20120605Notice of Affiliate Transaction.pdf

Mark C. Moench
Senior Vice President and General Counsel
201 .S Main Street, Suite 2400
PACIFICORP Salt Lake City, UT 84111
801-220-4459 Office
A MIOAMERCAN ENERGY HOLDINGS COMIW4Y 801-220-4058 Fax
[e-mail]
June 5, 2012
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VIA OVERNIGHT DELIVERY Ei5 c.
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Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983 rn
Attention: Jean D. Jewell
Commission Secretary
Re: PacifiCorp Notice of Affiliate Transaction
Case No. PAC-E-05-8
Dear Ms. Jewell:
This letter will serve as notice pursuant to Commitment 117(2), incorporated in the
Idaho Public Utilities Commission Order No. 29973 issued February 13, 2006, as supplemented
by Order No. 29998 March 14, 2006, in the above-referenced proceeding, approving the
acquisition of PacifiCorp by MidAmerican Energy Holdings Company ("MEHC"), of an affiliate
interest transaction with Wells Fargo Bank, N.A. and Wells Fargo Securities, LLC (Wells
Fargo). PacifiCorp (the Company) has selected Wells Fargo to be one of three passive joint lead
arrangers as well as a lender under a revolving credit agreement that the Company intends to
enter into in the near future. In addition, the Company anticipates that Wells Fargo will serve as
one of the three active lead arrangers as well as a lender under a separate revolving credit
agreement that is expected to be entered into during the first half of 2013.
Included with this filing are two supporting documents, to which Wells Fargo will be a
party. A copy of the draft Confidential Joinder Agreement is included as Attachment A. A copy
of the draft Confidential Additional Arranger Fee Letter is included as Attachment B. These
Confidential Attachments contain commercially-sensitive information, and the Company
requests they be kept confidential and under seal. These documents contain "draft" designations,
which will be removed prior to their execution. No material changes are expected to the terms
and conditions of these letters. PacifiCorp also expects to enter into an Engagement Letter with
Wells Fargo related to the 2013 credit agreement and will separately file the form of that
agreement when available.
PacifiCorp is a wholly-owned indirect subsidiary of MidAmerican Energy Holdings
Company (MEHC). MEHC is a subsidiary of Berkshire Hathaway, Inc (Berkshire Hathaway).
As of March 31, 2010, Warren E. Buffet (an individual who may be deemed to control Berkshire
Hathaway), Berkshire Hathaway, various subsidiaries of Berkshire Hathaway and various
Idaho Public Utilities Commission
June 5, 2012
Page 2
employee benefit plans of Berkshire Hathaway subsidiaries together held an interest in excess of
5 percent in Wells Fargo common stock. Therefore, Berkshire Hathaway's ownership interest in
Wells Fargo may create an affiliated interest in some PacifiCorp jurisdictions.
PacifiCorp intends to enter into two new revolving credit agreements over the next nine
to 12 months as part of an overall plan to replace existing facilities that expire over the same
approximate time period. In anticipation of the replacement process, PacifiCorp and its parent
company, MEHC, held discussions with and solicited proposals from a number of banks
concerning replacing PacifiCorp's credit agreements. Several banks, including Wells Fargo,
provided information on bank market conditions, structural considerations including tenors and
impact on pricing and fees, syndication strategies, arrangement and upfront fees, experience in
arranging comparable facilities for utilities and other corporate borrowers and other
considerations.
The Company selected Wells Fargo as one of six lead arrangers that will be engaged to
assist PacifiCorp in arranging the two new revolving credit agreements. The selection of Wells
Fargo as one of the six lead arrangers was based on their experience in syndicating comparable
facilities for utilities, knowledge of current bank market conditions, credit ratings, willingness to
make significant credit commitments to PacifiCorp, knowledge of the utility industry, the
Company and its operations, successful outcomes in prior financing transactions for the
Company and reasonable arrangement and other fees.
The selection of Wells Fargo was not influenced by Berkshire Hathaway's ownership
interest. Wells Fargo's fees will be equal to the fees paid to three of the five other lead arrangers
(while one bank will be paid slightly more and one bank slightly less due to expected roles and
work) and at what PacifiCorp believes to be market rates or better for the Company.
PacifiCorp anticipates Wells Fargo's arrangement and upfront fees will be approximately
$155,000. In addition, Wells Fargo will be paid an ongoing commitment fee at the same rate as
all other banks in the facilities.
As a public utility, the Company is expected to acquire, construct, improve, and maintain
sufficient utility facilities to serve its customers adequately and reliably at reasonable cost.
Revolving credit agreements and borrowings thereunder are part of a program to finance the
Company's facilities taking into consideration prudent capital ratios, earning coverage tests and
market uncertainties as to the relative merits of the various types of securities the Company
could sell. Accordingly, the transaction with Wells Fargo is consistent with the public interest.
Please do not hesitate to contact me if you have any questions.
Best Regards,
7J
Mark C. Moench
Senior Vice President and General Counsel
PacifiCorp
Enclosures
ATTACHMENTS A AND B ARE CONFIDENTIAL
AND PROVIDED UNDER SEPARATE COVER