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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNTAIN POWER FOR
APPROVAL OF CHANGES TO ITS
ELECTRIC SERVICE SCHEDULES
CASE NO. P AC-07-
Direct Testimony of Bruce N. Williams
ROCKY MOUNTAIN POWER
CASE NO. P AC-07-
June 2007
Please state your name, business address and present position with the
Company (also referred to as Rocky Mountain Power).
My name is Bruce N. Williams. My business address is 825 NE Multnomah
Suite 1900, Portland, Oregon 97232. I am the Vice President and Treasurer for
the Company.
Qualifications
Please briefly describe your education and business experience.
I received a Bachelor of Science degree in Business Administration with a
concentration in Finance from Oregon State University in June 1980. I also
received the Chartered Financial Analyst designation upon passing the
examination in September 1986. I have been employed by the Company for 22
years. My business experience has included financing of the Company s electric
operations and non-utility activities, investment management, and investor
relations.
Please describe your present duties.
I am responsible for the Company s treasury, credit risk management, pension
and other investment management activities. In this proceeding, I am responsible
for the preparation of the Company s embedded cost of debt and preferred equity,
and the testimony related to capital structure.
Purpose of Testimony
What is the purpose of your testimony in this proceeding?
I will first present a financing overview of the Company. Next, I will discuss the
planned amounts of common equity, debt, and preferred stock to be included in
Williams, Di -
Rocky Mountain Power
the Company s capital structure. I will then analyze the embedded cost of debt
and preferred stock supporting Rocky Mountain Power s electric operations in the
state of Idaho as of March 2007, with anticipated changes through December
2007. This analysis includes the known and measurable changes to the debt and
preferred stock portfolios and capital contributions from our parent company.
What financial information is your analysis based on?
The historical test period used in this case is the twelve months ending December
2006, updated with known and measurable changes. To match Rocky Mountain
Power s cost as closely as possible with customers' rates , the capital structure
applied in this case is the Company s actual capital structure as of March 31
2007, with known and measurable changes occurring through December 31
2007. This time period captures significant transactions between the end of the
historical test period and the beginning of the rate effective period. Rocky
Mountain Power believes it is appropriate to include these transactions in this
proceeding as it reflects ongoing capital costs to fund operations. As I discuss
later, I propose changes to remove long-term debt and preferred stock that will
mature or is subject to mandatory redemption prior to December 31 , 2007.
What is the overall cost of capital that Rocky Mountain Power is proposing
in this proceeding?
Rocky Mountain Power is proposing an overall cost of capital of 8.52 percent.
This cost includes the return on equity recommendation from Dr. Sam Hadaway
and the following capital structure and costs:
Williams, Di - 2
Rocky Mountain Power
Rocky Mountain Power
Overall Cost of Capital
Percent of Weighted
Com onent Total Cost Aver
Long Term Debt 49.26%07%
Preferred Stock 5.41%03%
Common Stock Equity 50.4%10.75%42%
100.52%
Financing Overview
How does the Company finance its electric utility operations?
The Company finances the cash flow requirements of its regulated utility
operations through a mix of debt and equity securities designed to provide a
competitive cost of capital and predictable capital market access.
How does the Company meet its debt and preferred equity financing
requirements?
The Company relies on a mix of first mortgage bonds, other secured debt, tax
exempt debt and preferred stock to meet its long-term debt and preferred stock
financing requirements. The Company has concluded the majority of its long-
term financing utilizing secured first mortgage bonds issued under the Mortgage
Indenture dated January 9, 1989. Exhibit No. 7 shows that, as of December 31
2007, the Company will have approximately $3.8 billion of first mortgage bonds
outstanding, with an average cost of 6.55 percent and average remaining maturity
of 16 years. Presently, all outstanding first mortgage bonds bear interest at fixed
Williams, Di - 3
Rocky Mountain Power
rates. Proceeds from the issuance of the first mortgage bonds (and other fmancing
instruments) are used to finance the combined utility operations across the
Company s six-state service territory.
Another important source of financing has been the tax-exempt financing
associated with certain qualifying equipment at power generation plants. Under
arrangements with local counties and other tax-exempt entities, the Company
borrows the proceeds and guarantees the repayment of the long-term debt in order
to take advantage of their tax -exempt status in financings. As of December 31
2007, the Company s tax-exempt portfolio will be $738 million in principal
amount which had an average cost of4.74 percent at March 31 2007 (which
includes the cost of issuance and credit enhancement).
Capital Structure
How does the Company determine the amount of common equity, debt, and
preferred stock to be included in the planned capital structure?
As a regulated utility, Rocky Mountain Power has a duty and an obligation to
provide adequate, efficient, just and reasonable service to customers in its Idaho
service territory while balancing cost and risk. In order to fulfill this obligation
Rocky Mountain Power must make significant capital expenditures for plant and
network maintenance, power generation and delivery infrastructure, clean air
investments, hydro re-licensing and other activities. Through its planning
process, the Company determined the amounts of new financing needed to
support these activities and calculated the required equity and debt ratios required
to maintain our current' A-' credit rating for senior secured debt. These
Williams, Di - 4
Rocky Mountain Power
determinations are then reflected in the Company s budget.
Have the Company s recent actions and budgets reflected an expectation that
the capital structure will include an increase in equity?
Yes. Following the acquisition by MidAmerican Energy Holdings Company on
March 21 , 2006, the Company has received a total of $21 5 million of cash capital
contributions from its direct parent company, PPW Holdings, LLC. Similarly, the
Company s 2007 budget includes additional cash equity contributions of $150
million prior to June 30, 2007.
Why does the Company s budget reflect the need for additional equity in the
capital structure?
The budget reflects the cost increases described in this case, including fuel, net
power costs, certain labor related costs, investment in major supply side
resources, thermal plant maintenance, hydro re-licensing and clean air
requirements. These cost increases, coupled with the increasingly more rigorous
expectations of the credit rating agencies for credit metrics and balance sheet
strength, mean that additional equity will be required along with improved
business results and other considerations to support the Company s current '
credit rating from Standard & Poor , its 'A3' rating from Moody s Investors
Service ("Moody ), and to prevent Fitch Ratings from further downgrades, with
the last downgrade occurring in January 2006.
How does this projected capital structure match up to comparable electric
utilities?
The projected capital structure is consistent with the comparable group that Dr.
Williams, Di - 5
Rocky Mountain Power
Hadaway has selected in his estimate of return on equity. Both the Company and
the group of comparable companies show an increasing percentage of common
equity in their capital structures. The Value Line estimate of common equity ratio
for the comparable group averages 50.0 percent.
Please describe the changes to the Company s levels of debt financing.
Through the period ending December 31, 2007, the balance of the outstanding
long-term debt will change through maturities, principal amortization and sinking
fund requirements. Based upon the long-term debt series outstanding on March
2007, I have calculated the reduction to the outstanding balances for
maturities, principal amortization and sinking fund requirements, which are
scheduled to occur during the period ending December 31 , 2007. The total long-
term debt maturities and principal amortized over this period is $119.9 million.
The resulting $4.5 billion of long-term debt is consistent with the Company
budget and is necessary to fund our ongoing operations. At this time the
Company has no plans to issue additional long-term debt prior to December 31
2007.
Please describe the changes to the Company s level of preferred equity
financing.
For preferred stock, I started with the balance outstanding at March 31 2007, and
made a reduction of$37.5 million of preferred stock to reflect the final sinking
fund requirement of the $7.48 No Par Serial Preferred stock series that will occur
on June 15 2007.
Williams, Di - 6
Rocky Mountain Power
Is the proposed capital structure consistent with the Company s current
credit rating?
Yes. This planned capital structure is intended to enable the Company to deliver
its budgeted capital expenditures while maintaining credit ratios that support the
continuance of its current' A-' credit rating.
What is the relationship between a strong credit rating and customer
benefits?
The credit rating assigned to a utility by the credit rating agencies directly affects
the price the utility pays to attract the capital necessary to support its current and
future operating needs. A strong credit rating directly benefits customers by
reducing immediate and future borrowing costs related to the financing needed to
support regulatory operations.
During periods of capital market disruptions, higher-rated companies are
more likely to have continuous, uninterrupted access to capital. This is not
always the case with lower-rated companies, which during such periods may find
themselves either unable to secure capital or able to secure capital only on
unfavorable terms and conditions.
In addition, higher-rated companies have greater access to the long-term
markets for power and fuel purchases and sales. Such access provides these
companies with more alternatives when attempting to meet the current and future
load requirements of their customers. Finally, a company with strong ratings will
often avoid having to meet costly collateral requirements that are typically
imposed on lower-rated companies when securing power or fuel in these markets.
Williams, Di - 7
Rocky Mountain Power
Is the Company subject to rating agency debt imputation associated with
Purchased Power Agreements?
Yes. Rating agencies and financial analysts consider Purchased Power
Agreements to be debt-like and will impute debt and related interest when
calculating financial ratios.
For example, Standard & Poor s will adjust published results and add in
debt and interest resulting from purchase power agreements when assessing the
Company s creditworthiness. They do so in order to obtain a more accurate
assessment of a company s financial commitments and fixed payments. Exhibit
No.8 is the May 12 2003 publication by Standard & Poor s detailing its view of
the debt aspects of purchase power agreements which was refined by their March
, 2007 publication (Exhibit No.9).
How does this impact Rocky Mountain Power?
During a recent ratings review, Standard & Poor s evaluated the Company
purchase power agreements and other related long-term commitments. Following
this review, Standard & Poor s added approximately $537 million of additional
debt and related interest expense to our leverage and coverage tests due to
PacifiCorp s purchase power agreements.
Financing Cost Calculation
How did you calculate the Company s embedded costs of long-term debt and
preferred stock?
I calculated the embedded costs of debt and preferred stock using the
methodology relied upon in the Company s previous rate filings in Idaho and
Williams, Di - 8
Rocky Mountain Power
elsewhere.
Please explain the cost of debt calculation.
I calculated the cost of debt by issue, based on each debt series' interest rate and
net proceeds at the issuance date, to produce a bond yield to maturity for each
series of debt. It should be noted that in the event a bond was issued to refinance
a higher cost bond, the pre-tax premium and unamortized costs, if any, associated
with the refinancing were subtracted from the net proceeds of the bonds that were
issued. The bond yield was then multiplied by the principal amount outstanding of
each debt issue, resulting in an annualized cost of each debt issue. Aggregating
the annual cost of each debt issue produces the total annualized cost of debt.
Dividing the total annualized cost of debt by the total principal amount of debt
outstanding produces the weighted average cost for all debt issues. This is the
Company s embedded cost of long-term debt.
How did you calculate the embedded cost of preferred stock?
The embedded cost of preferred stock was calculated by first determining the cost
of money for each issue. This is the result of dividing the annual dividend rate by
the per share net proceeds for each series of preferred stock. The cost associated
with each series was then multiplied by the total par or stated value outstanding
for each issue to yield the annualized cost for each issue. The sum of annualized
costs for each issue produces the total annual cost for the entire preferred stock
portfolio. I then divided the total annual cost by the total amount of preferred
stock outstanding to produce the weighted average cost of all issues. This is the
Company s embedded cost of preferred stock.
Williams, Di - 9
Rocky Mountain Power
Embedded Cost of Long-Term Debt
What is the Company s embedded cost of long-term debt?
Exhibit No.7 shows the embedded cost of long-term debt at March 31 , 2007
adjusted for the known and measurable changes discussed above to be 6.
percent.
Embedded Cost of Preferred Stock
What is the Company s embedded cost of preferred stock?
Exhibit No. 10 shows the embedded cost of preferred stock at March 31 2007
adjusted for the known and measurable changes discussed above to be 5.41
percent.
Does this conclude your testimony?
Yes.
Williams, Di - 10
Rocky Mountain Power
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Case No. PAC-07-
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Witness: Bruce N. Williams
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Bruce N. Williams
Pro Forma Cost of Long-Term Debt
June 2007
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, ,
J ',. ':' Case No. PAC-07-
-- " " -
L, i ~' '-
" -
' '- 'Exhibit No.
, '
Witness: Bruce N. Williams
::U ll,
~;,, :~:~,~;";~'::;
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Bruce N. Williams
Standard & Poor s Utilities & Perspectives
May 12 2003 Publication
June 2007
Last Week's Rating
Reviews and Activity .....
Did You Know?
World Energy Consumption
and Regional Carbon Dioxide
Emissionsin2001..........
Last Week'
Financing Activity
Duke Energys $700 Million
Senior Notes Are Rated '' . . . 11
Wisconsin Electric Power
$635 Million Debt Issue Is
Rated '
' .................
