20071218Application.pdf

~~MONTAIN
IUn'! DEC \ 8 Mî it ~ 00
VIA OVERNIGHT DELIVERY
201 South Main, Suite 2300
Salt Lake City, Utah 84111
December 18, 2007
Idaho Public Utility Commission
Statehouse
472 West Washigton Street
Boise, il 83702
ATTN:Ms. Jean Jewell
Commission Secretar
Re: Case No. PAC-E-07-lh In the Matter of the Application of ROCKY
MOUNTAI POWER for authority to (1) issue
and sell or exchange not more than $2,000,000,000
of debt, (2) enter into credit support arangements,
(3) enter into curency swaps, and (4) contrbute or
sell additional debt to special-purose entities.
Dear Commissioners:
Rocky Mountain Power, a division ofPacifiCorp (Company), respectfully requests that the
Commission enter its order, effective upon issuance, authorizing the Company to (1) issue and
sell or exchange, in one or more public offerings or private placements, fixed or floating rate
debt (Debt) in the aggregate principal amount not to exceed $2,000,000,000 or, if the Debt is
issued at an original issue discount, such greater amount as shall result in an aggregate offering
price of not more than $2,000,000,000 (or its equivalent amount in, or based upon, foreign
curencies determined at the time of issue), (2) enter into letter of credit arangements with one
or more bans or such other agreements or arangements as may be necessar or appropriate,
from time to time, to provide additional credit support for the payment ofthe principal of,
interest on and premium (if any) on such Debt, (3) enter into one or more curency swaps, and
(4) contribute or sell additional Debt to special-purose entities (SPEs) in an amount based upon
the common securties of the SPE. The Company also requests that such increased authority
remain in effect until Februar 28,2013, on the condition the Company's senor secured debt be
rated at "investment grade" by both Standard & Poor's Rating Servces and Moody's Investors
Service, Inc.
The requested authority is expected to accommodate the Company's 2008 and 2009 financing
requirements. These requirements include continuing high levels of capital expenditues to serve
customers, including expenditures for renewable resources, transmission investment and
environmental compliance consistent with acquisition commitments and the refinancing of
approximately $550 milion of maturng debt over the two-year period. The Company expects
that it wil use a substantial portion of this requested authority durng 2008 and 2009 and will
seek subsequent new or amended authority from the Commission to permit continued access to
the long-term debt markets.
The requested authority would.supplement the financing flexibility that the Commission had
previously authorized in Order No. 30258 in Case No. PAC-E-07-02 (the 2007 Order). In the
2007 Order, the Commission authorized the Company to issue up to $1.5 bilion of securties
identical to those covered in the enclosed Application. The Company has subsequently issued
$1.2 bilion principal amount of debt under the 2007 Order authority and has $300,000,000 of
additional issuance authorized under that order. As the Company does not anticipate utilizing
the remaining authority under the 2007 Order, it may be withdrawn if the Commission issues its
order in ths matter.
The enclosed application is substantially similar to the application submitted in connection with
the 2007 Order.
The Company respectfully requests that the Commission issue its order on or before Januar 31,
2008. The Company also requests twenty certified copies of any order issued in ths matter.
Notice of this Application wil be published within seven days as required by the Commission's
Rules of Procedure. Please note that the Company's Application Fee in the amount of$l,OOO is
being submitted under separate cover.
It is respectfully requested that all formal correspondence and Staff requests regardig this
material be addressed to:
Bye-mail (preferred):datarequest(ßacificorp.com
By regular mail:Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite.2000
Portland, Oregon 97232
By fax:[phone]
Informal inquiries may be directed to me at [phone].
Your attention to this matter is appreciated.
Sincerely,~rJ~
Bruce N. Willams
Vice President and Treasurer
Enclosures: Application (1 original and 4 copies)
Proposed Form of Order (1 original and 4 copies)
CD containing the proposed Form of Order
".
$'....
BEFORE THE IDAHO PUBLIC UTILITIES COMMISStQ9WEC 18 H:OO
In the Matter of the Application of ROCKY )
MOUNTAIN POWER for authority to (1) issue )
and sell or exchange not more than )
$2,000,000,000 of debt, (2) enter into credit )
support arrangements, (3) enter into currency )
swaps, and (4) contribute or sell additional debt )
to special-purpose entities. )
APPLICA nON
CASE NO. PAC-E-07-&
Rocky Mountain Power, a division ofPacifiCorp, (Company) hereby applies for an order
of the Idaho Public Utilities Commission (Commission) authorizing the Company to (1) issue
and sell or exchange, in one or more public offerings or private placements, fixed or floating rate
debt (Debt) in the aggregate principal amount of not more than $2,000,000,000 or, ifthe Debt is
issued at an original issue discount, such greater amount as shall result in an aggregate offering
price of not more than $2,000,000,000 (or its equivalent amount in, or based upon, foreign
currencies determined at the time of issue), (2) enter into letter of credit arrangements with one
or more banks or such other agreements or arrangements as may be necessary or appropriate,
from time to time, to provide additional credit support for the payment of the principal of, the
interest on, and the premium ofthe Debt, (3) enter into one or more currency swaps, and (4)
contribute or sell additional Debt to special-purpose entities (SPEs) in an amount based upon the
common securities of the SPE. and Commission approval of the proposed guarantee and expense
payment agreements relating to the preferred securities of the SPE, in each case substantially as
described herein. The Company requests that such authority remain in effect until February 28,
2013, so long as the Company maintains a BBB- or higher senior secured debt rating, as
indicated by Standard & Poor's Rating Services, and a Baa3 or higher senior secured debt rating,
as indicated by Moody's Investors' Service, Inc. The application is filed pursuant to Chapter 9,
APPLICA nON OF ROCKY MOUNTAIN POWER 1
Title 61, of the Idaho Code and Section 141 ofthe Commission's Rules of Procedure and is
intended to amend and supersede order No. 30258 (2007 Order) issued by the Commission
February 27,2007 in docket number PAC-E-07-02 (2007 Docket). This Application is
substantially similar to that filed by the Company in the 2007 Docket and seeks authorization to
issue up to $2,000,000,000 oflong-term debt through February 28,2013 on the same terms and
conditions contained in the 2007 Order.
The Company respectfully requests that the Commission issue an order by January 31, 2008.
The Company respectfully represents that:
(a) The official name of the applicant and address of its principal business office:
PacifiCorp, doing business as Rocky Mountain Power
825 N.B. Multnomah, Suite 2000
Portland, OR 97232
(b) The state and date of incorporation; each state in which it operates as a utility:
The Company was incorporated under Oregon law in August 1987 for the purpose of
facilitating consummation of a merger with Utah Power & Light Company, a Utah
corporation, and changing the state of incorporation ofPacifiCorp from Maine to Oregon.
The Company currently serves customers as Rocky Mountain Power in Idaho, Utah and
Wyoming and as Pacific Power in California, Oregon and Washington.
(c) The name, address, and telephone number of persons authorized to receive notices and
communications:
Bruce N. Wiliams
Vice President and Treasurer
PacifiCorp
825 N .E. Multnomah, Suite 1900
Portland, OR 97232
Telephone: [phone]
E-mail: bruce.wiliams(facificorp.com
JeffB. Erb
Assistant General Counsel
PacifiCorp
825 N.E. Multnomah, Suite 600
Portland, OR 97232
Telephone: [phone]
E-mail: jeff.erb(facificorp.com
APPLICATION OF ROCKY MOUNTAIN POWER 2
Jeffrey K. Larsen, Vice President
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
E-mail: jeff.larsen(âpacificorp.com
Daniel Solander, Senior Counsel
Rocky Mountain Power
201 South Main Street, Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
E-mail: danieL.solanderß!acificorp.com
Brian Dickman
Manager, Regulation
Rocky Mountain Power
201 South Main, Suite 2300
Salt Lake City, UT 84111
Telephone: [phone]
E-mail: brian.dickman(ipacificorp.com
It is respectfully requested that all formal correspondence and Staff requests regarding
this material be addressed to:
Bye-mail (preferred):datarequest(ipacificorp.com
By regular mail:Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 2000
Portland, Oregon 97232
By fax:[phone]
Informal questions should be directed to Bruce Willams at [phone].
(d) A full description of the securities proposed to be issued*:
(1 ) Type and nature of securities:
Debt to be issued in one or more transactions as conditions permit. The Debt may
be secured or unsecured and may be subordinated or unsubordinated.
(2) Amount of securities:
Not more than $2,000,000,000 aggregate principal amount or, if the Debt is issued
at an original issue discount, such greater amount as shall result in an aggregate
offering price of not more than $2,000,000,000 (or its equivalent amount in, or
based upon, foreign currencies determined at the time of issue); plus additional
*The information supplied in this section is substantially the same as that supplied for the 2007 Docket.
APPLICATION OF ROCKY MOUNTAIN POWER 3
Debt and guaranties relating to the preferred securities of special-purpose entities
in amounts as described below.
(3) Interest Rate:
If the Debt bears a fixed rate, the interest rate wil be set at the time of issuance.
If the Debt bears a floating-rate, the interest rate wil be set periodically based
upon a published or quoted index of short-term rates.
