20150717Notice of Affiliate Transaction.pdf

R. Jeff Richards
Vice President and General Counsel
201 S. Main Steet, Suite 2400
Salt Lake City, UT 84111
801-220-4734 Ollice
801-220-4058 Fax
j eff , r i c h a r d s@1t a c ift c o rp. c o m
Jnly 17,2015
VA OWRNIGHT DELIWRY
Idaho Public Utilities Commission
472West Washington
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 written notice pursuant to Commitment I l7(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 (now
known as Berkshire Hathaway Energy Company), of an affiliate interest transaction with Bridger
Coal Company (BCC) for the sale of certain mining longwall section equipment (the Joy
Longwall).r
BCC is a joint venture. PacifiCorp, through its direct wholly-owned subsidiary, Pacific
Minerals, Inc., owns a 66.67 percent interest in BCC. The remaining 33.33 percent interest in
BCC is owned by Idaho Power Company, an unaffiliated corporation. BCC operates the Bridger
Coal Mine (Bridger Mine) in southwest Wyoming. The Bridger Mine is the primary supplier of
coal to the Jim Bridger generating plant (Plant).
Historically, the Joy Longwall was used to extract coal at PacifiCorp's Deer Creek Mine
in Utah. With the closure of the Deer Creek Mine, the Joy Longwall is no longer needed at that
location.
To extract coal at the Bridger Mine, BCC currently uses longwall equipment originally
manufactured by DBT America, Inc. (the DBT Longwall). The DBT Longwall was initially
selected by BCC based on pre-operational feasibility evaluations. Those evaluations indicated
that the DBT Longwall would have a cutting height well-suited for the projected coal seam
thickness. However, the actual coal seam thickness in many mined areas has been less than
I "Joy" refers to the original equipment manufacturer for this equipment, Joy Global, Inc.
Jean D. Jewell
Notice of Affiliate Transaction
July 17,2015
projections. Accordingly, relatively higher amounts of rock (also known as ash) are extracted by
the DBT Longwall. This higher ash content decreases the efficiency of mined coal. To maintain
the coal quality necessary to maximize boiler combustion efficiency, coal extracted from the
Bridger Mine is often blended with coal obtained from other sources.
The available Joy Longwall meets the operating requirements for the Bridger Mine.
Accordingly, PacifiCorp and BCC have agreed to a Sale and Purchase Agreement for Joy
Longwall and Support Equipment (Agreement). A copy of the Agreement is included with this
notice as Attachment A. The Agreement has the support of both joint owners of BCC.
Pursuant to the Agreement, PacifiCorp will convey title to the Joy Longwall to BCC in
exchange for a purchase price of $13.3 million (rounded). The purchase price was determined to
be fair market value based on three independent appraisal reports. PacifiCorp will also incur
additional expenses for refurbishing the Joy Longwall and shipping it to BCC. These expenses
are estimated to be $4.6 million, and will be reimbursed by BCC at cost (in addition to the
purchase price). PacifiCorp will also convey title to certain additional coal mining support
equipment (including material haulage equipment, feeder breakers and high voltage electric
cable; hereinafter collectively referred to as the Support Equipment). The purchase price for the
Support Equipment is $1.2 million (rounded), plus reimbursement of PacifiCorp's shipping
costs. This amount was determined based on an ur"rug" of informal appraisals.2 BCC will also
pay applicable sales taxes incurred with regard to the Agreement.
The Agreement is in the public interest. The cutting height of the Joy Longwall is better
suited to the coal seam thickness at the Bridger Mine, and will reduce the ash content of coal
supplied to the Plant. PacifiCorp's customers will benefit from the extraction of coal with
reduced ash content, which will better meet the operational needs of the Plant. The Plant will be
able to produce the same number of megawatt hours with less fuel and will avoid certain
logistics costs associated with handling, staging and blending the higher ash coal. PacifiCorp will
therefore be able to more efficiently and effectively manage fuel costs at the Plant. The
Agreement will also allow BCC to avoid a costly refurbishment of DBT Longwall at this time.
Please do not hesitate to contact me if you have any questions.
