20090511AVU to IFG 1-17.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170 ~:: ;""
"',..,. \;j
~~'V'STA.
Corp.
2009 HAY II Pt1 2: 48
May 07, 2009
Dean J. Miler
McDevitt & Miler LLP
420 West Banock Street
P.o. BOX 2564-83701
Boise, ID 83702
Re: Production Requests ofIdaho Forest Group in Case Nos. A VU-E-09-01 and A VU-G-09-
01
Dear Mr. Miler,
Enclosed are an original and one copy of Avista's responses to Idaho Forest Group's production
requests in the above referenced docket. Included in ths mailing are Avista's responses to
production requests 001 through 017. The electronic versions of the responses were emailed on
05/07/09 and are also being provided in electronic format on the CDs included in this mailing.
Also included are Avista's CONFIDENTIAL responses to PR 008C and 009C. These
responses contain TRAE SECRET, PROPRIETARY or CONFIDENTIAL information and
are separately fied under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code,
and pursuat to the Protective Agreement between A vista and Idaho Forest Group dated
February 2, 2009. They are being provided under a sealed separate envelop, marked
CONFIDENTIA.
If there are any questions regarding the enclosed information, please contact meat (509) 495-
4546 or via e-mail at j oe.miler(gavistacorp. com
Sincerely,
9.~"'-"'-
... .~
Joe Miler
Regulatory Analyst
State & Federal Regulation
Enclosures
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JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
AVU-E-09-01/ AVU-G-09-01
Idaho Forest Group
Production Request
IFG-001
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
04/29/2009
N/A
Joe Miller
State & Federal Reg
[phone]
Please provide a copy of all responses made by A vista Corporation to discovery requests
submitted to Avista Corporation by the Commission Staff
RESPONSE:
Please see the previously provided CD's sent to the Idaho Forest Group service list on 4/29/09.
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JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09~011 A VU-G-09-01
Idaho Forest Group
Production Request
IFG-002
DATE PREPARD:WISS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
0412912009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Regulation
[phone]
Please provide a copy of the Settlement Agreement between the CDA Tribe, the United States
Deparent of the Interor and Avista Corporation. (Direct Testimony of Scott Morrs, Pg. 5).
RESPONSE:
Please find attached the Master Settlement Agreement (IFG _PR_ 002-Attachment-A) and an Index
of Settlement documents (IFGYR_002-Attachment-B). Due to the volume of documents, the
Company wil make those available upon request.
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 1 of 13
EXHIT 2 TO STIULATED MOTION, CASE NO. CV-08-526
MATER SETTMENT AGREEMENT
COEUR D~ENE TREAN AYlTA CORPORATION
Ths Master Settement Agreement (which includes al attchments hereto) is entered into
as of December 16, 2008, between the Coeur d'Alene Tnbe (UTribe") and A vista Corporation
("A vista") (hereinafer individualy referenced to as a "Party" or collectively as the "Pares")
and is intended to resolve comprehensively a number of issues between the Pares, including but
not limted to, Avista's obligations under federal law arsing out of or relating to its use,
occupancy, and enjoyment of the submerged lands of Coeur d'Alene Lake, Hepton Lake, and the
S1. Joe and Coeur d'Alene Rivers ("Submerged Lands") withn the curent boundares of the
Coeur d'Alene Indian Reservation l'Reservation") and other lands held in trst for the Tnoe by
the United States within the Reservation.
RECIALS
1. The Tribe is a federally-recognd Indian trbe which occupies the Reservation in
nort em Idaho. The Tribe bas a governg Tribal Constitution and Tribal Council duly
recogned by the Secretar of the Intenor.
2. A vista, whose corpomte name prior to Januar i, 1999, was The Washington
Water Fower Company, was organd under the laws of the Terrtory of Washigton in March
of1889. Avista is now orgaed under the laws of the State of Washington.
3. Coeur d'Alene Lake ("Lake'') is located in Idaho approximately 13 miles from the
Wasgton state line. Its major tributes are the St. Joe, St. Mares, and Coeur d Alene Rivers.
4. The Spokane River originates at the natu outlet of the Lake and flows westerly
approxitely 111 nnles to the confuence with the Coltmibia River in easern Washigton.
5. Since 1902, Avita ba constrted and maitaed utilty poles, lies, equipment,
and facilties on, over and under a porton oftbe Submerged Lands and other lands held in trst
for the Tribe by the United States within the Reseration.
6. In 1907, Avista began to store water on the Lake and afected trbutaes durg
par ofthe year.
7. Such water storage occurs on a poron of the Reservation, including the
approxiate southern one-thd of the Lake and certai trbuta waters.
8. With the exception of the Submerged Lands in Hepton Lake with the
Reservation that the Tribe has owned since 2004 in fee simple, the United States holds title, in
trst for tbe Tribe, and the Tribe holds title as the beneficialy interested par of the treeship.
to the Submerged Lands with the curent Reservation boundaries, as defied in the ageement
I FG _PR_ 002-Attachment-A Page 1 of 13
Case 2:08-cv-00526-BLW Document 6-3 Filed 12/17/2008 Page 2 of 13
. concluded between the United States and the Tribe on September 9, 1889, and ratified by
Congress in the Act of Marh 3, 1891,26 Stat. 1027. United States 'V. Idaho, 95 F.Supp.2d 1094,
1117 (D. Idaho 1998), affd, Idaho 'V. United States, 533 U.S. 262 (2001).
9. In that Act of Marh 3, 1891, Congress ratied a prior conveyace by the Tribe
("Seltice Conveyance") to Frederck Post of submerged lands and uplands at Post Falls, Idaho,
on the SpokareRiver withn'the origial 1873 boundaries of the-Reservation. AvIsta later
acquied Post's interest in such lands and constcted thereon in 1906 its Post Fals
Hydrelectrc Development ("BED"). The Parties dispute whether and to what extent, if any, the
Seltiee Conveyance granted to Frederick Post, and hence A vista, the right to store water on the
Submerged Lands wi the curnt boundares of the Reservation.
10. In 1909, Avista applied for and received a permit ("1909 Permit") from the
United Sttes Deparent of the Interior ("DOl"), without the consent of the Tribe, to store water
on a designated porton of the lands with the curent boundares of the Reservation. The Pares
dispute whether and to what extent, if any, the 1909 Permit grted to A vista the right to store
water on the Submerged Lands with the curent boundares of the Reservation.
11. From i 907 to 1941, A vista generaly operated the Post Falls HE to hold the
Lake and its afected trbutaes as close to an elevation of2,126.5 feet as practicable durg par
of each year, includig water storage on Submerged Lands within the Reservation..12. Since 1941, Avista generally has operated the Post Falls BED to hold the Lake
and its afected trbutares as close to an elevation of2,128 feet as practicable durg part of each
yea, including water storage on Submerged Lands withn th Reservation.
13. Purant to the provisions of Par I of the Federal Power Act ("FPA"), 16 U.S.C.
§§ 791 et seq., Avista is the existig Federal Energy Regulatory Commssion ("FERCU) licensee
of the Spokane River Project No. 2545 ("SRP"), which curently includes withn its licensed
boundares: the Post Falls HED in Idaho first licensd by FERC effective July I, 1981, which
includes withn its licensed boundares the Submerged Lands witlun the Reservation upon which
water is stored; and the downstream Upper Falls, Momoe Street, Nine Mile and Long Lake
HËDs ("downam HEDsU) in Washigton first licensed by FERC in 1972 (retroactive to
1965).
14. The curent license for the SRP expird on July 31,2007, and the SRP is being
operated under an anual license issued by FERC.
15. On July 28, 2005, Avista filed with FERC two applications for new licei;se to
provide for the continued opemtion of the BEDs curently licensed as par of the SRP: one
application for new license coverg the Post Falls BED which, if grted, would resut in
contiued use of the Submerged Lands within the Reservtion for water storage and other
puroses; and one application for a new license coverig the four downstream HEDs.
