20060606Application.pdf

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Pacific Power I Utah Power
Rocky Mountain Power
825 NE Multnomah, Suite 2000
Portland, Oregon 97232
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June 5, 2006
Idaho Public Utility Commission
Statehouse
472 West Washington Street
Boise, ID 83720
ATTN:Ms. Jean Jewell
Commission Secretary
Re: Case No. PAC-06-In the Matter of the Application ofPACIFICORP
for authority to issue up to 30 000 000 shares of
Common Stock to its Parent
Dear Commissioners:
PacifiCorp (Company) respectfully requests that the Commission enter its order, effective upon
issuance, authorizing the Company to issue, from time to time and for cash, up to 30 000 000
shares of its Common Stock (Shares) to the Company s immediate corporate parent, PPW
Holdings LLC, a Delaware limited liability company (Parent) and wholly owned subsidiary of
MidAmerican Energy Holdings Company. The Company requests that authority for such sales
and issuances remain effective until all the 30 000 000 Shares have been issued.
As discussed in the enclosed application, the Company believes that the proposed sale and
issuance of the Shares to the Parent, from time to time and in amounts that the Company may
deem appropriate, would be reasonably required to (i) maintain or improve its capitalization
ratio, (ii) maintain or improve the Company s access to capital on reasonable terms, (iii) assist
the Company in maintaining its current investment grade credit ratings and (iv) enable the
Company to acquire, construct, improve and maintain sufficient utility facilities to serve its
customers adequately and reliably at a reasonable cost. In addition, the Company anticipates
ongoing capital expenditure requirements, including those contemplated in the Commitments in
the Commission s Order No. 29998 issued in Case No. P AC-05-8. The Parent may make
common equity contributions to the Company in exchange for the Company s issuance of Shares
to the Parent, but such contributions would be at the Parent's option and not be subject to
specific time or dollar limitations. In addition, the Parent may elect to contribute equity into the
Company for no consideration (i.without the Company issuing any Shares), and the Company
believes that such contributions may be made without an order of the Commission. As such, any
such contributions would not affect the number of Shares included in any order issued by the
Commission in this case.
Idaho Public Utility Commission
June 5, 2006
Page 2
The requested authority is consistent with the Company s filings with the Oregon Public Utility
Commission, the Public Service Commission of Utah and the Washington Utilities and
Transportation Commission for the Company to issue the Shares to the Parent.
The enclosed Exhibit D (Balance Sheet) and Exhibit E (Income Statement) contain pro forma
calculations of issuances of all the Shares, in each case based on the Company s unaudited
financial statements for the quarter ended December 31 , 2005 and assuming that all the Shares
were issued and sold in their entirety at the same time. These calculations assume a per Share
price equal to $11.08 , the per share book value of the Company s Common Stock at February 28
2006. Because the issuances are expected to occur over time, the Company s actual
capitalization will likely be different from that included in the enclosed pro forma financial
statements.
As the Company s financial flexibility is important, the Company respectfully requests that the
Commission issue its order on or before June 23 , 2006, in lieu of within 30 days after the filing
ofthe enclosed application as required by Idaho Code 961-904. The Company respectfully
requests twenty certified copies of any order issued in this matter. Notice of this Application
will be published within seven days as required by the Commission s Rules of Procedure.
A check in the amount of$1 000 for the application fee is being sent separately.
Your attention to this matter is appreciated.
Sincerely,
Bruce N. Williams
Treasurer
Enclosures:Application, including exhibits (1 original and 4 copies)
Proposed Form of Order (1 original and 4 copies)
CD Rom (containing Cover Letter, Application including
exhibits and proposed Form of Order) (1 CD Rom)
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO.