North Carolina Eastern
Municipal Power's Bonds
Are Rated 'BBB' ............ 12
Medco Energi's Proposed
$200 Million Notes Are
Rated '' .. .. .. .. .. .. .. .. . 12
Utility Credit Rankings
Electric/Gas/Water. . . . . . . . , 14
Telecommunications. . . . . . . . 17
International..............
Key Contacts ............
STANDARD
&POOIrS
Rocky Mountain Power
Exhibit No.8 page 1 of 20
CASE NO. PAC-E-OS-O7
Witness BJUCe N. Williams
May 12. 2003
Vol. 12, No, 19
Standard Poor~
. '
TILITIES~
RSPECTIVES
GLOBAL UTILITIES RATING SERVICE
Feature Article
Buy Versus Build": Debt Aspects of
Purchased-Power Agreements ..................................
Utility Spotlight
High Commodity Prices Bode Well For Stone
Energy s Cash Flow .....................................,.........
Special Report
Survey of State Regulators Reveals Focus
on U.S. Utilities' Financial Strength.. .
. . . . . . . . . . . . . . . . . . . , . . . . . .
News Comments
Laclede Group s and Unit's Ratings Are Lowered; Outlook Stable. . .
. . . . . . . ~ . . . . . . . . .
Sierra Pacific Power's Water Facilities Bond Rating Is Raised to 'BB' .................
Empresa Electrica Guacolda Ratings Are Affirmed; Off Watch
. . . . . . . . . . . . . . . . . . . . . .
Spanish Utilities Gas Natural, Iberdrola Ratings Are Affirmed; Off Watch
. . . . . . . . . . . . .
Enel's and Subs' Ratings Are Affirmed; Off Watch, Outlook Negative. . . . . . . . . . . . . . , . .
Petrozuata Finance Ratings Is Affirmed; Off Watch. . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .
Feature Article
Rocky Mountain Power
Exhibit No.8 page 2 of20
CASE NO. PAC-E-O5~7
Witness Bruce N. Williams
Buy Versus Build": Debt Aspects of Purchased-Power Agreements
tandard & Poors Ratings Services views electric utility
purchased-power agreements (PPA) as debt-like in
nature, and has historically capitalized these obligations on
a sliding scale known as a "risk spectrum: Standard &
Poors applies a 0% to 100% "risk factor" to the net present
value (NPV) of the PPA capacity payments, and designates
this amount as the debt equivalent.
While determination of the appropriate risk factor takes
several variables into consideration, including the econom-
ics of the power and regulatory treatment, the overwhelm-
ing factor in selecting a risk factor has been a distinction in
the likelihood of payment by the buyer. Specifically,
Standard & Poors has divided the PPA universe into two
broad categories: take-or-pay contracts (TOP; hell or high
water) and take-and-pay contracts (TAP; performance
based). To date, TAP contracts have been treated far more
leniently (e,g., a lower risk factor is applied) than TOP con-
tracts since failure of the seller to deliver energy, or per-
form, results in an attendant reduction in payment by the
buyer, Thus, TAP contracts were deemed substantially less
debt-like. In fact, the risk factor used for many TAP obliga-
tions has been as low as 5% or 10% as opposed to TOPs,
which have been typically at least 50%.
Standard & Poors originally published its purchased-
power criteria in 1990, and updated it in 1993, Over the past
decade, the industry underwent significant changes related
to deregulation and acquired a history with regard to the
performance and reliability of third-party generators. In gen-
eral. independent generation has performed well; the likeli-
hood of nondelivery-and thus release from the payment
obligation-is low, As a result Standard & Poors believes
that the distinction between TOPs and TAPs is minimal, the
result being that the risk factor for TAPs will become more
stringent. This article reiterates Standard & Poors views on
purchased power as a fixed obligation, how to quantify this
risk, and the credit ramifications of purchasing power in
light of updated observations,
Why Capitalize PPAs?
Standard & Poors evaluates the benefits and risks of pur-
chased power by adjusting a purchasing utility s reported
financial statements to allow for more meaningful compar-
isons with utilities that build generation, Utilities that build
typically finance construction with a mix of debt and equity,
A utility that leases a power plant has entered into a debt
transaction for that facility; a capital lease appears on the
utilitys balance sheet as debt. A PPA is a similar fixed com-
mitment. When a utility enters into a long-term PPA with a
fixed-cost component it takes on financial risk, Furthermore,
utilities are typically not financially compensated for the risks
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Next Page ~Page 2 May 12, 2003
they assume in purchasing power, as purchased power is usu-
ally recovered dollar-for-dollar as an operating expense,
As electricity deregulation has progressed in some .coun-
tries, states, and regions, the line has blurred between tra-
ditional utilities. vertically integrated utilities. and merchant
energy companies, all of which are in the generation busi-
ness, A common contract that has emerged is the tolling
agreement which gives an energy merchant company the
right to purchase power from a specific power plant. (see
Evaluating Debt Aspects of Power Tolling Agreements:'
published Aug; 26, 2002), The energy merchant or toller, is
typically responsible for procuring and delivering gas to the
plant when it wants the plant to generate power, The power
plant operator must maintain plant availability and produce
electricity at a contractual heat rate. Thus, tolling contracts
exhibit characteristics of bpth PPAs and leases, However,
toilers are typically unregulated entities competing in a
competitive marketplace. Standard & Poors has determined
that a 70% risk factor should be applied to the NPV of the
fixed tolling payments, reflecting its assessment of the risks
borne by the toller, which are:
. Rxed payments that cover debt financing of power plant
(typically highly leveraged at about 70%),
. Commodity price of inputs,
. Energy sales (price and volume), and
. Counterparty risk,
Determining the Risk Factor for PPAs
Altematively, most entities entering into long-term PPAs, as
an alternative to building and owning power plants, continue
to be regulated utilities. Observations over time indicate the
high likelihood of performance on TAP commitments and,
thus, the high likelihood that utilities must make fixed pay-
ments, However, Standard & Poors believes that vertically
integrated, regulated utilities are afforded greater protection
in the recovery of PPAs, compared with the recovery of fixed
tolling charges by merchant generators, There are two rea-
sons for this. First, tariffs are typically set by regulators to
recover costs, Second, most vertically integrated utilities con-
tinue to have captive customers and an obligation to serve, At
a minimum, purchased power, similar to capital costs and fuel
costs, is included in tariffs as a cost of service.
As a generic guideline for utilities with PPAs included as
an operating expense in base tariffs, Standard & Poor's
believes that a 50% risk factor is appropriate for long-term
commitments (e.g, tenors greater than three years), This risk
factor assumes adequate regulatory treatment, including
recognition of the PPA in tariffs; otherwise a higher risk factor
could be adopted to indicate greater risk of recovery.
Standard & Poor's will apply a 50% risk factor to the capacity
Standard & Poor's Utilities & Perspectives
Feature Article
Rocky Mountain Power
Exhibit No.8 page 3 of20
CASE NO. PAC-E.oS.(17
Witness BIUCe N. Williams
component of both TAP and TOP PPAs, Where the capacity
component is not broken out separately, we will assume that
50% of the payment is the capacity payment. Furthermore,
Standard & Poors will take counterparty risk into account
when considering the risk factor, If a utility relies on any indi-
vidual seller for a material portion of its energy needs, the
risk of nondelivery will be assessed, To the extent that energy
is not delivered, the utility will be exposed to replacing this
power, potentially at market rates that could be higher than
contracted rates and potentially not recoverable in tariffs.
Standard & Poors continues to view the recovery of
purchased-power costs via a fuel-adjustment clause, as
opposed to base tariffs, as a material risk mitigant. A month-
ly or quarterly adjustment mechanism would ensure dollar-
for-dollar recovery of fixed payments without having to
receive approval from regulators for changes in fuel costs.
This is superior to base tariff treatment. where variations in
volume sales could result in under-recovery if demand is
sluggish or contracting, For utilities in supportive regulatory
jurisdictions with a precedent for timely and full cost recov-
ery of fuel and purchased-power costs, a risk factor of as low
as 30% could be used. In certain cases, Standard & Poor
may consider a lower risk factor of 10% to 20% for distribu-
tion utilities where recovery of certain costs, including
stranded assets, has been legislated, Qualifying facilities
that are blessed by overarching federal legislation may also
fall into this category, This situation would be more typical of
a utility that is transitioning from a vertically integrated to a
disaggregated distribution company. Still, it is unlikely that
Table 1
ABC Utility Co. Adjustment to Capital Structure
no portion of a PPA would be capitalized (zero risk factor)
under any circumstances.
The previous scenarios address how purchased power is
quantified for a vertically integrated utility with a bundled
tariff. However, as the industry transitions to disaggregation
and deregulation, various hybrid models have emerged. For
example, a utility can have a deregulated merchant energy
subsidiary, which buys power and off-sells it to the regulat-
ed utility, The utility in turn passes this power through to
customers via a fuel-adjustment mechanism, For the mer-
chant entity, a 70% risk factor would likely be applied to
such a TAP or tolling scheme, But for the utility, a 30% risk
factor would be used. What would be the appropriate treat-
ment here? In part, the decision would be driven by the rat-
ings methodology for the family of companies. Starting from
a consolidated perspective, Standard & Poors would use a
30% risk factor to t:alculate one debt equivalent on the con-
solidated balance sheet given that for the consolidated
entity the risk of recovery would ultimately be through the
utility's tariff. However, if the merchant energy company
were deemed noncore and its rating was more a reflection
of its stand-alone creditworthiness, Standard & Poor
would impute a debt equivalent using a 70% risk factor to
its balance sheet. as well as a 30% risk-adjusted debt
equivalent to the utility, Indeed, this is how the purchases
would be reflected for both companies if there were no
ownership relationship, This example is perhaps overly
simplistic because there will be many variations on this
theme, However, Standard & Poors will apply this logic as
Original capital structure Adjusted capital structure
Debt 1.400 1.400
Adjustment to debt 327
Preferred stock 200 200
Common equity 000 000
Total capitalization 600 100 927 100
Table 2
ABC Utility Co. Adjustment to Pretax Interest Coverage
Original pretex
interest coverage
Adjusted pretax
interest coverage
Net income 120
Income taxes 300
Interest expense 115 115 =2,
Pretax available 300
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Next Page ~Page 3 May 12, 2003
(300+331
1115+33)=2,
Standard & Poor s Utilities 81 Perspectives
Feature Article
KOCKy MOUmam t'ower
Exhibit No, 8 page 4 of 20
CASE NO, PAC-E-O7-
Witness Bruce N, Williams
a starting point. and modify the analysis case-by-case, com-
mensurate with the risk to the various participants,
Adjusting Financial Ratios
Standard & Poor's begins by taking the NPV of the annual
capacity payments over the life of the contract. The ratio-
nale for not capitalizing the energy component, even though
it is also a nondiscretionary fixed payment, is to equate the
comparison between utilities that buy versus build-i.e.
Standard & Poors does not capitalize utility fuel contracts.
In cases where the capacity and energy components of the
fixed payment are not specified, half of the fixed payment is
used as a proxy for the capacity payment. The discount rate
is 10%. To determine the debt equivalent. the NPV is multi-
plied by the risk factor. The resulting amount is added to a
utilitys reported debt to calculate adjusted debt. Similarly,
Standard & Poor s imputes an associated interest expense
equivalent of 10%-10% of the debt equivalent is added to
reported interest expense to calculate adjusted interest cov-
erage ratios. Key ratios affected include debt as a percent-
age of total capital. funds from operations (FFO) to debt.
pretax interest coverage, and FFO interest coverage, Clearly,
the higher the risk factor, the greater the effect on adjusted
financial ratios. When analyzing forecasts, the NPV of the
PPA will typically decrease as the maturity of the contract
approaches.
Utility Company Example
To illustrate some of the financial adjustments, consider the
simple example of ABC Utility Co. buying power from
Independent Power Co. Under the tenns of the contract.
annual payments made by ABC Utility start at $90 million in
2003 and rise 5% per year through the contract's expiration
in 2023. The NPV of these obligations over the life of the
contract discounted at 10% is $1.09 billion, In ABC's case,
Standard & Poors chose a 30% risk factor, which when mul-
tiplied by the obligation results in $327 million, Table 1 illus-
trates the adjustment to ABC's capital structure, where the
$327 million debt equivalent is added as debt, causing
ABC's total debt to capitalization to rise to 59% from 54%
(48 plus 11), Table 2 shows that ABC's pretax interest cover-
~ Back to
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Next Page ~Page May 12, 2D03
age was 2,6x, without adjusting for off-balance-sheet oblig-
ations, To adjust for the XYZ capacity payments. the $327
million debt adjustment is multiplied by a 10% interest rate
to arrive at about $33 million. When this amount is added to
both the numerator and the denominator, adjusted pretax
interest coverage falls to 2.3x,
Credit Implications
The credit implications of the updated criteria are that
Standard & Poors now believes that historical risk factors
applied to TAP contracts with favorable recovery mecha-
nisms are insufficient to capture the financial risk of these
fixed obligations. Indeed, in many cases where 5% and 10%
risk factors were applied, the change in adjusted financial
ratios (from unadjusted) was negligible and had no effect on
ratings. Standard & Poor s views the high probability of
energy delivery and attendant payment warrants recognition
of a higher debt equivalent when tapitalizing PPAs.