.16. The Tnbe and A vista recently have entered into a Settement in Pnciple
comprehensively resolving a number of disputes between them. The Settlement in Principle
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I FG _PR _ 002-Attachment-A Page 2 of 13
Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 3 of 13
. provides that the Pares shall execute a master agrement that identies all of the separate
agreeents between the Tribe and Avista, and that all of the separate agreements need to be
executed before a settlement agrement is effective.
NOW, THOREt in consideration of the terms of ths Agreement, the separte
agreements and permts identified in Section A below, and the Settement in Principle, the
Parties agre as follows:
A. Separate Agreements
The separte agreements and Tribal permits which need to be executed prior to ths
Maser Agrement becomig effective, and which along with ths Maser Agreement shall be
jointly filed by the Pares as par of a proposed Consent Judgment to be entered in the United
States Distrct Cour for the Distct ofIdaho, are identified below:
1.Trespass Clai (1907 - June 30,1981) Agrement
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Attachment A, which is incorporated by reference herein, is the Trespass Clai
(1907 - June 30,1981) Agreement resolvig the Tribe's trspass clai for
Avista's use, occupancy, and enjoyment of the Submerged Lands witl the
curent boundares of the Reservation dunng the period from 1907 to June 30,
1981, the day before the point in time (July 1,1981) when FERC first assumd
jursdiction over such lands;
2.Section lOee) Payments (July 1. 1981- End of Curent License) Agreement
Attachment B, which is incorporated by reference herein, is the Agreement with
resect to Section 10(e) Payments (July i, 1981 - End of Curent License) ,
resolving A vista's obligations for any payment of anual charges pursuant to FPA
Section 10(e), 16 U.S.C. § 803(e), and headwater benefits pursuant to FPA
Section 10(f), 16 U.S.C. § 803(t), for Avista's use, occupancy, and enjoyment of
the Submerged Lands within the curent boundares of the Reservation for the
penod from July i, 1981, to the day before the effective date of any new FPA
license issued by FERC to A via in pendig relicensing proceedings involvig
the use of such Submerged Lands;
3. Section 1 OCe) Payments (For the Term of Avist's New License) Agreement
Attachment C, whch is incorporated by reference herein, is the Agreement with
respect to Section 10(e) Payments (For the Term of Avista's New License)
resolvig Avista's obligations for any payment of anual charges pursuant to FP A
§ W(e) and headwater benefits puruantto FPA § 1O(t) for Avist's use,
occupancy, and enjoyment of the Submerged Lands within the curent boundares
of the Reservation for the term of any new FP A license issued by FERC to A vi.
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IFG _PR_ 002-Attachment-A Page 3 of 13
Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 4 of 13.
4.
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in pending relicensing proceedigs involving the use of such Submerged Lands
and any subsequent anua licenses;
Tribal Taxation Agreement
Attchent D, wluch is incorporated by reference herein, is the Tribal Ta.i:ation
Agreement addressing futue taation by the Tnõe of Avist's use, occupancy,
and enjoyment of (a) the Submerged Lands withn the curent boundares of
the
Reservation for water storage and other puroses durg the ter of any new FP A
license issued by FERC to A vista in pending relicensing proceedigs involvig
use of such Submerged Lands and any subsequent anualicenses, and (b) those
Submerged Lands and other Tribal trst lands with the curent boundares of the
Reservation relating to rights-of-way to be granted by DOl's Bureau ofIndian
Afais ("BIN'), consistent with the Rights-of-Way Agreement and Consent
beteen Avista and the Tnbe (Attchment E), for.Avista's existig utility lies,
poles, equipment, and facilties on. over and under all suell afected lands for the
term offi (50) years from the date of execution of that Rights-of-Way
Agreement and Consent;
5.Rights-of-Way Agreement and Consnt
Attachent E, which is incorporated by reference herein and which includes as
Attachment No. 7 thereto the Coeur d'Alene Tribe Pennt For A vista
Cororation's Existing Utility Facilties Located On, Over And U.nder Submerged
Lands Within the Coeur d'Alene Indian Reservation, is the Rights-of-Way
Agreement and Consent executed by the Pares, consistent with the Gran of
Easements for Rights-of-Way to be granted by BIA on. over and under ceai
Submerged Lands and other Tribal trt lands with the curent boundares of the
Reseration relatig to Avista's existng utility poles, lines, equipment, and
facilties on, over and under all such afected lands for the tenn of fift (50) year
from the date of execution of that Rights-of-Way Agreement and Consent by the
Tribe and Avist
6.Tnbal Water Storagelse Pert
Attchment F, which is incorprated by reference herein, is the Water
StoragelUse Permt ("Water Permt") issued by the Tribe puruant to Tribal Code
for the term of any new FPA license issued by FERC to A vista in pending
relicensing proceedigs involving the use of the Submerged Lands with the
curent boundares of the Reservation and any subsequent anua1licenses;
7.Federal Power Act Section 4(e) Agreement
Attachent G, which is incorporated by reference herein. is the Agrement
among DOl, the Tribe and Avist concerg FPA § 4(e), 16 U.S.C. § 797(e),
Mandatory Conditions for the Spokane River Project, FERC No. 2545, including
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IFG _PR_ 002-Attachment-A Page 4 of 13
Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 5 of 13
. Appendi A thereto, wluch is the Final Section 4(e) Conditions, and Attachment
B thereto, which is the Tribe's waiver of cerain futue claims against the United
States, for the term of any new FP A license issued by PERC to A vista in pending
relicensing proceedings that includes with the licensed boundares the
Submerged Lands with the curent boundaries of the Reseraton and any
subsequent aiuallicenses ("4(e) Agreement").
8. Supplemental Agrement to Federal Power Act Section 4(e) Agreement
Attchment H, which is incorporated by reference herein, is the Agreement
between A vista and the Tnbe that establishes the proces the Pares wil follow to
resolve certa specified disputes, establishes the process the Pares wil follow
with respect to legal actions brought by either Par against the other for breah
and/or enforcment of any of the 4(e) Agreement's terms and any contract entered
into between Avista and the Tribe pursuant to Secton 4.4 of the 4(e) Agrement,
specifies tlie cours tliat will have jursdiction over such lega actions and the law
tht wil apply in such lega actions, provides for the Tnbe's waiver of sovereign
imunity to alow Avista to intiate an pure such legal actions agaist the .
Tribe, and provides for the Tribe's release of A vista from certain specified clais
("Supplemental Agreement").
B. PERC License and Protection ofReservatioD Resources.. 1. As specified in Section 2.1 of the 4(e) Agreement, witln 45 days of the Effctive
Date of the 4(e) Agreement, Avista shall fie wi PERC a Join Explantory Statement that wil
include Avist's request that FERC: (a) consider Avist's July 28',2005 dual license
applications for the SRP as an application for a single new license; and (b) issue a single new 50-
year license covenng all five of the SRP BEDs, including the Post Fals HED.
2. The Tribe agrees that FERC's issuance of a single new license as requested in the
Joint Explanatory Statement referenced in Section B 1 hereof shall not consttute a material
change in facts or circumstaces under Section 3.3 of the 4( e) Agreement attched hereto as
Attachment G.
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3. Notwithstding the request included in the Joint Explanatory Statement
referenced in Section B.1 hereof, each Par shal have the nght to make any legal, factu, or
policy arguent, asserton, and clai it may choose to make, and to tae any action it may
choose to tae, with respect to whether FERC in any subsequent license prceedig should issue
a single new license coverig all five of the SRP HEDs or issue separate new licenses for (a) the
Post Falls HED and (b) the four downtream BEDs of the SRP. Furer, neither Avist's fiing
of the Joint Explanatory Statement referenced in Section B.1 hereof nor FERC's action in
response thereto (1) shall in any way prejudice either Par's nght (a) to mae any arent,
asserton, and clai it may choose to mae durg subsequent license proceedings that FERC
should issue a single new license or separte new licenses for (i) the Post Fals BED and (ii) the
four downeam HEDs of the SRP or (b) to take any action it may choose to take with respect to
FERC's action in response to such arguments, assertons, and clai or (2) shall be cite as
precedent agai any such argument. asserto~ claim or action.
