider state-law claims arising out of the contract provisions
and underlying facts and (4) assess the market power of IE and IPC with the Sierra Pacific and IPC
control areas under the FERC's Supply Margin Assessment test and impose appropriate remedies if the
test is not passed.
The companies intend to vigorously defend their position in these proceedings and believe these matters
will not have a material adverse effect on our consolidated financial position, results of operations or cash
flows.
This has been previously reported in our Quarterly Report on Form 10-Q for the quarter ended June 30,
2002.
United Systems, Inc., f/kla Commercial Building Services, Inc.: On March 18 , 2002, United Systems,
Inc. (United System) filed a complaint against IDACORP Services Co., a subsidiary of IDACORP, dba
IDACORP Solutions. United Systems is a heating, ventilation, refrigeration and plumbing contracting
company that entered into a contract with IDACORP Services in December 2000.
Under the terms of the contact, IDACORP Services authorized United Systems to do business as
IDACORP Solutions." The contract was to be effective from January 2001 through December 2005.
In November 2001 , IDACORP Services notified United Systems that IDACORP Services was terminating
the contract for convenience. The contract allowed for such termination but required the terminating party
to compensate the other party for all costs incurred in preparation for, and in performance of the contract
and for reasonable net profit for the remaining term of the contract. United Systems claims $7 million in
net profits lost and costs incurred.
IDACORP Services asserts that termination related compensation owed to United Systems , if any, is
substantially less than the amount claimed by United Systems.
On August 8 2002, United Systems filed an amended complaint adding IDACORP, IE, and IPC as
additional Defendants claiming they should be held jointly and severally liable for any judgment entered
against IDACORP Services.
This case is set for a jury trial the week of June 13, 2003. The companies intend to vigorously defend
their position in this proceeding and believe these matters will not have a material adverse effect on our
consolidated financial position , results of operations or cash flows.
Public Utility District No.1 of Grays Harbor County, Washington: On October 15, 2002, Public Utility
District No.1 of Grays Harbor County, Washington (Grays Harbor) filed a lawsuit in the Superior Court of
the State of Washington, for the County of Grays Harbor, against IPC, IDACORP and IE.
On March 9, 2001, Grays Harbor entered into a 20MW purchase transaction with IPC for the purchase of
electric power from October 1 , 2001 through March 31 , 2002, at a rate of $249 per MWh. In June 2001
with the consent of Grays Harbor, IPC assigned all of its rights and obligations under the contract to IE.
In its lawsuit, Grays Harbor alleges that the assignment was void and unenforceable, and seeks
restitution from IE and IDACORP. Alternatively, Grays Harbor alleges that the contract should be
rescinded or reformed as against IPC , IDACORP and IE, claiming that the contract was entered into
pursuant to a mutual or unilateral mistake; that it is unconscionable; or that Grays Harbor entered into the
contract under duress. Grays Harbor seeks as damages an amount equal to the difference between
$249 per MWh and the "fair value" of electric power delivered by IE during the period October 1 , 2001
through March 31 , 2002.
IDACORP, IPC, and IE have removed this action from the state court to the United States District Court
for the Western District of Washington at Tacoma. The companies intend to vigorously defend this
lawsuit and believe these matters will not have a material adverse effect on our consolidated financial
position , results of operations or cash flows.
State of California Attorney General: The California Attorney General (AG) filed the complaint in this
case in the California Superior Court in San Francisco on May 30, 2002. This is one of thirteen virtually
identical cases brought by the AG against various sellers of power in the California market, seeking civil
penalties pursuant to California s unfair competition law - California Business and Professions Code
Section 17200. Section 17200 defines unfair competition as any "unlawful, unfair or fraudulent business
act or practice. . . ." The AG alleges that IPC engaged in unlawful conduct by violating the Federal
Power Act (FPA) in two respects: (1) by failing to file its rates with the FERC as required by the FPA; and
(2) charging unjust and unreasonable rates in violation of the FPA. The AG alleges that there were
thousands of . . . sales or purchases" for which IPC failed to file its rates, and that IPC charged unjust
and unreasonable rates on "thousands of occasions." Pursuant to Business and Professions Code
Section 17206, the AG seeks civil penalties of up to $2 500 for each alleged violation. IPC is vigorously
defending the action. On June 25, 2002, IPC removed the action to federal court, and on July 25, 2002,
the AG filed a motion to remand back to state court. The court previously denied the AG's prior motions
to remand back to state court in the companion cases. IPC's Motion to Dismiss was heard by the court
on July 31 , 2002. A decision is expected before the end of the year. We intend to vigorously defend our
position in this proceeding and believe these matters will not have a material adverse effect on our
consolidated financial position , results of operations or cash flows.