(4) Dates of issuance and maturity:
The Company expects to issue the Debt from time to time in either public
offerings or private placements for cash or in exchange for its outstanding
securities. Maturities wil be established at the time of issuance.
(5) Institutional rating of the securties, or if not rated an explanation:
The Company's debt is rated, as of the date ofthis filing, as follows:
Security
Senior Secured Debt
Senior Unsecured Debt
Subordinated Debt
Moody's
A3
Baal
(P) Baa2
S&P
A-
BBB+
n/a
(6) Stock Exchange on which listed:
The Company has generally not listed its bonds, but has in the past listed certain
unsecured debt on The N ew York Stock Exchange. If the Debt is issued publicly
in an overseas market, the Debt may be listed, if appropriate, on one or more
foreign exchanges.
(7) Additional descriptive information:
General: Alternatives currently available to the Company include
(1) conventional first mortgage bonds placed publicly or privately in the domestic
or foreign markets, (2) secured or unsecured medium-term notes placed publicly
or privately in the domestic or foreign markets, (3) floating-rate debt placed
APPLICATION OF ROCKY MOUNTAIN POWER 4
publicly or privately in the domestic or foreign markets, (4) Eurodollar financings
placed publicly or privately overseas, (5) debt issued overseas denominated in, or
based upon, foreign currencies combined with a currency swap to effectively
eliminate the currency risk, and (6) subordinated debt placed publicly or privately
in the domestic or foreign markets and issued either alone or in conjunction with
an offering of preferred securities by a special-purose entity (SPE) organized by
the Company. A brief description of these transactions is set forth below.
i. First Mortgage Bonds. First mortgage bonds have been the traditional
debt financing vehicle utilized by utilities in the United States, and are
typically offered in public offerings but may be privately placed. First
mortgage bonds are secured by a mortgage on the fixed assets of the
utilty.
The bonds are typically redeemable at the Company's option at
redemption prices dependent upon U.S. Treasury yields. The Company
may determine that a call provision is appropriate to provide financial
flexibility in changing interest rate environments, and the bonds may be
redeemable at a premium over the principal amount, with the premium
declining to zero near the final maturity of the bonds.
The Company's first mortgage bonds are issued as First Mortgage Bonds
under the PacifiCorp Mortgage. The Commission has previously
authorized the Company to incur the lien of the PacifiCorp Mortgage in
Case No. U-I046-L5, Order No. 22157.
APPLICATION OF ROCKY MOUNTAIN POWER 5
The underwriting fee for First Mortgage Bond issuances vary by the
maturty of the debt but is not expected to exceed one percent of the
principal amount.
II. Medium-Term Notes. Medium-term notes (MTNs) are interest-bearing
instrments with maturities generally ranging between 9 months and
100 years. MTNs are typically offered on a continuous basis by the
borrower through one or more managers, which act as agents in placing
the notes, either domestically or through global programs. MTN s can be
offered on a secured or unsecured basis.
Compensation to the agents varies by the maturity of each tranche of
MTNs issued, but is not expected to exceed one percent of the principal
amount of notes placed.
The MTN investor universe in the United States consists of banks,
insurance companies, pension funds, thrfts, mutual funds, money
managers, investment advisors, corporate, and nonprofit organizations.
Overseas, the investor profile primarily consists of banks, insurance
companies, pension funds and retail accounts.
MTN programs are generally structured to allow a wide range of terms.
Principal amount, currency, maturity, interest rate and redemption terms
are fixed at the time of sale. In the event the Company chooses to issue
MTNs in foreign currencies, a currency rate swap would be
simultaneously entered into to effectively hedge the Company's exposure
against currency risk. If the Company issues secured MTN s, they wil
APPLICATION OF ROCKY MOUNTAIN POWER 6
most likely be issued in the form of First Mortgage Bonds under the
PacifiCorp Mortgage.
III. Floating-Rate Debt. Floating-rate debt is a security with interest rates that
reset periodically, such as daily, weekly, monthly, quarterly, semi-
annually or annually at the option of the Company. The most common
indices used for pricing floating-rate debt are based upon LIB OR,
commercial paper and Treasury bils.
Refunding provisions for floating-rate debt vary from transaction to
transaction depending upon the structure of the agreement. Should the
Company subsequently fix the interest rate through an interest rate swap
or cap, the cost of refunding would include the cost of unwinding the swap
or cap.
Floating-rate debt could be more advantageous than fixed-rate debt. First,
it can provide the Company with an occasional source of long-term
funding at attractive rates compared to the fixed-rate market. Second, it
allows the Company access to the short end of the yield curve when short-
term rates are attractive. Should rates begin to increase, the Company
could execute an interest rate swap or cap to secure a fixed rate.
The fees associated with a floating-rate debt arrangement are not expected
to exceed one percent of the principal amount of the debt.
iv. Eurodollar Financings. Eurodollar bonds or debentures are dollar-
denominated securities issued to foreign investors. Eurodollar securities
are generally placed by a foreign underwriter, or a foreign subsidiary of a
U.S. investment or commercial bank (bank). Eurodollar securities are
APPLICATION OF ROCKY MOUNTAIN POWER 7
generally unsecured obligations. However, the Company may be required
to enter into a letter of credit arrangement with one or more banks or such
other agreements or arrangements as may be necessary or appropriate,
from time to time, to support its obligation to repay the principal of, the
interest on, and the premium (if any) on the debt. Such an arrangement
could involve a fee, not expected to exceed one percent on the principal
amount of the debt. The Company would receive dollars at the time of
closing and all interest and principal payments would be made in dollars.
A Eurodollar bond issuance is typically arranged using a bank as the
underwriter (public offering) or placement agent (private offering). The
bank's role is to locate investors outside the United States that are
interested in purchasing financial assets in dollars. The interest rate
charged on the debt is usually a spread over U.S. Treasury obligations
having a similar maturity. After the call protection has expired, the bonds
are generally callable at their principal value. The issuance fee associated
with a Eurodollar bond offering is approximately two percent of the
principal amount sold.
A potential advantage of a Eurodollar offering is that it allows the
Company to access investors generally not active in the U.S. markets, and
at the same time does not subject the Company to any currency exposure.
Another advantage is that, from time to time, very attractively priced
funds become available in the private Eurodollar market when an investor
with dollars attempts to invest in U.S. dollar assets. Thus, for short
periods, a market could be created wherein the issuer can obtain very
attractive rates relative to the public markets. These windows in the
APPLICATION OF ROCKY MOUNTAIN POWER 8
market open and close very quickly, making it necessary that the
Company have the opportunity to commit quickly when offered an
attractive proposaL.
V. Foreign Currency Debt Combined with a Currency Swap. The issuance of
debt denominated in a currency other than U.S. dollars, combined with a
curency swap, would allow the Company to issue debt in a foreign
curency and execute a currency swap to effectively eliminate the currency
risk. By issuing in a foreign curency, the Company would attact
investors that would not normally be investing in its securities. Issuing
securities in a foreign currency becomes attractive when the nominal
interest rate charged in the foreign country is significantly lower than the
rate in the United States or in U.S. dollar-denominated securities. To the
extent that the cost of executing the currency swap is less than the
difference between the nominal interest rate in the foreign country and the
dollar-denominated interest rate, issuing debt in a foreign currency and
executing a currency swap provides a lower total cost of debt.
The foreign currencies most frequently used in the past by U.S. companies
include Euro, Swiss Francs, British Sterling, Japanese Yen, Canadian
Dollars, Australian Dollars and New Zealand Dollars. The underwters
for a foreign currency offering are responsible for locating investors
wiling to purchase the Company's debt that has principal and interest
denominated in the foreign currency. The fees for a foreign currency
offering are expected to approximate two percent of the principal amount
sold.
APPLICATION OF ROCKY MOUNTAIN POWER 9
In order to effectively eliminate the currency risk, the Company would
enter into a currency swap that would be executed simultaneously with the
foreign currency offering. In the currency swap, the Company would
receive a stream of payments in the foreign currency exactly equal in
amount and timing to the Company's obligations for the foreign currency
debt (principal and interest). In exchange, the Company would agree to
make a stream of payments in U.S. dollars to the third party. The net
effect of the transaction is that the Company's foreign curency
obligations would be exactly offset by the foreign curency receipts under
the exchange and the Company's net payments would be in U.S. dollars.
Whether or not the other party to the exchange pedorms, the Company
remains obligated under the terms of the foreign curency debt. The
Company would propose to minimize the risk of nonperformance in the
exchange through the selection of a third party participant with a long-
term credit rating of AA equivalent or better or with a third party that is a
high quality sovereign or agency of a sovereign if the tenor of the
exchange agreement is five years or longer and long-term credit rating of
A or better if the tenor is less than five years.
The fees associated with arranging a currency swap agreement are a
function of interest rates and currency differentials between the U.S. dollar
and the applicable foreign curency.
Because a foreign offering with a currency swap involves two transactions
and multiple parties, the complexity and cost of tryng to unwind such a
APPLICATION OF ROCKY MOUNTAIN POWER 10
foreign offering prior to its final maturity effectively makes this type of
transaction generally non-callable prior to its final maturity.