Best Regards,
-?$:zt'"
R. Jeff Richards
Vice President and General Counsel
PacifiCorp
Enclosures
2 PacifiCorp received informal valuations from five vendors. Not all vendors supplied valuations for all components
of the Support Equipment. PacifiCorp averaged the supplied values where applicable to determine fair market value.
Attachment A
Sale and Purchase Agreement for
Joy Longwall and Support Equipment
SALE AIYD PURCIIASE AGRF,EMENT
THIS SALE AI{D PLIRCHASE AGREEMENT (t}ris "Agreernenf), is made as of June 4,
2015, by and bet*,een PACIFICORP, an Oregon corporation, as seller ('Selled), having a place of
business d. 825 NE Multnomah, Portland" Otegoru 97232 on the one hand, and Bridger Coal
Company ("Buyet''), a joint venture of Pacific lvfinerals, Inc., a Wyoming corporation and wholly
owned subsidiary of Seller, and Idatro Enerry Resowses Co., a Wyoming corporation, as buyer,
having a place of brsiness at 1088 Nine Mile Road, Point of Rocks, Wyoming, 82942 on the other
hand.
1. Purchas'e and Sale. Subject to the temrs of this Agrcement, Seller agrees to sell,
tansfer and convey to Buyer, and Buyer agrees to pruclrase and receive, all and not less than all of
Selleds righq tifle and interest in and to each and every one of the items ofproperty (collectively, the
"Equipment") described on E:rhibit "A" attaohed hereto. In consideration, Buyer agrees to pay
Seller the "Purchase Price" of the Equipnent as set forth and adjusted as provided in E ftibit A to this
Agleqnent, on or beforc the sec<md business day foltowing the later of the effectiveness of this
Section or Seller's notice to Buyer of thc final hJr€hase Price. The "Transportation" cost set forth
therein is included in the Purchase Price as an estimate and Seller will increase or reduce the Ptuchase
Price for the fuial, actual costs of tansportation to Buyer's hemises. The sale is not cftstive and
consummated until Seller is in receipt of the Purchase Price. Buyer is responsible for payment of all
applicable sales tax on this purchase and sale. Seller's obligation to convey the Equipment is
expressly conditioned on Seller obtaining all required regulatory approvals, and Buyer's
obligation to purchasc thc Equipment is likewise expressly conditioned on Buyer obtaining all
required regulatory approvals.
2, Delivery. Seller agrees to cause the Equipment to bc delivcred to Buyer's premises
at Bridgcr Coal Company, Underground Mine, 1088 Nine Mile Rd., Point of Rocls, Wpming
('Buyer's Premises"), Seller will maintain inswance oovering the tansportation and delivery of
the Equipment to Buyer's Prtmises as evide,nced in the Certificale of Liability Insurance attached
h€rsto as Exhibit C, and shall cause Buyer to be a loss payec thereunder.
3. Storase Lic€,nse. In consideration of tbe srmr of $1.00 paid in hand by Seller, Buyer
grants to Seller a iioense to storc all Equipment at reasonable locations on Buyer's Premises, ftee and
clear of any liens or claims of Buyer, pending r€ceipt ofregulatory approrials by Seller and Buyer for
the purctrase md sale. In the event rcgulatory approvals are not received by Seller or Buyer, Buyer
grants to Seller a license to store aU Equiprnelrt on Buyer's premiscs until the Equipme,ut is otherwise
disposed or relocated in coruideration of paynent by Seller to Buyer of the sum of $1.00 per month.
4. Title DocumenjatioJn Upon reoeipt of payment in full of the Pr:rphase Price, Seller
will e:<ecuG and deliver to Buyer the "Bill of Sale" in the form of E:&ibit "B" bertto. Upon
execution ofthe BiIl of Sale by Seller, all risk of loss or damage to the Equipment shall pass to Bu)rcr.