Wholesale Electricity Antitrust Cases I & II: These cross-actions against IE and IPC emerge from
multiple California state court proceedings first initiated in late 2000 against various power
generators/marketers by various California municipalities and citizens , including California Lieutenant
Governor Cruz Bustamante and California legislator Barbara Mathews in their personal capacities. Suit
was filed against entities including Reliant Energy Services , Inc., Reliant Ormond Beach, L.L.C., Reliant
Energy Etiwanda, L.L.C., Reliant Energy Ellwood , L.L.C., Reliant Energy Mandalay, L.L.C., and Reliant
Energy Coolwater, L.L.C. (collectively, Reliant); and Duke Energy Trading and Marketing, L.L.C., Duke
Energy Morro Bay, L., Duke Energy Moss Landing, L.L.C., Duke Energy South Bay, L.L.C., Duke
Energy Oakland , L.L.C. (collectively, Duke). While varying in some particulars, these cases made a
common claim that Reliant, Duke and certain others (not including IE or IPC), colluded to influence the
price of electricity in the California wholesale electricity market. Plaintiffs asserted various claims that the
defendants violated California Antitrust Law, (the Cartwright Act) Business & Professions Code Section
16720 , et seq., and California s Unfair Competition Law, Business & Professions Code Section 17200, et
seq. Among the acts complained of are bid rigging, information exchanges, withholding of power and
various other wrongful acts. These actions were subsequently consolidated , resulting in the filing of
Plaintiffs' Master Complaint (PMC) in San Diego Superior Court on March 8, 2002.
On April 22 , 2002, more than a year after the initial complaints had been filed , two of the original
defendants, Duke and Reliant, filed separate cross-complaints against IPC and IE , and approximately 30
other cross-defendants. Duke and Reliant's cross-complaints seek indemnity from IPC, IE and the other
cross-defendants for an unspecified share of any amounts they must pay in the underlying suits because,
they allege , other market participants like IPC and IE engaged in the same conduct at issue in the PMC.
Duke and Reliant also seek declaratory relief as to the respective liability and conduct of each of the
cross-defendants in the actions alleged in the PMC. Reliant has also asserted a claim against IPC for
alleged violations of the California Unfair Competition Law, Business and Professions Code Section
17200, et seq. As a buyer of electricity in California, Reliant seeks the same relief from the cross-
defendants, including IPC, as that sought by plaintiffs in the PMC as to any power Reliant purchased
through the California markets.
Some of the newly added defendants (foreign citizens and federal agencies) removed that litigation to
federal court. IPC and IE, together with numerous other defendants added by the cross-complaints, have
moved to dismiss these claims, and those motions were heard in September 2002, together with motions
to remand the case back to state court filed by the original plaintiffs. As a result of the various motions
no trial date is set at this time. The companies cannot predict the outcome of this proceeding, nor can
they evaluate the merits of any of the claims at this time, but they intend to vigorously defend these
lawsuits.
California Energy Situation
On July 25, 2001 , the FERC issued an order establishing a proceeding to explore whether there may
have been unjust and unreasonable charges for spot market sales in the Pacific Northwest during the
period December 25, 2000 through June 20, 2001. The FERC Administrative Law Judge (AU) submitted
recommendations and findings to the FERC on September 24 , 2001. The AU found that prices should be
governed by the Mobile-Sierra standard of the public interest rather than the just and reasonable
standard, that the Pacific Northwest spot markets were competitive and that no refunds should be
allowed. Procedurally, the AU's decision is a recommendation to the commissioners of the FERC.
Multiple parties have submitted comments to the FERC respecting the AU's recommendations. The City
of Tacoma and the Port of Seattle have requested that the docket be reopened to allow the submission of
additional evidence related to alleged manipulation of the power market by Enron and others.
In a series of requests for information ending on May 8 , 2002 , the FERC issued a data request to all
sellers of Wholesale Electricity and/or Ancillary Services to the CallSO and/or the CalPX during the years
2000-2001. The request required IPC and IE to respond in the form of an affidavit to inquiries respecting
various trading practices that the FERC identified in its fact-finding investigation of Potential Manipulation
of Electric and Natural Gas Prices in Docket No. PA02-000. IPC and IE filed the various responses
sought by the FERC. The May 22, 2002 response indicated that although they did export energy from the
CalPX outside of California during the period 2000-2001 , they did not engage in any impermissible
trading practice described in the Enron memoranda. The energy was resold to supply preexisting load
obligations, to supply term transactions or to supply a contemporaneous sales transaction. The
companies denied engaging in the other ten practices identified by the FERC. IPC and IE filed additional
responses with the FERC on May 31 and June 5, 2002. In the May 31 response, the companies denied
engaging in the practice referred to as "wash
" "
round trip" or "sell/buyback" trading involving the sale of
an electricity product to another company together with a simultaneous purchase of the same product at
the same price. In the June 5 response, where the data request was directed to all sellers of natural gas
in the Western Systems Coordinating Council and/or Texas during the years 2000-2001 , the companies
denied engaging in the practice referred to as "wash
" "
round trip" or "sell/buyback" trading involving the
sale of natural gas together with a simultaneous purchase of the same product at the same price.
