20070227final_order_no_30258.pdf

Office of the Secretary
Service Date
February 27, 2007
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
ROCKY MOUNTAIN POWER FOR
AUTHORITY TO (1) ISSUE AND SELL OR
EXCHANGE NOT MORE THAN $1,500,000,000
OF DEBT, (2) ENTER INTO CREDIT
SUPPORT ARRANGEMENTS, (3) ENTER
INTO CURRENCY SWAPS, AND
(4) CONTRIBUTE OR SELL ADDITIONAL
DEBT TO SPECIAL-PURPOSE ENTITIES.
CASE NO. P AC-07-
ORDER NO. 30258
On February 6, 2007, PacifiCorp dba Rocky Mountain Power (PacifiCorp; Company)
filed an Application that requested shelf authority to borrow not more than $1 500 000 000 in
debt, in one or more offerings.
Specifically, the Company seeks authority to: (1) issue and sell or exchange, in one
or more public offerings or private placements, not later than March 31 , 2012, fixed or floating
rate debt (Debt) in the aggregate principal amount of not more than $1 500 000 000 or, if such
Debt is issued at an original issue discount, such greater amount as shall result in an aggregate
offering price of not more than $1 500 000 000 (or its equivalent amount in, or based upon
foreign currencies determined at the time of issue); (2) enter into letter of credit arrangements
with one or more banks or such other agreements or arrangements as may be necessary or
appropriate, from time to time, to provide additional credit support for the payment of the
principal of, the interest on, and the premium (if any) on such Debt; (3) enter into one or more
currency swaps; and (4) contribute or sell additional Debt to special-purpose entities (SPEs) in an
amount based upon the common securities of the SPE and Commission approval of the proposed
guarantee and expense payment agreements relating to the preferred securities of the SPE. Such
authority would remain in effect until March 31 , 2012 so long as the Company maintains a BBB-
or higher senior secured debt rating, as indicated by Standard & Poor s Rating Services, and a
Baa3 or higher senior secured debt rating, as indicated by Moody s Investors' Service , Inc. After
reviewing the Application, the Commission grants the Company s request.
STAFF COMMENTS
Staff recommended approval of the shelf authority of $1. 5 billion debt for the period
through March 31 , 2012. The Company s prior commitment in Case No. PAC-99-3 to a cost
ORDER NO. 30258
test remains effective where foreign transactions will not be utilized for ratemaking unless and
until PacifiCorp can show that the all-in costs are not greater than the all-in cost of similar
domestic borrowings.
The commitments and terms in Case No. PAC-05-, Order No. 29787, remain
effective. As a condition of the extended authority, PacifiCorp s senior secured debt will be
rated at investment grade or PacifiCorp will follow the established procedure of notification if
the ratings drop. PacifiCorp should still be required to notify the Commission of its intent to
utilize a SPE and provide all details anticipated with the transaction. The required Quarterly
Financing Activity Reports and credit rating reports, to the extent not filed in the MEHC
Acquisition Case No. P AC-05-, Order No. 29998, will continue to be filed in this case.
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 of PacifiCorp from Maine to Oregon. The Company
currently serves customers as Rocky Mountain Power in Idaho , Utah and Wyoming and as
Pacific Power in California, Oregon and Washington.
The Company proposes to issue or exchange the Debt in either public offerings or
private placements, domestically or overseas from time to time not later than March 31 , 2012, so
long as the Company maintains a BBB- or higher senior secured debt rating, as indicated by
Standard & Poor s Rating Services, and a Baa3 or higher senior secured debt rating, as indicated
by Moody s Investors' Service , Inc. The Company finds that the variety of borrowing options
available to it dictate that it have the ability to select the debt instrument, market and maturity
that allows it to borrow at a lower all-in cost, consistent with its financial goals. The type
issue and its terms including interest rate will be determined at the date of issue and the
Company will notify the Commission Staff of the terms as soon as practical before the issue.
The type of issue will be based on the all-in costs and benefits of the alternatives. The Company
committed in Case No. P AC-99-3 to a cost test where foreign transactions will not be utilized
for ratemaking unless and until it can assure the all-in costs of the foreign borrowing is no more
than the all-in cost of similar domestic borrowings.
If the Debt bears a fixed rate, the interest rate will be set at the time of issuance. If
the Debt bears a floating rate, the interest rate will be set periodically based upon a published or
ORDER NO. 30258
quoted index. The Debt may be publicly or privately placed in the domestic or foreign markets.
Selection of the method of issuance and the location will depend on the relative all-in cost and
other benefits of the alternatives being considered.
The types of offerings contemplated by the Company in its Application include:
a. Conventional first mortgage bonds placed publicly or privately in the
domestic or foreign markets;
b. Secured or unsecured medium-term notes placed publicly or privately in
the domestic or foreign markets;
c. Floating rate debt placed publicly or privately in the domestic or foreign
markets;
d. Eurodollar financings placed publicly or privately overseas;
e. Debt issued overseas denominated in, or based upon, foreign currencies
combined with a currency swap to effectively eliminate the currency risk;
and
f. Subordinated debt placed publicly or privately in the domestic or foreign
markets and issued either alone or in conjunction with an offering of
preferred securities by an SPE organized by the Company.