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I FG _PR_ 002-Attachment-A Page 5 of 13
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 6 of 13
C. Conditons Precedent
This Master Agreement and tlie sepaate agreements and perms identied in Section A
hereof and incorporated by reference herein. shall be collectively and separately effective only
upon each of the followig conditions in t1s Section C being met; provided; however, tliat the
4( e) Agrement and Supplemental Agreement shall be effective as specified in those agreements.
The subsequent termation of any of such separate agrements or permts, including tlie 4( e)
Agreement and the Supplementa Agement, shall not afect the validity oftlie Master
Agreement and such other separate agreements and pennits.
1. The Tribe's duly authorized governg body, complying with applicable law,
lawflly authorizes its representative to excute, and such representative so executes, ths Maser
Agreement and all of the separate agreements and peimts identified in Section A hereof on
behalf of the Tribe;
2. Avist's duly authorized governg body, complying with applicable law.
lawfly authorizes its representative to execute, and such representative so executes, ths Maste
Agrement and all of the separate agrements identified in Section A hereof on behalf of Avista;
3. The Tribe, or the Tribe and A vista, as appropriate, though their respective legal
counsel, and afer lawfl authorition by their respective governing bodies, fie in the United
States Distrct Cour for the Distrct ofIdaho (a) the Tribe's Complaint for Declartory Judgment
and Trespass Damages puruant to 28 U.S.C. 2201, (b) their Stipulated Motion to Incorporate
Agreements in a Judgment, and ( c) thei proposed form of a Judgment, provided, howeve,., that
the declination of that Distct Cour to enter the Consent Judgment with respect to and including
ths Maser Agreement or any other agreement identified and incorporated by reference here~ in
whole or in par, shal not afect the collective or separte effectiveness of ths or any other such
agreement; and
4.The Deparent of the Interior executes the 4( e) Agreement
BIA executes the Grant of Easements' for Rights-of~ Way identifed in Section A 55.
hereof.
D. Reservation of Cls and Defenses
Ths Master Agreement, and the separate agreements and permts identified in Section A
hereof and incorporated by reference herein) are not intended and shall not be constred to apply
to, address or resolve, or submit to the jursdiction of FERC or any cour any clais the Tribe
may have with respect to the submerged lands of the Lake that ar located outside the curent
boundares of the Reservation or that lie with the boundares of Hey bum Stte Park with the
curent Reservation boundaries. The Tñbe reserves all of its rights and clais as to the above-
descnbed submerged lands and A vist retans al of its defenses. In addition) except to the extent
set fort in Appendix B to the 4(e) Agreement, nothg in ths Master Agreement, and the
separate agreements and permts identified in Section A hereof and incorporated by reference
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I FG _PR_ 002-Attachment-A Page 6 of 13
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 7 of 13
hereint is intended or shal be construed to apply to, address or resolve any clais the Tribe may
have agaist the United Statest or any governenta deparentt agency or offcer thereoft
ansing out of. or related to or in any way connected witht the use, occupancy. and/or enjoyment
by Avista of the Submerged Lands with the curent boundares of the Reservation, and the
Tribe reserves al of such rights and clais against the United States.
E. CODBideration
i. All of the obligations each Par agreed to incur under th Master Agreement and
the separate ageements and permts identified in Section A hereof and incorporated by reference
herein served as consideration for the other Par's agrement to incur al of its obligations under
ths Master Agreement and such separate ageements and pennts. In recogntion of this and to
preserve the comprehensive resolution of issues reflected in ths Master Agreement and such
separte agreements and perts, the Pares fuer agree as follows:
a.To the extent that FERC or any federal cour enters a fial order not
subject to fuer judicial review or appeal that reduces. or indicates that
A vist does not have to pay. the ful amount of the payments specified in
Section A.I of the Section 10(e) Payments (July It 1981- End of Curent
License) Agrement or in Section A.2 of the Section 10( e) Payments (For
the Term of Avist's New License) Agrement, Avista agres that it shall
pay to the Tribe as consideration for al of the obligations incurred by the
Tnbe identified above, such additional amounts as are necessar to ensure
that the Tribe receives the full amount of the payments specified in
Secton A.I of the Section lO(e) Payments (July 1. 1981 - End of Curent
License) Agreement and in Section A.I of the Section 10(e) Payments
(For the Term of Avista's New License) Agreement.
b. To the exent that FERC or any federal cour enters a fial order not
subject to fuer judicial review or appeal that increses the amount of
payments to be made by Avista over the amounts specifed in Section A.I
of the Section IO(e) Payments (July i, 1981- End of Curent License)
Agrement or in Section A.2 of the Section IO(e) Payments (For the Tenn
of Avista's New License) Agreement, the Tribe agrees that it shall repay
to A vista the amount of any such increase in payments withn 30 days of
the date that Avist makes any such increased payments to the Tribe.
2. Any final order enteed by PERC or any federal cour described in Sections E.lo
a. or b. bereofshall not dinish or expand in any way Avist's obligations to make payments as
specifed in SectionA.I of the Section 10(e) Payments (July I. 1981-End of Curnt License)
Agreement or in Section A.2 of the Section 10(e) Payments (For the Term of Avisla's New
License) Agreement, and the Pares acknowledge and affirm that Avist's obligations to malee
such payments, as specifed in Section E.l.a. hereoft and the Tribe's repayment obligation
puruant to Section E.l.b. hereof may be enforced if necessar in the United States Distrct Cour
for the Distct of Idaho consistent with Section H.2 hereof.
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I FG _PR_ 002-Attachment-A Page 7 of 13
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 8 of 13
F. Compromise Settement
This Master Agreement and attchents thereto is a compromise settement of disputed
claims. Avista does not admt liabilty and reserves its defenses. The Tnbe reserves all ofits
rights and clais as stated in Section D hereof.
G. Fiber Optics
The Pares agree to discuss in good faith a futue agreement for the Tnbe's access to
A vista's fiber optics.
B. Dispute Resolution
i. Should the Paries' best efforts in resolving issues regarding the interpretation or
enforcement of the terms of this Master Agreement, or the separte agreements and perts
identified in Section A hereof and incorporated by reference herein, fail, the dispute shall be
submitted to an inormal, non-binding mediation process that shal not exceed 90 days in lengt
uness agred otherwse by the Pares faciltated by a trained mediator;provide~ however, that
any dispute regarding the 4( e) Ageement or the Fin Section 4( e) Conditions shall be governed
by the Dispute Resolution Section (Section 7) set fort in the 4(e) Agreement;providedfurtheri
huwever, that disputes regarding A vista's compliance with the obligation set fort in the fit
sentence of Section 4.4 of the 4( e) Agrement shall be governed by Section H.2 hereof without
mediation. The cost of any mediation shall be shared equally.
2. If a good faith effort to resolve disputes though mediation fails, or in the case of
disputes regarding A vista's compliance with the obligation set forth in the first sentence of
Section 4.4 of the 4(e) Agreement, each Par shal have the abilty to employ legal process
agast the other Par solely to enforce the terms of ths Maser Agrement and the separte
ageements and peits identified in Section A hereof and incorprated by reference herein, and
to secure legal relief agaist the other Par, includig compensatory damages, but not punitive,
exemplar, or simlar damages, and equitable remedies, for breach of contrct, to the extent set
fort in tls Section H hereof;provided however, that only equitable relíefshall be avaiable to
enforce the Tribal Taxation Agreement identified in Section A.4 hereof, and that the abilty to
employ legal process to enforce the terms of the 4( e) Agreement identied in Section A.7 hereof
and any contrct entered into between Avista mid the Tnòe puruant to Section 4.4 thereof, and
to secur legal relief, including compensatory damages and equitable remedies, for breach of
contract as to the 4(e) Ageement and such Section 4.4 contracts, sha be as specifed in the
Supplementa Agreement:
a.At the tie ths Master Agrement is signed, the Tnbal Council of
the
Coeur d' Alene "Tribe, as the duly authonzed governg body of the Tribe,
shall execute an express waiver of sovereign immunty, alowig
prosecution of a legal action by A vita agai the Tnbe for breach and/or
enforcement of any of the term of the Master Agrement, and the
separte ageeents and permts identified in Section A hereof and
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incorporated by reference herein, to the extent set forth in that executed
waiver which is Attcluent I hereto. The Parties agree that the Tribe
shall have the right to purue the same enforcement remedies made
avaiable to Avista by vie of the attched waver.
b.Subject to the Parties' use of bindig arbitrtion as set forth in Section H.2
c hereof with respect to actions for monetai relief or damages, and
subject to exhauston of the Tribal judicial and admstrtive remedies
referenced in Section H.2 d hereof if such remedies are available and
adequate, the Pares age tht any such legal actions beteen them shall
be prosecuted in the United States Distrct Court for the Distrct of Idaho.