On October 2, 2002, the United States Commodity Futures Trading Commission (CFTC) issued a
subpoena to IPC requesting, among other things, all records related to all natural gas and electricity
trades by IPC involving "round trip trades , also known as "wash trades" or "sell/buyback trades
including, but not limited to those made outside the Western Systems Coordinating Council region. The
subpoena applies to both IE and IPC. As discussed above, on May 22, 2002, both IE and IPC responded
to a similar request from the FERC stating that they did not engage in "round trip" or "wash" trades. By
letter from the CFTC dated October 7 , 2002 the Division of Enforcement agreed to hold in abeyance until
a later date all items requested in the subpoena with the exception of one paragraph which related to
three trades on a certain date with a specific party. The companies have provided the requested
information.
ATTACHMENT II(
IDAHO POWER COMPANY
STATEMENT OF RETAINED EARNINGS
AND
UNDISTRIBUTED SUBSIDIARY EARNINGS
For the Twelve Months September 30, 2002
Retained Earninqs
Retained earnings (at the beginning of period) .................................
Balance transferred from income.......................................................
Dividends received from subsidiary...................................................
Balance transferred to parent...........................................................
Total........................................................'...............
Dividends:
Preferred Stock ......,.................................."""""'"......,............
Common Stock .........................................................................
TotaL......................................................,................
Retained earnings (at end of period).................................................
Undistributed Subsidiary Earninqs
Balance (at beginning of period)........................................................
Equity in earnings for the period........................................................
Dividends paid (Debit)........................................................................
Balance transferred to parent............................................................
Balance (at end of period).................................................................
453 808 703
284 254
(iOOO OOO
(62,282)
534 030,675
851 264
69,983 803
835,067
459 195,608
13,419 836
197 391
000 000
282
679,509
The accompanying Notes to Financial Statements are an integral part of this statement
ATTACHMENT II(e)
IDAHO POWER COMPANY
STATEMENT OF INCOME
For the Twelve Months Ended September 30, 2002
Operating Revenues.........................................................................................
Operating Expenses:
Purchased power......................................................................................
Fuel.........................................................................................................
Power cost adjustment............................... .... .......................................
Other operation and maintenance expense..............................................
Depreciation expense...............................................................................
Amortization of limited-term electric plant.................................................
Taxes other than income taxes.................................................................
Income taxes - Federal.............................................................................
Income taxes - Other................................................................................
Provision for deferred income taxes.........................................................
Provision for deferred income taxes - Credit.............................................
Investment tax credit adjustment..............................................................
Total operating expenses....................................................................
Operating Income.............................................................................................
Other Income and Deductions:
Allowance for equity funds used during construction................................
Income taxes............................................................................................
Other - Net...............................................................................................
Net other income and deductions.............................................................
Income Before Interest Charges.......................................................................
Interest Charges:
Interest on first mortgage bonds...............................................................
Interest on other long-term debt...............................................................
Interest on short-term debt......................................................................
Amortization of debt premium, discount and
expense - Net.....................................................................................
Other interest expense.............................................................................
Total interest charges.............................................................
Allowance for borrowed funds used during construction - Credit..............
Net interest charges................................................................
Net Income.......................................................................................................
Actual
858 678,419
172 657,794
100 939,726
141 555 291
214 344 379
728,041
951 917
19,517 538
54,810 236
828,639
781 838
(104 598 321 )
975,483
734,492 561
124,185,858
33,433
954,442)
836,759
915 750
140 101 608
303 522
341 530
768 239
356,907
500,442
270 639
194 954
60,075,685
80,025,923
The accompanying Notes to Financial Statements are an integral part of this statement
IDAHO POWER COMPANY
EXPLANATION OF ADJUSTMENTS SHOWING
EFFECT OF TRANSACTION IN THE INCOME STATEMENT
For the Twelve Months Ended September 30, 2002
Interest on long-term debt
Interest savings on $300,000 000 principal amount
of first mortgage bonds and short term debt retired at
interest rates ranging between 3% and 8%....................(19.518 000)
Interest on new $300 000,000 principal amount of
first mortgage bonds issued at interest rate estimated
at 6.000/0.........................................................................,.000 000
Interest expense....................................................................................
Income taxes:
Increase in Federal income taxes:
due to decrease in interest expense
($1 518 000 x 32./0)....................................................................................."..
Increase in State income taxes:
due to decrease in interest expense
($1 518 000 x 6.50/0)...........................................................................................
518 000)
496 386
670
TT ACHMENT III
STATE OF IDAHO
COUNTY OF ADA ) ss.
CITY OF BOISE
ROBERT W. STARMAN, the undersigned, Secretary ofIdaho Power Company,
do hereby certify that the following constitutes a full, true and correct copy of the resolutions
adopted by the Board of Directors on November 21 , 2002, relating to the issuance of up to
$300,000 000 of First Mortgage Bonds , Preferred Stock and/or Debt Securities under a Shelf
Registration filed with the SEC, and that said resolutions have not been amended or rescinded and
are in full force and effect on the date hereof.
IN WITNESS WHEREOF, I have he to set my hand this 25th day of February,
~SU
Isl Robert W. Stahman
Secretary
2003.