The Application recognizes that a foreign currency offering involves a degree of risk
to a u.s. issuer because changes in the relationship between the value of the u.S. dollar and
foreign currency may increase the ultimate cost of the debt. Currency swaps allow a party to
make a series of payments in U.S. dollars in exchange for a series of payments in, or based upon
foreign currencies. Combining a foreign currency offering with a currency swap effectively
eliminates the currency risk by providing the issuer a stream of foreign currency payments equal
to obligations on the foreign debt.
The Company expects to issue or exchange the Debt in either public offerings or
private placements from time to time not later than March 31 , 2012 , so long as the Company
maintains a BBB- or higher senior secured debt rating, as indicated by Standard & Poor s Rating
Services , and a Baa3 or higher senior secured debt rating, as indicated by Moody s Investors
Service, Inc. The Debt may have various maturities, although medium-term notes generally have
maturities longer than nine months.
The net proceeds of the issuances will be used for one or more of the utility purposes
authorized by Idaho Code ~ 61-901. To the extent that any funds to be reimbursed were used for
ORDER NO. 30258
the discharge or refunding of obligations, those obligations or their precedents were originally
incurred in furtherance of a utility purpose.
Issuances of the Debt proposed are part of an overall plan to finance the cost of 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.
The Company has paid the fees required by Idaho Code ~ 61-905.
CONCLUSIONS OF LAW
PacifiCorp dba Rocky Mountain Power is an electrical corporation within the
definition of Idaho Code ~ 61-119 and is a public utility within the definition of Idaho
Code ~ 61-129. The Idaho Public Utilities Commission has jurisdiction over this matter pursuant
to the provisions of Idaho Code ~ 61-901 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 Utilities Laws of the State of Idaho and are compatible with the public interest. However
this 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 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 is approved.
ORDER
IT IS THEREFORE ORDERED that the Company s Application for authority
to: (1) issue and sell or exchange, in one or more public offerings or private placements, not
later than March 31 , 2012, fixed or floating rate Debt in the aggregate principal amount of not
more than $1 500 000 000 or, if the Debt is issued at an original issue discount, such greater
amount as shall result in an aggregate offering price of not more than $1 500 000 000 (or its
ORDER NO. 30258
equivalent amount in, or based upon, foreign currenCIes determined at the time of issue);
(2) enter into letter of credit arrangements with one or more banks or such other agreements or
arrangements as may be necessary or appropriate, from time to time, to provide additional credit
support for the payment of the principal of, the interest on, and the premium (if any) on the Debt;
and (3) enter into one or more currency swaps, is granted. Such authority would remain in effect
until March 31 , 2012, so long as the Company maintains a BBB- or higher senior secured debt
rating, as indicated by Standard & Poor s Rating Services, and a Baa3 or higher senior secured
debt rating, as indicated by Moody s Investors' Service , Inc.
IT IS FURTHER ORDERED that if the Company s senior secured debt ratings fall
below the investment grade levels referenced in the above ordering paragraph (the
Downgrade ), the Company s authority to incur Debt as provided in this Order will not
terminate, but instead such authority will continue for a period of 364 days from the date of the
Downgrade (the "Continued Authorization Period") provided that the Company:
(1) Promptly notifies the Commission in writing of the Downgrade; and
(2) Files a supplemental application within seven (7) days after the
Downgrade, requesting a supplemental order ("Supplemental Order
authorizing the Company to continue to incur Debt as provided in this
Order, notwithstanding the Downgrade. Until Rocky Mountain Power
receives the Supplemental Order, any Debt incurred or issued by the
Company during the Continued Authorization Period will become due or
mature no later than the final date of the Continued Authorization Period.
IT IS FURTHER ORDERED that the Company shall file with the Commission an
application seeking approval of any proposed contribution or sale by the Company of additional
Debt to special-purpose entities (SPEs) before such an agreement may be deemed effective.
IT IS FURTHER ORDERED that the Company shall file with the Commission on a
quarterly basis debt reports including any Debt authorized by this Order and, to the extent not
otherwise an obligation of the Company pursuant to Commitment I 20 approved by Order
No. 29998 in Case No. P AC-05-, all credit rating agency reports related to the Company
issued during the quarter.
IT IS FURTHER ORDERED that the Company shall file the following as they
become available:
a. The "Report of Securities Issued" required by 18 C.R. ~ 34.1 O.
ORDER NO. 30258
b. Verified copies of any agreement entered into in connection with the
issuance of Debt pursuant to this order.
c. A verified statement setting forth in reasonable detail the disposition of the
proceeds of each offering made pursuant to this order.
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 prOVlSlon of
Chapter 9, Title 61 , Idaho Code, or any act or deed done or performed in connection with this
Order shall be 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 the Company notify the Commission as soon as
possible prior to the issuance with as much information as possible on the issue. The notice may
be by telephone or facsimile to be followed with letter of verification if notice is less than seven
days.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of the Company 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. See Idaho Code ~ 61-626.
ORDER NO. 30258
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this ;J. 7 ~
day of February 2007.
MARSHA H. SMITH, COMMISSIONER
" (~~.-! /\...-.
ATTEST:
J a D. Je~ell
Commission Secretary
O:PAC-07-
ORDER NO. 30258