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HomeMy WebLinkAbout20190311Application.pdfEXECUTIVE OFFICES I NrenruouNTArN Ges Coruparuv 555 SOUTH COLE ROAD . p.O. BOX 7608 . BOTSE, |DAHO 83707 . (208) 377-6000 o FAX: 377-6097 ,-irf ! f)r ?. ln,ii,rllt'(_.11, ui{ March 11,2019 Ms. Diane Hanian Commission Secretary Idaho Public Utilities Commission 472W. Washington St. P.O. Box 83720 Boise, lD 83720-0074 RE: Case No. INT-G-19-02 Dear Ms. Hanian: Enclosed for filing with this Commission are the original and seven (7) copies of Intermountain Gas Company's ("Intermountain") Application to Issue and Sell Securities. Also enclosed is a check in the amount of $ 1,000 for the IPUC Issuance Fee. Intermountain respectfully requests that the Application be processed by modified procedure and that an order be issued by April 11,2019. Because April I I is not within thirty days of today, Intermountain has not included the notice required by Rule 145. If you should have any questions regarding this Application, please contact me at (208) 377-6015 Sincerely, Lori A. Blattner Director - Regulatory Affairs Intermountain Gas Company Enclosure cc: Mark Chiles Preston N. Carter INTERMOUNTAIN GAS COMPANY CASE NO. INT-G-19.02 APPLICATION AND EXHIBITS In the Matter of the Application of INTERMOT NTAIN GAS COMPAIYY for Authorization to Issue and Sell Securities r,I ,- i ] Preston N. Carter, ISB No. 8462 Givens Pursley LLP 601 W. Bannock St. Boise, lD 83702 Telephone: (208) 388-l 200 Attorney for Intermountain Gas Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ,:nili{fi,fi I I P}{ ?' tl+ In the Matter of the Application of INTERMOUNTAIN GAS COMPANY for Authorization to Issue and Sell Securities Case No. INT-G-19-02 APPLICATION AND REQTIEST FOR MODIFIED PROCEDURE 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 authorizationto issue and sell up to Seventy Five Million Dollars (S75,000,000) of Unsecured Notes on or about June 14, 2019 with one or more maturity dates ranging from five (5) to thirty (30) years from issuance. Intermountain also requests authorization to renew a Revolving Line of Credit of Eighty Five Million Dollars ($85,000,000) not to exceed a five (5) year period with an option to borrow an additional Twenty Five Million Dollars ($25,000,000) for the same timeframe, or One Hundred and Ten Million Dollars ($110,000,000) in total. The renewal would also occur on or about June 14, 20t9. The Seventy Five Million Dollars ($75,000,000) of Unsecured Notes and the One Hundred and Ten Million Dollars ($110,000,000) of Revolving Line of Credit renewal result in a combined request of One Hundred and Eighty Five Million Dollars ($185,000,000). Intermountain respectfi.rlly requests that the Commission issue an order by April 11,2019. Because April 11 is not within thirty days of filing, the notice required under Rule 145 has not been included. lntermountain submits that a hearing is not necessary to consider the issues presented in this Application, ffid respectfully requests that it be processed by modified procedure under the Commission's rules of Procedure 201 through2l}.Intermountain is ready and willing for immediate APPLICATION - 1 consideration of the Application, and will assist the Commission and Commission staff in processing the Application expeditiously. Communications in reference to this Application should be addressed to Lori A. Blattner Director - Regulatory Affairs Intermountain Gas Company Post Office Box 7608 Boise, ID 83707 and Preston N. Carter Givens Pursley LLP 601 W. Bannock St. Boise, ID 83702 In support of this Application, Intermountain does allege and state as follows: L 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; APPLICATION - 2 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. II. Applicant desires to issue, and therefore seeks authority from this Commission, to issue and sell up to Seventy Five Million Dollars ($75,000,000) of Unsecured Notes on or about June 14, 2019. Commission Order No. 33725, date March 8,2017, granted Intermountain authority to enter into a renegotiated Revolving Line of Credit not to exceed One Hundred and Ten Million ($110,000,000) at any one time. This Applications also seeks authority to renew the existing Revolving Line of Credit of One Hundred and Ten Million ($110,000,000) not to exceed a five (5) year period for the