Standard & Poor's will attempt to identify utilities that are
more vulnerable to modifications in purchased-power
adjustments. Utilities can offset these financial adjustments
by recognizing purchased power as a debt equivalent. and
incorporating more common equity in their capital struc-
tures. However, Standard & Poors is aware that utilities
have been reluctant to take this action because many regu-
lators will not recognize the necessity for, and authorize a
retum on, this additional wedge of common equity.
Altematively, regulators could authorize higher retums on
existing common equity or provide an incentive return mech-
anism for economic purchases. Notwithstanding unsupport-
ive regulators. the burden will still fall on utilities to offset
the financial risk associated with purchases by either quali-
tative or quantitative means, 8
Jeffrey Wolinsky, CFA
New York (1) 212 438-2117
Dimitri Nikas
New York (1) 212-438-7807
Anthony Flintoff
London (44) 20-7826-3874
Laurence Conheady
Melboume (61) 3-9631-2036
Standard & Poor Utilities & Perspectives
Utility
Rocky Mountain Power
Exhibit No, 8 page 5 of 20
CASE NO, PAC-07-O5
Witness Bruce N, Williams
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'"
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High Commodity Prices Bode Well For Stone Energy s Cash Flow
ndependent oil and gas company Stone Energy Corp.
(BB/Stable/-) is poised to generate strong free cash flow
in 2003 as a result of very strong commodity prices recorded
during the first quarter and the likelihood that they will
remain higher than average for the remainder of the year.
Based on Standard & Poors Ratings Services commodity pric-
ing assumptions for 2003, which is $24 per barrel for West
Texas Intermediate crude oil and $4,00 per thousand cubic
feet equivalent (mcfe) for Henry-Hub-traded natural gas,
Stone should generate in excess of $300 million of operating
cash flow, compared with the companys projected capital
spending budget of about $240 million, Although Stone may
initially use this free cash flow to pay down debt. the liberat-
ed liquidity likely will be used to fund potential acquisitions.
The ratings on Lafayette, La,based Stone Energy reflect
the challenges the company faces as a participant in the
volatile, capital-intensive exploration and production segment
of the oil and natural gas industry, with a short reserve life,
the bulk of its assets located in high-cost regions, and some-
what aggressive financial policies. These risks are tempered
by low production costs, a proven exploration staff, and a
high percentage of company-operated properties,
Stones proved reserves as of Dec. 31, 2002 were 750.
billion cubic feet equivalent (58% gas; 24% proved undevel-
oped), The company s reserves are concentrated in the Gulf
of Mexico and Gulf Coast (93% of Stones total proven
reserves and 95% of production), where reserves generally
deplete rapidly. Stones remaining assets are in the Rocky
Mountains. Stone intends to expand these assets because
of the opportunity to modestly diversify its reserve base
with longer-lived properties.
Standard & Poors expects that Stone will produce about
300 million cubic feet equivalent (mmcfe) per day in 2003
compared with 286 mmcfe per day in 2002, yielding a short
reserve life (total provedl of about 7.1 years. Stones short
reserve life heightens the importance of consistent invest-
ment to maintain production and replace produced reserves,
and could necessitate external financing to sustain produc-
tion and maintain reserves if hydrocarbon prices fall to
lower-than-normallevels,
Stone somewhat compensates for its short reserve life
through its acreage position, demonstrated exploration skills,
and maintenance of capital available for acquisitions.
Although Stone did not fully replace reserves in 2002 (replac-
ing 79% of production), Stones management believes that
this is an anomaly because Stone generally replaces its
reserves through a combination of drilling and complimentary
acquisitions. During 2002, Stone did not complete any materi-
al acquisitions. Over the past five years (1998 through 2002),
Stone on average replaced 171% of its production at an aver-
age cost of $2.50 per mcfe, with 124% provided through the
drillbit and the balance through acquisitions, Stones average
Page 5 May 12, 2003
all-sources finding and development costs are high compared
with onshore operators, because of the higher capital costs
associated with working in coastal waters. However, the eco-
nomics of Stone s Gulf of Mexico properties may be better
than lower-cost onshore operators because of premium real-
ized prices and the fast-producing nature of the properties.
These factors also contribute to low unit cash production
costs; in 2003, Stone is expected to maintain its highly com-
petitive lease operating and general and administrative
expenses of about 60 cents per mete and 10 cents per mefe,
respectively.
Stone s capital structure is adequate for the rating cate-
gory, even after considering the incurrence of about $300
million of acquisition-related debt in 2001. As of Dec. 31,
2002, total debt-to-total capital was 43%, when compared
with 22% in 2000. In 2003, improvement in debt leverage is
expected from increased retained earnings. Cash flow and
profitability measures in 2003 should improve markedly
because of strong hydrocarbon prices. Furthermore, the com-
pany has reduced the risks to its cash flow of pricing
declines through attractively priced commodity price hedg-
ing (about 30% of production). For the medium term, even in
a low commodity price environment. Stone should be capa-
ble of delivering EBITDA interest cov.erage of more than 9x
and funds from operations in excess of 50%, In 2003,
assuming a NYMEX natural gas price of $24 per barrel for
West Texas Intermediate crude oil and $4,00 per mete for
Henry-Hub-traded natural gas, Stone should generate more
than $300 million of operating cash flow, which should fully
fund the companys projected capital spending budget of
about $240 million.
As of March 10, 2003, Stone s liquidity consisted of cash
balances and short-term investments of $28 million and
about $161 million available on its $350 million ($300 mil-
lion borrowing base) unsecured facility. These sources
should provide the company with adequate near-term liquid-
ity as the company does not intend to outspend internal
cash flow and has no near-tenn debt maturities until
December 2004, when the credit facility matures.
Full availability of Stones revolving credit facility is likely
because the company is easily outperforming its financial
covenants that include a maximum consolidated debt-to-
EBITDA ratio of 3,25x,
The stable outlook reflects Standard & Poors expecta-
tions for Stone to pursue production growth funded with
internally generated funds and, when possible, reduce lever-
age to a more appropriate level for Stones production pro-
file. Stone is expected to remain acquisitive, but such trans-
actions should be financed conservatively. 8
Steven Nocar
New York (1) 212-43B-7803
Standarrl & Poors Utilities & Perspectives
Special Report
Rocky Mountain Power
Exhibit No.8 page 6 of20
CASE NO. PAC-E-oS-o7
Witneu Bruce N. Williams
Survey of State Regulators Reveals Focus on U.S. Utilities
Financial Strength
recentlY completed survey of state regulators by RKS
Research & Consulting on behalf of Standard & Poor
Ratings Services revealed significant shifts in regulator pri-
orities since the previous survey of January 2001, The
feedback from the interviews, which polled 47 different
jurisdictions, placed financial issues as the most important
consideration for regulators, followed by federal-state
jurisdictional disputes, and generation and transmission
resource adequacy, Other topics included reliability and
power quality issues, service obligations, and subsidization
of affiliate transactions, Regarding toncerns over the next
five to 10 years, respondents focused on jurisdictional clar-
ity and resource adequacy, which would indicate that
financial concerns are expected to dissipate in this time
frame, Two years ago, the primary issues noted by regula-
tors were considerably different: the development of dis-
tributed generation and service reliability led the list. fol-
lowed by transmission issues,
The responses indicate that utilities' financial profiles
matter greatly to state regulators, at least in the short term,
Regulators overwhelmingly stated that utilities need to
maintain strong financial profiles. In fact, regulators high-
lighting this concem increased threefold, and more than a
third expressed extreme concem for utilities' financial
health, compared with less than 10% in 2001. Along with
this position was the view by almost half of the respondents
that utilities had weakened during the past three years, par-
ticularly those in the Midwest and the West. Reasons cited
for this included the economic downtum, bad investment
decisions, holding company/affiliate transactions, and the
fallout from the Califomia and Enron Corp. crises, However,
about half of the Northeastem state regulators believe that
utilities have actually strengthened, reflecting the conver-
sion of many utilities to basically lower-risk transmission
and distribution companies, Not surprisingly, only half of all
commissioners said they had as much confidence in the
integrity of utility financial statements compared with a few
years ago. Interestingly, a measurable number-17%-indi-
cated a higher confidence level in financial statement quali-
ty; 26% have less confidence,
State regulators clearly expect to be more involved in
monitoring utilities in their jurisdictions, However, while util-
ities' financial conditions, and more specifically, their insula-
tion from nonregulated activities, ranked first among the
~ Back to
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Next Page ~Page 6 May 12,2003
most pressing issues, opinion is evenly divided regarding
whether current laws provide the appropriate enabling
authority for regulators to ensure that utilities are not
adversely affected by unregulated affiliates.
Other issues of note include:
. Deep jurisdictional disputes with the FERC over Standard
Market Design (SMD). The majority consider SMD fatally
flawed, and that it will lead to wide inequities between
high- and low-cost electricity regions, Respondents high-
lighted inflexibility, cost-shifting among states, and
whether any compelling need for SMD actually exists. A
majority also expressed doubt that the proposal would
ever deliver the promised results.
8 Broad agreement that restructuring has stalled. along
with increasing support for a return to cost-of-service
regulation,
. Concems that regional transmission systems are less
than fully adequate.
8 A plurality that is opposed to the repeal of the Public
Utility Holding Company Act, especially by those states
that do not provide retail choice.
Standard & Poor's views regulators' heightened concern,
and their cognizance of the fact that unregulated parents
and affiliates' business pursuits have negatively affected
utilities' credit quality, as encouraging. However, the general
sense that cUrrent laws and regulations limit regulators
abilities to intervene tends to neutralize the value of such
recognition, Indeed, Standard & Poors has witnessed cer-
tain states, such as Minnesota, Arizona, and Kansas.
becoming engaged in overseeing the financial activities and
decisions of their utilities. While utilities and their parents
may remain focused on a "back-to-basics" strategy. it is not
clear that over the longer term such a strategy will hold, If it
fails. and in a few years the industry is again diversifying its
strategy to attract higher PIE ratios, regulators may be left
on the sidelines again to wonder what happened to their
regulated utilities, 8
Richard W. Cortright. Jr.
New York (1) 212-438-7665
(Ordering information for copies of the Standard Poors
2003 Survey of State Regulators is available from Richard
.claeys, RKS-West at dclaeysrt!Jrksresearch.com or at
(1) 408-867-6430.)
Standard & Poor s Utilities & Perspectives
News Comments
Rocky Mountain Power
Exhibit No.8 page 7 of20
CASE NO. P AC-~S'()7
Witness Bruce N. Williams
laclede Group s and Unit's
Ratings Are lowered:
Outlook Stable
nOn May 5, Standard & Poor s Ratings Services low-
Uered its long-term corporate credit ratings on parent
The laclede Group Inc.'s and laclede Gas Co. to '
from '
Standard & Poor's also affirmed its ' A-" short-term cor-
porate credit rating and commercial paper ratings on
laclede Gas. The outlook is stable.
St. louis, Mo.based laciedeGroup has about $260 mil-
lion of outstanding long-term debt.
The rating action reflects subpar financial measurements
relative to former credit quality, The financial weakness can
be traced primarily to several successive warmer-than-nor-
mal winters and higher debt leverage.
