20070411final_order_no_30294.pdf

Office ofthe Secretary
Service Date
April 11 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR AN
ORDER AUTHORIZING UP TO $450,000,000 )
AGGREGATE PRINCIPAL AMOUNT AT
ANY ONE TIME OUTSTANDING OF SHORTTERM BORRO~NGS
CASE NO. IPC-07-
ORDER NO. 30294
On March 16, 2007, Idaho Power Company (Idaho Power Company) filed an
Application requesting authorization to make up to $450 000 000 aggregate principal amount of
short-tenn borrowings. With this Order the Commission approves the Company s Application
as more fully set forth below.
THE APPLICATION
Idaho Power requests authorization to make short-tenn borrowings of up
$450 000 000 aggregate principal amount at anyone time outstanding for a period from April 1
2007 through April 1 , 2014. Idaho Power states that its short-tenn borrowings will consist of (1)
loans issued by financial and other institutions and evidenced by unsecured notes or other
evidence of indebtedness of the Company and (2) unsecured promissory notes and commercial
paper of the Company to be issued for public or private placement through one or more
commercial paper dealers or agents, or directly by the Company.
Idaho Power intends to secure commitments for new unsecured lines of credit, or
extensions of existing unsecured lines of credit, for its short-tenn borrowings. The unsecured
lines of credit may be obtained with several financial or other institutions, directly by the
Company or through an agent, when and if required by the Company s then current financial
requirements. Each individual line of credit commitment will provide that up to a specific
amount at anyone time outstanding will be available to the Company to draw upon for a fee to
be detennined by a percentage of the credit line available, credit line utilization, compensating
balance or combination thereof.
Idaho Power may also make arrangements for uncommitted credit facilities under
which unsecured lines of credit would be offered to the Company on an "as available" basis and
at negotiated interest rates. Such committed and uncommitted borrowings will be evidenced by
the Company s unsecured promissory notes or other evidence of indebtedness.
ORDER NO. 30294
Unsecured promissory notes will be issued and sold by Idaho Power through one or
more commercial paper dealers or agents, or directly by the Company, up to the limits imposed
by applicable statutes, rules or regulations. Each note issued as commercial paper will be either
discounted at the rate prevailing at the time of issuance for commercial paper of comparable
quality and maturity or will be interest bearing to be paid at maturity. Each note will have a
fixed maturity and will contain no provision for automatic "roll over.
Idaho Power plans to enter into a new credit agreement in April 2007, which will
provide a committed line of credit for short-tenn borrowings from participating banks. The
Company expects that the credit agreement will initially authorize short-tenn borrowings of up
to $300 million aggregate principal amount at anyone time outstanding, with the option of the
Company to increase the borrowing limit to $450 million during the tenn of the credit
agreement. Idaho Power further expects that the credit agreement will have an initial tenn of
five years, from April 2007 to April 2012, with the option of the Company to extend the tenn for
two one-year extensions, up to April 2014. Idaho Power will provide written notice to the
Commission in the event that the Company elects to increase the short-tenn borrowing limit
under the credit agreement above $300 000 000, or extend the tenn of the credit agreement
beyond April 2012.
Idaho Power states that its short-tenn borrowings will have maturities of one year or
less. All short-tenn borrowings under the Company s Application will mature no later than
April 1 2014.
Idaho Power s line of credit arrangements are expected to include one or more lead
agents and a number of additional banks as participating agents. The Company s proposed new
credit agreement would likely include the following fees for the lead agent(s) and participating
agents: An up-front arrangement fee payable to the lead agent(s) totaling approximately
$225 000; up-front agent participation fees payable to all participating agents totaling
approximately $87 500; annual commitment facility fees payable to all participating agents
totaling approximately $210 000 per year; and annual administrative fees payable to the lead
agent(s) of approximately $15 000 per year. Other expenses relating to the credit agreement are
estimated to include: Idaho Power outside legal fees of approximately $30 000, agent legal fees
of approximately $30 000, and miscellaneous expenses of approximately $5 000. Idaho Power
states that such fees are customary in the market and will offset the agents ' costs, including
ORDER NO. 30294
personnel time, travel and administrative costs associated with negotiating and administering the
credit agreement. Idaho Power further states that it expects to receive a reduction in the annual
fees payable under the proposed new credit agreement, as compared with its current credit
agreement fees. With respect to commercial paper issuances, Idaho Power expects that the
commercial paper dealers or agents will sell such notes at a profit to them not to exceed 1/8 of 1
percent of the principal amount of each note.
Idaho Power states the purpose for which the proposed short-term borrowings will be
made and promissory notes, commercial paper or other evidence of indebtedness issued, is to
obtain temporary short-term capital 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.
