ORDER NO. 97-144

ENTERED APR 11 1997

This is an electronic copy.

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UF 4147

DISPOSITION: APPLICATION TO AMEND EXISTING AUTHORITY

APPROVED

In Order No. 96-320, the Commission granted Washington Water Power Company’s application, filed pursuant to ORS 757.415 and OAR 860-027-0030, requesting authority to engage in certain financial transactions. That application, in part, sought authority to guarantee not more than $150 million in trust originated preferred securities (TOPS). In the report supporting the authorization, Staff indicated that the TOPS might bear either a fixed or floating rate. The application, however, did not specify if, or how, a floating rate would be negotiated or determined.

On March 5, 1997, Washington Water Power Company filed an application to modify the authority granted in Order No. 96-320 to specifically include issuing a floating-rate TOPS and to clarify how rates on the TOPS will be determined.

Based on a review of the application and the Commission’s records, the Commission finds that the application satisfies applicable statutes and administrative rules. At its public meeting on April 1, 1997 the Commission adopted Staff’s recommendation to approve the application. Staff’s recommendation is attached as Appendix A and is incorporated by reference.

OPINION

Jurisdiction

ORS 757.005 defines a "public utility" as anyone providing heat, light, water, or power service to the public in Oregon. The Company is a public utility subject to the Commission’s jurisdiction.

Applicable Law

ORS 757.415(1) provides that:

A public utility may issue [stocks and bonds, notes, and other evidences of indebtedness] for the following purposes and no others[:]

(a) The acquisition of property, or the construction, completion, extension or improvements of its facilities.

(b) The improvement or maintenance of its service.

(c) The discharge or lawful refunding of its obligations.

(d) The reimbursement of money actually expended from income or from any other money in the treasury of the public utility not secured by or obtained from the issue of stocks or bonds, notes or other evidences of indebtedness, or securities of such public utility, for any of the purposes listed in paragraphs (a) to (c) of this subsection[.]

(e) * * * * *

When an application involves refunding of obligations, the applicant must show that the original borrowings were made for a permissible purpose. Avion Water Company, Inc., UF 3903, Order No. 83-244 at 3; Pacific Power & Light Co., UF 3749, Order No. 81-745 at 5.

ORS 757.415(2) provides that:

[The applicant] shall secure from the commission * * *an order * * *stating:

(a) The amount of the issue and the purposes to which the proceeds are to be applied; and

(b) In the opinion of the commission, the [proceeds] reasonably [are] required for the purposes specified in the order and compatible with the public interest, which is necessary or appropriate for or consistent with the proper performance by the applicant of service as a public utility, and will not impair its ability to perform that service; and

(c) Except as otherwise permitted in the order in the case of bonds, notes, or other evidences of indebtedness, such purposes are not, in whole or in part, reasonably chargeable to operating expenses or to income.

The Commission believes that the proposed transaction is reasonably required for the purposes stated, is compatible with the public interest, and is consistent with the proper performance of the Company’s public utility service. The proposed transaction will not impair the Company’s ability to perform that service. The purposes of the proposed issuance are not, in whole or part, reasonably chargeable to operating expenses or to income.

For ratemaking purposes, the Commission reserves judgment on the reasonableness of the Company’s capital costs and capital structure. In its next rate proceeding, the Company will be required to show that its capital costs and structure are just and reasonable. See ORS 757.210.

CONCLUSIONS

1. The Company is a public utility subject to the Commission’s jurisdiction.

2. The Company’s application meets the requirements of ORS 757.415.

ORDER

IT IS ORDERED that the application of Washington Water Power Company for authority to engage in certain financial transactions is granted.

Made, entered, and effective ________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A request for rehearing or reconsideration must be filed with the Commission within 60 days of the date of service of this order. The request must comply with the requirements of OAR 860-014-0095. A copy of any such request must also be served on each party to the proceeding as provided by OAR 860-013-0070. A party may appeal this order pursuant to ORS 756.580.