20120912Notice of Affiliate Transaction.pdf

14PACIFICORP
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
801-2204058 Fax
marL,noenchpacsficorp.com
September 12, 2012
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Idaho Public Utilities Commission t
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472 West Washington r'.i m
Boise, ID 83702-5983
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 I 17(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. PacifiCorp d.b.a. Rocky Mountain Power ("PaciflCorp" or the "Company")
hereby submits an original and seven (7) copies of the Indemnity Agreement (Agreement) to be
executed by and between PacifiCorp and National Indemnity Company (NTCO). A copy of the
Agreement is included with this Notice as Attachment A.
PaciflCorp and NICO are both wholly-owned, indirect subsidiaries of MidAmerican
Energy Holdings Company (MEHC). MEHC's ownership interest in the Company and Kern
River may create an affiliated interest in some PacifiCorp jurisdictions.
NICO offers various property and casualty insurance products, including professional
liability and specialty risk coverage. PacifiCorp desires to purchase surety bonds from NICO for
various business needs and will replace surety bonds currently being provided from a more
costly vendor. PaciflCorp worked with its insurance broker to select NIICO as the appropriate
vendor for the Company's surety bond needs. The broker determined that there were a total of
three companies offering surety bonds. One of these companies did not offer reclamation bonds,
which is a key component of PacifiCorp's business operations. The remaining two companies
were PacifiCorp's current vendor and NICO. PacifiCorp selected NICO for its ability to provide
the same amount of coverage for a significant savings over what the Company is currently
paying.
Idaho Public Utilities Commission
September 12, 2012
Page 2
PacifiCorp anticipates spending approximately $123,000 per year for surety bonds
provided by NICO. This represents an approximate $83,000 savings over coverage provided by
the current vendor. Bonds will be transitioned to NICO as they expire with the current vendor.
PacifiCorp must purchase surety bonds to meet contractual and regulatory obligations.
The Company is able to purchase surety bonds from NICO at the same coverage for less
expense. Accordingly, the transaction with NICO is consistent with the public interest.
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
INDEMNITY AGREEMENT
Bond No.
WHEREAS, (hereinafter called UNDERSIGNED) has requested
National Indemnity Company (hereinafter called SURETY) to execute as surety the bond that is
attached to this Agreement (hereinafter called BOND); and
WHEREAS, the UNDERSIGNED by executing this Agreement represents that it has a
material and beneficial interest in the obtaining of the BOND.
NOW, THEREFORE, in consideration of the execution of the BOND, the UNDERSIGNED,
for itself, its respective personal representatives, successors and assigns, covenants and agrees
with respect to the BOND that:
This Agreement binds the UNDERSIGNED to SURETY with respect to the BOND.
2.The UNDERSIGNED agrees to pay in advance an annual premium of
$ the BOND and agrees to continue to pay the annual premium until SURETY is
fully discharged and released from any and all liability on the BOND and satisfaction by the
UNDERSIGNED of its obligations to SURETY under this Agreement.
3.The UNDERSIGNED shall indemnify SURETY and hold it harmless from and
against all claims, damages, suits, expenses, losses, costs, professional and consulting fees,
disbursements, interests, attorney fees, and expenses of every nature (including premiums and fees
due for the issuance and continuance of the BOND) which the Surety may sustain, incur or become
liable for by reason of having executed or procured the BOND, or by making any investigation of any
matter concerning the BOND, or by prosecuting or defending any action in connection with the
BOND, or by recovering any salvage or enforcing this Agreement. In the event SURETY advances
funds for the benefit of the UNDERSIGNED in connection with work subject to the BOND
(hereinafter sometimes referred to as BONDED CONTRACT) and/or for the discharge of obligations
incurred in connection with a BONDED CONTRACT, such advances shall be deemed losses" under
the terms of this Agreement whether or not such advances have been so used by the
UNDERSIGNED.
4.(A) At SURETY's sole discretion, SURETY may demand and, upon SURETY's
demand, the UNDERSIGNED shall deliver over to SURETY collateral security acceptable to
SURETY and equal in value to any reserve set up by SURETY to cover any contingent losses and
any subsequent increase thereof. SURETY shall return to the UNDERSIGNED any unused portion
of collateral upon termination of the liability of SURETY on the BOND and satisfaction by the
UNDERSIGNED of its obligations to SURETY under this Agreement.
(B) All payments received for or on account of a BONDED CONTRACT, and all
monies due and to become due under any such contract or contracts, whether in the possession of
the UNDERSIGNED or otherwise, are trust funds, in which SURETY has an interest, for the payment
of obligations incurred in the performances of such contract and for labor, materials and services
furnished in the prosecution of the work provided in such contract or any extension of modification
thereof.
5.The SURETY may settle or compromise any claim, liability, demand, suit or
judgment upon the BOND executed or procured by it, and any such settlement or compromise shall
be binding upon the UNDERSIGNED. The vouchers or other evidence of payments made by
SURETY shall be prima facie evidence of the fact and amount of the liability of the UNDERSIGNED
to SURETY.
6.The SURETY shall be entitled to reimbursement from UNDERSIGNED immediately
upon making payments or upon incurring any costs, losses or expenses in connection with the
BOND.
7.The UNDERSIGNED shall furnish to SURETY such information as it may request
concerning any BONDED CONTRACT, and the UNDERSIGNED hereby authorizes those with
whom such contracts are made to furnish to SURETY all information concerning such contracts and
the work thereunder. The SURETY may from time to time, in its sole discretion, examine the books
and records of the UNDERSIGNED.
