IV. Financing-Long Term

The settling parties request that the Commission find as a fact that Nor-Cal's financial advisors have structured a financing plan calling for repayment of the debt issued to acquire PacifiCorp's California distribution assets entirely out of net system revenues.

This financial plan is included in the application and provides for 100% taxable bond financing of the purchase price secured only by operating revenue without recourse to financial resources of any of Nor-Cal's members (Del Norte County and the City of Yreka). It is proposed that Nor-Cal will market $198.5 million of 30-year taxable bonds at 7% interest.

The Commission is asked to find as a fact that the firms of Paine Webber, Incorporated, Goldman Sachs & Company, Bear Stearns & Company, and Morgan Stanley Dean Witter will underwrite the issuance of Nor-Cal bonds. This statement, which we are asked to find as fact, appears nowhere in the application or in supporting documents. It was part of an unsworn explanation of the project made by an employee of PacifiCorp or Nor-Cal at the PPH in Yreka.

The Commission is asked to find as a fact that Nor-Cal's financial advisors are in the process of securing a final commitment letter from Ambac Assurance to provide bond insurance for the sale transaction which will raise the transaction's bond rating to AAA. Again, the record references to this statement are the unsworn comments of the applicant at the PPH in Yreka. Moreover, the application appends letters from Ambac Assurance Corporation, Financial Security Assurances, Inc. and MBIA Insurance Corporation responding to Nor-Cal's advisors that they were amenable to reviewing the documents for the proposed financing in order to determine if they were interested in it. Other than the PPH comment by applicant, the record is devoid of evidence that any insurance commitment has been made to date.