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1 (The following proceedings were
2 had in open hearing.)
3 COMMISSIONER HANSEN: Exhibits
4 identified 104, 105, and 106 will be identified on
5 the record and part of the record if there is no
6 objections. So ordered.
7 (Staff Exhibit Nos. 104 through
8 106 were marked for identification.)
9 MR. PURDY: I'm finished for now, and
10 I tender him for cross-examination. Thank you.
11 COMMISSIONER HANSEN: Okay. Let's see
12 if we have any questions. Let's start with you,
13 Mr. Budge.
14 MR. BUDGE: No questions,
15 Mr. Chairman.
16 COMMISSIONER HANSEN: Mr. Nye.
17 MR. NYE: No questions.
18 COMMISSIONER HANSEN: Mr. Ward.
19 MR. WARD: No questions.
20 COMMISSIONER HANSEN: Mr. Richardson.
21 MR. RICHARDSON: No questions.
22 COMMISSIONER HANSEN: PacifiCorp.
23 MR. MILLER: Thank you, Mr. Chairman.
24 Just a very few if I could.
25
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1 CROSS-EXAMINATION
2
3 BY MR. MILLER:
4 Q. Mr. Sterling, just a few questions for
5 you:
6 At page 20 of your direct testimony,
7 you had raised the possibility of an additional
8 series of penalties that would apply if network
9 reliability dropped below base line levels. Do you
10 recall that?
11 A. Yes, I do.
12 Q. And were you in the hearing room
13 yesterday to hear the testimony of the witness
14 Robin MacLaren?
15 A. Yes, I was.
16 Q. And did you note that he introduced as
17 an additional exhibit, Exhibit No. 226?
18 A. Yes, and I have reviewed that exhibit
19 since it has been filed.
20 Q. And in general terms, is Exhibit 226 a
21 proposal from the Company to address the issue of
22 declines in reliability below the base line levels?
23 A. Yes, it is.
24 Q. And taking one step back, when you
25 made the -- or suggested the -- your approach, what
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1 goal did you have in mind; that is, what were you
2 trying to accomplish or what did you think needed to
3 be accomplished?
4 A. We felt that some protection needed to
5 be provided to customers in the event performance
6 deteriorated below current levels. And so we had
7 proposed a penalty mechanism that would ensure that
8 enough money would be available to remedy any
9 problems should they come up so that performance
10 could be restored to at least base line levels.
11 Q. It was kind of the idea that, in very
12 general terms, if the Idaho standard for approval is
13 a no harm standard, you just wanted to be sure that
14 customers were protected against the possibility of
15 harm?
16 A. That's true, and that's why I had
17 proposed penalties in addition to the penalties
18 suggested by the Company, because the Idaho Statute
19 does require no harm to customers.
20 Q. And that certainly is a goal that is
21 not disputed in any way by the Company, but it is
22 possible to achieve goals of that nature through
23 various mechanisms, one way to do it?
24 A. Certainly.
25 Q. And having reviewed the proposal of
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1 the Company to set up this performance review
2 process, in your opinion, does that process seem
3 likely to achieve the goal of preventing harm to
4 customers due to a decline in reliability?
5 A. Yes, I do think it accomplishes the
6 same objectives that we had intended with my
7 original proposal.
8 Q. And I believe the response to a
9 question from Commissioner Hansen, the Company
10 indicated that, additionally, it would make a
11 commitment to formally notify the Commission if
12 things got to a escalated stage. Certainly want to
13 reiterate that commitment at this point and make
14 sure you understand it.
15 A. Yes, I do.
16 Q. If, as part of the Order which we hope
17 for approving this merger, the Commission attached a
18 condition requiring implementation of the
19 performance review process, is it your or do you
20 think that the goal of protecting customers from
21 harm due to a decline in reliability would be
22 adequately achieved?
23 MR. PURDY: Excuse me, Mr. Chairman.
24 Might I just ask of Counsel when he refers to
25 "performance review process," is he referring to
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1 Exhibit 226?
