20060630Decision memo.pdf

DECISION MEMORANDUM
TO:CO MMISSIO NER KJELLAND ER
COMMISSIONER SMITH
COMMISSIONER HANSEN
CO MMISSI 0 N SECRETARY
LEGAL
WORKING FILE
FROM:TOM MCKEOWN AND TERRI CARLOCK
DATE:JUNE 28, 2006
RE:IN THE MATTER OF PACIFICORP'S APPLICATION FOR AUTHORITY
TO ISSUE OF UP TO 30,000,000 SHARES OF AUTHORIZED COMMON
STOCK TO ITS PARENT PPW HOLDINGS LLC; CASE NO. PAC-06-
On June 5, 2006 , PacifiCorp applied for authority to offer, issue and sell up to 30 000 000
shares of authorized Common Stock, with a book value equal to $11.08 per share
, ("
Common
Stock"). The proceeds will be used for one or more of the following purposes: (a) the acquisition
of property, or the construction, completion, extension, or improvement of its facilities, (b) the
improvement or maintenance of service, (c) the discharge or refunding of its obligations, (d) the
reimbursement of monies actually expended from income or from the treasury ofPacifiCorp to the
extent permitted, or (e) for other purposes permitted by law.
PacifiCorp proposes to issue 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 ofthe date of the 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. The Company proposes to issue and sell 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 book value of the Common Stock
as determined as of the last day of the month prior to issuance.
The Company believes that the proposed sale and issuance of the Shares to the Parent, from
time to time and in the amounts that the Company and Parent may deem appropriate, would be
reasonably required to (1) maintain or improve its capitalization ratio , (2) maintain or improve the
Company s access to capital on reasonable terms (3) assist the Company in maintaining its current
DECISION MEMORANDUM JUNE 28, 2006
investment grade credit ratings and (4) enable the Company to acquire, construct, improve and
maintain sufficient utility facilities to serve its customers adequately and reliably at a reasonable
cost.
STAFF RECOMMENDATION
The proposed methods of Common Stock issuance provides the flexibility for PacifiCorp to
maintain its current senior long-term debt rating of "" by Standard & Poor s and "A3" by
Moody s. Staff recommends approval of the requested Common Stock issuance authority.
COMMISSION DECISION
Does the Commission accept Staffs recommendations to approve PacifiCorp s request to
issue up to 30 000 000 shares of authorized Common Stock.
Thomas McKeown
i:udmemos/dm paceO6 7
DECISION MEMORANDUM JUNE 28 , 2006