(CORPORATE SEAL)
RESOLVED , That the proper officers of the Company be, and they
hereby are, authorized and empowered to make, execute and file, in the name and on
behalf of the Company, such applications and other documents and any amendments
or supplements to such applications and documents with the state regulatory
authorities having jurisdiction over the Company and/or its securities as may be
necessary to obtain an exemption from competitive bidding requirements and to
facilitate the creation, issuance, sale and delivery by this Company in one or more
series from time to time of (a) first mortgage bonds ("First Mortgage Bonds ) in an
aggregate principal amount not exceeding $300 000 000, (b) additional shares of
preferred stock ("Preferred Stock") having an aggregate par or stated value not
exceeding $300 000 000, and (c) unsecured debt securities ("Debt Securities , and
with the First Mortgage Bonds and Preferred Stock, collectively referred to as the
Securities ) in an aggregate principal amount not exceeding $300 000 000;
provided, however, that the total principal amount of First Mortgage Bonds and Debt
Securities and the par or stated value of Preferred Stock to be issued and sold shall
not, in the aggregate, exceed $300 000 000; and be it
FURTHER RESOLVED, That the proper officers ofthe Company be
and they hereby are, authorized to prepare and file with the Securities and Exchange
Commission one or more registration statements (each including a prospectus) and
any amendments (including post-effective amendments) or supplements thereto, for
the registration under the Securities Act of 1933, as amended, of the Securities and
for qualification under the Trust Indenture Act of 1939 , as amended, of the
Company s Mortgage and Deed of Trust, dated as of October 1 1937 , as heretofore
supplemented and as it is proposed to be further supplemented by a supplemental
indenture or indentures and for qualification under the Trust Indenture Act of 1939
as amended, of an indenture of the Company relating to the Debt Securities, as it is
proposed to be supplemented by a supplemental indenture or indentures; and be it
FURTHER RESOLVED , That Jan B. Packwood, J. LaMont Keen
Robert W. Stahman and Elizabeth W. Powers , be, and they hereby are, appointed and
designated as the persons duly authorized to receive communications and notices
from the Securities and Exchange Commission with respect to said registration
statement; and be it
FURTHER RESOLVED, That the Company hereby appoints Jan B.
Packwood, J. LaMont Keen and Robert W. Stahman, and each of them severally, as
the true and lawful attorney and attorneys of the Company with full power to act with
or without the others and with full power of substitution and resubstitution to execute
said registration statement and any amendment or amendments thereto, for and on
behalf of the Company; and that each officer and director of the Company executing
said registration statement and any amendment or amendments thereto on behalf of
the Company, be, and he hereby is, authorized to appoint Jan B. Packwood, J.
LaMont Keen and Robert W. Stahman, and any agent named for service in said
registration statement, and each of them severally, his true and lawful attorney or
attorneys with power to act with or without the other and with full power of
substitution and resubstitution, to execute in his name, place and stead, in his
capacity as an officer or director ofthe Company, such registration statement and any
amendment or amendments thereto, and all instruments necessary or incidental in
connection therewith, and to file the same with the Securities and Exchange
Commission, with full power and authority to each of said attorneys to do and
perform, in the name and on behalf of the said officers or directors, or any of them
every act whatsoever necessary or desirable to be done in the premises as fully and
to all intents and purposes as such officer or director might or could do in person; and
be it
FURTHER RESOLVED, That the proper officers of the Company be
and they hereby are, authorized and empowered to take, in the name and on behalf
of the Company, any and all action which they may deem necessary or desirable in
order to effect the registration or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of any of the states or territories of the United
States of America and the District of Columbia, and in connection therewith to
execute, acknowledge, verify, deliver, file and publish all such applications , reports
agreements, resolutions and other papers, documents and instruments that may be
required or appropriate under such laws, and to take any and all other action which
may be deemed by them to be necessary or desirable in order to maintain such
registration or qualification for as long as they deem it to be in the best interests of
the Company; and be it
FURTHER RESOLVED, That upon obtaining the necessary
regulatory authorizations, and upon effectiveness of the registration statement under
the Securities Act of 1933 , and, if applicable, the relevant indenture becoming
qualified under the Trust Indenture Act of 1939, as amended, the proper officers of
the Company be, and they hereby are, authorized to issue and sell, or cause to be
issued and sold, all or any portion of the Securities either pursuant to competitive
bidding, negotiated underwriting, private sale, through agents, directly to an agent at
a negotiated discount or directly to purchasers, upon such terms and conditions and
at a price or prices as are established by the Board of Directors by these resolutions
or may hereafter be established by the Board of Directors or the Executive
Committee of this Board; and be it
FURTHER RESOLVED , That the President, any Vice President or
the Treasurer of the Company be, and each of them hereby is, authorized to enter into
an Underwriting Agreement, a Purchase Agreement, a Selling Agency Agreement
and/or a Distribution Agreement in the form or forms to be approved by the Board