execution and delivery of the renewed credit agreement. The Board of Directors of Intermountain has duly authorized the requested Unsecured Notes and renewal of the Revolving Line of Credit. A copy of the Resolution authorizing the Unsecured Notes and renewal of the Revolving Line of Credit is attached hereto as Exhibit No. I and is incorporated herein by reference. III. The estimated terms and conditions of the Unsecured Notes and renewal of the Revolving Line of Credit are incorporated herein by reference as though fully set out. A copy of the terms for the above referenced Unsecured Notes and Revolving Line of Credit will be submitted under separate cover after issuance and is to be treated as confidential pursuant to PUC IDAPA Rules 31.01.01.067 and 31.01.01.233, together with ldaho Code gg 74-104,106,107, and 48-801 et seq. APPLICATION.3 Issuer: Purchasers: Principal Amount: Interest Rates: Security: Use of Proceeds Maturity: Fees Other Requirements: Summary of Terms and Conditions for the Unsecured Notes Intermountain Gas Company Institutional investors in a private placement led by Wells Fargo Securities, LLC and U.S. Bancorp Investments, Inc. Unsecured Note - up to $75,000,000 Final rates dependent on tenor of notes. Current estimates based on five (5) year Treasury Rates: plus 110-130 basis points for five (5) year tranche; Current estimates based on ten (10) year Treasury rates: plus 120-155 basis points for ten (10) year tranche; and plus 140-170 basis points for fifteen (15) year tranche. Current estimates based on thirty (30) year Treasury rates: plus 155-200 basis points for thirty (30) year tranche. None If approved, the Unsecured Notes will be used to provide for the following purposes and no others: the acquisition of utility plant or the construction, extension or improvement of utility facilities; the improvement or maintenance of service; and refunding the Company's treasury expended on utility purposes. Long-term maturity dates in one or more tranches ranging from five (5) to thirty (30) years from the issuance date. Private placement agent fees of up to forty (a0) basis points (up to $300,000) will be paid in conjunction with the issuance ofthe securities. Legal fees and reasonable out-of-pocket costs will be paid or reimbursed to lenders counsel and Cohen Tauber Spievack & Wagner P.C. (lntermountain's legal counsel), and are estimated at $125,000. Costs associated with this transaction are to be paid by Intermountain as noted in the above delineation of "Fees." APPLICATION - 4 Summaqv of Terms and Conditions for Revolving Line of Credit Intermountain Gas CompanyBorrower: Lender: Principal Amount: Interest Rates: Security: Use of Proceeds Maturity: Administrative Fees: Commitment Fee: A syndicate of financial institutions arranged by U.S. Bancorp Investments,Inc. and Wells Fargo Securities, LLC. Revolving Line of Credit - $85,000,000, which will include a $15 Million sublimit for standby letters of credit and a $5 Million sublimit for swingline loans. The Borrower has the right to borrow an additional $25,000,000 subsequent to the Closing date up to an aggregate amount not to exceed $110 Million. At the Borrower's option, any loan under the credit facility will bear interest at arute equal to (D LIBOR plus the Applicable Margin, as determined in accordance with the Performance Pricing grid set forth below or (ii) the base rate (to be defined as the highest of (a) the U.S. Bank prime rate, (b) the Federal Funds rate plus .50Yo and (c) a daily rate equal to one-month LIBOR plus (l .00%). None If approved, the Revolving Line of Credit will be used to provide for capital expenditures, deferred gas costs, and for general corporate purpose needs of lntermountain. Up to five (5) years from the execution and delivery of definitive documentation for the Senior Credit Facility. Annually, beginning at the time of closing and each year on the anniversary date of the credit facility, the Borrower will pay an Administrative Fee of approximately $15,000 to U.S. Bancorp Investments, Inc. The Borrower will pay a fee determined in accordance with the estimated Performance Pricing gnd set forth below, on the actual daily unused amount of each Lender's commitment. The Facility Fee is payable quarterly in arrears, commencing on the first quarterly payment date to occur after the Closing