Notwithstanding recent financial improvement, including
the refinancing of laclede Group s $45 million bridge loan
with hybrid preferred-stock securities (to which Standard &
Poors accords some equity treatment) and resolution of sev-
eral regulatory issues, the companys prospective consolidat-
ed financial condition is expected to approach levels that
are suitable for the revised rating,
Standard & Poors believes that ratings stability reflects
expectations for financial improvement. solid competitive
standing, flexible supply position, abundant storage capaci-
ty, a stable customer base, and prospects for modest rate
relief. These attributes are somewhat offset by laclede
Groups support of riskier unregulated affiliates, -
Barbara A. Eiseman
New York (1) 212-438-7666
Sierra Pacific Power's Water
Facilities Bond Rating Is
Raised to 'BB'
p;III On May 5, Standard & Poor s Ratings ~ervices
,...
raised its rating on Sierra Pacific PowerCo,
$80 million Washoe County water facilities refunding rev-
enue bonds to 'BB' from '
The upgrade reflects the backing of the previously unse-
cured bonds by Sierra Pacific Power s general and refunding
bonds as part of the current remarketing,
The tax-exempt bonds, for which Sierra Pacific Power is
the obligor, mature in 2036, but are remarketed periodically
to reset interest rates, The company will set rates for only
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Next Page ~Page 7 May 12, 2003
one year because Sierra Pacific Power has only short-term
authority to issue general and refunding bonds,
Reno, Nevada-based Sierra Pacific Power had $1.02 bil-
lion in debt outstanding as of Dec. 31 , 2002. Its '8+' -corpo-
rate credit rating reflects the consolidated credit profile of
Sierra Pacific Resources and its utility subsidiaries, Nevada
Power Co. and Sierra Pacific Power, The rating factors in the
adverse regulatory environment in Nevada; operating risk
from Nevada Powers dependence on wholesale markets for
over 50% of its energy requirements; and the substantially
weakened financial profile resulting from the disallowance
in 2002 by the Public Utility Commission of Nevada (PUCN)
of $434 million in deferred-power costs for Nevada Power
and $56 million for Sierra Pacific Power. The recent federal
court decision denying Nevada Powers request to recover
the $437 million disallowed by the PUCN did not affect rat-
ings because Standard & Poors had not factored into the
current ratings any positive outcome from the litigation.
The negative outlook reflects the risk of an adverse rul-
ing either by the PUCN on Nevada Power's pending deferred
cost recovery case or by the court on the Enron Corp. law-
suit. Enron is demanding payment of about $300 million in
marked-to-market profits on power supply contracts with
Nevada Power that Enron terminated following Nevada
Powers downgrade in April 2002. -
Swami Venkataraman
San Francisco (1) 415-371-5071
Empresa Electrica Guacolda
Ratings Are Affirmed: Off Watch
On May 2, Standard & Poors Ratings Services
,.
affirmed its 'BBB-' corporate credit rating on Chilean
power generator Empresa EhJctrica Guacolda SA
(Guacolda), and removed the rating from CreditWatch with
negative implications, The outlook is stable. The rating was
originally placed on CreditWatch on April 3, 2003 due to
high refinancing risk.
The rating action follows the company s announcement
that it has successfully placed $150 million in senior amor-
tizing secured loan participation certificates with final matu-
rity in 2013, Proceeds were mainly applied to refinance its
$87 million net debt maturities on April 30, 2003, and to
prepay its $48,8 outstanding debt with Mitsubishi Corp,
The new $150 million facility significantly reduces
Guacolda s refinancing risk and leaves a debt structure much
more in accordance with the companys cash flow projections,
Although cash reserves are low, Guacolda does not face
important capital expenditures or large capital amortizations
in the next two to three years, Guacolda has been applying
Standard & Poor's Utilities & Perspectives
News Comments
Rocky Mounlain Power
Exhibit No, 8 page 8 of 20
CASE NO, PAC-07-OS
Witness Bruce N, Williams
excess cash flows to debt reduction in recent years-total
financial debt has decreased to $192 million as of December
2002 from $215 million as of December 2001, However
Guacoldas leverage remains at high levels (62.9% as of
December 2002), mainly due to the devaluation of the
Chilean peso, 8
Sergio Fuentes
Buenos Aires (54) 114-891-2131
Marta Castelli
Buenos Aires (54) 114-891-2128
Spanish Utilities Gas Natural,
Iberdrola Ratings Are Affirmed:
Off Watchn n On May 6. Standard & Poors Ratings Services
I.C.II affirmed its 'long-tenn and '1' short-term
corporate credit ratings on Spanish utilities Gas Natural
SDG SA and Iberdrola SA, and removed the long-term rat-
ings on both from CreditWatch, where they were placed on
March 10, 2003, The affirmation follows the withdrawal of
Gas Natural's takeover bid for Iberdrola, The outlook for
both companies is stable.
Gas Natural's board announced the withdrawal of its
tender offer for Iberdrola after the bid was rejected by the
Spanish energy industry advisory body, Comision Nacional
de Energia.
Also. Gas Natural stated that it would continue to pur-
sue organic growth in line with its 2007 strategic plan, The
utility aims to retain its roughly 70% share of the Spanish
gas supply market, which is likely to experience increasing
competition from electric utilities. In addition, Gas Natural
targets a 10% market share in electricity supply, and plans
to establish 4,800 MW of new gas-fired installed capacity
by 2007, However, the utility's undiversified portfolio leaves
it exposed to gas prices,
While Gas Natural's financial profile continues to pro-
vide headroom for debt-financed acquisitions, it also implies
some event risk as the company may pursue larger-than-
expected acquisitions, as reflected by its offer for lberdrola,
Iberdrola, however, will continue to benefit from its
strong market position, while targeting a 20% market share
in gas supply, The companys strong business profile is par-
tially offset by a considerable weakening in its financial pro-
file caused by its ambitious 2002 growth strategy, 8
Karl Nietvelt
Paris (33) 1-4420-ti751
Ana Nogales
London (44) 20-7826-3619
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Next Page ~Page 8 May 12, 2003
Enel's and Subs' Ratings Are
Affirmed: Off Watch,
Outlook Negative
On May 2, Standard & Poors Ratings Services
I.C.II affinned its '' long-tenn ratings on Italy
largest electric utility Enel SpA and its subsidiaries Camuzzi
Gazometri SpA, Enellnvestment Holding B,, and Camuzzi
Finance SA The ratings were removed from CreditWatch
where they were placed on March 21 . 2003. The outlook is
negative, The resolution of the CreditWatch listing follows
Standard & Poor s review of Ene"s new business plan and
future strategies. At the same time, the 'r short-tenn cor-
porate credit ratings on Enel and Camuzzi were affinned.
The ratings on Enel reflect its stable cash flow from reg-
ulated activities, strong position; and robust financial pro-
file. Offsetting its credit strengths are the higher credit risks
associated with the companys electricity generation opera-
tions, increasing exposure to competitive pressure in the
core electricity and gas markets, and substantial investment
in the telecom industry.
Enel's financial profile deteriorated in 2002 as a conse-
quence of higher-than-expected debt. This mainly resulted
from its wholly owned telecom subsidiary, Wind, not being
floated, Although Enel's financial performance is forecast to
recover, Standard & Poors does not expect Enel's debt to
decrease materially in the short tenn.
Funds from operations to net debt is expected to remain
strong at more than 25% over the medium tenn.
Uncertainties and execution risks surrounding possible
exit solutions have prolonged Enel's financial support for
Wind, with a further €1 billion capital injection forecast
over the next 12 months. Enel's exposure to the volatile tele-
com sector will shrink after it sells its interest in Wind, but
Standard & Poors does not believe that this is likely in the
short term,
The negative outlook reflects the uncertainty regarding
the group s telecom operations and the likelihood that Enel
will have to support Wind in the short-to-medium tenn. In
addition, the companys credit quality is expected to decline
beyond the short term as market liberalization progresses
and competitive pressure increases. Any debt-funded acqui-
sitions. expansion into higher-risk activities, or a lower-than-
forecast performance by the consolidated businesses could
accelerate a lowering of the long-tenn ratings to 1/.'
Monica Mariani
Milan (39) 02 72111-207
Daniela Katsiamakis
London (44) 20-7826-3519
Standard & Poors Utilities & Perspectives
News Comments
Rocky Mountain Power
Exhibit No, 8 page 9 of 20
CASE NO, PAC-07-OS
Witness Bruce N, Williams
Petrozuata Finance Ratings Is
Affirmed: Off Watch
On May 5, Standard & Poor s Ratings Services
L;;I affirmed its 'B' rating on Petrozuata Finance Inc.'s $1
billion bonds and removed it from CreditWatch, where it
was placed with negative implications on Dec. 10, 2002.
The outlook is stable. The bonds are guaranteed by
Petrol era Zuata, Petrozuata C,
Petrozuata is a heavy oil production and upgrading pro-
ject in Venezuela that is owned by Conoco Venezuela
Holding (50.1%), a subsidiary of ConocoPhillips, and PDVSA
Petroleo (49.9%). a subsidiary of Petro Ie os de Venezuela
SA (PDVSA),
The removal of the CreditWatch listing is due mainly to
the project's ability to restart and stabilize operations and to
make offshore debt payments without exposure to foreign
exchange controls. The removal is further supported by the
outlook for Venezuela and PDVSA, which was revised to sta-
ble on April 16,2003, by Standard & Poors because of the
government's improving liquidity and a reduction, albeit lim-
ited, in economic and political pressures.
.. Back to
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Next Page ~Page May 12, 2003
The Petrozuata project restarted upgrader operations in
early March 2003 following the redelivery of natural gas and
hydrogen feedstocks by PDVSA Gas and third parties sup-
plied by PDVSA Gas. Petrozuata reports that its current
operations are in line with 2003 business forecasts,
The stable outlook reflects Petrozuatas current produc-
tion above or at pro forma rates and general expectations
that the project will continue to receive sufficient feed-
stocks from PDVSA Gas to support production and will not
be subject to foreign exchange controls. The outlook could
change to negative if the project's ability to maintain steady
production becomes questionable, or if the credit outlook for
the Venezuela or PDVSA worsens.
The outlook could be revised to positive if the outlook on
PDSVA and the government improves.
Terry A. Pratt
New York (1) 212-438-2080
Bruce Schwartz. CFA
New York (1) 212-438-1809
Standard & Poor Utilities & Perspectives
Last Week'
Rating Reviews
Rocky Mountain Power
Exhibit No.8 page 10 of20
CASE NO. PAC-E.oS-D7
Witness Bruce N. Williams
Ratings Activity: April 30 to May 7
Enel SpA
lberdrola SA
laclede Group Inc,
laclede Gas Co,
Petrozuata Finance Inc,
Action
Outlook revised
Outlook revised
Rating lowered
Rating lowered
Outlook revised
Did You Know?
Negative
Stable
Stable
Date
May 2
May6
MayS
MayS
MayS
From
Watch Neg
Watch Neg
Watch Neg
World Energy Consumption and Regional Carbon Dioxide Emissions in 2001
Region
Industrialized countries
Eastern Europe/Former Soviet Union
Asia
Middle East
Africa
Central and South America
Total
Consumption
(quadrillion BTUs)
211,
53,
20,
12,
20.
403,
Emissions (mil. metric
tons carbon equivalent)
179
856
640
354
230
263
522
Source: Energy IntoRnation Administration/lntemational Energy Outlook 2003.
.. Back to
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Next Page ~Page 10 May 12, 2003 Standard & Poors Utilities & Perspectives
last Week'
Financing Activity
Rocky Mountain Power
Exhibit No.8 page 11 of20
CASE NO. PAC-E'()S-o7
Witness Bruce N. Wil1iama
New Debt and Preferred Stock Issues, and New Shelf Registrations
April 30 to May 7
Companv Rating Outlook
Illue
registared
data
Amount Couponissued/reg rate Security(miI.S) ('Iv) type
Meturity
date
BP Ipreed
overPrice Treelury Underwriter
Electric & WaterAES Corp,
Alabama Power Co,
Appalachian Power Co, BBB
Arizona Public Service Co, BBB
Arizona Public Service Co, BBB
Duke Energy Corp,
Empire District Electric Co, BBB,
Entergy Arkansas Inc, BBB+
Wisconsin Electric Power Co,
Wisconsin Electric Power Co,
496 Citigroup
Barclays Capital
Bank One Capital Markets
lehmanlBank of America Securities
lehmanlBank of America Securities
-Citigroup/JP Morgan
Negative
Stable
Stable
Stable
Stable
Negative
Stable
Stable
May 2, 2003
May 2, 2003
April 30. 2003
May 6, 2003
May 6. 2003
May I, 2003
April 30. 2003
May 2.2003
May 2. 2003
May 2, 2003
600 Senior Secured Notes May 15, 2015 100
25D 125 Orawdown May 1. 2008
200 Unsecured Notes
200 Orawdown May 1.2033
300 Drawdown May 1, 2015
700 Drawdown 2023
100 Credit Agreement April 17, 2005
150 Rrst Mongage Bonds May 1.2018
300 Drawdown May 15, 2013
335 625 Drawdown May 15, 2033
Gas
None
JP Morgan/BancOne Capital Markets
JP Morgan/8ancOne Capital Markets
Oil & Gas
None
Project Finance
None
Telecommunications
None
bp-Basis point. All shelf ratings except medium-term note programs are preliminary until drawn down.