In the Matter of the Application of
ACIFICORP for authority to issue and sell up
to 30 000 000 shares of Common Stock to its
Parent
APPLICATION,
P AC-b-Ob-Ot-r
PacifiCorp (Company) hereby applies for an order of the Idaho Public Utilities
Commission (Commission) authorizing the Company to issue and sell, from time to time and for
cash, up to 30 000 000 shares of its Common Stock (Shares) to its immediate corporate parent
PPW Holdings LLC, a Delaware limited liability company (Parent) and a wholly owned
subsidiary of MidAmerican Energy Holdings Company, without a further order of the
Commission. The Company requests that such authorization remain in effect until all the Shares
have been issued. This application is filed pursuant to Chapter 9, Title 61 , ofthe Idaho Code and
Section 14 of the Commission s Rules of Practice and Procedure.
The Company respectfully represents that:
(a)The official name of the applicant and address of its principal business office
PacifiCorp
825 N.E. Multnomah, Suite 2000
Portland, OR 97232
(b)The state and date of incorporation: each state in which it operates as a utility
The Company was incorporated under Oregon law in August 1987 for the purpose of
facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation
and changing the state of incorporation of the Company from Maine to Oregon. The Company
uses, or intends to use (as applicable), the assumed business names of Pacific Power (in the
Company s Oregon, California and Washington service territories), Utah Power (in the
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Company s Utah service territories, however, this usage is subject to further change) and Rocky
Mountain Power (in the Company s Idaho and Wyoming service territories).
(c)The name, address, and telephone number of persons authorized to receive notices and
communications:
Bruce N. Williams, Treasurer
PacifiCorp
825 NE Multnomah, Suite 1900
Portland, OR 97232
Telephone: [phone]
Mark Moench, Senior Vice President
and General Counsel
Rocky Mountain Power
201 South Main, 23rd Floor
Salt Lake City, UT 84111
Telephone: [phone]
The Commission is also requested to dispatch copies of all notices and communications
to the following:
Gary R. Barnum
Stoel Rives LLP
900 S.W. Fifth Avenue, Suite 2600
Portland, OR 97204
Telephone: [phone]
It is respectfully requested that all formal correspondence and Staff requests regarding
this material be addressed to:
Bye-mail (preferred):datareq uest~paci ficorp. com
By regular mail:Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 300
Portland, Oregon 97232
By fax:[phone]
Informal questions should be directed to Brian Dickman at tel. [phone].
(d)The date by which Commission action is requested
By June 23 , 2006, in lieu of within 30 days after the filing of this application as required
by Idaho Code 961-904.
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(e)Background
In this application, the Company is seeking an order of the Commission authorizing the
Company to issue the Shares without a further order of the Commission. The Company requests
that such authorization remain in effect until all the Shares have been issued. The Parent may
also make equity contributions to the Company for which no Shares would be issued and no
Commission order would be required.
All ofthe Company s issued and outstanding Common Stock is directly held by the
Parent. The Parent is directly owned by MidAmerican Energy Holdings Company, an Iowa
corporation.
(t)Full description of the securities proposed to be issued
Common stock description : The Company will issue the Shares of its Common
Stock pursuant to its Third Restated Articles of Incorporation, as amended (Articles). The
Articles authorize the Company to issue up to 750 000 000 shares of its Common Stock. As of
the date ofthe Company s application in this case, 357 060 915 shares of Common Stock were
issued and outstanding, and all of those shares were held by the Parent.
Description of the transactions proposed: The Company proposes to issue and
sell the Shares, from time to time and for cash, pursuant to one or more subscription or other
agreements between the Company and the Parent. Sales would be made at a purchase price not
less than the book value of the Common Stock, determined as of the last day of the month prior
to each issuance.
Justification for the transactions: The Company believes that the proposed sale
and issuance of the Shares to the Parent, from time to time and in amounts that the Company and
the Parent may deem appropriate, would be reasonably required to (i) maintain or improve its
capitalization ratio, (ii) maintain or improve the Company s access to capital on reasonable
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terms, (iii) assist the Company in maintaining its current investment grade credit ratings and
(iv) enable the Company to acquire, construct, improve and maintain sufficient utility facilities to
serve its customers adequately and reliably at a reasonable cost.
