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HomeMy WebLinkAboutPOCATELL.txt 1 POCATELLO, IDAHO, JULY 28, 1999, 7:05 P.M. 2 3 4 COMMISSIONER HANSEN: Good evening, 5 ladies and gentlemen. This hearing will be in 6 order. 7 Can you hear me at the back of the 8 room okay? 9 MR. RON LAW: Get a little closer to 10 the mike. 11 COMMISSIONER HANSEN: Good evening. 12 This hearing will be in order. This is the time and 13 place set by the Idaho Public Utility Commission for 14 a public hearing in Case No. PAC-E-99-1, known as In 15 the matter of the joint Application and Petition of 16 PacifiCorp and Scottish Power plc for an Order 17 approving proposed transaction, and an Order 18 approving the issuance of PacifiCorp common stock. 19 I'm Commissioner Dennis Hansen, and 20 I'll be chairman of this hearing. At my left is 21 Commissioner Marsha Smith, and at my right, 22 Commissioner Paul Kjellander. The three of us make 23 up the Commission, and we are the three that will be 24 making the Decision on this matter. 25 We now need to take the appearances of 1184 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 the parties that are here this evening before we 2 start the public hearing. We'll start with the 3 Staff. Mr. Purdy. 4 MR. PURDY: I'm Brad Purdy, I'm a 5 deputy attorney general, and I represent the 6 Commission Staff in this case. 7 COMMISSIONER HANSEN: Mr. Miller. 8 MR. MILLER: Thank you, Mr. Chairman. 9 Joe Miller, attorney, on behalf of ScottishPower, 10 one of the joint Applicants. 11 COMMISSIONER HANSEN: Mr. Eriksson. 12 MR. ERIKSSON: John Eriksson of 13 Stoel Rives for PacifiCorp. 14 MR. BUDGE: Randy Budge, an attorney 15 in Pocatello, on behalf of Intervenor Solutia of 16 Soda Springs, formerly Monsanto, who is on record of 17 opposing the merger. 18 And maybe, Mr. Chairman, after the 19 introduction, I had one brief matter I want to take 20 up before we proceed. 21 COMMISSIONER HANSEN: Okay. 22 MR. NYE: Mr. Chairman, Mark Nye, 23 attorney for Intervenors Idaho Irrigation Pumpers, 24 who oppose the merger. 25 COMMISSIONER HANSEN: Thank you. 1185 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 We'll now give you the time and the 2 floor, Mr. Budge. 3 MR. BUDGE: I think one comment is 4 appropriate, Mr. Chairman, Commissioners: 5 After last night's hearing, there were 6 a number of people that came up to myself and also 7 Mr. Nye and said, If you folks and your clients are 8 opposed to this merger, why didn't you do anything 9 at the hearing? You didn't cross-examine witnesses, 10 you didn't make statements. 11 And I thought, for the record and the 12 benefit of the public, that they should be aware 13 that as formal Intervenors in this proceeding, that 14 we participated fully in the technical hearings that 15 were in Boise, and that's the proper forum for us to 16 present our objections, which we did through 17 testimony of witnesses. And it's not our intent in 18 these proceedings to cross-examine witnesses in any 19 way unless there's a point of clarification, nor do 20 we intend purposely to make a specific statement 21 outlining the detailed reasons of our objection, 22 which as the Commission knows and the parties know, 23 we will have a full opportunity to do so in written 24 briefs submitted by the August 13th deadline. 25 There is one minor matter, 1186 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 Mr. Chairman, that I very hesitate to bring up in 2 this forum, other than to say that I think it should 3 be a matter of the public record in the -- that's 4 being recorded, and that is, the Commission chose in 5 this matter to have a period of question and answers 6 for the public in advance of the hearing. And while 7 I think that was fine in concept, the design perhaps 8 was flawed, in that from the perspective of us, as 9 an opponent to the merger, I think the proceeding 10 turned into something that I felt was improper, was 11 unfair, and prejudicial, for the reason that the 12 Applicants in this case ScottishPower and PacifiCorp 13 had an opportunity to have their attorneys, as well 14 as some of their witnesses in the technical 15 proceedings, as well as their public relations 16 people, answer questions in such a manner that they 17 can put their own spin on how they view the merger, 18 and that, from our perspective, has a direct effect 19 and impact, and influences the testimony that the 20 public will present in this type of a hearing. 21 And so I question in the future that 22 that's an appropriate way to proceed, and if you 23 decide to have question and answer periods in the 24 future, perhaps it should be limited to Staff; or 25 other parties who don't necessarily share the 1187 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 viewpoint of the Applicants have a similar 2 opportunity to answer questions as to why they might 3 oppose the merger or why they might disagree with a 4 particular position being asserted. 5 Again, I apologize for bringing it up, 6 but I think it's something that should be considered 7 in future proceedings. 8 COMMISSIONER HANSEN: Mr. Budge, I 9 think your comments are appropriate. 10 It was the intention of the 11 Commission -- at many of the hearings -- we hold 12 public hearings. The public, when they attend these 13 hearings, they have questions, and not realizing 14 that we follow a judicial type proceedings here 15 where they make the statement and really don't have 16 the opportunity to ask questions. Especially with 17 the extended area calling hearings that we had 18 throughout Idaho, we found that it was very 19 productive that people could meet, they could ask 20 questions about how they testify and how they can 21 get on the record, and ask some questions they may 22 have. 23 I can assure you that it was not the 24 Commission's intent to leave any parties out, but 25 I -- I do take your comments, and as a Commission, 1188 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 we will make sure in the future that we try to keep 2 the field very level. 3 MR. BUDGE: I would thank you for your 4 comments. 5 MR. MILLER: And if I could just -- 6 COMMISSIONER HANSEN: Mr. Miller. 7 MR. MILLER: Thank you, Mr. Chairman. 8 -- rebut the suggestion that the 9 Companies used the question and answer period as an 10 advocacy opportunity. It was our intent, and we 11 think we carried it out, to give factual, direct 12 answers to questions that people had, and not to use 13 this as an opportunity to somehow influence public 14 opinion. And the suggestion that we did that or to 15 the extent that we did that, our experience last 16 night shows how successful we were. 17 (Laughter.) 18 COMMISSIONER HANSEN: Thank you. 19 Does any one of the any other parties 20 have a preliminary statement they wish to make 21 before we move on? 22 MR. BUDGE: And I think the design was 23 well-intended and I was well aware of it. It was 24 simply the intent was good but the design and result 25 was probably less than what we had expected, after 1189 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 hearing what went on tonight. 2 COMMISSIONER HANSEN: Thank you. 3 We'd like to welcome the Legislators 4 that are here this evening. I recognize we have 5 Senator Noh, Senator Geddes, Representative 6 Stevenson, and Representative Chase. And did I miss 7 anyone? Oh, and Representative Geddes. We 8 appreciate your attendance here this evening. 9 The purpose of this hearing this 10 evening is to hear from the public, to hear from 11 you, and get your comments and thoughts regarding 12 this proposed merger. So we'll follow a format 13 tonight. 14 As you came in, you had the 15 opportunity to sign a sheet. We'll call your name 16 off this sheet. If you wish to testify, you'll come 17 forward, Commissioner Kjellander will swear you in. 18 You just take an oath that you'll tell the truth. 19 We know all of you are going to tell the truth 20 anyway, but we still, for the record, have to have 21 that. 22 Then, our deputy attorney will ask you 23 a couple of questions -- your name and your 24 address -- so that we have that on the record. 25 It's really important that we have 1190 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 your statement and everything on the record, because 2 our Decision is based on the record. And if we make 3 a Decision that any party might think is not based 4 on what is said at the hearings, they can challenge 5 our Decision before the Supreme Court of the State 6 of Idaho. So that's why it's very important. 7 We have the court recorder here to 8 make sure that everything is recorded, and that's 9 why we can't take comments from the audience and you 10 can't speak up. You have to come up and make your 11 statement here. 12 After -- after you've given your name 13 and address, then you'll be allowed to make your 14 statement. 15 After you've made your statement, 16 there may be a question or two that may be asked for 17 clarification of what you've said. Each one of the 18 parties here this evening have the opportunity, if 19 they so desire, to ask a question, as well as the 20 Commissioners. And so after you finish, I will ask 21 each one if they have any questions for you, and if 22 there are none, then you can take your seat; or if 23 you have a question or two, they will be I'm sure 24 easy for you to answer. 25 So let's begin. 1191 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 We appreciate all of you coming out 2 this evening. We'll probably go for an hour, an 3 hour and a half, and then we'll have a break. This 4 will give you an opportunity at the break to ask any 5 of the parties here questions that you may have that 6 you'd like to ask during the break; or after the 7 hearing tonight, I'm sure they will stick around and 8 be glad to answer any questions any of you may have. 9 So we'll start tonight with 10 Senator Laird Noh, if he would come forward. 11 12 SENATOR LAIRD NOH, 13 appearing as a public witness, being first duly 14 sworn, was examined and testified as follows: 15 16 EXAMINATION 17 18 BY MR. PURDY: 19 Q. Good evening, Senator. Would you 20 please state your name and address for the record? 21 A. Laird Noh -- spelled N-O-H -- 22 3442 Addison Avenue East, Kimberly, Idaho, 83341. 23 Q. Senator, if I may ask you, are you 24 here as a customer of PacifiCorp, or are you -- in 25 what representative capacity are you testifying this 1192 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 evening? 2 A. I am testifying this evening as 3 Chairman of the Idaho Senate Resources and 4 Environment Committee. I've held that position 5 since 1983. And that is the committee in the 6 Legislature that has jurisdiction over water rights 7 and the administration of water rights in the state 8 of Idaho. 9 I'm also here as a member of the Idaho 10 Special Electric Utility Deregulation Committee, the 11 joint Committee, which deals with these issues. I'm 12 also one of four members of that Committee who have 13 been engaged for over a year in negotiations with 14 Idaho Power Company over issues of water rights and 15 other aspects of electric utility policy which can 16 be directly and adversely affected should 17 deregulation occur either by a mandate of Congress, 18 an act of the Legislature, or by de facto through 19 litigation or other means which active utilities and 20 their attorneys may devise. 21 Q. Thank you. With that, please go ahead 22 with your statement. 23 A. I first -- first would like to make a 24 few remarks about the water rights issue. And I 25 know at last night's hearing, one of the co-chairs 1193 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 of the Deregulation Committee Senator Lee, and 2 Senator Linford who is the House counterpart of the 3 Committee which I chair in the Legislature, spoke of 4 that issue and presented a letter. But I think 5 there may be, particularly having sat through this 6 evening, the question and answer period, and at the 7 end of that session, it was very clear that the 8 attorney for PacifiCorp and I think Mr. Purdy from 9 the PUC Staff correctly recognized that it's a very 10 complex area. But it was clear to me that 11 Mr. Eriksson from PacifiCorp and members of the 12 audience are -- who addressed that at the question 13 and answer session are not aware of the implications 14 that are involved with water rights in this case, 15 and so maybe that's worth a little bit of expansion. 16 This issue, which I think was very 17 properly raised by the PUC Commission as an issue 18 which could be involved in adverse impacts upon the 19 public interest, is very germane. I think it also 20 calls into -- into focus the difficulty the 21 Commission has, in that with the specter of utility 22 deregulation haunting the nation and Idaho and all 23 of our utilities and the customers, in weighing the 24 potential aspects which might adversely affect the 25 public interest, I think they have to take the 1194 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 likelihood of deregulation into consideration. 2 As far as water rights go, 3 Mr. Eriksson was correct in the question and answer 4 session: PacifiCorp, as well as Idaho Power, 5 Washington Water Power -- now Avista -- in the state 6 of Idaho, do hold very large and important hydro 7 water rights. In various circumstances, including 8 with PacifiCorp on the Bear River and on the 9 Henry's Fork of the Snake River, as with the other 10 utilities, a number of those rights are senior to a 11 number of junior water rights on the river. And so 12 at any point in time, those utilities have the right 13 and the ability to call or to take -- attempt to 14 take -- those water rights away from those who have 15 been exercising those rights for many years. 16 In the case of also these utilities, 17 they are in a position in some cases -- that's 18 certainly true of PacifiCorp -- to shut off all 19 future water development in the future, which can 20 directly affect and hamper economic growth in those 21 river basins. 22 And that's -- and, of course, this was 23 exactly the same situation in Montana when the 24 Legislature deregulated. Montana Power immediately, 25 upon deregulation, sold the hydro facilities and the 1195 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 water rights to a Pennsylvania company, a global 2 energy company. With deregulation, there is no 3 longer a motivation for the utilities to get along, 4 if it would, to manage the river, to deliver the 5 junior water rights, to cooperate with other 6 entities in the management of the water rights. 7 Their sole obligation then becomes a duty to the 8 stockholders to maximize the revenues from that 9 asset, namely, the water rights. In the state of 10 Montana with Avista and with Montana Power, the 11 State suddenly learned that over 400,000 irrigated 12 acres were in jeopardy. Even the City of Missoula 13 doesn't own its own water right. 14 The Idaho Power territory has been 15 through this in the Swan Falls Agreement. 16 Nevertheless, negotiations are going on with 17 Washington Water Power. Legislators are in the 18 process, will begin this week discussions with 19 Avista, which used to be Washington Water Power, on 20 this serious subject, because they own now the 21 unsubordinated water right to the level of 22 Lake Coeur d'Alene. 23 So it is a very serious issue. It is 24 correct that our Attorney General, the Department of 25 Water Resources, are engaged in discussions with 1196 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 PacifiCorp and ScottishPower to resolve this issue. 2 But it is absolutely critical, and I don't think 3 there's any question that should the Public 4 Utilities Commission approve this merger prior to 5 the resolution of those very basic issues, 6 certainly, it's unquestionable that the public 7 interest would be adversely affected because of the 8 potential to cut off all economic development that 9 needs water in the Bear River Basin would be 10 evident. 11 Those agreements are of such 12 importance to the balance of the State and such an 13 anomaly in the water rights field that they will 14 require some form of Legislative authorization or 15 approval. 16 Now, on -- on to other subjects. 17 What I will attempt to do is lay out 18 from my perspective several general areas where I 19 feel the approval of the merger would seriously call 20 into question -- I think would raise serious 21 probabilities that there would be an adverse effect, 22 impact, upon the public interest in the State, and 23 then try to lay out some supporting reasons for 24 those positions. 25 Number one: Reliability of service 1197 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 and delivery of this most critical of commodities 2 will likely be adversely affected by the merger. 3 The huge distance between management and the 4 consumer both geographically and culturally is, in 5 fact, great and is likely to be adverse. 6 What we're seeing in this country is a 7 trend which began perhaps with what I think was the 8 erroneous Decision by the PUC ten years ago to 9 authorize the merger of Utah Power and Light and 10 PacifiCorp. In my discussions, I have found no 11 electrical consumers who believe service and 12 reliability were improved when the PUC made that 13 earlier mistake, and what we are seeing in this 14 merger is the likelihood that that trend of greater 15 distance, lesser interest in the immediate needs of 16 an arrid West, will be adversely affected. 17 One need only to look at the recent 18 history of PacifiCorp with their misguided zeal to 19 get big, follow the latest industrial fad, squander 20 their resources in the British Isles, all to the 21 detriment of their core business. We do not need 22 more of the same. 23 Rural American consumers have 24 experienced -- this is not a new phenomenon, and 25 Rural America has experienced similar adverse 1198 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 effects on the public interest in other industries 2 of less critical importance such as banking, 3 airlines, and railroads. 4 Secondly, the track record of British 5 utilities is too limited, too short a duration, to 6 provide confidence in ScottishPower's ability to 7 deliver reliable electrical service to a rural Idaho 8 irrigation environment at low cost. On the 9 contrary, the privatized sales of government British 10 electric utilities in recent years have often 11 involved beneficial prices to political insiders who 12 made the acquisitions from the government. 13 Subsequent international mergers and buyout of those 14 privatized utilities were sometimes designed to move 15 huge profits to other countries to avoid taxes. 16 This, in fact, was the basis for the blockage by an 17 awakened British government to PacifiCorp's move to 18 buy the British Energy Group. 19 Thirdly, the importance of constant 20 delivery of power to the irrigated desert 21 environment will not be fully understood by a 22 Scottish culture drenched in rain. This has already 23 been illustrated with instructive clarity by the 24 focus of Scottish executives upon the great benefits 25 of a $50 rebate for failure to restore power in 1199 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 24 hours. 2 The readiness of ScottishPower leaders 3 to speak of the international consolidation of 4 electrical utilities as being no different than the 5 consolidation of any other commodity or service is 6 further evidence that they do not comprehend the 7 unique importance of electricity in rural, arrid 8 America. 9 Additionally, all of these risks are 10 further exacerbated by the failure of the 11 United States to come to grips with issues of 12 reliability of delivery in a deregulated 13 environment. The Electric Deregulation Committee 14 has heard very strong testimony from Idaho's largest 15 employer -- Micron Technology -- that our power 16 grid, the reliability of service in this 17 environment, are already jeopardized in the case of 18 Idaho with the excessive sales of power out of 19 state, so spinning reserves are inadequate; and as 20 deregulation comes, that raises even greater 21 concerns. 