20110830final_order_no_32343.pdf

Office of the Secretary
Service Date
August 30,201 1
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR AN )CASE NO.IPC-E-11-12
ORDER AUTHORIZING UP TO $450,000,000 )
AGGREGATE PRINCIPAL AMOUNT AT )
ANY ONE TIME OUTSTANDING OF )ORDER NO.32343
SHORT-TERM BORROWINGS )
On July 1,2011,Idaho Power Company applied to the Commission for an Order
authorizing the Company to borrow short-term debt up to $450,000,000 aggregate principal
amount at any one time.On July 29,2011,the Company filed a request that the disposition
period for this case commence on July 29,2011 to allow the Company to provide for proper
newspaper notices as required.’Having considered the Company’s Application and exhibits,the
Commission enters this Order granting the Company’s Application.
THE APPLICATION
The Company describes borrowings under the requested authority as (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.Any short-term borrowings will have maturities
of one year or less.
Idaho Power intends to secure commitments for new unsecured lines of credit,or
extensions of existing unsecured lines of credit,for its short-term 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 any one time outstanding will be available to the Company to draw upon for a fee to
be determined by a percentage of the credit line available,credit line utilization,compensating
balance or combination thereof.
This Order uses the term “Application”to collectively mean the Company’s July 1,2011 Application and July 29,
2011 extension request.
ORDER NO.32343 1
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.
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 October of 2011,which
will provide a committed line of credit for short-term borrowings from participating banks.The
Company expects that the credit agreement will initially authorize short-term borrowings of up
to $325,000,000 aggregate principal amount at any one time outstanding,with the option of the
Company to increase the borrowing limit to $450,000,000 during the term of the credit
agreement.Idaho Power further expects that the credit agreement will have an initial term of
five years,from October 2011 to October 2016,with the option of the Company to extend the
term for two one-year extensions,up to October 2018.Idaho Power will provide written notice
to the Commission in the event that the Company elects to increase the short-term borrowing
limit under the credit agreement above $325,000,000,or extend the term of the credit agreement
beyond October 2016.
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:(1)an up-front arrangement fee payable to the lead agent(s)totaling approximately .15%
to .25%of the principal amount committed;(2)up-front agent participation fees payable to all
participating agents totaling approximately .25%of the principal amount committed;(3)annual
commitment facility fees payable to all participating agents equal to approximately .15%to .25%
of the principal amount committed;and (4)annual administrative fees payable to the lead
agent(s)of approximately $20,000 to $30,000.The principal amount committed for purposes of
calculating the agent fees will be $325,000,000,unless the authorized borrowing amount under
ORDER NO.32343 2
the credit agreement is increased as described above,up to a maximum of $450,000,000.Other
expenses relating to the credit agreement are estimated to include:Idaho Power outside legal fees
of approximately $100,000,agent legal fees of approximately $50,000,and miscellaneous
expenses of approximately $25,000.
Idaho Power states that the above referenced Credit Agreement fees are customary in
the market and will offset the agents costs,including personnel time,travel and administrative
costs associated with negotiating and administering the credit agreement.With respect to
commercial paper issuances,Idaho Power expects that the commercial paper dealer or agents
will sell such notes at a profit to them of not to exceed 1/8 of 1 percent of the principal amount of
each note.
The Company requests this borrowing authority be continuing for the seven-year
period so long as Idaho Power’s senior secured debt rating is investment grade,at least BBB-or
higher by Standard &Poor’s and Baa3 or higher by Moody’s Investors’Service.If the
Company’s senior secured debt rating falls below investment grade,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 borro wings and issue commercial paper as provid ed 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.
The Company will use the net proceeds to obtain temporary capital for one or more of
the following purposes:(a)the Company’s acquisition,construction,completion,extension or
improvement of facilities,(b)the improvement or maintenance of service,(c)discharge or
refunding of obligations,and (d)for general corporate purposes.
