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1 (The following proceedings were
2 had in open hearing.)
3 Q. BY MR. RICHARDSON: And, Mr. Chairman,
4 there was an additional exhibit introduced --
5 Exhibit 102 -- by PacifiCorp earlier dealing with
6 the subject matter of these witnesses' testimony,
7 and I just ask -- like to ask them a single
8 question, and that is did that exhibit change or
9 does it change any of the conclusions in your
10 testimony?
11 A. BY WITNESS HANSEN: No, it does not.
12 MR. RICHARDSON: Thank you.
13 Mr. Chairman, the two witnesses are
14 available for cross-examination.
15 COMMISSIONER HANSEN: Okay. I believe
16 we will change the order. We'll start with Mr. Nye.
17 MR. NYE: No questions.
18 COMMISSIONER HANSEN: Mr. Ward.
19 MR. WARD: No questions. Thank you.
20 COMMISSIONER HANSEN: Mr. Budge.
21 MR. BUDGE: No questions.
22 COMMISSIONER HANSEN: Let's see.
23 Mister -- let's see. Who do we have with
24 PacifiCorp? Mr. Eriksson.
25 MR. ERIKSSON: Thank you.
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HEDRICK COURT REPORTING O'MEARA/HANSEN (Di)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 CROSS-EXAMINATION
2
3 BY MR. ERIKSSON:
4 Q. Let's start with the exchange program
5 issue. In your direct testimony, you briefly
6 describe that program, and in your testimony, you
7 state that Bonneville Power Administration makes a
8 cash payment to exchanging utilities for the amount
9 of the exchange benefits. Is that correct?
10 A. BY WITNESS HANSEN: Yes, it is.
11 Q. And where does BPA get that money from
12 to make that cash payment?
13 A. BY WITNESS HANSEN: From its
14 customers.
15 Q. And its customers would include
16 entities such as cities, co-ops, public utilities
17 districts, such as you represent?
18 A. BY WITNESS HANSEN: That is correct.
19 Q. And if the exchanging utility is
20 entitled to less benefits through change in the ASC
21 or even for the -- ineligible for the program, that
22 would improve or reduce the cost to your
23 constituents paid to BPA?
24 A. BY WITNESS HANSEN: That is correct.
25 Q. And that leaves me -- or, leads me to
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HEDRICK COURT REPORTING O'MEARA/HANSEN (X)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 the next question, and that is what is Public
2 Power's -- Council's interest in this case?
3 A. BY WITNESS HANSEN: The Public Power
4 Council flagged a couple of issues as being of
5 importance to its members. The first is
6 transmission issues of a subset of its members. As
7 wholesale transmission transactions are not within
8 the purview of this Commission, we have not raised
9 those in our testimony.
10 And the second issue is the
11 residential exchange as described in our testimony.
12 Q. And the purpose of raising the issue
13 of residential exchange in this case?
14 A. BY WITNESS HANSEN: As we move into
15 the future, there are a lot of unanswered questions
16 about how the residential exchange will be treated
17 post-2001, and given a large number of unanswered
18 questions, we merely wished to raise some issues
19 that will be of importance in the next few months--
20 in the next few months and years as post-2001
21 conditions are determined.
22 Q. Is there anything this Commission
23 could do to address your issues?
24 A. BY WITNESS O'MEARA: I -- I think
25 there's a number -- there's a number of aspects in
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1 which the Commission can address these issues, one
2 in terms of informational requirements we flagged
3 where IPUC Staff quite properly is quite concerned
4 then moving the locus of decision-making from
5 Portland to Scotland, that that might make it more
6 difficult in order to get the necessary documents
7 associated with -- with regulating PacifiCorp. And
8 what we wanted to add was although the IPUC clearly
9 has an interest in making sure it has access to
10 those documents, that Bonneville and Intervenors in
11 average system cost proceedings have an interest as
12 well in getting equal access to those documents.
13 The other thing that we wanted to
14 point out in terms of the -- for the consideration
15 of the IPUC is that they are, in fact, considering,
16 you know, a merger proceeding here, and one of the
17 things we wanted to raise was that the change of the
18 status of PacifiCorp as a result of the merger might
19 conceivably have an impact on the level of
20 residential exchange and the merged entities'
21 potential eligibility for the residential exchange.