5. DISCLNMER OT WARRANTIES. BIIYER IIEREEY ACKNO1VLEDGES
AND AGREES TrrAT THE EQIIIPMEITTT IS SOLD ..AS IS'AI\D ..WIfiRE IS" WITH NO
{00167963.DoCx; l}l
WARRANTTES OR REPRESENTATTONS BY SELIJR WHATSOE\ru& WmTIIER
EXPRESS OR IMPLIEI', AS TO AIitY MATTER REI,ATING TO TIIE EQTIIPMENT,
rNcr,UDINc, WnHOITT LIIIrTATION, WARRANTTES Or MERCEAIYTABILITY OR
rulrrEss FoR A PARTrgt[AR Pt RFOSF4 WARRANTmS AS TO WruTHER lrrE
EQIIIPMENT WIIT BE IN TIIE STATE IN WIIICH IT IS NO}Y WHEN IT ARRIVES ON
BIIYER S PREMISES, ANn BTIYER TmREBY WATyES TIIE RIGHT TO ASSERT AI\[Y
AI\TD ALL SUCH WARRANTIES AGNNST SEII,E& SIJBIECT OI\LY TO TIM
WARRANTy By SEI,LER TIIAT SELLER EAS GOOD, VALID AIID II{ARKETABLE
TITLE TO ALL OF THE PIJRCHASED ASSETS, ArrD WILL EITECTTI,ELY CONyEY
THE EQIIIPMENT TO BIIYER TREE AT{D CLEAR OX' AIYY LIEN, CLNM OR
ENCTIMBRANCE OF ANY PARTY CI,AIMING AN INIEREST TIIROUGH SEII,ER
6. Crepcral. This Agreement is governed by the laws of the Sme of U/pming. this
Agreemc,lrt constitutcs the eirtire undcrstanding and agrcenrent behlreen Buycr and Seller in
conneotion with i6 subject matt€r and all prior understmdings and agreementg whethcr oral or
rrritten,alemergedintoandsryersededhcrcby.ThisAgecmentmaybeamendedonlybyawritten
instnment o<ecuted by bottt Buyer and Seller. TO TI{E FTIIIEST EfiENT PERMTTED BY
LAW, EACH OF THE PARTIES fmRETO WAIVES Alr{Y RIGHT IT MAY HAVE TO A TRLAL
BY JTJRY IN RESPECT OF LMGATION DIRECTLY OR INDIRECTLY ARISING Ot]T OF,
I.JNDER OR IN CONNECNON WTII{ TTIIS AGREEMENT. EACH PARTY FT.'RTIIER
wArvEs AI.ry RTGIIT TO CONSOLIDATE, OR TO REQLTEST TIIE CONSOLIDATION OF,
ANIY ACTION IN WHICH A JURY TRI.AL HAS BEEN WATVED WIfi{ AI\TY OTIIER ACTION
IN WHICH A JTJRY TRIAL CA}.INOT BE OR HAS NOT BEEN WAIVED.
7. Liabilities Not Assumed. Buyer does not a$lume, and shall havo no responsibility
for, any liability of Seller relating to the Equipent which has arisen, been accnred by Seller, or
incurred by Seller or is othenrise bascd on errents 'nl '19 place, priorto the remonal from Joyuall of
the Equipment for Transportation ofthe Equipnneotto Bu5rer's Prrcmises.
8. Sunrival. a[ rcpesentations, warrmties, corrcnanb and obligations undcr this
Agreerneirt will suwivc Seller's convelance of the Egipme,nt to Buyer under the Bill of Sale.
IN MTNESS WHEREOF, the partix hereto have causod thcir arlhorized rcpresentatives to
execute this Agrcement as of the date first set forth abone.
BRIDGER COAL COMPAhIY PACIFICORP
Aoknowledged:
{00167963.DOCX; 1}2
Prsifiolrinaab,Itrc.Idsho BoEf$r Rcnracr Co.
{00167963DOcx(; U3
E)CIIBIT IIAI' TO
PURCIIAS4 AGREEMENT
Equipment Desoiption and compone,nt p"ci"S and adjus[nent:
Longwall Equipment:
t00167963.DOCX; 1)a
Miscellaneous Equiprnent:
23.1{a Di.!l PoEEdTorVCriolr
2!-16/t Lo|bro*Dlrr
lt-l?O UOSod(}rA.
