20120619Notice of Affiliate Transaction.pdf

I PACIFICORP
A MIDAMERICAN ENERGY HOLDINGS COMPANY
Mark C. Moench
Senior Vice President and General Counsel
201 S. Main Street, Suite 2400
Salt Lake City, UT 84111
801-220-4459 Office
801-220-4058 Fax
[e-mail]
June 19, 2012
VIA OVERNIGHT DELIVERY
Idaho Public Utilities Commission
472 West Washington 0..
Boise, ID 83702-5983
Attention: Jean D. Jewell h
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). 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 is one supporting document, a letter agreement (Letter
Agreement), to which Wells Fargo will be a party. A copy of the draft confidential Letter
Agreement is included as Attachment A. Through this Letter Agreement PaciflCorp expects that
Wells Fargo will be an arranger (along with five other banks) for a revolving credit agreement
that is expected to be entered into during the first half of 2013. This Confidential Attachment
contains commercially-sensitive information, and the Company requests they be kept
confidential and under seal. This document contains a "draft" designation, which will be
removed prior to execution. No material changes are expected to the terms and conditions of this
Letter Agreement.
PacifiCorp is a wholly-owned indirect subsidiary of MidArnerican 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
Idaho Public Utilities Commission
June 19, 2012
Page 2
Hathaway), Berkshire Hathaway, various subsidiaries of Berkshire Hathaway and various
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 twelve 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, PaciflCorp 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 PaciflCorp, 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 Letter Agreement solidifies the
arrangers for the revolving credit agreement to be entered into during the first half of 2013, with
Wells Fargo expected to be one of the arrangers.
The selection of Wells Fargo was not influenced by Berkshire Hathaway's ownership
interest. Wells Fargo's arrangement fee 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 fee related to the second credit
agreement will be approximately $87,500. In addition, Wells Fargo will be paid upfront and
ongoing commitment fee at a rate to be determined but is expected to be the same rate as other
banks in the second facility.
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.
Idaho Public Utilities Commission
June 19, 2012
Page 3
Please do not hesitate to contact me if you have any questions.
Best Regards,
Mark C. Moench
Senior Vice President and General Counsel
PacifiCorp
Enclosures
ATTACHMENT A IS CONFIDENTIAL AND PROVIDED UNDER SEPARATE COVER