20110621Cover Letter re Confidential Transaction.pdf

~~~OUNTAIN RE. c. ç l\!r:n. .., ,i i: ¡ .~ ".,~'"
Mark C Moench
Senior Vice President and General Counsel
101 S. Main Street, Suite 1400
Salt Lake Cit, UT 84111
801-110-459 Office
801-110-058 Fax
mark.moench(aciflcorp.com
10 lì JUN '2 \ N1' \0: '4
June 21, 2011
VI OVERNIGHT DELIVERY
Idaho Public Utilties Commssion
472 West Washington
Boise, ID 83702-5983
Attention: Jean D. Jewell
Commssion Sec
Re: PacifiCorp Notice of Subsidiar Formtion and Affliate Trasaction
Case No. P AC-E-05-8
Dea Ms. Jewell:
Ths letter will see as notice pursuat to Commtment I 17(1) and 17(2), incorporated
in the Idao Public Utilties Commission Order No. 29973 issued Febru 13, 2006, as
supplemented by Order No. 29998 March 14, 2006, in the above-referenced proceedig,
approving the acquisition ofPacifiCorp's intent to form an afliate, Fossil Rock Fuels, LLC, a
Delaware limited liabilty company ("Fossil Rock") for the purose of transacting business with
PacifiCorp's reguated operation and document an afliate transaction by vire of an Operating
Agreement that will be enter into by and between PacifiCorp and Fossil Rock in the near
futu. A copy of the draf Operatig Agreement is included as Atthment A. Rocky Mounta
Power requests confdential tratment of Atthment A, and is filing it under seal.
Fossil Rock wil be formed as a wholly-owned direct subsidiar ofPacifiCorp.
Therefore, PacifiCorp's ownership interest in Fossil Rock may create an afliated interest in
certn PacifiCorp jursdctions.
PacifiCorp intends to make a capital contrbution to Fossil Rock in the amount of
$20,020,000. Fossil Rock will use the contrbution to acquire two leases related to the
Cottonwood coal mie. PacifiCorp received the right to mie the coal mierals in the
Cottonwood mie as par of a settlement of litigation PacifiCorp brought agaist Arch Coal Sales
Company (Arch Coal) pertg to the coal supply agrement Arch Coal has with PacifiCorp.
Fossil Rock is scheduled to accept transfer of the coal leaes for the purchae price payment of
$20,020,000 and assumption of remaig lease payments in the amount of $5 milion. Ths
purchase price is equivalent to Arch Coal's original bid and obligations for these coal leases
when Arch Coal acquired them from the Utah State Institutional Trut Lands Admstration
(SITLA). The coal lease tracts are adjacent to the Company's existing, but inactive, Trail
Mounta Mine federa coal leases. These reserves will be used to supply coal to PacifiCorp coal
fired generation plants.
June 21, 2011
Jean D. Jewell
Notice of Subsidiar Formation
and Afliate Traaction
Page 2
Purchase of the Cottonwood mine leases is in the public interest to ensur the Company
has acess to quaity fuel supplies necessa for the operation of its generation plants. The
creation of a regulated subsidiar to adminster these contracts is also in the public interest, as it
benefits the Company and its customers since the coal mie is located adjacent to the Company's
existing Trail Mounta mie. PacifiCorp is formg Fossil Rock as a reguated subsidiar solely
for the purse of adsterig the Cottonwood mine leases. Fossil Rock's business activities
will be consolidated into PacifiCorp's results of operations for reporting purses.
Please do not hesitate to contact me at the above number or Ted Weston at (801) 220-
2963 if you have any questions regarding ths filing.
Very Truy,
ß(uff6.~
Mark C. Moench
Senior Vice President and General Counsel
PacifiCorp