22 Until those decisions are made, it 23 would be irresponsible to move management of our 24 electrons further from home across the globe. Just 25 last week, Energy Secretary Richardson raised the 1200 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 specter of further blackouts in the East and the 2 Midwest resulting from the pressures of deregulation 3 and drought. We've had some experience in the West 4 now with both of these phenomena. 5 Additionally, irrigation is such a 6 small percentage of PacifiCorp's business today -- 7 one percent -- and it will be miniscule after a 8 takeover -- 16/100ths of one percent -- that 9 irrigation's interest will be lost among the myriads 10 of subsidiaries and products earning higher 11 short-term rates of return. 12 Secondly, load factors in the Idaho 13 service area of PacifiCorp, coupled with probable 14 future changes in loads, will likely lead to adverse 15 noncommercial rate impacts resulting from the 16 merger. 17 The Idaho territory of PacifiCorp is 18 now 55 percent industrial, almost all of that from 19 Solutia, and 16 percent irrigation. With wholesale 20 deregulation of electricity already a fact and the 21 experience in surrounding states and to some degree 22 in Idaho, it is very likely that Solutia will not be 23 a future customer of ScottishPower. This raises the 24 specter of Solutia's cost coming to rest on the 25 remainder of PacifiCorp's customers. 1201 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 Thirdly, these factors, combined with 2 the unique, anomalous nature of the PacifiCorp 3 service area, are compelling arguments for 4 divestiture of all or most of the PacifiCorp service 5 area as a condition of any sale of ScottishPower. 6 Agriculture is a purely competitive industry with no 7 ability to effect prices for its product or to pass 8 on cost increases. It is also an industry in the 9 middle of a major economic depression. Unlike other 10 service areas in the state, this one is almost 11 exclusively very rural irrigation and Solutia, with 12 little opportunity to blend other components of 13 irrigation and consumer load into the cost of 14 maintenance. Irrigation is, indeed, a minute 15 component of PacifiCorp and ScottishPower. The 16 general economy and public interest of Idaho will be 17 adversely affected if this important agricultural 18 sector is set apart in this service area as a 19 high-cost unit managed from Glasgow. 20 Number five: Idaho law creates a 21 deficiency in the Public Utility Commission's 22 ability to trace and audit the enormous complexity 23 of affiliate international transactions which will 24 be involved with this sale. While Scottish offers 25 cooperation, Scottish may itself be taken over by or 1202 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 sold to another international enterprise somewhere 2 in the world in six months or six years. We have no 3 experience in this state or on the Commission with 4 the International Law of Contracts, tax impacts, or 5 other aspects of attempting to protect consumer 6 interests in the modern international utility 7 environment. At a minimum, even if cooperation 8 occurs, there will be six significant added costs 9 for our Public Utilities Commission. 10 To date, Idaho public policy has been 11 to vigorously oppose deregulation of the electric 12 utility industry. Based upon disastrous experiences 13 in some other states, even Congress has slowed down 14 the speeding deregulatory freight train. 15 ScottishPower, earning a 25 percent return on equity 16 in recent years, is not really interested in a 17 regulated rural electric utility industry. Approval 18 of this sale will adversely affect the public 19 interest by sending a signal to other utilities and 20 Congress that mergers and transfers of our critical 21 power system to larger international conglomerates 22 seeking very high short-term rates of return is good 23 policy. Approval will clearly encourage 24 deregulation and further adversely affect the public 25 interest. 1203 HEDRICK COURT REPORTING NOH P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Is that your 2 statement? 3 THE WITNESS: Yes. 4 COMMISSIONER HANSEN: Thank you, 5 Senator. Let's see if we have any questions. 6 Mr. Purdy. 7 MR. PURDY: I do have a couple. 8 9 CROSS-EXAMINATION 10 11 BY MR. PURDY: 12 Q. Senator, thank you very much for your 13 comments. 14 The first issue I want to address is 15 the water rights. And as a senior member of the 16 Idaho Senate and a man well-versed in this area, I'm 17 sure you recognize the Commission's -- the 18 limitations on the Commission's ability to make 19 Decisions regarding an electric utility's water 20 rights and with respect to protecting those rights. 21 Do you recognize those limitations? 22 A. Mr. Purdy, I -- I am not an attorney, 23 but my understanding is that while the Idaho 24 Department of Water Resources administer and is the 25 administrator for water rights in the state, the 1204 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 Public Utilities Commission has a clear obligation 2 to ensure that electric utility matters do not 3 adversely affect the public interest. Water and 4 hydroelectricity are tied together, and therefore, I 5 think it is incumbent upon the Public -- and this 6 is, of course, my own opinion -- it is incumbent 7 upon the Commission to work with the Idaho 8 Department of Water Resources and the Attorney 9 General's Office, and in this case it would also 10 have to be the Idaho Legislature, to ensure that 11 those local economies are not adversely impacted by 12 the loss or the threat which would be imposed upon 13 water rights which result from a PUC Decision in the 14 electric utility area. 15 Q. Thank you. In the context of my 16 question, I was, just for the record, referring to 17 Idaho Code Section 61-531 -- -539, which came about, 18 as you know, of course, as a result of the 19 Swan Falls scenario years ago with Idaho Power. 20 So that I understand, you know, it 21 would seem that your suggestion to this Commission 22 is that it, in an effort to protect the public 23 interest, defer its Decision until some agreement is 24 reached between Water Resources and the Applicants. 25 Is that correct? 1205 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 A. That is correct. 2 Q. Okay. Another area I wanted to ask 3 you about, Senator, was the standard -- has to do 4 with the standard of review that this Commission 5 must adhere to when it makes its final Decision in 6 this case. And you talked about the public interest 7 in that regard, and of course you're aware that we 8 have a Statute that -- 9 Or, well, let me ask you, do you agree 10 that this Commission is bound by law to first find, 11 based on clear evidence, that the public interest 12 would be adversely affected before it can disapprove 13 this merger? 14 A. Well, that's my understanding. You 15 know, I deal a lot with water law, not very much 16 with Public Utility Commission law, and, of course, 17 there is a -- you know, the public interest criteria 18 is very strong in the water law area. 19 Q. Thank you. Now, you mentioned 20 divestiture as a condition precedent to any approval 21 of a merger or as a -- something that you would 22 rather see than this merger. 23 A. Yes. 24 Q. And my question was simply how would 25 you envision that taking place? 1206 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 A. Well, you know, I have ideas and I 2 don't know that they are appropriate to discuss at a 3 public hearing. I think anybody has ideas on how 4 that might come about. 5 I've discussed this, by the way, with 6 the consultant to the Electric Utility Deregulation 7 Committee -- Mr. Reading -- and, of course, he was 8 out doing some research, couldn't come up with a 9 particular answer either. 10 I think what I have learned in the 11 course of my experience on the Deregulation 12 Committee in researching for this testimony is that 13 the Public Utilities Commission historically can go 14 a couple of ways. They can stick very closely to 15 established law in quite a narrow way, or they can 16 reach out and attempt, as other Commissions may have 17 done in the past, to try to broaden that law a 18 little bit. They can exercise what might be the 19 full range of their authorities, perhaps, you know, 20 run some risks down the line in court and on 21 appeals. 22 I am one who feels that in this 23 particular case, the stakes are high enough to the 24 citizens of Idaho and the future of these areas, 25 that the Commission ought to proceed with all the 1207 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 vigor that it can within the bounds of the law, 2 right up to the limit, to attempt to see that the 3 public interest is not adversely affected; because I 4 think the potential is to very seriously adversely 5 affect the public interest. 6 Q. Thank you. And I'll beg your 7 indulgence and the Chair's for one more question. 8 You suggested that the Commission is 9 underpowered with respect to auditing the books and 10 records of public utility affiliates, and I agree 11 with you, for what that's worth. 12 My question is, simply, do you -- does 13 the Legislature have anything pending right now to 14 address that problem? 15 A. Well, the Legislature -- sometimes it 16 takes two or three tries to get legislation passed, 17 and at the last session, why, we were halfway 18 there. And I have sensed from Legislative 19 leadership, both the House and the Senate had an 20 interest in pursuing that again. 21 Q. Great. Thank you very much for your 22 testimony. 23 MR. PURDY: That's all I have. 24 COMMISSIONER HANSEN: Mr. Miller. 25 MR. MILLER: Thank you, Mr. Chairman, 1208 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 Senator Noh. As I indicated last night, 2 Mr. Chairman, it's my view, both as a matter of 3 respect and as a matter of efficiency, 4 cross-examination is not a very good way to explore 5 these issues. 6 THE WITNESS: I'd agree with that. 7 MR. MILLER: Thank you. 8 (Laughter.) 9 COMMISSIONER HANSEN: Is that your 10 question? 11 MR. MILLER: Even though there may be 12 some disagreement on some issues. 13 So with that, we would just indicate 14 that the failure to cross-examine obviously does not 15 signify an acquiescence in everything that a witness 16 might say, and that we do contemplate a posthearing 17 brief and intend to address some of Senator Noh's 18 concerns in a posthearing brief. 19 COMMISSIONER HANSEN: Thank you. 20 Mr. Eriksson. 21 MR. ERIKSSON: No questions. 22 COMMISSIONER HANSEN: Mr. Budge. 23 MR. BUDGE: No questions. Thank you. 24 COMMISSIONER HANSEN: Mr. Nye. 25 MR. NYE: Mr. Chairman, no questions, 1209 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 other than to thank the witness. And the Irrigators 2 likewise have made their objection a matter of 3 record, so we consider this to be a public hearing, 4 and the fewer lawyers, the better. 5 (Laughter.) 6 COMMISSIONER HANSEN: Let's see if we 7 have any questions from the Commission. 8 Commissioner Kjellander. 9 COMMISSIONER KJELLANDER: No. 10 COMMISSIONER SMITH: No, but I just 11 want to thank Senator Noh for what I think are very 12 thoughtful comments. 13 COMMISSIONER HANSEN: Thank you, 14 Senator. 15 (The witness left the stand.) 16 COMMISSIONER HANSEN: Our next person 17 we have, Jeanette Wolfley. 18 19 20 21 22 23 24 25 1210 HEDRICK COURT REPORTING NOH (X) P.O. BOX 578, BOISE, ID 83701 Public 1 JEANETTE WOLFLEY, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 EXAMINATION 6 7 BY MR. PURDY: 8 Q. Would you please state and spell your 9 name, and give us your address? 10 A. My name is Jeanette Wolfley. It's 11 spelled J-E-A-N-E-T-T-E W-O-L-F-L-E-Y. My address 12 is 1752 North Elk Road, Pocatello, Idaho. 13 Q. Thank you. Are you here as a customer 14 of PacifiCorp tonight? 15 A. No, I'm not. 16 Q. Who do you represent? 17 A. I represent the Shoshone-Bannock 18 Tribes. 19 Q. Thank you. Go ahead. 20 A. Mr. Chairman, and members of the 21 Commission, as I indicated, my name is 22 Jeanette Wolfley, and I'm an attorney here on behalf 23 of the Shoshone-Bannock Tribes and the Fort Hall 24 Indian Reservation. This testimony is presented on 25 behalf of the Shoshone-Bannock Tribes. Their 1211 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 official tribal address is Pima Bannock Avenues in 2 Fort Hall, Idaho, and the mailing address is 3 P.O. Box 306, Fort Hall, Idaho, 83203. 4 As many of you may know or may not 5 know, the Reservation is located north and west of 6 here. And the Reservation was reserved in 1868 in a 7 treaty between the United States and the Shoshone 8 and Bannock representative. Today the Reservation 9 is home to approximately 6,000 residents and 10 consists of approximately 544,000 acres. 11 The -- it was interesting to hear the 12 response to some of the questions that were asked by 13 Delbert Farmer, who is our tax revenue director for 14 the Tribe, earlier in the question and answer 15 period, because part of the response that 16 ScottishPower gave I guess would have been a 17 response that you would give to a consumer group or 18 to some public interest group. 19 The interest of the Tribe in this 20 situation is as a regulating agency or authority of 21 the Fort Hall Indian Reservation, and in the 1940s, 22 the Shoshone-Bannock Tribe granted, by resolution to 23 Utah Power and Light, permission for the 24 construction, operation, and maintenance of several 25 transmission lines which go across the -- or, 1212 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 several maintenance of easements for transmission 2 lines which cross the Fort Hall Indian Reservation. 3 Currently, PacifiCorp, or Utah Power 4 and Light, has seven transmission lines which cross 5 the Tribally-owned land, as well as 6 individually-owned land on the Fort Hall Indian 7 Reservation. Each of these easements or 8 right-of-ways for the transmission lines are entered 9 into in a separate easement or right-of-way between 10 the Tribal government, individual landowners of the 11 Reservation, and approval process by the Department 12 of Interior. 13 In addition to this process, there is 14 a separate license and use agreement that has to be 15 signed for these transmission lines through the 16 Fort Hall Indian Reservation. 17 Beginning in 1941, the Tribe entered 18 into several agreements with Utah Power and Light, 19 and these lines enable, of course, the transmission 20 of power to businesses and residents throughout 21 Southeastern Idaho and Northern Utah. 22 The Tribes are here this evening to 23 basically oppose the sale of PacifiCorp to 24 ScottishPower because PacifiCorp is currently in 25 violation of Federal and Tribal law with regard to 1213 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 the easements that affect the transmission lines. 2 In 1941, Utah Power and Light entered 3 into, and obtained, a 50-year easement from the 4 Tribes and individual landowners. Approximately 5 1,000-plus landowners are impacted by a particular 6 power line known as Anaconda to Grace line. This 7 particular line runs along the eastern side of the 8 Reservation in mainly in Caribou County, I guess, if 9 you were looking at the county lines. 10 In January of 1991, this particular 11 easement that was granted in 1941 terminated after 12 the 50-year right-of-way grant by the Tribe and 13 various landowners. That particular easement since 14 1991 has not been renewed by Utah Power and Light or 15 by PacifiCorp, so they have failed to obtain Tribal 16 permission from the Tribe itself, the landowners, or 17 the Department of Interior, or made any attempt to 18 renew the easement agreement with the Tribe. 19 In short, PacifiCorp is currently in 20 trespass on the Fort Hall Indian Reservation for the 21 Anaconda/Grace line, and the Department of Interior, 22 in fact, has verbally notified PacifiCorp of the 23 current Federal trespass on the Fort Hall 24 Reservation. As of 1991, there hasn't been any 25 action taken by PacifiCorp to remedy the situation. 1214 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 MR. MILLER: Could I just interrupt, 2 just briefly? 3 COMMISSIONER HANSEN: Mr. Miller. 4 MR. MILLER: Thank you, Mr. Chairman. 5 Without any disrespect at all, it's, 6 of course, our understanding that the purpose of 7 these hearings is to receive public comment, and 8 primarily public comment from customers. We're now 9 having injected into the case an issue that sounds 10 to me like an Intervenor issue of someone who has a 11 dispute with the Company over property rights. We, 12 of course, prior to this evening, had no notice that 13 this would be made somehow an issue in this case. 14 So, again, without disrespect, we feel that it's 15 unfair to use the public comment vehicle as a way to 16 raise a substantive issue more properly raised as an 17 Intervenor as a grounds for opposition. We 18 obviously are in no position tonight to litigate the 19 merits of whether or not the Company is or isn't in 20 violation of agreements. So it would be manifestly 21 unfair for us to sit quietly, as we do for 22 everything else, in the face of this type of 23 testimony. 24 COMMISSIONER HANSEN: The Chair is -- 25 will be aware of your comments, Mr. Miller, as we 1215 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 evaluate the case. We will be aware of those 2 comments. However, I am going to let the witness 3 continue to finish her statement. 4 I believe you're probably about 5 finished, are you? 6 THE WITNESS: Yes, I am. 7 COMMISSIONER HANSEN: Why don't you 8 continue and finish it. 9 THE WITNESS: Given the issue of 10 trespass on the Fort Hall Indian Reservation, the 11 Tribe is objecting to the sale until there is a 12 valid easement in place. 13 This goes to the public interest, 14 because one of the things that are factors we 15 believe that the Commission should consider in 16 making its Decision is whether or not a public 17 utility is in compliance with State, Federal, and 18 Tribal law. If they are not in compliance with the 19 laws, they are not actually meeting the best 20 interest of the public or the best interests of 21 their consumers, and that is why we believe it is 22 proper to present at this public hearing. 23 Prior to any sale of PacifiCorp to 24 ScottishPower, the Tribes urge this trespass issue 25 to be resolved with the Tribes, the landowners, and 1216 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 the Department of Interior. We also urge the Public 2 Utility Commission to not approve the sale given the 3 current violations of Federal and Tribal law by 4 PacifiCorp. 5 Thank you. 6 COMMISSIONER HANSEN: Thank you. 7 Let's see if we have any questions. 8 Mr. Purdy. 9 MR. PURDY: I have no questions. 10 COMMISSIONER HANSEN: Mr. Miller. 11 Mr. Eriksson. Mr. Budge. Mr. Nye. Commissioner. 12 COMMISSIONER SMITH: No thank you. 13 COMMISSIONER HANSEN: Thank you very 14 much for your testimony. 15 (The witness left the stand.) 16 COMMISSIONER HANSEN: Timothy Schwartz 17 (phonetic). 18 MR. SHURTZ: Shurtz. 19 COMMISSIONER HANSEN: That's right. 20 COMMISSIONER SMITH: He's already 21 sworn. 22 23 24 25 1217 HEDRICK COURT REPORTING WOLFLEY P.O. BOX 578, BOISE, ID 83701 Public 1 TIMOTHY J. SHURTZ, 2 appearing as a public witness, having been 3 previously duly sworn, was further examined and 4 testified as follows: 5 6 EXAMINATION 7 8 BY MR. PURDY: 9 Q. Sir, please state your name. 10 A. Timothy Shurtz, S-H-U-R-T-Z. I 11 represent the City of Firth, and as of today -- 12 Q. I'm sorry. You testified last night 13 in Rexburg as well, did you? 14 A. Yes, I did. I did. 15 I also, as of today -- the reason why 16 I'm testifying again: The City of Bancroft notified 17 by Council and resolution that asked that I read 18 this for them. 19 Q. Thanks. 20 A. Commissioners, I would like to voice 21 the feeling of my city government and other local 22 city and county governments on the proposed merger 23 of PacifiCorp -- the parent company of Utah Power -- 24 and ScottishPower. 