20140311Notice of Affiliate Transaction Redacted.pdf

REDACTED
R. Jeff Richards
Vice President and General Counsel
201 S. Moin Sfieet, Suite 2100
Salt Lake CiA, UT 84111
801-220-4734 Oflice
801-220-4058 Fox
j elf . ri c h ar d s@t a c ifi c o rp. c o m
March 11,2014
VIA OVERNIGHT DELIWRY
Idaho Public Utilities Commission
472West Washington
Boise,ID 83702-5983
Attention:Jean D. Jewell
Commission Secretary
PacifiCorp Notice of Affiliate Transaction
Case No. PAC-E-05-8
Dear Ms. Jewell:
This letter will serve as notice pursuant to Commitment I l7(2), incorporated in the
Idalro 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 Securities, LLC (Wells Fargo) and U.S. Bancorp
Investments, Inc. (US Bank). PacifiCorp selected Wells Fargo and U.S. Bank to each be a co-
manager underwriter for a bond offering PacifiCorp intends to issue in the near future. A copy
of the draft Form of Underwriting Agreement (Agreement) is included as Confidential
Attachment A. This document contains a "draft" designation, which will be removed upon
execution of the agreement. PacifiCorp does not expect to see any material changes to the terms
and conditions of the Agreement.
PacifiCorp is a wholly-owned indirect subsidiary of MEHC. MEHC is a subsidiary of
Berkshire Hathaway, Inc. (Berkshire Hathaway). As of March 31,2010, Wa:ren E. Buffet (an
individual who may be deemed to control Berkshire 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 each Wells Fargo and U.S. Bank
common stock. Therefore, Berkshire Hathaway's ownership interest in Shaw Environmental may
create an affiliated interest in some PacifiCorp jurisdictions.
PacifiCorp intends to issue a bond offering in the near future and has solicited
underwriting proposals from a number of banks. Several banks, including Wells Fargo and U.S.
Bank, provided information on indicative credit spreads, market conditions, their credit analysis,
marketing plans, and underwriting fees. PacifiCorp selected three other banking institutions to
lead the transaction as joint book running managers and selected Wells Fargo and U.S. Bank to
be among the [six] co-managers for this bond offering. The selection of Wells Fargo or U.S.
Re:
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Jean D. Jewell
Notice of Affiliate Transaction
March ll,2014
Bank was not influenced by Berkshire Hathaway's ownership interest. Wells Fargo's and U.S.
Bank's underwriting fees will be determined at a rate equal to all underwriters and at what
PacifiCorp believes to be market rates or better for itself. PacifiCorp anticipates Wells Fargo's
and U.S. Bank's underwriting fee will be signific4ly lgq! than the fees paid to the joint book
running managers and range from approximately $I each, respectively depending on the
maturity of the debt that PacifiCorp issues. The underwiting fee is commercially-sensitive, and
if revealed, could erode PacifiCorp's bargaining position in future transactions. Such erosion of
bargaining power could lead to increased costs. Accordingly, this information is submitted
under seal, and PacifiCorp requests that it be made confidential.
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.
Issuance of bonds are part of a program to finance PacifiCorp'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 PacifiCorp could sell. Accordingly, the
transaction is consistent with the public interest.
Please do not hesitate to contact me if you have any questions.
Best Regards,qefl,"
R. Jeff Richards
Vice President and General Counsel
PacifiCorp
Enclosures
ATTACHMENT A IS CONFIDENTIAL
AND WILL BE PROVIDE SEPARATELY