Issuing debt denominated in a foreign currency combined with a currency
swap requires that the Company have a great degree of flexibility in
timing the offering in order to pick the currency, nominal interest rates,
and exchange rate that wil enable it to achieve a lower cost.
Cost Test: The Company wil not undertake the proposed transactions in a
foreign market unless and until it can assure itself that the total cost ofthe
foreign borrowings proposed in this matter is no more than the total cost
of domestic borrowings for a similar term for companies of comparable
credit rating at the time of the borrowing.
VI. Subordinated Debt. It is anticipated that any subordinated debt could be
issued in one or more series pursuant to the Company's Indenture dated as
of May i, 1995, as supplemented, or pursuant to a new indenture. The
Company may issue the subordinated debt (a) directly to investors, as in
the issuance and sale of its 8 3/8% Junior Subordinated Deferrable Interest
Debentures, Series A, pursuant to the orders issued in Case No. PAC-S-
94-2, (b) in exchange for its outstanding securities, as in the issuance of its
8.55% Junior Subordinated Deferrable Interest Debentures, Series B,
pursuant to Case No. P AC-S-95-l, or (c) to an SPE in support ofthe
preferred securties of the SPE, as in the issuance and sale of its 8 1/4%
Junior Subordinated Deferrable Interest Debentures, Series C, pursuant to
orders issued in Case No. PAC-S-96-2, and its 7.70% Junior Subordinated
APPLICATION OF ROCKY MOUNTAIN POWER 11
Debentures Series D, pursuant to the orders issued in Case No. PAC-E-97-
2.
In a transaction involving preferred securities of an SPE, the Company
would organize the SPE and contribute or sell subordinated debt of the
Company to the SPE in an amount based upon the common securities of
the SPE (generally 3% of the aggregate liquidation preference of the
preferred securities issued by the SPE). The SPE would issue preferred
securities, which are expected to have a liquidation preference of $25
each, have cumulative dividends payable quarterly and could be listed on
the New York Stock Exchange. In addition, the SPE would purchase
subordinated debt of the Company in an aggregate principal amount
corresponding to the liquidation preference of the preferred securties
issued by the SPB. In certain circumstances, the subordinated debt of the
Company underlying the preferred securities of the SPE could be
distributed to the holders of the preferred securties in connection with the
liquidation of the SPE.
In this instance, the Company would guarantee the SPE's payment of:
(i) any accumulated and unpaid distributions required to be paid on the
preferred securities of the SPE to the extent that the SPE has funds on
hand available therefore; (ii) the redemption price with respect to any
preferred securities called for redemption to the extent that the SPE has
fuds on hand available therefore; and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of the SPE (unless the
Company's subordinated debt is distributed to holders of the SPE's
preferred securities), the lesser of ( a) the aggregate of the liquidation
APPLICATION OF ROCKY MOUNTAIN POWER 12
preference and all accrued and unpaid distributions to the date of payment
and (b) the amount of assets of the SPE remaining available for
distribution to holders of the preferred securities. The guarantee is
expected to be directly enforceable by holders of the preferred securities
issued by the SPE and subordinate to all senior debt of the Company. It is
also anticipated that the Company and the SPE wil enter into an expense
reimbursement arrangement under which the Company wil agree to pay
the expenses of the SPE.
(e) A description of the method of issuance and sale or procedure by which any obligation
as guarantor wil be assumed*:
The Company proposes to issue the Debt from time to time in either
public offerings or private placements, domestically or overseas, for cash
or in exchange for its outstanding securities. The financial markets have
become increasingly global and, as such, foreign sources of capital
compete directly with domestic sources for investment opportunities. The
Company anticipates that issuances wil be primarily fixed-rate First
Mortgage Bonds, but it is requesting authority for a variety of borrowing
options in order to provide the financial flexibility to pursue the most
attractive markets at the time of issuance and to produce the most
competitive cost for the Company.
Underwriters or placement agents wil be selected after negotiations with a
group of potential candidates. The firm or firms selected to lead an
offering under this authority wil be determined by the Company's
* The information supplied in this section is substantially the same as that supplied for the 2007 Docket.
APPLICATION OF ROCKY MOUNTAIN POWER 13
assessment of their ability to assist the Company in meeting its objective
of having the lowest total cost for the Debt to be issued. This assessment
is based upon the level of underwriting or placement fees, their knowledge
of the Company and its varied operations, the Company's parent company
and its affliates, and their ability to market the Debt to achieve the
Company's financing and capital strcture objectives.
(f) (1) (i)The name and address of any person receiving a fee (other than a fee for
technical services) for negotiating, issuing, or selling the securities or for
securing an underwriter, sellers, or purchasers of securities except as related
to a competitive bid: *
Other than for technical services, the only fees payable by the Company
wil be fees and expenses to the underwriters and agents (including
arrangement fees for currency swaps). The Company may also incur an
annual fee for credit support which is not expected to exceed one percent on
the principal amount of the Debt.
(ii) The fee amount:
Subject to final negotiations, the fee is not expected to exceed 3.0 percent
of the aggregate principal amount of the Debt if the Debt is issued overseas.
If issued domestically, the fee is not expected to exceed 1.0 percent ofthe
aggregate principal amount of the Debt. If subordinated debt is issued, the
fee is not expected to exceed 3.15 percent of the aggregate principal amount
ofthe Debt. The level of the fee is only one factor in determining the
*The information supplied in this section is substantially the same as that supplied for the 2007 Docket.
APPLICATION OF ROCKY MOUNTAIN POWER 14
overall cost of the Debt to be issued and, as such, is not the sole basis of the
financing decision.
(iii) The facts showing the reason for and reasonableness of the fee:
The aforementioned compensation levels to the agents or underwriters are
consistent with the usual and customary fees prevailing curently in the market.
These fees are reasonable given the services provided by the agents or
underwters. The agents and the underwrters wil be familiar with the Company,
its parent company and affliates and their long-term financing needs. They wil
be available for consultation on these matters and wil assist the Company in
evaluating market conditions and in formulating the exact terms of the
transactions. See subsection (f) supra.
(2) All facts showing that the applicant is or is not" controlled" by or is or is not
under the common "control" ofthe person listed in (h)(l)(i:
The Company wil have no officer or director in common with any underwter or
agent. All of the Company's issued and outstanding common stock is indirectly
owned by MidAmerican Energy Holdings Company.
(g) The purposes of the issuance * :
The purposes for which the Debt is proposed to be issued in this matter are (1) the
acquisition of property, (2) the constrction, completion, extension or improvement of
utility facilities, (3) the improvement of service, (4) the discharge or lawful refunding of
* The information supplied in this section is substantially the same as that supplied for the 2007 Docket.
APPLICATION OF ROCKY MOUNTAIN POWER 15
obligations which were incurred for utility purposes or (5) the reimbursement of the
Company's treasury for funds used for the foregoing purposes.
The Company keeps its accounts in a manner which enables the Commission to ascertain
the amount of money expended and the purposes for which the expenditures were made.
If the funds to be reimbursed were used for the discharge or refuding of obligations,
those obligations or their precedents were originally incurred in furtherance of the utility
purposes listed above.
To the extent that the funds to be reimbursed were used for the discharge or refunding of
obligations, those obligations or their precedents were originally incurred in furtherance
of utility purposes (1), (2) and (3) supra.
The results of the offerings are estimated to be:
ESTIMATED RESULTS OF THE OFFERING (1)
Total Percent of Total
Gross Proceeds $ 2,000,000,000 100.000%
Less:Agents/Underwriters
Compensation (I)17,500,000 0.875%
Proceeds Payable to Company $ 1,982,500,000 99.125%
Less: Other Issuance Expenses 2,500,000 0.125%
Net Proceeds $1,980,000,000 99.000%
(1) Assumes the issuance of first mortgage bonds.
Other Issuance Expenses
Regulatory agency fees $2,000
SEC fees 214,000
Company counsel fees 650,000
Accounting fees 350,000
Printing and engraving fees 225,000
APPLICATION OF ROCKY MOUNTAIN POWER 16
Rating agency fees
TOTAL
575,000
250,000
234,000
$ 2,500,000
Trustee/Indenture fees
Miscellaneous expenses
(h) Statement that applications for authority to finance are required to be filed with state
governents:
In addition to this Application, the Company is fiing an application with the Oregon
Public Utility Commission and a notice to the Washington Utilities and Transportation
Commission in connection with each issuance pursuant to Washington law. The
California Public Utilities Commission, the Utah Public Service Commission and the
Wyoming Public Service Commission have exempted the Company from their respective
securities statutes.
(i) A statement of the facts relied upon to show that the issuance is appropriate *:
As a public utility, the Company is expected to acquire, construct, improve, and maintain
sufficient utility facilities to serve its customers adequately and reliably at reasonable
cost. Issuances of the Debt are part of a program to finance the Company's facilities
taking into consideration prudent capital ratios, earnings coverage tests and market
uncertainties as to the relative merits of the various types of securties the Company could
sell.