Except for provisions of ths Maer Agreement or the separate agreements
and pennts identied in Section A hereof and incorporated by reference
herein that are governed by the FPA or other applicable federal law, and
except to the extent that Tribal law is applicable pursuant to Section
H.2.c(3) and d hereof, ths Maser Agreement and the separate ageements
identified in Section A.l though 4 and A.8 hereof and incorporated by
reference herein shall be construed and interpreted in accordance with the
contract law and applicable sttute of limtations of the State of Idaho,
without regard to Idaho's confict oflaw priciples; provided, however,
that except as set fort in th Section H.2.b or in Section H.2 c(3) hereof,
nothng in t1us Agreement, or in the separate agreements and permts,
identified in Section A hereof and incorporated by reference herein, is
intended or shal be constred to recognze the applicabilty of the law of
the State of Idaho, or the jursdction of the Idaho State Cours, to
detenne in any way the natue and exten of any rights reserved by the
Tribe, or held in trust for the Tribe by the United States, puruant to
federal law .
c. If the United States Distct Cour for the Distrct of Idaho declies for any
reason to exercise jurisdiction over any legal action for monetar relief or
damages brought by either Par agaist the other Par pursuant to
Section H.2 b hereof, or if the Pares otherse mutuly agre to use
binding arbitration according to this Section H.2 c hereof, the Pares agree
that any clai by either Par agaist the other Par for monetar relief or
damages for breach of ths Master Agreement and the separate agreements
and permits identied in Section A hereof and incorporated by reference
herein, excluding, however, the Tnbal Taxation Agreement identied in
Section A.4 hereof as to which only equitable relief shall be avaiable.
shall be subject to bindig arbitration accordg to the followig
procedures. uness the Pares mutually agre to use alternative binding
arbitrtion procedures:
(1)Such arbitron shall be admstered by the American Arbitration
Association "'AA") in accordance with the Commercial
Arbitration Rules of th AA in effect at the tie the claim arses,
except as otherwse provided in Section H.2 c(2) hereof. The
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I FG _PR_ 002-Attachment-A Page 9 of 13
Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 10 of 13
. demand for arbitration shall be made within a reasonable time afer
the clai has arsen or afer the United States Distrct Cour for the
Distrct of Idaho has declied to exercise jursdiction over the
clai, but in no event shal it be made afer the date when
institution oflegal proceedigs based on such claims would be
bared by the applicable statute of limtations except in the cas
where that Cour declines to exercise jursdiction over the clai.
(2) In any such arbitration. the arbitrator(s) shall not be empowered to
award damages or moneta relief in excess of compensatory
damages, and each Par expressly waives and foregoes any right
to puntive. exemplar, or similar damages. Each Party shall bear
the cost of its own attorney fees, and uness otherwse agreed
between the Parties, such arbitration shall occur in Coeur d Alene.
Idaho.
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d..
(3)Any award rendered by the arbitrator(s) shall be final and binding
without the nght of either Par to appeal to any cour Any action
to seek an entr of judgment upon such award shall be brought in
the United States Distrct Court for the Distrct ofIdaho in
accordance with applicable law. In the event said Cour declines to
accept jursdiction to enter a judgment with respect to such award.
or if that Cour has declined to exercise jursdiction over the clai
in dispute prior to any award rendered in binding arbitration, then
the Pares agre that any arbitrtion award: (a) in favor ofthe
Tnbe shall be enforced without alteration thereof in the Tnbal
Cour and A vista hereby waives any objection to the jursdiction
of the Tribal Cour to enter and enorce a judgment upon such
award; and (b) in favor of A vista shall be enforced without
alteration thereof in the Idaho Stte Cour and the Tnbe's waiver
of sovereign immity set forth in Attachment I hereto shall waive
any objecon to the jursdiction of the Idalio State Cour to enter
and enforce a judgment upon such awar. The Paries agree that
the exercise of jursdction by the Tnòa and Idaho State Cours. as
well as the application of Tribal law and Idaho State law, pursuant
to ths Section H.2 c(3) hereof, shall be solely and exclusively
limited to enorcement of the award rendered in binding arbitration
and shal be otherwse consient with the provisíons of this Master
Agrement. Either Par may bring an action in the United States
Distct Cour for the Distrct of Idaho challenging a decision by
the Tribal or Idaho State Cour pursuant to ths Section H.2 c(3)
her.eof if that Par deems such decision to be inconsistent with this
Maser Agreement or contr to applicable federal law.
The Pares agree tht neither Par shall file any action in any State Cour
or Tribal Cour seekig relief in any way related to ths Master Agreement
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I FG _PR_ 002-Attachment-A Page 10 of 13
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 11 of 13
or an of the separate agreements and permts identifed in Section A
hereof and incorporated by reference herein, nor shall either Par be
required to exhaust any State or Tribal judicial or admstrative remedies
prior or subsequent to the commencement and ful adjudication of a
judicial action in the Unied States Distrct Court for the Distrct of Idaho,
except as otherse provided (1) in Section H.2 c(3)(a) and (b) hereof, (2)
in the Rights-of-Way Agreement identified in Section A.S hereof, (3) in
the Trib Water Pennt identified in Section A.6 hereof, or (4) in Section
2.3 of the Supplemental Agreement identified in Section A.8 hereof;
pi.ovided, however, that Avista may brig an action in the United States
Distct Cour for the Distct of Idaho challenging any final action taen
by the Tribe pursuant to the judicial or admstrtive remedies referenced
in ths Section H.2 d(2), (3), and (4) hereofif Avista deems such decision
to be inconsistent with tlùs Maser Agreement or contrar to applicable
federal law.
I.Executie Commitee
There is hereby established an Executive Committee consisting ofthe Chaian of the
Tnbal Council and the CluefExecutive Offcer of Avista (and/or their designees). The
Executive Commttee wi meet anually uness otherwse agred. The Executive Commttee
wil review the status of implementig ths Agreement and discuss projects or actities of
mutual interest and benefit to the Pares.
J. Succesors and Assign
This Master Agreement, and the separte agreements and pennts identified in Section A
hereof and incorporated by reference herein, shal bind and inure to the beneft of the respective
successors and assign of the Pares.
K. Medation Costs aDd Fees
Avist waives reimbursement of the $173,695.46 it advanced to the Tribe for mediation-
related costs and expenses.
L. Partes and Authorities
1. The Chaian of the Coeur d'Alene Tribal Council warants that he ha authority
to execute ths Agreement onbehalfofthe Tribe pursuant to the Tribal Council's
Resolution and applicable law.
2. The Chef Executive Offcer of Avista Corporation warants that he has authority
to execute ths Agreement pursuant to the A vita' s Board of Directors' Resolution and
applicable law.
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I FG _PR_ 002-Attachment-A Page 11 of 13
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Case 2:08-cv..00526-BLW Document 6-3 Filed 12117/2008 Page 12 of 13
Executed ths 16th day of December, 2008.
Coeur d Alene Tribe
By:
C~~
Chaian, Coeur d Alene Tribal Council
12
IFG _PR_ 002-Attachment-A Page 12 of 13
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Case 2:08-cv-00526-BLW Document 6-3 Filed 12117/2008 Page 13 of 13
Executed ths 16th day of December, 2008.
