20100305final_order_no_31018.pdf

Office of the Secretary
Service Date
March 5 2010
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA 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-10-
ORDER NO. 31018
On February 5, 2010, PacifiCorp dba Rocky Mountain Power filed an Application
requesting authority to incur debt up to $2 000 000 000 aggregate principal amount at anyone
time. PacifiCorp requests that this additional authority remain in effect through February 28
2015, so long as the Company s bond rating for senior secured debt remains investment grade.
Having fully considered the Application and exhibits, the Commission enters this
Order approving PacifiCorp s Application.
THE APPLICATION
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 , 2015, 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, 2015, 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
ORDER NO. 31018
or higher senior secured debt rating, as indicated by Moody s Investors' Service , Inc.
STAFF RECOMMENDATION
Staff recommends approval of the shelf authority of $2 000 000 000 debt for the
period through February 28, 2015. The Company s prior commitment since Case No. PAC-
99-3 to a cost test remains effective where foreign transaction will not be utilized for ratemaking
unless and until PacifiCorp can show that the all-in costs are not greater than the all-in cost of
similar domestic borrowings.
The remaining commitments and terms in prior cases, including Case No. PAC-07-
, Order No. 30489, remain effective. As a condition of this authority, PacifiCorp s senior
secured debt will be rated at investment grade or PacifiCorp will follow the established
procedure of notification if the ratings drop. The Company will still be required to notify the
Commission of its intent to utilize a SPE and provide all details anticipated with the transaction.
The required Quarterly Financing Activity Reports and credit rating reports, to the extent not
filed in the MEHC Acquisition Case No. P AC-05-, Order No. 29998, will continue to be filed
in this case.
FINDINGS OF FACT
The Company was incorporated under Oregon law in August 1987 for the purpose of
facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation
and changing the state of incorporation of PacifiCorp from Maine to Oregon. The Company
currently serves customers as Rocky Mountain Power in Idaho, Utah and Wyoming and as
Pacific Power in California, Oregon and Washington.
The Company proposes to issue or exchange the Debt in either public offerings or
private placements, domestically or overseas from time to time not later than February 28 2015
so long as the Company maintains a BBB- or higher senior secured debt rating, as indicated by
Standard & Poor s Rating Services, and a Baa3 or higher senior secured debt rating, as indicated
by Moody s Investors' Service , Inc. The Debt may have various maturities, although medium-
term notes generally have maturities longer than nine months. The Company finds that the
variety of borrowing options available to it dictate that it have the ability to select the debt
instrument, market and maturity that allows it to borrow at a lower all-in cost, consistent with its
fmancial 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
ORDER NO. 31018
before the issue. The type of issue utilized by the Company will be based on the all-in costs and
benefits of the alternatives. The Company committed in Case No. P AC-99-3 to a cost test
where foreign transactions will not be utilized for ratemaking unless and until it can assure the
all-in costs of the foreign borrowing is no more than the all-in cost of similar domestic
borrowings.
If the Debt bears a fixed rate, the interest rate will be set at the time of issuance. If the
Debt bears a floating rate, the interest rate will be set periodically based upon a published or
quoted index. The Debt may be publicly or privately placed in the domestic or foreign markets.
Selection of the method of issuance and the location will depend on the relative all-in cost and
other benefits of the alternatives being considered.
The types of offerings contemplated by the Company in its Application include:
a. Conventional first mortgage bonds placed publicly or privately in the
domestic or foreign markets;
b. Secured or unsecured medium-term notes placed publicly or privately in
the domestic or foreign markets;
c. Floating rate debt placed publicly or privately in the domestic or foreign
markets;
d. Eurodollar financings placed publicly or privately overseas;
e. Debt issued overseas denominated in, or based upon, foreign currencies
combined with a currency swap to effectively eliminate the currency risk;
and
f. Subordinated debt placed publicly or privately in the domestic or foreign
markets and issued either alone or in conjunction with an offering of
preferred securities by an SPE organized by the Company.
The Application recognizes that a foreign currency offering involves a degree of risk
to a U.S. issuer because changes in the relationship between the value of the U.S. dollar and
foreign currency may increase the ultimate cost of the debt. Currency swaps allow a party to
make a series of payments in U.S. dollars in exchange for a series of payments in, or based upon
foreign currencies. Combining a foreign currency offering with a currency swap effectively
eliminates the currency risk by providing the issuer a stream of foreign currency payments equal
to obligations on the foreign debt.
ORDER NO. 31018
The net proceeds of the issuances will be used for one or more of the utility purposes
authorized by Idaho Code ~ 61-901. To the extent that any funds to be reimbursed were used for
the discharge or refunding of obligations , those obligations or their precedents were originally
incurred in furtherance of a utility purpose.
CONCLUSIONS OF LAW
PacifiCorp dba Rocky Mountain Power is an electrical corporation within the
definition of Idaho Code ~ 61-119, and a public utility within the definition of Idaho Code ~ 61-
129. The Commission has jurisdiction over this Application pursuant to the provisions of Idaho
Code ~ 61-90 I et seq. The Commission further finds that the Application reasonably conforms
to Rules 141 through ISO ofthe Commission s Rules of Procedure, IDAPA 31.01.01.141-150.
Based upon the representation 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 obligations which were incurred
for utility purposes; or the reimbursement of the Company s treasury for funds used for the
foregoing purposes.
PacifiCorp has paid all lawful fees as provided by Idaho Code ~ 61-905. The
Commission further finds that the proposed transaction is in the public interest and a formal
hearing on this matter is not required. The method of issuance is proper.
The general 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.
ORDER NO. 31018
ORDER
IT IS HEREBY ORDERED that PacifiCorp dba Rocky Mountain Power s 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, 2015 , 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, 2015, 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 will continue for a period of 364 days from the date of the Downgrade (the
Continued Authorization Period") provided that the Company:
(1) Promptly notifies the Commission in writing of the Downgrade; and
(2) Files a supplemental application within seven (7) days after the Downgrade
requesting a supplemental order ("Supplemental Order ) authorizing the
Company to continue to incur Debt as provided in this Order
notwithstanding the Downgrade. Until 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.
ORDER NO. 31018
IT IS FURTHER ORDERED that the Company shall file with the Commission an
application seeking approval of any proposed contribution or sale by the Company of additional
Debt to special-purpose entities (SPEs) before such an agreement may be deemed effective.
IT IS FURTHER ORDERED that the Company shall file with the Commission on a
quarterly basis debt reports including any Debt authorized by this Order and, to the extent not
otherwise an obligation of the Company pursuant to Commitment I 20 approved by Order No.
29998 in Case No. P AC-05-, all credit rating agency reports related to the Company issued
during the quarter.
IT IS FURTHER ORDERED that the Company shall file, as soon as they become
available, the following:
(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 the Commission with respect to rates, service, accounts, valuation, estimates
or determination of costs, or any other matter which may come before this Commission pursuant to
its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provisions of Chapter 9
Title 61 , Idaho Code, or any act or deed done or performed in connection therewith 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.
ORDER NO. 31018
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration within twenty-one (21) days of the service date of 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 5-f/A
day of March 2010.
~;I~
JIM . KEMPTO PRE ENT
MARSHA H. SMITH, COMMISSIONER
ATTEST:
~~~
Commission Secretary
O:PAC-IO-O2 ks
ORDER NO. 31018