20160915Application.pdf

EXECUTIVE OFFICES
INTERMOUNTAIN GAS COMPANY
555 SOUTH COLE ROAD • P.O. BOX 7608 • BOISE, IDAHO 83707 • [phone] • FAX: [phone]
September 15, 2016
Ms. Jean Jewell
Commission Secretary
Idaho Public Utilities Commission
472 W. Washington St.
P.O. Box 83720
Boise, ID 83720-0074
RE: Case No. INT-G-16-04
Dear Ms. Jewell:
REC EIVED
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Enclosed for filing with this Commission are the original and seven (7) copies of Intermountain Gas
Company's Application to Issue and Sell Securities. Also enclosed is a check in the amount of $1,000 for
the IPUC Issuance Fee.
If you should have any questions regarding this Application please contact me at 377-6168.
Sincerely,
zt2: Director-Regulatory Affairs
lntermountain Gas Company
Enclosure
cc: Scott Madison
Mark Chiles
Ronald L. Williams
INTERMOUNTAIN GAS COMPANY
CASE NO. INT-G-16-04
APPLICATION
AND
EXHIBITS
In the Matter of the Application of INTERMOUNT AIN GAS COMP ANY
for Authorization to Issue and Sell Securities
Ronald L. Williams, ISB 3034
Williams Bradbury PC
1015 W. Hays St.
Boise, Idaho 83 702
Telephone: [phone]
Attorney for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
INTERMOUNTAIN GAS COMPANY
for Authorization to Issue and Sell
Securities
Case No. INT-G-16-04
APPLICATION
Intermountain Gas Company ("Intermountain" or "Company"), a subsidiary of MDU
Resources Group, Inc. with general offices located at 555 South Cole Road, Boise, Idaho, does hereby
request authorization to issue and sell up to Fifty Million Dollars ($50,000,000) of Unsecured Notes
with one or more maturity dates ranging from ten (10) to thirty (30) years from issuance.
Communications in reference to this Application should be addressed to:
Michael P. McGrath ·
Director -Regulatory Affairs
Intermountain Gas Company
Post Office Box 7608
Boise, ID 83707
and
Ronald L. Williams
Williams Bradbury PC
1015 W. Hays St.
Boise, Idaho 83 702
In support of this Application, Intermountain does allege and state as follows:
APPLICATION - 1
I.
Intermountain is a gas utility, subject to the jurisdiction of the Idaho Public Utilities
Commission, engaged in the sale of and distribution of natural gas within the State of Idaho under
authority of Commission Certificate No. 219 issued December 2, 1955, as amended and
supplemented by Order No. 6564, dated October 3, 1962.
Intermountain provides natural gas service to the following Idaho communities and counties
and adjoining areas:
Ada County -Boise, Eagle, Garden City, Kuna, Meridian, and Star;
Bannock County -Arimo, Chubbuck, Inkom, Lava Hot Springs, McCammon, and Pocatello;
Bear Lake County -Georgetown, and Montpelier;
Bingham County -Aberdeen, Basalt, Blackfoot, Firth, Fort Hall, Moreland/Riverside, and Shelley;
Blaine County-Bellevue, Hailey, Ketchum, and Sun Valley;
Bonneville County -Ammon, Idaho Falls, Iona, and Ucon;
Canyon County -Caldwell, Greenleaf, Middleton, Nampa, Parma, and Wilder;
Caribou County -Bancroft, Grace, and Soda Springs;
Cassia County -Burley, Declo, Malta, and Raft River;
Elmore County-Glenns Ferry, Hammett, and Mountain Home;
Fremont County -Parker, and St. Anthony;
Gem County -Emmett;
Gooding County-Gooding, and Wendell;
Jefferson County-Lewisville, Menan, Rigby, and Ririe;
Jerome County -Jerome;
Lincoln County -Shoshone;
Madison County -Rexburg, and Sugar City;
Minidoka County -Heyburn, Paul, and Rupert;
Owyhee County -Bruneau, and Homedale;
Payette County -Fruitland, New Plymouth, and Payette;
Power County -American Falls;
Twin Falls County -Buhl, Filer, Hansen, Kimberly, Murtaugh, and Twin Falls;
Washington County-Weiser.