2r-t7? Di.d Pqtf,dTwrrHihL
03-0,19 &.d.rEo.Ls
0il.0l0 Fl&rErulr
0t.l4l lillr, Porndtlclotr $oo,
0tla2 B.ttcry locd$otbr $oop
0&709 ,ll'Poly DriE
Er lto MCMEI.cdql Po*rCdIG
0a{5t lmDdrr(htrrrl fEqailCior)
*05t P&Eoh&Eo& trralii
Ehr@ 9!0L 9rCt07 lralrl99
Bino n5 yts.dlr2 2tnlffi
onm lDOlto4C 69'$ 70tlzm7
Elm gltlt. 9',0{,|l lza$2,(rt
t ntAlr&r 5MFEM48AUZO! 54-2917 12B1119{6
tanlAir&r 6MrBIrl-ttA\Zt70t ra-z0tt l2ljl89n
rrirotild dr T339{20 Ull,2ol I
FLddld n/r Tr!9,6,!l ilt20ll
DBr Li 9t3t7-r0 llllt&o4El r. *y - J.ooo lurfi9l9
Arr0 rl r50rt lal200,
Hihi al nh AINAD
?5,00.00 4.fltr.00 2,0@.00 t1,500,m
6?.5m.O 4.01t0.00 1000.m ,!,950,@
200,000.m t4@o,0o 2,0o.m 114,000.@
102,100.00 5.tro.00 2,0o,o0 I t0.650,00
55,000,m 3,100.00 t,250.00 61,150.00
ta,lll.ll 336000 lrto 00 60,!.ll.ll
t6(000.00 9p60.00 l lJt0.00 r t7,atl,00
It.l3lt! r!,000.00 It.att.oo 20t,r9t.tr
,0,6rr.00 ,.or7.to ,1l'62.10
fl,qr4.r, 2,lla06 t00.(l0 5t.{16,,il
lraDll!. lrGJ D.rclrd.n Etr ra.a.t lorart ilo, hdc
Hr Prlc trl.rt ti-. tnl
{00167963.DOCX; l}5
Rebuild Estimate:
7.1/fii5 lRIJOl62t Aniroct 410 Clbh f6LW Bnltv 3 19967.1)s
il4nt5 lRLMl6gm IilamrffhEhatflrbr Bcrhv l-(l.!.0
la7,rs lLMl6t101 Lcwi Goce Hvd Haoo fc Brctby 4t1r.05
z7?o15 N83l'l Eclo In&stbs Rcuk of LW crblar lllm_m
a1mt5 lLN83t5 Echo Indrkic!A!*mHvdBGtbv 1r00.00
2'rcml5 lLM1655l7 MiE Wcrt Cmllow rraw and hurinrs 3_N.52
2nunt5 rLN833l JoM L\[l !]EecChrus llmm
?Jniln5 lIiI{-205 JoM RcbuiBrndR+H lltrarsr r9J70.q)
!finol.s rLoI{-2X6 JovMfe Rchfl udRe-HrdHcrdc tn2n-w
al&mB ll-{)t{-2&,JwMfi nabdd.id R..Hrrd Trbu Drir Tirl,ofyl
4/2Smts )H2rrcol Jov Mfr GrnE ddlrlor€Dh3c eob ohu risr recc l0-7t0.00
?/18ml5 -oH.28r Jo Mfr RchflStrllhdlr D'ilt.A
4t23mt5 )totr cor Jov Mfr Clunri ordrr to rfib oxlorln to ft CMT Ir52.00
alatzJtt lL€H-289 Jor Mfq RcbuiliCrolrr 119.640.00
?,ltltfit5 rL-olf.2(I)Jov ldfr CnrrbMffidTabboo Rshdd l21Cr, ilt
zl&l201s lL€H-214 Jov Mfe ShbldRehiS Barb ,00.m.m
3Il12015 rLoIt-2{B JflMfa ortr llhbH uoL mnain(s)1m.00.00uflm$tLoH-291 JflMfr $c.il Pt.ohc nlbuI 1.050m-00
2m2,Jts LoIJ-XZ Intctnumeh Elxhoix Fre CaffirRlhfl(ZLZ|6)zrjtl-m
Iviorsot IdanrarlRohits 16496,50qu':nB t5951 McomonrnMecffir Frtrheb Tmlbvr 3l-t78.25
3nr12015 RtN-8380 MmililnIurolfrrr Irioouaf, Rchtr 50.0m.00
12f?,15 ILM-t65960 Mccrnlown tttschhr PtshPnll 34285.00
3/ll/2O15 RIN.B37!'tlarrrtilrn MrcliE Rn&i! Pum RahlH OdhI2 vNnts
lBtm$ILN-t379 IvlarrtlbwnMrahi!EuulinTu* Skit Rcrir 13.845.00
33120t5 RLN.B85 Malurb\rn lrrchirE Sltll!3DnrnR.hd ,0.m,o
4620ts RLMl659+3 Bsco Bl Sbnvo! drdBloclo fc Dnm 31.680.O
NcikmCmtrrtin Trroalrtin frrn flaar Cncl to Jo tls-(m.m
Jov M&thn&nChrcr 45300.m
?ltslwtS ll.w-35742 M-Tcc Rc-tio dfrc csrrcw flvor 60.100.m
u$tu5 RLMt6560'Jov MfP NlsE h&filCmcchh t9,25.$
2nl?o,JJ lltt83a3 fil.l,mil.hFtatffih.Tctt rd c,bad sactirn trudqmor 30.1$.m
v8mlS w-31743 Srclrch Cban and amir tlih Prttsurt Flers t.7IB.!