25 Let me first begin by saying that we 1218 HEDRICK COURT REPORTING SHURTZ P.O. BOX 578, BOISE, ID 83701 Public 1 appreciate the hard-working employees of Utah Power 2 and that -- and the day-to-day service they render 3 to Idaho. However, we have come to oppose the 4 merger of PacifiCorp and ScottishPower for the 5 following reasons: 6 We feel that allowing our overseas -- 7 allowing an overseas company control and -- control 8 in essential service such as power is not in the 9 best interest of the people of Idaho who are served 10 by Utah Power. Why should we allow profits 11 generated by the sale of power in Idaho to be sent 12 overseas? 13 We also feel rates paid by Utah Power 14 consumers are higher than most other power providers 15 in the area. Why should residents -- why should the 16 residents of Idaho that live in the Utah Power 17 service area be required to pay higher energy rates 18 when other residents of Idaho enjoy much lower 19 rates? 20 We are all -- number three: We are 21 already being told to expect another round of 22 increases once the merger is complete. How can 23 anyone say that this merger is going to be good for 24 the residents of Idaho? 25 I feel that we should be allowed, with 1219 HEDRICK COURT REPORTING SHURTZ P.O. BOX 578, BOISE, ID 83701 Public 1 the Commission's help, to seek other providers of 2 this essential service who are willing to work with 3 the Idaho community to provide power at a lower cost 4 to all the residents of Idaho, and by doing so, 5 improve the standard of living for all the residents 6 of the great state of Idaho. 7 And this is -- thank you. And this is 8 signed and agreed on by the City of Bancroft, the 9 City of Basalt, the City of Firth, the City of 10 Shelley, Bear Lake County, and Bingham County. 11 And I'd also ask, is it possible -- 12 there are other -- we all know how slow government 13 moves sometimes. There are other cities and 14 counties considering this resolution at this time on 15 approval. 16 I'd like to submit this to the public 17 record at this time. 18 COMMISSIONER HANSEN: That'd be fine 19 to submit to us now, and the Commission will open -- 20 keep the record open for written comments through 21 the 9th of August, so any other parties that want to 22 submit something in writing will be able to do so up 23 to that time. 24 THE WITNESS: We were told the 13th is 25 the question and answer period. Is that -- 1220 HEDRICK COURT REPORTING SHURTZ P.O. BOX 578, BOISE, ID 83701 Public 1 MR. PURDY: Mr. Chairman, I, quite 2 frankly, didn't know at what point you would feel 3 that the record was complete. I did indicate to the 4 people during the question and answer session that 5 briefs were going to be submitted on the 13th. 6 COMMISSIONER HANSEN: Well we won't 7 argue over four days. We'll give you till the 13th, 8 yes. 9 Is that your statement then? 10 Let's see if we have any questions. 11 Mr. Purdy. 12 MR. PURDY: I have none. 13 COMMISSIONER HANSEN: Mr. Miller. 14 MR. MILLER: I'm going to break my own 15 rule and ask one question. 16 17 CROSS-EXAMINATION 18 19 BY MR. MILLER: 20 Q. Mister -- or, sir, there are, of 21 course, two sides to every story. You would agree 22 with that, wouldn't you? 23 A. Yeah. Yeah. 24 Q. As the cities have been considering 25 these resolutions, have they in any way asked 1221 HEDRICK COURT REPORTING SHURTZ (X) P.O. BOX 578, BOISE, ID 83701 Public 1 ScottishPower to come tell their side of the story? 2 Have these cities heard ScottishPower's side of the 3 story? 4 A. I am not aware of it at this time -- 5 Q. Okay. 6 A. -- but the cities have been dealing 7 with Utah Power and PacifiCorp for many years. 8 Q. Sure. 9 A. So it may be a carryover from the 10 feelings that -- ScottishPower may be a wonderful 11 company, but the carryover from the feelings about 12 their dealings with PacifiCorp mainly is part of the 13 problem here. 14 Q. But Scottish hasn't been invited to 15 come and give their side of the story as you're 16 considering these resolutions, has it? 17 A. I can say "no." 18 MR. MILLER: That's all I had. 19 Thanks. 20 COMMISSIONER HANSEN: Mr. Eriksson. 21 MR. ERIKSSON: No questions. 22 COMMISSIONER HANSEN: Mr. Budge. 23 MR. BUDGE: No questions. 24 COMMISSIONER HANSEN: Commissioners. 25 Thank you for your testimony. If 1222 HEDRICK COURT REPORTING SHURTZ (X) P.O. BOX 578, BOISE, ID 83701 Public 1 you'd like to leave that -- 2 (The witness left the stand.) 3 COMMISSIONER HANSEN: Bruce Pallante. 4 5 BRUCE PALLANTE, 6 appearing as a public witness, being first duly 7 sworn, was examined and testified as follows: 8 9 EXAMINATION 10 11 BY MR. PURDY: 12 Q. Sir, would you please state and spell 13 your name, and provide us your address? 14 A. My name is Bruce Pallante, spelled 15 P-A-L-L-A-N-T-E. My address is 1590 Larsen Road, 16 Soda Springs, Idaho. 17 Q. Thanks, sir. Are you here as a 18 customer of PacifiCorp tonight? 19 A. Yes, I am. 20 Q. Thank you. Go ahead, please. 21 Let me ask you: What type of customer 22 are you? 23 A. A residential customer. 24 Q. Thanks. 25 A. My name is Bruce Pallante, and I live 1223 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 in Soda Springs, Idaho. I think it's best to clear 2 the air, in that I am here as a Utah Power and Light 3 residential customer and citizen of Idaho. While I 4 am the plant manager of Solutia's Soda Springs 5 phosphorus plant, I am not here to represent 6 Solutia's position to the proposed merger. That 7 will be done in accordance with the regulatory 8 process. As a Utah Power and Light customer and 9 citizen of Idaho, I have concerns regarding the 10 proposed merger that, to date, have not been 11 addressed to my satisfaction. 12 As has been stated in other meetings 13 and the media, the Idaho Code sets forth standards 14 for a merger of this nature. One of these standards 15 requires that the public interest will not be 16 adversely affected. Since this is an Idaho 17 standard, I assume that the public interest we are 18 talking about are the citizens and ratepayers of 19 Idaho. I further assume that not adversely affected 20 means that rates will not be increased, nor will 21 service levels decline. Some states have been more 22 precise in their definition of protecting public 23 interest and use terms such as "the public must 24 benefit from mergers." Regardless of the exact 25 words, the intent is crystal clear that the first 1224 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 duty is to protect the public interest. 2 My experience is that it is the burden 3 of the Companies contemplating merger to prove or 4 guarantee that the public interest will benefit, not 5 for the ratepayers to prove that they will not be 6 harmed. From that standpoint, I feel that this 7 proposed merger has attempted to shunt their 8 obligations and duties, and have forced this to 9 become a case of the public proving that they may be 10 harmed. This is completely backwards, but we must 11 all do what we must do, given the situation. 12 PacifiCorp and ScottishPower have 13 repeatedly been asked to provide specifics of the 14 efficiencies and cost improvements to be gained by 15 the merger and have failed to provide these. They 16 have testified that they have not yet undertaken 17 such studies and will not until six months after the 18 merger is approved. As a ratepayer, I cannot accept 19 blind promises that I will somehow be better off. 20 If there are efficiencies to be gained by combining 21 two companies on two sides of the Atlantic, why 22 won't the Companies step up to their obligation and 23 provide the necessary details? 24 Furthermore, why are they not 25 confident enough to provide guarantees to the public 1225 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 that rates will go down, or at a minimum, not 2 increase? 3 The proposed merger has promised new 4 programs and services that no one has asked for as 5 an enticement to elicit support. Unfortunately, 6 most of the cost of these programs will be borne by 7 the ratepayers. That sounds like a cost increase to 8 me, which will eventually lead to a rate increase. 9 Idaho Code has a standard as part of the approval 10 process that there be no cost increase or rate 11 increase as a result of the merger. 12 That is not the end of my cost 13 concerns. 14 ScottishPower has proposed spending 15 135 million on new programs; however, the ratepayers 16 will only have to pay for 120 million of this. 17 There are approximately $240 million of acquisition 18 and transition costs which will also be passed on to 19 the ratepayers, including $20 million of severance 20 packages for 26 highly-compensated managers of 21 PacifiCorp. I would suggest that all these costs be 22 borne by the share owners, not the ratepayers. 23 More importantly, I'm deeply concerned 24 that this experiment attempting to merge the first 25 US utility with an overseas firm with little 1226 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 applicable experience in the United States would be 2 tried in Idaho at the ratepayers' expense. There is 3 little risk to the share owners. If it doesn't 4 work, simply file another rate case to earn an 5 allowable return. This would never happen in 6 private industry. Only in a regulated monopoly can 7 you earn more by being less efficient. If such a 8 merger were to be approved, it must have enforceable 9 conditions limiting the ratepayer risk and properly 10 transferring the risk to the shareholders. Again, 11 Idaho Code sets forth standards to protect the 12 public interest, not the share owner interests. 13 I have an engineering degree and an 14 MBA, and have been deeply involved in business and 15 share owner interest for most of my career. 16 Business exists to maximize profits, plain and 17 simple. I previously had the unpleasant experience 18 of shutting down a large phosphorus plant outside of 19 Butte, Montana. I would like to share a few of 20 these. 21 That facility was at a competitive 22 disadvantage with Idaho electric rates and was 23 facing increased pressures of offshore competition. 24 I watched as hundreds of employees who once had 25 15- to 20-dollar-an-hour jobs and many years 1227 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 invested towards dignified retirements left the 2 state to start their lives all over again with 3 service industry jobs that pay six to eight dollars 4 an hour. It broke my heart. 5 I also watched the State of Montana 6 move too quickly to electric deregulation. There 7 isn't a person in the power company or the elected 8 official of Montana that wishes they could not do it 9 all over if they had the choice. I saw 10 Montana Power sell its generating assets to 11 Pennsylvania Electric, along with all of the water 12 rights. If anyone thinks Western water rights and 13 where they are controlled from is a theoretical 14 discussion, I suggest they talk with the irrigators 15 in our neighboring state. Yes, the share owners of 16 Montana Power were rewarded by quadrupling of their 17 stock price, but what about the public interest? Is 18 getting -- it is getting less and less likely that 19 their children will be able to work in their 20 beautiful state and support and raise their 21 families. I do not want to see this happen in 22 Idaho. We need to learn from others and really 23 understand what it means to protect the public 24 interest, as is required by Code. 25 I favor a merger that defines and 1228 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 guarantees benefits to the public interest. I favor 2 management experiments with proven track records and 3 applicable experiences, but not at the ratepayers' 4 expense. I favor a merger that provides Idaho the 5 same benefits and guarantees to all the states 6 involved. 7 I do not support the merger of 8 ScottishPower and PacifiCorp as presented. 9 ScottishPower and PacifiCorp have the burden to 10 prove and guarantee the public will benefit and not 11 be adversely harmed, and to prove that costs and 12 rates will not be increased. If the merger is such 13 a good thing and if ScottishPower and PacifiCorp are 14 so confident, then there should be no problem 15 articulating and guaranteeing the benefits to the 16 ratepayers. 17 Absent the specific cost improvements 18 and rate guarantees to the ratepayers, I ask our 19 Commission not to approve the merger. 20 Thank you. 21 COMMISSIONER HANSEN: Thank you for 22 your statement. Let's see if we have any questions. 23 Mr. Purdy. 24 MR. PURDY: Thank you for your 25 thoughtful comments. I have no questions. 1229 HEDRICK COURT REPORTING PALLANTE P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Mr. Miller. 2 Mr. Eriksson. 3 MR. ERIKSSON: Yes. 4 5 CROSS-EXAMINATION 6 7 BY MR. ERIKSSON: 8 Q. Mr. Pallante, I notice you were 9 reading a written statement. Did you write that 10 yourself? 11 A. I certainly did. 12 Q. In its entirety? 13 A. In its entirety. 14 Q. And where did you get the information 15 that you included in that? 16 A. Most all of this information has been 17 from public records, public testimony that's 18 obtainable to anyone. 19 Q. And how did you obtain that 20 information? 21 A. Newspaper clippings. There are copies 22 of the public testimony circulating. Certainly our 23 company has copies of that information. The media 24 has had good coverage, the Idaho Journal. 25 Q. And how did you obtain it? 1230 HEDRICK COURT REPORTING PALLANTE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 A. By reading them. 2 Q. Where did you obtain them? 3 A. Where did I obtain them? 4 Q. Yes, where did you obtain the 5 information? 6 A. Like where did I buy the newspaper? 7 What are you asking? 8 Q. The references to the Idaho Code. 9 A. The Idaho Code? 10 Q. Yes. 11 A. We have copies of that at work. 12 Q. Is that where you looked at it? 13 A. Yes, that is where I looked at it. 14 Q. And have you read all of the testimony 15 in this case? 16 A. Not all of it. 17 Q. Have you read some of it? 18 A. Yes, I have. 19 Q. So you don't have a complete picture 20 of what is in the testimony? 21 A. I have a picture of what I read. 22 Q. But you admit you have not read all 23 the testimony? 24 A. That's correct. 25 Q. And you concluded your -- you made 1231 HEDRICK COURT REPORTING PALLANTE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 your conclusions based on part of the testimony 2 then? 3 A. I made my conclusions on what I read, 4 and, yes, that would be correct. 5 Q. Where did you obtain the testimony? 6 MR. BUDGE: Your Honor -- 7 COMMISSIONER HANSEN: Mr. Eriksson. 8 MR. BUDGE: I'm going to object to 9 that. 10 COMMISSIONER HANSEN: You've asked the 11 witness that. He's given you I think a satisfactory 12 answer. 13 MR. ERIKSSON: I'll leave it. 14 COMMISSIONER HANSEN: Mr. Budge. 15 MR. BUDGE: If there are further 16 questions along this line, I just intended to object 17 to the line of questioning. I think it's out of 18 line for this particular proceeding. The witness 19 certainly can form his personal opinions and testify 20 as a residential customer based on all information 21 available. And to the extent that he has more 22 information available and studied more than others 23 doesn't necessarily subject him to this type of 24 cross-examination that could happen in a formal 25 proceeding. 1232 HEDRICK COURT REPORTING PALLANTE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Mr. Eriksson, 2 did you have any further questions? 3 MR. ERIKSSON: No. I apologize if I 4 got carried away. 5 COMMISSIONER HANSEN: Mr. Budge, do 6 you have any questions? 7 MR. BUDGE: No. 8 COMMISSIONER HANSEN: Mr. Nye. 9 MR. NYE: No questions. 10 COMMISSIONER HANSEN: Commissioner. 11 COMMISSIONER KJELLANDER: No. 12 COMMISSIONER HANSEN: Commissioner. 13 Thank you very much for your 14 testimony. 15 THE WITNESS: I have a copy if you'd 16 like it. 17 COMMISSIONER HANSEN: Yes. Would you 18 please leave it with us? 19 COMMISSIONER KJELLANDER: Thank you. 20 (The witness left the stand.) 21 COMMISSIONER HANSEN: Bob Meline. 22 23 24 25 1233 HEDRICK COURT REPORTING PALLANTE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 ROBERT I. MELINE, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 EXAMINATION 6 7 BY MR. PURDY: 8 Q. Sir, would you please state and spell 9 your name, and give us your address? 10 A. Robert I. Meline, M-E-L-I-N-E, 11 655 South Tenth, Pocatello, Idaho, 83201. 12 Q. Thank you. Who do you represent 13 tonight? 14 A. Myself. 15 Q. All right. What type of -- I'm 16 assuming you are a PacifiCorp customer? 17 A. No. I was previously the director of 18 a State agency that consumed powers from Utah Power 19 and PacifiCorp, and also a residence down in 20 Lava Hot Springs. 21 Q. What agency? 22 A. The Lava Hot Springs State Foundation. 23 Q. You're not currently a customer? 24 A. No, I'm retired. 25 Q. Thank you. Go ahead. 1234 HEDRICK COURT REPORTING MELINE P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Mr. Meline, make 2 your statement then. 3 THE WITNESS: I just wanted to make a 4 statement on the things you've talked about, and 5 I've read over a lot of things that's been 6 available, and I just have one point I want to bring 7 up, and that is that the -- a chance for us to get 8 somebody in here, a corporation in here, that could 9 enhance the service for power utilities I think 10 should definitely be considered, because for ten and 11 a half years, there was a steady decline in the 12 service in taking care of the utilities that was 13 furnished to the agency that I directed. And I 14 think that there should be given -- if there's 15 somebody come along that's got a chance to do it 16 better and they can prove they can do it better, 17 that I think there should be consideration given in 18 this effort. 19 And that's my only statement. 20 COMMISSIONER HANSEN: Let's see if we 21 have any questions. 22 Mr. Purdy. 23 MR. PURDY: I really don't. Thank 24 you. 25 COMMISSIONER HANSEN: Mr. Miller. 1235 HEDRICK COURT REPORTING MELINE P.O. BOX 578, BOISE, ID 83701 Public 1 Mr. Eriksson. Mr. Budge. 2 MR. BUDGE: No questions. 3 COMMISSIONER HANSEN: Mr. Nye. 4 COMMISSIONER SMITH: Just one. 5 COMMISSIONER HANSEN: Yes, we have a 6 question. Commissioner Smith. 7 8 EXAMINATION 9 10 BY COMMISSIONER SMITH: 11 Q. In this declining service, are you 12 timing it from the merger of Utah Power and Light 13 with PacifiCorp? Is that the period of time you 14 identified as ten and a half years that you've seen 15 the decline in service? 16 A. From about I believe it was about 1988 17 until -- for ten and a half years. We noticed in 18 the operation of the State Foundation the problems 19 that we had with utilities and power and the outages 20 and the downtime and the damages to different pumps 21 and motors was on a steady increase. 22 Q. Okay. 23 A. And that was just my concern when I 24 heard about this going on and looked into it, and I 25 thought this would be a great opportunity if there's 1236 HEDRICK COURT REPORTING MELINE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 another chance to get somebody in that can do a 2 better job. And I don't know what their problems 3 was or are, but they can't -- I know they did some 4 downsizing, moved management, and moved crews, so 5 there was a lot more downtime. 6 Q. Okay. Thank you. 7 COMMISSIONER HANSEN: Thank you for 8 your testimony. 9 THE WITNESS: Thank you. 10 (The witness left the stand.) 11 COMMISSIONER HANSEN: Trent Clark. 12 13 TRENT CLARK, 14 appearing as a public witness, being first duly 15 sworn, was examined and testified as follows: 16 17 EXAMINATION 18 19 BY MR. PURDY: 20 Q. Sir, please give us your name and 21 address. 22 A. My name is Trent L. Clark. I'm with 23 the Soda Springs Chamber of Commerce, and our 24 address is Post Office Box 697, Soda Springs, Idaho, 25 83276. 1237 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 Q. And so you are here representing the 2 Soda Springs Chamber of Commerce only, or anybody 3 else? 4 A. I'm here representing only the 5 Soda Springs Chamber of Commerce, who, for the 6 record, more than 50 percent of our dues are paid by 7 business enterprises that buy power from PacifiCorp 8 currently. 9 Q. Okay. Thanks. Go ahead, please. 