..if Back to
"'II Table of Contents
Next Page ~
Duke Energy s $700 Million
Senior Notes Are Rated
On May 2, Standard & Poor s Ratings Services
"assigned its 'A-' senior unsecured debt rating to Duke
Energy Corp.'s $700 million convertible senior notes due
2023. The outlook is negative.
Charlotte, N.based Duke Energy had $22.5 billion in
consolidated debt outstanding (including current maturities)
as of Dec. 31, 2002.
The proposed note issue is a drawdown from Duke
Energys existing $1,5 billion shelf registration,
Standard & Poors negative outlook on Duke Energy
reflects the need to review the companys progress on its
asset sale strategy, as well as updated financial projections,
to determine the likelihood and timing of financial improve-
ment. Duke Energy will need to improve funds from opera-
tions (FFO) interest coverage and fFO to total debt beyond
4x and 16%, respectively, to maintain current ratings,
Standard & Poors also said that the FERC's investiga-
tions of energy traders continues to be a concern,
At the drawdown, the shelf registration had $1,3 billion
available. Duke Energy plans to use the proceeds for various
Page 11 May 12, 2003
corporate needs, which may include the reduction of out-
standing commercial paper,
The notes are senior unsecured obligations of the corpo-
ration. The noteholders can convert their holdings to com-
mon shares ofUuke Energy if certain conditions are met.
Given that there is no mandatory conversion, Standard &
Poors views the notes as being fully debt-like. 8
Dimitri Nikas
New York (1) 212-438-7807
Wisconsin Electric Power
$635 Million Debt Issue Is
Rated
On May 5, Standard & Poor s Ratings Services
,.
assigned its 'A-' rating to Wisconsin Electric Power
Co.'s $635 million of senior unsecur.ed debentures due in
2013 and 2033, Proceeds will be used to retire existing
callable debt of various maturities. The outlook is stable,
Milwaukee, Wisc,based Wisconsin Energy Corp" parent
of Wisconsin Electric Power, and its other subsidiaries had
Standard & Poor's Utilities & Perspectives
Last Week'
Financing Activity
.... Back to
"'II Table of Contents
Next Page ~
about $3.9 billion of debt outstanding as of March 31, 2003,
Standard & Poor s stable outlook for Wisconsin Energy
reflects the companys focus on its core utility business,
which is expected to remain strong and provide the majori-
ty of the cash flows, However, the ratings or outlook could
change due to further weakening of financial measures
during the construction phase of its Power the Future (PTF)
program if interest rates rise or project costs supercede
original estimates,
Standard & Poor s also noted that the company is sub-
ject to refinancing risk when it will need to raise permanent
financing for PTF projects, which could also adversely affect
the ratings and outlook.
Wisconsin Energys PTF program is the companys plan
to build new nonregulated generation to meet Wisconsin
Electric Power's expected energy demand for the next
10 years, 8
Peter Otersen
New York (1) 212-438-7674
North Carolina Eastern
Municipal Power's Bonds Are
Rated 'BBB'
On May 2, Standard & Poor s Ratings Services
,.
assigned its 'BBB' rating to North Carolina Eastem
Municipal Power Agency s $294.1 million power system rev-
enue bonds series 2003D-E, based on the agency s signifi-
cant debt burden, relatively high wholesale power costs and
resultant uncompetitive member retail rates, and credit
quality implications resulting from the presence of economi-
cally depressed regions in its service territory,
These risks are mitigated by the strong take-or-pay con-
tracts provided, which contractually obligate member cities
to pay agency debt service; the financial oversight and polit-
ical support provided by the Local Govemment Commission
of North Carolina: and the limited prospects for any North
Carolina deregulation,
The outlook is stable, reflecting the strength of the exist-
ing legal structure provided by the contracts and the Local
Government Commission of North Carolina s oversight, the
lack of deregulation, and the recently renewed supplemental
agreement with Carolina Power & Light Co,
Proceeds of the bonds and certain other available
money will be used to refund existing power system
revenue bonds.
North Carolina Eastern s weak business profile of 't)' on
Standard & Poor s 10-point scale takes into account the
agency s high fixed costs and the overall average credit
quality of the member cities, which include the very poor
Page 12 May 12, 2003
Rocky Mountam Power
Exhibit No.8 page 12 of20
CASE NO. PAc-E-OS-O7
Witnc.. Bruce N. Williams
economics and demographics of some of the smaller par-
ticipants. Some display shrinking populations, high unem-
ployment, and per capita income levels well below the
national average. These trends heighten Standard & Poor
credit concerns,
North Carolina Eastem is a joint-action agency that pro-
vides wholesale power to 32 member cities under take-or-
pay contracts, The bonds are payable from member rev-
enues collected by the agency, 8
Brian Janiak
New Yorkm 212-438-5025
David Budek
New York (1 ) 212-438-7969
Medco Energi's Proposed $200
Million Notes Are Rated '
anOn May 5, Standard & Poor s Ratings Services
UiUlassigned its '8+' rating to Indonesian oil and
gas company P.T. Medco Energi Internasional Tbk.'s pro-
posed senior unsecured notes issueof about $200 million,
The notes are due 201 0, and puttable by noteholders in
2008. The notes will be issued by subsidiary MEI Euro
Finance Ltd, and will be guaranteed by Medco. The rating
on the notes, therefore, reflects the corporate credit rating
on Medco, Proceeds from the new debt will be used pri-
marily to fund Medcos acquisition of petroleum assets in
2003 and its intensive exploration, development. and pro-
duction program.
In addition, Medco is offering to exchange its existing
$100 million 10% senior unsecured notes due March 2007
for the proposed notes due 2010, Those exchange offer
notes that are tendered will form a single series with the
proposed note issue, and will have the same rating.
The additional debt of about $200 million is consistent
with Standard & Poors expectations of Medcos capital
structure, whereby total debt to capital could rise to 50% to
60% (from about 16% at Dec. 31, 2002) in the near-to-medi-
um term, depending on the implementation of planned
development activities and acquisition opportunities,
Medco s rating reflects the companys short proved-
reserves life index of 4.8 years, which explains the compa-
s plans to acquire producing oil blocks in 2003, in addi-
tion to developing its substantial gas reserves, to add to its
proved reserves base and production volumes, With
reserves declining due to the maturity of Medcos fields, the
company is also expected to incur significant capital costs
and face various execution risks to convert its substantial
probable reserves into proved reserves.
Production and proved reserves growth remain highly
dependent on gas sales contracts, or the development of
Standard & Poors Utilities & Perspectives
Last Week'
Financing Activity
.... Back to
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Next Page ~
gas infrastructure in Indonesia, to absorb the company
large uncommitted gas reserves.
Although the policy direction in Indonesia is largely posi-
tive. the full operational effects of expected changes remain
to be seen,
Uncertainty in the regulatory environment will continue
in the near-to-medium term. Medco does. however. enjoy
some insulation from sovereign debt risks. Despite its own
difficulties. the Indonesian government in recent years has
not sought to impose a debt moratorium or interfere with
local companies accessing the foreign exchange markets to
service their foreign currency obligations, Furthermore.
Medco enjoys some insulation from currency instability and
weaknesses in the 1ndonesian banking system as its oil
prices and revenues are in U,S, dollars, which are deposited
mainly in offshore bank accounts,
The rating on Medco also reflects the companys favor-
able cost structure and production track record. The large
size of Medco s operating areas, low labor costs, and prox-
imity to oil and gas supply infrastructure contribute to its
better-than-average cost structure, Lifting cost in 2002 was
about $2;89 per barrel of oil equivalent (boe), compared with
Page 13 May 12, 2003
Rocky Mounlain Power
Exhibit No, 8 page 13 of20
CASE NO. PAC-E-O7-
Witness Bruce N, Williams
the global average of $4 to $5 per boe, The company
three-year rolling average finding and development costs
were moderately low at $2.69 per boe, Medco also has
moderate, although increasingly aggressive, debt leverage
and strong credit measures, Its credit ratios will weaken in
the near-to-medium term. when the company assumes
greater debt to fund its acquisition of petroleum assets and
drilling rigs in 2003, and its intensive drilling program,
The rating also assumes that 2003 petroleum asset
acquisition costs will be between $150 million and $180
million, can immediately contribute to the companys proved
reserves base. and that corresponding production volumes
can be realized in a timely manner.
Securing long-term gas sales contracts would allow the
company to certify its probable gas reserves into proved
reserves. This could result in a modest improvement in
Medco s overall credit quality. if coupled with an improving
country risk environment. 8
Ee-Lin Tan
Singapore (65) 6239-"6394
Manggi Habir
Singapore 165) 6239-6308
Standard & Poor's Utilities & Perspectives
Utility Credit Ranking
Rocky Mountain Power
Exhibit No.8 page 14 of20
CASE NO. PAC-~S-O7
Witness BIUCC N. Williams
The following list contains Standard & Poor's Ratings, Outlooks, and
Business Profiles for utilities. This list, dated May 7, 2003, reflects the most
current ratings, rankings. and outlooks, It is arranged by corporate credit rat-
ing categories, Within corporate credit rating categories. issuers are grouped
by Outlooks; and within Outlook categories. issuers are listed by RELATIVE
STRENGTH. with the first being the strongest, and the last being the weakest.
A Standard & Poor's rating Outlook assesses the potential direction of an
issuer's long-tenn debt rating over the intennediate to longer tenn, In deter-
mining a rating Outlook, consideration is given to any changes in the eco-
nomic and/or fundamental business conditions, An Outlook is not necessarily
a precursor of a rating change or future CreditWatch action, 'Positive' indi,
cates that a rating may be raised; 'Negative" means a rating may be lowered;
s. Electric/GaslWater Companies
Company Corporate Credit Rating Bus. Prof.
Baton Rouge Water Works Co, (The)M/Stable/-
Madison Gas & Electric Co,AAlNegative/A-
Nicor Gas Co,M/r::w,Neg/A-
Nicor Inc,M/r::w,NegjA-
Washington Gas Light Co,AA-/Stable/A-
WGL Holdings Inc,AA-/Stable/A-
Wisconsin Public Service Corp,AA-/Stable/A'
Southem California Water Co,A+/Stable/-
Southern Califomia Gas Co,A+/Stable/A-
San Diego Gas & Electric Co,A+/Stable/A-
American States Water Co,A+/Stable/-
Califomia Water Service Co,A+/Stable/-
Consolidated Edison Co, of New York Inc.A+/Stable/A-
Consolidated Edison Inc.A+/Stable/A,
Orange and Rockland Utilities Inc,At/Stable/A-
Rockland Electric Co,A+/Stable/-
Otter Tail Corp,A+/Stable/A,
Questar Pipeline Co,A+/Negative/-
Elizabethtown Water Co,At/Negative/-
KeySpan Energy Delivery New York A+/Negative/-
KeySpan Energy Delivery Long Island A+/Negative/-
Pennsylvania Suburban Water Co,A+/r::w,Negj-
Central Hudson Gas & Electric Co.A/Positive/-
New Jersey Natural Gas Co,A/Positive/A-
American Transmission Co,A/Stable/A-
Aquarion Co.A/Stable/-
BHC Co.A/Stable/-
Middlesex Water Co.A/Stable/-
Colonial Pipeline Co,A/Stable/A-
Northwest Natural Gas Co.A/Stable/A-
ONEOK Inc,A/Stable/A-
Massachusetts Electric Co,A/Stable/A-
Narragansett Electric Co,A/Stable/A,
New England Power Co.A/Stable/A,
Niagara Mohawk Power Corp.A/Stable/-
National Grid USA A/Stable/ A,
NSTAR A/Stable/A-
Boston Edison Co,A/Stable/A,
Commonwealth Electric Co,A/Stable/-
NSTAR Gas Co,A/Stable/-
Cambridge Electric Light Co,A/Stable/-
Buckeye Partners loP,A/Stable/-
Laclede Gas Co,A/Stable/A-
Laclede Group Inc,A/Stable/-
MidAmerican Energy Co,A/Stable/A,
WPS Resources Corp.A/Stable/ A-
Mississippi Power Co,A/Stable/A,
~ Back to
Table of Contents
Next Page ~Page May 12. 2003
Stable" indicates that ratings are not likely to change; and "Developing
means ratings may be raised or lowered, N,M, means not meaningful.