zl]s-mt5 R.LNt3il4 Grm'r Frcc ClrhDiesrombly 2J36.00
zzsnot5 ILNt345 Grvnsfr Arrcmblv of Canrovor Clrih t416&00ubnits\Itr45 orrvmrlr Clrm erd Ranir BBolts I t20m
2126D0t3 tLMl65624 RMWiLo Paoe Chein Nuis. Bolts 9835.,m
2n6mt5 U-W3t15 IduthlEhcEb 6()(l tfP Molo.! of LW ooilril (2)t6754 4t
2n6m$rLw35747 Indltsbl EbctL 250HP Iirer(3)n238.12
,/5tfr15 irlr ftorrINV tnrf,rrhl Elanti.-650TWSFhilCc*r t60mm
3,'z)15 ilDfmINV hdEtrhl Ebctic 562 TVF-E FtrklCqplor '19.1fl.55Atxtxmr5R,LN839S Gwnut'r CbhTraibn (4)7:m-0
Subtoal 3 3J7Al13.8l I At22m00
Toigl fcrldim rabs tex s {JBr3l3.tl
SrbTo 2,rJ279.67
T6 I LrnsqB.$
{00167963.DOCX; l}5
EXHIBIT TIBI? TO
PI]RCHASE AND SALE AGREEMENT
BILL OF SALE
This Bill of Sale is q(ecuted and delivered this _ day of _____, 2015, by
PACIF'ICORP, an Oregon coqporation, as seller ("Seller"), to Bridger Coal Company ('Buycd), in
consideration of the payrnent by Buyer to Seller of $18242,372.32 (as adjwted as provided under
Transportation in Eftibit A) the receipt of which is lre,reby acknowledged. All applicable sales tax,
which is estimated at $1,112,318.91, wiU be paid by the Buyer directly to appropriate ta:cing
authorities and $882,866.67 for the second armored face conveyor (pan line) which will be contrastod
for directly by the Buyer. Seller hereby sells, fansfers and conveys all ofits righf tifle and interest in
and to the property described on Schedule 'I' attached hereto (thc "Equipmenf') to Buyer and its
successorc and assigtrs, to have andto hold forever.
TIrE EQIIIPMEI{T rS SOLD IIEREIIDTDER "AS rS" A}[D ', WImRE rS' WITrI NO
WARRANTIES OR REPRESENTATIONS BY SELLER WHATSOE\IE& WHETIIER
EXPRESS OR IMPLIED, AS TO ANY MATTER RELATING TO TIIE EQT'IPMENT,
INCLUDING WIIHOIJ"T LIMITATION, WARRANTIES OT' MERCHANTABILITY OR
TTTNESS FOR A PARTTCTTLAR PURPOSE, St BJECT OIYLY TO Trm WARRAI\TY By
SELLER THAT SELLER IIAS GOOD, VALID AIYD I|{ARKETABLE TITLE TO ALL OF
THE PIJRCHASED ASSETS, AnlI) mREBY CONVEYS TIIE EQImMEI\IT TO BTTYER
['RBE AND CI,EAR OF AIYY LTT'N, CI.AIM OR ENCTIMBRANC'E O[' ANY PARTY
CLAIMING AI\T INTEREST THROUGII SELLER
SELLER
PACIFICORP
By
Name:
Title
{00167963.DOCX: l}8
Transportation to Buyer:
Transportation to Buyer, the rcbuild of certain equip'ment is subjcct to change and Seller will noti$
Buyer ofthe final Purchase Price adjusted for those changes.
