HomeMy WebLinkAbout26197.docx(text box: 1)BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
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IN THE MATTER OF THE APPLICATION OF PACIFICORP FOR AUTHORITY TO ISSUE AND SELL OR EXCHANGE ITS DEBT SECURITIES IN CONNECTION WITH THE DISCHARGES OF THE PP&L AND UP&L MORTGAGES.
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CASE NO. PAC-S-95-3
ORDER NO. 26197
On September 25, 1995 PacifiCorp (Company) filed its Application, pursuant to Chapter 9, Title 61, of the Idaho Code and Rule 14 of the Commission's Rules of Practice and Procedure for authority, in connection with the discharge of the Pacific Power & Light Company Mortgage and Deed of Trust dated as July 1, 1947 (PP&L Mortgage) and Utah Power & Light Company Mortgage and Deed of Trust dated as December 1, 1943 (UP&L Mortgage), to issue and sell in one or more public offerings or private placements or to exchange for other debt of the Company, not later than December 31, 1996, its fixed or floating rate debt (Debt) in the aggregate principal amount of not more than $700,000,000.
The Company was incorporated under Oregon law in August 1987 for the purpose of facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation, and changing the state of incorporation of PacifiCorp from Maine to Oregon. The Company uses the assumed business names of Pacific Power & Light Company and Utah Power & Light Company within their respective service territories located in the states of California, Idaho, Montana, Oregon, Utah, Washington and Wyoming.
Approximately 99 percent of the Company’s direct utility revenues in 1994 were derived from its electric operations and approximately 5 percent of those revenues were derived from its Idaho operations.
The Company proposes to issue the Debt from time to time not later than December 31, 1996, in public offerings or private placements, or in exchange for other debt of the Company as described below
Bond Exchange Transactions
The Company expects to issue up to $63,234,000 of First Mortgage and Collateral Trust Bonds (Exchange Bonds) under the PacifiCorp Mortgage and Deed of Trust, dated January 9, 1989 (PacifiCorp Mortgage), in exchange for an equivalent principal amount of two series of First Mortgage Bonds (PP&L Bonds) previously issued under the PP&L Mortgage. The Exchange Bonds will be issued pursuant to exchange agreements. The Exchange Bonds will carry the same interest rate and maturity, and have substantially the same call provisions, as the PP&L Bonds. All of the bonds which had been issued under the UP&L Mortgage have previously been retired (other than bonds held by the PacifiCorp Mortgage trustee).
The PP&L Bonds to be exchanged include: (a) the Adjustable Rate Series due November 1, 2002 which has $13,234,000 aggregate principal amount outstanding, is repriced annually at 127% of the 10-year Treasury Bond with a floor of 10% and a ceiling of 24% and is not callable until November 1, 1996 and (b) a 9 3/8% Series First Mortgage Bond due July 22, 1997 which was issued to collateralize a $50,000,000 Yen Currency Loan.
Bond Credits Preservation
The Company expects to issue up to $636,766,000 of First Mortgage and Collateral Trust Bonds (Bond Credit Bonds) under the PacifiCorp Mortgage on the basis of previously retired bonds under the PP&L and UP&L Mortgages (Class A Mortgages), prior to the discharge of the Class A Mortgages. By funding these bonds through the PacifiCorp Mortgage, bond credits would be become available for future issuances after the Bond Credit Bonds are retired (even if they are immediately retired). This will enable the Company to avoid some of the expenses associated with surveys and appraisals of property as the basis of future issuances of bonds. The Company expects the Bond Credit Bonds will be issued pursuant to private placement agreements or underwritten transactions in which the Bond Credit Bonds would be quickly redeemed or repurchased. The terms of the proposed offering would include: a maturity not to exceed two years with a call provision not to exceed 60 days at 100% of the stated principal amount of the Bond Credit Bonds and/or purchase provisions to reacquire the Bond Credit Bonds at any time deposited with a trustee or bank to be subsequently drawn upon to either repurchase or call the Bond Credit Bonds at the earliest available date.
Up to $636,766,000 of bond credits may exist under the Class A Mortgages, or will be created as part of the bond exchange transactions.
General
Prior to the merger of PacifiCorp, a Maine corporation, with Utah Power & Light Company into PacifiCorp, an Oregon corporation, PacifiCorp, a Maine corporation, had issued first mortgage bonds under the PP&L Mortgage and Utah Power & Light Company had issued first mortgage bonds under the UP&L Mortgage. After the merger, PacifiCorp entered into the PacifiCorp Mortgage, with new issues of bonds being supported by a pledge of bonds issued under the UP&L Mortgage and the PP&L Mortgage (known collectively as the Class A Mortgages). The Company’s primary source of secured long-term debt financing has been First Mortgage and Collateral Trust Bonds issued under the PacifiCorp Mortgage. The Company’s intent has been that, once the first mortgage bonds issued under the Class A Mortgages (other than those held by the trustee as the basis of issuances under the PacifiCorp Mortgage) have been retired, the Class A Mortgages would be discharged and the PacifiCorp Mortgage would become its sole mortgage.
The Company believes that discharge of the Class A Mortgages is desirable because it is expected to allow cost savings resulting from reduced administrative requirements and increased flexibility for the issuance of secured debt.