Utility business profiles are categorized from 1 (strong) to 10 (weak), In order
to determine a utility's business profile. Standard & Poor's analyzes the fol-
lowing qualitative business or operating characteristics typical of a utility:
markets and seNice area economy; competitive position; fuel and power
supply; operations; asset concentration; regulation; and management:
Telecommunications companies have not been assigned business profiles,
Issuer credit ratings. shown as long-tenn rating/outlook or CreditWatch/
short-tenn rating, are local and foreign currency unless othelWise noted. A
dash '' indicates not rated, AA asterisk ". indicates that the utility was
reviewed this week and its ranking position was updated,
Compsn,Corporate Credit Reting Bus. Prof,
Alabama Power Co,A/Stable/A,
Gulf Power Co,A/Stable/-
Georgia Power Co,A/Stable/ A-
Savannah Electric & Power Co,A/StMJle/-
Southem Co,A/Stable/A-
Equitable Resources Inc,A/Stable/A-
Atlantic City Sewerage Co,A/Stable/-
Ouestar Corp,A/Negative/A'
Boston Gas Co,A/Negative/-
Colonial Gas Co,A/Negative/-
KeySpan Generation LLC A/Negative/-
KeySpan Corp,A/Negative/A-
Rorida Power & Light Co,A/Negative/A-
FPL Group Inc,A/Negative/-
FPL Group Capital A/Negative/A-
Piedmont Natural Gas Co,lnc,A/r::w-Negj-
IDACDRP Inc,/Positive/A-
Idaho Power Co.lPositive/A-
Northem Natural Gas Co,lPositive/-
Midwest Independent Transmission
System Operator Inc,/Positive/-
Peoples Energy Corp.A-/Stable/A-
Peoples Gas Light & Coke Co,/Stable/A-
North Shore Gas Co,/Stable/A-
VIrginia Electric & Power Co,A-/Stable/A-
Wisconsin Gas Co,/Stable/A-
Wisconsin Electric Power Co,/Stable/A-
Wisconsin Natural Gas Co,A-/Stable/-
Atlanta Gas Light Co,/Stable/-
Alabama Gas Corp,/Stable/-
Energen Corp./Stable/-
AGl Resources Inc./Stable/-
Public SeNice Co, of North Carolina Inc,/Stable/A-
South Carolina Electric & Gas Co,/Stable/A-
SCANA Corp./Stable/-
PPL Electric Utilities Corp,/Stable/A-
Baltimore Gas & IIectric Co,/Stable/A-
PECO Energy Co,A-/Stable/A,
Commonwealth Edison Co,/Stable/A-
Exelon Generation Co, LLC /Stable/A-
Exelon Corp,A-/Stable/A-
Sempra Energy A-/Stable/A-
Constellation Energy Group Inc,/Stable/A,
DelmaNa Power & Light Co./Stable/A-
Union Electric Co,/Stable/A-
Central Illinois Public Service Co,A-/Stable/-
Central Illinois Light Co,/Stable
CILCDRP Inc./Stable/-
AmerenEnergy Generating Co,/Stable/-
Standard & Poor's Utilities & Perspectives
Rocky Mountain Power
Exhibit 8 page 15 of 20
CASE NO, PAC-E-O7-OS
Witness Bruce N, Williams
Utili Credit Rankin
S. Electric/GaslWater Companies continued
Campaay Corporate Credit Raling Bus. Pral.Company Carpareta Credit Raling Bus. Pral.
Ameren Corp,/Stable/A-Progress Energy Rorida Inc,BBBt/Negative/A-
Louisville Gas & Electric Co,MStable/A,Progress Energy Carolinas Inc,BBBt/Negative/ A-
Kentucky Utilities Co,A-/Stable/A,Rorida Progress Corp.BBBt/Negative/-
LG&E Energy Corp,/Stable/-Progress Energy Inc,BBBt/Negative/ A-
LG&E Capital Corp,MStable/A-Connecticut Natural Gas Corp.BBBt/Negative/-
AmerenEnergy Generating Co,/Stable/-Southern Connecticut Gas Co.BBBt/Negative/-
Indiana Gas Co, Inc,A-/Negative/-Central Maine Power Co,BBBt/Negative/-
Kern River Gas Transmission Co,/Negative/-New Vorl( State Electric & Gas Corp,BBBt/Negative/A-
Southem Indiana Gas & Electric Co,/Negative/-Energy East Corp,BBBt/Negative/-
Vectren Utility Holdings MNegative/A-Rochester Gas & Electric Corp,BBBt/Negative/-
Vectren Corp,/Negative/-RGS Energy Group Inc,BBBt/Negative/-
PacifiCorp Holdings Inc./Negative/-Questar Marl(et Resources Jnc,BBBt/Negative/-
PacifiCorp MNegative/A,ALLETE Inc,BBBt/CW,Dev/A-
Wisconsin Power & Light Co,/Negative/A-Northern States Power Wisconsin BBBt/CW-Dev/-
Atmos Energy Corp,A-/Negative/A-
Montana-Dakota Utilities Co,A-/Negative/-TEPPCD Partners LP.BBBlStable/-
MDU Resources Group fnc,/Negative/A,TE Products Pipeline Co, LP.BBB/Stable/-
Northern Border Pipeline Co,MNegative/-Florida Gas Transmission Co,BBB/Stable/~
Northern Border Partners LP./Negative/-NUl Utilities Inc,BBB/Stable/-
Duke Energy Corp,/Negative/A-Arizona Public Service Co,BBBlStable/A,
Duke Capital Corp,/NegativeA-Pinnacle West Capital Corp,BBB/Stable/A-
Texas Eastern Transmission LP.A-/Negative/-Kinder Morgan Inc,BBBlStable/A,
Marl(et Hub Partners Storage LP.MNegative/-AEP Texas Central Co, (formerly
PanEnergy Corp,MNegative/-Central Power & Light)BBB/Stable-
United Water New Jersey A-/CW-Neg/-AEP Texas North Co, (fonne~y West
United Waterworl(s MCW-Neg/-Texas Utilities Co,BBB/Stable
NOVA Gas Transmission LId.MCW-Neg/-AEP Resources Inc,BBBlStable
TransCanada Pipelines Ltd,/CW-Neg/-Appalachian Power Co,BBB/Stable-
Columbus Southern Power Co,BBB/Stable-
South Jersey Gas Co,BBBt/Stable/-Indiana Michigan Power Co,BBBlStable-
PEPCO Holdings Inc,BBBt/Stable/A,Kentucky Power Co.BBBlStable-
Cascade Natural Gas Corp.BBBt/Stable/-Ohio Power Co,BBB/Stable-
UGI Utilities Inc,BBBt/Stable/-Public Service Co, of Oklahoma BBB /Stable-
Kinder Morgan Energy Partners LJ BBBt/Stable/A'Southwestern Electric Power Co,BBB/Stable/-
Connecticut Light & Power Co,BBBt/Stable/-American Electric Power Co, Inc.BBB/Stable /A,
Western Massachusetts Electric Co,BBBt/Stable/-Public Service Electric & Gas Co,BBBlStable/M
Public Service Co. of New Hampshire BBBt/Stable/-PSEG Power LLC BBB/Stable/-
Northeast Utilities BBBt/Stable/-Public Service Enterprise Group Inc,BBB/Stable/A-
Oklahoma Gas & Electric Co,BBBt/Stable/A'PSEG Energy Holdings. Inc,BBB/Stable/-
OGE Energy Corp,BBBt/Stable/A'Entergy Arl(ansas Inc,BBB/Stable/-
Wiscoosin Energy Corp.BBBtStable/A-Entergy Louisiana Inc,BBBlStable/-
Transok Inc,BBBt/Stable/-Entergy Mississippi Inc,BBBlStable/-
Enogex Inc,BBBt/Stable/-Entergy New D~eans Inc BBB/Stable/-
Consolidated Natural Gas Co,BBBtlStable/A-Entergy Corp,BBB/Stable/-
Dominion Resources Inc,BBBt/Stable/A-Hawaiian Electric Industries Inc,BBBlStable/A-
Michigan Consolidated Gas Co,BBBt/Stable/A-Duke Energy Field Services LLC BBBlStable/A,
Detroit Edison Co,BBBt/Stable/A-Black Hills Power Inc.BBBlStable/-
MCN Energy Enterprises Inc,BBBt/Stable/-alack Hills Corp,aBBlStable/A-
DTE Enterprises BBBt/Stable/-Potomac Capital Investment Corp,BBBlStable/-
DTE Energy Co,BBBt/Stable/A-Empire District Electric Co,BBB/Stable/A,
Cinergy Corp.BBBt/Stable/A-Great Plains Energy Inc.BBBlStable/-
Cincinnati Gas & Electric Co,BBBt/Stable/-Kansas City Power & Light Co,BBB/Stable/A-
PSI Energy Inc.BBBt/Stable/-Southern Union Co,BBBlStable/-
National Fuel Gas Co,BBBt/Stable/A-Dayton Power & Light Co.BBBlStable/A-
Union Light Heat & Power Co,BBBt/Stable/-DPL rnc,BBB/Stable/A-
Hawaiian Electric Co. Inc.BBBt/Stable/A,Centerpoint Energy Inc.BBBlStable/-
Maui Electric Co, LId,BBBt/Stable/-Centerpoint Energy Houston Electric LLC BBBlStable/-
Hawaiian Electric Light Co. Inc,BBBt/Stable/-Centerpoint Energy Resources Corp,BBBlStable/-
Potomac Electric Power Co,BBBt/Stable/A-TXU U,S, Holdings BBB/Negative/-
Conectiv BBBt/Stable/-Oncor Electric Delivery Co,BBB/Negative/-
Atlantic City Electric Co,BBBt/Stable/A,TXU Energy Co, LLC BBB/Negative/-
Kaneb Pipe Line Operating Partnership L~BBBt/Stable/-TXU Gas Co,BBB/Negative/-
Portland General Electric Co, BBBt/Developing/A-TXU Corp.BBB/Negative/-
Interstate Power & Light Co,BBB+/Negative/A,PacifiCorp Group Holdings Co.BBB/Negative/-
Alliant Energy Corp,BBBt/Negative/A'Jersey Central Power & Light Co.BBB/Negative/-
Alliant Energy Resources Inc.BBBt/Negative/-Pennsylvania Electric Co,BBB/Negative/-
~ Back to
Table of Contents
Next Page ~Page 15 May 12. -2003 Standard & Poors Utilities & Perspectives
Rocky Mounlain Power
Exhibit No,8 page 16 of 20
CASE NO. PAC-07-OS
Wimess Bruce N, Williams
Utili Credit Rankin
S. Electric/Gas/Water Companies continued
Company Corporata Cradit Rating Bus. Prof.Company Corporate Credit Rating Bus, Prof.