A vista Corporation
By:
Scttá~W\~
CEO and Chairman of the Board of Directors
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I FG _PR_002-Attachment-A Page 13 of 13
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A vista - Coeur d'Alene Tribe
SETTLEMENT DOCUMENTS
December 16, 2008
Stipulated Motion to Incorporate Agreements into a Judgment
Exhibit 1 - Order of Referral for Judicially-Supervised Mediation
Exhbit 2 - Master Agreement
Attachment A to Exhibit 2 - Agreement Trespass Claim (1907 - June 30, 1981)
Attachment B to Exhibit 2 - Agreement Section 1 O( e) Payments from July 1,
1981 - End of Curent License
Attachment C to Exhibit 2 - Agreement Section 10(e) Payments for the Term of
Avista Corporation's New License
Attachment D to Exhibit 2 - Agreement Tribal Taxation
Attachment E to Exhbit 2 - Rights-of-Way Agreement and Consent
Appendix 1 to Attachment A - Supplementation to Application for Grant of
Rights-of-Way and Renewal Application for Grant of Rights-of-Way
Appendix 2 to Attachment A - Application for Grant of Rights-of- Way
Appendix 3 to Attachment A - Renewal Application for Grant of Rights-of-Way
Appendix 4 to Attachment E - Quitclaim Deed
Appendix 5 to Attachment E - CDA Resolution 47 (2009)
Appendix 6 to Attachment E - Grant of Easements for Rights-of-Way
Appendix 7 to Attachment E - Coeur d'Alene Tribe Permit for A vista
Corporation's Existing Utility Facilities Located on, Over and Under Submerged
Lands Within the Coeur d Alene Indian Reservation
16. Attachment F to Exhbit 2 - Water StoragelUse Perit
(cont'd)
IFG PR 002-Attachment-B.doc Page 1 of2
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A vista - Coeur d'Alene Tribe
SETTLEMENT DOCUMENTS
December 16,2008
Appendix 1 to Attchment F - Application for Tribal Water StoragelUse Perit
Attachment G to Exhbit 2 - Settlement Agreement Addressing Federal Power
Act Section 4(e) Mandatory Conditions for Spokane River Project, FERC No.
2545
Appendix A to Attachment G -
Appendix B to Attachment G - CDA Resolution 49 (2009)
Attachment H to Exhibit 2 - Supplemental Agreement to Federal Power Act
Section 4( e) Settlement Agreement
Appendix A to Attachment H - Tribal Waiver of Sovereign Immunity
Attachment I to Exhibit 2 - Waiver of Sovereign Imunity
CDA Resolution 46 (2009) - Approving Documents
CDA Resolution 51 (2009) - Approving Intial Payment
Judgment
IFG PR 002-Attachment-B.doc Page 2 of2
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JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0l / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-003
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
04/29/2009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Reguation
[phone]
Please provide a copy of any court order or judgment approving the Settlement Agreement.
RESPONSE:
Please see the final Judgment (IFG _PR _ 003-Attachment-A.pdf) signed by Chief Judge Winmll
dated 12/1812008, and the "Stipulated Motion to Incorporate Agreements into a Judgment"
(IFG_PR_003-Attachment-B) which is referenced in the Judgment.
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Case 2:08-cv-00526-BLW Document 7 Filed 12/18/2008 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
. COEUR d ALENE TRIBE,)
)
)
)
)
)
)
)
)
)
JUDGMENT
Case No. CV-08-526-N-BLW
Plaintiff,
v.
AVISTA CORPORATION,
Defendant.
Pusuant to the settlement of this action and the Stipulàted Motion to Incorporate
Agreements Into a Judgment (Docket No. 6),filed by the Parties in this action on
December 17, 2008, IT IS HEREBY ORDERED AND ADmDGED THAT pursuant to
the terms of the settlement reached by the Pares, Plaintiffs Complaint is dismissed with
prejudice and all of the Agreements and Tribal Permits attached to the Pares' Stipulated
Motion as Exhibit 2 are incorporated into this Judgment and made a part of this
Judgment. This Court wil retain continuing jurisdiction to enforce the tenus of the
Agreements and Tribal Permits consistent therewith. The Cour wil, however,
administratively close the fie subject to reopening at the request of either Par.
'.
DATED: December 18, 2008
_,'" ,;'(""Ili$ t~('.,
..~. 'ê (''f
~'5t.,. ..,.,' .... ;
.: ", . .... .1.
.i "\.tt!' ..'¡"1 \ .. \,'1'rIf..r u\
Õ.~W~
B. WINMILL
Chief Judge
United States District Court
IFG _PR_ 003-Attachment-A.pdf Page 1 of 1
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Howard Funke, ISB No. 2720
Funke & Associates, P.C.
424 Sherman Avenue, Suite 308
P.O.Box969
Coeur dAlene, Idaho 83816
Telephone: [phone]
Facsimile: [phone]
Email: hfue(!indian-Iaw.org
Attorney for Plaintiff, Coeur d Alene Tribe
Wiliam J. Schroeder, ISB No. 6674
Paine Hamblen LL
717 West Sprague Avenue, Suite 1200
Spokane, Washington 99201-3505
Telephone: [phone]
Facsimile: (509-838-0007
Email: wilIam.schreder(!paieharblen.com
Attorney for Defendant, Avista Corporation
UNTE STATES nlSTICT COURT
FOR THE DISTRCT OF IDAHO
Coeur d Alene Tribe,
Plaintiff
vs.
A vista Corporation,
Defendant.
)
)
) Case No. CV -08-526
)
) STIULTE MOTION TO
) INCORPORATE AGREMETS INTO A
) JUGMENT
)
)
)
The Plaintiff Coeur d'Alene Tnoe ("Tnòe") and Defendant Avista Corporation
("Avista") (collectively "the Pares"), by and though their counsel of
record, seek to resolve the
pending controversy as set fort in the Tribe's Complait for Declaratory Judgment and Trespass
Damages filed herein. This controversy raises a number of issues between the Pares, including
but not limited to, the extent of Avista's obligations under federal law arsing out of or relatig to
its use, occupancy, and enjoyment of the submerged lands of Coeur d'Alene Lake, Hepton Lake,
1
I FG _PR_ 003-Attchment-B. pdf Page 1 of 13
. and the St. Joe and Coeur d'Alene Rivers ("Submerged Lands") within the curent boundares of
the Coeur d'Alene Indian Reservation ("'Reservation") and other lands held in trst for the Tribe
by the United States within the Reservation. The Paries therefore submit this Stipulated Motion
to incorporate a comprehensive Master Settlement Agreement ("Master Agreement") reched
between the Pares, as well as seven other settlement agrements and two Tribal permits
attched to and incorporated as par of that Master Agrement, Into this Court's Judgment. The
Paries furter request, and consent to. this Court retaning continuing jursdiction to enforce
between the Parties the terms of all such settement agreements and the Tribal permits. consistent
with the terms thereof. As grunds therefore, the Pares submit the following:
1. This Court has original subject-matter jurisdiction over ths action under 28
U.S.C. § 1331 (federal-queston jursdiction suIts) and § 1362 (federal-question jursdiction suits
"brought by any Indian trbe or band with a governing body duly recognized by the Secreta of.
.
the Interior"). as a civil action wherein the matter in controvers arses under the Constituon.
laws, or treaties of the United States. United States v. Pend Oreile Public Utility Dist. No.1, 28
F.3d 1544.1549 n.8 (9th Cir. 1994). cert. denied. 514 U.S. 1015 (1995) ("federal law controls an
action for trespass on Indian land. See County of Oneida v. Oneida Indian Nation, 470 U.S. 226.
234 (1985) (right ofIndians to occupy lands held in trst by theUnited States for their use is 'the
exclusive province of federal law"')). Issuance of a declaratory judgment is authorized pursuant
to 28 U.S.C. § 2201. Venue is proper under 28 U.S.C. § 1391(b).
2. The Tribe is a federally-recognzed Indian tnbe which occupies the Reservation in
nortern Idaho. The Tribe has a governing Tribal Constitution and Tribal Council duly
recognzed by the Secreta of the Interior withn the meaning of 28 U .S.C. § 1362.