Accordingly, the proposed issuances (1) are for lawful objects within the corporate
purposes ofthe Company, (2) are compatible with the public interest, (3) are necessary or
appropriate for or consistent with the proper pedormance by the Company of its service
as a public utility, (4) wil not impair its ability to perform that service, and (5) are
reasonably necessary or appropriate for these purposes.
* The information supplied in this section is substantially the same as that supplied for the 2007 Docket.
APPLICATION OF ROCKY MOUNTAIN POWER 17
(j) A statement of the bond indenture or other limitations on interest and dividend coverage,
and the effects of these limitations on this issuance:
See Exhibit J.
(k) A summary of rate changes which occurred during or after or which wil become
effective after the period described by the income statement included as Exhibit E:
In December 2006, the Utah Public Service Commission approved a stipulation
settling the Company's general rate case originally filed in March 2006. The stipulation
calls for an annual increase of$115.0 milion, or 9.95%, with $85.0 milion of the
increase effective December 11, 2006 and the remaining $30.0 milion effective June 1,
2007.
In September 2006, the Oregon Public Utility Commission approved a stipulation
settling the Company's general rate case originally fied in February 2006. Under the
stipulation, effective January 1, 2007 the Company received an annual increase for non-
power cost items of$33.0 milion and a $10.0 milion increase for power costs through
its annual transition adjustment mechanism. After 2007, the Company's power costs wil
be updated annually using the existing transition adjustment mechanism. In December
2006, the Oregon Public Utility Commission approved the Company's request to begin
amortization ofthe net amount of$2.3l milion deferred in the Company's motion for
reconsideration of the tax adjustment ordered in the Company's 2004 general rate case,
and rate credits associated with the MidAerican Energy Holdings Company transaction.
The $2.31 milion increase was effective January 1,2007.
In December 2006, the Idaho Public Utility Commission approved three applications
filed by the Company seeking to adjust the rates of certain Idaho customers for a total
increase of $8.25 milion. The applications were based on settlement agreements reached
after negotiations between the Company and the respective customers and took the place
of a general rate case request originally planned to be filed in 2006. The first application
APPLICATION OF ROCKY MOUNTAIN POWER 18
was approved effective as of September 1, 2006 and the remaining two applications were
approved effective as of January 1, 2007.
In December 2006, the California Public Utilities Commission approved a stipulation
settling the Company's general rate case originally filed in November 2005. The
stipulation called for a $7.3 milion annual increase in rates and a 10.6% retur on equity,
a dollar-for-dollar energy cost adjustment clause that allows for annual changes in the
level of net power costs, a post-test year adjustment mechanism that provides for
inflation-based increases to rates in 2008 and 2009, the ability to seek recovery of the
California-allocable portion of major plant additions exceeding $50.0 milion, and
scheduled rate increases under the terms of a transition agreement with Klamath
irrgators.
In June 2007 the Washington Transportation and Utilities Commission issued an
order approving a rate increase of$14 milion effective June 27, 2007.
APPLICATION OF ROCKY MOUNTAIN POWER 19
(m) Any other applicable exhibits:
The following exhibits are made a part of this application:
Incorporated by
reference to:
Exhibit Case Exhibit
A-I PAC-E-A
02-4
A-2 PAC-E-A-2
07-02
B**
C
D
E
F**
G
H
I
J
K**
L**
Description
Third Restated Aricles of Incorporation effective
November 20, 1996, as amended effective
November 29, 1999
Bylaws, as amended effective May 23, 2005
Resolutions ofthe Board of Directors authorizing the
proposed issuances
A statement (1) explaining the measure of control or
ownership exercised over the applicant by a utilty, bank,
trust company, banking association, underwter, or
electrical equipment supplier, and (2) explaining that the
applicant is a member of any holding company system
Balance Sheet, actual and pro forma, dated
September 30, 2007
Income Statement, actual and pro forma, for the
12 months ended September 30,2007
SEC Registration Statement on Form S-3ASR
Public invitation for proposal to purchase or underwrite
the proposed issuance ilot applicable.)
Copies of each proposal received for a negotiated
placement of the offering, a summary tabulation, a list of
prospective underwriters from whom no proposal was
received, and a justification of the accepted underwriting
proposal ilot applicable)
Source and Uses of Treasury Funds, actual and pro
forma, dated September 30, 2007
A statement of the bond indenture or other limitations on
interest and dividend coverage, and the effects of those
limitations on this issuance
Prospectus
Underwriting Agreement or Agency Agreement
** Exhibit or supplement to the Exhibit is to be fied as soon as available.
APPLICATION OF ROCKY MOUNTAIN POWER 20
PRAYER
Rocky Mountain Power respectfully requests that the Commission enter its order in this
matter, effective upon issuance, authorizing Rocky Mountain Power to (1) issue and sell or
exchange, in one or more public offerings or private placements, fixed or floating rate Debt in
the aggregate principal amount of not more than $2,000,000,000 or, ifthe Debt is issued at an
original issue discount, such greater amount as shall result in an aggregate offering price of not
more than $2,000,000,000 (or its equivalent amount in, or based upon, foreign currencies
determined at the time of issue), (2) enter into letter of credit arrangements with one or more
banks or such other agreements or arrangements as may be necessary or appropriate, from time
to time, to provide additional credit support for the payment of the principal of, the interest on,
and the premium (if any) on the Debt, (3) enter into one or more curency swaps, and (4)
contribute or sell additional Debt to one or more SPEs in an amount based upon the common
securities of the SPE and Commission approval of the proposed guarantee and expense payment
agreements relating to the preferred securities of the SPE, in each case substantially as described
herein. The Company agrees to notify the Commission of its intent to utilize a SPE and provide
all details anticipated with the transaction. The Company requests that such authority remain in
effect until February 28,2013, so long as the Company maintains a BBB- or higher senior
secured debt rating, as indicated by Standard & Poor's Rating Services, and a Baa3 or higher
senior secured debt rating, as indicated by Moody's Investors' Service, Inc. The Company
agrees to continue to file with the Commission on a quarterly basis debt reports including any
Debt authorized by the requested order and, to the extent not otherwise an obligation of the
APPLICATION OF ROCKY MOUNTAIN POWER 21
;Company pursuant to Commitment 120 approved by Order No. 29998 in Case No. P AC-E-05-8,
all credit rating agency reports related to the Company issued during the quarter.
Dated at Portland, Oregon on December 18, 2007.
PAC IFIC ORP
By:~tJ~
Bruce N. Wiliams
Vice President and Treasurer
APPLICATION OF ROCKY MOUNTAIN POWER 22
VERIFICATION
I, Bruce N. Wiliams, declare, under penalty of perjury, that I am the duly appointed Vice
President and Treasurer ofPacifiCorp and am authorized to make this verification. The
application and the attached exhibits were prepared at my direction and were read by me. I know
the contents of the application and the attached exhibits, and they are true, correct, and complete
of my own knowledge except those matters stated on information or belief which I believe to be
tre.
WITNESS my hand and the seal ofPacifiCorp on this 18th day of December, 2007.
fu r0 LU~
Bruce N. Wiliams
(Seal)
APPLICATION OF ROCKY MOUNTAIN POWER 23
,.
.~
EXHIBITC
Statement of Control, Ownership
and
Holding Company Status
..
Exhibit C
Statement of Control, Ownership and Holding Company Status
1. PacifiCorp does not directly or indirectly own, control or hold power to vote, 5 percent or
more of the outstanding voting securities of any "public utilty company" as defined in
the Public Utility Holding Company Act of 1935, as amended (PUHCA 1935) or the
Public Utility Holding Company Act of 2005 (PUHCA 2005) of any company that is a
"holding company" by virtue of such acts, and no determination has been made by the
Securities and Exchange Commission or the Federal Energy Regulatory Commission that
PacifiCorp exercises a controllng influence over any such person.
2. All ofPacifiCorp's issued and outstanding common stock is indirectly owned by
MidAmerican Energy Holdings Company, which is a "holding company" under PUHCA
2005 and a majority-owned subsidiary of Berkshire Hathaway Inc.