of Directors or the Executive Committee of this Board, with such underwriters
purchasers and/or sales agents as the Board of Directors or the Executive Committee
of this Board shall determine for the sale by the Company of the Securities; and be
FURTHER RESOLVED, That there are hereby created five new
series of First Mortgage Bonds , under the Company s Mortgage and Deed of Trust
dated as of October 1 , 1937 , as supplemented, each to be designated "First Mortgage
Bonds Series due -" or "First Mortgage Bonds, Secured Medium-Term
Notes, Series E", and the issuance by the Company of not to exceed $300 000 000
in aggregate principal amount of such five series of First Mortgage Bonds is hereby
authorized and that, pursuant to the provisions of the Company s Mortgage and Deed
of Trust, dated as of October 1 , 1937, as supplemented, the proper officers of the
Company be, and they hereby are, authorized to execute under the seal of the
Company and to deliver to Bankers Trust Company as Corporate Trustee under said
Mortgage, First Mortgage Bonds in a total aggregate principal amount not to exceed
$300 000 000, in fully registered form in denominations of $1 000 and any multiple
or multiples thereof; that this Board of Directors hereby determines that all of the
First Mortgage Bonds of each such series shall mature on the date or dates and shall
bear interest at the rate or rates and be payable on the date or dates provided in the
Supplemental Indenture providing for the creation of such series or, if Secured
Medium-Term Notes, Series E, this Board of Directors hereby determines that such
First Mortgage Bonds to be issued from time to time shall (i) bear interest at such rate
or rates (which may be fixed or variable), (ii) mature on such date or dates from nine
(9) months to forty (40) years from the date of issue , (iii) contain such provisions
with respect to the redemption thereof prior to maturity, and the dates and prices
associated therewith, as may be appropriate upon due consideration of current market
conditions and the Company s general financing plan, and (iv) have such other terms
and provisions , all as may be determined from time to time by the President, any
Vice President or the Treasurer of the Company and as shall be set forth or referred
to in, and confirmed by, written order or orders for the authentication and delivery
of the First Mortgage Bonds of such series under the Company s Mortgage and Deed
of Trust, as heretofore supplemented, and each such written order shall conclusively
establish the determination by the Board of Directors of the terms of the principal
amount of the First Mortgage Bonds of such series subject to such written order, both
principal and interest to be payable at the office or agency of the Company in the
Borough of Manhattan, The City of New York, and at the option of the Company,
interest on each said First Mortgage Bond may also be payable at the office of the
Company in Boise, Idaho, in such coin or currency of the United States of America
as at the time of payment is legal tender for public and private debts; and that such
First Mortgage Bonds shall be otherwise redeemable, registrable, transferable and
exchangeable as otherwise contemplated in the form established by the Board of
Directors or the Executive Committee of this Board; and that such First Mortgage
Bonds shall contain such other terms as the Board of Directors or the Executive
Committee of this Board shall approve, such approval to be conclusively evidenced
by the actions of the Board of Directors or the Executive Committee of this Board in
setting the terms of each such series of First Mortgage Bonds and by the execution
and delivery thereof by the officers executing the same; and be it
FURTHER RESOLVED, That Bankers Trust Company be, and it
hereby is, requested, upon fulfillment of the requirements specified in Article V, VI
and/or VII of said Mortgage, to authenticate said First Mortgage Bonds, and deliver
the same promptly, in accordance with the written order or orders of the Company
signed by the President or any Vice President, and by the Treasurer or any Assistant
Treasurer of the Company; and be it
FURTHER RESOLVED, That the Executive Committee be, and it
hereby is , authorized to approve one or more Supplemental Indenture(s),
supplemental to the Company s Mortgage and Deed of Trust dated as of October 1
1937; and that the proper officers of the Company be, and they hereby are, authorized
and directed to execute and deliver, on behalf of the Company, said Supplemental
Indenture(s) with such terms therein as the Executive Committee or the officers
executing the same may approve, their approval of any such terms and/or changes to
be conclusively evidenced by the actions of the Executive Committee in setting the
terms of each such series of First Mortgage Bonds or by the execution and delivery
thereof by the officers of the Company; and be it
FURTHERRESOL VED, Thatthe proper officers of the Company be
and they hereby are, authorized and directed to record and file or cause to be recorded
and filed such Supplemental Indenture(s), when executed, in such offices as in their
judgment may be necessary or appropriate in order to carry out the purposes of the
foregoing resolutions; and be it
FURTHER RESOLVED, That the Executive Committee be, and it
hereby is, hereby authorized to adopt and approve a form of First Mortgage Bond
substantially as provided and set forth in the Company s Mortgage and Deed of Trust
dated as of October 1 1937, with such changes thereto as the Executive Committee
or the officers of the Company executing the same may approve, such approval to be
conclusively evidenced by the actions of the Executive Committee in setting the
terms of said First Mortgage Bonds or by the execution and delivery thereof by the
officers of the Company; and, until definitive bonds are ready for delivery, the proper
officers of the Company be, and they hereby are, authorized in their discretion to
execute and deliver to Bankers Trust Company, as Corporate Trustee, and Bankers
