20221213Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER ANDERSON
COMMISSIONER CHATBURN
COMMISSIONER HAMMOND
COMMISSION SECRETARY
LEGAL
WORKING FILE
FROM:JOSEPH TERRY
CLAIRE SHARP
DATE:DECEMBER 13,2022
RE:PACIFICORP'S REQUESTTO INCREASE AND EXTEND ITS SHORT-
TERM DEBT AUTHORITY FOR FIVE YEARS;CASE NO.PAC-E-22-17
On October 28,2022,PacifiCorp filed an Application requesting a five-year extension in
authorityto borrow up to $2.0 billion in short-term debt aggregate principal amount through
November,30,2027.This authoritywould extend the existing short-term debt authoritythat
expires April 30,2026,pursuant to Order No.34927 (prior authorities under Orders Nos.33476,
32221,27457,28346,28970,29374,and 29999).The Company's application fee of $1,000 was
submitted under a separate cover.Staff confirmed the application fee was calculated correctly
and was received by the Commission on November 14,2022.
As a condition for the five-yeartime period,PacifiCorp's senior debt must maintain an
investment grade credit rating by both Standard and Poor's Rating Services and Moody's
Investor Services Inc.The other terms and conditions will not be changed.
The type of issue (promissory notes,commercial paper,or revolvingcredit)and terms of
issue,including interest rate,will be determined at the date of issue.The short-term debt may
include (1)unsecured short-term prornissory notes to and borrow from U.S.or foreign
commercial banks (or their affiliates)under the followingfacilities:(a)not more than $2.0
billion in aggregate principal amount outstanding at any one time under one or more revolving
credit agreements and (b)not more than $2.0 billion in aggregate principal amount outstanding at
any time under other borrowing arrangements;and (2)commercial paper in the U.S.or foreign
countries in aggregate principal amount not to exceed $2.0 billion at any one time.
STAFF COMMENTS -1
This increase is primarily due to the increased capital program required to support
Company operations.PacifiCorp's capital expenditure program has grown significantlyin size
recently due to adding new renewable generation resources,associated transmission and
investments in wildfire mitigation assets to meet the needs of PacifiCorp's customers and the
policy objectives of PacifiCorp's state regulatory commissions.
STAFF DISCUSSION AND RECOMMENDATION
Staff confirmed the application fee was calculated correctly and was received by the
Commission on November 14,2022.Because this Application is requesting an extension from
the previous Order,using the previous application and information on file the Application
complies with Commission rules,with the exception of IDAPA 31.01.01.141.08 requiring a
public notice.Staff requested that the Company issue a public notice and the Company sent out
a press release on the week of December 5,2022.
The requested authority,if approved,will be continuous and would remain in effect until
November 30,2027.As a condition of the continuous five-year term,PacifiCorp must maintain
a BBB-or higher senior secured debt rating by Standard and Poor's Rating Services,and a Baa3
or higher senior secured debt rating by Moody's Investors'Service,Inc.PacifiCorp's current
senior secured debt ratings are A by Standard and Poor's,and Al by Moody's.
If PacifiCorp's senior secured debt ratings fall below the investment grade level
("Downgrade"),it is recommended that PacifiCorp's authoritynot terminate,but instead such
authority continue for a period of 180 days from the date of the Downgrade ("Continued
AuthorizationPeriod")provided that PacifiCorp:
1.Promptly notifies the Commission in writing of the Downgrade;and
2.Files a supplemental application with the Commission within seven days after the
Downgrade requesting a supplemental order ("Supplemental Order")authorizing
PacifiCorp to continue to incur debt as provided in this Order,notwithstanding the
Downgrade.Until PacifiCorp receives the Supplemental Order,any debt incurred or
issued by PacifiCorp during the Continued Authorization Period will becorne due or
mature no later than the final date of the Continued Authorization Period.
Staff recommends the authoritybe granted.The reasonableness of the interest rate and
all-in-cost will be evaluated as part of the review of issuance documents in this case and future
audits.
STAFF COMMENTS -2
COMMISSION DECISION
1.Does the Commission wish to authorize the Company to borrow $2.0 billion in
short-term debt be approvedthrough November 30,2027?
2.Does the Commission wish to continue the credit rating condition requiring
investment grade for senior secured debt?
oseph Terry
STAFF COMMENTS -3