Intermountain's properties in these locations consist of transmission pipelines, a liquefied
natural gas storage facility, distribution mains, services, meters and regulators, and general plant and
equipment.
APPLICATION - 2
II.
Applicant desires to issue, and therefore seeks authority from this Commission, to issue and
sell up to Fifty Million Dollars ($50,000,000) of Unsecured Notes.
The Board of Directors oflntermountain has duly authorized the requested Unsecured Notes.
A copy of the Resolution authorizing the Unsecured Notes is attached hereto as Exhibit No. 1 and is
incorporated herein by reference.
III.
The estimated terms and conditions of the Unsecured Notes are incorporated herein by
reference as though fully set out.
A copy of the terms for the above referenced Unsecured Notes will be submitted under
separate cover and is to be treated as confidential pursuant to PUC IDAPA Rules 31.01.01.067 and
31.01.01.233, together with Idaho Code§§ 74-104, 106, 107, and 48-801 et seq.
Borrower:
Lender:
Principal Amount:
Interest Rates:
Security:
Use of Proceeds:
Maturity:
APPLICATION -3
Summary of Terms and Conditions
Intermountain Gas Company
One or more private placement investors (the "Investors")
Unsecured Note -up to $50,000,000
Final rates dependent on tenor of notes. Current estimates
based on (10) year Treasury rates: plus 130-140 basis points
for ten (10) year tranche; and plus 155-165 basis points for
fifteen (15) year tranche. Current estimates based on thirty
(30) year Treasury rates: plus 165-175 basis points for thirty
(30) year tranche.
None
If approved, the Unsecured Notes will be used to provide for
capital expenditures and working capital, reduce the
Company's Revolving Credit Agreement and for general
corporate purpose needs of Intermountain.
Long-term maturity dates in one or more tranches ranging
from ten (10) to thirty (30) years from the issuance date.
Fees:
Other Requirements:
Private placement agent fees of up to forty ( 40) basis points
(up to $200,000) will be paid in conjunction with the issuance
of the securities. Legal fees and reasonable out-of-pocket costs
will be paid or reimbursed to lenders counsel and Cohen
Tauber Spievack & Wagner P.C. (Intermountain's legal
counsel), and are estimated at up to $125,000.
Costs associated with this transaction are to be paid by
Intermountain as noted in the above delineation of"Fees."
IV.
Based on this Commission's authorization, the Unsecured Notes will be used to provide for
capital expenditures and working capital, reduce the Company's Revolving Credit Agreement and for
general corporate purpose needs of Intermountain. These uses are consistent with the public interest
and necessary, appropriate, and consistent with the proper and legally mandated performance to the
public by Intermountain as a public utility.
V.
The net proceeds (up to Fifty Million Dollars ($50,000,000) minus the estimated Fees of Three
Hundred and Twenty Five Thousand Dollars ($325,000)) are estimated at up to Forty Nine Million
Six Hundred and Seventy Five Thousand Dollars ($49,675,000).
VI.
Intermountain' s Statement of Capitalization as of July 31, 2016, showing all authorized and
outstanding classes of securities as adjusted to reflect the proposed issuance of up to $50,000,000 of
Unsecured Notes, is as follows:
Common Stock &
Surplus
Long Term Debt
Total Capitalization
APPLICATION - 4
Amount
Outstanding
($000's)
$ 102,891
105,455
$ 208)46
July 31, 2016
As Adjusted
Amount
($000's) Ratio
$ 102,891 47.1%
115,755 52.9%
$ 218,646 100.0%
VII.
The estimated fees and expenses of the issuance of such Unsecured Notes are expected to
total up to Three Hundred and Twenty-Five Thousand Dollars ($325,000) consisting of the following:
Agent Fees
Legal Fees
Misc. Fees
Total
VIII.