2 COMMISSIONER HANSEN: Mr. Miller.
3 MR. MILLER: Yes, thank you,
4 Mr. Purdy, for discussing that. I was referring to
5 the performance review process as described in
6 Exhibit 226.
7 THE WITNESS: Yes, if this information
8 contained in this exhibit was included in a final
9 Order, I believe that would be satisfactory.
10 Q. BY MR. MILLER: Very good. I just
11 wanted to ask a couple of questions on your
12 testimony with respect to water rights, which I
13 think starts on page 34. Maybe it doesn't start
14 there; maybe that's where I want to go. Just a
15 couple clarifying things, nothing I had any serious
16 trouble with:
17 To put things in perspective, you
18 understand that in its simplest terms, this
19 transaction is merely a change in the identity of
20 the stockholders of PacifiCorp?
21 A. Yes, I understand that.
22 Q. Right. And that PacifiCorp, as a
23 corporation, will remain fully subject to this
24 Commission's jurisdiction?
25 A. Yes, I understand that.
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1 Q. And is it also your understanding that
2 no water rights or contractual interests are
3 transferred in any way to ScottishPower; they all
4 remain the property of PacifiCorp?
5 A. Yes.
6 Q. If you'd look at your statement on --
7 starting on line 5 over to line 7 where it says
8 ScottishPower can receive only those rights that
9 PacifiCorp holds and no more; upon reflection, is
10 that statement somewhat inaccurate to the extent
11 that it implies there will be transfers of water
12 rights from PacifiCorp to Scottish?
13 A. I think what I meant by that sentence
14 was that whatever water rights PacifiCorp holds now
15 would be held by PacifiCorp or the new merged entity
16 after the merger.
17 Q. All right. You weren't intending to
18 suggest that there would be transfers of rights from
19 PacifiCorp to Scottish?
20 A. No.
21 Q. All right. Great. Similarly, at
22 line 11, you characterize Scottish as its
23 successor-in-interest. Again, I take it you're not
24 intending to imply that there would be transfers
25 from PacifiCorp to Scottish?
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1 A. No, I'm not. And I would point out,
2 I'm not an expert on the corporate structure of the
3 Company, but no, I didn't intend to imply that.
4 Q. Yeah. And from another portion of
5 your testimony, I believe it's Staff's view that if,
6 after the merger, PacifiCorp did for some reason
7 intend to transfer water rights or contractual
8 interests either to ScottishPower or to someone
9 else, that the Commission would have jurisdiction to
10 review and approve such a transfer?
11 A. Yes.
12 MR. MILLER: All right. I think
13 that's all I had.
14 COMMISSIONER HANSEN: Okay. Let's see
15 if we have any questions from the Commissioners.
16
17 EXAMINATION
18
19 BY COMMISSIONER HANSEN:
20 Q. I believe I have one:
21 Mr. Sterling, even though this
22 proposed performance review process as described in
23 Exhibit 226 is established, do you see that this
24 prevents the Commission to get involved in service
25 qualities at any time they see fit, or even going so
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1 far as issuing a fine or penalty if they so feel it
2 needed, say if the process is not functioning as the
3 Commission desires?
4 A. Certainly not. I think the Commission
5 has that authority even if this process was
6 incorporated as part of the final Order.
7 Q. Thank you. That's all I have.
8 COMMISSIONER HANSEN: Do you have any
9 redirect?
10
11 REDIRECT EXAMINATION
12
13 BY MR. PURDY:
14 Q. Just one or two just to follow up on
15 Commissioner Hansen's question:
16 Without asking for a legal
17 interpretation, are you aware that there is a
18 Statute that essentially allows the Commission at
19 any time to set standards of service that it deems
20 appropriate for the utilities that it regulates?
21 A. Yes, I am aware of that.
22 Q. All right. Now, in response to a
23 question of Mr. Miller, getting back to page 20 of
24 your testimony, the word "base line levels" was used
25 a couple times in reference to when penalties might
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1 be assessed under your original proposal; and I
2 think the suggestion was made that if -- if service
3 drops below base line levels, that there might be
4 additional penalties applied.
