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Home My WebLink About20130611Compliance Filing.pdfYPncrnConp\ a mD f,iEircAN ENEROY HOLO0{68 @MH tY June 11,2013 VIA OWRNIGHT DELIWRY Idaho Public Utilities Commission 472West Washington Boise,lD 83702-5983 Ms. Jean D. Jewell Commission Secretary Re: Idaho Docket No. PAC-E-05-08 Compliance To the Idaho Public Utilities Commission: PacifiCorp submits the attachments in compliance with the Commission's Order in this case issued on February 13,2006 and amended on March 14,2006. The Order approved the Stipulation supporting the acquisition of PacifiCorp by MidAmerican Energy Holdings Company. Commitmentl2} of the Stipulation provides that PacifiCorp will provide to the Commission, on an informational basis, credit rating agency news releases and final reports regarding PacifiCorp when such reports are known to PacifiCorp and are available to the public. Therefore, in compliance with Commitment I20 of the Stipulation, please find the attached report related to PacifiCorp. Very truly yours, V/(,,LG 714,""J^- Mark C. Moench Senior Vice President and General Counsel Enclosure ll Ma* C. Moench Senior Vice President and General Counsel 201 S. Main Street, Suite 2400 Salt Lake City, UT 81111 801-220-4459 Oflice 801-2204058 Fax ma r h mo en c h@1t a c iJi c o rp. c om rti FitchRatings FITCH RATES PACIFICORPIS $3OOMM ISSUANCE OF FIRST MORTGAGE BONDS'A-'; OUTLOOK STABLE Fitch Ratings-New York-04 June 2013: Fitch Ratings has assigned an'A-'rating to PacifiCorp's (PPW) $300 million issuance of 2.95%o, first mortgage bonds due June l, 2023. Proceeds will be used to fund utility capital expenditures and for general corporate purposes. The notes will rank on parity in right of payment with all existing and future secured debt. The Rating Outlook for PPW is Stable. Stable Outlook: PPW's rating and Stable Outlook reflects the company's solid financial position, competitive resource base and relatively balanced and diversified regulatory environment. The Stable Outlook assumes reasonable outcomes in pending and future rate proceedings to recover anticipated, significant capital investment. PPW's ratings are standalone, reflecting its credit profile. PPW is owned by MidAmerican Energy ('BBB+' IDR, Stable Outlook), which in turn, is 90% owned by Berkshire Hathaway Corp. ('AA-'IDR, Stable Outlook). The ownership structure provides flexibility in managing PPW capital structure and liquidity position. KEY RATINTG DRIVERS: --PPW is ring-fenced by special purpose entities to preserve credit quality. -Solid financial metrics. --Balanced and diversified regulatory environment. --Reduced capex plan. --Good liquidity. --Manageable debt re-financing levels. Solid Financial Metrics: Fitch expects financial metrics to remain comparable to or slightly ahead of guideline metrics for the risk profile and rating category, with forecasts for EBlTDA-to-interest to trend upward of 4.8 times (x) and funds from operations (FFO) to debt to near 19% through 2015. Fitch attributes lower FFO in the forecast period to the absence of bonus depreciation. Balanced and Diversified Regulatory Environment: PPW has regulated electric generation, distribution and transmission operations across six western states which limits exposure to any one regulatory jurisdiction. The utility receives fairly balanced regulatory treatment, with multi-year rate plans complete in Idaho, Utah and Wyoming; and, existing rate-making features allowing for timely recovery of, or deferral of capital investments. Power cost adjustment mechanisms cover over 90%o ofutility retail electric sales. PPW has two pending general rate cases on which Fitch anticipates fair outcomes. In Oregon PPW requested a S56 million electric rate increase based on a 9.8o/o retum on equity (ROE); and, in Washington the utility requested a $42.8 million electric rate increase based on a l0% ROE. Reduced Capex Plan: Utility capital investments are forecast at just over $1 billion in 2013, and just under $6 billion through 2017. The five-year capex plan is nearly $2 billion lower than prior projections largely due to lower forecast load growth. Management has also delayed invesftnents in new generation and transmission; and, plans to convert the Naughton Unit 3 from coal to natural gas to manage environmental compliance costs. PPW's capex program is focused on transmission, distribution and environmental invesfinents, and is generally consistent with public policy goals in the region. Rating concerns for PPW include execution and recovery of its capex program; and, the emergence of more stringent environmental rules and regulations. Good Liquidity: The utility's liquidity position at March 31,2013 was $1.02 billion, including $133 million in available cash. PPW's stand-alone bank credit is $1.2 billion and includes trvo separate credit facilities, each sized at $600 million, and which mature in 2017 and 2018, respectively. Bank credit supports the utility's commercial paper program and provides for the issuance of letters ofcredit. Manageable Debt Re-Financings: Debt maturities include $261 million due in 2013; $253 million due in 2014; $122 million due in 2015; $57 million due in 2016:' and, $52 million due in 2017. Fitch considers the re-financing risk as low and views access to the capital markets as unrestricted. RATING SENSITIVITIES: --A positive rating action on PPW could occur if FFO to debt were to increase and be sustained near 20%. --A negative rating action on PPW could occur if FFO to debt were to decrease and be sustained below 16%. Contact: Primary Analyst Lindsay Minneman Director +t-212-908-0592 Fitch Ratings, Inc. One State Plaza New York, NY 10004 Secondary Analyst Phil Smyth, CFA Senior Director +l-212-908-0531 Committee Chairperson Glen Grabelsky Managing Director +t-212-908-0577 Media Relations: Brian Bertsch, New York, Tel: +l 212-908-0549, Email: brian.bertsch@fi tchratings. com. Additional information is available at'www.fitchratings.com'. Applicable Criteria and Related Research: --'Corporate Rating Methodology', AuB. 8, 2012; --'Rating North American Utilities, Gas and Water Companies', May 16, 201l; --'Recovery Ratings and Notching Criteria for Utilities', Nov. 13,2012; --'Parent and Subsidiary Rating Linkage', Aug 8,2012. Applicable Criteria and Related Research: Parent and Subsidiary Rating Linkage http ://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt id:6855 52 Corporate Rating Methodology http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id:684460 Rating North American Utilities, Power, Gas, and Water Companies http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id:625129 Recovery Ratings and Notching Criteria for Utilities http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id:693750 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COIWUNDERSTANDINGCREDITRATINGS. IN ADDITION, RATTNG DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALIry, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH TIIE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY ST]MMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.