The Company s senior long-term secured debt is currently rated "" by Standard &
Poor s and "A3" by Moody
(g)
Effect of the transactions:
The issuances will enable the Company to maintain or improve its capitalization. The
enclosed Exhibits D and E contain pro forma calculations that are based on the Company
unaudited financial statements for the quarter ended December 31 , 2005 and that assume the
issuance of all ofthe 30 000 000 Shares for consideration totaling approximately $332.4 million.
These calculations also assume a per share price equal to $11.08 per share, the book value of
common shares at February 28 2006. As described above, the exact amount of the issuances of
the Shares will vary with the book value ofthe Company s common stock, and the timing of
such issuances, if and when they occur, is at the discretion ofthe Company and the Parent. As
such, the calculations included on Exhibits D and E are not indicative ofthe exact pricing terms
and timing of the proposed issuance of the Shares, and the Company s capitalization will likely
be different from that included in Exhibit D.
(h)The purposes of the financings
The proceeds from the proposed issuances will be used for one or more of the following
purposes: (1) the acquisition of property; (2) the construction, completion, extension, or
improvement of the Company s facilities; (3) the improvement or maintenance of the Company
service; (4) the discharge or refunding of the Company s obligations; or (5) the reimbursement of
moneys actually expended for the foregoing purposes from income or from other treasury funds
not secured by or obtained from the issue, assumption or guarantee of securities.
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(i)Statement that applications for authority to finance are required to be filed with state
governments
In 2002 and 2005 , the Company filed applications (collectively, PHI Equity
Applications) for authority to issue and sell shares of Common Stock to its former direct
corporate parent, PacifiCorp Holdings, Inc., a Delaware corporation and an indirect subsidiary of
Scottish Power plc, a public limited company incorporated under the laws of Scotland. The PHI
Equity Applications were made with the Commission and also with the Oregon Public Utility
Commission and the Washington Utilities and Transportation Commission. The Company
subsequently issued 59 736 311 shares of its Common Stock to PacifiCorp Holdings, Inc. for a
total consideration of approximately $635 million.' The Company is making new filings with
those commissions, as well as with the Public Service Commission of Utah, and such filings are
(except for the identification of the Company s "Parent") substantially similar to the PHI Equity
Applications. This application is substantially similar to the other filings. The California Public
Utilities Commission and the Wyoming Public Service Commission have exempted the
Company from their respective securities statutes. The Company will not be required to obtain
authorization from the Securities and Exchange Commission under the Public Utility Holding
Company Act of 1935 , as amended, with respect to the proposed issuances.
A statement of the facts relied upon to show that the issuance is appropriate
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. The
1 While authority to issue approximately 5.1 million shares of the Company s common
stock to PacifiCorp Holdings, Inc. remains under the orders issued in connection with the PHI
Equity Applications, the Company has no intent to issue any such shares to PacifiCorp Holdings
Inc. because it is no longer the Company s "Parent." As such, the Company acknowledges that
the unused authority that remains under the Commission s Order Nos. 29144 and 29786 should
be terminated.
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proposed issuances are part of a program to finance the Company s facilities, taking into
consideration prudent capital ratios, earnings coverage tests and market uncertainties as to the
relative merits of the various types of securities the Company could sell.
Accordingly, the proposed issuances (1) are for lawful objects within the corporate
purposes ofthe Company, (2) are compatible with the public interest, (3) are necessary or
appropriate for or consistent with the proper performance by the Company of its service as a
public utility, (4) will not impair its ability to perform that service, and (5) are reasonably
necessary or appropriate for these purposes.
(k)A summary of rate changes which occurred during or after or which will become
effective after the period described by the income statement included as Exhibit E
Please see the disclosures beginning on page 13 of the Company s Annual Report on
Form 10-K for the year ended March 31 2006, enclosed herewith as Exhibit G. In addition:
In January 2005 the Commission approved the Company s application to reduce
the BPA credit effective January 31 2005. The change will result in an
reduction in the credit given to residential customers and a 20.5% reduction in the
credit given to small-farm customers. Changes in the level ofthe BP A credit
affect the net electricity costs to customers but do not impact the Company
results of operations or earnings.
