20170303Decision Memo.pdf

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DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECR.ETARY
LEGAL
TERRI CARLOCKFROM:
DATE:MARCH 3,20t7
INTERMOLJNTAIN GAS COMPANY'S REQUEST TO ISSUE
^A,ND SELL SECURITIES; CASE NO. INT-G-17-01
On February 16,2017,Intermountain Gas Company (lntermountain or Company), a
subsidiary of MDU Resources Group, Inc., filed an Application requesting authority to enter into
a base revolving line of credit facility for $85 Million with the ability to utilize an additional
amount of $25 Million for a total requested revolving line of credit authority of $l l0 Million.
This authority will replace the current authority approved in OrderNo.32840 totaling
$90 Million due to expire July 13,2018.
This authority is requested for a five-year period. The proceeds will be utilized for
general utility purposes including covering working capital, refinancing indebtedness, financing
capital construction, and paying defened gas costs.
The Company has the option to select between predetermined interest rate methods. The
rate will be based on london Interbank Offered Rate (LIBOR), U.S. Bank Prime Rate or the
Federal Funds rate plus appropriate margins. Additional charges will be incurred for
administrative fees of $15,000 annually and commitment fees based on a performance grid. The
performance grid has four levels with the rate determined by the ratio of consolidated funded
indebtedness to total capitalization ratio. Therefore the higher the level of debt incurred, the
greater the borrowing cost for borrowed funds. The debt ratio for Intermountain was 48,7% as of
December 31,2016.
IDECISION MEMORANDUM MARCH 3,2017
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STAFF RECOMMENDATION
Staffrecommends approval of the Application to enter into line of credit agreements
totaling $l l0 Million as described. Staffalso recommends IGC continue to file quarterly reports
with the Commission showing its capitalization ratio and debt bonowing information including
interest rates paid. 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 in future audits.
All fees have been paid in accordance with ldaho Code $ 6l-905.
COMMISSION DECISION
Does the Commission approve Intermountain's request to enter into five-year revolving
line of credit agreements of $85 Million with an option to borrow an additional $25 Million?
Does the Commission accept the proposed reporting requirements?
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Terri Carlock
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i'udcmos/INTGl7. I LOC dcc mcm
2DECISION MEMORANDUM MARCH 3,2017