20040527Responses of Avista to Potlatch.pdf

Avista Corp.
1411 East Mission PO Box 3727
Spokane, Washington 99220-3727
Telephone [phone]
Toll Free 800-727.9170
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UTILITIES COr"lrliSSION
May 26, 2004
Conley E. Ward
GIVENS PURSLEY LLP
601W. Bannock Street
PO Box 2720
Boise, ill 83701-2720
Re:Production Request of Potlatch Corporation
in Case Nos. A VU-04-01 and A VU-04-
Mr. Ward
I have attached one copy of Avista s response to Potlatch Data Request No.(s) 31 , 31(C),
, 33(C), 35 , 36, 37, 39, 40, 41 , 42, 43, 44, 46B, 47, and 49.
If you have any questions, please call me at [phone] or Don Falkner at (509) 495-
4326.
Mike
Rate Analyst
Enclosures
Cc:S. Woodbury
D. Peseau
A. Yankel
(IPUC)
(Utility Resources, Inc.
(Yankel & Assoc, Inc.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01 / AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNES S
RESPONDER:
DEP ARTMENT:
TELEPHONE:
5/21/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide an update as of March 31, 2004 of the CS2 construction cost figure cited at
Mr. Lafferty page 24, lines 4-
RESPONSE:
The requested materials are being provided with A vista s data response to Potlatch, number
31(C). The materials provided contain TRADE SECRET or CONFIDENTIAL information
and are separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D , Idaho Code.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU - E-O4-0 1 A VU -O4-0 1
Potlatch
Data Request
DATE PREPARED:
WITNES S
RESPONDER:
DEP ARTMENT:
TELEPHONE:
5/23/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide an update as of the same date of the amounts cited by Mr. Lafferty at page 25,
lines 3-
RESPONSE:
Please see response to Potlatch Data Request No. 31(C).
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01/ A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNES S
RESPONDER:
D EP AR TMENT:
TELEPHONE:
5/22/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide itemized cost components and documentation of the $3.7 million of CS2
operating costs Mr. Lafferty cites on page 28 , lines 13-15.
RESPONSE:
The requested materials are being provided with A vista s data response to Potlatch, number
33(C). The materials provided contain TRADE SECRET or CONFIDENTIAL information
and are separately filed under IDAPA 31.01.01 , Rule 067, and Section 9-340D, Idaho Code.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01/ A VU-O4-
Potlatch
Data Request
D ATE PREPARED:
WITNES S
RES PO ND ER:
DEP ARTMENT:
TELEPHO NE:
5/14/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please identify by name and title each individual participating in, making, or approving each of
the 4 hedging transactions identified as Deal A and Deal B , and describe the role each played in
the transactions.
RESPONSE:
The following individuals had a role in the four transactions comprising Deal A and Deal Band
are listed along with their job titles at that time:
Gary Ely Chairman, President and CEO
Kelly Norwood
Ed Groce
Bob Gruber
Vice President & General Manager, Energy Resources
Manager, Wholesale Marketing
Manager, Natural Gas
Pat Gorton
Bob Lafferty
Jason Thackston
Manager, Risk Management
Wholesale Power Manager
Wholesale Power Manager
Bob Gruber, Ed Groce, Pat Gorton, Bob Lafferty and Jason Thackston gathered information
reviewed resource needs, contacted potential brokers, sellers and transporters of natural gas and
discussed firm natural gas transportation alternatives and availability, firm natural gas delivery
alternatives, and the fixed for floating hedge transactions. Kelly Norwood participated in review
of alternatives and provided executive guidance. Gary Ely authorized the two transactions
labeled as Deal A as required by the Risk Policy based on the length of delivery term. Kelly
Norwood authorized the two transactions labeled as Deal B as required by the Risk Policy based
on the length of deli very term.
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
5/14/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please identify by name and title each individual directly authorizing each of Deals A and B.
RESPONSE:
Please see response to Potlatch Data Request No. 35.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQ UES TER :
TYPE:
REQUEST NO.
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
D EP AR TMENT:
TELEPHONE:
5/14/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please identify by name and title the highest-ranking individual aware of each of Deals A
and B prior to the entering of each transaction.
RESPONSE:
Gary EI Y - Chairman, President & CEO
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01 / A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RES PO ND ER:
D EP AR TMENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please indicate the trading limit or exposure in dollars that any A vista trader or transactor may
engage in, per transaction, if any. Provide the same information for all individuals involved in
Deals A and B even if no longer in A vista s employ. Provide sufficient details to fully explain
how the trading limits are enforced.
RESPONSE:
The Company s Energy Resources Risk Policy has been provided in Exhibit No.5, Schedule 3 of
witness Richard Storro s Pre-filed Direct Testimony. Management accountability for
enforecement of deviations from the Risk Policy is explained in that document. The term limits
contained in that policy specify which employees are authorized to enter into transactions of
different terms. The authoizations for the four transactions comprising Deal A and Deal B are
explained in response to Potlatch Data Request No. 35.
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
Idaho
AVU-O4-01 / AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
DEP ARTMENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide transaction summaries for each and every hedge entered into by A vista Utilities in
2002 and 2003.
RESPONSE:
Please see response to Data Request No. 34 (C).