2
IFG _PR_ 003-Attachment-B.pdf Page 2 of 13
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3.Avista, whose corporate name prior to Januar i, i 999, was The Washington
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IFG _PR_ 003-Attachment-B.pdf page 3 of 13
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United States within the Reservation, for the purposes of constrcting and maintaining utility
poles, lines, equipment, and facilties on, over and under such lands, have constituted and
contiue to constitute trespass on, over and under such lands without the consent oftlie Tribe and
without the payment of fair compensation to the Tribe in violation of the 1873 Executive Order
of President Grat establishing the Reservation, subsequent congressionally-ratified Agreements
between the Tribe and the United States, other federa statutes and reguations, and federal
common law. Avist admits that federal law applies but disputes that claim and alleges
afrmative defenses thereto, while the Tribe disputes those defenses ("Rights-of-Way Dispute").
The Federal Energy Regulatory Commission ("'PERC") is without jursdiction to resolve that
dispute.
Water Storage Dispute
9. In 1907, A vista began to store water on Coeur d Alene Lake ("Lake") and
afected trbutares during par of each year. Such water storae occurs on a porton of the
Reservation, including the Submerged Lands in the approximate southern one-third of
the Lake
and certn trbuta waters.
10. From 1907 to 1941, Avistgeneraly operated the Post Falls Hydroelectrc
Development ("RE") to hold the Lake and its afected trbutaries as close to an elevation of
2,126.5 feet as practicable dung par of each year, including water storage on the Submerged
Lands within the Reseration.
11. Since 1941, Avist generally has operated the Post Falls BED to hold the Lake
and its afected trbutaies as close to an elevation of2,128 feet as practicable durng part of each
year, including water storage on the Submerged Lands within the Reservation.
4
IFG _PR_ 003-Attachment-B.pdf Page 4 of 13
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12. Pursuant to the provisions of Par I of the Federal Power Act ("FPAIf). 16 U.S.C.
§§ 791 et seq., Avista is the existig FERC licensee of the Spokane River Project No. 2545
("SRP"), which currntly includes within its licensed boundares: the Post Falls HED in Idaho
first licensed by FERC effective July 1. 1981, which includes within its licensed boundares the
Submerged Lands withn the Reservation upon which water is stored; and the downstam Upper
Falls, Monroe Street, Nine Mile and Long Lake HEDs ("downstream HEDs") in Washington
first licensed by FERC in 1972 (retractive to 1965).
13. The curent license for the SRP expired on July 31, 2007. and the SRP is being
operated under an anual license issued by FERC.
14. On July 28. 2005. Avista filed with FERC two applications for new license to
provide for the contiued operation of the five HEDs currently licensed as par of the SRP; one
application for a new license coverig the Post Falls HED which. if granted, would result in
contiued use of the Submerged Lands within the Reservation for water storage and other
purposes; and one application for a new license covering the four downstream REs.
15. The Tribe contends that Avist's continuous use, occupancy, and enjoyment of all
the Submerged Lands within the Reservation, including a designated porton of such lands
described in the permit referenced in paragraph 17 hereof, for water storage thereon and other
puroses from 1907 until June 30, 1981, the day before the point in tie (July 1, 1981) when
FERC first licensed Avista's use of those lands as par of Avista's SRP. constituted trspass over
and upon such lands without the consent of the Tnbe and without the payment of fair
compensation to the Tribe in violation of the 1873 Executive Order of President Grant
estblishing the Reservation. subsequent congressionally-ratified Agreements between the Tribe
and the United States. other federal sttutes and regulations, and federal common law. Avista
5
IFG _PR_ 003-Attachment-B.pdf Page 5 of 13
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admits that federal law applies but disputes that claim and alleges affrmative defenses thereto,
while the Tribe disputes those defenses C'Water Storage Dispute"). FERC is also without
jurisdiction to resolve that dispute.
16. Specifcally, in the Act of March 3. 1891. Congress ratied a prior conveyance by
the Tribe ("Seltice Conveyance") to Frederick Post of submerged lands and uplands at Post Falls.
Idaho, on the Spokane River within the original 1873 boundaries of the Reservation. A vista later
acquired Post's interests in such lands and constrcted thereon in 1906 its Post Falls HE. The
Pares dispute whether and to what extent, if any. the Seltice Conveyance grted to Frederick
Post, and hence A vist the right to store water on the Submerged Lands withn the current
boundares of the Reservation.
17. Specifically, in 1909 Avista applied for and received a permit ("1909 Permit')
from the United States Deparent of the Interior ("DOl"), without the consent of the Tribe. to
store water on a designated porton of the lands witin the curnt boundanes of the Reservation.
The Pares dispute whether and to what extent, if any. the 1909 Permit grted to A vista the
right to store water on the Submerged Lands within the curent boundares of the Reseration.
Afected Lands Dispute
18. The Pares dispute the precise amount of Submerged Lands and other trst lands
within the Reservation that A vista has used, occupied and enjoyed, and that A vist proposes to
continue using in the future ("Affected Lands Dispute"). Resolution of that dispute is also
controlled by federal law. and FERC likewise is without jurisdiction to resolve that dispute
which directly implicates issues concerng title to real propert. Resolution of the Affected
Lands Dispute wil dirctly afect resolution of the Rights-of-Way (1902 forward) and Water
Storage (1907 to June 30.1981) Disputes. as well as the following matters:
6
IFG _PR_ 003-Attchment-S.pdf Page 6 of 13
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a.The extent to which Avista may be obligated to pay the Tribe anual
charges, disputed by the Pares, to be set by PERC pursuant to § lO(e) of the FPA, 16. U.S.C. §
803( e), and headwater benefits, also disputed by the Paries, to be set by FERC puruant to §
10(i) oftbe FPA, 16 U.S.C. § 803(i), for the use, occupancy, and enjoyment of the Submerged
Lands for water storage and other puroses for the period from July 1, 1981, to the expiration of
Avista's existig FERC license for the SRP, and for the period, potentially up to 50 year, of any
new FPA license that FERC may issue to Avista involving the use of the Submerged Lands;
b. The nature and scope of conditions under § 4(e) of the FPA, 16 U.S.C. §
797(e), also disputed by the Pares, that the Secretar of the Interior deems necessar for the
adequate protection and utilization of the Reservation and that FERC is required to include as a
matter of federal law within any new FP A license it may issue to A vist that includes within the
licensed boundares the Submerged Lands within the Reservation; and
c. The exercise of the Tribe's retained sovereign powers in the futue under
applicable federal and Tnbal law to impose taxes and issue pennits in connection with Avista's
use, occupancy, and enjoyment of the Submerged Lands and other lands owned by the Tribe or
held in trst for the Tribe by the United States within the Reservation.
19. The Pares believe that if this contrversy is not resolved though a
comprehensive settement subject to ths Cour's contiuing jursdiction, they wiB be embroiled
in years of litigation in ths Court concerng the Rights-of-Way, Water Storage, and Afected
Lands Disputes, as well as in lengty litigation before PERC over the extent of any A vista
obligations pursuantto FPA §§ 4(e), 10(e), and iOCt).
20. Afer several year of good faith, but unsuccessful settement discussions thugh
a private mediator, the Partes agreed to a judicially-supervised mediation to be conducted by the
7
IFG _PR_ 003-Attachment-B. pdf Page 7 of 13
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Honorable Wiliam C. Canby, Jr., Circuit Judge for the United States Court of Appeals for the
Ninth Circuit. On Februar 11,2005, the Honorable B. Lyn Winmil, Chief Judge of this
Cour entered an Order of Referral for Judicially-Supervised Mediation (attached hereto as
Exhibit i), which ordered that Judge Canby be referred to the Distrct of Idaho for the purposes
of conductig a judicially-supervised mediation agreed to by the Pares.