EXHIBITC
EXHIBITD
PACIFICORP
Unconsolidated Balance Sheet
Septem ber 30, 2007
EXHIBITD
PACIFICORP
PRO FORMA UNCONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2007
ASSETS AND OTHER DEBITS TOTAL CORPORATION PROPOSED FINANCING TOTAL PROFORMA
UTILITY PLANT
ELECTRIC PLANT IN SERVICE (101)16,193,546,771.76 16,193,546,771.78
PROPERTY UNDER CAPITAL LEASES 1101.1\49,253,139.06 49,253,139.06
ELECTRIC PLANT PURCHASED OR SOLD (102 (75,662.23)(75,662.23)
EXPERIMENTAL ELECTRIC PLANT - UNCLASSIFIED 1103\0.00 0.00
ELECTRIC PLANT HELD FOR FUTURE USE (105)4,607,161.91 4,607,161.91
COMPLETED CONSTRUCTION NOT CLASSIFIED (1061 61,452.304.66 61,452,304.86
CONSTRUCTION WORK IN PROGRESS - ELECTRIC 1107\777,459,905.36 1,790,976,302.49 2,566,436,207.65
ELECTRIC PLANT ACQUISITION ADJUSTMENTS (114)157,193,779.75 157,193,779.75
OTHER UTILITY PLANT (118)0.00 0.00
NUCLEAR FUEL (120.1-120.4)0.00 0.00
TOTAL UTILITY PLANT 17,263,437,200.53 1,790,976,302.49 19,054,413,503.02
ACCUM PROV FOR DEPR OF ELECT PLANT IN SERVICE (108)CR 6,162,672,411.03 6,162,672,411.03
ACCUM PROV FOR AMORT OF ELECT PLANT IN SERVICE 11111 CR 402,632,078.39 402,632.078.39
ACCUM PROV FOR ASSET ACQUISITION ADJUSTMENT (115)CR 83,998,328.82 83,996,328.82
ACCUM PROV FOR DEPR OF OTHER UTILITY PLANT 11191 CR 0.00 0.00
ACCUM PROV FOR AMORT OF NUCLEAR FUEL ASSEMB (120.5)CR 0.00 0.00
UTILITY PLANT - NET 10,614,134,382.29 1,790,976,302.49 12,405,110,684.78
NON UTILITY PROPERTY AND INVESTMENTS
NON UTILITY PROPERTY 121 8,890,322.33 8,890,322.33
ACCUM PROV FOR DEPR/AMORT OF NON UTILITY PROP (122)CR 1,311,359.38 1.311,359.38
INVESTMENT IN ASSOCIATED COMPANIES 1123\7,328,610.53 7,328,610.53
INVESTMENT IN SUBSIDIARY COMPANIES (123.1\137,808,001.42 137,808,001.42
OTHER INVESTMENTS (124)86,872,171.82 86,872,171.82
OTHER SPECIAL FUNDS (128 11,261,324.55 11,261.324.55
LONG-TERM PORTION OF DERIVATIVE INSTRUMENT ASSETS (175)177,372,391.96 177,372,391.96
TOTAL NONUTILITY PROPERTY & INVESTMENTS 428,221,463.23 0.00 428,221,463.23
CURRENT AND ACCRUED ASSETS
CASH (131) 18,770,793.25 0.00 16,770,793.25
SPECIAL DEPOSITS 1132-134)8,685,743.83 8,885,743.83
WORKING FUNDS (135)2,670.00 2,670.00
TEMPORARY CASH INVESTMENTS (136\15,627.96 15,627.96
NOTES RECEIVABLE 11411 616,425.82 616,425.62
CUSTOMER ACCOUNTS RECEIVABLE (142\389,712,654.34 369,712,654.34
OTHER ACCOUNTS RECEIVABLE 1143\14,294,967.46 14,294,967.46
ACCUMULATEDPROV FOR UNCOLLECTIBLE ACCOUNTS 144)CR 16,691,503.58)/6,691,503.58)
NOTES RECEIVABLE FROM ASSOCIATED COMPANIES (145)20,998,132.46 20,996,132.48
ACCOUNTS RECEIVABLE FROM ASSOCIATED COMPANIES (146)16,254,054.10 16,254,054.10
FUEL STOCK (151-152)98,284,963.83 98,284,963.83
MATERIALS AND SUPPLIES (154-163)151,114,659.16 151,114,659.16
PREPAYMENTS (165)50,947,538.30 50,947,536.30
INTEREST AND DIVIDENDS RECEIVABLE (1711 3,814.46 3,814.46
RENTS RECEIVABLE (172)2,487,755.75 2,487,755.75
ACCRUED UTILITY REVENUES (173)182,022,000.00 182,022,000.00
MISCELLANEOUS CURRENT AND ACCRUED ASSETSl1741 50,839,115.00 50,839,115.00
CURRENT PORTION OF DERIVATIVE INSTRUMENT ASSETS (175)312,420,578.56 312,420,578.56
LONG-TERM PORTION OF DERIVATIVE INSTRUMENT ASSETS (175)/177,372,391.96)/177,372,391.96)
DERIVATIVE INSTRUMENT ASSETS - HEDGES (176)5,236,263.00 5,236,263.00
TOTAL CURRENT AND ACCRUED ASSETS 1,138,843,861.76 0.00 1,136,843,861.76
DEFERRED DEBITS
UNAMORTIZED DEBT EXPENSE (181)22,671,819.67 24,553,333.33 47,225,153.00
EXTRAORDINARY PROPERTY LOSSES 1182.1)0.00 0.00
UNRECOVERED PLANT AND REGULATORY STUDY COSTS (182.2)16,318,621.66 16,318,621.86
OTHER REGULATORY ASSETS 1182.3)1,313,698,594.32 1,313,698,594.32
PRELIMINARY SURVEY & INVESTIGATION CHARGES (183)0.00 0.00
CLEARING ACCOUNTS 184\0.00 0.00
TEMPORARY FACILITIES (185)104,980.11 104,980.11
MISCELLANEOUS DEFERRED DEBITS 1166\51,562,368.60 51,562,368.60
RESEARCH DEVELOPMENT DEMONSTRATION EXPENDITURES (188)0.00 0.00
UNAMORTIZED LOSS ON REACQUIRED DEBT (189)21,941,660.82 21,941,660.82
ACCUMULATED DEFERRED INCOME TAXES (190)818,465,075.55 818,465,075.55
TOTAL DEFERRED DEBITS 2,244,763,120.93 24,553.333.33 2,269,316,454,26
TOTAL ASSETS AND OTHER DEBITS 14,425,962,828.21 1,815,529,635.82 16,241,492,464.03
EXHIBITD
PAGE 1 OF 2
EXHIBITD
PACIFICORP
PRO FORMA UNCONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2007
LIABILITES AND OTHER CREDITS TOTAL CORPORATION PROPOSED FINANCING TOTAL PROFORMA
CAPITALIZATION
COMMON EQUITY
COMMON STOCK ISSUED (201\3,417,945,896.24 3,417,945,896.24
COMMON STOCK LIABILITY FOR CONVERSION /203\0.00 0.00
PREMIUM ON CAPITAL STOCK (207)0.00 0.00
OTHER PAID-IN CAPITAL (208-211\426,927,975.38 426,927,975.38
INSTALLMENTS RECEIVED ON CAPITAL STOCK (212\0.00 0.00
CAPITAL STOCK EXPENSE (214)DR 41,288,206.75 41,288,206.75
RETAINED EARNINGS /215.1,216)1,140,312,572.81 (9,490,153.18)1,130,822,419.63
REACQUIRED CAPITAL STOCK (217)0.00 0.00
ACCUMULATED OTHER COMPREHENSIVE INCOME (219)(3,546,202.36\(3,546,202.36\
TOTAL COMMON EQUITY 4,940,352,035.32 (9,490,153.18)4,930,861,882.14
PREFERRED STOCK ISSUED 1204\41,463,300.00 41,463,300.00
LONG-TERM DEBT
BONDS 12211 4,534,648,000.00 2,037,695,000.00 6,572,343,000.00
POLLUTION CONTROL FUNDS ON DEPOSIT WITH TRUSTEE 1221.4, 5)0.00 0.00
ADVANCES FROM ASSOCIATED COMPANIES (223)0.00 0.00
OTHER LONG-TERM DEBT 1224 0.00 0.00
UNAMORTIZED PREMIUM ON LONG-TERM DEBT (225)41,678.76 41,678.76
UNAMORTIZED DISCOUNT ON LONG- TERM DEBT (226\DR 5,417,101.34 725,000.00 6,142,101.34
TOTAL LONG-TERM DEBT 4,529,272,57742 2,036,970,000.00 6,566,242,577 .42
TOTAL CAPITALIZATION 9,511,087,912.74 2,027,479,846.82 11,538,567,759.56
OTHER NONCURRENT LIABILITIES
OBLIGATIONS UNDER CAPITAL LEASES (227)48,322,112.15 48,322,112.15
ACCUMULATED PROVISION FOR PROPERTY INSURANCE 228.1)196,532.25 198,532.25
ACCUMULATED PROVISION FOR INJURIES & DAMAGES /228.2)4,372,365.32 4,372,365.32
ACCUMULATED PROVISION FOR PENSIONS & BENEFITS (228.3)512,798,434.56 512,798,434.56
ACCUMULATED MISCELLANEOUS OPERATING PROVISIONS (228.4)39,297,923.89 39,297,923.89
ACCUMULATED PROVISION FOR RATE REFUNDS (229)0.00 0.00
LONG- TERM PORTION OF DERIVATIVE INSTRUMENT LIABILITIES (244)458,749,112.07 458,749,112.07
ASSET RETIREMENT OBLIGATION (230\93,304,715.52 93,304,715.52
TOTAL OTHER NONCURRENT LIABILITIES 1,157,041,195.76 0.00 1,157,041,195.76
CURRENT AND ACCRUED LIABILITIES
NOTES PAYABLE (231)206,146,000.00 (206,146,000.00 0.00
ACCOUNTS PAYABLE (232)448,930,481.76 448,930,481.76
NOTES PAYABLE TO ASSOCIATED COMPANIES (233)0.00 0.00
ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES (234)11.344,075.78 11,344,075.78
CUSTOMER DEPOSITS (235)21,979,106.91 21,979,106.91
TAXES ACCRUED (236)98,438,496.09 (5,804,211.00 92,634,285.09
INTEREST ACCRUED (237)77,794,796.70 77794,796.70
DIVIDENDS DECLARED (238)520,947.43 520,947.43
MATURED LONG- TERM DEBT (239)0.00 0.00
MATURED INTEREST (240)0.00 0.00
TAX COLLECTIONS PAYABLE /2411 14,220,773.05 14,220,773.05
MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES (242)65,364,123.49 65,364,123.49
OBLIGATIONS UNDER CAPITAL LEASES (243)1,388,011.68 1,388,011.68
DERIVATIVE INSTRUMENT LIABILITIES (244\616,368,703.98 616,368,703.98
CURRENT PORTION OF DERIVATIVE INSTRUMENT LIABILITIES (244)(458,749,112.07\(458,749,112.07)
DERIVATIVE INSTRUMENT LIABILITIES - HEDGES (245\2,060,585.00 2,060,585.00
TOTAL CURRENT AND ACCRUED LIABILITIES 1,105,806,989.80 (211,950,211.00)893,856,778.80
DEFERRED CREDITS
CUSTOMER ADVANCES FOR CONSTRUCTION 1252'18,309,579.07 18,309,579.07
OTHER DEFERRED CREDITS 1253 64,723,388.14 64,723,388.14
OTHER REGULATORY LIABILITIES (254)75,987,750.99 75,987,750.99
ACCUMULATED DEFERRED INVESTMENT TAX CREDITS (255)55,747,850.00 55,747,850.00
UNAMORTIZED GAIN ON REACQUIRED DEBT 1257\0.00 0.00
ACCUM DEFERRED INCOME TAXES - ACCEL AMORTIZTN (281l 67,591.00 67,591.00
ACCUM DEFERRED INCOME TAXES-OTHER PROPERTY (282)2,010,758,980.99 2,010,758,980.99
ACCUMULATED DEFERRED INCOME TAXES-OTHER (283)426,431,589.72 426,431,589.72
TOTAL DEFERRED CREDITS 2,652,026,729.91 0.00 2,652,026,729.91
TOTAL LIABILITIES AND OTHER CREDITS 14,425,962,628.21 1,815,529,635.82 16,241,492,464.03
EXHIBIT D
PAGE 2 OF 2
.'
