20060525final_order_no_30049.pdf

Office of the Secretary
Service Date
May 25, 2006
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY TO ENTER
INTO FINANCING TRANSACTIONS FOR
THE REFUNDING OF $116,300 000 OF
SWEETWATER COUNTY, WYOMING
POLLUTION CONTROL REVENUE
REFUNDING BONDS
ORDER NO. 30049
CASE NO. IPC-06-
On April 27, 2006, Idaho Power Company (Idaho Power; Company) filed an
Application seeking authority to enter into financing transactions to refund up to $116 300 000
aggregate principal amount of Sweetwater County, Wyoming, Pollution Control Revenue
Refunding Bonds. With this Order the Commission approves the Company s Application as
more fully set forth below.
THE APPLICATION
The Company seeks authority to enter into financing transactions to refund an
aggregate principal amount of $116 300 000 of Sweetwater County, Wyoming, Pollution Control
Revenue Refunding Bonds consisting of Series 1996A Bonds ($68 100 000 principal amount),
Series 1996B Bonds ($24 200 000 principal amount), and Series 1996C Bonds ($24 000 000
principal amount). These bonds were issued in 1996. Case No. IPC-96-, Order No. 26521.
The bond proceeds were used to refinance prior Sweetwater County, Wyoming, Pollution
Control Revenue Bonds issued in the 1970s and 1980s to finance the acquisition, construction
and installation of air and water pollution control facilities at the Jim Bridger coal fired electric
generating plant located near Rock Springs, Wyoming.
Under the proposed refunding transaction, Sweetwater County will issue and sell up
to $116 300 000 aggregate principal amount of one or more series of the Refunding Bonds and
loan the proceeds to the Company. The loan proceeds, together with certain monies from the
Company, will be used to refund the Outstanding Bonds. This will be done in order to secure
lower average interest rate for the Refunding Bonds as compared to the Outstanding Bonds.
The interest rate may be fixed or variable, and may be convertible. Idaho Power
proposes to file by letter seven days (or as soon as possible) prior to issuance the likely range of
interest rates and other terms of the Refunding Bonds. All final documents will also be filed
with the Commission. The Company expects the Refunding Bonds to be issued on or before
ORDER NO. 30049
July 15 , 2006. The maturity date for the Refunding Bonds will be July 15, 2026, the same
maturity date as for the Outstanding Bonds. The Company proposes to enter into guarantees
pledges, letters of credit, insurance, or other agreements to insure timely payment, lend credit or
liquidity support, or enhance the credit rating for the bonds and thereby reduce interest expense.
The Company states that, under federal tax laws, it will not be able to increase the
principal amount of the Refunding Bonds to include the redemption premium on the Series
1996A Bonds, the underwriter s fees, or the costs of issuance for the Refunding Bonds.
Consequently, the Company intends to record these amounts as unamortized debt expense and
amortize them over the life of the Refunding Bonds.
STAFF REVIEW AND RECOMMENDATION
Commission Staff reviewed the Company Application and accompanying
documents. Staff recommended approval of the Application, noting that the notification
regarding the interest rate(s), as well as the proposed accounting treatment of the redemption
premium, underwriter s fees, and the costs of issuance for the Refunding Bonds are consistent
with prior practice and other security issuances by the Company. Staff recommended approval
of the Company s request to refund up to $116 300 000 aggregate principal amount of
Sweetwater County, Wyoming, Pollution Control Revenue Refunding Bonds, Series 1996A
1996B , and 1996C. Staff also recommended that the Commission acknowledge the accounting
treatment and amortization of the issuance costs, but reserve any ratemaking determination for
the next rate case.
FINDINGS OF FACT
Idaho Power was initially incorporated under the laws of the State of Maine and
subsequently migrated its state of incorporation from Maine to the State of Idaho effective June
, 1989. The Company is qualified to do business as a foreign corporation in the States of
Oregon, Nevada, Montana, and Wyoming. Idaho Power is engaged principally in the generation
purchase, transmission, distribution and sale of electric energy to residential, commercial and
industrial customers in southern Idaho and eastern Oregon.
Based on the representations in the Application, we find that the proceeds from the
issuances and sales ofthe Shares will be used for (a) the improvement or maintenance of service
(b) the discharge or refunding of its obligations, (c) the reimbursement of moneys actually
ORDER NO. 30049
expended from income or from the treasury of Idaho Power to the extent permitted, or (d) for
other purposes permitted by law.