Trust Company, be, and it hereby is, requested to authenticate and deliver a
temporary bond or temporary bonds in substantially the form approved by the
Executive Committee of this Board; and be it
FURTHER RESOLVED, That if any officer of the Company who
signs, or whose facsimile signature appears upon, said First Mortgage Bonds, ceases
to be an officer of the Company prior to the issuance of said Bonds, the Bonds so
signed or bearing such facsimile signature shall nevertheless be valid; and be it
FURTHER RESOLVED, That upon all said First Mortgage Bonds the
signature of the President or a Vice President of the Company, the signature of the
Secretary or an Assistant Secretary of the Company and the seal of the Company may
be facsimile; and that any such facsimile signature of any such officer of the
Company appearing on said First Mortgage Bonds is hereby approved and adopted
as a signature of such officer of the Company, and any such facsimile seal of the
Company appearing on said First Mortgage Bonds is hereby approved and adopted
as a seal of the Company; and be it
FURTHER RESOLVED, That in respect of said First Mortgage
Bonds, Bankers Trust Company be, and it hereby is, appointed agent of this
Company (1) in respect of the payment of the principal of, and interest (and premium
if any) on, said First Mortgage Bonds, (2) in respect of the registration, transfer and
exchange of said First Mortgage Bonds, and (3) upon which notices , presentations
and demands to or upon the Company in respect of said First Mortgage Bonds, and
in respect of the Company s said Mortgage and Deed of Trust, dated as of October
, 1937 , as supplemented, may be given or made; and be it
FURTHER RESOLVED, That Robert W. Stahman be, and he hereby
, appointed Counsel , under the Mortgage, to render any opinions of counsel
required thereunder, and Jan B. Packwood be, and he hereby is, appointed Engineer
under the Mortgage, to make, execute and deliver any Engineer s Certificate required
thereunder, said appointments to remain in effect until the Trustee receives written
notice to the contrary; and be it
FURTHER RESOLVED, That the Executive Committee and the
proper officers of this Company be, and they are hereby, authorized to take such
actions , for and on behalf of the Company, relating to the authentication, creation
issuance, sale and delivery of said First Mortgage Bonds, the execution and delivery
of one or more Supplemental Indentures as hereinabove provided and the recording
and filing of such completed Supplemental Indentures in such offices as they may
deem necessary or desirable, including, without limitation , the determination of the
interest rate and the insertion thereof in the form of said First Mortgage Bonds and
at their option, in the Supplemental Indenture creating such series; and be it
FURTHER RESOLVED, That the proper officers of the Company be
and they hereby are, authorized and empowered to execute and deliver on behalf of
the Company one or more indentures providing for the issuance of Debt Securities
by the Company, including supplements to any indenture, with such trustee or
trustees as they may appoint, such indenture or indentures, or supplement or
supplements, to be in such form or forms and bear such date or dates as may be
approved by the officers of the Company executing the same, such approval to be
conclusively evidenced by the execution of said indenture or indentures or
supplement or supplements; and be it
FURTHER RESOLVED, That the proper officers of the Company
, and they hereby are, authorized and empowered to appoint any agent, trustee or
registrar necessary or appropriate in connection with the issuance or sale of the Debt
Securities; and be it
FURTHER RESOLVED , That the trustee appointed in connection
with the issuance or sale of the Debt Securities be, and it hereby is, requested, upon
fulfillment of the requirements specified in said indenture, to authenticate said Debt
Securities , and deliver the same promptly, in accordance with the written order or
orders of the Company signed by the President or any Vice President, and by the
Treasurer or any Assistant Treasurer of the Company; and be it
FURTHER RESOLVED , That the proper officers of the Company be
and they hereby are, authorized and empowered to execute the Debt Securities in
temporary or definitive form, under manual or facsimile signature, and under the
facsimile seal of the Company attested by the manual or facsimile signature of the
Secretary; and be it
FURTHER RESOLVED, That the Executive Committee and the
proper officers of this Company be, and they are hereby, authorized to take such
actions, for and on behalf of the Company, relating to the authentication, creation
issuance, sale and delivery of said Debt Securities, the execution and delivery of the
indenture and one or more supplemental indentures as hereinabove provided
including, without limitation, the determination of the interest rate and the insertion
thereof in the form of said Debt Securities and, at their option, in the supplemental
indenture creating such series; and be it
FURTHER RESOLVED, That the Executive Committee and the
proper officers of this Company be, and they hereby are, authorized and empowered
in the name and on behalf of the Company to do or cause to be done any and all other
acts and things as they may deem necessary or desirable to consummate the
transactions set forth in and contemplated by these resolutions with full power to act
in the premises, and that all actions of the Executive Committee and the proper
officers of the Company taken pursuant to and in furtherance of the purposes of these
resolutions be, and they hereby are, established as actions of this Board of Directors.
ATTACHMENT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR AN
ORDER AUTHORIZING THE ISSUANCE AND
SALE OF UP TO $300 000 000 OF APPLICANT'S)
(1) FIRST MORTGAGE BONDS , (2) SERIAL
PREFERRED STOCK, WITHOUT PAR VALUE AND (3) DEBT SECURITIES
CASE NO.