22 Q. As far as access to documents, do you
23 see it to be this Commission's role to ensure that
24 BPA has access to PacifiCorp documents?
25 A. BY WITNESS HANSEN: Go ahead.
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HEDRICK COURT REPORTING O'MEARA/HANSEN (X)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 A. BY WITNESS O'MEARA: Okay.
2 I don't think it's the Commission's
3 role; however, we do want to point out and one of
4 the things the Commission is clearly concerned about
5 is exchange issues and average system cost issues,
6 that in order to be able to make a correct average
7 system cost determination, that it's not merely that
8 the perfect documents be available to Commission
9 Staff for retail rate-making, but that similar
10 documents have to be available for Bonneville and
11 Intervenors to be able to determine the appropriate
12 level of exchange, and that clearly is considerable
13 interest to the Commission.
14 Q. And you recognize the level of
15 assurance, the commitments that the Company has made
16 with respect to access to documents to this
17 Commission?
18 A. BY WITNESS O'MEARA: Yes.
19 Q. Now, in your testimony, you've alluded
20 to the year -- you've indicated that PacifiCorp
21 wouldn't necessarily remain eligible for the
22 exchange program post-merger with ScottishPower. Do
23 you have an opinion as to whether or not it would?
24 A. BY WITNESS HANSEN: We don't have an
25 opinion at this time. There are too many unanswered
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HEDRICK COURT REPORTING O'MEARA/HANSEN (X)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 questions.
2 Q. What would -- what are some of those
3 unanswered questions given -- given that we have a
4 full description of what the transaction is.
5 A. BY WITNESS HANSEN: Uh-huh. Before
6 Bonneville can make a final determination of ASC
7 ineligibility, it needs to conduct a public process,
8 and then the final decision maker on issues
9 regarding the implementation of the ASC methodology
10 rest with FERC.
11 Q. Now, did both of those points refer to
12 ASC methodology or eligibility?
13 A. BY WITNESS HANSEN: The ASC
14 methodology references FERC as being the final
15 decision maker on issues regarding implementation of
16 the ASC methodology.
17 Q. You would agree with me that there is
18 no certainty that PacifiCorp would become ineligible
19 under the Northwest Act?
20 A. BY WITNESS HANSEN: Yes.
21 Q. And, in fact, at this point, you would
22 agree that you cannot even say that there is a
23 probability that PacifiCorp will become ineligible?
24 A. BY WITNESS HANSEN: Yes.
25 Q. Now turning to the level of the
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P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 exchange benefits which you also addressed in your
2 testimony, at this point, you do not know what
3 PacifiCorp's ASC would be two years from now?
4 A. BY WITNESS HANSEN: That is correct.
5 Q. And likewise at this point, you don't
6 know what BPA's priority current exchange rate will
7 be two years from now?
8 A. BY WITNESS HANSEN: That is correct.
9 Q. And you cannot say whether the merger
10 will affect the level of exchange benefits available
11 to PacifiCorp?
12 A. BY WITNESS HANSEN: That is also
13 correct.
14 MR. ERIKSSON: That's all I have.
15 COMMISSIONER HANSEN: Go to the
16 Staff. Mr. Purdy.
17
18 CROSS-EXAMINATION
19
20 BY MR. PURDY:
21 Q. Seems as though it's your conclusion
22 then that at this juncture, there is no way to
23 determine with certainty whether and how the
24 exchange credits would be affected by the merger?
25 A. BY WITNESS HANSEN: That is correct.
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HEDRICK COURT REPORTING O'MEARA/HANSEN (X)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 MR. PURDY: Nothing further. Thank
2 you.
3 COMMISSIONER HANSEN: See if we have
4 any questions from the Commissioners. Commissioner
5 Smith.
6 COMMISSIONER SMITH: Thank you.
7
8 EXAMINATION
9
10 BY COMMISSIONER SMITH:
11 Q. Were both of you present -- I believe
12 it was still today -- when Mr. Brattebo testified?
13 A. BY WITNESS HANSEN: We were both
14 present.
15 Q. My recollection is that he testified
16 that with the merger or without the merger, the
17 exchange program as we now know it, because of the
18 7(b)(2) and in lieu provisions, is basically history
19 after year 2001. Do you have a different opinion?
