20050308Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:TERRI CARLOCK
DATE:MARCH 7, 2005
RE:IDAHO POWER COMPANY'S SHORT-TERM BORROWING REQUEST
OF $300 MILLION CASE NO. IPC-05-
On February 14, 2005, Idaho Power Company (Idaho Power) filed an Application
requesting authority to incur up to $300 000 000 aggregate principal amount at anyone time of
short-term debt. Idaho Power requests a five-year authorization period from April 1, 2005
through March 31 , 2010. Since the requested five-year authorization period is longer than the
two-year period granted with prior authorities, Idaho Power has included a condition where the
five-year authority remains in place so long as bond ratings remain investment grade (BBB- or
higher by Standard & Poor s Rating Service and Baa3 or higher by Moody s Investors' Service
Inc.
The securities will consist of loans issued as public or private placements in the form of
unsecured notes, unsecured promissory notes, commercial paper or other indebtedness. The
terms and interest rate for each issue will be determined at the time of issuance. The debt
issuance(s) may be at a fixed or variable interest rate based on LIBOR, the applicable prime rate
or other established rate and may be based on Idaho Power s first mortgage bond credit rating.
The length of the issuance series may also vary with the borrowing(s) issued with a maximum
maturity of up to five years. In no event will the varYing maturities have a final maturity beyond
March 31 , 2010. Each note will have a fixed maturity with no provision for automatic roll over.
Fees will be charged by a syndicated facility for credit line arrangement estimated at
$200 000, an annual fee estimated at $30 000, and a facility fee as a percentage of each bank'
DECISION MEMORANDUM - 1 -March 7, 2005
commitment. It is expected that commercial paper dealers or agents will sell the paper to receive
a commission not to exceed 1/8 of 1 percent of the principal amount of each note.
The funds will be obtained for temporary, interim capital requirements for the following
purposes: acquisition or construction of new plant along with the improvement or maintenance
of existing generation, distribution, transmission and general plant; refunding of financing
instruments; or other corporate purposes.
STAFF RECOMMENDATION
Staff recommends approval of the $300 million short-term debt authority for the five-year
period. Staff accepts the proposed requirement to maintain investment grade ratings as a
condition of the five-year authority. As an additional requirement with the five-year authority,
Staff recommends Idaho Power change its current reporting to provide quarterly debt reports that
also include credit rating reports. Idaho Power accepts these requirements.
COMMISSION DECISION
Should the $300 million short-term debt line be approved?
Should the authority be approved for a five-year term with the investment grade rating
and additional reporting requirements?
J.rnn~ GuJoch
Terri Carlock
TC\ipce054STD300M.DM.
DECISION MEMORANDUM - 2 -March 7, 2005