PROPOSED ORDER
This matter is before the Commission upon the Application of Idaho Power
Company ("Applicant") filed March 3 , 2003, for authority to issue and sell from time to time (a)
up to $300 000 000 aggregate principal amount of one or more series of Applicant's First
Mortgage Bonds, which may be designated as secured medium-term notes (Bonds), (b) up to
$300 000 000 in gross proceeds to Applicant of one or more series of its Serial Preferred Stock
Without Par Value (Preferred Stock), and (c) up to $300 000 000 aggregate principal amount of
one or more series of unsecured debt securities of the Applicant (Debt Securities); provided
however, that the total principal amount of the Bonds, the gross proceeds to Applicant of the
Preferred Stock and the principal amount of the Debt Securities to be issued and sold shall not
exceed $300 000 000. 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 one
and nine.
PROPOSED ORDER - 1
IT.
Applicant 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 in connection with its utility
business, with its principal office in Boise, Idaho.
III.
The Applicant seeks authority to issue and sell, from time to time, (a) up to
$300 000 000 aggregate principal amount of one or more series of the Bonds under its Indenture
of Mortgage and Deed of Trust, dated as of October 1937 as supplemented and amended
Mortgage ), and as to be further supplemented and amended, (b) up to $300 000 000 in gross
proceeds to the Applicant of one or more new series of its Serial Preferred Stock, Without Par
Value, under its Restated Articles of Incorporation, as amended, and (c) up to $300 000 000
aggregate principal amount of one or more series of Debt Securities under an unsecured debt
Indenture of Applicant; provided, that the total principal amount of the Bonds and gross proceeds
to the Applicant of the Preferred Stock and the principal amount of the Debt Securities to be
issued and sold shall not exceed $300 000 000.
IV.
The Applicant has filed a registration statement for the Bonds , Preferred Stock
and Debt Securities with the Securities and Exchange Commission (SEC) pursuant to the shelf
registration provisions of Rule 415 of the Securities Act of 1933 , as amended. This will enable
the Applicant to take advantage of attractive market conditions efficiently and rapidly. Under the
shelf registration, the Applicant will be able to issue the Bonds, Preferred Stock and/or Debt
Securities at different times without the necessity of filing a new registration statement. The
PROPOSED ORDER - 2
Applicant requests authority to issue the Bonds, Preferred Stock and/or Debt Securities over a
period of two years from the date of this Order.
The Bonds will be issued pursuant to one or more supplemental indentures to the
Mortgage and will be secured equally with the other First Mortgage Bonds of the Applicant. The
Applicant may enter into interest rate hedging arrangements with respect to the Bonds, including
treasury interest rate locks, treasury interest rate caps and/or treasury interest rate collars. The
Applicant states that price or prices, issuance date or dates, maturity or maturities, interest rate or
rates (which may be fixed or variable) and/or the method of determination of such rate or rates
time of payment of interest, whether all or a portion of the Bonds will be discounted, whether all
or a portion of the Bonds will be issued in global form, whether interest rate hedging
arrangements will apply to the Bonds , repayment terms, redemption terms, if any, and any other
special terms of the Bonds have not yet been determined and may be different for each issuance
of the Bonds.
VI.
The Bonds may be designated as secured medium-term notes. The medium-term
notes could have maturities from nine months to thirty years. Before issuing medium-term notes
publicly, the Applicant will file a Prospectus Supplement with the SEC setting forth the general
terms and conditions of the medium-term notes to be issued. Upon each issuance of the medium-
term notes pursuant to the Prospectus Supplement, the Applicant will file a Pricing Supplement
with the SEC providing a specific description of the terms and conditions of each issuance of the
medium-term notes. The Applicant will also file a copy of the Prospectus Supplement and
Pricing Supplements with the Commission.
PROPOSED ORDER - 3
VIT.
The Preferred Stock will be issued pursuant to the provisions contained in the
Applicant s Restated Articles of Incorporation relating to Serial Preferred Stock, Without Par
Value. Applicant states that the series designation, aggregate amount of the issue, purchase price
or prices, retirement date or dates, if any, sinking fund provisions, if any, dividend rate or rates
(which may be fixed or variable) and/or the method of determination of such rate or rates, time of
payment of dividends , redemption terms, if any, and any other special terms of the Preferred
Stock have not yet been determined and may be different for each issuance of the Preferred
Stock.
VIII.
The Debt Securities will be unsecured obligations of the Applicant and will be
issued under an existing or new unsecured debt Indenture of the Applicant. The Applicant may
enter into interest rate hedging arrangements with respect to the Debt Securities, including
treasury interest rate locks, treasury interest rate caps and/or treasury interest rate collars. The
Applicant states that price or prices, issuance date or dates, maturity or maturities, interest rate or
rates (which may be fixed or variable) and/or the method of determination of such rate or rates
time of payment of interest, whether all or a portion of the Debt Securities will be discounted
whether all or a portion of the Debt Securities will be issued in global form, whether interest rate
hedging arrangements will apply to the Debt Securities, repayment terms, redemption terms, if
any, and any other special terms of the Debt Securities have not yet been determined and may be
different for each issuance of the Debt Securities.