PacifiCorp
Pro Forma Issuance of $2.0 bilion of Long-term Debt
Pro Forma Journal Entries for the 12 Months Ended September 30,2007Cash131Unamortized Debt Expense 1181
Unamortized Debt Discount 226Bonds 221
Pro forma proceeds of October 3, 2007 issuance of 6.25% First Mortgage Bonds due October 15, 2037
pursuant to Order No. 30258
593,850,000
5,400,000
750,000
600,000,000
Cash
Unamortized Debt Expense
Bonds
Proceeds of issuing pro forma $2.0 bilion in long-term debt
131
181
221
1,980,000,000
20,000,000
2,000,000,000
Notes Payable - Commercial Paper 231 206,146,000Cash 131 206,146,000'
Proceeds of pro forma bond issuances used to retire existing short.term debt at September 30, 2007Bonds 221 562,305,000Cash 131 562,305,000
Proceeds of pro forma bond issuances used to repay long-term debt maturities (for scheduled maturities
from 10/1/07 through 12131/09)
Interest on Long-Term Debt
Cash
Interest due on October 3, 2007 $600 milion bond issuance
427/216
131
37,500,000
37,500,000
127,000,000
127,000,000
9,895,008
9,895,008
33,245,769
33,245,769
Interest on Long-Term Debt
Cash
Interest due on $2,0 billon pro forma bond issuance ~ 6.35%.
427/216
131
Cash 131Other Interest Expense 431/216
Reduced interest due from short-term debt replaced by pro forma bond issuancesCash 131Interest on Long-Term Debt 427/216
Reduced interest due from maturing bonds replaced by pro forma bond issuances
Construction Work In Progress 107 1,684,039,777Cash 131
Remaining proceeds of pro forma bond issuances used to finance additional capital spending
1,684,039,777
Construction Work In Progress
AFUDC - borrowed funds
Capitalized interest from increased CWIP
107
432/216
106,936,526
106,936,526
"
PacifiCorp
Pro Forma Issuance of $2.0 billon of Long-term Debt
Taxes Accrued
Income Taxes - Federal
Income Taxes - State
Net tax effect of above interest expense amounts
236
409/216
409/216
666,667
666,667
180,000
180,000
25,000
25,000
5,804,211
5,109,847
694,364
Amortization of Debt Expense 428 1 216Unamortized Debt Expense 181
Amortization of debt expense for $2.0 billon pro forma bond issuance
Amortization of Debt Expense 428 1 216Unamortized Debt Expense 181
Amortization of debt expense for October 3, 2007 $600 milion bond issuance
Amortization of Debt Discount 428/216
Unamortized Debt Discount 226
Amortization of debt discount for October 3, 2007 $600 milion bond issuance
PacifiCorp
Pro Forma Issuance of $2.0 bilion of Long-term Debt
Pro Forma Assumptions:
1) Proceeds of long-term debt issuance used to retire short-term debt, replace maturing long-term
debt and finance capital expenditures,
2) Assumed 30 year long-term debt issuance at 6,35% interest rate with 1.0% issuance costs.
3) Assumed short-term debt interest rate of 4.8%.
4) Scheduled long-term debt maturities through 12/31/09:
Maturity
Amount Rate Date Annual Interest
$3,745,000 8.271%10101/07 309,748.95
301,000 7.978%10/01/07 24,013.78
1,242,000 8.493%10/01/07 105,483.06
925,000 8.797%10/01/07 81,372.25
1,460,000 8.734%10/01/07 127,516.40
2,206,000 8.294%10101/07 182,965.64
800,000 8.635%10101/07 69,080.00
764,000 8.470%10101/07 64,710.80
$11,443,000 $964,890.88
200,000,000 6.375%05/15/08 12,750,000.00
200,000,000 4.300%09/15/08 8,600,000.00
4,055,000 8.271%10101/08 335,389.05
325,000 7.978%10101108 25,928.50
1,348,000 8.493%10101/08 114,485.64
1,007,000 8.797%10/01/08 88,585.79
1,587,000 8.734%10101/08 138,608.58
2,389,000 8.294%10101/08 198,143.66
869,000 8.635%10/01/08 75,038.15
828,000 8.470%10101/08 70,131.60
$412,408,000 $22,396,310.97
125,000,000 7.000%07/15/09 8,750,000.00
4,391,000 8.271%10101/09 363,179.61
351,000 7.978%10101/09 28,002.78
1,462,000 8.493%10101/09 124,167.66
1,095,000 8.797%10101109 96,327.15
1,726,000 8.734%10101/09 150,748.84
2,587,000 8.294%10101/09 214,565.78
944,000 8.635%10101/09 81,514.40
898,000 8.470%10101/09 76,060.60
$138,454,000 $9,884,566.82
$562,305,000 $33,245,768.67
5) For purposes of pro forma statements, the allowance for borrowed funds used during construction
rate assumed equal to rate for pro forma bond issuance used to finance new capital spending.
6) Effective federal income tax rate of 33.41% and effective state tax rate of 4.54%.