10 A. First, I'd like to thank the 11 Commission -- Commissioner Hansen, Commissioner 12 Smith, Commissioner Kjellander -- for the 13 opportunity to have this hearing here and express 14 the business interests of the Soda Springs Chamber 15 of Commerce. We do consist of over 140 businesses 16 in the Soda Springs area, and as I mentioned, a 17 significant portion of those businesses do operate 18 and employ employees, and they buy their power from 19 PacifiCorp currently. 20 In order to illustrate the concerns of 21 Soda Springs Chamber businesses, I would ask the 22 indulgence of the Commission to allow me to share a 23 brief biography of an individual who I'm sure you 24 will recognize them when I tell you their name. 25 This individual was the son of a 1238 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 custom's agent. By all reports, he was a straight 2 and respectful young man who never womanized, 3 smoked, or drank in excess. He worked hard to 4 finish school at a time when young men his age 5 frequently dropped out years earlier. 6 After his father's death, he supported 7 himself and his mother by painting postcards. 8 When she died, he had been raised with 9 a strong belief in patriotism and he enlisted 10 immediately for military service and saw active duty 11 in Europe during the World War. There, he fought 12 courageously, once wounded by enemy fire, and a 13 second time overcome by mustard gas. He was 14 decorated with the nation's highest honor for 15 bravery in action. 16 Back at home, his war record gave him 17 a platform to speak out on political issues, which 18 he used. His passion led him to become a trend 19 sender -- trendsetter of opinion and an important 20 national leader. 21 Now, whose biography did I just cite? 22 Was it one of our presidents, a congressional 23 leader, or perhaps a civil rights figure? No, this 24 is the biography of the former Chancellor of the 25 German Republic, Adolph Hitler. 1239 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 The reason I bring that to your 2 attention is this story emphasizes how easy it is to 3 assemble a group of facts that, which true when 4 individually taken, collectively do not paint an 5 accurate picture. 6 And at this point, I would like to 7 associate my remarks with the gentleman prior -- 8 Mr. Meline -- who said that really what businesses 9 are facing is just the simple question: Is this 10 someone who can do the job better? And we are asked 11 then to make the determination based on the picture 12 that is painted of ScottishPower. Is ScottishPower 13 a company that can do the job better? 14 The businesses whom I represent are 15 protected, as has been stated so far tonight, by 16 Idaho law from having a monopoly right to supply 17 them power handed over to an unreliable or 18 inefficient private enterprise. That's what the law 19 exists to do, is to protect them from that. 20 We have been asked to trust that 21 ScottishPower is not such a company, and that it is, 22 in fact, a highly effective and efficient power 23 supplier. But the Soda Springs Chamber of Commerce 24 businesses who currently buy power from PacifiCorp 25 cannot afford to risk their survival on a partial 1240 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 picture. 2 For example, we have the picture that 3 has been painted by the advocates for the 4 Petitioners here. However, a simple review of the 5 Internet -- in fact, by the way, as Commissioner 6 Hansen knows, our Soda Springs Chamber of Commerce 7 does not have all of the resources that some of the 8 Intervenors have. In fact, we have simply had to 9 sit down on the computer and do our research the 10 old-fashioned way. 11 But sitting down at the computer and 12 looking across the Internet, we were able to 13 identify, for instance, two different stories: One 14 coming from Portland, Oregon, where ScottishPower 15 was telling the community leaders there that they 16 should not be worried about major layoffs among 17 PacifiCorp employees, but then the very next story 18 comes from Glasgow where ScottishPower is justifying 19 the premium paid to PacifiCorp stockholders by 20 touting the profits that will be generated from this 21 merger and using the terms "significant overhead 22 reduction" as a way that they would generate those 23 profits. Well, who are we to believe: That there's 24 going to be no employee impact, or that there are 25 going to be significant overhead reductions? 1241 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 I, at this time, I'd also like to 2 associate the Soda Springs Chamber of Commerce with 3 Senator Noh's comments with regard to the track 4 record of ScottishPower. We have to recognize that 5 ScottishPower was only a few years ago a 6 government-owned bureaucracy that operated without 7 regard for the efficiency demanded by the 8 marketplace. We are asked to believe that they have 9 climbed a steep learning curve since then to become 10 a lean and competitive market player. But two 11 pieces of information suggest otherwise. 12 First of all, the fact that the news 13 stories that I found on the Internet suggest that 14 right after they became privatized, Tony Blair and 15 the Labor Party swept into power in Great Britain, 16 and one of their major issues as they swept into 17 power was the preservation of the jobs of the, 18 quote, formerly State-owned enterprises, and they 19 quickly passed into law protections that, in 20 essence, prevented ScottishPower from firing any of 21 their overhead. The employees in Scotland 22 apparently have protections there. 23 Secondly, a check of the Financial 24 Times of London pages yielded quite a bit of 25 commentary about how ScottishPower has, in fact, 1242 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 developed itself into a very profitable enterprise; 2 but almost all of the commentators noted that that 3 was not through cost cutting. It was more 4 accurately described as through cherry picking. In 5 essence, they jettisoned the high-cost areas of 6 their service territory, and went out and acquired 7 the more profitable areas. 8 We find it interesting that the Public 9 Utility Regulator in Northern Ireland raised a very 10 relevant concern to the matter you are considering 11 right now as they studied the issue of 12 multiutilities. As the Commission is well aware, a 13 multiutility is the new hybrid of public service 14 provider who operates with one foot in the market 15 and the other in a government-granted monopoly. 16 There are enormous incentives in such a situation 17 for such companies to slide costs from their 18 competitive businesses into their monopoly 19 businesses. To prevent this, the multiutility is 20 expected to maintain a barrier, or "fence," between 21 the different businesses. 22 The issue that was raised in 23 Northern Ireland was that as the public served and 24 the service provider becomes separated by geography, 25 time, and distance, it becomes harder to ensure the 1243 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 integrity of the fence. 2 And by the way, I have a copy of that 3 Northern Ireland report. That may be of interest to 4 your Staff. 5 Now, if it is true that Northern 6 Ireland was concerned about whether their Staff had 7 the ability to police the fence of ScottishPower -- 8 and by the way, ScottishPower was mentioned 9 specifically in the Northern Ireland report -- then 10 how much more should Southern Idaho be concerned 11 about our ability to police the fence? 12 In the absence of any assurances that 13 would support ScottishPower's claims and left to 14 trust a description of their promised efficiency, 15 that appears erroneous, or at best incomplete, and I 16 remind you of the dangers of an incomplete 17 description. 18 The Soda Springs Chamber of Commerce 19 urges you not to approve the requested merger. 20 Thank you. 21 COMMISSIONER HANSEN: Thank you for 22 your statement. Let's see if we have any questions. 23 Mr. Purdy. 24 MR. PURDY: I have none. Thank you. 25 COMMISSIONER HANSEN: Mr. Miller. 1244 HEDRICK COURT REPORTING CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 MR. MILLER: Just, I think, two. 2 3 CROSS-EXAMINATION 4 5 BY MR. MILLER: 6 Q. I'm sure I just missed it, but I 7 didn't catch by whom you're employed. 8 A. I am an employee of Solutia. 9 Q. And in what capacity? 10 A. I work in their public relations 11 office. 12 Q. You are their public affairs 13 spokesman? 14 A. My title is actually Director of 15 Government Public Affairs. 16 Q. Yeah. Yeah. I was just curious: I 17 think I saw in the last couple of weeks a Solutia 18 press release in which you are quoted as being in 19 opposition to the merger? 20 A. That press release was issued in my 21 employment capacity, speaking for the company. 22 Q. Over the course of the past couple of 23 weeks, has it been part of your responsibilities at 24 Solutia to help engage in a media campaign in 25 opposition to the merger? 1245 HEDRICK COURT REPORTING CLARK (X) P.O. BOX 578, BOISE, ID 83701 Public 1 A. Since my employer is here, I'm 2 obligated to say "yes," but frankly -- since that's 3 what he pays me to do -- but frankly, that press 4 release was my first activity in that regard. 5 Q. All right. Thank you for clarifying 6 that. 7 COMMISSIONER HANSEN: Mr. Eriksson. 8 MR. ERIKSSON: No questions. 9 COMMISSIONER HANSEN: Mr. Budge. 10 MR. BUDGE: No questions. 11 COMMISSIONER HANSEN: Mr. Nye. 12 13 CROSS-EXAMINATION 14 15 BY MR. NYE: 16 Q. In the Chamber there down in Soda and 17 the area, apart from Solutia, is there much strong 18 support for this proposed merger, at all? 19 A. Actually, the resolution that we 20 passed within our Chamber to support my testimony 21 here today passed without dissent, so it was 22 unanimous. 23 Q. And can you tell us, of the -- 24 You said about 140 businesses belong 25 to the Chamber? 1246 HEDRICK COURT REPORTING CLARK (X) P.O. BOX 578, BOISE, ID 83701 Public 1 A. That's correct. 2 Q. How many employees would that be 3 roughly there in the -- in Soda, or in the county? 4 A. I think our estimate -- 5 Q. Not counting Solutia. Sorry. 6 A. Okay, not counting Solutia. We use -- 7 we use an employment figure of a little over 3,000, 8 so not counting Solutia or its contractors, that 9 would be 2,400. 10 MR. NYE: Thank you, Mr. Chairman. 11 COMMISSIONER HANSEN: Let's see if we 12 have any questions from the Commission. 13 Commissioner. 14 15 EXAMINATION 16 17 BY COMMISSIONER SMITH: 18 Q. Just one, Mr. Clark: 19 A statement you made caused me to 20 worry if I'm falling dreadfully behind the times 21 again. I thought I heard you say that the Internet 22 was the old-fashioned way to do research, and if 23 that's the case, I want to know what I've missed. 24 A. Commissioner Smith, in fact, the 25 old-fashioned way is to roll up your sleeves and sit 1247 HEDRICK COURT REPORTING CLARK (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 down and do the research yourself, rather than hire 2 an attorney to do it. 3 (Laughter.) 4 Q. BY COMMISSIONER SMITH: But don't 5 forget, those lawyers have to eat too. 6 A. Okay. 7 COMMISSIONER HANSEN: That was a good 8 question. 9 COMMISSIONER SMITH: Thank you. 10 COMMISSIONER HANSEN: Thank you for 11 your testimony. 12 (The witness left the stand.) 13 COMMISSIONER HANSEN: Representative 14 Roger Chase. 15 16 REPRESENTATIVE ROGER CHASE, 17 appearing as a public witness, being first duly 18 sworn, was examined and testified as follows: 19 20 EXAMINATION 21 22 BY MR. PURDY: 23 Q. Sir, would you please give us your 24 name and address? 25 A. Roger Chase, 4985 Clearview Avenue, 1248 HEDRICK COURT REPORTING CHASE P.O. BOX 578, BOISE, ID 83701 Public 1 Pocatello, Idaho, 83204. 2 Q. Thank you. And in what representative 3 capacity are you testifying tonight? 4 A. I'm testifying tonight as the District 5 Representative for District 33, which includes part 6 of the area that will be affected by the merger. 7 Q. Thanks. Go ahead with your statement, 8 please. 9 A. Thank you. 10 Members of the Commission, I 11 appreciate the opportunity to be here tonight. 12 Certainly, there are always doubts when we look at a 13 merger of this magnitude. Certainly, I've always 14 been one that raises a lot of doubts. 15 I believe that the questions that have 16 been risen here tonight or that people have brought 17 up are some questions that really need to be 18 answered, but I believe that we can answer those 19 questions, and I think that in the long run, there's 20 a potential for this merger to be good for the State 21 of Idaho and good for this district. 22 Certainly, we need to address the 23 irrigators' needs in this area. And I hope as the 24 Public Utilities Commission looks at that, that they 25 address those needs of the irrigators, particularly 1249 HEDRICK COURT REPORTING CHASE P.O. BOX 578, BOISE, ID 83701 Public 1 look at the needs of the small irrigators. I know 2 in our district, in the district I represent, we 3 have very small farmers who are really struggling, 4 and we need to make sure that we take care of them 5 in this merger. But I believe that that's something 6 that can be addressed, and I have confidence the 7 Public Utilities Commission can take care of that. 8 And I also understand the needs 9 of the industries in the area. I work for the 10 J. R. Simplot Company, and I understand what our 11 needs are as far as power consumption, and I 12 understand what will happen to Solutia if there's 13 big changes there. But, again, I believe that 14 ScottishPower in their merger will be able to 15 address those issues and make sure that those needs 16 are met. 17 Certainly, as I've talked to people in 18 my district, they have some doubts about this, but 19 many of them feel that they have not been happy with 20 the service that they have at this time, and I 21 believe that through the knowledge that they have, 22 limited -- limited as mine is, that there's a chance 23 that this will help the people of our area. 24 I think that it's important to look at 25 some of the things that ScottishPower has told us 1250 HEDRICK COURT REPORTING CHASE P.O. BOX 578, BOISE, ID 83701 Public 1 that they will do as soon as they have made 2 commitments to our communities. That's very 3 critical to us. I think, as I understand it, their 4 commitment to their working force has been a good 5 relationship from people I've talked to, and I think 6 in those senses that ScottishPower has something to 7 offer the area here in Idaho. 8 I believe that under the guidance of 9 the Public Utilities Commission, this merger will 10 benefit Idaho. I believe questions that have been 11 risen here tonight need to be answered before that 12 merger takes place, but I believe ScottishPower has 13 the ability and I believe PacifiCorp has the ability 14 to answer those questions, and when they do that, I 15 believe the Public Utility Commission, under the 16 guidance of the Idaho Code, can make sure that 17 Idaho's water and Idaho's power rates and Idaho's 18 people are protected. They can work out a deal that 19 will make sure we are protected in the future, not 20 only for six months. 21 I believe that the questions that 22 Senator Noh talked about tonight can be answered. 23 Certainly, we need to keep our water in Idaho, we 24 need to keep our water rates lower, but I believe 25 that under the guidance of the Public Utilities 1251 HEDRICK COURT REPORTING CHASE P.O. BOX 578, BOISE, ID 83701 Public 1 Commission and the working with the irrigators, the 2 industries, the Tribe, and Scottish and PacifiCorp, 3 that we can make this merger work and it will be 4 good for the residents of Southeastern Idaho. 5 Thank you. 6 COMMISSIONER HANSEN: Let's see if we 7 have any questions. 8 Mr. Purdy. Mr. Miller. Mr. Budge. 9 MR. BUDGE: Just one, if I may. 10 11 CROSS-EXAMINATION 12 13 BY MR. BUDGE: 14 Q. Representative Chase, living in 15 Pocatello, as you do, I've been surprised about the 16 pretty much a total lack of media coverage here -- 17 both on TV, as well as in print -- over this merger, 18 and basically a lack of detail at all. I was just 19 curious what your source of information may have 20 been to lead you to the conclusion that you have 21 that you feel ScottishPower can address these 22 concerns that you have. 23 A. Yes, several sources. Certainly, the 24 media in the area hasn't been intense, but I have 25 had an opportunity through the Internet to look at 1252 HEDRICK COURT REPORTING CHASE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 media from other areas. 2 During the Legislative session, I had 3 a chance to talk with representatives of 4 ScottishPower, I had a chance to talk with people in 5 Lava, people in McCammon, which are the two areas 6 that are in my district that will be served by this 7 merger. 8 So it hasn't been an intense amount of 9 knowledge, but the amount of knowledge I have 10 obtained has been through those sources, basically. 11 Q. Would it be accurate to say that the 12 bulk of the information you have had was supplied by 13 ScottishPower representatives? 14 A. I would say probably a third of it 15 has, yes. 16 MR. BUDGE: Thank you. 17 COMMISSIONER HANSEN: Mr. Nye. 18 MR. NYE: No questions. 19 COMMISSIONER HANSEN: Commissioners. 20 COMMISSIONER KJELLANDER: Thank you 21 for your testimony. 22 COMMISSIONER HANSEN: Oh, Commissioner 23 Smith. 24 COMMISSIONER SMITH: Thank you, 25 Representative Chase. I appreciate your taking the 1253 HEDRICK COURT REPORTING CHASE (X) P.O. BOX 578, BOISE, ID 83701 Public 1 time to come out. 2 And I guess the comment I want to 3 offer is that last night and tonight, we have heard 4 many people express dissatisfaction with the quality 5 of service that they're getting currently, and I 6 just want to let you know that when you get that 7 from your constituents, to please urge them to call 8 the Commission, because we need to know that. And 9 if people don't contact us, we have no way of using 10 the power that we do have to correct whatever is 11 going on out there. 12 THE WITNESS: I will do that. Thank 13 you. 14 15 EXAMINATION 16 17 BY COMMISSIONER HANSEN: 18 Q. I have one question. You mentioned 19 that you were concerned about the irrigation 20 customers and rate increase for them or J. R. 21 Simplot Company. I guess I'd like to ask you a 22 question: 23 Do you feel there is any customers in 24 your district or area you serve that could take a 25 rate increase now? 1254 HEDRICK COURT REPORTING CHASE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 A. I don't believe anybody ever wants a 2 rate increase, and so I would say "no." 3 But it's my understanding that whether 4 the merger goes through or not, PacifiCorp has that 5 opportunity to come to you and ask for a rate 6 increase if they feel it's necessary. And I guess I 7 have enough confidence in the three of you to kind 8 of dump this over on your side of the table, that 9 you can make a good judgment with the understanding 10 that you have to have a balance between keeping the 11 Company profitable and yet taking care of the people 12 that live in that area. 13 Certainly, in our district, I think 14 one of the more telling things that was mentioned 15 here tonight was the uniqueness of our district, and 16 when you talk about the pumpers and Solutia, you're 17 probably talking 70 percent of this power. So as 18 you look at that in your Decision, I think you're 19 going to have to address how that affects that, and 20 I think ScottishPower has to understand that they're 21 going to have to address that issue in a manner that 22 assures you that those people are going to be 23 protected. 24 But one thing I know to be a fact of 25 life,: There's always going to be rate increases. 1255 HEDRICK COURT REPORTING CHASE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 I can't believe that power is ever going to go 2 down. I certainly hope we can do everything to 3 block deregulation in Idaho, but rate increases have 4 been a fact of life, my entire lifetime in Idaho. 