20080122final_order_no_30489.pdf

Office of the Secretary
Service Date
January 22, 2008
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
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-07-
ORDER NO. 30489
On December 18 2007, PacifiCorp dba Rocky Mountain Power (Company) filed an
Application that requested shelf authority to borrow not more than $2 000 000 000 in debt, in
one or more offerings.
THE APPLICATION
Specifically, the Company seeks authority to: (1) issue and sell or exchange, in one
or more public offerings or private placements, not later than February 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 banks or such other agreements or arrangements as may be necessary or
appropriate, from time to time, to provide additional credit support for the payment of the
principal of, the interest on, and the premium (if any) on such Debt; (3) enter into one or more
currency swaps; and (4) contribute or sell additional Debt to special-purpose entities (SPEs) in an
amount based upon the common securities of the SPE and Commission approval of the proposed
guarantee and expense payment agreements relating to the preferred securities of the SPE. Such
authority would remain in effect until 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.
On January 7 2008, PacifiCorp filed a copy of the Resolutions approved by its Board
of Directors authorizing the proposed issuance contained in this Application. On January 11
2008, the Company filed with the Commission a copy of its SEC Registration Statement (Form
ORDER NO. 30489
3) as Exhibit F-2 in this case. After reviewing the Application, the supplemental filings and
Staffs recommendation, we grant the Company s Application as set out below.
ST AFF REVIEW AND RECOMMENDATION
Commission Staff reviewed the Company Application and accompanying
documents. Staff recommends approval of the Application, noting that the Company will file a
Notice of Issuance and Terms of Debt Securities and all final documents associated with such
transactions with the Commission Staff. The Company has submitted the appropriate fees for
securities issuance under Idaho Code ~ 61-905.
FINDINGS OF FACT
1. PacifiCorp was incorporated under Oregon law in August 1987 for the purpose of
facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation
and changing the state of incorporation of PacifiCorp from Maine to Oregon. The Company
currently serves customers as Rocky Mountain Power in Idaho, Utah and Wyoming and as
Pacific Power in California, Oregon and Washington.
2. 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 has determined that the variety of borrowing
options available to it dictate that it has the ability to select the debt instrument, market and
maturity that allows it to borrow at a lower all-in cost, consistent with its financial goals. The
type of issue and its terms including interest rate will be determined at the date of issue and the
Company will notify the Commission Staff of the terms as soon as practical before the issue.
The type of issue will be based on the all-in costs and benefits ofthe alternatives. The Company
committed in Case No. P AC-99-3 to a cost test where foreign transactions will not be utilized
for ratemaking unless and until it can assure the all-in costs of the foreign borrowing is no more
than the all-in costs of similar domestic borrowings.
3. If the Debt bears a fixed rate, the interest rate will be set at the time of issuance.
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.
ORDER NO. 30489
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.
4. The types of offerings contemplated by the Company in its Application include:
a. Conventional first mortgage bonds placed publicly or privately in the
domestic or foreign markets;
b. Secured or unsecured medium-term notes placed publicly or privately in
the domestic or foreign markets;
c. Floating rate debt placed publicly or privately in the domestic or foreign
markets;
d. Eurodollar financings placed publicly or privately overseas;
e. Debt issued overseas denominated in, or based upon, foreign currencies
combined with a currency swap to effectively eliminate the currency risk;
and
f. Subordinated debt placed publicly or privately in the domestic or foreign
markets and issued either alone or in conjunction with an offering of
preferred securities by an SPE organized by the Company.
5. The Application recognizes that a foreign currency offering involves a degree of
risk to a U.S. issuer because changes in the relationship between the value of the U.S. dollar and
foreign currency may increase the ultimate cost of the debt. Currency swaps allow a party to
make a series of payments in u.S. dollars in exchange for a series of payments in, or based upon
foreign currencies. Combining a foreign currency offering with a currency swap effectively
eliminates the currency risk by providing the issuer a stream of foreign currency payments equal
to obligations on the foreign debt.
6. The Company expects to issue or exchange the Debt in either public offerings or
private placements 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 Debt may have various maturities, although medium-term notes generally have
maturities longer than nine months.
7. The net proceeds of the issuances will be used for one or more of the utility
purposes authorized by Idaho Code ~ 61-901. To the extent that any funds to be reimbursed
ORDER NO. 30489
were used for the discharge or refunding of obligations, those obligations or their precedents
were originally incurred in furtherance of a utility purpose.
