20161007Decision Memo.pdf

TO:
FROM:
DATE:
RE:
DECISION MEMORANDUM
COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
LEGAL
WORKING FILE
TERRI CARLOCK
OCTOBER 6, 2016
INTERMOUNTAIN GAS COMPANY'S REQUEST TO ISSUE AND SELL
DEBT; CASE NO. INT-G-16-04.
On September 15, 2016, Intennountain Gas Company (Intennountain, Company) filed an
Application requesting authority to issue and sell $50,000,000 of unsecured debt securities in one
or more issuance. The maturity date and interest rate will be established at the time of issuance.
Intennountain filed an amendment on October 4, 2016 requesting maturing dates be authorized
up to 40 years.
The interest rate will be set at the time of issuance based on the tenn of the note.
Differing tranches include: 1) A 10-year note will be based on 10-year Treasury rates plus an
adder of 130-140 basis points; 2) A 15-year note will be based on 10-year Treasury rates plus an
adder of 155-165 basis points; and 3) A 30-year note will be based on 30-year Treasury rates
plus an adder of 165-175 basis points. The current treasury rate for 10-year notes is 1. 72% so
you might expect an interest rate for Intennountain between 3 .02% -3.12% for a 10-year
issuance. A 30-year treasury rate is currently 2.44% so the interest rate for lntennountain to
issue a 30-year note might be 4.09% -4.19%.
Net proceeds from the sale of the unsecured notes will be used to repay any remaining
amounts outstanding on the Company's Revolving Credit Agreement; provide for capital
expenditures on its facilities; provide working capital; and for general corporate purposes.
The required securities fees have been submitted.
DECISION MEMORANDUM 1 OCTOBER 6, 2016
STAFF RECOMMENDATION
Staff recommends approval of the requested $50 million in unsecured debt authority.
Staff also recommends that all final debt and pricing documents be filed with the
Commission.
COMMISSION DECISION
Does the Commission approve the requested $50 million unsecured debt authority with
the reporting requirements?
Terri Carlock
TalNT-G-16-04 unsecured notes SOM DM 10 6.16.
DECISION MEMORANDUM 2 OCTOBER 6, 2016