5 Q. Last night at the hearing, there was 6 talk about a condition should be a possible rate 7 cap, rate freeze, where the rates would be capped 8 for a period of time; I believe they mentioned three 9 to five years. Do you feel that that kind of a 10 condition is enough of a guarantee to the customers 11 that you're concerned about in their rates? 12 A. My concerns wouldn't so much be as a 13 rate cap as it would be that we would have 14 guarantees that good service is provided to the 15 people, a service that they can count on. I think 16 that if a rate cap is necessary to make this merger 17 go through, I can't say that I would object to that, 18 but that is not my number one concern. My number 19 one concern is for a good, steady, reliable source 20 of power. 21 And I'm spoiled: I live in the 22 Idaho Power region. I know my power bill is a lot 23 less than people in McCammon and the southern area. 24 And I think we need to move to make 25 sure that whoever runs this company -- PacifiCorp or 1256 HEDRICK COURT REPORTING CHASE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 ScottishPower -- gets their rates more in line with 2 what Idaho Power does. And, certainly, I understand 3 there are two different sources of delivering power, 4 where Idaho Power's major reliance is on hydro 5 power. 6 But I believe that it's tough to cap 7 anybody and say, You have to do this; and so that's 8 not a major concern to me. My concern, again, is 9 more to make sure that we have a company that can 10 deliver power, and guarantee that that water and 11 that power stays in Idaho. 12 Q. Okay. Thank you very much. 13 (The witness left the stand.) 14 COMMISSIONER HANSEN: I believe we 15 will take a ten-minute break, and when we come back, 16 our next person that we have signed up is 17 Senator Robert Geddes. So we'll take a ten-minute 18 break and then come back. 19 (Recess.) 20 COMMISSIONER HANSEN: Okay, we'd like 21 to get started. I believe we were where we were 22 calling Senator Robert Geddes. 23 24 25 1257 HEDRICK COURT REPORTING CHASE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 SENATOR ROBERT L. GEDDES, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 EXAMINATION 6 7 BY MR. PURDY: 8 Q. Good evening, Senator. Would you give 9 us your name and address, please? 10 A. My name is Robert L. Geddes. I reside 11 at 370 Mountain View Avenue, Soda Springs, Idaho. 12 Q. And in what capacity are you 13 testifying this evening? 14 A. I'm testifying tonight in the capacity 15 of my position as State Senator, representing 16 District 32. 17 Q. Thank you. Go ahead, sir. 18 A. Thank you. 19 I represent District 32 in the Idaho 20 State Senate. This district includes 21 Caribou County, Bear Lake County, Franklin County, 22 Oneida County, and the southern portion of 23 Bannock County. Virtually all of my legislative 24 district falls within the service area of 25 PacifiCorp. 1258 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 This proposed takeover is of major 2 interest to the residential customers, the 3 businesses, the water users, and the special 4 contract customers that I represent. 5 My first involvement in this proposal 6 was during the legislative session this spring. 7 ScottishPower representatives made presentation to 8 multiple groups of Legislators, outlining their 9 interests in acquiring PacifiCorp as they provided a 10 brief overview of their company. During that 11 presentation, information was provided to me that 12 was later determined to be, in my opinion, a 13 significant misrepresentation of the truth. That 14 concerned me. 15 I've been critical of the Public 16 Utility Commission's Decision to relocate the 17 technical hearings in Boise, outside of the affected 18 service area of PacifiCorp. In order for me to 19 observe the technical hearings and participate in 20 the public hearings, I have driven 1,054 miles to 21 attend. Driving that distance provides a lot of 22 time to think. My comments will, therefore, not be 23 as brief as you are perhaps hoping for. 24 (Laughter.) 25 THE WITNESS: Here we are again 1259 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 tonight, holding a hearing outside of the area in 2 which the public will be affected. The hearing last 3 night in Rexburg was the only hearing that occurred 4 within the service area of PacifiCorp. One out of 5 three hearings, in my opinion, is a shortfall effort 6 to obtain public support or opposition. I urge the 7 Commission to evaluate the necessity to conduct 8 additional public hearings in impacted communities 9 such as Soda Springs, Montpelier, Preston, and 10 Malad, and to allow more effective public 11 participation regarding this important issue. 12 It has been mentioned in the news 13 media that I have authored a letter and encouraged 14 other Legislators to share my opinion regarding this 15 issue. That is correct. The letter outlined some 16 general concerns regarding this takeover, and merely 17 emphasizes that the PUC should be extremely cautious 18 to comply not only with the letter, but also with 19 the intent of the Idaho law. 20 I am not an attorney, but I have 21 reviewed Idaho Code 61-328 and contemplated what the 22 intent of the 1951 Idaho Legislature may have been 23 when that law became effective. In my reading of 24 the Code, the statement -- 25 And may I quote from the Code, 1260 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 Mr. Chairman? 2 COMMISSIONER HANSEN: All right. 3 THE WITNESS: -- such authorization 4 and Order shall be issued only following public 5 Notice and hearing; upon verified Application of the 6 parties setting forth such facts, not promises, as 7 the Commission shall prescribe or require; and if 8 the Commission shall find that the public interest 9 will not be adversely affected. 10 I personally believe that our law 11 could be and should be strengthened by changing the 12 words "adversely affected" to more clearly state 13 what I believe their intent was: "To provide 14 benefit to the public." 15 From letters, phone calls, personal 16 discussions that I've had with many of my 17 constituents, any increase in rates will certainly 18 be deemed as an adverse effect. 19 I will respectfully submit a copy of 20 the letter that I have written, along with the 21 signatures of 53 other Legislators. I request that 22 this be placed in the official record of this 23 proceeding. My intent is to merely remind you of 24 your responsibilities, not to usurp your authority, 25 and to express the interest the Idaho Legislature 1261 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 shares regarding this important issue. 2 I've been following the developments 3 of this issue both in the United States media and 4 also in the United Kingdom -- Kingdom media. It is 5 fascinating to compare the contrast of how this news 6 is being disseminated. 7 On Saturday, July 6, 1999, the London 8 Dow Jones newswire reported ScottishPower finance 9 director Ian Russell also spelled out the utility's 10 US strategy for the next five years when he said, 11 and I quote, The emphasis would be to gain the 12 regulatory green light for this four billion British 13 pound takeover of PacifiCorp. 14 He further stated, and I quote, The 15 plan is to improve customer service and earnings. 16 PacifiCorp makes half of what the regulators would 17 allow it to earn, end quote, Russell told the Dow 18 Jones newswire. 19 To me, this says that the future plans 20 of ScottishPower are to maximize earnings. This 21 will be significantly and it will be -- it will be 22 significant and it will be an adverse effect, in my 23 view, and one that Eastern and Southeastern Idaho 24 communities cannot bear. Agricultural commodity 25 prices are all depressed and our businesses are 1262 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 facing global competition. There is simply no room 2 for increased input costs at this time. 3 Certainly, regarding water right -- 4 concerns regarding water rights have been expressed. 5 Maybe as significant as the water rights question is 6 who will be there to manage the river. Irrigation, 7 water rights, and river management is not widely 8 understood, I don't believe, by ScottishPower. A 9 water right in Idaho is merely a license to use 10 water if and when that water is available. Does 11 ScottishPower have any expertise or experience in 12 this area? I believe the answer is "no." 13 I have reviewed the Orders of the 14 Pacific -- or, of the Public Utilities Commission 15 regarding telephone access in Southern Idaho. In 16 those cases, significant weight was placed on the 17 public acceptance and opinion. I certainly hope 18 that the same consideration is extended in this 19 case. From the testimony that I have heard from the 20 public, the public is saying that they feel that 21 this takeover is not in their best interest. I have 22 found, as a public servant, it is wise to listen to 23 the public that you represent. In this case, your 24 constituency is the same as mine. 25 There is no regulatory deadline for 1263 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 the Idaho Public Utilities to rule on this issue. 2 The safest approach for Idaho is the go-slow 3 approach. It has served us well in the past. Other 4 states in the PacifiCorp service area have a much 5 higher stake in this issue. Idaho must not set the 6 precedent to allow the approval momentum to build. 7 The cautious approach will allow Idaho's PUC to 8 impose conditions for the merger if it is approved 9 as specified in Idaho Code. This will also allow 10 our citizens the same benefits from commitments and 11 deals being offered in other states. Wyoming has 12 already negotiated a rate cap. Oregon has 13 negotiated a multimillion-dollar cost reduction per 14 year. A significant -- a similar agreement is 15 pending in Utah. 16 Please don't sell Idaho short. We 17 need the same benefits of the other states in our 18 region. I cannot support the approval of this 19 takeover based on the proposal ScottishPower is 20 offering. 21 This concludes my statement, and I 22 will be happy to answer any questions. 23 COMMISSIONER HANSEN: Okay. Thank you 24 for your testimony. Let's see if we have any 25 questions. 1264 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 Mr. Purdy. 2 MR. PURDY: Thank you, Senator. No, I 3 don't. 4 COMMISSIONER HANSEN: Mr. Miller. 5 Mr. Eriksson. Mr. Budge. 6 MR. BUDGE: No questions. 7 COMMISSIONER HANSEN: Mr. Nye. 8 MR. NYE: I do. 9 10 CROSS-EXAMINATION 11 12 BY MR. NYE: 13 Q. Will you be putting the letter in the 14 record from the -- signed by the Legislators? 15 A. I have copies of that, and I will give 16 that to the Commissioners at this time. 17 COMMISSIONER HANSEN: And if he 18 submits that, that will be part of -- in the record. 19 MR. NYE: And one other question. 20 COMMISSIONER HANSEN: Go ahead, 21 Mr. Nye. 22 Q. BY MR. NYE: You mentioned that there 23 were some material misrepresentation of fact by 24 ScottishPower to you personally? 25 A. Yes. 1265 HEDRICK COURT REPORTING GEDDES (X) P.O. BOX 578, BOISE, ID 83701 Public 1 Q. Would you amplify that, please? 2 A. I will. During the legislative 3 session, representatives from ScottishPower met with 4 a number of groups of Legislators, primarily those 5 who represent the service area of PacifiCorp. They 6 presented a brief overview of what their plans were 7 to merge with ScottishPower, and they also provided 8 a lot of insight on the programs and new service 9 opportunities that would be offered. 10 At the end of their discussion, I 11 asked and indicated that I represented a legislative 12 district with a lot of special service contracts and 13 a lot of industrial customers. I asked 14 Mr. Alan Richardson, who will be the ScottishPower 15 CEO, if their intention was to provide the same type 16 of service and cost considerations that have been 17 provided in the past by PacifiCorp. 18 He said, That's right, you work for 19 Solutia, don't you? 20 I said, Yes. 21 He said, They are our biggest and our 22 best customer. He says, In fact, we've already been 23 to St. Louis, we've met with your management, and 24 they are fully supportive of this merger. 25 Later, I asked Mr. Russ Westerberg 1266 HEDRICK COURT REPORTING GEDDES (X) P.O. BOX 578, BOISE, ID 83701 Public 1 (phonetic), who is a lobbyist for PacifiCorp, when 2 they visited St. Louis and with whom they had met. 3 Approximately ten days later, 4 Mr. Westerberg indicated to me that because 5 Mr. Richardson had not traveled extensively in the 6 United States, he was a little bit unsure of his 7 geography, and he had, in fact, never met with any 8 of the Solutia management or had never been to 9 St. Louis. 10 In my career with Solutia, I've 11 traveled to St. Louis perhaps 50 or 60 times. I 12 don't remember all of those experiences, but I 13 certainly remember the first time that I went there. 14 COMMISSIONER HANSEN: Let's see if we 15 have any questions from the Commissioners. 16 Commissioner Kjellander. 17 18 EXAMINATION 19 20 BY COMMISSIONER KJELLANDER: 21 Q. Senator Geddes, again, thanks for 22 coming tonight and last night and a couple of weeks 23 ago. You're a familiar face, and we appreciate your 24 comments. 25 Also from your testimony, I guess is 1267 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 it clear that -- to state that you recognize that 2 Idaho Code is more permissive, or at least less 3 restrictive, than the other states with regards to 4 merger approval? 5 A. Commissioner Kjellander, it's my 6 understanding that some of the other states 7 neighboring Idaho have the provision that a merger 8 of this nature must be proven to be a benefit to the 9 customer. Our Code requires that it merely has to 10 be proven that it will not adversely affect. 11 I think that's somewhat subjective. I 12 wish that our Code was a little more clear. I think 13 the intent when it was written in 1951 implied that 14 a benefit should be available, but it is subjective 15 and I wished it were more clear. 16 Q. Specifically then, I guess where do 17 you see within the Code that the intent would have 18 been the same as the other states when they say that 19 it has to be better in terms of the public interest 20 test, when it clearly states in that Code that it 21 cannot adversely affect the public interest? 22 A. My opinion on that issue is coming 23 primarily from visiting with at least 53 of my other 24 colleagues as I presented this letter and had them 25 consider adding their signature to the list. I 1268 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 think if you take the two provisions of the Code, 2 one which says it must be in the public interest, 3 and the other one that says that it must not 4 adversely affect, I think those imply that there 5 should be a benefit, and I would speculate that the 6 intent of those Legislators in 1951 perhaps used 7 that intent as they wrote that legislation. 8 Q. Senator -- and I don't mean to keep 9 pushing on that section of Code, but since you did 10 bring it up -- the second listed item in that 11 specific section of the Code addresses the financial 12 issue as it relates to costs and pricing. And as I 13 read that -- and perhaps I'm off base on this; I 14 guess I'd like your opinion -- as the Code was 15 written, it would sound as if the public interest 16 was one test and then with a comma had been the 17 listing, but the pricing issue was then addressed in 18 the second section of that second listed item. 19 Is that the way you would view that 20 with regards to cost? 21 A. Well, I think the cost portion, at 22 least in my mind, is very confusing. I mean, if 23 this merger goes through, I believe that it would be 24 difficult to quantify, or qualify even, if the costs 25 and the rates are being proposed to increase as a 1269 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 result of the merger. Based on testimony that we've 2 heard and my experience in the Legislature where the 3 attempt was made to allow the PUC to have access to 4 more of the records to make that assessment, I would 5 fully support that provision. Without that, I don't 6 know how you folks can balance that and make that 7 judgment as to which costs are justified based on 8 costs of providing the service, and which costs may 9 be somewhat or somehow associated with the nature of 10 the merger. 11 Q. Appreciate you taking the time to 12 respond to my questions. And, again, it's good to 13 see you. Thank you. 14 COMMISSIONER HANSEN: I have a couple 15 of questions. 16 17 EXAMINATION 18 19 BY COMMISSIONER HANSEN: 20 Q. Senator, you talked about public 21 hearings in the counties that you represent, and I 22 guess I'd like to ask you a question: 23 Have you had requests from people in 24 these counties for the Commission to hold public 25 hearings there for them to testify? 1270 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 A. I haven't had specific requests for 2 that, Commissioner, but what I have done is had a 3 lot of support based on the fact that I raised that 4 issue, that the hearings were being transferred from 5 Pocatello to Boise and that we were not having 6 hearings close to the area of impact. 7 Q. Do you feel like the people in your 8 district you represent were aware of this public 9 hearing here this evening and that they could come 10 and testify here? 11 A. I think some people were, but very few 12 people were aware of this hearing. I think a lot of 13 people stay away from an issue like this because of 14 the technical nature, and because in this instance, 15 because of the hearings being held in Boise. And I 16 think there would have been some synergy. I would 17 have hoped that, you know, perhaps TV coverage would 18 have been provided if those hearings would have been 19 located here in Pocatello. I think more information 20 would have been disseminated through the written 21 media, and perhaps more people would have been 22 educated and chosen to become involved. 23 My position is that this is a public 24 process. The Public Utilities Commission should 25 make every effort to make it convenient and 1271 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 available for the public to engage in. If the 2 public doesn't engage, then that's their fault, but 3 at least the opportunity should not be difficult for 4 them to do so. 5 Q. So if the Commission were to schedule 6 a public hearing -- one, possible two -- in the area 7 that you represent which is served by PacifiCorp, 8 your best estimate, do you think then it would be 9 supported by the people, that they would come out? 10 Your best estimate. I know you couldn't predict 11 it. We can't even predict it. Sometimes we'll have 12 a hearing and no one will show up; sometimes we'll 13 be here like tonight and have quite a few. 14 But in your mind -- because it is 15 expensive, it requires some effort, but that is our 16 job -- but do you think that the people desire a 17 public hearing in that area that you represent, in 18 the rural area of Southeastern Idaho? 19 A. I guess my best instance for reference 20 is the expanded area service for the telephones. 21 And I think in that instance, the Public Utilities 22 Commission bent over backwards to provide 23 information. There were fliers enclosed in 24 telephone customers' billings. There was a lot of 25 interest in that. You'll remember you came to 1272 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 Preston, you came to Soda Springs, and you came to 2 Paris, and virtually we had capacity crowds in each 3 hearing, primarily offering support for that action. 4 Of course, I can't guarantee that if a 5 hearing was held in one of the communities that I 6 listed, that we would have that same response. I 7 would certainly hope that we would, but like you 8 say, the public is hard to predict. 9 Q. Thank you very much. Thank you for 10 your testimony. 11 (The witness left the stand.) 12 COMMISSIONER HANSEN: Next person we 13 have is Troy Nielsen. 14 15 TROY NIELSEN, 16 appearing as a public witness, being first duly 17 sworn, was examined and testified as follows: 18 19 EXAMINATION 20 21 BY MR. PURDY: 22 Q. Sir, would you please give us your 23 name and address? 