20 A. BY WITNESS HANSEN: Well, we have the
21 same opinion.
22 A. BY WITNESS O'MEARA: Let me amplify on
23 that.
24 A. BY WITNESS HANSEN: Okay.
25 A. BY WITNESS O'MEARA: I don't think --
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HEDRICK COURT REPORTING O'MEARA/HANSEN (Com)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 I think that the -- clearly a utility such as
2 PacifiCorp have continued -- have a continued legal
3 right to the exchange after 2001.
4 Q. Assuming Congress doesn't change it?
5 A. BY WITNESS O'MEARA: Right, assuming
6 Congress doesn't change it. And actually I was
7 joking with Scott that of the perhaps six people who
8 understand 7(b)(2), two of them were present --
9 Q. That's pretty scary?
10 A. BY WITNESS O'MEARA: -- in the hearing
11 room with Scott and myself.
12 Bonneville does have the option of in
13 lieuing. Where I do disagree with Mr. Brattebo is
14 that that doesn't eliminate potential exchange
15 benefits to Bonneville -- I mean, excuse me,
16 PacifiCorp. It merely -- that under in lieuing,
17 Bonneville would continue to provide PacifiCorp with
18 lower cost power, what would -- then would be
19 Bonneville being required to take more expensive
20 PacifiCorp power back in return.
21 The Public Power Council supports BPA
22 subdescription settlement, and a portion of that
23 subscription settlement is the allocation of power
24 that Bonneville has proposed to residential and
25 small farm customers, investor-owned utilities. It
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HEDRICK COURT REPORTING O'MEARA/HANSEN (Com)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 is our desire, as is Bonneville's as well, that this
2 allocation effectively replace exchange, but we
3 don't have an assurance that that will occur.
4 Q. That allocation hasn't been made yet.
5 Correct?
6 A. BY WITNESS O'MEARA: Well,
7 Bonneville's proposed allocation 1,800 megawatts of
8 power going up to 2,200.
9 Q. In the second five years?
10 A. BY WITNESS O'MEARA: Right.
11 Q. But it hasn't had -- doesn't have
12 names and numbers?
13 A. BY WITNESS O'MEARA: Right. It's up
14 to state commissions to make a recommendation to
15 Bonneville that then will decide who actually gets
16 what share of power.
17 Q. But besides this theoretical
18 possibility that if the statute's not changed,
19 there's this theoretical possibility is this basic
20 conclusion that with or without the merger, after
21 2001, the exchange program is probably not going to
22 be used and subscription will be the vehicle?
23 A. BY WITNESS O'MEARA: That's our hope,
24 and one of the reasons why we're here in the hearing
25 room is we want that, we want that to happen, and
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HEDRICK COURT REPORTING O'MEARA/HANSEN (Com)
P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 so -- but we're not necessarily so convinced as
2 Mr. Brattebo that the exchange would necessarily be
3 a dead letter after 2001.
4 COMMISSIONER SMITH: Thank you,
5 Mr. Chairman.
6 COMMISSIONER HANSEN: Commissioner
7 Kjellander.
8 Do we have redirect?
9 MR. RICHARDSON: No reredirect,
10 Mr. Chairman. Thank you. That concludes the Public
11 Power Council's presentation today.
12 COMMISSIONER HANSEN: Thank you.
13 MR. RICHARDSON: And, Mr. Chairman,
14 one further matter: May Ms. Hansen and Mr. O'Malley
15 (sic) be excused?
16 COMMISSIONER HANSEN: Is there any
17 objection? That's fine.
18 (The witnesses left the stand.)
19 MR. RICHARDSON: I said "O'Malley"; I
20 meant "O'Meara." I'm sorry.
21 COMMISSIONER HANSEN: Okay, let's move
22 now to -- can we move to the -- yes.
23 Let's go at ease for a couple, three
24 minutes, and we'll go off the record and talk about
25 how we want to finish this up.
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P.O. BOX 578, BOISE, ID 83701 Public Power Coun.
1 (Discussion off the record.)
2 COMMISSIONER HANSEN: Okay, we're back
3 on record. Okay, we'll now go to Solutia.