21. Afer over the years of working through many complex issues, under the direct
supervsion of Judge Canby, the Partes fialized a comprehensive Settement in Pnnciple that
they have implemented through the Mater Agreement (attched hereto as Exhibit 2) and a
series of other agreements and a Tribal water permit which are attched to and incorporated by
reference into that Master Agrement, and filed herewith, as follows:
a. Trespas Claim (1907 - June 30, 1981) Agreement (Attchment
A to Exhbit 2 hereto), which resolves the Tribe's trespass claim for
Avista's use, occupancy, and enjoyment of the Submerged Lands within
the current boundares of the Reservation dunng the period from 1907 to
June 30,1981, the day before the point in tie (July 1, 1981) when FERC
first assumed jurisdiction over such lands;
b. Secon 10(e) Payments (July 1, 1981- End of Current License)
Ageement (Attachment B to Exhibit 2 hereto), which resolves Avista's
obligation for any payment to the Tribe ofFPA § 10(e) anual charges and
FPA § lO(t) headwater benefits for A vista's use, occupancy, and
enjoyment of the Submerged Lands within the currnt boundares of the
Reservation duñng the time period from July i, 1981, to the day before
the effective date of any new FPA license issued by FERC to Avist In
8
IFG _PR_ 003-Attchment-B.pdf Page 8 of 13
.pending relicensing proceedings involving the use of such Submerged
Lands;
c. Section IO(e) Payments (For the Term of Avila's New
License) Ageement (Attchment C to Exhibit 2 hereto), which resolves
Avista's obligation for any payment to the Tribe ofFPA § ID(e) anual
charges and § IO(t) headwater benefits for Avista's use, occupancy, and
enjoyment of the Submerged Lands within the current boundares of the
Reservation for the term of any new FPA license issued by FERC to
A vista in pending relicensing proceedings involving the use of such
Submerged Lands and any subsequent anual licenses;
.d. Tribal Taxtion Ageement (Attchment D to Exhibit 2 hereto),
which addresses fue taation by the Tribe of Avist's use, occupancy,
and enjoyment of (1) the Submerged Lands withn the curent boundares
of the Reservation for water storage and other puroses dunng the term of
any new FPA license issued by FERC to A vista in pendig relicensing
proceedings involving the use of the Submerged Lands and any
subsequent annual licenses, and (2) those Submerged Lands and other
Tribal trst lands within the curent boundares of the Reservation relating
to the rights-of-way granted or renewed, with the consent of the Tribe, by
the DOl, acting thugh the Bureau of Indian Affairs ("BIN'), to Avist
for and/or Avista's existig utility poles, lines, equipment, and facilties
on, over and under all such afected lands, for the term of fift (50) years
.
9
I FG _PR_ 003-Atlchment-B.pdf Page 9 of 13
.from the date of execution by the Tnòe and Avist of the Rights-of-Way
Agreement and Consent (Attchment E to Exibit 2 hereto);
e. Rights-of-Way Agement and Consent (Attacluent E to
Exibit 2 hereto), which includes as Attchment No.7 thereto the Coeur
d'Alene Tnbe Pennit for Avista Corporation's Existing Utilty Facilties
Located On. Over and Under Submerged Lands Within the Coeur d Alene
Indian Reservation. concerning the grant or renewal by the BIA, with the
consent of the Tnbe. of rights-of-way on, over and under certain
Submerged Lands and other Tribal trst lands within the curent
boundares of the Reservation relating to Avista's existing utility poles,
.lines. equipment, and facilties on. over and under all such afected lands
for the term offift (50) years from the date of execution by the Tribe and
Avist of such Rights-of-Way Agreement and Consent;
f. Tribal Water Storagelse Permit (Attchment F to Exhibit 2
hereto), which is issued by the Tribe pursuant to Tnbal law for the tenn of
any new FP A license issued by FERC to A vista in pending reI ¡censing
proceedings involving the use of the Submerged Lands and any
subsequent annual licenses;
g. FP A Section 4( e) Ageement (Attchment G to Exhibit 2 hereto).
which is the ageement among the DOl, the Tribe and Avista_concerning
FPA § 4(e) Mandatory Conditions for the Spokane River Project, PEC
No. 2545, for the tenn of any new FP A license issued by FERC to Avista
in pending relicensing proceedings that includes within the licensed.
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IFG _PR _ 003-Attachment-B.pdf Page 10 of 13
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boundares the Submerged Lands within the current boundares of the
Reservation and any subsequent anual licenses; and
h. Supplemental Agreement (Attaclnent H to Exhibit 2 hereto),
which is the agrement that, among other things, establishes the process
the Tribe and Avista wil follow to resolve certin specific disputes
involving the FPA Section 4(e) Agrement.
22. Section C of the Pares' Master Agreement provides that the FPA Section 4(e)
Agreement and Supplementa Agrement wil become effective when the FP A Section 4( e)
Agreement is executed, that the other separte agrements and permits identified in paragraph 21
hereof wil not be effective until the Master Agreement is effective, and that the Master
Agreement will not be effective until: (a) that agrement and al of the separte agreements as
well as the Tribal permits have been executed by the Pares; (b) the DOl acting though the BIA
has granted or renewed nghts-of-way consistent with the Partes' Rights-of-Way Agreement and
Consent identifed in pargrph 21(e) hereof; (c) the FPA § 4(e) Agreement identified in
paragraph 21(g) hereofhas been executed by the DOl; and (d) the Pares have jointly filed in
the United States Distct Cour for the Distct ofIdaho their stipulated motion to incorporate all
such agreements and the Tnòal pennts into a judgment, and their proposed form of such
judgment, all of which have been so filed with this Cour.
23. The Maser Agreement, as well as each of the separate agreements and permits
identified in paragrph 21 hereof. have been executed by the duly authorized representatives of
the Pares. In addition, the DOl acting though the BIA has grted or renewed rights-of-way
consistent with the Pares ' Rights-of-Way Agreement and Consent identified in paragrph 21 (e)
hereof, and the DOl has executed the FPA § 4(e) Agreement identified in pargrph 21 (g)
11
IFG _PR_ 003-Attachment-B.pdf Page 11 of 13
.
.
.
hereof. Thus, all of the conditions precedent identifed in Section C of the Master Agreement
(Exhibit 2 hereto) have been satisfied.
24. By entering the Judgment requested by the Pares that incorprates the Master
Agreement and all the agreements and the pemits identified in pargraph 21 hereof, this Court
would retain contiuing jursdiction, pursuant to 28 U.S.C. § 1331 and 1362, to enforce upon
request of either Par against the other Par the terms of the Maser Agreement as well as the
other agrements and the Tribal permits thus identied, to the extent consistent therewith.
25. Exercise of such continuing jurisdiction by this Cour would be in the best
interests of the Pares and in the public interest because it would avoid divisive, protracted and
costy litigation on a wide range of complex legal and factual issues spanning potentially more
than 150 years. Conversely, if ths Stipulated Motion is not granted, the controversy between the
Paries wil remain pending before this Court.
WHREORE. the Tribe and Avista respectflly request that to resolve the pending
controversy. as set fort herein and as alleged in the Tribe's Complait for Declartory Judgment
and Trespass Damages previously filed herein, this Court enter a judgment incorporating the
Paries' Master Agreement (Exhibit 2 hereto), and all the agreements and the permits attched
thereto and identified in paragrph 21 of this Motion and filed herein as par of such Exhibit 2
hereto, into a Judgment and that it retan contiuing jurisdiction to enforce between the Pares
the terms thereof. A proposed form of the Judgment is also filed herewith.
12
I FG _PR_ 003-Attachment-B.pdf Page 12 of 13
. '
.Dated December lÇ ~ 2008.
Dated December L. 2008.
.
.
By:
By:
&AS~
Howard Funke, ISB No. 2720
Attorney for Plaintif Coeur d Alene Tribe
424 Sherman Avenue, Suite 308
P.O.Box969
Coeur d'Alene, Idaho 83816
Telephone: [phone]
Facsimile: 208-667-4695
Email: hfunke§indian-Iaw.org
PAI HALEN LLP
J
~ ~d'~~
Wiliam J. Scilder, ISB 6674
Attorney for Defendant Avista Corporation
717 West Sprague Avenue. Suite 1200
Spokane, Washington 99201-3505
Telephone: [phone]
Facsimile: (509-838-0007
Email: wiliam.schrederafainehamblen.com
13
IFG _PR_003-Attchment-B.pdf Page 13 of 13
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0l 1 A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-004
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
04/29/2009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Regulation
[phone]
If it is different form the CDA Settlement Agreement, please provide a copy of the "Montana
Riverbed Litigation" Settlement Agreement. (Direct Testimony of Scott Morrs, Pg. 7).