24 A. Yeah. My name is Troy Nielsen -- 25 T-R-O-Y N-I-E-L-S-E-N -- 310 Court Street, 1273 HEDRICK COURT REPORTING NIELSEN P.O. BOX 578, BOISE, ID 83701 Public 1 Soda Springs, Idaho. 2 Q. Who are you here representing tonight? 3 A. I'm representing myself, as a customer 4 of PacifiCorp. 5 Q. What type of customer are you? 6 A. I'm a residential customer. I am also 7 an employer of 70 employees at Heritage Safe Company 8 in Grace, Idaho. 9 Q. You manufacture safes? 10 A. We manufacture safes. 11 Q. Great. Thanks. Go ahead, please. 12 A. I guess my testimony will be brief, 13 Commissioners, and it is surrounded by one thought, 14 and that is the sovereignty that we place upon Idaho 15 and the realization that allowing international 16 companies to control one of our largest assets -- 17 which would be power and water -- and the challenge 18 that it might be in the future to control and manage 19 with an international company. 20 It is not of concern to me that there 21 is a merger taking place. There is not a concern to 22 me that there might be price increases. Of course, 23 during a merge, you would think that efficiencies 24 would increase, volumes would increase, overhead 25 would decrease, thus, we would see a decrease in 1274 HEDRICK COURT REPORTING NIELSEN P.O. BOX 578, BOISE, ID 83701 Public 1 rates. However, it is of more concern to myself as 2 an employer, as a citizen of Idaho, that we are 3 dealing with internationalists or international 4 companies to control our assets. 5 That's all I have to say. 6 COMMISSIONER HANSEN: Thank you for 7 your testimony. Let's see if we have any 8 questions. 9 Mr. Purdy. 10 MR. PURDY: No questions. 11 COMMISSIONER HANSEN: Mr. -- 12 MR. ERIKSSON: No. 13 COMMISSIONER HANSEN: Mr. Budge. 14 Mr. Nye. Commissioners. 15 16 EXAMINATION 17 18 BY COMMISSIONER HANSEN: 19 Q. I have one question. 20 A. Okay. 21 Q. I'm not going to let you off that 22 easy. 23 A. Thank you, Dennis. 24 Q. No, I'd like to ask you, are you 25 satisfied now with the service quality that you 1275 HEDRICK COURT REPORTING NIELSEN (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 receive from PacifiCorp? 2 A. I've only been in business five years, 3 and seems to be -- the service seems to be 4 sufficient at this point. I haven't had any 5 problems other than some minor shutdowns. They 6 usually inform us of those and we can prepare for 7 that. So I have no problem. 8 Q. So do you feel in your business that 9 you need to increase service quality or technology 10 to serve your business versus what you have now? 11 A. Not if there is a cost involved, no. 12 Q. Okay. Thank you. That's all I have. 13 (The witness left the stand.) 14 COMMISSIONER HANSEN: Wade Clark. 15 16 WADE CLARK, 17 appearing as a public witness, being first duly 18 sworn, was examined and testified as follows: 19 20 EXAMINATION 21 22 BY MR. PURDY: 23 Q. Your name and address, sir, please? 24 A. Wade Clark, three -- 380 Court Street, 25 Soda Springs, Idaho. 1276 HEDRICK COURT REPORTING W. CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 Q. And who are you representing tonight? 2 A. I'm representing Alexander Company as 3 a small business owner. The business is located in 4 Bancroft, Idaho. We are a commercial customer of 5 Utah Power and Light. 6 Q. Just generally, what do you do? 7 A. We have a grain milling business. We 8 bring raw products into our business, we mill it, 9 and then ship it nationwide to soup companies. 10 Q. Great. Thanks. Go ahead, please. 11 A. I've been married about 20 years -- 12 21 years -- and in those 20-some odd years, I have 13 purchased one American-made vehicle. And I told 14 this to a friend of mine a while back, and he chided 15 me for being unAmerican. 16 And I told him, on the contrary, I was 17 being very American. I was voting with my dollars 18 and sending a message to Detroit that I was not 19 satisfied with the product that they gave me. 20 And I believe over the last ten years, 21 that General Motors in Detroit generally has 22 received that message from the majority of Americans 23 and they improved the quality of their vehicles. 24 I have no problem really with dealing 25 with a foreign company. I hope that sometime our 1277 HEDRICK COURT REPORTING W. CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 business, we'll be exporting internationally. 2 The problem I do have is not being 3 able to vote with my dollar. If I could purchase my 4 power from someone else if my service wasn't up to 5 snuff or if the rate is increased, and I could go 6 somewhere else and purchase it, I wouldn't have a 7 problem. I think that would be great. But I don't 8 have that option in dealing with a monopoly. And so 9 I guess I'm at the mercy of the Public Utilities 10 Commission to keep my rates in line and to keep them 11 competitive so that I can be competitive nationally 12 and globally. 13 I think it behooves everyone in Idaho 14 to keep our resources at home and add as much value 15 to our natural resources as we can. We've watched 16 the Japanese dominate world trade, and they have 17 done so by keeping resources at home and adding as 18 much value as they can and then shipping it out, and 19 that's what we need to do as Idahoans to improve our 20 economy, to make a state where our children can grow 21 up and live and prosper. If we -- if we turn 22 control of our natural resources -- and electricity 23 is a big, big part of any business -- over to 24 someone else who doesn't have the same concerns that 25 we do, then I think we're selling ourselves short. 1278 HEDRICK COURT REPORTING W. CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 So I guess my concern is cost 2 increases. As Troy mentioned, in a merger, you 3 would think there would be some economies of scale 4 and some efficiencies that would take place, 5 overhead reduced, and I feel that those advantages 6 should be passed on to the customers and not given 7 as special interest gifts in order to grease the 8 wheels so that a merger can take place. 9 That's all I have. 10 COMMISSIONER HANSEN: Thank you for 11 your testimony. Let's see if we have any questions. 12 Mr. Purdy. 13 MR. PURDY: I have none. Thank you. 14 COMMISSIONER HANSEN: Mr. Miller. 15 Mr. Eriksson. Mr. Budge. Mr. Nye. Commissioner. 16 Thank you very much. 17 THE WITNESS: Thank you. 18 (The witness left the stand.) 19 COMMISSIONER HANSEN: We'll now have 20 Representative John Stevenson. 21 22 23 24 25 1279 HEDRICK COURT REPORTING W. CLARK P.O. BOX 578, BOISE, ID 83701 Public 1 REPRESENTATIVE JOHN STEVENSON, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 EXAMINATION 6 7 BY MR. PURDY: 8 Q. Sir, your name and address, please? 9 A. John A. Stevenson, 1099 North 400 10 West, Rupert, Idaho. 11 Q. How do you spell your last name? 12 A. S-T-E-V-E-N-S-O-N. 13 Q. Thanks. And in what capacity are you 14 testifying tonight? 15 A. Tonight, I -- I guess tonight I'm 16 testifying as a stockholder in PacifiCorp. 17 Q. Are you also a customer? 18 A. I am not a customer. I am a 19 stockholder. 20 Q. Okay. 21 A. I am a Representative from 22 District 24, which is Idaho Power territory, but I 23 am a member of the Resource and Conservation 24 Committee in the House, and an ad hoc member of the 25 Electric Restructuring Commitment. 1280 HEDRICK COURT REPORTING STEVENSON P.O. BOX 578, BOISE, ID 83701 Public 1 Q. Thanks. Please go ahead. 2 A. Thank you. 3 I believe that the merger is not in 4 the public interest to the citizens of Idaho and 5 should be rejected for several reasons: 6 First, I am concerned that our local 7 US utility will become owned and controlled by a 8 foreign corporation headquartered in Glasgow, 9 Scotland. I fear this removal of control across the 10 Atlantic will make this important utility in 11 Eastern Idaho more unresponsive to customers, and 12 place it beyond the reach and influence of and 13 control of the Commission, as well as the 14 Legislature, making it much more difficult to 15 protect the interests of the Idaho ratepayers. 16 Second, I am concerned and find it 17 objectionable that the substantial water rights 18 owned by PacifiCorp, both in the Snake River and the 19 Bear River drainages, will come under the control of 20 a foreign corporation. Idaho's ability to protect 21 and preserve these important water rights would seem 22 in jeopardy as a result. 23 Third, the disparity of rates paid by 24 the PacifiCorp/Utah Power customers which are higher 25 than their neighbors on Idaho Power systems, and I 1281 HEDRICK COURT REPORTING STEVENSON P.O. BOX 578, BOISE, ID 83701 Public 1 understand that are also considerably higher than 2 PacifiCorp charges irrigators in surrounding states, 3 is simply unfair and should not be tolerated 4 further, and must be corrected in some fashion. 5 While irrigators have complained about this problem 6 for some time, it is my understanding ScottishPower 7 has failed to address this issue in the proceedings, 8 and merely wants to defer problems until a general 9 rate case at an unknown future date. 10 Fourth, from what I have been able to 11 determine from the media coverage of recent hearings 12 in Boise, there appears to be no guarantee by 13 ScottishPower that rates of PacifiCorp customers in 14 Eastern Idaho won't continue to rise. It seems like 15 everyone will benefit from this merger except the 16 ratepayers. Why is it that the rates of PacifiCorp 17 customers in other states are going down, while 18 Idaho appears to be heading up? 19 It is my understanding that PacifiCorp 20 has been financially weakened and mismanaged in the 21 past primarily because of unsuccessful attempts to 22 diversify and expand into a worldwide utility 23 company. This seems to be the same problem 24 ScottishPower is now pursuing, and I fear ratepayers 25 will again suffer if that is not successful. If 1282 HEDRICK COURT REPORTING STEVENSON P.O. BOX 578, BOISE, ID 83701 Public 1 PacifiCorp remains to weaken that it is a candidate 2 for a takeover by another company, then so be it. 3 In my view, the taxpayers of Idaho would be better 4 off with another US company owning PacifiCorp. 5 I have some concerns with the promises 6 that are made by PacifiCorp, both in public 7 humanitarian contributions that they tell us will 8 not be a part of the ratepayer base, but will come 9 out of profits. That being the case, as a 10 stockholder, that comes out of my money, and I have 11 some concern concerning that. 12 The guarantees that they promise -- 13 $50 if your power is out longer than three hours or 14 24 hours -- primarily is attached, in the 15 information that I have received, if it is not 16 related to an act of God. Most power outages are 17 related to an act of God. 18 For these reasons, I would urge the 19 Commission to deny the merger, and I appreciate your 20 consideration this night. 21 COMMISSIONER HANSEN: Thank you very 22 much for your statement. Let's see if we have any 23 questions. 24 Mr. Purdy. 25 MR. PURDY: No, thank you. 1283 HEDRICK COURT REPORTING STEVENSON P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Mr. Miller. 2 Mr. Eriksson. Mr. Budge. Mr. Nye. Commissioners. 3 Thank you very much. 4 (The witness left the stand.) 5 COMMISSIONER HANSEN: We now have 6 Kirk Corbridge. 7 8 KIRK CORBRIDGE, 9 appearing as a public witness, being first duly 10 sworn, was examined and testified as follows: 11 12 EXAMINATION 13 14 BY MR. PURDY: 15 Q. Please state your name and address, 16 sir. 17 A. Yes. It's Kirk Corbridge. It's 18 K-I-R-K; Corbridge is C-O-R-B-R-I-D-G-E. My address 19 is 2390 North 100 West, Malad, Idaho. And I come as 20 a residential customer and as an agricultural 21 customer. 22 Q. Thanks. Go ahead, please. 23 A. I'd like to express appreciation to 24 the Commission for having this hearing as close to 25 Malad as you have. In reiteration of what 1284 HEDRICK COURT REPORTING CORBRIDGE P.O. BOX 578, BOISE, ID 83701 Public 1 Representative Geddes has mentioned already, I 2 didn't know about this hearing until a couple of 3 days ago, and I think had more known about it down 4 where I'm from, there definitely would have been 5 more people here representing the Malad area. 6 I come here to express opposition to 7 the merger with three major concerns tonight: 8 One, let me give just a brief history 9 of agriculture in our part of the country down 10 there. I was talking to a neighbor just recently, 11 and he mentioned about when he got home from the 12 War, he bought a brand-new Ford pickup and drove to 13 Montana and bought it for $2,000. At that time, the 14 hog prices right after the War were 22 cents, and as 15 I talked to him, hog prices were at 18 cents and 16 they were on their way down. 17 Last year, we sold our cattle on the 18 high of the market, and those cattle prices were the 19 same prices that I was paid when I was in high 20 school in the 1970s. 21 And, of course, grain prices now are 22 at 40-year lows. 23 So you can see the disparity and the 24 prices that were being paid for agriculture 25 commodities versus the costs that are incurring. 1285 HEDRICK COURT REPORTING CORBRIDGE P.O. BOX 578, BOISE, ID 83701 Public 1 There's no room for a rate increase that we could 2 stand. 3 We are one of the largest stockholders 4 in our irrigation company, and if anyone could 5 absorb a rate increase, we probably could, but we 6 can't; and I know that there are a lot of other 7 stockholders in that irrigation company that can't 8 either. 9 So my concern is that there be a 10 guaranteed rate decrease, not a cap, or an increase 11 then a rate decrease. Of course, our power down 12 there is quite a bit more expensive than those just 13 across the border from us in Utah, and that just 14 concerned me. 15 A second concern is the fact that 16 PacifiCorp would have to bribe the stockholders to 17 vote for the merger. I've been told that if 18 something is good, it will stand on its own merits. 19 And if they have to pay a dollar per stock to have 20 the stockholders vote for the merger, this seems 21 unusual to me. 22 My third concern is accountability for 23 our services, which has dwindled since the days of 24 when Utah Power was controlled in Salt Lake City. 25 When control went up to Portland, Oregon, it seemed 1286 HEDRICK COURT REPORTING CORBRIDGE P.O. BOX 578, BOISE, ID 83701 Public 1 like it's harder to get a response time to the 2 problems that we had. And my concern is if it goes 3 out of the country, what will that be? 4 My last concern is that the resources 5 of this country and especially of this state could 6 be turned over or sold to an interest so far from 7 the people than the resources from which it serves. 8 Thank you for your time. 9 COMMISSIONER HANSEN: Okay. Thank you 10 for your testimony. Let's see if we have any 11 questions. 12 Mr. Purdy. 13 MR. PURDY: No questions, thank you. 14 COMMISSIONER HANSEN: Mr. Miller. 15 Mr. Eriksson. Mr. Budge. Mr. Nye. 16 MR. NYE: No questions. 17 COMMISSIONER HANSEN: Commissioners. 18 COMMISSIONER SMITH: No, I don't. 19 20 EXAMINATION 21 22 BY COMMISSIONER HANSEN: 23 Q. I have one. I'd just like to ask you 24 the same question I asked earlier: 25 Are you satisfied with the quality of 1287 HEDRICK COURT REPORTING CORBRIDGE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 service you are receiving right now from PacifiCorp? 2 A. No, I'm not, for several reasons: 3 It's been much harder since the 4 PacifiCorp merger in order to get people to come to 5 service our pumps when they are down or get contact 6 when we need to have pumps started. 7 And also because of the rates that 8 we've seen gradually climb. 9 I would say, "no." 10 Q. If you were sure that this merger 11 would bring about a better service quality, would 12 that make you supportive of it? 13 A. Well, to me, there are several issues 14 other than just service. Service is just one part 15 of it. Of course, I would like to see that. I 16 would also like to see a rate decrease, not just a 17 rate cap. But there is other things, like I've 18 mentioned, of the circumstances behind the merger 19 and also the thing of the sovereignty of the people 20 that will be buying it, those other questions 21 concerning it as well. 22 Q. Thank you very much for your 23 testimony. 24 (The witness left the stand.) 25 COMMISSIONER HANSEN: David Matthews. 1288 HEDRICK COURT REPORTING CORBRIDGE (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 DAVID MATTHEWS, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 EXAMINATION 6 7 BY MR. PURDY: 8 Q. Sir, your name and address, please. 9 A. My name is David Matthews, and I live 10 at 89 West Second South in Paris, Idaho. 11 Q. Who are you representing tonight? 12 A. I'm the Mayor of Paris, so I guess I'm 13 representing the citizens of Paris, Idaho. 14 Q. Are you also a customer? 15 A. Yes. Yes. Yes, I am. Residential 16 customer. 17 Q. Thanks. Go ahead, please. 18 A. I guess maybe the main reason that I'm 19 here: A few years ago, we had a public hearing in 20 Paris. The question was to sell our telephone. We 21 were with U S WEST, and the question was if another 22 company was going to be able to buy that area and 23 then that would be run by another company. Nobody 24 showed up -- well, I think two people showed up -- 25 at the public hearing. This was granted, and many 1289 HEDRICK COURT REPORTING MATTHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 of the citizens of Paris have been very regretful 2 that they did not attend that public hearing. So 3 that is probably the main reason that I'm here 4 tonight. 5 I've talked to many citizens, and to 6 answer -- to kind of answer the question that you 7 presented to the fellow, the gentleman who was 8 talking about the other cities, we have a meeting 9 next Monday night, our regular City Council 10 meeting. If you would like to attend that, I can 11 put you on the agenda. 12 (Laughter.) 13 THE WITNESS: But -- you're welcome to 14 come present your -- 15 But I have talked to -- we have about 16 500-plus citizens in Paris, and I haven't talked to 17 all of them, but the several who I've talked to, to 18 the last one, oppose this merger. 19 An incident that we had a couple of 20 weeks ago, we have -- on our sewer system, we have 21 lift stations and that have to lift this sewage up 22 and then pump it in down the system into the sewer 23 lagoon. Some people had purchased a house and they 24 were remodeling this house and they happened to go 25 down in the basement and look, and the sewage was 1290 HEDRICK COURT REPORTING MATTHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 backing up into their house. And they called the 2 City. 3 Our City employees went out and the 4 pump had quit and -- but it was determined that it 5 wasn't our pump, it was the Power Company's not 6 generator, but transformer or whatever it was right 7 there close. And our City employees tried all 8 afternoon to -- to call the number in Portland or 9 wherever to get ahold of so we could get some people 10 so that this sewage would not back up in these 11 people's basements any further. And numerous 12 telephone calls. 13 What we had to finally resort to was 14 one of the PacifiCorp employee's wives told us the 15 local number so that we could get ahold, and they 16 finally came and was able to correct this problem. 17 And so, you know, we used to have a 18 business office in Montpelier and so you could go 19 and get your concerns resolved, and now that that's 20 moved further and then if this merger takes place, 21 then that removes that even further. 22 And so I think we have considerably -- 23 a considerable amount of retired people in Paris who 24 are on fixed incomes and has kind of been mentioned 25 about rate increases, and so we're kind of opposed 1291 HEDRICK COURT REPORTING MATTHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 to, you know, any immediate rate increases. 2 And so probably for these reasons and 3 maybe others, I'm opposed to this merger. 4 COMMISSIONER HANSEN: Thank you for 5 your statement. Let's see if we have any 6 questions. 7 Mr. Purdy. 8 MR. PURDY: No, thank you. 9 COMMISSIONER HANSEN: Mr. Miller. 10 Mr. Eriksson. Mr. Budge. Mr. Nye. Commission. 11 Thank you very much for your 12 testimony. 