:
EXHIBITE
PACIFICORP
Unconsolidated Statement of Income
Septem ber 30, 2007
EXHIBITE
PACIFICORP
PRO FORMA UNCONSOLIDATED STATEMENT OF INCOME
12 MONTHS ENDED SEPTEMBER 30, 2007
TOTAL CORPORATION PROPOSED FINANCING TOTAL PROFORMA
UTILITY OPERATING INCOME
OPERATING REVENUES 4,150,856,818.44 4,150,856,818.44
OPERATION AND MAINTENANCE EXPENSE
OPERATION 2,378,128,008.20 2,378,128,008.20
MAINTENANCE 373,856,986.96 373,856,986.96
TOTAL OPERATION AND MAINTENANCE EXPENSE 2,751,984,995.16 0.00 2,751,984,995.16
DEPRECIATION 410,842,012.91 410,842,012.91
DEPRECIATION EXPENSE FOR ASSET RETIREMENT COSTS 0.00 0.00
AMORTIZATION 63,570,408.58 63,570,408.58
TAXES OTHER THAN INCOME TAXES 101,101,838.15 101,101,838.15
CURRENT INCOME TAXES 128,966,143.00 15,804,211.00\123,161,932.00
PROVISION FOR DEFERRED INCOME TAXES 65,134,930.00 65,134,930.00
INVESTMENT TAX CREDIT ADJUSTMENTS - NET 15,854,860.00\15,854,860.00\
GAINS FROM DISPOSITION OF UTILITY PLANT CR 0.00 0.00
LOSSES FROM DISPOSITION OF UTILITY PLANT 0.00 0.00
ACCRETION EXPENSE 0.00 0.00
GAINS FROM DISPOSITION OF ALLOWANCES CR 8,947,548.13 8,947,548.13
OTHER UTILITY OPERATING INCOME - STEAM HTG 0.00 0.00
UTILITY OPERATING INCOME 644,058,898.77 5,804,211.00 649,863,109.77
OTHER INCOME AND DEDUCTIONS
OTHER INCOME
INCOME FROM MERCHANDISING 1555,511.98\1555,511.98\
INCOME FROM NON UTILITY OPERATIONS 284,309.47 284,309.47
NONOPERATING RENTAL INCOME 58,037.38 58,037.38
EQUITY IN EARNINGS OF SUBSIDIARIES 6,638,217.97 6,638,217.97
INTEREST AND DIVIDEND INCOME 9,035,947.39 9,035,947.39
ALLOW FOR FUNDS USED DURING CONSTRUCTION 33,033,47214 33,033,472.14
MISCELLANEOUS NONOPERATING INCOME 200,972,441.58 200,972,441.58
GAIN ON DISPOSITION OF PROPERTY 878,476.20 878,476.20
TOTAL OTHER INCOME 250,345,390.15 0.00 250,345,390.15
OTHER INCOME DEDUCTIONS
LOSS ON DISPOSITION OF PROPERTY 4,163,624.37 4,163,624.37
MISCELLANEOUS AMORTIZATION 1 115,926.87 1,115,926.87
MISCELLANEOUS INCOME DEDUCTIONS 205,788,838.50 205,788,838.50
TOTAL OTHER INCOME DEDUCTIONS 211,068,389.74 0.00 211,068,389.74
TAXES APPlIC TO OTHER INCOME & DEDUCTIONS
TAXES OTHER THAN INCOME TAXES 226052.35 226,052.35
INCOME TAXES 14,144,979.00 14,144,979.00
DEFERRED INCOME TAXES 4,744,910.87 4,744,910.87
INVESTMENT TAX CREDITS 12,065,260.00\/2,065,260.00)
TOTAL TAXES APPlIC TO OTHER INC & OED 17,050,682.22 0.00 17,050,682.22
NET OTHER INCOME AND DEDUCTIONS 22,226,318.19 0.00 22,226,318.19
INCOME BEFORE INTEREST CHARGES 666,285,216.96 5,804,211.00 672,089,427.96
INTEREST CHARGES
INTEREST ON LONG-TERM DEBT 265,183,893.03 131,254,231.33 396,438,124.36
AMORTIZATION OF DEBT DISCOUNT AND EXPENSE 3,114,033.40 871,666.67 3985,700.07
AMORTIZATION OF LOSS ON REACQUIRED DEBT 4,670,252.14 4,670,252.14
AMORTIZATION OF PREMIUM ON DEBT 12,718.18)12,718.18\
AMORTIZATION OF GAIN ON REACQUIRED DEBT . (77,228.52\/77,228.52)
INTEREST ON DEBT TO ASSOCIATED COMPANIES 0.00 0.00
OTHER INTEREST EXPENSE 26,597,115.26 (9,895,008.001 16,702,107.26
ALLOW FOR BRD FUNDS USED DURING CONSTR 131,225,511.59)1106,936,525.82\1138,162,037.41\
NET INTEREST CHARGES 268,259,835.54 15,294,364.18 283,554,199.72
INCOME BEFORE EXTRAORD, ITEMS 398,025,381.42 (9,490,153.18\388,535,228.24
EXTRAORDINARY ITEMS - NET OF INCOME TAX
INCOME TAX ON CUM. EFFECT OF CHANGE IN ACCT. PRINC 0.00 0.00
CUMULATIVE EFFECT OF CHANGE IN ACCT. PRINCIPLE 0.00 0.00
NET INCOME 398,025,381.42 19,490,153.18\388,535,228.24
PREFERRED DIVIDEND REQUIREMENTS 2,083,789.72 2,083,789.72
EARNINGS AVAILABLE FOR COMMON STOCK 395,941,591.70 /9,490,153.18)386,451,438.52
EXHIBITE
PAGE 1 OF 1
EXHIBIT I
Sources and Uses of Treasury Funds
Septem ber 30, 2007
.,
EXHIBIT I
PACIFICORP
PRO FORMA SOURCES AND USES OF TREASURY FUNDS
SEPTEMBER 3D, 2007
TREASURY FUND USES:TOTAL CORPORATION PROPOSED FINANCING TOTAL PROFORMA
UTILITY PLANT 17 ,263,437 ,200.53 1,790,976,302.49 19,05,413,503.02
ACCUMULATED PROVISION FOR DEPREC. AND AMORTIZATION CR 6649,302,818.24 0.00 6,649,302,818.24
UTILITY PLANT - NET 10,614,134,382.29 1,790,976,302.49 12,405,110,68.78
INVESTMENT IN DEFERRED OR TERMINATED PROJECTS 552,481,000.00 0.00 552,481,00.00
TOTAL FUND USES 11,166,615,382.29 1,790,976,302.49 12,957,591,664.78
TREASURY FUND SOURCES:
PERMANENT FINANCING ISSUANCES
LONG TERM DEBT 4,123,205,000.00 2,449,138,000.00 6,572,34,00.00
PREFERRED STOCK 41,483,300.00 0.00 41,463,30.00
COMMON STOCK & OTHER PAID IN CAPITAL 3,886,162,078.37 0,00 3,886,162,078.37
OBLIGATIONS UNDER CAPITAL LEASES 46,934,100.47 0.00 46,934,100.47
TOTAL 8,097,764,478.84 2,49,138,00.00 10,54,902,478.84
TEMPORAY FINANCING ISSUANCES
SHORT TERM DEBT INET 206,130,372.04 1206,146,00.00 15,627.96)
CURRENT PORTION OF LONG TERM DEBT 411,443,000.00 1411,443,00.00 0.00
CURRENT PORTION OF CAPITAL LEASES 1,388,011.68 0.00 1.388,011.68
ADVANCES FROM SUBSIDIARIES NED 0.00 0.00 0.00
TOTAL 618,961,383.72 1617,589,00.00 1,372,383.72
TOTAL FUND SOURCES 8,716,725,862.56 1,831,549,00.00 10,548,274,862.56
BALANCE OF FUNDS OBTAINED FROM INCOME AND FROM SOURCES
OTHER THAN SECURITIES ISSUED AND OTHER OBLIGATIONS INCURRED 2,449,889,519.73 40,572,697.51 2,409,316,822.22
EXHIBIT I
PAGE 1 OF1
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EXHIBITJ
Limitations on Issuance of First Mortgage Bonds
and
Preferred Stock
Septem ber 30, 2007
..
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Exhibit J
Limitations on Issuance of First Mortgage Bonds
and Preferred Stock
September 30, 2006
Mortgage
Bonds may be issued under the Company's Mortgage on the basis of: (1) Class
"A" Bonds delivered to the Trustee under the Mortgage; (2) 70% of qualified Property
Additions after adjustments to offset retirements; (3) retirement of Bonds or certain prior
lien bonds; and/or (4) deposits of cash, With certain exceptions in the case of(1) and (3)
above, the issuance of Bonds under the Mortgage is subject to adjusted net earings of
the Company for twelve out of the preceding fifteen months, before income taes, being
at least twice the anual interest requirements on all Bonds at the time outstading,
including any new issue, all outstanding Class "A" Bonds held other than by the Trustee
or by the Company, and any other indebtedness secured by a lien prior to the Lien of the
Mortgage.
Under above mortgage coverage tests, the Company estimates that it could have
issued an additional $4.6 billon principal amount of Bonds under the Mortgage as of
September 30, 2006.
Preferred Stock
Not applicable to proposed issuance.
EXHIBIT J
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
ROCKY MOUNTAIN POWER for
authority to (1) issue and sell or
exchange not more than $2,000,000,000
of debt, (2) enter into credit support
arrangements, (3) enter into currency
swaps, and (4) contribute or sell
additional debt to special-purpose
entities.
)
)
)
)
)
)
)
)
)
)
CASE NO. PAC-E-07-_
ORDER NO.
On December 18, 2007, Rocky Mountain Power (Company) fied an Application that
requested shelf authority to borrow not more than $2,000,000,000 in debt, in one or more
offerings.
Specifically, the Company seeks authority to: (1) issue and sell or exchange, in one or
more public offerings or private placements, not later than Febru 28, 2013, fixed or floating
rate debt (Debt) in the aggregate principal amount of not more than $2,000,000,000 or, if such
Debt is issued at an original issue discount, such greater amount as shall result in an aggregate
offering price of not more than $2,000,000,000 (or its equivalent amount in, or based upon,
foreign currencies determined at the time of issue); (2) enter into letter of credit arrangements
with one or more bans or such other agreements or arrangements as may be necessary or
appropriate, from time to time, to provide additional credit support for the payment of the
principal of, the interest on, and the premium (if any) on such Debt; (3) enter into one or more
curency swaps; and (4) contribute or sell additional Debt to special-purose entities (SPEs) in an
amount based upon the common securities of the SPE and Commission approval of the proposed
guarantee and expense payment agreements relating to the preferred securities of the SPE. Such
authority would remain in effect until Februar 28, 2013 so long as the Company maintains a
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BBB- or higher senior secured debt rating, as indicated by Stadard & Poor's Rating Services,
and a Baa3 or higher senior secured debt rating, as indicated by Moody's Investors' Service, Inc.