Movo Thr
>45Days
Ertirnt€d
Dolltg
Per Shiold
Per Shicld
6 Panr Per load
Each
Eash
Each
Each
Each
Each
Each
Each
2PerIoad
2 Per Load
I Per Losd
I Perload
I Perload
l PcrLad
t23 $
7$
232 $
4$
2$
2$
2S
ls
l3
2t
2$
e$
es
4$
4$
2S
s$
2,700.00
1,7m.00'
4900.00
3,700,00
3,7(n.00
z1n.@
3,60000
e700.00
1,5m.00
1,550.00
1,550.00
1,550.00
r850.00
1,950,00
rBs0.00
2,050.00
1E,900.00
6f.J33.33
19,600.00
7,400.00
7,400.00
5,400.00
3,600.00
2.700.m
3,000.m
3,100.00
r3B50.m
13,950.00
7,800,00
7,800.00
3,900,00
t00167963.DOCX; 1)7
EXHIBIT ''C''TO
AGREEMENTPURCIIASE AND SALE
GIbntsr!4C0G MELOOiI
GERTIFICATE OF LIABILITY INSURANGE
llr AGoRD nnr rnd logo ]t ngbffrd nr*a CASORD t(xt
aEFnHcATE DOE! tor AFf|RIATIYELY OR IIHATWELYAEID, EfIEf,D m ALrER TllE COI'ERAOE AFFOiD@ EY rHE POUCIE!
BELrOW.fltCBTIFICAIEOFlMR TCEoGSIlOTcOEIITtmACillrACTSElSEt-llClElrmOIEIREXPIAtm€ntrED
iEPREIEIIAIIY- OR PROq'GB. AXD fiE C!frIIHCAIE IS.DA.
lhlt'r|.rr.lG..riltb.. durDo{lq,crth r.hq rqurtttf,roilrri,Ararlna.raCltrbarilG.trh mrcorlf
c DfrDoftlol{
oo88 lTnEt@ U,]{PHY r aTRXAXI{.
tTroADffiTIRE'IIE!O.
SALTlll(ECttr,UT lalto
ilrEt-EoiloiltrRtETlox
FOtulaoHlfrTltrrilf,uT gta
]IrcA'rE- r€ilml3rrl5hE AaY iEot [5r. rt oi o6gllolr Arr oslIRAgIoR gIlS EclEiII wn{ RElPEr IE fitCH Ttt
CEtfl?EAIE IAY E EE'EO OR TAY PffiAII I}IE III.NAIG AFFOOO EY ITC PGUCIET DE&f,ID 'ilEil E II.BII TO AlI I: IEiIIS.
EICUEFI'G AIO COI'DlrtrlF 0F SlJOl FqJCE]S,coutl IltY H yE !E{ f,E(IED Bt pAlD cufl8.
qrEre ffiE.r.
l&rullslrnY
lE'rUOt il,rffi ,locrlutrutfll.l5EEll,lI h$r* fnrplrIrl{
ADDTflOML FURED OiLY IF RHIUiED tn/ WiITIEil Od{ITACT UITTI REtPEST TO OE}GIRAL IJ^BUTY:BIEN3Y ElT
aEretEmrm erll:Ef,lltllltr
EI{EIRCYWEST!I rcRftIAI{EIREEf
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f,gl.D ATV OI il'DE EIIID}fl.EI ICTEEI.ID EFilIIIt mailH D tE llG, EnGt [tl E DELtrEttD txrffirct Iil II tc.tr FmB.
C tn€0t0 ACORO oOiFOi TOL A! nelrb rsrrd
AomD2.tr0'r0r0t) 1ol1,87t3raarrflt20G