13 (The witness left the stand.) 14 COMMISSIONER HANSEN: We now have 15 James May. 16 17 JAMES MAY, 18 appearing as a public witness, being first duly 19 sworn, was examined and testified as follows: 20 21 THE WITNESS: My name is James May. 22 The last name is spelled M-A-Y. My address is 23 359 Arabian, Pocatello, Idaho. I am the plant 24 controller for the Kerr-McGee facility in 25 Soda Springs, Idaho. We are a PacifiCorp customer. 1292 HEDRICK COURT REPORTING MAY P.O. BOX 578, BOISE, ID 83701 Public 1 EXAMINATION 2 3 BY MR. PURDY: 4 Q. For those that don't know, including 5 me, what do you do at Kerr-McGee? 6 A. I was about to describe. 7 Q. Okay. 8 A. Our facility is a vanadium extraction 9 facility. Vanadium is an elemental chemical. We 10 also process a lithium polymer for use in batteries, 11 and we make a phosphate fertilizer. At present, we 12 have 69 positions, 69 jobs, that we provide in 13 Soda Springs, Idaho. Twenty-one of those jobs are 14 currently on a layoff status because the vanadium 15 facility is shut down. That facility was originally 16 shut down because of environmental concerns over the 17 water balance used in the process; however, the 18 decision to start that facility up is going to be 19 based solely on economic concerns. The vanadium 20 market is basically a commodity market, and right 21 now, it is very low. 22 Our plant spends a little under 23 $700,000 a year on electricity from PacifiCorp. 24 That is the dollar figure for 1998. During that 25 year, we operated our fertilizer plant for about 1293 HEDRICK COURT REPORTING MAY P.O. BOX 578, BOISE, ID 83701 Public 1 25 percent of the year, so the potential is that it 2 could be a larger portion of our cost. Overall, 3 that cost represents about six percent of our total 4 cost. In the vanadium facility, that figure is 5 probably closer to ten percent of our cost. So it's 6 not a minor cost. 7 Obviously, we're concerned about rate 8 increases, and all businesses experience shrinking 9 margins. One of the things that sticks out with me 10 is the article in the Idaho State Journal in the 11 last week or so about the $24 million increase. As 12 I look at that based on the testimony that's been 13 given to the Commission before, that represents 14 approximately $200,000. And I arrived at that in a 15 roundabout way; I can't specifically hang my finger 16 on it. But it is a considerable amount when we 17 start talking about rate increases. 18 I have a letter that I'm going to 19 submit to the Commission, and I won't read any more 20 parts of that, but I'd like to make two points. 21 Well, one point; I've already made my first point. 22 Excuse me. 23 ScottishPower's ability to create 24 efficiency. Here, in Idaho, we've always been proud 25 of our low electric prices. In fact, the Department 1294 HEDRICK COURT REPORTING MAY P.O. BOX 578, BOISE, ID 83701 Public 1 of Commerce home page, there's a specific page that 2 ranks the power cost in Idaho versus other states, 3 and we're way down there. Now, realizing that the 4 power costs from PacifiCorp are a little bit more, 5 sometimes significantly more than what Idaho Power 6 charges, I think that's probably a better comparison 7 than looking at surrounding states and other 8 customers of PacifiCorp, because after all, we're 9 all Idahoans and that does affect our economy. 10 ScottishPower has made a lot of 11 promises about efficiencies. The efficiencies 12 primarily been coming -- come about through 13 benchmarking techniques based on averages inside the 14 industry. Well, as a businessman, I know that any 15 efficiency program has certain risks associated with 16 it. Given the relationship between a utility and 17 its ratepayers, I think that risk should be borne 18 primarily by ScottishPower. 19 Also, ScottishPower is a business. 20 They expect a return on their investment. Reuters 21 News Service, I read an article this morning that it 22 was about a $9.2 million investment. There's a lot 23 of talk about whether or not expenses are created 24 above the line or below the line, and whether or not 25 they can be passed on to ratepayers. Inside a 1295 HEDRICK COURT REPORTING MAY P.O. BOX 578, BOISE, ID 83701 Public 1 business, it makes very little difference whether 2 it's above or below; you've still got to get a 3 return on that investment. 4 And that concludes my comments. 5 COMMISSIONER HANSEN: Thank you for 6 your statement. Let's see if we have any 7 questions. 8 Mr. Purdy. 9 MR. PURDY: No, thank you. 10 COMMISSIONER HANSEN: Mr. Miller. 11 Mr. Eriksson. Mr. Budge. Mr. Nye. Commissioners. 12 COMMISSIONER KJELLANDER: Just one, a 13 clarification. 14 COMMISSIONER HANSEN: Commissioner 15 Kjellander. 16 17 EXAMINATION 18 19 BY COMMISSIONER KJELLANDER: 20 Q. For the court reporter, could you 21 spell "vanadium"? 22 A. V-A-N-A-D-I-U-M. 23 Q. Could you tell me what it's used for? 24 A. It's used as a catalyst in metal to 25 strengthen metals. It's also used in filters. It 1296 HEDRICK COURT REPORTING MAY (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 has been used in nuclear facilities to control the 2 reaction time, and basically it would speed up a 3 nuclear reaction is my understanding. Again, I'm 4 just an accountant; I'm not real sure. 5 Q. I'm never on a game show. I just 6 wanted to know. 7 (Laughter.) 8 THE WITNESS: Okay. Great. 9 COMMISSIONER HANSEN: Thank you very 10 much. 11 (The witness left the stand.) 12 COMMISSIONER HANSEN: We'll call 13 Rosa Moosman. 14 15 ROSA MOOSMAN, 16 appearing as a public witness, being first duly 17 sworn, was examined and testified as follows: 18 19 EXAMINATION 20 21 BY MR. PURDY: 22 Q. Name and address, please, ma'am. 23 A. My name is Rosa Moosman. I live at 24 404 North Ninth in Montpelier, Idaho. 25 Q. Could you spell your name for us? 1297 HEDRICK COURT REPORTING MOOSMAN P.O. BOX 578, BOISE, ID 83701 Public 1 A. M-O-O-S-M-A-N. 2 Q. Thanks. Are you here as a PacifiCorp 3 customer tonight? 4 A. I am here as a PacifiCorp customer, 5 but also as editor of the News Examiner in 6 Montpelier. 7 Q. All right. What type of customer are 8 you? 9 A. A residential customer. 10 Q. Residential. Thanks. Go ahead, 11 please. 12 A. The first thing I noticed about the 13 merger of PacifiCorp with ScottishPower was I was 14 receiving no information. Virtually the only 15 information I have received is through the Idaho 16 Public Utilities Commission. Ordinarily, when 17 people want -- when a company wants people to know 18 about their business, they contact the newspaper. 19 ScottishPower has not been in Montpelier, they have 20 not been in Preston, they have not been in Bear Lake 21 County at all, they have not been in Franklin 22 County, other than just a brief pass-through. As 23 far as I can tell, they have not been in 24 Oneida County. I don't know whether they have been 25 in Caribou County, but because their major customers 1298 HEDRICK COURT REPORTING MOOSMAN P.O. BOX 578, BOISE, ID 83701 Public 1 are there, they may have been. 2 But it tells me that they have no 3 concern about rural Idaho and their rural customers. 4 It tells me that the little guys mean nothing to 5 them. And I feel like as they have treated rural 6 Idaho right now by providing no information, that 7 they will continue to treat rural Idaho the same 8 way: That they will provide no information and they 9 will neglect the interest. 10 The corporate buyouts I have seen have 11 also -- emphasizes to me that -- with a bank, 12 particularly, as the -- the headquarters of the bank 13 become further removed, so do the services become 14 further removed, and the rates become higher. They 15 find ways of tacking on a little fee here and a 16 little fee here and a little fee here and somewhere 17 else, until you're paying much more for the same 18 service. And I see from the information I got -- 19 have received, I had no reason not to believe that 20 that would be the case with ScottishPower. What 21 little information I have received, I had to go far 22 out of my way to receive it, and most of it has 23 come -- virtually all of it has come through the 24 Idaho Public Utilities Commission, any unbiased 25 information. 1299 HEDRICK COURT REPORTING MOOSMAN P.O. BOX 578, BOISE, ID 83701 Public 1 Ten, 15 years ago in Montpelier, we 2 had a significant beneficial presence from 3 PacifiCorp. Vaughn Rasmussen was in his office. I 4 could call him, I could ask him questions. I could 5 find out why there was a power failure in Geneva or 6 what happened with the breach of the power structure 7 in Bear Lake. That's virtually impossible to get 8 ahold of somebody from PacifiCorp now, and -- 9 however, when I complained about it tonight, two 10 people gave me their cards, so maybe it will be 11 better. 12 But PacifiCorp has not been very 13 responsive in the small communities and it's become 14 less responsive. The offices have closed. The -- 15 ScottishPower has not said that they would return 16 those offices to the small communities; they have 17 told us nothing. They have not assured us that 18 irrigators would not pay more; they have told us 19 nothing. We feel that that has been very 20 unresponsive on their part and very dissatisfying to 21 us. 22 The community presence is very 23 important to us. The people from Utah Power used to 24 do Scouts, they used to do Rotary, they used to do 25 community economic development. No longer. They 1300 HEDRICK COURT REPORTING MOOSMAN P.O. BOX 578, BOISE, ID 83701 Public 1 don't do it anymore. I cannot envision a company 2 that's based in Glasgow, Scotland, as caring two 3 bits about Bear Lake Valley, about how the lake is 4 run. 5 As you are aware, Bear Lake Valley has 6 a very important resource in the lake itself. That 7 interest is a prime consideration to irrigators. 8 It's very important to the recreation and tourism 9 industry. It's very important to landowners within 10 the valley. ScottishPower, as far as I know, knows 11 nothing about Bear Lake Valley, about Bear Lake and 12 its operation, and how important it is to the -- you 13 know, we're only 600 -- 6,000 people. They won't 14 care. And that is how I feel about how they have 15 demonstrated their interest in the valley so far and 16 how they will demonstrate it in the future. 17 I feel like deregulation would -- 18 would be the same sort of move. ScottishPower 19 merger would be one more step in the deregulation 20 process where Idaho's water rights would be sold to 21 California or somewhere else by means of selling the 22 power cheaply there and making us pay for it. 23 And that's my testimony. Thank you. 24 COMMISSIONER HANSEN: Okay. Thank you 25 very much. Let's see if we have any questions. 1301 HEDRICK COURT REPORTING MOOSMAN P.O. BOX 578, BOISE, ID 83701 Public 1 Mr. Purdy. 2 MR. PURDY: No questions, thank you. 3 COMMISSIONER HANSEN: Mr. Miller. 4 Mr. Eriksson. Mr. Budge. Mr. Nye. 5 MR. NYE: No questions. 6 COMMISSIONER HANSEN: Commissioners. 7 Thank you very much. 8 (The witness left the stand.) 9 COMMISSIONER HANSEN: We now have 10 Grant Jones. 11 12 GRANT JONES, 13 appearing as a public witness, being first duly 14 sworn, was examined and testified as follows: 15 16 EXAMINATION 17 18 BY MR. PURDY: 19 Q. Good evening, sir. Your name and 20 address, please? 21 A. My name is Grant H. Jones. Address is 22 2601 West 500 South, Malad. 23 Q. Who are you speaking on behalf of 24 tonight? 25 A. I am speaking on behalf of myself, as 1302 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 a irrigator, farmer, rancher down there; and also 2 I'm president of Malad Valley Irrigation, which we 3 have a number of our stockholders that use the 4 electric power to sprinkle that water on their land 5 for conserving the water and -- but actually raising 6 better crops. 7 Q. Thanks. Go ahead. 8 A. Really wasn't prepared when I come 9 today, but I would like to thank the opportunity to 10 be here and represent some of our people in Malad on 11 this, because they are busy haying and the harvest 12 has started and there was Planning and Zoning 13 meeting and whatever you wanted in Malad. So I will 14 try to represent them well here. Thank you. 15 I can't say anything bad about 16 Scotland or the Scottish people, because I'd still 17 like a trip over there. 18 But we went through two changes in 19 power -- in fact, three -- but since I've been 20 farming, Utah Power took -- bought out California 21 Pacific and that went through pretty smoothly. 22 Along come PacifiCorp. They made a 23 lot of promises. They held a meeting in Malad. 24 They wouldn't move a line crew out of there, they 25 wouldn't move their supplies, they wouldn't move 1303 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 their buildings and sell them. Had an office you 2 could go in and talk to them and pay your bill and 3 have a good visit. Those people that worked for 4 Utah Power was very important in the life of the 5 people in Malad. They was involved in many things 6 and they was well liked and loved there in the 7 valley. But it wasn't very long, they closed the 8 office in Malad, they moved all the line trucks, 9 they closed the building down, took power poles, 10 wire, the whole works, so now that they have to 11 contact Preston or Tremonton, which that's an hour 12 or better delay. If it's a big line truck coming 13 in, you've got a bad outage up there, it's longer 14 than that. 15 As I see the proposal, the merger of 16 ScottishPower, it sounds very much like 17 Pacific Power come in and proposed to us. I don't 18 see any advantage in it. It could be broken 19 promises. I guess I'd have to question with 20 PacifiCorp sitting with a pretty good dollars' worth 21 of unsecured debt, why they would even look at them 22 on that. 23 Another situation we got now, we have 24 a power line that comes through our valley. In 25 fact, they've got an easement through some of my 1304 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 property, and I'd like to renew that easement on a 2 yearly basis. But two miles south of my home, they 3 have a substation and they have two switches on 4 there. When the electricity is coming from the 5 North and they want to switch it and take it from 6 the South, the one switch goes off and the other one 7 comes on, so now the electricity is going north 8 instead of south. 9 Also, in connection with that, down in 10 the Utah line, we've got a man down there, drill 11 well in Utah with Utah rates of power, he's pumping 12 it into Idaho and sprinkling. That's right along 13 the interstate. On the west side of the valley 14 we've got a farmer that's pumping in Idaho and 15 sprinkling part of it in Utah, and he's paying Idaho 16 rates. Who holds who on that deal? I think it's 17 unfair. I think they need to get a look. 18 How can we have power going both ways, 19 we have to live with different rates. I think it's 20 because PacifiCorp and Utah Power neglected to 21 taking care of Idaho in a proper manner. 22 One thing that we are facing in 23 agriculture down there if we -- if these costs 24 raises our services or raises some of the 25 manufacturing that we're using in here, we start 1305 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 paying more for phosphate fertilizer and these 2 services, we can't pass those costs on. 3 One other thing that we've seen happen 4 in these multinational merges is we've lost the 5 market for our grain and our cattle. And I'm 6 concerned about multinational mergers coming in and 7 start to running our power companies or what else 8 here in Idaho. It's not a good thing that's 9 happening. I hate to see it happen. 10 And I believe that is the end of my 11 testimony. Thank you. 12 COMMISSIONER HANSEN: Thank you very 13 much. Let's see if we have any questions. Do we 14 have any questions, Mr. Purdy? 15 MR. PURDY: No, I don't. Thank you. 16 COMMISSIONER HANSEN: Commissioners. 17 COMMISSIONER SMITH: No, I don't. 18 COMMISSIONER HANSEN: Thank you very 19 much. 20 (The witness left the stand.) 21 COMMISSIONER HANSEN: We now have 22 Norman Johnson. 23 24 25 1306 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 NORMAN K. JOHNSON, 2 appearing as a public witness, being first duly 3 sworn, was examined and testified as follows: 4 5 THE WITNESS: My name is 6 Norman Johnson, from Grace, Idaho. 7 8 EXAMINATION 9 10 BY MR. PURDY: 11 Q. And your address -- please hold on a 12 second. 13 A. 905 Varley Road, Grace. 14 Q. And who do you represent tonight? 15 A. I am a farmer and an irrigator, and 16 I'm also on the board of the Last Chance Canal 17 Company. I'm a director. 18 Q. Okay. What is the relationship 19 between Last Chance and PacifiCorp, if any? 20 A. I don't know if I understand your 21 question. 22 Q. Is there a -- is there some kind of -- 23 I'm sorry, go ahead with your statement. I'll wait 24 and see if I have any questions. 25 A. Thanks. It might help to know that we 1307 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 are the largest irrigation company on the 2 Bear River. I don't know if that answers your 3 question. 4 As my first comment I guess would be 5 in relationship to my position as on the board of 6 directors for the Last Chance Canal Company. We 7 would oppose the proposed merger on the basis of 8 concerns on how the river would be managed as far as 9 to honoring Bear Lake. 10 In the past, we have worked well with 11 Utah Power through drought years. We had seven 12 consecutive years of drought where lake levels 13 became pretty low and at times we are announced 14 perhaps in our interest in the lake or the water 15 because water we take out and irrigate is not 16 available downstream for further power generation, 17 but over the years we've been able to work together 18 and manage that. 19 Secondly, I guess there's been some 20 questions wondering how the service is, 21 Mr. Chairman, on PacifiCorp. I might just give the 22 personal experience that might help answer that. 23 We've had four outages during this 24 summer. We used to call Lava Hot Springs and they 25 knew where our farm was, where our pumps were, and 1308 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 our response time was very reasonable. 2 Now, with PacifiCorp, we have a number 3 assigned to each pumping facility. We have about 4 nine on our farm. And if we have a power outage, we 5 call Portland. We have yet to talk to anybody in 6 Portland that knows where Grace, Idaho is, let alone 7 any further than that. But we give them the number. 8 And one of the outages we had, we lost 9 a breaker in a main panel. I called a local 10 electrician and he had a breaker, but we needed a 11 disconnect in order to put the breaker in, so we 12 called the number and waited a considerable time. 13 Meantime, I'm paying the electrician because he 14 can't go anywhere. I can't go anywhere because I 15 don't know if anybody is going to show up. I 16 finally took the electrician into town to buy him 17 something to eat, and we saw a Utah Power truck pull 18 up across the road, so I went over to ask him, Are 19 you here to service our disconnect? 20 And as of that time, he hadn't 21 received word that he was supposed to. 22 So -- but he ran right out and 23 disconnected us, and we were able to repair the pump 24 panel. 25 After -- later, we had -- but he also 1309 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 gave me his cell phone number, which was a godsend, 2 because we've had a couple microbursts where wires 3 have crossed, we've had fuses blow, and by calling 4 the cell phone number we get a quick response, so -- 5 going that way. I hope I don't jeopardize the 6 Utah Power employee that gave me his cell phone 7 number, but we get good service by getting the local 8 contact. 9 I also feel, as mentioned earlier, 10 that the merger with PacifiCorp was probably a 11 mistake, at least from our perspective. I think by 12 merging further and putting an ocean between us, 13 that our needs will be even further diminished. I 14 understand that the president of ScottishPower or 15 some high official had no idea what a wheel line was 16 or a center move or anything regarding irrigation. 