STAFF RECOMMENDATION
Staff recommended approval of the proposed short-term borrowing authority up to
$450,000,000 in total,for the period of October 1,2011 to October 1,2018.Staff recommended
ORDER NO.32343 3
the proposed filing requirements be adopted.Staff also recommended the authority under this
initial approval be continuing (without further order required)provided the Company maintains
senior secured debt ratings that are investment grade,BBB-/Baa3.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Idaho Power is an Idaho corporation with its principal office in Boise,Idaho.The
Company is an electric corporation as defined by Idaho Code §61-119,and a public utility as
defined in Idaho Code §61-129.
The Commission has jurisdiction over this matter under Idaho Code §61-901,et seq.
The Company’s Application reasonably conforms to Rules 141 through 150 of the Commission’s
Rules of Procedure (IDAPA 31.01.01.141-150),and that the Company has paid all fees required
by Idaho Code §61-905.
After examining the Application and Staff’s recommendation,the Commission finds
that the proposed transaction is in the public interest and a formal hearing on this matter is not
required.
The Company proposes to issue securities2 for lawful purposes under Idaho Code §
61-901,and the proposed issuance is within the Company’s corporate powers.The
Commission’s approval of the issuance is not a finding of fact or a conclusion of law that the
particular use to which these funds are to be put is approved by this Order.The issuance of an
Order authorizing the proposed issuance does not constitute agency determination or approval of
the type of financing or the related costs for ratemaking purposes.The Commission does not
have before it for determination in this case and therefore does not determine the effect of
issuance on rates to be charged by the Company for service to Idaho consumers.
ORDER
IT IS HEREBY ORDERED that the Company’s Application is granted.
IT IS FURTHER ORDERED that the Company is authorized to issue securities and
apply the proceeds therefrom in the manner and for the purposes described in the Application.
Specifically,the Company may borrow short-term debt up of up to $450,000,000 in aggregate
principal amount at any one time,as specified in the Application.Such authority will remain in
effect until October 1,2018,so long as the Company maintains senior secured debt ratings of at
2 When discussing securities,this Order uses the term “issue”(and forms thereof)to mean “issue,assume,or
guarantee”securities as referenced in Idaho Code §61-901,ci seq.
ORDER NO.32343 4
least BBB-by Standard &Poor’s Rating Services and Baa3 or by Moody’s Investors’Service,
Inc.
IT IS FURTHER ORDERED that this authorization will remain in place from
October 1,2011 to October 1,2018,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 borro wings and issue commercial paper as provided in the
Order,notwithstanding the Downgrade.Until the Company receives the
Supplementation 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 ordering paragraph 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 the Company must notify the Commission in
writing if:(1)the Company will increase the credit limit beyond $325,000,000;or (2)the
Company will exercise either of the one-year extensions beyond October 1,2016.The Company
must provide such notice to the Commission at least seven (7)days before the referenced event is
to occur (or,if the required information is then unavailable,as soon as thereafter as possible).
IT IS FURTHER ORDERED that the Company shall file the following documents
with the Commission as soon as they become available:verified copies of any agreement entered
into in connection with the issuance of any security pursuant to this Order.
IT IS FURTHER ORDERED that the foregoing authorization is without prejudice to
the regulatory authority of the Commission with respect to rates,utility capital structure,service
ORDER NO.32343 5
accounts,valuation,estimates for determination of cost 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 nothing in this Order and no provisions of Chapter
9,Title 61,Idaho Code,or any act or deed done or performed in connection with this Order shall
be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any
security authorized,issued,assumed,or guaranteed under the provisions of Chapter 9,Title 61
Idaho Code.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of the Company’s exhibits or other material accompanying the Application for any
purpose other than the issuance of this Order.
THIS IS A FINAL ORDER.Any person interested in this Order (or in issues finally
decided by this Order)or in interlocutory Orders previously issued in this case 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 or in interlocutory Orders previously issued in this case.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.32343 6
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of August 2011.
PAUL KJEL AN ,PRESIDENT
Nj
MACK A.REDFORD,COMMISSIONER
MARSHA H.SMITH,COMMISSIONER
ATTEST:
1 /7!)
Jn D.Jewell(j
Commission Secretary
O:IPCE-1 I-l2kk
ORDER NO.32343 7