PROPOSED ORDER - 4
IX.
Applicant states that the Bonds, Preferred Stock and/or Debt Securities may be
sold by public sale or private placement, directly by the Applicant or through agents designated
from time to time or through underwriters or dealers. If any agents of the Applicant or any
underwriters are involved in the sale of the Bonds, Preferred Stock and/or Debt Securities, the
names of such agents or underwriters, the initial price to the public (if applicable), any applicable
commissions or discounts, and the net proceeds to the Applicant will be filed by the Applicant
with the Commission. If the Bonds are designated as medium-term notes and sold to an agent or
agents as principal, the names of the agents, the price paid by the agents, any applicable
commission or discount paid by the Applicant to the agents and the net proceeds to the Applicant
will be filed with the Commission.
The net proceeds to be received by the Applicant from the sale of the Bonds
Preferred Stock and/or Debt Securities will be used for the acquisition of property; the
construction, completion, extension or improvement of its facilities; the improvement or
maintenance of its service; the discharge or lawful refunding of its obligations; and for general
corporate purposes. To the extent that the proceeds from the sale of the Bonds, Preferred Stock
or Debt Securities are not immediately so used, the will be temporarily invested in short-term
discounted or interest-bearing obligations.
PROPOSED ORDER - 5
CONCLUSIONS OF LAW
Applicant is incorporated under the State of Idaho and is duly authorized to do
business in the states of Oregon, Nevada, Montana and Wyoming in connection with its utility
operations.
IT.
The Commission has jurisdiction over this Application.
III.
The Commission does not have before it for determination and, therefore, does
not determine the effect of the Bonds, Preferred Stock and/or Debt Securities on rates to be
charged by Applicant for electric service to consumers in the State of Idaho.
IV.
The proposed issuance and sale of the Bonds, Preferred Stock and/or Debt
Securities are for a lawful purpose and are within Applicant's corporate powers. The proposed
transaction is in the public interest, and a formal hearing on this matter would serve no public
purpose.
All fees have been paid by Applicant in accordance with Idaho Code 61-905.
PROPOSED ORDER - 6
ORDER
IT IS THEREFORE ORDERED that the Application of Idaho Power Company to
issue and sell from time to time (a) up to $300 000 000 aggregate principal amount of one or
more series of the Bonds, (b) up to $300 000 000 in gross proceeds to Applicant of one or more
series of its Serial Preferred Stock, and (c) up to $300 000 000 aggregate principal amount of one
or more series of the Debt Securities in the ways and for the purposes set forth in its Application
, and the same is hereby granted; provided, that the total principal amount of the Bonds, gross
proceeds to the Applicant of the Preferred Stock and the principal amount of the Debt Securities
to be issued and sold shall not exceed $300 000 000. This authorization shall be for two years
from the date of this order. Applicant may request an extension of this authorization by letter
filed with the Commission prior to the expiration of such two-year period.
IT IS FURTHER ORDERED that Applicant 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 Bonds, Preferred Stock and/or Debt Securities of the
likely range of interest rates or dividend rates and other terms for the securities, unless , in the
case of Bonds, the Bonds are issued as medium-term notes.
IT IS FURTHER ORDERED that Applicant file, as promptly as possible after the
issuance of each series of Bonds, a copy of the Prospectus Supplement showing the terms of the
sale, and the names of the purchasers or underwriters or agents with the Commission. If the
Applicant issues Bonds designated as medium-term notes , the Applicant's reporting requirements
shall consist of filing with the Commission a copy of the Prospectus Supplement for the medium-
term notes as filed with the SEe. The Applicant shall also file with the Commission a copy of
PROPOSED ORDER - 7
the Pricing Supplements filed with the SEC , setting forth the specific terms and conditions for
each issuance of the medium-term notes.
IT IS FURTHER ORDERED that Applicant file, as promptly as possible after the
issuance of each series of the Preferred Stock, a copy of the Prospectus Supplement showing the
terms of the sale, and the names of the purchasers or underwriters or agents with the
Commission.
IT IS FURTHER ORDERED that Applicant file, as promptly as possible after the
issuance of each series of Debt Securities, a copy of the Prospectus Supplement showing the
terms of the sale, and the names of the purchasers or underwriters or agents with the
Commission.
IT IS FURTHER ORDERED that nothing in this order shall be construed to
obligate the state of Idaho to payor guarantee in any manner whatsoever any security authorized
issued, assumed, repurchased, defeased 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.
DONE BY ORDER of the Idaho Public Utilities Commission at Boise, Idaho this
day of 2003.
PROPOSED ORDER - 8
PAUL KJELLANDER, President
DENNIS S. HANSEN, Commissioner
MARSHA H. SMITH, Commissioner
TIEST:
JEAN D. JEWELL
Commission Secretary
PROPOSED ORDER - 9