Idaho Power requests authorization to make the short-term borrowings as described
in its Application during said seven-year period, so long as the Company maintains at least a
BBB- or higher senior secured debt rating, as indicated by Standard & Poor s Ratings Services
and a Baa3 or higher rating as indicated by Moody s Investors' Service, Inc. Idaho Power
requests that if its senior secured debt rating falls below either such rating ("Downgrade ), its
short-term borrowing authority would continue for a period of 364 days from the date of the
Downgrade ("Continued Authorization Period"), provided that the Company: (1) promptly
notifies the Commission in writing of the Downgrade; and (2) files a supplemental application
with the Commission within seven (7) days after the Downgrade, requesting a supplemental
order ("Supplemental Order ) authorizing Idaho Power to continue to make short-term
borrowings and issue commercial paper as provided in the Order, notwithstanding the
Downgrade. Until Idaho Power receives the Supplemental Order, any short-term borrowings
made or commercial paper issued by the Company during the Continued Authorization Period
would become due or mature no later than the final date of the Continued Authorization Period.
ST AFF REVIEW AND RECOMMENDATION
Commission Staff reviewed the Company Application and accompanYIng
documents. Staff recommended approval of the Application with the following conditions: (1)
for ratemaking purposes, the Commission shall reserve judgment on the reasonableness of the
Company s capital costs, comparative underwriting analysis and any associated commissions
and expenses incurred for any or all security issuances; (2) in its next rate proceeding, the
ORDER NO. 30294
Company will be required to show that its capital cost, comparative underwriting analysis
embedded expenses and methods of securities marketing are just and reasonable; and (3) the
Company will promptly notify the Commission as required, related to increases in the base
amount, extension of the term and change in ratings as set forth above.
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 upon the representations in the Application, we find that the funds obtained
through the short-term indebtedness will be used for the acquisition of property; the construction
completion, extension or improvement of facilities; the improvement or maintenance of its
service; the discharge or lawful refunding of its obligations; and other corporate purposes.
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 recommendations, the Commission finds
that an evidentiary hearing in this matter is not required.
The Commission further finds that the Application requesting authorization to make
up to $450 000 000 aggregate principal amount of short-term borrowings, subject to certain
conditions, is for a lawful purpose, is within Idaho Power s corporate powers, and is generally
compatible with the public interest. The method of issuance is proper.
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.
ORDER NO. 30294
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.
The Company has paid the required fees required by Idaho Code ~ 61-905.
ORDER
IT IS HEREBY ORDERED that Idaho Power Company s Application for authority
to make up to $450 000 000 aggregate principal amount at anyone time outstanding of short-
term borrowings, for the period of April 1 , 2007 through April 1 , 2014, under the terms and
conditions and for the purposes set forth in the Application and this Order is granted.
IT IS FURTHER ORDERED that this authorization will remain in place from April
, 2007 to April 1 , 2014, provided that the Company maintains at least a BBB- or higher senior
secured debt rating, as indicated by Standard & Poor s Ratings Services, and a Baa3 or higher
rating as indicated by Moody s Investors' Service, Inc. If Idaho Power s senior secured debt
rating falls below either such rating ("Downgrade ), the Company s authority to incur short-term
borrowings and issue commercial paper as provided in this Order will not terminate, but instead
such authority will continue for a period of 364 days from the date of the Downgrade
Continued Authorization Period"), provided that Idaho Power: (1) promptly notifies the
Commission in writing of the Downgrade; and (2) files a supplemental application with the
Commission within seven (7) days after the Downgrade, requesting a supplemental order
Supplemental Order ) authorizing the Company to continue to make short-term borrowings
and issue commercial paper as provided in the Order, notwithstanding the Downgrade. Until the
Company receives the Supplemental Order, any short-term borrowings made or commercial
paper issued by Idaho Power during the Continued Authorization Period will become due or
mature no later than the final date of the Continued Authorization Period. Subject to the
foregoing proviso regarding a Downgrade, no additional authorization is required to carry out
this transaction and no Supplemental Order will be issued.
IT IS FURTHER ORDERED that Idaho Power file, as soon as available, final
exhibits as set forth in its Application.
IT IS FURTHER ORDERED that Idaho Power will promptly notify the Commission
regarding increases in the base amount, extension of the term, and change in ratings as set forth
in the Application and this Order.
ORDER NO. 30294
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
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. For ratemaking purposes, the
Commission shall reserve judgment on the reasonableness of the Company s capital costs
comparative underwriting analysis and any associated commissions and expenses incurred for
any or all security issuances. In its next rate proceeding the Company will be required to show
that its capital cost, comparative underwriting analysis, embedded expenses, and methods of
securities marketing are just and reasonable.
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.
ORDER NO. 30294
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of April 2007.
P AU KJELLAN E , PRESIDENT
............
MARSHA H. SMITH, COMMISSIONER
MACK A. REDFO
ATTEST:
O:IPC-07-
ORDER NO. 30294