$200,000.00
120,000.00
5,000.00
$325,000.00
The fee required by Section 61-905 of the Idaho Code, was determined as follows:
First
Next
Remaining
$ 100,000 at $1.00 per $1,000
900,000 at $0.25 per $1,000
49,000,000 at $0.10 per $1,000
$ 50,000.000
=
=
=
=
$ 100.00
225.00
4,900.00
$5,225.00
As this amount is larger than the $1,000 maximum fee set forth in Section 61-905 of the Idaho
Code, a check for $1,000 is enclosed with this Application.
IX.
This Application is filed pursuant to the applicable statutes, including Idaho Code Sections
61-901, 61-902, 61-903 and 61-905, and the Rules and Regulations of this Commission.
Intermountain stands ready for an immediate hearing of this Application if such is determined
necessary by this Commission.
A proposed Order granting this Application is attached hereto as Exhibit No. 2 and is
incorporated herein by reference.
X.
Notice of this Application will be published prior to Commission authorization in The Idaho
State Journal, The Idaho Statesman, The Idaho Business Review, The Post Register, and The Times
News pursuant to Rule 141.08 of the Commission's Rules of Practice and Procedure.
APPLICATION - 5
WHEREFORE, lntermountain respectfully petitions the Idaho Public Utilities Commission
as follows:
a. That this Application be processed without hearing pursuant to the Rules and
Regulations of this Commission and acted upon at the earliest possible date;
b. Additionally, that this Commission approve and authorize the issuance of Unsecured
Notes for the purposes described up to and including Fifty Million Dollars ($50,000,000) for a period
of up to thirty (30) years.
c. That this Commission allow lntennountain to manage its Unsecured Note financing
pursuant to the order issued in this matter until such time as Intermountain's Board of Directors
changes the authorized level of such Notes.
d. For such other relief as this Commission may determine proper relative to this
Application.
DATED at Boise, Idaho, this 15th day of September, 2016.
INTERMOUNT AIN GAS COMPANY Williams Bradbury PC
y RALlJ~
Ronald L. Williams
Attorney for lntermuuntain Gas Company
APPLICATION - 6
EXHIBIT NO. 1
CASE NO. INT-G-16-04
INTERMOUNTAIN GAS COMPANY
BOARD RESOLUTION
(2 pages)
CERTIFICATE
I, JULIE A. KRENZ, hereby certify that I am the duly elected and qualified Assistant
Secretary of Intermountain Gas Company, an Idaho corporation; that the following is a true and
correct copy of resolutions adopted by Written Consent of the Board of Directors dated
September 8, 2016; and that said resolutions have not been modified or amended and are
presently in full force and effect:
WHEREAS, there has been presented to the Board of Directors of
Intermountain Gas Company (the "Company") a Summary of Terms and
Conditions outlining a Note Purchase Agreement (the "Agreement") between the
Company and one or more private placement investors (the "Investors") under
which the Company proposes to issue and sell unsecured notes in an aggregate
principal amount of up to Fifty Million Dollars ($50,000,000), in one or more
series, with maturities ranging from ten (10) to thirty (30) years as set forth in the
Agreement;
NOW, THEREFORE, BE IT RESOLVED, that the Summary of Terms
and Conditions substantially in the form presented to the Board of Directors, is
hereby approved and accepted;
FURTHER RESOLVED, that the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President or Assistant Vice President,
the General Counsel, and any other officer who performs a policy-making
function (such as administration, operations, accounting, or finance) of the
Company be, and each of them hereby is, authorized to negotiate, execute and
deliver the Agreement substantially in conformity with the Summary of Terms
and Conditions presented to the Board of Directors, with such changes, additions
and deletions as to any or all of the terms and provisions thereof as the authorized
officer executing the Agreement on behalf of the Company shall deem proper,
such execution to be conclusive evidence of the authorized officer's authority
granted herein and the approval thereof by the Board of Directors; and
FURTHER RESOLVED, that the authorized officers be, and each of them
hereby is, authorized and empowered to take or cause to be taken any and all
further actions and to execute and deliver or cause to be executed and delivered
all further agreements, documents, certificates, and undertakings, in the name and
on behalf of the Company, and to make such filings or applications with
governmental or regulatory agencies and authorities as the authorized officers
may determine to be necessary, proper, or desirable to carry into effect the intent
and purpose of any and all of the foregoing resolutions; and the delivery of any
such agreement, document, certificate, and/or undertaking shall be conclusive
evidence of the officer's authority granted herein and the approval thereof by the
.,Board of Directors; and all actions previously taken by any officer or agent of the
Company in connection with the transactions contemplated by the Summary of
Terms and Conditions (including, but not limited to, the negotiation of the
Agreement and all related agreements) and the transactions contemplated by the
foregoing resolutions are hereby ratified, approved, and confirmed in all respects.
