20160511Redacted Notice of Affiliate Transaction.pdf

\PaclFtConp
May I1,2016
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 notice pursuant to Commitmentl 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 (MEHC)1, of an affrliate
interest transaction with Wells Fargo Bank, National Association and Wells Fargo Securities,
LLC (Wells Fargo), and U.S. BankNational Association (U.S. Bank).
PacifiCorp has selected Wells Fargo and U.S. Bank to each be one of seven joint lead
arrangers for establishing a new revolving credit and letter of credit facility that will replace one
of the Company's existing revolving credit agreements. In addition, the Company anticipates
that Wells Fargo and U.S. Bank will serve in these same roles during a similar replacement
process that is expected to occur during the first quarter of 2017 for the replacement of the
Company's second revolving credit agreement.
Included with this filing are supporting documents to which Wells Fargo or U.S. Bank
will be aparty. A copy of the draft Confidential Commitment Letter, to which both Wells Fargo
and U.S. Bank will be a party, is included as Attachment A. A copy of the draft Confidential
Active Arranger Fee Letter to which Wells Fargo will be aparty to is included as Attachment B.
Included as Attachment C is a draft Confidential Passive Arranger Fee Leffer to which U.S. Bank
will be a party. All attachments hereto shall be referred to collectively as "Confidential
Attachments." These Confidential Attachments contain commercially-sensitive information and
are submitted as confidential. These documents contain "draft" designations, which will be
removed before execution. No material changes are expected to the terms and conditions of
these letters.
PacifiCorp is a wholly-owned indirect subsidiary of Berkshire Hathaway Energy
Company (BHE). BHE is a subsidiary of Berkshire Hathaway, Inc. (Berkshire Hathaway).
rAs of April 30,2OI4,MEHC was renamed Berkshire Hathaway Energy.
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R. Jeff Richards
Vice Prcsident and General Counsel
1407 llest North Temple, Suite 320
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801-220-1731 OfJice
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Warren 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 hold an interest in excess of five percent in each of
Wells Fargo and U.S. Bank common stock. Therefore, Berkshire Hathaway's ownership interest
in each of Wells Fargo and U.S. Bank may create an affiliated interest in some PacifiCorp
jurisdictions.
PacifiCorp currently has two revolving credit agreements each with $600 million of bank
commitments.2 One credit agreement expires in June 2017 (the2017 CreditAgreement) and the
second credit agreement expires in March 2018 (the 2018 Credit Agreement). PacifiCorp now
intends to replace each of the two credit agreements over the next twelve months as part of an
overall plan to maintain liquidity for commercial paper and other short-term borrowings and
other obligations. In anticipation of replacing the credit agreements, PacifiCorp and its parent
company, BHE, held discussions with, and solicited proposals from, a number of banks
conceming PacifiCorp's credit agreements. Several banks, including Wells Fargo and U.S.
Bank, 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 three active joint lead arrangers that will be
engaged to assist PacifiCorp in arranging a replacement credit facility to the 2017 Credit
Agreement. The Company selected U.S. Bank as one of four passive joint lead arrangers to
further assist with replacing the2017 Credit Agreement. The selection of each of Wells Fargo
and U.S. Bank as one of the seven joint 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 PacifiCorp, 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 selection of Wells Fargo or U.S. Bank was not influenced by Berkshire Hathaway's
ownership interest. Wells Fargo's arrangement fee will be equal to the fees paid to one other
active joint lead arrangers (while two other active joint lead arrangers will be paid slightly less
due to expected lesser roles and work). U.S. Bank will be paid arranger fees approximately
equal to or less than the other passive joint lead arrangers. PacifiCorp believes these fees to be at
market rates or better for the Company. PacifiCorp anticipates Wells Fargo's and U.S. Bank's
arrangement and upfront fees related to replacingthe20lT Credit Agreement will be
upp.o-*i*ua"lv I and J respectively. In addition, both Wells Fargo and U.S. Bank
will be paid an ongoing commitment fee and other fees at the same rate as all other banks in the
new credit facility.
2 Paci{iCorp has previously fumished these credit agreements to the Commission. Please see filings from July 16,
2012,and May 3, 2013,in Case No. PAC-E-05-8.
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The Commission has previously authorized PacifiCorp to enter into one or more revolving credit
agreements and borrowings thereunder in Order No. 33476, issued March 4,2016, in Case No.
PAC-E-I6-03.
As a public utility, the Company is expected to acquire, construct, improve, and maintain
suffrcient 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, these transactions with Wells Fargo and U.S. Bank are consistent with
the public interest.
Please do not hesitate to contact me if you have any questions.
Best Regards,
R. JeffRichards
Vice President and General Counsel
PacifiCorp
Enclosures
ATTACHMENTS A.C ARE CONFIDENTIAL
AND WILL BE PROVIDED SEPARATELY