Date, or June 2019. APPLICATION - 5 Pricing Level Indebtedness to Capitalization Ratio Facility Fee Eurodollar Advances/Letter of Credit Fee Base Rate Advances I > 0.60:1.0 0.30%1.450%0.450% II )0.55:1.0 but < 0.60: 1.0 0.225%1.275%0.275% III 20.45:1.0 but < 0.55: 1.0 0.175%1.075%0.075% IV < 0.45:1.0 0.125%1.000%0.000% Other Requirements:Costs associated with this transaction are to be paid by Intermountain. IV. Based on this Commission's authorization, the Unsecured Notes will be used to provide for the following purposes and no others: the acquisition of utility plant or the construction, extension or improvement of utility facilities; the improvement or maintenance of service; and refunding the Company's treasury expended on utility purposes. The proceeds from the renewal of the Revolving Line of Credit will be used to provide for capital expenditures, deferred gas costs, and for general corporate purpose needs oflntermountain. 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 for the Unsecured Notes (up to Seventy Five Million Dollars ($75,000,000) minus the estimated Fees of Four Hundred and Twenty Five Thousand Dollars ($425,000)) are estimated at up to Seventy Four Million Five Hundred and Seventy Five Thousand Dollars ($74,575,000). The net proceeds for the renewal of the Revolving Line of Credit (up to Eighty Five Million Dollars ($85,000,000) plus the option to borrow an additional Twenty Five Million ($25,000,000) minus the estimated Fees of Three Hundred Seventy Four Thousand, Seven Hundred Fifty Dollars (9374,750)) are estimated at up to One Hundred Nine Million Six Hundred Twenty Five Thousand, Two Hundred and Fifty Dollars ($109,625,250). APPLICATION - 6 vI. Intermountain's Statement of Capitalization as of December 31, 2018, showing all authorized and outstanding classes of securities as adjusted to reflect the proposed issuance of up to $75,000,000 of Unsecured Notes, is as follows: December 31,2018 Common Stock & Surplus Long Term Debt Total Capitalization Actual Amount Outstanding ($000's) $ 139,904 136"076 $275p80 Agent Fees Legal Fees Arrangement and Syndication Fees Legal Fees IPUC Issuance Fees Ratio 50.7% 49.3% 100.0% Adjusted Amount ($000's) $ 139,904 2t1.076 $_350p80 YII. The estimated fees and expenses of the issuance of such Unsecured Notes are expected to total up to Four Hundred and Twenty Five Thousand Dollars ($425,000) consisting of the following: Total $425J00 The estimated fees and expenses of the renewal of the Revolving Line of Credit are expected to total up to Three Hundred Seventy Four Thousand, Seven Hundred Fifty Dollars ($374,750) consisting of the following: $300,000 125.000 s248,750 125,000 1.000 APPLICATION - 7 Total $314J5! VIII. 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 $1,000 184"000.000 at $0.10 per $1,000 $__185J00J00 $ 100: 225: 18.400: $lgJb 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 *ris Application. Ix. This Application is filed pursuant to the applicable statutes, including Idaho Code Sections 61-901, 6l-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 will be published within seven days of the filing date of this Application nThe ldaho State Journal, The ldaho 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 - 8 WHEREFORE, lntermountain respectfully petitions the Idaho Public Utilities Commission as follows: a. That this Application be processed by modified procedure, without hearing, and that the Commission issue an order on or before April ll,2019; b. Additionally, that this Commission approve and authorizethe issuance of Unsecured Notes for the purposes described up to and including Seventy Five Million Dollars ($75,000,000) for a period ranging from five (5) years up to thirty (30) years and renewal of a Revolving Line of Credit for the purposes described up to and including One Hundred and Ten Million Dollars ($110,000,000) not to exceed a five (5) year period. c. That this Commission allow Intermountain to manage its Unsecured Note financing pursuant to the order issued in this matter until such time as Intermountain's Board of Directors changes the authorized level of such Notes and its short-term financing pursuant to the order issued in this matter until such time as lntermountain's Board of Directors changes the authorized level of such short-term borrowing, with Intermountain making