IN WITNESS WHEREOF, I have hereunto set my hand on September 9, 2016.
2
EXHIBIT NO. 2
CASE NO. INT-G-16-04
INTERMOUNTAIN GAS COMPANY
IDAHO PUBLIC UTILITIES COMMISSION
PROPOSED ORDER
(3 pages)
PROPOSED ORDER OF APPLICANT
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of
INTERMOUNTAIN GAS COMPANY
for Authorization to Issue and Sell
Securities
Case No. INT-G-16-04
ORDER NO.
On September 15th, 2016, Intermountain Gas Company (the "Company"), a subsidiary of
MDU Resources Group, Inc., applied to the Commission under Idaho Code §§ 61-901, et seq. for
authority to issue Unsecured Notes, not to exceed $50,000,000, for a period ofup to thirty (30) years.
Having fully considered the Application, the Commission enters this Order granting it as follows.
THE APPLICATION
The Company asks for authority to issue and sell up to $50,000,000 of unsecured debt
securities. The proposed issuance will be directly placed in one or more tranches with one or more
private placement investors. The Company anticipates that one or more tranches with maturity dates
between 10 years and 30 years from the date of issuance. The interest rate will be set at the time of
issuance based on 10-year Treasury rates plus a basis point adder of approximately 130-165 for any
10-year issuance or 15-year issuance, and based on 30 year Treasury rates plus a basis point adder of
approximately 165-175 for any 30-year issuance. The Company says it will use net proceeds from the
sale of the unsecured notes to provide for capital expenditures on its facilities; provide working
capital; reduce amounts outstanding on the Company's Revolving Credit Agreement and for general
corporate purposes.
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
The Company is an Idaho corporation with its office and principal place of business in Boise,
Idaho. It is a natural gas public utility that owns and operates transmission pipelines, a liquefied
natural gas storage facility, distribution mains, services, meters and regulators, and general plant and
equipment. It is a gas corporation and public utility as defined in Idaho Code§§ 61-117 and 61-129.
ORDER NO. PAGE 1 -------
The Commission has jurisdiction over the Application under Idaho Code § 61-901, et seq.
We find that the proposed transaction is in the public interest and a formal hearing on this matter is
not required. We further find that the proposed issuance is for a lawful purpose and is within the
Company's corporate powers, that the Application reasonably conforms to Rules 141 through 150 of
the Commission's Rules of Procedure, ID APA 31.01.01-141-150, and that the Company has paid all
fees due under Idaho Code§ 61-905. Accordingly, we find that the Application should be approved
and the proposed financing should be allowed.
The Commission's Order approving the proposed financing and the general purposes to which
the proceeds may be put is not a determination that the Commission approves of the particular use to
which these funds will be put. This Order also is not a Commission determination/approval of the
type of financing or the related costs for ratemaking purposes. The effect of the proposed transaction
on rates the Company charges for natural gas service will be determined in connection with the
Company's Application filed under Case No. INT-G-16-02.
ORDER
IT IS HEREBY ORDERED that the Company's Application for authority to issue and sell up
to $50,000,000 of unsecured debt securities is granted.
IT IS FURTHER ORDERED that the foregoing authorization is without prejudice to the
regulatory authority of this Commission with respect to rates, utility capital structure, service,
accounts, valuation, estimates or determination of cost 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 pay or 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 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 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.
ORDER NO. _____ _ PAGE 2
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this __ _
day of 2016.
PRESIDENT
COMMISSIONER
COMMISSIONER
ATTEST:
SECRETARY
ORDER NO. PAGE 3 ------