20220523Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
CHRIS BURDIN
DATE:MAY 24,2022
RE:IDAHO POWER COMPANY'S REQUESTFOR SHELF
AUTHORIZATION TO ISSUE UP TO $1,200,000,000IN DEBT;
CASE NO.IPC-E-22-14
BACKGROUND
On May 2,2022,Idaho Power Company ("Company")filed an Application requesting
shelf authorityto sell from time to time (a)up to $1.2 Billion aggregate principal amount of one
or more series of the Company's first mortgage bonds which may be designated as secured
medium term notes (Bonds),and (b)up to $1.2 Billion aggregate principal amount of one or
more series of unsecured debt securities (Debt Securities);provided that the total principal
amount of these issuances shall not exceed $1.2 Billion.The Company requested the authority
be authorized through May 31,2025,to align with the anticipated three-yearlife of the Shelf
Registration.The required filing fees were received on May 5,2022.
The Bonds will be issued pursuant to one or more supplemental indentures to the
Mortgage and will be secured with the other First Mortgage Bonds of Idaho Power.The Bonds
and/or Debt Securities may be sold by public or private placement,directly by Idaho Power or
through agents designated from time to time or through underwriters or dealers.The types and
terms of issuance will be determinedat the time of issuance.A copy of the Shelf Registration,
any Prospectus,Prospectus Supplements,Pricing Supplements,statement of net proceeds and
any agent information along with all final documents will be filed with the Commission.The
Company is also requesting continued authorityto enter into interest rate hedging arrangements
with respect to the Bonds and/or Debt Securities includingtreasury interest rate locks,treasury
DECISION MEMORANDUM -1 -MAY 24,2022
interest rate caps,treasury interest rate collars,treasury options,forward starting interest rate
swaps and/or swaptions.
The net proceeds from the issuances will be used for the acquisition of property;
construction,extension or improvement of utility facilities;improvement or maintenance of
service;discharge or lawful refunding of its obligations;and general corporate purposes.To the
extent that the proceeds from the sale of the Bonds or Debt Securities are not immediately used,
they will be temporarily invested in short-term discounted or interest-bearing obligations.
A shelf registration allows a company to issue debt in one or more series and to take
advantage of attractive market conditions efficiently and rapidly,allowing issuances to be made
at lower cost and facilitatingongoing review.The current shelf registration authority approved
by Commission Order No.34302 expires May 31,2022.The Company currentlyhas $270
million remaining under current shelf authorityand the Company requests this authority to
remain in effect for 21 days followingthe date of the Commission's order when it would
automatically expire if no petitions for reconsideration are received.
The Company's current outstanding First Mortgage Bonds and unsecured senior debt are
currentlyrated A-and A3 by Moody's Investors Services (Moody's),and A-and BBB by
Standard and Poor's Rating Service (S&P),respectively.The existing shelf authority has a
provision that if any rating falls below investment grade (Baa3 for Moody's and BBB-for S&P)
the Company will make a filing to support the continued authority of unissued amounts.Staff
proposes this provision continue for the length of this authority.
Should all the requested authority be issued,the Company's debt load would increase
significantly.If all the debt was issued without an increase in equity,the Company's capital
structure would change from a 55%equity and 45%debt to 44%equity and 56%debt.
Assuming the Company adds to its retained earnings at the rate it has over the last three years,
the Company's capital structure would be at a 47%equity and 53%debt.
The Company has a number of capital projects that either have a current case pending
before the Commission or are planned in the Integrated Resource Plan ("IRP").In Case No.IPC-
E-22-13,the Company is requesting a Certificate of Public Convenience and Necessity for a 120
MW battery project that will be a significant capital expense.In addition,the Company's 2021
IRP filed in Case No.IPC-E-21-43 calls for 357 MW of gas resources,700 MW of wind
resources,420 MW of solar resources,and 120 MW of additional storage projects by 2025,when
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this authority would expire.These significant capital projects warrant an increase in capital
funding.
STAFF RECOMMENDATION
Staff recommends the Commission grant the requested authority for $1.2 Billion shelf
registration through May 31,2025.This will allow the authority to align with the expected SEC
authorization.
Staff recommends the Commission order the Company to make a filing supporting
continued authority if the ratings fall below investment grade.
Staff recommends the Commission order Idaho Power continue to file copies of all
documents described above by letter within seven days or as soon as possible prior to issuance.
COMMISSION DECISION
Does the Commission approve the $1.2 Billion shelf registration through May 31,2025?
Does the Commission wish to establish the filing requirements described?
seph Terry
Udmemos/IPC-E-22-14 Decision Memo
DECISION MEMORANDUM -3 -MAY 24,2022