20201103Decision Memo.pdf

RE
DECISION MEMORANDUM
TO COMMISSIONBR zuELLANDBR
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM: JOSEPH TERRY
DATE: OCTOBER 30,2020
PACIFICORP'S SHELF AUTHORITY REQUEST OF $3 BILLION DEBT;
CASE NO. PAC.E.2O.15
On October 14,2420, PacifiCorp, doing business as Rocky Mountain Power (the
"Company"), filed an Application requesting authority to incur debt up to $3,000,000,000
aggregate principal amount at any one time. The Company also requests authority to enter into
letters of credit arrangements to provide additional credit support. The Company requests this
additional authority remain in effect through September 30,2025, so long as the Company's
bond rating for senior secured debt remains investment grade. Investment grade is BBB- or
higher by Standard & Poor's Rating Services ("S&P") and Baa3 or higher by Moody's [nvestors'
Service, Inc. ("Moody's"). The Company's current secured debt ratings are A+ by S&P and Al
by Moody's.
The requested authority will amend and supersede Order No. 34205. (Case No.
PAC-E-18-10). Under its current authority, the Company has issued all $2 billion in debt
authorized in Order No. 34205. The securities will be issued in one or more tranches and will
consist of securities issued or exchanged as public or private placements in the form of secured
or unsecured debt. The maturity, other terms, and interest rate for each issue will be determined
at the time of issuance. The issuance(s) may be at a fixed rate set at the time of issuance or
variable interest rate based on a published index of short-term rates such as Treasury bills,
commercial paper, or LIBOR. Fees will be charged based on the type of security issued but are
not expected to exceed l%o of the outstanding balance. Any First Mortgage Bonds will be issued
under the PacifiCorp Mortgage. The Commission has previously authorized the Company to
incur the lien of PacifiCorp Mortgage in Case No. U-i045, Order No. 22157. The variety of
funding options requested will allow the Company to evaluate the all-in cost of each option after
considering all associated fees, so the issuances result in lowest cost issuances.
-l-DECISION MEMORANDUM ocToBER 30,2020
The requested financing authority will provide funds for one or more utility purposes,
including the acquisition of property; the construction, completion, extension or improvement of
utility functions; the improvement of 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. Over $2 Billion in long-term debt will mature by the time
the requested authority expires.
The Company's Application Fee in the amount of $1,000 was submitted under a separate
cover on October 19,202A. Staff confirmed the Application Fee was correct and received.
STATF RECOMMENDATION
Staff recommends the approval of the shelf authority to incur up to $3 Billion debt for the
period through September 30,2025. The Company's prior commitments since Case No.
PAC-E-99-03 to a cost test remains effective where foreign transactions will not be utilized for
ratemaking unless and until PacifiCorp can show that the all-in costs are not greater than the all-
in costs of similar domestic borrowings.
Staff recommends the commitments and terms from prior cases, up to and including Case
No. PAC-E-I4-05, Order No. 33083 remain in effect. This includes, but is not limited to, that
PacifiCorp's senior secured debt rating will remain at investment grade and will follow the
established procedure of notification if the ratings are downgraded; and PacifiCorp will file
quarterly financing aclivity reports and credit rating reports, to the extent that they are not filed
with the Acquisition Case (Case No. PAC-E-05-08, Order No. 29998).
COMMISSION DECISION
Should the $3 Billion shelf aurhority for debt be approved?
Should the authority be approved through September 30,2025 with the existing terms
and conditions including maintaining the investment grade rating, continuing the additional
reporting requirements, providing the anticipated details of the transaction, and meeting the all-in
cost test commitment?
erry
Udmemos/PACE2O I 5 Decision Menro
DECISION MEMORANDUM ocToBER 30,20201