quarterly reports to this Commission setting forth the date of issuance, principal amount, interest rate, date of maturity and identity of payee for all promissory notes issued during such quarter. d. For such other relief as this Commission may determine proper relative to this Application. DATED at Boise, Idaho, this l lth day of March,2019 INTERMOUNTAIN GAS COMPANY Givens Pursley LLP By r-=c <--By Lori Blattner Director - Regulatory Affairs Preston N. Carter Attorney for Intermountain Gas Company APPLICATION - 9 EXHIBIT NO. I CASE NO. INT.G.19.O2 INTERMOUNTAIN GAS COMPANY BOARD RESOLUTION (2 pages) CERTIFICATE I, Karl A. Liepitz, hereby certify that I am the duly elected and qualified Assistant Secretary of Intermountain Gas Compffiy, tM Idaho corporation; that the following is a true and correct copy of resolutions adopted by Written Consent of the Board of Directors dated March 5, 2019; and that said resolutions have not been modified or amended and are presently in full force and effect: WHEREAS, the Board of Directors of Intermountain Gas Company (the "Company") has determined ttrat it is desirable for the Company to (i) enter into a revolving credit agreement whereby the lenders would make revolving loans to the Company, from time to time, in amounts up to the aggregale principal amount of One Hundred Ten Million Dollars ($l10,000,000), for a period not to exceed five years (the "Credit Agreemenf'), and (ii) issue and sell unsecured notes in an aggregate principal amount of up to Seventy-Five Million Dollars ($75,000,000), in one or more series, with maturities up to thirty years (the 'triotes') under a Note Purchase Agreement or similar agreement (the'Note Purchase Agreement"); NOW, TIIEREFORE, BE IT RESOLVED, that the Chairman of the Board, Chief Executive Officer, President, any Vice President, General Counsel, or any other officer who performs a policy-making function (such as administration, operations, accounting, or finance) of the Company (the "Authorized Officers') be, and each of them hereby is authorized to (i) negotiate, execute and deliver a Credit Agreement, with such terms and provisions as the Authorized OfEcer executing the Credit Agreement on behalf of the Company shall deem proper, and (ii) in connection with such Credit Agreement, execute and deliver promissory notes in an aggregate principal amount up to $110,000,000 (the "Promissory Notes'), such execution by the Authorized Officer of the Credit Agreement and the Promissory Notes to be conclusive evidence of the Authorized Officer's authority granted herein and the approval thereof by the Board of Directors; FURTfGR RESOLVED, that the Authorized Officers of the Company be, and each of them hereby is authorized to (i) negotiate, execute and deliver a Note Purchase Agreement with such terms and provisions as the Authorized Officer executing the Note Purchase Agreement on behalf of the Company shall deem proper, and (ii) in connection with such Note Purchase Agreement, execute and deliver Notes in an aggregate principal amount of up to $75,000,000, such execution by the Authorized Officer of the Note Purchase Agreement and the Notes to be conclusive evidence of the Authorized Officer's authority granted herein and the approval thereof by the Board of Directors; FURTHER RESOLVED, that each and every offrcer of the Company be, and hereby is, authorized and empowered, in the name and on behalf of the Company from time to time, to take such actions and to execute and deliver such agreements, certificates, instruments, notices and documents as may be required or as such offrcer may deem necesszry, advisable, or proper in order to carry out and perform the obligations of the Company under the Credit Agreement, the Note Purchase Agreement, the Promissory Notes, the Notes and any other agreements executed by the Company pursuant to these resolutions; and all such actions to be performed in such manner, and all such agreements, certificates, instruments, notices, and documents to be executed and delivered in such form as the offrcer performing or executing the same shall approve, the performance or execution thereof by such officer to be evidence that such officer deems all of the terms and provisions thereof to be proper; and all actions previously taken by any officer of the Company in connection with the execution