5 Now, when I look at your testimony,
6 specifically line 5 of page 20, you use the word --
7 the words "current levels."
8 My question is simply are there -- is
9 there any difference between "current levels" --
10 that term -- and the term "baseline levels"?
11 A. Not really. I think the distinction
12 is simply that we don't have very good information
13 now to quantify what current levels are. Various
14 witnesses have suggested that a lot of outage
15 information is simply not reported and that the
16 quality of data now is -- is not very good. So in
17 order to establish a basis for comparison, we need
18 to establish a base line, and presumably that base
19 line would be based on conditions now and going into
20 the immediate future. So, no, I don't see any
21 significant difference between those two.
22 Q. When will those base line levels be
23 more firmly established?
24 A. It's my understanding that if the
25 merger is approved, PacifiCorp and ScottishPower
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1 would -- would within six months begin to install
2 equipment and facilities or equipment and procedures
3 for documenting performance that can be used to
4 establish a base line, and so I would see that base
5 line becoming established within six months of the
6 close of the merger.
7 Q. That new equipment will provide us
8 with more accurate ideas as to what actual levels of
9 service quality are?
10 A. Yes, it would.
11 MR. PURDY: And I have nothing
12 further. Thank you.
13 COMMISSIONER HANSEN: Thank you,
14 Mr. Sterling.
15 (The witness left the stand.)
16 COMMISSIONER HANSEN: Does the Staff
17 have any other witnesses?
18 MR. MILLER: Can I make one comment
19 before you go on, Mr. Chairman? In response to your
20 question to Mr. Sterling, I know I could speak for
21 the Company: With respect to the proposal contained
22 in Exhibit 226, if the Commission saw fit to
23 incorporate that as a condition of the approval of
24 the transaction, we think it would be certainly
25 appropriate for the Commission to specifically note
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1 that the approval of that process is not in
2 derivation of any other right, remedy, or power of
3 the Commission.
4 MR. PURDY: Thank you. That completes
5 the presentation of Mr. Sterling's case, and now I
6 call Beverly Barker.
7
8 BEVERLY BARKER,
9 produced as a witness at the instance of the Staff,
10 being first duly sworn, was examined and testified
11 as follows:
12
13 DIRECT EXAMINATION
14
15 BY MR. PURDY:
16 Q. Would you please state your name and
17 business address?
18 A. My name is Beverly Barker. My
19 business address is 472 West Washington Street.
20 Q. And you are employed by the Idaho
21 Public Utilities Commission?
22 A. Yes, I am.
23 Q. In what capacity?
24 A. I am deputy administrator for the
25 consumer assistance division.
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HEDRICK COURT REPORTING BARKER (Di)
P.O. BOX 578, BOISE, ID 83701 Staff
1 Q. And in that capacity, have you
2 prefiled direct testimony in this proceeding
3 consisting of 22 pages of text?
4 A. Yes, I have.
5 Q. And attached to your testimony and
6 identified therein is Exhibit 107. Is that right?
7 A. Yes.
8 Q. All right. Do you have any changes or
9 modifications to your testimony or exhibit?
10 A. No, I don't.
11 Q. Therefore, if I were to ask you the
12 same questions today as contained in your direct
13 testimony, would your answers be the same?
14 A. Yes, they would.
15 MR. PURDY: Mr. Chairman, given that,
16 I have nothing further to do but ask that the direct
17 testimony of Beverly Barker be spread upon the
18 record as if read, and Exhibit 107 be identified.
19 COMMISSIONER HANSEN: That testimony
20 will be spread upon the record if there's no
21 objections. So ordered.
22 (The following prefiled direct
23 testimony of Ms. Barker is spread upon the record.)
24
25
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HEDRICK COURT REPORTING BARKER (Di)
P.O. BOX 578, BOISE, ID 83701 Staff