In February 2005 the Public Service Commission of Utah approved a stipulation
settling a general rate case. Under the stipulation, the Company was awarded an
increase in prices of $51.0 million annually, resulting in an average price increase
of 4., effective as of March 1 2005.
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(1)Exhibits:
The following exhibits are made a part of this application:
Exhibit Description
Third Restated Articles of Incorporation effective November 20 , 1996, as
amended effective November 29, 1999
Bylaws, as amended effective May 23 , 2005
Resolutions of the Board of Directors authorizing the proposed issuances
Balance Sheet, actual and pro forma, dated December 31 , 2005
Income Statement, actual and pro forma, for the 12 months ended
December 31 , 2005
Source and Uses of Treasury Funds, actual and pro forma, dated
December 31 , 2005
Annual Report on Form 10- K for the year ended March 31 , 2006
http://sec.gov/Archives/edgar/datal75 5 94/000007 5 9406000028/p 1 Ok.htm
Exhibit to be filed with the Commission as soon as available.
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PRA YER
The Company respectfully requests that the Commission enter its order in this matter
effective upon issuance, granting authority to the Company for the proposed issuance and sale to
the Parent, from time to time and for cash, of up to 30 000 000 shares of the Company
Common Stock without a further order of the Commission. The Company requests that such
authorization remain in effect until all the Shares have been issued.
Dated at Portland, Oregon on June
~,
2006.
ACIFICORP
BY:N W;
Bruce N. Williams
Treasurer
Gary . B for
Stoel Rives L
900 S.W. Fifth Avenue, Suite 2600
Portland, OR 97204-1268
Telephone: [phone]
Attorneys for PacifiCorp
Portlnd2-4566140,60017507-00036
VERIFICATION
Bruce N. Williams, declare, under penalty of perjury, that I am the duly appointed
Treasurer ofPacifiCorp and am authorized to make this verification. The application and the
attached exhibits were prepared at my direction and were read by me. I know the contents of the
application and the attached exhibits, and they are true, correct, and complete of my own
knowledge except those matters stated on information or belief which I believe to be true.
WITNESS my hand and the seal of PacifiCorp on this ay of June, 2006.
Bruce N. Williams
(Seal)
Portlnd2-4566140,60017507-00036
BEFORE THE PUBLIC UTILITY COMMISSION
OF IDAHO
In the Matter of the Application of
P ACIFICORP for authority to issue and
sell up to 30 000 000 shares of Common
Stock to its Parent ORDER NO.
CASE NO. P AC-06-
On June -' 2006, PacifiCorp (Company) filed its application in the named matter
pursuant to Chapter 9, Title 61 , of the Idaho Code and the Commission s Rules of Procedure
(IDAPA 31.01.01.141-150) requesting an order authorizing the Company to issue and sell, from
time to time and for cash, up to 30 000 000 shares of the Company s Common Stock (Shares) to
its direct corporate parent, PPW Holdings LLC, a Delaware limited liability company (Parent).
Such issuances would be separate from any equity contributions by the Parent to the Company
for which no Shares would be issued. In 2002 and 2005 , the Company had sought and received
authority from the Commission (Order Nos. 29144 and 29786, respectively) to issue up to a
fixed number of shares of common stock to its former direct corporate parent, PacifiCorp
Holdings, Inc.
FINDINGS OF FACT
The Company was incorporated under Oregon law in August 1987 for the purpose of
facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation
and changing the state of incorporation ofPacifiCorp from Maine to Oregon. The Company uses
the assumed business names of Pacific Power (in the Company s Oregon, California and
Washington service territories), Utah Power (in the Company s Utah service territories) and Rocky
Mountain Power (in the Company s Idaho and Wyoming service territories).
