20161215Redacted Notice of Affiliate Transaction.pdf

R. Jeff Richards ~ PACIFl[ORP Vice President and General Counsel
1407 W. North Temple, Suite 320
Salt Lake City, UT 84116
801-220-4734 Office
December 15, 2016
Idaho Public Utilities Commission
472 West Washington
Boise, ID 83702-5983
Attention:
Re:
Jean D. Jewell
Commission Secretary
PacifiCorp Notice of Affiliate Transaction
Case No. PAC-E-05-8
Dear Ms. Jewell:
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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 (now "Berkshire
Hathaway Energy Company" or "BHE"), of an affiliated interest transaction with International
Business Machines Corporation (IBM) for the replacement of the Company 's existing
engineering drawing management system. The Company intends to enter into two Statement of
Work agreements (SOWs) with IBM that will be executed upon the submission of all required
regulatory filings. The SOWs contain all relevant details regarding the product and services
IBM will provide to Company, including pricing terms. The SOWs are being issued under the
terms and conditions of the existing IBM Contract for Software Solutions and Implementation
Services (Original Agreement), which serves as a master contract under which IBM is engaged
by the Company from time to time for the purchase and set-up of various systems and related
services. A verified copy of the Original Agreement is included with this Notice as Attachment
A. A verified copy of each of the SOWs is included with this Notice as Attachment B. The
Attachments contain commercially-sensitive information and, accordingly, require designation as
confidential. Disclosure of the information could erode Company's bargaining position and
could be deemed a breach of its contractual obligations.
PacifiCorp is a wholly-owned indirect subsidiary of Berkshire Hathaway Energy
Company (BHE). BHE is a subsidiary of Berkshire Hathaway, Inc. (Berkshire Hathaway).
Berkshire Hathaway publicly owns IBM common stock totaling greater than a five percent
interest. Therefore, Berkshire Hathaway's ownership interest in IBM may create an affiliated
interest in some PacifiCorp jurisdictions.
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Jean D. Jewell
Notice of Affiliate Transaction
December 15, 2016
The Company has historically used a variety of technologies from IBM to support the
delivery of key business functions. Specific functions provided by IBM include support for
Company 's customer service and billing, support for enterprise reporting and analytics in the
Enterprise Data Warehouse, support for Corporate Enterprise Content Management for
document storage, archiving and retrieval, and support for optimization of energy trading
activities.
The Company relies on software furnished by IBM to create and maintain critical
business records. Without the software furnished by IBM, many groups in the Company would
not be able to perform critical tasks necessary for business functions or prepare reports related to
those business functions. The Company used its standard request for proposal procurement
process when seeking a vendor to replace its engineering drawing management system as
described in the SOWs. It is estimated that the Company will spend a total of approximately
$1 ,252,540.00 for the services to be provided under the SOWs. IBM was selected as the lowest
bidder. The SOWs contain standard terms and conditions, which protect the Company and
appropriately mitigate risk. Accordingly, the transaction is consistent with the public interest.
Please do not hesitate to contact me if you have any questions.
Best Regards,
R. Jeff Richards
Vice President and General Counsel
PacifiCorp
Enclosures
CONFIDENTIAL
IDAHO AFFILIATED INTEREST FILING
ATTACHMENT A
IBM ORIGINAL AGREEMENT
This attachment is confidential in its entirety and will be provided under separate cover.
CONFIDENTIAL
IDAHO AFFILIATED INTEREST FILING
ATTACHMENT B
STATEMENT OF WORK AGREEMENTS
This attachment is confidential in its entirety and will be provided under separate cover.