8. Based upon the representations in the Application, we find that the funds obtained
through the proposed types of offerings will be used for the acquisition of property; the
construction, completion, extension or improvement of utility facilities; the improvement or
maintenance of its service; the discharge or lawful refunding of obligation which were incurred
for utility purposes; or the reimbursement of the Company s treasury for funds used for the
foregoing purposes.
9. The Company has paid the fees required by Idaho Code ~ 61-905.
CONCLUSIONS OF LAW
PacifiCorp dba Rocky Mountain Power is an electrical corporation within the
definition of Idaho Code ~ 61-119 and is a public utility within the definition of Idaho
Code ~ 61-129. The 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.
After examining the Application and Staff s recommendation, the Commission finds
that an evidentiary hearing in this matter is not required.
The method of issuance is proper.
The g~neral purposes to which the proceeds will be put are lawful purposes under the
Public Utilities Law of the State of Idaho, are within PacifiCorp s corporate powers, and are
compatible with the public interest. However, this general approval of the general purposes to
which the proceeds will be put is neither a finding of fact nor a conclusion of law that any
particular construction program of the Company which may be benefited by the approval of this
Application has been considered or approved by this Order, and this Order shall not be construed
to that effect.
The issuance of an Order authorizing the proposed financing does not constitute
agency determination/approval of the type of financing or the related costs for ratemaking
purposes, which determination the Commission expressly reserves until the appropriate
proceeding.
The Application is approved.
ORDER NO. 30489
ORDER
IT IS THEREFORE ORDERED that PacifiCorp dba Rocky Mountain Power
Application is granted. The Company is authorized to: (1) issue and sell or exchange, in one or
more public offerings or private placements, not later than February 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
currencies determined at the time of issue); (2) enter into letter of credit arrangements with one
or more banks or such other agreements or arrangements as may be necessary or appropriate
from time to time, to provide additional credit support for the payment of the principal of, the
interest on, and the premium (if any) on the Debt; and (3) enter into one or more currency swaps.
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 shall not
terminate, but instead such authority shall continue for a period of 364 days from the date of the
Downgrade (the "Continued Authorization Period") provided that the Company:
(1) Promptly notifies the Commission in writing of the Downgrade; and
(2) Files a supplemental application within seven (7) days after the
Downgrade, requesting a supplemental order ("Supplemental Order
authorizing the Company to continue to incur Debt as provided in this
Order, notwithstanding the Downgrade. Until the Company receives the
Supplemental Order, any Debt incurred or issued by the Company during
the Continued Authorization Period will become due or mature no later
than the final date of the Continued Authorization Period.
IT IS FURTHER ORDERED that the Company shall file with the Commission an
application seeking approval of any proposed contribution or sale by the Company of additional
Debt to special-purpose entities (SPEs) before such an agreement may be deemed effective.
ORDER NO. 30489
IT IS FURTHER ORDERED that the Company shall file with the Commission on a
quarterly basis debt reports including any Debt authorized by this Order and, to the extent not
otherwise an obligation of the Company pursuant to Commitment I 20 approved by Order
No. 29998 in Case No. P AC-05-, all credit rating agency reports related to the Company
issued during the quarter.
IT IS FURTHER ORDERED that the Company shall file the following documents as
they become available: (a) the "Report of Securities Issued" required by 18 C.R. ~ 34.10; (b)
verified copies of any agreement entered into in connection with the issuance of Debt pursuant to
this order; and (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 payor guarantee in any manner
whatsoever any security authorized, issued, assumed, or guaranteed under the provisions of
Chapter 9, Title 61 , Idaho Code.
IT IS FURTHER ORDERED that the Company notify the Commission as soon as
possible prior to the issuance with as much information as possible on the issue. The notice may
be by telephone or facsimile to be followed with letter of verification if notice is less than seven
days.
IT IS FURTHER ORDERED that issuance of this Order does not constitute
acceptance of the Company s exhibits or other material accompanying the Application for any
purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally
decided by this Order) may petition for reconsideration within twenty-one (21) days of the
service date of this Order with regard to any matter decided in this Order. Within seven (7) days
after any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code ~ 61-626.
ORDER NO. 30489
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of January 2008.
J~ ~A 11.-
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~~ ~,.gg
!a,h D. Jewell .
Cb'mmission Secretary
O:PAC-07-16 dh
ORDER NO. 30489