17 We're such a miniscule part of their operation that 18 I can't think that they would move in regard to meet 19 our need. If we had further drought or other needs, 20 I can't see them working with us in the way that 21 Utah Power has in addressing those needs and 22 securing the needs of the valley. So I just -- I 23 just can't see that happening. 24 Just basically, I oppose a merger with 25 a foreign company that would manage or influence the 1310 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 use of our natural resources. I -- again, I guess 2 along the same basis what I mentioned earlier, I 3 just can't see how that's going to benefit us. 4 I'm concerned, as others have 5 mentioned here, that we pay a higher rate and that 6 there's nothing been addressed in the merger 7 proceedings to address that problem in our behalf as 8 Idaho users. We're PacifiCorp customers, but we're 9 paying higher rates than neighboring states that are 10 also PacifiCorp customers. 11 I was told about methods that were 12 mentioned earlier about PacifiCorp buying their 13 votes, essentially, by paying the stockholders to 14 vote for their merger, the benefit packages, and 15 severance packages. Don't sound kosher to me. And 16 I guess there's a concern on who's going to pay for 17 that, because the stockholders don't want to pay for 18 it, and the ratepayers don't want to pay for it 19 either. 20 I just made a few notes. 21 I was also in agreement that the news 22 coverage in our area has been very minimal. I'm 23 sure a lot of ratepayers are unaware of this 24 proceeding. Or the coverage has been limited. And 25 probably we need -- many people need a better 1311 HEDRICK COURT REPORTING JONES P.O. BOX 578, BOISE, ID 83701 Public 1 understanding and knowledge of what's taking place. 2 And that concludes my comments. 3 COMMISSIONER HANSEN: Thank you for 4 your comments. Let's see if we have any questions. 5 Mr. Purdy. 6 MR. PURDY: Just briefly. 7 8 CROSS-EXAMINATION 9 10 BY MR. PURDY: 11 Q. Does Last Chance have any agreements 12 with PacifiCorp regarding how the Bear River is 13 operated? 14 A. I'm a new board member and I may not 15 be able to answer that as well as another one that 16 will be testifying here shortly, but it's my 17 understanding that the hydrologist is retiring from 18 Utah Power and that PacifiCorp has replaced them, 19 and the hydrologist is on retainer for consulting. 20 But, again, you may ask Mr. Mathews when he 21 testifies. 22 Q. So you're not familiar with any -- 23 whether there are any agreements between -- 24 A. I'm not. 25 Q. Okay. Thanks. 1312 HEDRICK COURT REPORTING JOHNSON (X) P.O. BOX 578, BOISE, ID 83701 Public 1 COMMISSIONER HANSEN: Mr. Miller. 2 Mr. Eriksson. Mr. Budge. Mr. Nye. Commissioners. 3 4 EXAMINATION 5 6 BY COMMISSIONER HANSEN: 7 Q. I have a couple questions: 8 Last night at our hearing, we had some 9 potato farmers there that said they couldn't afford 10 to have a power outage over 24 hours, and evidently 11 their soil was pretty sandy up in that area. The 12 people that -- I know you farm potatoes -- 13 A. Yes, I do. 14 Q. -- as well as others. Could people in 15 your area afford to be off for 24 hours without 16 power? 17 A. We can't. And right now, on some 18 systems where it takes five days to get across, 19 we're wheeling them back the same day and starting 20 them again to keep up with the water needs of the 21 crop. So a 24-hour outage -- once you get dry, you 22 can't catch up. They become rough, bottle-necked, 23 they become heat depressed, and you don't have a 24 chance to crop until another year. Everything banks 25 on getting it right that year. 1313 HEDRICK COURT REPORTING JOHNSON (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 Q. I see. One other question: You had 2 mentioned about it not being advertised very well in 3 that area. In talking to some of the people you 4 represent, Last Chance Canal Company or people as 5 well as farmers in your area, do you think they 6 desire the Commission to hold a public hearing where 7 they could come out and express themselves? 8 A. I would think so, yes. 9 Q. Okay. Thank you very much for your 10 testimony. 11 (The witness left the stand.) 12 COMMISSIONER HANSEN: We now have 13 Dean Mathews. 14 15 DEAN M. MATHEWS, 16 appearing as a public witness, being first duly 17 sworn, was examined and testified as follows: 18 19 EXAMINATION 20 21 BY MR. PURDY: 22 Q. Good evening. Your name and address, 23 please, sir. 24 A. Dean Mathews, 670 Mingo Road, Grace, 25 Idaho. 1314 HEDRICK COURT REPORTING MATHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 Q. And who do you represent tonight? 2 A. I'm representing the Last Chance 3 Canal. I'm vice president of that canal company. 4 Also, a farmer and irrigator in the Grace area. 5 The Last Chance system operates off of 6 the Bear River, and we're kind of the forgotten 7 corner of the state of Idaho. 8 Just to bring you up a little bit on 9 the Bear River: It's the largest body -- or, the 10 largest river in the United States that doesn't run 11 into the sea. It starts in the high Uintahs above 12 Salt Lake City, runs through Wyoming -- starts in 13 Utah, runs into Wyoming, then into Idaho, back into 14 Utah, and empties into the Great Salt Lake, 15 approximately 80 miles from where it starts. Runs a 16 distance of 500 miles. 17 The Last Chance takes its water out of 18 the Bear River and canal systems, and then pumped 19 from those canals onto the farm ground. We're right 20 close to 100 percent sprinkler irrigated. I think 21 maybe under 100 acres flood irrigated, approximately 22 32,000 acres that are irrigated in the Grace area. 23 The Last Chance system has 161 24 shareholders, and this is a -- is a big concern of 25 ours for -- as owners of the water shares and how 1315 HEDRICK COURT REPORTING MATHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 they are handled. We have a great concern on the 2 hydrology of the river. 3 Utah Power and Light at one time had 4 five different people employed in the hydrology 5 department to manage the Bear River. Under 6 PacifiCorp, they have gone down to one retired 7 hydrologist who is hired back on retainer. This is 8 critical. 9 When we have problems on our farm with 10 a power outage, we call Portland. Person on the 11 other end asks which state, which city, and which 12 town are you calling from. 13 If we have a serious problem, where 14 does the buck stop? Does it stop in Scotland? 15 Which brings up the issue: We have 16 spent countless hours and trips to Salt Lake on 17 environmental issues, on water issues concerning the 18 canal companies. Does this mean that we're going to 19 have to roll up our sleeve, take a series of shots, 20 and have a visa or a passport to go to Scotland to 21 solve our irrigation problems? 22 Also on my farm, I have in excess of 23 20,000 animals which cannot go without electricity 24 for more than an hour in summer's heat. In years 25 prior, it has gone up to four hours. I've had to 1316 HEDRICK COURT REPORTING MATHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 purchase a generator to plug in to my power pole in 2 order to pump water for these animals. 3 We can see a whole host of issues here 4 that have not been addressed. We have not had 5 public meetings or input, very little 6 advertisement. Again, I say, where will the buck 7 stop? Where will the buck passing stop? Now we're 8 fighting with it stopping in Portland. Somebody 9 here doesn't know and they don't know and, well, 10 it's got to go to Portland. 11 We can foresee the same problems 12 happening with ScottishPower: Well, we can't handle 13 that maybe in Salt Lake City, or we can't handle 14 that in Portland. So then are we back to Scotland 15 to solve the problem? 16 I don't know if the Titanic was made 17 in Scotland, but maybe some of the steel was smelted 18 there, and it was -- it was dubbed unsinkable. It 19 sank. And I think if this merger takes place, we 20 could dub this the Titanic of Idaho. 21 And I think it is that critical, 22 ladies and gentlemen, that we stand up and fight for 23 what we believe in. Our pioneer forefathers put 24 these canal systems in, and I believe in fighting 25 for what they built for us. 1317 HEDRICK COURT REPORTING MATHEWS P.O. BOX 578, BOISE, ID 83701 Public 1 And it is my opinion that we have a 2 "no" vote for this merger. 3 Thank you. 4 COMMISSIONER HANSEN: Let's see if we 5 have any questions. Mr. Purdy. 6 7 CROSS-EXAMINATION 8 9 BY MR. PURDY: 10 Q. When you call PacifiCorp during 11 daytime hours on weekdays, do you get Portland or do 12 you get Salt Lake? 13 A. At one time, we had a Malad number, 14 then we had a Montpelier number, then we had a 15 Salt Lake number, all of which were done away with 16 and we have now a Portland number. And if you're as 17 lucky as Norm to maybe get a cell phone number from 18 somebody, why, I guess that's what it takes to get 19 things taken care of. 20 Q. Do you know about the agreements 21 between Last Chance and PacifiCorp? 22 A. I know that there are some 23 agreements -- 24 Q. Let me -- 25 A. -- in the process. 1318 HEDRICK COURT REPORTING MATHEWS (X) P.O. BOX 578, BOISE, ID 83701 Public 1 Q. Let me interrupt you, just to cut to 2 the chase. Do you know whether they're long-term 3 agreements or are they year-to-year agreements in 4 terms of the operation? 5 A. Due to the nature of the agreements 6 that were -- that were being discussed and the 7 confidentiality and the cause of rumors and so 8 forth, it was handled between our attorney and the 9 president of the Last Chance only. And I'm not 10 up-to-speed on anything that has been finalized 11 between the two. To my knowledge, there has not 12 been anything finalized. 13 Q. Okay. Thanks. 14 COMMISSIONER HANSEN: Mr. Miller. 15 Mr. Eriksson. Mr. Budge. 16 MR. BUDGE: No questions. 17 COMMISSIONER HANSEN: Mr. Nye. 18 MR. NYE: No questions. 19 COMMISSIONER HANSEN: Commissioners. 20 COMMISSIONER SMITH: No questions. 21 COMMISSIONER HANSEN: Thank you very 22 much for your testimony. 23 (The witness left the stand.) 24 COMMISSIONER HANSEN: We now come to 25 the end of our sign-up list. This is the last one 1319 HEDRICK COURT REPORTING MATHEWS (X) P.O. BOX 578, BOISE, ID 83701 Public 1 we have signed up this evening. That's 2 Representative Robert C. Geddes. 3 COMMISSIONER SMITH: Did we save the 4 best for last? 5 REPRESENTATIVE GEDDES: Scary. 6 7 REPRESENTATIVE ROBERT C. GEDDES, 8 appearing as a public witness, being first duly 9 sworn, was examined and testified as follows: 10 11 EXAMINATION 12 13 BY MR. PURDY: 14 Q. Your name and address, please? 15 A. My name is Robert C. Geddes. I live 16 at 7235 North 2600 West, Preston, Idaho. 17 Q. Who do you represent tonight? 18 A. I represent myself, as a consumer in 19 my home, I'm also a pumper, and I guess more 20 important than that, I represent some 30,000 people 21 in my legislative district. 22 Q. Which district is that? 23 A. District 32, comprised of Bear Lake 24 County, Caribou County, Franklin County, Oneida 25 County, and a portion of Bannock County coming up 1320 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 Marsh Valley as far as Arimo. 2 Q. Thank you. Please go ahead. 3 A. Thank you very much. 4 And, Mr. Chairman, I appreciate this 5 opportunity to come before you and, again, 6 representing those people. I do feel, although I've 7 not spoken with each one of them, I do feel with 8 having visited with a large number of people that 9 there is absolute opposition to the merger of 10 PacifiCorp and ScottishPower Company. I would like 11 to comment just very briefly. 12 The Commission may be wondering why 13 there were only 53 Legislators who signed the 14 petition. I have to remind you that the Legislature 15 is not in session. We thought it was a great thing 16 that we got 53 members on that roster, given that 17 we're not in session. And we were not able to 18 contact every member of the Legislature, due to the 19 fact that we are not in session. To my knowledge, 20 there were only two Legislators who were contacted 21 that did not feel comfortable in signing the letter 22 that has been submitted to you, and I think they 23 indicated they did not feel they had sufficient 24 information to put their name on the line. And so 25 we -- that's nearly 50 percent of all the 1321 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 Legislators even when we are not in session. 2 I guess I speak from a district that 3 is probably as rural or more rural than most any 4 other in the whole state. We're a rural district, 5 we're made up of basically agriculture interests, 6 with the exception of those references that have 7 been made in Caribou County where Solutia is 8 involved, Kerr-McGee, and there are a couple of 9 others. 10 And it's my feeling, after having 11 talked to many constituents, including employees of 12 PacifiCorp, that there has been a substantial 13 deterioration in the service that has been rendered 14 to the constituency in my area, and I think we've 15 heard mention of many of those tonight. And we're 16 concerned in our area that deterioration will -- can 17 escalate, will continue, based on the absence of the 18 owner of the Company or the administration of the 19 Company. They will not be close at hand in order to 20 take care of the problems. And there may even be 21 further reduction in the service that would be given 22 to the users. I have some concern how such a 23 company can tell us that they will give us better 24 service when they determine that their better 25 service will be based on a scale of economy and 1322 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 efficiencies. I don't know how that can be done. 2 And I guess my real -- one of my real 3 concerns is that -- and I would refer again to -- 4 or, refer to Idaho Code Section 61-328 where it sets 5 forth three -- three items that must be met before 6 mergers would take place: That the public interest 7 will not adversarially (sic) be affected; that costs 8 and rates for supplying services will not be 9 increased; and the Applicants have the intent and 10 financial ability to operate the property in 11 question. 12 They have testified, it's my 13 understanding, that they have studied and quantified 14 the merger costs, but there's been no confirmation, 15 nor no studies that have been completed, to verify 16 any potential savings, and I fail to be able to 17 understand how we can say that our interests are not 18 adversely affected when they have not come forth 19 with studies that would tell what their position 20 would be on -- on rates, the effect on ratepayers, 21 and so forth. 22 I also want to compliment those who 23 have testified today. I think a good share of those 24 who have testified today have been from 25 Southeast Idaho, the four counties I have mentioned. 1323 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 I think they're to be commended for that. I do have 2 some concern that we didn't have at least one 3 hearing where they could have come without having to 4 travel 75, 80, 90 miles to get here. And it would 5 be my suggestion that we do offer that opportunity 6 in the down counties for those people to testify. 7 I have in my district only weekly 8 newspapers. I've seen little or no mention, as has 9 been reported by one of the editors tonight, that 10 there has not been a lot of publicity as it relates 11 to the issue. For that reason, I think it's 12 important that we have opportunity for them to 13 testify. 14 So it would be my recommendation that 15 we do have additional hearings in the areas that 16 have not been widely circulated by the media prior 17 to any approval. 18 But I do want to go on record as in 19 behalf of my constituents, I think that there's -- 20 it's just overwhelming, the opposition as related to 21 this merger. 22 I think that would complete my 23 testimony. 24 If I were to introduce myself 25 properly, I would like to have said -- but because 1324 HEDRICK COURT REPORTING GEDDES P.O. BOX 578, BOISE, ID 83701 Public 1 I'm under oath, I can't do that -- I would have 2 introduced myself as the son of Senator Geddes, 3 because he's much smarter and wiser than me. But I 4 can't do that. I just have to take credit for being 5 his father. 6 I stand for any questions. 7 COMMISSIONER HANSEN: Thank you for 8 your testimony. 9 Mr. Purdy. Mr. Miller. Mr. Eriksson. 10 Mr. Budge. Mr. Nye. Commissioners. 11 12 EXAMINATION 13 14 BY COMMISSIONER HANSEN: 15 Q. I guess I have one question: 16 You talk about the deterioration of 17 service. Do you think that the Commission should 18 open an investigation into the service quality of 19 PacifiCorp? 20 A. I wouldn't want to accuse anyone in 21 this case. My response I guess has come as a result 22 of some discussions with employees of the Company, 23 with some former employees, and their indication is 24 that they feel that even it has become a safety 25 factor. And so to that extent, I don't know who 1325 HEDRICK COURT REPORTING GEDDES (Com) P.O. BOX 578, BOISE, ID 83701 Public 1 should impose that study, but yes, I do think they 2 should be investigated. 3 Q. Thank you very much. That's all the 4 questions I have. Is there anyone -- thank you, 5 Representative Geddes. 6 (The witness left the stand.) 7 COMMISSIONER HANSEN: Is there anyone 8 that did not sign up that would like to make a 9 statement? If they would, please raise your hand 10 and you can come forth and make a statement. 11 Okay, that completes our public 12 hearing tonight in -- 13 Yes, Commissioner Smith. 14 COMMISSIONER SMITH: Mr. Chairman, 15 maybe I'm jumping the gun on you, but I just wanted 16 to tell the people here that I have been attending 17 public hearings of the Public Utilities Commission 18 in one capacity or another since 1981, and I just 19 wanted to compliment those who testified tonight. I 20 think your comments were thoughtful, on point, 21 succinct, and it was very worthwhile to be here, and 22 I appreciate it. Thank you very much. 23 COMMISSIONER HANSEN: Thank you. 24 This completes our public hearing in 25 Pocatello. I too would voice the same comments as 1326 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 Commissioner Smith. I appreciated those that 2 testified this evening. I think it was a very good 3 hearing. I appreciate the testimony. I appreciate 4 the way that you, as an audience -- and I know a lot 5 of people have left -- but have conducted yourself 6 this evening in a very orderly manner and fashion, 7 and that's very helpful for the Commission. 8 I am -- I'm going to recess this 9 hearing tonight. Based on the Commission review, we 10 may hold another public hearing or two. That could 11 come forth from the Commission. We'll discuss 12 that. And so I am not going to bring this hearing 13 in case to a close this evening. I will still leave 14 it open, subject to the Commission within the next 15 few days issuing a statement on whether this 16 completes the hearing or whether we feel additional 17 public hearings should be held. 18 So with that, this completes our 19 hearing this evening. Thank you for your 20 attendance, and we will adjourn this meeting 21 tonight. Thank you. 22 (The hearing adjourned at 23 10:08 p.m.) 24 25 1327 HEDRICK COURT REPORTING COLLOQUY P.O. BOX 578, BOISE, ID 83701 1 AUTHENTICATION 2 3 4 This is to certify that the foregoing 5 proceedings held in the matter of the joint 6 Application and Petition of PacifiCorp and 7 Scottish Power plc for a declaratory Order or Order 8 approving proposed transaction and an Order 9 approving the issuance of PacifiCorp common stock, 10 Case No. PAC-E-99-1, commencing on Wednesday, 11 July 28, 1999, at the Cavanaugh Hotel, 1555 12 Pocatello Creek Road, Pocatello, Idaho, is a true 13 and correct transcript of said proceedings to the 14 best of my ability, and the original thereof for the 15 file of the Commission. 16 17 18 19 __________________________________ WENDY J. MURRAY, Notary Public 20 in and for the State of Idaho, residing at Meridian, Idaho. 21 My Commission expires 2-5-2002. Idaho CSR No. 475 22 23 24 25 1328 HEDRICK COURT REPORTING AUTHENTICATION P.O. BOX 578, BOISE, ID 83701