4 MR. BUDGE: Thank you, Mr. President.
5 We'd call Richard M. Anderson to the stand.
6
7 RICHARD M. ANDERSON,
8 produced as a witness at the instance of Solutia,
9 Inc., being first duly sworn, was examined and
10 testified as follows:
11
12 DIRECT EXAMINATION
13
14 BY MR. BUDGE:
15 Q. Would you please state your full name
16 and business address for the record?
17 A. My name is Richard Anderson, 39 Market
18 Street, Suite 200, Salt Lake City, 84101.
19 Q. Mr. Anderson, did you prefile
20 testimony and exhibits in this case on behalf of
21 Solutia, Inc.?
22 A. I did.
23 Q. And have you also been a participant
24 and witness in other merger proceedings in other
25 states involving the same Applicants?
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HEDRICK COURT REPORTING ANDERSON (Di)
P.O. BOX 578, BOISE, ID 83701 Solutia
1 A. I have. I represented clients in the
2 Utah -- I mean, in the Wyoming proceedings last
3 week, and will represent clients in the Utah
4 proceedings in August.
5 Q. And just for informational purposes
6 for the Commission and parties, would you indicate
7 who you testified on behalf of in the Wyoming case?
8 A. The Wyoming case?
9 Q. Yes.
10 A. I testified on behalf of the Wyoming
11 Industrial Energy Consumers. An acronym WIEC is
12 what it's more known to go by and actually was used
13 earlier in today's proceedings.
14 Q. And in the Oregon proceeding, who was
15 your client in that case?
16 A. Oregon?
17 Q. Yes. Or is it the Utah?
18 A. Utah proceeding.
19 Q. Utah proceeding. Excuse me.
20 A. I represent Utah Industrial Energy
21 Consumers, is a coalition of 14 industrial entities
22 within the state of Utah.
23 Q. Referring to your representation of
24 Solutia in this proceeding, did you prefile
25 testimony consisting of pages 1 through 50 and
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HEDRICK COURT REPORTING ANDERSON (Di)
P.O. BOX 578, BOISE, ID 83701 Solutia
1 exhibits consisting of Exhibits 301 through 309?
2 A. I did.
3 Q. Do you have any corrections you wish
4 to make to your testimony or your exhibits?
5 A. I do, two minor corrections, and then
6 a correction with regard to an exhibit.
7 On page 50, lines 20 -- at the very
8 end of line 20 and carrying on into line 21, the
9 line currently reads "would will." It should read
10 "who will."
11 And also on page 50 --
12 Q. Could you hold just one moment?
13 A. Sure.
14 Q. I think some people are still turning
15 to that correction. Would you give it to us again
16 on page 50?
17 A. Page 50, lines -- at the end of
18 line 20 and then carrying on into line 21, it
19 currently reads "would will." It should read "who
20 will."
21 Q. And the next correction?
22 A. Next correction is also on page 50,
23 line 23. The word "conclude" is misspelled. Should
24 be C-O-N-C-L-U-D-E.
25 Q. Do you have any corrections to your
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HEDRICK COURT REPORTING ANDERSON (Di)
P.O. BOX 578, BOISE, ID 83701 Solutia
1 exhibits?
2 A. I do. Exhibit 304, the exhibit that
3 was included within the prefiled testimony, was an
4 erroneous conclusion. It's not consistent while
5 it's of the same study type in terms of the
6 comparison of different utilities nationwide. With
7 regard to the reference in the testimony to
8 Exhibit 304, there's a disconnect between that
9 reference and what was actually -- what was
10 included. I believe Counsel and the Commissioners
11 have before them the corrected version of
12 Exhibit 304.
13 Q. Mr. Anderson, if the questions
14 contained in your prefiled testimony were asked
15 today, would your answers be the same?
16 A. Yes.
17 MR. BUDGE: Mr. President, we would
18 move that the testimony and exhibits of Mr. Anderson
19 be spread upon the record, and we would tender him
20 for cross-examination.
21 COMMISSIONER HANSEN: Okay. The
22 testimony be spread upon the record if there is no
23 objection. Being none, it would be so ordered.
24 (The following prefiled direct
25 testimony of Mr. Anderson is spread upon the
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HEDRICK COURT REPORTING ANDERSON (Di)
P.O. BOX 578, BOISE, ID 83701 Solutia
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HEDRICK COURT REPORTING ANDERSON (Di)
P.O. BOX 578, BOISE, ID 83701 Solutia