After reviewing the Application, the Commission grants the Company's request.
STAFF RECOMMENDATION
(To be inserted.)
FINDINGS OF FACT
The Company was incorporated under Oregon law in August 1987 for the purose of
faciltating consummation of a merger with Utah Power & Light Company, a Uta corporation,
and changing the state of incorporation of PacifiCorp from Maine to Oregon. The Company
curently serves customers as Rocky Mountain Power in Idaho, Uta and Wyoming and as
Pacific Power in California Oregon and Washington.
The Company proposes to issue or exchange the Debt in either public offerings or private
placements, domestically or overseas from time to time not later than February 28, 2013 so long
as the Company maintains a BBB- or higher senior secured debt rating, as indicated by Standard
& Poor's Rating Services, and a Baa3 or higher senior secured debt rating, as indicated by
Moody's Investors' Service, Inc. The Company finds that the varety of borrowing options
available to it dictate that it have the abilty to select the debt instrent, market and matuity
that allows it to borrow at a lower all-in cost, consistent with its financial goals. The type of
issue and its terms including interest rate wil be determined at the date of issue and the
Company will notify the Commission Staff of the terms as soon as practical before the issue.
The tye of issue wil be based on the all-in costs and benefits of the alternatives. The Company
committed in Case No. P AC-E-99-3 to a cost test where foreign transactions will not be utilized
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for ratemaking unless and until it can assure the all-in costs of the foreign borrowing is no more
than the all-in cost of similar domestic borrowings.
If the Debt bears a fixed rate, the interest rate will be set at the time of issuance. If the
Debt bears a floating rate, the interest rate will be set periodically based upon a published or
quoted index. The Debt may be publicly or privately placed in the domestic or foreign markets.
Selection of the method of issuance and the location will depend on the relative all-in cost and
other benefits of the alternatives being considered.
The types of offerings contemplated by the Company in its application include:
a. Conventional first mortgage bonds placed publicly or privately in the
domestic or foreign markets;
b. Secured or unsecured medium-term notes placed publicly or privately in
the domestic or foreign markets;
c. Floating rate debt placed publicly or privately in the domestic or foreign
markets;
d. Eurodollar financings placed publicly or privately overseas;
e. Debt issued overseas denominated in, or based upon, foreign curencies
combined with a curency swap to effectively eliminate the curency risk;
and
f. Subordinated debt placed publicly or privately in the domestic or foreign
markets and issued either alone or in conjunction with an offering of
preferred securities by an SPE organized by the Company.
The Application recognizes that a foreign curency offering involves a degree of risk to a
U.S. issuer because changes in the relationship between the value of the U.S. dollar and foreign
currency may increase the ultimate cost of the debt. Curency swaps allow a pary to make a
series of payments in U.S. dollars in exchange for a series of payments in, or based upon, foreign
curencies. Combining a foreign curency offering with a curency swap effectively eliminates
3
the curency risk by providing the issuer a stream of foreign curency payments equal to
obligations on the foreign debt.
The Company expects to issue or exchange the Debt in either public offerings or private
placements from time to time not later than Februar 28,2013 so long as the Company maintains
a BBB- or higher senior secured debt rating, as indicated by Standard & Poor's Rating Services,
and a Baa or higher senior secured debt rating, as indicated by Moody's Investors' Service, Inc,
The Debt may have varous maturities, although medium-term notes generally have matuities
longer than nine months.
The net proceeds of the issuances wil be used for one or more of the utility puroses
authorized by Idaho Code § 61-901. To the extent that any fuds to be reimbursed were used for
the discharge or refuding of obligations, those obligations or their precedents were originally
incured in furtherance of a utilty purose.
Issuances of the Debt proposed are par of an overall plan to finance the cost of the
Company's facilties taing into consideration prudent capital ratios, earings coverage tests and
market uncertinties as to the relative merits of the varous types of securities the Company
could sell.
The Company has paid the fees required by Idaho Code § 61-905.
CONCLUSIONS OF LAW
PacifiCorp doing business as Rocky Mountain Power is an electrcal corporation within
the definition of Idaho Code § 61-119 and is a public utility within the definition of Idaho
Code § 61-129.
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The Idaho Public Utilties Commission has jurisdiction over this matter pursuant to the
provisions of Idaho Code § 61-901 et seq" and the Application reasonably conforms to
Rules 141 through 150 of the Commission's Rules of Procedure, IDAPA 31.01.01.141-150.
The method of issuance is proper.
The general puroses to which the proceeds wil be put are lawfl puroses under the
Public Utilties Law of the State of Idaho and are compatible with the public interest. However,
this general approval of the general puroses to which the proceeds wil be put is neither a
finding of fact nor a conclusion of law that any particular construction program of the Company
which may be benefited by the approval of this Application has been considered or approved by
this Order, and this Order shall not be construed to that effect.
The issuance of an Order authorizing the proposed financing does not constitute agency
determination/approval of the type of financing or the related costs for ratemaking puroses,
which determination the Commission expressly reserves until the appropriate proceeding.
The Application should be approved.
ORDER
IT IS THEREFORE ORDERED that the Company's Application for authority
to: (1) issue and sell or exchange, in one or more public offerings or private placements, not
later than Februar 28,2013, fixed or floating rate Debt in the aggregate principal amount of not
more than $2,000,000,000 or, if the Debt is issued at an original issue discount, such greater
amount as shall result in an aggregate offering price of not more than $2,000,000,000 (or its
equivalent amount in, or based upon, foreign curencies determined at the time of issue);
(2) enter into letter of credit arangements with one or more bans or such other agreements or
arangements as may be necessary or appropriate, from time to time, to provide additional credit
5
. .
support for the payment of the principal of, the interest on, and the premium (if any) on the Debt;
and (3) enter into one or more currency swaps, is granted, Such authority would remain in effect
until February 28,2013, so long as the Company maintains a BBB- or higher senior secured debt
rating, as indicated by Standard & Poor's Rating Services, and a Baa3 or higher senior secured
debt rating, as indicated by Moody's Investors' Service, Inc.
IT IS FURTHER ORDERED that if the Company's senior secured debt ratings fall
below the investment grade levels referenced in the above ordering paragraph (the
"Downgrade"), the Company's authority to incur Debt as provided in this Order will not
terminate, but instead such authority will continue for a period of 364 days from the date of the
Downgrade (the "Continued Authorization Period") provided that the Company:
(l) Promptly notifies the Commission in writing of the Downgrade; and
(2) Files a supplemental application within seven (7) days after the Downgrade,
requesting a supplemental order ("Supplemental Order") authorizing the Company to
continue to incur Debt as provided in this Order, notwithstanding the Downgrade.
Until Rocky Mountain Power receives the Supplemental Order, any Debt incured or
issued by the Company during the Continued Authorization Period will become due
or mature no later than the final date of the Continued Authorization Period.
IT IS FURTHER ORDERED that the Company shall fie with the Commission an
application seeking approval of any proposed contribution or sale by the Company of additional
Debt to special-purose entities (SPEs) before such an agreement may be deemed effective.
IT IS FURTHER ORDERED that the Company shall fie with the Commission on a
quarerly basis debt reports including any Debt authorized by this Order and, to the extent not
otherwse an obligation of the Company pursuant to Commitment I 20 approved by Order
No. 29998 in Case No, PAC-E-05-8, all credit rating agency reports related to the Company
issued during the quaer.
6
"
IT is FURTHER ORDERED that the Company shall fie the following as they become
available:
a. The "Report of Securities Issued" required by 18 C.F.R. § 34.10.
b. Verified copies of any agreement entered into in connection with the
issuance of Debt pursuant to this order.
c. A verified statement setting forth in reasonable detail the disposition of the
proceeds of each offering made pursuant to this order.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory
authority of this Commission with respect to rates, service, accounts, valuation, estimates, or
determination of costs, or any other matter that may come before this Commission pursuant to
this jurisdiction and authority as provided by law.
IT is FURTHER ORDERED that nothing in this Order and no provision of Chapter 9,
Title 61, Idaho Code, or any act or deed done or performed in connection with this Order shall be
construed to obligate the State of Idaho to pay or guarantee in any maner whatsoever any
security authorized, issued, assumed, or guaranteed under the provisions of Chapter 9, Title 61,
Idaho Code.
IT is FURTHER ORDERED that the Company notify the Commission as soon as
possible prior to the issuance with as much information as possible on the issue. The notice may
be by telephone or facsimile to be followed with letter of verification if notice is less than seven
days.
IT is FURTHER ORDERED that issuance of this Order does not constitute acceptace
of the Company's exhibits or other material accompanying the Application for any purpose other
than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
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service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho, this
day of ,2008.
flM KEMPTON, Commissioner
MACK A. REDFORD, Commissioner
MARSHA H. SMITH, Commissioner
ATTEST:
JEAN JEWELL
Commission Secretar
8