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The proposed sales and issuances of the Shares are part of an overall financing plan to
benefit the Company by strengthening its balance sheet and increasing its equity. Proceeds from
the issuances will be used for the acquisition of utility property; the construction, completion
extension or improvement of utility facilities; the improvement or maintenance of service; the
discharge or lawful refunding of obligations which were incurred for utility purposes; or the
reimbursement of the Company s treasury for funds used for the foregoing purposes; all as
permitted under Idaho Code 961-901.
PacifiCorp proposes to issue and sell the Shares to its Parent at a purchase price not less
than the book value of the Common Stock, determined as of the last day of the month prior to
each issuance. Exhibit D to the Company s application in this case sets forth the Company s pro
forma capital structure, expressed in percentages and based on the Company s audited financial
statements for the quarter ended December 31 , 2005, after giving effect to an assumed issuance
of 30 000 000 shares of Common Stock to its Parent with an aggregate purchase price of
$332.4 million.
The Company has paid the fees required by Idaho Code 961-905.
CONCLUSIONS OF LAW
The Company is an electrical corporation within the definition of Idaho Code 961-119 and
is a public utility within the definition of Idaho Code 961-129.
The Idaho Public Utilities Commission has jurisdiction over this matter pursuant to the
provisions of Idaho Code 961-901 et seq., and the Application reasonably conforms to Rules 141
through 150 of the Commission s Rules of Procedure (IDAPA 31.01.01.141-.150).
The method of issuance is proper.
The general purposes to which the proceeds will be put are lawful purposes under the
Public Utility Law of the State ofldaho and are compatible with the public interest. However, this
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general approval of the general purposes to which the proceeds will be put is neither a finding of
fact nor a conclusion of law that any particular construction program of the Company which may
be benefited by the approval of this Application has been considered or approved by this Order
and this Order shall not be construed to that effect.
The proposed issuances are also generally consistent with the commitments made in the
MidAmerican sale case (Commission Order No. 29998 in Case No. P AC-05-8).
The issuance of an Order authorizing the proposed financing does not constitute agency
determination/approval of the type of financing or the related costs for ratemaking purposes, which
determination the Commission expressly reserves until the appropriate proceeding.
The Application should be approved.
ORDER
IT IS THEREFORE ORDERED that the application of PacifiCorp issue and sell, from
time to time and for cash, up to 30 000 000 shares of Common Stock to its Parent is hereby
granted.
IT IS FURTHER ORDERED that this authorization shall remain in effect until all the
Shares have been issued.
IT IS FURTHER ORDERED that the unused authority previously granted by the
Commission in its Order Nos. 29144 and 29786 is hereby terminated.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory
authority of this Commission with respect to rates, service, accounts, valuation, estimates, or
determination of costs, or any other matter that may come before this Commission pursuant to
this jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Chapter 9,
Title 61 Idaho Code or any act or deed done or performed in connection with this Order shall be
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construed to obligate the State of Idaho to payor guarantee in any manner whatsoever any security
authorized, issued, assumed or guaranteed under the provisions of Chapter 9, Title 61 Idaho Code.
IT IS FURTHER ORDERED that PacifiCorp shall file the following as they become
available:
The "Report of Securities Issued" required by 18 CFR 9 34.10.
Verified copies of any agreement entered into in connection with the Company
sale and issuance of the Shares to its Parent and all resolutions adopted by the Company s Board
of Directors relating to the sale and issuance of the Shares.
A verified statement setting forth in reasonable detail the disposition of the
proceeds of each sale and issuance of the Shares pursuant to this Order.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of
PacifiCorp s exhibits or other material accompanying the Application for any purpose other than
the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration in response to issues raised in the petition for reconsideration. See Idaho Code
961-626.
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DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho , this day
of -' 2006.
PAUL KJELLANDER, President
DENNIS S. HANSEN, Commissioner
MARSHA H. SMITH, Commissioner
ATTEST:
JEAN JEWELL, Secretary
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