Based on the representations in the Application, we further find that Idaho Power
proposes to enter into certain financial transactions in order to refund an aggregate principal
amount of $116 300 000 of Sweetwater County, Wyoming, Pollution Control Revenue
Refunding Bonds consisting of Series 1996A Bonds ($68 100 000 principal amount), Series
1996B Bonds ($24 200 000 principal amount), and Series 1996C Bonds ($24 000 000 principal
amount) that were issued in 1996. Case No. IPC-96-, Order No. 26521. The purpose is to
secure a lower average interest rate for the Refunding Bonds as compared to the Outstanding
Bonds.
Based on the representations in the Application, we further find that to the extent the
proceeds from the sale of the Refunding Bonds are not immediately applied to the refunding of
the Outstanding Bonds, they may be temporarily invested by the trustee in high grade, short-term
taxable securities and short-term government obligations. To achieve favorable ratings by
national bond rating agencies for the Refunding Bonds, Idaho Power may collateralize the
Refunding Bonds with its own First Mortgage Bonds or other substitute collateral. The
Refunding Bonds will be sold on a negotiated public offering basis by Sweetwater County to the
underwriters selected for the transaction (Underwriters) pursuant to a contract of purchase. The
Underwriters will receive a fee of 0.45% of the aggregate principal amount of the Refunding
Bonds offered. Idaho Power will notify the Commission by letter seven days (or as soon as
possible) prior to issuance of the likely range of interest rates and other terms of the Refunding
Bonds. All final documents will also be filed with the Commission.
The Company has paid the required fees required by Idaho Code ~ 61-905.
CONCLUSIONS OF LAW
Idaho Power Company is an electric corporation within the definition of Idaho Code
~ 61-119, and a public utility within the definition of Idaho Code ~ 61-129. The Idaho Public
Utilities Commission has jurisdiction over this matter pursuant to Title 61 , Idaho Code, Chapters
1 and 9, specifically Idaho Code ~~ 61-119, 61-129, 61-901 , and 61-902, and IDAPA
31.01.01.141-.150.
After examining the Application and Staffs comments, the Commission finds that an
evidentiary hearing in this matter is not required.
ORDER NO. 30049
The Commission further finds that the Application requesting authority to enter into
financing transactions in order to refund an aggregate principal amount of $116 300 000 of
Sweetwater County, Wyoming, Pollution Control Revenue Refunding Bonds, subject to certain
conditions, is for a lawful purpose, is within Idaho Power s corporate powers, and is generally
compatible with the public interest.
This general approval of the general purposes to which the proceeds will be put is
neither a finding of fact nor a conclusion of law that any particular program of the Company
which may be benefited by the approval of this Application has been considered or approved by
this Order, and this Order shall not be construed to that effect.
The issuance of this Order does not constitute agency determination/approval of the
type of financing or the related costs for ratemaking purposes, which determination the
Commission expressly reserves until the appropriate proceeding.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Application for authority
to enter into certain financial transactions to refund up to $116 300 000 aggregate principal
amount of Sweetwater County, Wyoming, Pollution Control Revenue Bonds is granted.
IT IS FURTHER ORDERED that Idaho Power shall file the terms of issuance with
the Commission by letter within seven days, or as soon as possible, prior to issuance and shall
promptly file all final documents with the Commission.
IT IS FURTHER ORDERED that the Commission acknowledges the Company
intent to record the redemption premium on the Series 1996A Bonds, the underwriter s fees, or
the costs of issuance for the Refunding Bonds as unamortized debt expense and to amortize them
over the life of the Refunding Bonds; however, the Commission reserves any ratemaking
determination for these amounts for the next rate case.
IT IS FURTHER ORDERED that nothing in this Order or any act or deed performed
in connection with this Order shall be construed to obligate the State of Idaho to payor guarantee
in any manner whatsoever any security authorized, issued, assumed or guaranteed under the
provisions of this Order.
IT IS FURTHER ORDERED that this authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, service, accounts, evaluation
ORDER NO. 30049
estimates or determination of costs or any other matter which may come before the Commission
pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that the issuance of this Order does not constitute
acceptance of Idaho Power Company s exhibits or other material accompanying this Application
for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of this Order with regard to any
matter decided in this Order. Within seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ~5"t'k
day of May 2006.
MARSHA H. SMITH, COMMISSIONER
~~O NER
ATTEST:
Je D. JewellCo ission Secretary
O:IPC-O6-14 dw
ORDER NO. 30049