of the Credit Agreement, the Note Purchase Agreement, the Promissory Note, the Notes and the transactions contemplated by the foregoing resolutions are hereby ratified, approved, and confirmed in all respects; and FURTHER RESOLVED, that all actions heretofore taken in good faith by any officer of the Company in anticipation of, or in connection with, the foregoing are hereby approved, ratified and confirmed in all respects as fully as if such actions had been presented to the Board of Directors for its approval prior to such actions being taken. IN WITNESS WHEREOF, I have hereunto set my hand on March 11,2019. Karl A. Liepitz,Secretary 2 EXHIBIT NO.2 CASE NO. INT.G.19.O2 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-19-02 ORDER NO. On March llth,2}lg,Intermountain Gas Company (the "Compffiy"), a subsidiary of MDU Resources Group, Inc., applied to the Commission under ldaho Code $$ 6l-901, et seq. for authority to issue Unsecured Notes, not to exceed $75,000,000, for a period ranging from five (5) years up to thirty (30) years and renew a Revolving Line of Credit up to $110,000,000, not to exceed a five (5) year period. 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 $75,000,000 of unsecured debt securities. The proposed issuance will be directly placed in one tranche by Wells Fargo Securities, LLC and U.S. Bancorp Investments, [nc. The Company anticipates one tranche with proposed maturity dates ranging from five years to thirty years from the date of issuance. The interest rate will be set at the time of issuance based on l0-year Treasury rates plus a basis point adder of approximately 120-170 for any l0-year issuance or 15-year issuance, and based on 30-year Treasury rates plus a basis point adder of approximately 155-200 for any 30-year issuance. The Company says it will use net proceeds from the sale of the unsecured notes for the following purposes and no others: the acquisition of utility property or the construction, extension or improvement of utility facilities; the improvement or maintenance of service; and refi.rnding the Company's treasury expended on utility purposes. The Company also asked for authority to renew its Revolving Line of Credit of not more than $l 10,000,000 at any one time. The proposed Revolving Line of Credit would exist for a period not to exceed five years from the date of execution and delivery of the credit agreement. The Company contends that it will use the proceeds to provide for capital expenditures, deferred gas costs, and for ORDER NO PAGE 1 general corporate purpose needs of Intermountain. U.S. Bancorp Investments, fnc., would administer the Revolving Line of Credit. 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 ldaho Code $$ 61-117 and6l-129. The Commission has jurisdiction over the Application under ldaho Code $ 6l-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 14 I through 1 50 of the Commission's Rules of Procedure, IDAPA 3 I .01 .01- 141- 1 50, and that the Company has paid all fees due under ldaho 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 determinatior/approval of the type of financing or the related costs for ratemaking purposes. The Commission does not have before it for determination, and so does not determine, the effect of the proposed tansaction on rates the Company will charge for natural gas service. ORDER IT IS HEREBY ORDERED that the Company's Application for authority to issue and sell up to $75,000,000 of Unsecured Notes with proposed maturity dates from five (5) to thirty (30) years and renewal of the Revolving Line of Credit up to $110,000,000 not to exceed a five (5) year period are granted. IT IS FURTHER ORDERED that the Company must continue to file quarterly reports with the Commission setting forth the date of issuance, principal amount, interest rate, date of maturity and identity of payee for all promissory notes issued during the quarter. The Company must continue to file its capitalization ratios with the quarterly reports. ORDER NO PAGE 2 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 inthis 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 ofthe 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 $ 6I-626. DONE by Order of the Idaho Public Utilities Commission at Boise,Idaho this day of- 2019. PRESIDENT COMMISSIONER COMMISSIONER ATTEST: ORDER NO. SECRETARY PAGE 3