20150914final_order_no_33375.pdf

Office of the Secretary
Service Date
September 14,2015
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR )CASE NO.IPC-E-15-23
AUTHORITY TO INCUR SHORT-TERM )
DEBT IN AN AGGREGATE PRINCIPAL )
AMOUNT OF UP TO $450,000,000 AT ANY )ORDER NO.33375
ONETIME )
On August 14,2015,Idaho Power Company (the Company)applied for authority to
incur short-term debt in an aggregate principal amount of up to $450,000,000 at any one time.
The Company essentially seeks to renew its current short-term borrowing authority,which the
Commission approved in Order No.32343,Case No.WC-E-l1-12 (the “Current Order”),
through November 30,2022.The Commission Staff has reviewed the Application and
recommended we approve it.
Based on our review of the record,we issue this Order approving the Application as
noted below.
THE APPLICATION
The Company is an electric public utility that serves southern Idaho and eastern
Oregon.With this Application,the Company seeks the authority to obtain loans evidenced by:
(1)unsecured notes or other instruments of indebtedness;and (2)unsecured promissory notes
and commercial paper of the Company to be publicly or privately issued through commercial
paper dealers or agents,or directly by the Company.
The Company explains that it intends to obtain bank commitments for new unsecured
credit lines,or extensions of existing unsecured credit lines,that would enable the Company to
borrow up to a specific amount of funds at any one time for a fee based on a percentage of the
credit line available,credit line utilization,compensating balance,or a combination thereof.The
Company states that it may also arrange for uncommitted credit lines in which lenders would
offer unsecured loans of no specific amount on an “as available”basis at negotiated interest
rates.
The Company’s borrowings would be reflected in unsecured promissory notes or
other evidence of indebtedness.The Company states that each note issued as commercial paper
would be discounted at the rate prevailing at issuance for commercial paper of comparable
ORDER NO.33375 1
quality and maturity,or will bear interest to be paid at maturity.Each note also would have a
fixed maturity date without an automatic “roll over”provision.The note would mature in one
year or less,or would involve a revolving loan facility with a final maturity date no later than
November 30,2022.The Company seeks authorization to borrow money at any time,so long as
the loans and associated commercial paper mature by November 30,2022.
Presently,the Company’s main short-term borrowing agreement is a Credit
Agreement dated October 26,2011,that was last amended on July 9,2015,and will expire on
October 26,201$(the “Credit Agreement”).Banks that participated in the Credit Agreement
have committed to loan the Company a total principal amount of $300,000,000 at any one time
outstanding.The Company can opt to increase this amount to $450,000,000.
With this Application,the Company proposes to amend the Credit Agreement,or to
enter into a new credit agreement in about November 2015 (the “New Credit Agreement”).The
New Credit Agreement would provide for committed credit lines as described above,and would
extend through November 2020 with two,one-year extension options through November 2022.
The Company explains that it would use the New Credit Agreement primarily as a backup credit
facility to enhance credit ratings for its commercial paper issuances,but that it may also borrow
directly under the New Credit Agreement.The Company states it will file a copy of the New
Credit Agreement with the Commission when that agreement is executed.The Company also
will notify the Commission if the Company elects to increase the borrowing limit under the New
Credit Agreement above $300,000,000,or to extend the New Credit Agreement’s term beyond
November 2020.
The Company expects that its borrowing arrangements will involve lead agents and a
number of additional banks as participating agents.The Company states that the New Credit
Agreement would likely require the Company to pay the following agency fees:(1)an up-front
arrangement fee payable to the lead agent(s)totaling about 0.10%to 0.20%of the principal
amount committed;(2)up-front agent participation fees payable to all participating agents
totaling approximately 0.10%to 0.15%of the principal amount committed;(3)annual
commitment facility fees payable to all participating agents equal to about 0.15%to 0.25%of the
principal amount committed;and (4)annual administrative fees payable to the lead agent(s)of
about $15,000 to $30,000.For purposes of calculating the agent fees,principal amount
committed will be $300,000,000 unless the Company opts to increase its authorized borrowing
ORDERNO.33375 2
amount to $450,000,000.as described above.The Company estimates to incur other expenses
related to the New Credit Agreement,including $50,000 in outside legal fees for the Company,
$50,000 in agent legal fees,and $25,000 in miscellaneous expenses.The Company states that
these fees are customary in the market and will offset the agents’costs,including personnel time,
and travel and administrative costs associated with negotiating and administering the New Credit
Agreement.With respect to commercial paper issuances,the Company expects the commercial
paper dealers or agents will sell such notes at a profit of not more than 1/8 of 1%of each note’s
principal amount.
The Company plans to borrow money and issue debt as described above to obtain
temporary capital for general corporate purposes and to enable the Company to acquire property;
build,complete,extend,or improve facilities;improve or maintain its service;discharge or
lawfully refund its obligations.