8.(A) In the event (i) the UNDERSIGNED is declared to be in default in the
performance of a BONDED CONTRACT or (ii) the UNDERSIGNED shall breach any terms or this
Agreement (hereinafter collectively referred to as "EVENT OF DEFAULT"), then the UNDERSIGNED
does hereby assign to SURETY all its right, title and interest to: (a) all payments, monies and
properties that may become payable on a BONDED CONTRACT; (b) all supplies, equipment and
material used in performance of a BONDED CONTRACT; and (c) all subcontracts related to work
under a BONDED CONTRACT and all surety BOND securing the performance of, or the discharge
of obligations incurred in connection with, such subcontracts. In addition, in any such event
aforesaid, SURETY, at its option and in its sole discretion, may take possession of all or any part of
the work under any or all BONDED CONTRACTS, and at the expense of the UNDERSIGNED
complete, or cause the completion of, such work, or re-let, or consent to the re-letting or completion
thereof. Upon the happening of an EVENT OF DEFAULT, SURETY shall have the right to take
immediate possession of the supplies, tools, plant, equipment, and materials and to use, and
consume, if necessary, the same in the performance of any BONDED CONTRACT by itself or by
others.
(B) Upon the happening of an EVENT OF DEFAULT, the UNDERSIGNED
authorizes and empowers SURETY, or any person or persons designated by SURETY, to execute in
the name of the UNDERSIGNED any agreements deemed necessary or desirable by SURETY to
provide absolute title to SURETY of any funds, property and rights as are hereby assigned,
transferred or conveyed; and the UNDERSIGNED hereby authorizes SURETY, or such person or
persons designated by SURETY, to take immediate possession of such funds, property, and rights,
to collect such sums as may be due from the UNDERSIGNED or other person, and to endorse, in
the name of the UNDERSIGNED, and to collect any checks, drafts, warrants and other agreements
made and issued in payment of any such funds. The SURETY is authorized to assert and prosecute
any right of claim hereby assigned, transferred or otherwise conveyed in the name of the
UNDERSIGNED and to compromise and settle any such right or claim on such terms as it considers
reasonable under the circumstances in its sole and absolute discretion, subject only to the
requirement that it act in good faith, which shall be defined as the absence of deliberate or willful
malfeasance. The SURETY may sell any property assigned to it pursuant to this Agreement at
public or private sale, with or without notice, at any time or place, without incurring any liability of any
kind. The SURETY may purchase any of the property at such sale. SURETY shall not incur any
liability to any of the UNDERSIGNED in the exercise of the rights granted by this Section 7, except
for deliberate and willful malfeasance.
9.The UNDERSIGNED shall not, while the BOND shall be outstanding and shall not
have been released or discharged to SURETY's satisfaction, take any action that would affect or
diminish the rights of SURETY under this Agreement.
10.The UNDERSIGNED waives notice of default or any other acts giving rise to a claim
under the BOND or liability of SURETY under the BOND.
11.If any provision or provisions of this Agreement be void or unenforceable under the
laws of any place governing its construction or enforcement, this Agreement shall not be void or
vitiated thereby, but shall be construed and enforced with the same effect as though such provision
or provisions were omitted. All rights and remedies of SURETY under this Agreement shall be
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cumulative, and the exercise of or failure to exercise any particular right or remedy at any time shall
not be considered to be an election of remedy or a waiver of any other right or remedy. The rights,
powers and remedies afforded SURETY by the terms of this Agreement are in addition to, and not in
lieu of, any and all right rights, powers, and remedies which SURETY may have or acquire against
the UNDERSIGNED or others whether by the terms of any other agreement or by operation of law.
12.This Agreement constitutes both a security agreement to SURETY and also a
financing statement, in accordance with the provisions of the Uniform Commercial Code of every
jurisdiction wherein such Code is in effect. The filing or recording of this Agreement shall be solely at
the option of SURETY, and may be filed by SURETY without in any way subrogating, restricting or
limiting the rights of SURETY under this Agreement, under law or in equity. The failure to file this
Agreement shall not release or excuse any of the obligations of the UNDERSIGNED under this
Agreement. The SURETY may add schedules to this Agreement, describing specific items of
security covered by this Agreement. For the purpose of recording this Agreement, a photocopy
acknowledged before a Notary Public to be a true copy hereof shall be regarded as an original. The
SURETY, when recording this Agreement, may also prepare, execute, and file a UCC-1 form
pursuant to the power of attorney granted to SURETY under this Agreement.
13.The UNDERSIGNED hereby irrevocably constitute and appoint SURETY as its true
and lawful attorney with the right, but not the obligation, to exercise all of the rights of the
UNDERSIGNED assigned, transferred and conveyed to SURETY in this Agreement; hereby giving
and granting to SURETY full power and authority to make, execute, endorse and deliver any
agreements for the full protection intended to be given to SURETY hereunder as the
UNDERSIGNED might or could do.
14.This Agreement, its riders and addenda may be executed in separate counterparts,
none of which need contain signatures of all parties, each of which shall be deemed an original, and
all of which taken together constitute one and the same instrument.
15.The rights and remedies afforded SURETY by the terms of this Agreement may not
be waived or modified unless agreed to in a writing executed by SURETY. There have been no oral
or other agreements as a condition precedent or inducement to the execution of this Agreement by
any of the UNDERSIGNED.
Dated this day of _______ 2005.
THE UNDERSIGNED REPRESENTS TO THE SURETY THAT IT HAS CAREFULLY READ THIS
ENTIRE AGREEMENT AND THAT THERE ARE NO OTHER AGREEMENTS OR
UNDERSTANDINGS WHICH IN ANY WAY LESSEN OR MODIFY THE OBLIGATIONS SET
FORTH HEREIN.
By
(Signature)
(Print or Type Name and Tide)
Tax ID:
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