Metropolitan Edison Co,BBB/Negative/-Southern California Edison Co.BB/CW-Oev/-
Ohio Edison Co.BBB/Negative/-Consumers Energy Co,BB/Negative/-
Cleveland Electric Illuminating Co,BBB/Negative/-CMS Energy Corp,88/Negative/-
Toledo Edison Co,B8B/Negative/-Tucson Electric Power Co,BB/CW-Neg/-
Pennsylvania Power Co.BBB/Negative/-
FlrstEnergy Corp,BBB/Negative/-Ferrellgas Partners LP.BB,/Stable/-
Southwestern Energy Co,BBB/Negative/-West Penn Power Co,BB-/CW-Neg/-
Cleco Power LLC BBB/Negative/A-Potomac Edison Co,BB-/CW-Neg/-
Cleco Corp,BBB/Negative/A-Monongahela Power Co,BB,/CW-Neg/-
Duquesne light Co,BBB/Negative/A-Allegheny Energy Inc,BB-/CW-Neg/-
DOE Inc,BBB/Negative/A,Allegheny Generating Co,BB-/CW-Neg/-
Tampa Electric Co.BBB/Negative/A-Allegheny Energy Supply Co, LLC BB-/CW-Neg/-
TECO Energy Inc,BBB/Negative/A-
Teco FInance Inc,BBB/Negative/-Heating Oil Partners LP,B+/Stable/-
NiSource Inc,BBB/Negative/A-Sierra Pacific Power Co,B+/Negative/-
Columbia Energy Group BBB/Negative/-Nevada Power Co.B+/Negative/-
Bay State Gas Co,BBB/Negative/-Sierra Pacific Resources B+/Negative/-
Northern Indiana Public SeNice Co,BBB/Negative/-EI Paso Natural Gas Co,B+/Negative/-
Noark Pipeline FInance LLC BBB/Negative/-Tennessee Gas Pipeline Co,B+/Negative/-
PPL Corp,BBB/Negative/-ANR Pipeline Co,B+/Negative/-
PPL Energy Supply LLC BBB/Negative/A-Colorado Interstate Gas Co,B+/Negative/-
Duke Energy Trading and Marketing LLC BBB/Negative/-EI Paso CGP Co,B+/Negative/-
Xcel Energy Inc,BBB/CW,Oev/A-Southern Natural Gas Co,B+/Negative/-
Northem States Power Co,BBB/CW-Oev/A-EI Paso Corp,B+/Negative/-
Southwestern Public SeNice Co,BBB/CW,Oev/A-EI Paso Tennessee Pipeline Co.B+/Negative/-
Public Service Co, of Colorado BBB/CW,Oev/A-Transcontinental Gas Pipe Line Corp.B+/CW-Neg/-
Texas Gas Transmission Corp,B+/CW-Neg/-
Green Mountain Power Corp,BBB,/Stable/-The Williams Companies Inc,B+/CW-Neg/-
EI Paso Electric Co,BBB-/Stable/-Northwest Pipeline Corp,B+/CW-Neg/-
Entergy Gulf States Inc,BBB,/Stable/-Aquila Inc.B+/CW-Neg/-
System Energy Resources Inc.BBB-/Stable/-Aquila Merchant SeNices Inc,B+/CW-Neg/-
Puget Sound Energy Inc,BBB-/Stable/A-
Washington Natural Gas Co,BBB-/Stable/A-Reliant Energy Mid-Atlantic Power
Puget Energy Inc,BBB-/Stable/-Holdings LtC B/CW,Oev/-
Central Vem1Dnt Public SeNice Corp.BBB-/Stable/-Reliant Resources Inc.B/CW,Oev/-
Texas-New Mexico Power Co,BBB-/Stable/-Orion Power Holdings Inc.B/CW-Oev/-
Public Service Co, of New Mexico BBB-/Stable/-Illinois Power Co.B/CW-Neg/-
SEMCO Energy Inc,BBB-/Negative/-Oynegy Holdings tnc,B/CW-Neg/-
Southwest Gas Corp.BBB-/Negative/-lIIinova Corp,B/CW-Neg/-
Dynegy Inc,B/CW-Neg/-
AmeriGas Partners LP.BB+lStable/-Mirant Americas Generation Inc,B/CW-Neg/-
Western Gas Resources Inc,BB+/Stable/-Mirant Corp,B/CW-Neg/-
Avista Corp,BB+lStable/-Mirant Americas Energy Marketing LP.B/CW-Neg/-
Kansas Gas & Electric Co.BB+lDeveloping
Westar Energy Inc,BB+lDeveloping/-Edison International B-lDeveloping/-
Indianapolis Power & Light Co,BB+/Negative/-
IPALCO Enterprises Inc.BB+/Negative/-PG&E Gas Transmission-Northwest tCC/CW-Neg/-
EI Paso Energy Partners loP.BB+/CW-Neg/-
Northwestern Corp.BB+/CW-Neg/-PG&E Energy Trading Holdings Co,C/CW-Neg/-
Northwestern Energy Montana BB+/CW-Neg/-
NRG Energy Inc.0/-1-
Transwestem Pipeline Co,BB/CW-Pos/-Pacific Gas & Electric Co,01-/0
CMS Panhandle Pipeline Cas.BB/CW,Pos/-
.... Back to
"II Table of Contents
NeX1 Page ~Page 16 May 12, 2003 Standard & Poors Utilities & Perspectives
Utility Credit Ranking
Rocky Mounmin Power
Exhibit No, 8 page 17 of 20
CASE NO, PAC-O7-
Witness Bruce N, Williams
~ Back to
"II Table of Contents
Next Page ~
s. Telecommunications Companies
Company
sac Communications Inc,
BeliSouthCorp,
Cingular Wireless LtC
Verizon Communications Inc,
Cellco Partnership
(d/b/a Verizon WIreless)
ALlTEL Corp.
Telephone & Data Systems Inc,
CenturyTellnc,
Intelsat Ltd,
AT&T Corp,
Page 17 May 12, 2003
Corporata Credit Roting Company
AT&T Wireless Services Inc.
Citizens Communications Co,
AA-/CW-Neg/ A-l +
A+/Stable/A,
A+/Stable/A-
A+/Stable/-
Sprint Corp.
PanAmSat Corp,
A+/Stable/-
NNegative/A-
Owest Communications International
Broadwing Inc,
/Negative/-Williams Communications Group
BBB+/Stable/A-
BBB+/Stable/A-
BBB+/Negative/A'
Corporate Credit Rating
BBB/Stable/A-
BBB/Negative/A-
BBB-/Stable/A-
B+/CW-Pos/-
lDeveloping/-
B-/Negative/-
0/-/-
Standard & Poors Utilities & Perspectives
Utility Credit Rankings
... Back to
Table of \:ontents
Next Page ~
International Companies
Company Corporate Credit Rating
Rocky Mountain Power
'Exhibit No, 8 page 18 of 20
CASE NO. PAC-E-O7-OS
Witness Bruce N, Williams
Bus,Pral,Company Corporate Credit Rating Bus. Prof.
Asia/Pacific
Singapore Power lid,AAA/Stable/-
Tokyo Electric Power Co, Inc,AA./Negative/A.
SPI PowerNet Ply lid,A+/positive/A.
CLP Power Hong Kong lid.A+/Stable/ A-
Powereor Australia LLC A-/Stable/A.
United Energy Lid,/CW.NegJA.
Korea Electric Power Corp,Foreign cunancy
/Stable/A-
Tenaga Nasional Berhad BBB/Stable/-
TXU Electricity lid,BBB/Stable/A-
Contact Energy lid,BBB/Stable/A.
Huaneng Power Inc,Foreign currency
BBB/Stable/-
Electricity Generating Authority
of Thailand Local cunancy
BBB+/Stable/-
National Thermal Power Corp. (NWC) Foreign currency
BB/Negative/-
Tata Power Co, lid Foreign currency
BB/Negatlve/-
Manila Electric Co,Foreign cunancy
B-/Negative/-
Gas Credit Ranking.
Europe/Middle East/Africa
Gasunie (N,V, Nederlandse)AAAfNegatlve/A-
Gaz de France AAAlr:N-NegJA-
Transco PLC AlStable/A-
Cantrica PlC AlStable/A.
Latin America
Metrogas SA 0/-/-
Asia/Pacific
Osaka Gas Co, Ltd,AA-/Negative/A,
Australian Gas Light Co, (The)AlStable/A-
Water Credit Ranking.
Europe/Middle East/Africa
Thames Water PLC A+/Negative/A-
Suez SA A-/Stable/A.
Asia/Pacific
Sydney Water lid,Local cunancy
AAAlStable/A- t+
Foreign currency
AA+/Stable/A.
Europe/Middle East/Africa
Electricite de France
E.ONAG
Ibamrala SA
Acea SpA
RWE AG
ENEL SpA
National Grid Co, PLC
Verbundgesellschaft
Endesa SA
United Utilities PLC
South Westem Electricity PLC
PowerGen UK PLC
Innogy PLC
SconishPower UK PLC
CEl AS
Public Power Corp. of Greece
WPO Holdings U.
Israel Electric Corp, Ltd.
ESKOM Holding Ltd,
Mosenergo (AO)
British Energy PLC
Latin America
Comision Federal de Bectricidad (CFEI
Enersis SA
Companhia de Eletricidade
do Rio de Janiero ICERJ)
AES Gener SA.
Empresa Electrica del Norte
Grande SA (Edelnor SA)
Compania de Transporte de
Energia Electrica de Alta
Tension SA (Transener)
Page 18 May 12, 2003
AAlNegative/A-
AA-/Stable/A-
A+/Stable/A.
A+/Negative/A-
A+/Negative/A,
A+/Negative/A- t
NStable/A-
NStable/-
A/Negative/A-
A-/Positive/A,
A-/Stable/A,
/Stable/A-
/Negative/A-
A-/Negative/A-
BBB+/positive/-
BBB+/Stable/-
BBB+/Negative/A'
Foreign currency
BBB+/Negative/-
Local currency
/Positive/-
Foreign currency
BBB-/positive/-
/Positive/-SO/-/-
'local currency
BBB+/Stable/-
Foreign currency
BBB-/Stable/-
BBB./Negative/-
Local cunancy
BB'/Negative/-
Foreign currency
B+/Stable/-
B/Negative/-
cc/CW-Pos/-
0/-/-
Standard & Poors Utilities & Perspectives
Key Contacts
Rocky Mountam Power
Exhibit No.8 page 19 of20
CASE NO. PAC-E-oS-o7
Witneta Bruce N. Williams
S. Utility Contacts
Ronald M, Barone
Richard W. Cortright, Jr,
John W. Whitlock
Suzanne Smith
Andrew Watt
David Bodek
Barbara A, Eiseman
Jodi Hecht
Todd A, Shipman, CFA
Judith G, Waite
Jeffrey Wolinsky, CFA
John Kennedy
Dimitri Nikas
Peter E, Dtersen
Aneesh Prabhu
William R. Ferara
Brian Janiak
Rajeev Sharma
Scott Beicke
Holly Harper
Kevin Beicke
Paul Quinlan
Swami Venkataraman
leo Carrilo
Martin A, Scott
John Alii
Carolyn Zakrevsky
David Acosta
S. Oil & Gas Contacts
Arthur F. Simonson
John W. Whitlock
Andrew Watt
Bruce Schwartz, CFA
John Thieroff
DanielVolpi
Steven Nocar
Paul Harvey
Martin A, Scott
Nancy Hwang
Web and E-mail
New York (1)212-438-7662
New York (1) 212-43B-7665
New York (1) 212-438-7678
New York (1)212-438-2106
New York (1)212-438-7868
New York (1)212-438-7969
New York (11212-438-7666
New York (1)212-438-2019
New York (11212-438-7676
New York (1)212-438-7677
New York (1)212-438-2117
New York (1)212-438-7670
New York (1)212-438-7807
New York (1) 212-438-7674
New York (1) 212-438-1285
New York (1)212-438-7667
New York (1) 212-438-5025
New York (1)212-438-1729
New York (1) 212-438-7663
New York (1) 212-438-2017
New York (1)212-438-7847
New York (1)212-438-1563
San Francisco (1) 415-371-5071
San Francisco (1) 415-371-5077
New York (1) 212-438-1303
New York (1)212-438-2695
New York (1)212-438-2694
New York (1)212-438-4927
New York
New York
New York
New York
New York
New York
New York
New York
New York
New York
(1) 212-438-2094
(1) 212-438-7678
(1) 212-438-7868
(1) 212-438-7809
(1) 212-438-7695
(1) 212-438-7688
(1) 212-438-7803
(1) 212-438-7696
(1) 212-438-1303
(1) 212-438-2740
International Contacts
Damian DiPerna Canada
Marta Castelli
Agnes DePetigny
Europe, Middle East, Africa Paris
Michael Wilkins
United Kingdom london
Paul Coughlin Asia Pacific Hong Kong
Paul Stephen Australia Melbourne
Michael Petit Japan/Korea TokyoPeter Rigby New YorkWilliam Chew New York
S. Telecommunication Contacts
Richard Sidennan New York
Rosemarie Kalinowski New York
Catherine Cosentino New YorkMichael Tsao New York
S. Public Power Contacts
RichardW.Cortright,Jr, New York (1)212-438-7665David Bodek New York (1) 212-438-7969
Suzanne Smith New York HI 212-438-2106Jodi Hecht New York (1)212-438-2019
Terry A. Pratt New York (1) 212-438-2080Dimitri Nikas New York (11212-438-7807
Swami Venkataraman San Francisco (1) 415-371-5071leoCarrilo San Francisco (1) 415-371-5077
Project Finance Contacts
William Chew
Arthur F. Simonson
Suzanne Smith
Peter Rigby
Arleen Spangler
Terry A, Pratt
Jeffrey Wolinsky, CFA
Tobias Hsieh
Scott Taylor
Elif Acar
Ian Greer
Nancy Hwang
Toronto (1) 416-507-2561
Buenos Aires (54) 11-4891-2128
(33)-4420-6670
(44)-207-826-3528
(852)-2533-3502
(613)-9631-207~
(813)-3593-8701
(1) 212-438-2085
0) 212-438-7981
(1) 212-438-7863
(1) 212-438-7841
(1) 212-438-7828
(1) 212-438-7832
New York
New York
New York
New York
New York
New York
New York
New York
New York
New York
Melbourne
New York
(1) 212-438-7981
(1) 212-438-2094
(1) 212-438-2106
(1) 212-438-2085
(1) 212-438-2098
(1) 212-438-2080
(1)212-438-2117
(1) 212-438-2023
(1) 212-438-2057
(1) 212-438-6482
(613~9631-2032
11) 212-438-2740
Visit Us on the Web
More U.S. utility credit information is available at:
www.standardandpoors.comlratings
Subscriptions to Standard & Poors on-line
rating service are available at:
www.ratingsdirectcom
~ Back to
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Next Page ~Page 19 May 12, 2003
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.... Back to
""III Table of Contents
KOCky Mountam l'owcr
Exhibit No.8 page 20 of20
CASE NO. P AC.E-OS~7
Witnesa BI1ICC N. Williams
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Page 20 May 12. 2003 Standard & Poor's Utilities & Perspectives
Ji,) i
;:'
:::3ll Case No. PAC-07-
Exhibit No.