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO:
REQUEST:
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
Idaho
A VU-04-01/ A VU-04-
Potlatch
Data Request
DATE PREP ARED:
WITNES S
RES PONDER:
DEP ARTMENT:
TELEPHONE:
5/20/2004
Bob Lafferty
Bill Johnson
Power Supply
[phone]
Provide on a monthly basis, November 2001 through March 2004, a comparison of each
month's Deal A and Deal B hedged price actually paid by Avista Utilities with the monthly
deli vered index -based price for each corresponding month.
RESPONSE:
Please see attached worksheet.
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VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01/ A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
OS/25/2004
Bob Lafferty
Pat Gorton
Corporate Risk
[phone]
REQUEST:
Please identify which of the transactions on Exhibit 7, Schedule 19 were for physical natural gas
and which were financial trades.
RESPONSE:
All of the transactions in Exhibit No.7, Schedule No. 19 were for the purchase of physical
natural gas except for those transaction on April 10, April 11 , May 2, and May 10, 2001.
Financial transactions on April 11 and May 2, 2001 were made to fix the price of an index
physical purchase made on March 9, 2001. Financial transactions on April 10 and May 10, 2001
were made to fix the price of an index transaction made on March 22, 2001.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01 / A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
. RESPONDER:
DEPARTMENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide a list with details of all other A vista Utilities hedging transactions for periods
longer than 3 months entered into since January 1 , 2000.
RESPONSE:
Please see response to Data Request No. 34 (C). Transactions with terms for periods longer than
3 months are flagged with an asterisk.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01 / A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNES S
. RESPONDER:
DEPARTMENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please refer to Mr. Lafferty s testimony on page 31 , lines 5-6 and explain how the 4 hedging
transactions (as opposed to the original index purchase) added to gas supply.
RESPONSE:
The testimony cited on page 31 , lines 5-6 refers to the Company s net electric resource position.
It is the Company s practice to only include that amount of electric energy that is at fixed prices
to net against its loads and obligations on the Position Reports. The reason is because energy
that is based upon an index price has not eliminated the risk that energy price may increase due
to an escalating index. While an index product may assure delivered supply, it does not hedge
against the potential of future price run-up.
The price of electric energy may be fixed by hedging the price of electricity or by hedging the
price of natural gas used to generate electricity. The four hedging transactions fixed the price of
index-based natural gas with which to generate electric energy. The Company used those
transactions to reduce its net system position and to reduce its risk of having to incur higher costs
to acquire electric energy in the marketplace.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01 / A VU-O4-
Potlatch
Data Request
46(B)
DATE PREPARED:
WITNESS:
. RESPONDER:
DEP ARTMENT:
TELEPHONE:
OS/25/2004
Bob Lafferty
Pat Gorton
Corporate Risk
[phone]
REQUEST:
Please explain how the price for the swaps between A vista Utilities and A vista Energy was
determined or negotiated.
RESPONSE:
During the period February through May of 2001 the company received periodic quotes from
various counterparties for the purchase of natural gas at various delivery points and time frames.
However, during that timeframe, the verbal quotes received were not regularly recorded if a
transaction was not executed. The Company also reviewed NYMEX forward closing price
information available in publications as well as other daily price information from Enron Canada
Corp., Gas Daily and Inside FERC. In addition, the Company periodically received forward
price information from Avista Energy for gas delivery point at AECO, Sumas, Rockies and
Malin based on the basis differential from published NYMEX prices.
Avista Energy provided a market-based quote to fix the price on 10,000 dkth on April 10, 2001
and on the remaining 10,000 dkth on May 10, 2001. In each of these cases, A vista Utilities made
comparisons of the A vista Energy prices to market information acquired as described above, as
described in the Pre-filed Direct Testimony and Exhibits of Robert Lafferty, and as described in
response to Potlatch Data Request No. 38.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO:
Idaho
A VU-04-01 / A VU-04-
Potlatch
Data Request
DATE PREPARED:
WITNES S
RESPONDER:
DEP ARTMENT:
TELEPHONE:
5/20/2004
Bill Johnson
Bill Johnson
Power Supply
[phone]
REQUEST:
Please provide a detailed explanation of the reference in Exhibit 10 , Schedule 1 , line 67
to a "Puget Sale" in the amount of $10,279,000.
RESPONSE:
The sale to Puget Energy was a 15-year agreement that ended December 31 2002. In
2002 revenue from the sale was $10,279,150. The amount of energy delivered in the 2002 test
year was 216,810 MWh, based on 33 MW of capacity and a 75% capacity factor.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01 / AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RES PO ND ER:
DEP ARTMENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Re: Exhibit 7, Schedule 21, page 1 of 70. Please provide a detailed explanation with supporting
documents for the statement "Seemed to be a lack of transport available Newport not interested
in releasing to Av. Had lost out on bid for GTN transport available 11/1/02"
RESPONSE:
The Company s efforts to secure firm natural gas transportation as an initial approach to securing
firm delivered natural gas to Coyote Springs is described in the Pre-filed Direct Testimony of
Robert Lafferty on pages 37 - 38. As stated in testimony on page 37, lines 24 - 25, the
Company was unsuccessful in securing firm transportation capacity in the limited open season
offering by PG&E GTN. Newport Northwest was awarded that capacity, but indicated that they
were not interested in releasing it to A vista Utilities at their cost.
CONFIDENTIAL ATTACHMENTS