Following the discharge of the Class A Mortgages, the Company’s first mortgage bonds will be issued under the PacifiCorp Mortgage. The Commission has previously authorized the Company to incur the lien of the PacifiCorp Mortgage in Case No. U-1046-158, Order No. 22157. As in its previous issuances, the Company expects to issue the Exchange Bonds and the Bond Credit Bonds as First Mortgage and Collateral Trust Bonds, which are collateralized with first mortgage bonds under the PP&L Mortgage and UP&L Mortgage. Bonds issued under the PP&L and UP&L Mortgages would not count toward the maximum amount of debt authority granted in this docket.
Offering costs are not expected to exceed 1.00% for the Debt.
The results of the financings are expected to be:
Other Expenses
Securities and Exchange Commission fees$ 241,379
Regulatory agency fees1,000,
Company’s counsel fees100,000
Underwriters' counsel fees 100 000
Holders’ fees and other exchange expenses 50,000
Accounting fees20,000
Printing and engraving fees30,000
Rating agency fees150,000
Trustee fees25,000
Indenture recording fees45,000
Miscellaneous 37,621
TOTAL$800,000
The net proceeds of the proposed offering of the Bond Credit Bonds may be temporarily deposited with a trustee or bank and invested to the earliest date the Bond Credit Bonds may be called or repurchased by the Company. The proceeds of the Bond Credit Bonds will be used to reimburse the Company’s treasury for funds expended from income and from other treasury funds that were not derived from the issuance of securities. No proceeds will be realized through the issuance and sale of the Exchange Bonds. The funds to be reimbursed, including the funds reimbursed by the issuance of the PP&L Bonds as part of the bond exchange transactions, were used in furtherance of one or more of the utility purposes authorized by I.C. §61-901. To the extent the funds to be reimbursed were used for the discharge or refunding of obligations, those obligations or their precedents were originally incurred in furtherance of a utility purpose.
Issuances of the Debt proposed are part of an overall plan to finance the cost of the Company’s facilities taking into consideration prudent capital ratios, earnings coverage tests and market uncertainties as to the relative merits of the various types of securities the Company could sell.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Commission, having considered the application and appended exhibits, the information in its files concerning the Company, the applicable law, and being fully advised in the premises, FINDS and CONCLUDES:
The Company is an electrical corporation within the definition of Idaho Code § 61-119 and is a public utility within the definition of Idaho Code § 61-129.
The Idaho Public Utilities Commission has jurisdiction over this application pursuant to the provisions of Idaho Code§ 61-901 et seq. and the Application reasonably conforms to Section 14 of the Commission's Rules of Practice and Procedure.
The method of issuance is proper.
The general purposes for the issuance are lawful purposes under the Public Utility Law of the State of Idaho and are compatible with the public interest. However, this general approval of the general purposes of the issuance is neither a finding of fact nor a conclusion of law that any particular construction program of the Company which may be benefitted by the approval of this Application has been considered or approved by this Order, and this Order shall not be construed to that effect.
The issuance of an Order authorizing the proposed transaction does not constitute agency determination/approval of the type of financing or the related costs for ratemaking purposes which determination the Commission expressly reserves until the appropriate proceeding.
The Company has paid the fees required by I.C. § 61-905.
O R D E R
IT IS THEREFORE ORDERED that the application of PacifiCorp for authority to issue and sell, in one or more public offerings or private placements, or to exchange for other debt of the Company, not later than December 31, 1996, its fixed or floating rate Debt, in the aggregate principal amount of not more than $700,000,000, is granted.
IT IS FURTHER ORDERED that the authority granted herein is in addition to the authority granted in Case No. PAC-S-95-3.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory authority of this Commission with respect to rates, service, accounts, valuation, estimates or determination of costs, 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 provision of Chapter 9, Title 61, Idaho Code, or any act or Deed done or performed in connection with this Order 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 PacifiCorp shall file the following as they become available:
a)The "Report of Securities Issued" required by 18 CFR 34.10.
b)Verified copies of any agreement entered into pursuant to this Order.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of PacifiCorp 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.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this day of October 1995.
RALPH NELSON, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
Myrna J. Walters
Commission Secretary
vld/O-pacs953.ws
**NOTE**
This document has been retyped onto the system for record-keeping purposes only. This version differs slightly from the original document in the formatting sense only. The original document was lost in transition to archive directory.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
(text box: 3)
IN THE MATTER OF THE APPLICATION OF PACIFICORP FOR AUTHORITY TO ISSUE AND SELL OR EXCHANGE ITS DEBT SECURITIES IN CONNECTION WITH THE DISCHARGES OF THE PP&L AND UP&L MORTGAGES.
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CASE NO. PAC-S-95-3
ERRATUM NOTICE
On October 26, 1995, IPUC Order No. 26197 was issued by this Commission. The following change(s) should be made to that Order:
Page 5, Order section, paragraph 2, line 2
READS
. . . authority granted in Case No. PAC-S-95-3.
SHOULD READ:
. . . authority granted in Case No. PAC-S-94-3.
DATED at Boise, Idaho this day of October 1995.
Myrna J. Walters - Commission Secretary
bls/O-pacs953.err
COMMENTS AND ANNOTATIONS
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Service Date
October 26, 1995