Witness: Bruce N. Williams\ :: i "tI:, i!
' ,
I ',1'
oJ ilL i \ I ~: :
" '...::
i ,. ii
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Bruce N. Williams
Standard & Poor s Imputed Debt Calculation
for U.S. Utilities' Power Purchase Agreements
May 30, 2007 Publication
June 2007
(30-Mar-2007) Credit FAQ: Imputed Debt Calculation For U.S. Utilities' Power PurChaSf".H P~P'f". 1 of4
Rocky Moun1ain Power
Exhibit No, 9 page 1 of 4
CASE NO, PAC-E-O7-OS
Wibless Bruce N, Williams
RESEARCH
Credit FAQ:
Imputed Debt Calculation For U.S. Utilities' Power
Purchase Agreements
Publication date:
Primary Credit Analysts:
30-Mar-2007
David Bodek, New York (1) 212-438-7969;
d avid - bodek~standa rda ndpoors, com
Richard W Cortright, Jr., New York (1) 212-438-7665;
richarcC cortright~stand arda nd poors, com
Solomon B Samson, New York ~1) 212-438-7653;
soL samson ~standa rdandpoors, com
In November 2006, Standard & Poors Ratings Services invited members of the U.S. electric industry and
interested parties to provide us with comments on our proposal to incorporate evergreen treatment in the
debt equivalents we calculate to reflect the fixed obligations created by power purchase agreements
(PPAs). Evergreen treatment would, for analytical purposes, assume an extension of the life of some
short- and intermediate-term PPAs, so as to achieve comparability in the financial metrics of companies
with supply arrangements of varying durations.
We received comments from every sector of the power industry--utilities, independent power producers,
trade organizations, consultants, investors, and regulators. Based on the comments received, we have
reached a number of conclusions regarding the application of evergreen treatment to PPAsin our analysis.
We have also made a number of clarifications and refinements to our rating methodology. This discussion
supplements our Nov. 1 , 2006 article "Request for Comments: Imputing Debt to Purchased Power
Obligations " which is available on RatingsDirect.
Frequently Asked Questions
How is evergreen treatment applied in Standard & Poor s credit analysis?
Standard & Poor s adjusts reported financial metrics to capitalize portions of the costs of PPAs. The intent
of these adjustments is to capture fixed PPA obligations that have debt-like attributes because they fund
the recovery of third-party power suppliers' capital investments in generation assets. These fixed
obligations merit inclusion in a utility s financial metrics as though they are part of a utility's permanent
capital structure. Evergreen treatment would extend the tenor of short- and intermediate-term contracts to
reflect the long-term obligation of electric utilities to meet their customers' demand for electricity.
We have concluded that there is a limited pool of utilities whose portfolios of existing and projected PPAs
do not meaningfully correspond to long-term load serving obligations. Although evergreen treatment will be
applied selectively in those cases where the portfolio of existing and projected PPAs is inconsistent with
long-term load-serving obligations, a blanket application of evergreen treatment is not warranted.
The net present value (NPV) of the fixed obligations associated with a portfolio of short-term or
intermediate-term contracts can lead to distortions in a utility s financial profile relative to the NPV of the
fixed obligations of a utility with a portfolio of PPAs that is made up of longer-term commitments. Where
there is the potential for such distortions, rating committees will consider evergreen treatment of existing
PPA obligations as a scenario for inclusion in the rating analysis.
What are the mechanics of PPA debt imputation and evergreen treatment?
A starting point for calculating the debt to be imputed for PPA-related fixed obligations can be found
among the "commitments and contingencies" in the notes to a utility s financial statements. An NPV is
calculated for the stream of capacity payments associated with the outstanding contracts included in the
https:/lwww.ratingsdirectcom/Apps/RDkontroller/ArticIe?id=S 70 164&type=&outputTyp... 3/30/2007
(30-Mar-2007) Credit FAQ: Imputed Debt Calculation For U.S. Utilities' Power Purchase... Page 2 of 4
Rocky Moun1ain Power
Exhibit No,9 page 2 of 4
CASE NO, PAC-07-
Witness Bruce N, Williams
financial statements. The notes to the financial statements report capacity payments for the succeeding
five years and a "thereafter" period.
While we have access to proprietary forecasts that show the detail underlying the costs that are
amalgamated beyond the five-year horizon, others, for purposes of calculating an NPV, can divide the
amount reported as "thereafter" by the average of the capacity payments in the preceding five years to
derive an approximate tenor of the amounts combined as the sum of the obligations beyond the fifth year.
In calculating debt equivalents, we also include new contracts that will commence during the forecast
period and aren t reflected in the notes to the financial statements. 'For this group of -contracts , debt
imputation will not commence until the year that energy deliveries are to begin under the anticipated
contract.
How is NPV calculated?
The NPV is calculated using a discount rate equivalent to the ~ompany s average cost of debt, net of
securitization debt. Once we arrive at the NPV, we apply a risk factor to reflect the benefits of regulatory or
legislative cost recovery mechanisms (see "Request for Comments: Imputing Debt to Purchased Power
Obligations," (cited above) for a discussion of risk factors).
How does evergreen treatment alter the PPA debt adjustment?
If evergreen treatment is warranted, we would extend the expiration of existing ~ontracts and those that
are slated to commence during the five-year horizon. Based on our analysis of several companies, we
have determined that any evergreen extension of the tenor of existing contracts and anticipated contracts
should extend those contracts to 12 years beyond the relevant forecast year.
To decide whether to apply evergreen treatment, we would start with an examination of actual capacity
payments scheduled during the five-year horizon and the period represented as the thereafter period in the
financial statements. If we conclude that the duration of PPAs is short relative to our targeted tenor, we
would then add capacity payments until the targeted tenor is achieved. The price for the .capacity that we
add will be derived from new peaker entry economics.
We use empirical data to establish the cost of developing new peaking capacity and will reflect regional
differences in our analysis. The cost of new capacity is translated into a dollars-per-kilowatt-year figure
using a proxy weighted average cost of capital and a proxy capital recovery period.
Does customer choice curb the need for evergreen treatment?
Several comments submitted to us observed that over the long term there is the potential that customers
may switch to third-party providers, thereby undermining the rationale for an evergreen adjustment. We
acknowledge that the introduction of customer migration would alter the long-term obligation to serve. At
the same time, it must be noted that our rating methodology already addresses this concern. Customer
choice typically goes hand in hand with the transformation of a utility into a pure transmission and
distribution system. We have previously stated that we won t impute debt for those utilities whose role-as
a result of either regulatory orders or legislation-is limited to that of a conduit between suppliers and retail
customers. Therefore, utilities whose customers have retail choice aren t generally exposed to debt
imputation and, in turn, we won t apply evergreen treatment to their supply obligations.
Have there been revisions to the analytical treatment of short-term PPAs?
For many years, Standard & Poor's didn t calculate debt equivalents for the fixed costs of power supply
arrangements whose tenor was three years or less. We recently announced our abandonment of this
exception to our debt imputation criteria, However, we understand that there are some utilities that use
short-term PPAs of approximately one year or less as gap fillers pending either the construction of new
capacity or the execution of long-term PPA contracts. To the extent that such short-term supply
arrangements represent a nominal percentage of demand and serve the purposes described above, we
will neither impute debt for such contracts nor provide evergreen treatment to such contracts.
Are accommodations made for PPAs that are treated as leases in the financial statements?
Several utilities have reported that their accountants dictate that certain PPAs need to be treated as leases
for accounting purposes due to the tenor of the PPA or the residual value of the asset upon the PPA'
expiration. We have consistently taken the position that companies should identify those capacity charges
https://www.ratingsdirect:com/AppslRD/controller/ Article?id=570 164&type=&outputTyp... 3/30/2007
130-Mar-2007) Credit FAQ: Imputed Debt Calculation For S. Utilities' Power Purehase... Page 3 of 4
Rocky Mounlain Power
Exhibit No, 9 page 3 of 4
CASE NO, PAC-E-O7-O5
Witness Bruce N, Williams
that are subject to lease treatment in the financial statements so that we can accord PPA treatment to
those obligations, in lieu of lease treatment. That is, PPAs that receive lease treatment for accounting
purposes won t be subject to a 100% risk factor for analytical purposes as though they were leases.
Rather, the NPV of the stream of capacity payments associated with these PPAs will be reduced by the
risk factor that is applied to the utility's other PPA commitments.
How is the depreciation expense related to PPAs calculated?
We noted in our November article that we now add an implied depreciation expense to funds from
operations (FFO) to align the analytical treatment of PPAs with the concept of purchased power as a
substitute for self-build. We observed that we calculate imputed depreciation expense in conformity with
the methodology used for calculating a depreciation adjustment as an offset to debt equivalents created by
leases.
The imputed depreciation expense is calculated for any given year by taking the scheduled fixed capacity
payment commitment for that year and subtracting from it the implied interest expense calculated from the
NPV of the stream of capacity payments associated with that year. The calculated depreciation proxy is
added to FFO in the numerator as part of the calculation of both the FFO-to-interest and FFO-to-debt
ratios.
What adjustments are made for tolling contracts?
We will assign a 100% risk factor when imputing debt to an unregulated energy company that has entered
into a tolling agreement for a power plant's output. This is done because of the absence of a regulatory
mechanism for the recovery of the fixed costs presented by the tolling arrangement.
Are transmission contracts treated differently than PPAs?
In recent years, some utilities have entered into long-term transmission contracts in lieu of building
generation. In some cases, these transmission contracts provide access to specific power plants, while
other transmission arrangements provide access to competitive wholesale electricity markets. We have
concluded that these types of transmission arrangements represent extensions of the power plants to
which they are connected or the markets that they serve, Irrespective of whether these transmission lines
are integral to the delivery of power from a specific plant or are conduits to wholesale markets, we view
these arrangements as exhibiting very strong parallels to PPAs as a substitute for investment in power
plants. Consequently, we will impute debt for the fixed costs associated with long-term transmission
contracts.
Additional Contacts:Arthur F Simonson, New York (1) 212-438-2094;
arthur - simonson~standardandpoors.com
Arleen Spangler, New York (1) 212-438-2098;
arleen span g Ie r~sta ndardan dpoors. com
Scott Taylor, New York (1) 212-438-2057;
scott - taylor~standardandpoors. co
John W Whitlock, New York (1) 212-438-7678;
john- whitlock~standardandpoors.com
Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities
designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein
are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make
any other investment decisions. Accordingly, any user of the infonnation contained herein should not rely on any credit rating or
other opinion contained herein in making any investment decision, Ratings are based on infonnation received by Ratings
Services. Other divisions of Standard & Poor's may have infonnation that is not available to Ratings Services. Standard & Poor's
has established policies and procedures to maintain the confidentiality of non-public infonnation received during the ratings
process.
Ratings Services receives compensation for its ratings, Such compensation is nonnally paid either by the issuers of such
securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the
rating, it receives no payment for doing so, except for subscriptions to its publications, Additional infonnation about our ratings
fees is available at www,standardandpoors,comfusratingsfees.
https://www.ratingsdirectcom/ Apps/RD/controHer/ Article?id=570 164&type=&outputTyp... 3/30/2007
(30-Mar-2007) Credit F AQ: Imputed Debt Calculation For U.S. Utilities' Power Purchase... Page 4 of 4
Rocky Mounlain Power
Exhibit No, 9 page 4 of 4
CASE NO, PAC-O7-
Wib1ess Bruce N. Williams
Copyright IG) 2007 Standard & Poor's, a division of The McGraw-Hili Companies, All
Rights Reserved. Privacy Notice TheMcGraw"HitlCcmpanre5
. .. .;. .g..'
.~i!~11
https://www.ratingsdirectcom/ Apps/RD/controller/ Article?id=S70 164&type=&outputTyp...3/30/2007
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:i .Case No. PAC-07-
Exhibit No.1 0
Witness: Bruce N. Williams
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ROCKY MOUNTAIN POWER
Exhibit Accompanying Direct Testimony of Bruce N. Williams
Pro Forma Cost of Preferred Stock
June 2007
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