The Company requests that the Commission authorize it to borrow money and issue
debt as described above so long as the Company maintains at least a BBB-or higher corporate
credit rating,as indicated by Standard &Poor’s Ratings Services,and a Baa3 or higher long-
term issuer rating,as indicated by Moody’s Investors’Service,Inc.The Company also requests
that if its rating falls below either such rating (“Downgrade”),its short-term borrowing authority
would continue for 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 the Company to continue to make
short-term borrowings and issue commercial paper as provided in the
Commission’s then outstanding short-term borrowing order,
notwithstanding the Downgrade.
Until the Company 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.
STAFF REVIEW AND RECOMMENDATION
Staff reviewed the Company’s Application and confirmed that the Company paid the
fees required pursuant to Idaho Code §61-901 et seq.Staff recommended the Commission
ORDERNO.33375 3
approve the Company’s Application and proposed short-term borrowing authority,up to
$450,000,000 in total,for the period through November 30,2022.Staff also recommended the
proposed filing requirements be adopted.Lastly,Staff recommended the authority under this
approval be continuing (without further order required)provided the Company maintains senior
secured debt ratings that are investment grade,BB3-/Baa3.
DISCUSSION AND FINDINGS
The Commission finds that the Company is an Idaho corporation,an electric
corporation within the definition of Idaho Code §61-119,and a public utility within the
definition of Idaho Code §61-129.The Commission has jurisdiction over this Application
pursuant to the provisions of Idaho Code §61-901,et seq.
The Commission finds that the Company’s Application should be approved.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 the Company has paid all fees required by
Idaho Code §61-905.Further,the proposed issuance is for a lawful purpose,is within the
Company’s corporate powers,and is compatible with the public interest.
The issuance of an Order authorizing the proposed financing does not constitute
agency determinationlapproval of the type of financing or the related costs for ratemaking
purposes,which determination the Commission expressly reserves until the appropriate
proceeding.
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
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 electric service to
consumers in the State of Idaho.
ORDER
IT IS HEREBY ORDERED that the Company’s Application is granted.The
Company may make up to $450,000,000 aggregate principal amount at any one time outstanding
of short-term borrowings through November 30,2022,under the terms and conditions and for
the purposes set forth in the Company’s Application and this Order.The Company’s borrowing
authority under this Order will replace its existing borrowing authority under the Current Order;
ORDER NO.33375 4
at no time will the authorized borrowing levels under the Current Order and this Order exceed
$450,000,000 aggregate principal amount at any one time outstanding.
IT IS FURTHER ORDERED that this authorization will remain in place through
November 30,2022,provided that the Company maintains at least a BBB-or higher corporate
credit rating,as indicated by Standard &Poor’s Ratings Services,and a Baa3 or higher long-
term issuer rating,as indicated by Moody’s Investors’Service,Inc.If a Downgrade occurs,the
Company’s authority to incur short-term borrowings and issue commercial paper as provided in
this Order will not terminate,but instead will continue for the Continued Authorization Period,
provided 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 authorizing
the Company to continue to make short-term borrowings and issue
commercial paper as provided in the Commission’s then outstanding
short-term borrowing order,notwithstanding the Downgrade.
Until the Company receives the Supplemental Order,any short-term borrowings
made or commercial paper issued by the Company 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 relating to a Downgrade,no additional
authorization is required to carry out this transaction and no Supplemental Order will issue.
IT IS FURTHER ORDERED that the Company must notify the Commission in
writing if:(I)the Company will increase the credit limit beyond $300,000,000;or (2)the
Company will exercise either of the one-year extensions beyond November 2020.The Company
must provide such notice to the Commission at least seven (7)days before the referenced event is
to occur (or,if the required information is then unavailable,as soon as thereafter as possible).
IT IS FURTHER ORDERED that the Company file,as soon as available,final
exhibits as set forth in its Application.
IT IS FURTHER ORDERED that the foregoing authorization is without prejudice to
the regulatory authority of the Commission with respect to rates,utility capital structure,service
accounts,valuation,estimates for determination of cost or any other matter which may come
before this Commission pursuant to its jurisdiction and authority as provided by law.
ORDER NO.33375 5
IT IS FURTHER ORDERED that nothing in this Order and no provisions of Chapter
9,Title 61,Idaho Code,or any act or deed done or performed in connection with this Order shall
be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any
security authorized,issued,assumed,or guaranteed under the provisions of Chapter 9,Title 61
Idaho Code.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of the Company’s exhibits or other material accompanying the Application for any
purpose other than the issuance of this Order.
THIS IS A FINAL ORDER.Any person interested in the Order (or in issues decided
by this Order)may petition for reconsideration within twenty-one (21)days of the service date of
this Order with regard to any matter decided in this Order and in this case.Within seven (7)days
after any person has petitioned for reconsideration,any other person may cross-petition for
reconsideration.See Idaho Code §6 1-626 and 62-619.
DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this
day of September 2015.
PAUL KJEL D R,PRESIDENT
MARSHA H.SMITH,COMMISSIONER
A
KRITINE RAPER,CGMMIS$IONER
ATTEST:
ommission Secretary
O:IPC-E-I 5-23_kk
ORDERNO.33375 6