RESPONSE:
Please see "IFG YR _ 004-Attachment-A.pdl' which is a copy of the Settlement Agreement and
"IFG_PR_004-Attachment B.pdl' which is a copy of the Hydropower Site Lease. Please also see
the Company's response to IFG-007.
.
_ Memorandum of Negotiated Settlement Terms
Octobe 19,2007
Ths meordu outes the ke te of th agment in priciple reached
betweenAvi Corpraon and the Sta of Monta to resolve al issues pë
betwee them in Cau No. cnv 2004846, Mont Fir Judicial Distct Cour Lewis &
Clar County.
1. Rent. For pmses of settement A vi agr to pay ret to the Stte
eac year beg caend yea 2007, an contiuig thugh the reaining te of
A vist's FERC lice for th Clak Fork Projec A vi acknowledges th th Sta
own 3,158 acs of riverb with the Cla Fork Prject Th Sta acknowledes th
th ren reprts the fu in vaue of the Sta inte oteste beg us by
Avi in connecon with its opon of the Cla Fork Prjecf(whch Uicludes both th
Noxon Raid prjec ánd th porton of the Cainet Gorge projec witl Mont).
Ret will be pai in ar, with paent due on or befoc each Febru 1 for thc
, previous ca yea., Th.inti amount of th rent wi be $4 mion pe yea. The
rent wi be adjus ea.ye as follows:.a. Benning with caen year 2008, and contiuig tlough
caenda yea 2016, the bas aøount of $4 mion pe ye
sh be adjused
upward by th Conser PrceJndex(CPI) anua averge for
th caenda yea
for whch payment is due.
b. Not la th June 30, 2016, th pares wi m.eet and coer to
determe wheter the anua reta rema consisnt wi th prciples ,of law
as applied to th fats. In thc event either par believes the anua renta no
longer is consnt wi applicale! law applied to the fa, the pares will
negotite in goo fa to det an apprprate adjus re ra. lfthe
paes do not agr upn an adj~ renta rate by Septeber 30,2016, the
pares will engage in adviry aritron and submit th aritrr's
recendaon to th Sta Boar of Land Commssion ("Land Boar") forappr.
2. Leae Term. The paes ¡grto joiny reomm to th Lad Boad
a lea of a power site pui to thc pr~ions ,of
th Hydrec Reour A.ct
Mont Coe.An §§ 77-4-20 ~, et seq. 'As pa of th :rmmendaon th Sta an
Avi agee to st th the rent agr upon by
the paes rerests fu maket
value for the lea of 3,158 acres of Clark For riverbe being used by A vista in
conection with the Clar Fork Prject The durtion of
the lea wil be not less th the
remaig te of Avi's FERC licee.
., 3. Most Favore NationsClaUSe. If co-pa PPL Monta LL, either by
litigaon tbughjudgment an any appe or thug settlemt, recivcs a
detinaton th the ful maket vaue of
its lad in at isue in the litigaton is
baed upn fators more favorable to it th thse conted in the settement with '
IFG_PR_004-Attachment-A.pdf Page 1 of 3
i
.
A vi, thê Avi ret will be adus by an amount nec to reflec the more
favole deteinaton. For puse oftbs cla, a more farale determon will
occur if91eaggga anua re c1ed by settemt or litigaon for PPL Monta
(''Dte PPL Ret" isless th 48% of1he aggr amount of
base yea rent
("Claed PPL R. clai by the Sta in its ca in chief at tral If
th occur, the
$4 inil~on ba ret to be paidby Avi sh be reuce reaeely stg on the
da of fi judgmen on th PPL Mo clai or settement by a pee equa to
the Dete PPLRe divided by the Cla PPL Re See Atthmnt A foi an
iluson of the caeuåtion.
,4. . Repeer for Subsequent Govemmenta ActioD. If. d.g 1he te of
the Avi lea, tle Lad Bo the Mont Legislat, the Deparent of
Nat
Resour and Consryon, or any other Sta entity with jurdicton ents or adopts a
renta sta, ru, OT poliey aplicale to leas isd mi the Hydrleetic
Resoures Aet tht wouid ret in a re paymt more favorale to Avist th the rent
cacuated \Ider pargrph 1, th re pad by Avi shall be modied retroacvely
stg on the da of enen or adption to inorrae
the irore favorale te.
.S: Reopener for Subsequent Judicial Determintion. It durg thetenn
of the Avist le8 thie of the Clak Fork Rivei with thbounes of Avi's
PERC lice isdet by a cour of compejurcton to be not~gable fçir
title pu Avi's obligan to pay re shee. If. dur the ter of
the
Avi lea, a co of compte jmictin dettb (a) the sh net beefits
methd is not a Jawñ m.odtocacul th fu mat vaue ofland in; or (b)
no compnson or reuc compeon ii the na of reta is owe -to the State of
Monta for occcyofstawned rier, an the åplicaon of such
determtion or deteonS would ret in a ret paent more farale to Avi
th the re cacuate wider pah 1, or othrw exgush Avist'~ obligaon to
pay re Avi's obligaon to pay ret win be moded retroavely stag on theda of deton to refec a method of caculti rent th is consnt with the
cour deteon or detons, or.Avi's obligaon to pay ret shall ce,
acrdgly.
6. Consent Dectee The pares wi agee on the form for, and jointly move
the entr as a fi judgm of, a consent dec th (a) incrprates the term oftbs
Memradum; (b) conta ft relea of A vi an the Sta for al ma at isue in
th~ litigaori; (e) alows for apprprte public notce an comment; (d) cees th ,
. Avi is in fu complian with the te of the Hydrlectrc Reures Ac an (e)
include apprpriat other ~ su as diut resoluto~ forc
majeue an so fort.
.
STATE OF MONTANA
B1'4._..
bH.ii cMSlìJl:, ~~~T. 4~c".
Date: tx. J 1 f 1dÎ
A VIA CORPORATION
B~1t~--n,FÑCjtll'-l ".P.#-t£~Dat: løf!do7 ' '7~~~
IFG _PR_ 004-Attachment-A.pdf
2
Page 2of3
.1
.'
.-' "-
ATlACH A
. .
If the Det PPL R~ ~ lesS th 48% ofthc C1ed PPL Re Avi anua
rent sh be recculat acg to followig fonnula:
An Recuat AvistRe = A x (D .; C) Wh:
A = $8,416,51,0 (Amun of$m re claed by th Sta in the
Sta's Conton 9.A of the Pral Or)
D = DePPL Re
.
c ~ Cled PPL Re se for in Sta's ca in chef
As an illuon ifDct PPL Re ~s $3,000,00, an th Claed PPL Ret is .
$7,252,804, th AnU3 Avi Re woU¥ be calcu as follows:
Amua Reccu Avi Re: $3,481,347 = S8,416.510 x ($3.00.000
+$7,22.804)
.
IFG _PR _ 004-Attachment-A.pdf
3
Page 30f3
.
HYDROPOWER SITE LEASE
Pursuant to the Montana Hydroelectric Resources Act, Section 77~4~201, MCA,
et seq., this Hydropower Site Lease ("Lease") is entered into efTective as of January 1,
2007, (the "Effective Date") between the STATE OF MONTANA, STATE BOARD
OF LAND COMMISSIONERS, (hereinafter referred to as the "Lessor"), whose
address is P.O. Box 201601, Helena, MT 59620-1601, and AVISTA CORPORATION,
a corporation organized under the laws of the State of Washington, ("Lessee"), whose
address is 1411 East Mission Avenue, -P.O. Box 3727, Spokane, WA 99202-3727. The
Lessor and the Lessee may be referred to herein singly as ,,~ii or jointly as "Paries."
RECITALS
A. The Lessee owns and operates the Clark Fork Project for which a new
license was issued by the Federal Energy Regulatory Commission as FERC Project No.
2058 (the "FERC License"). (Order Issuing Nei-v License. 90 FERC ~161, 167 (2000)).
The FERC License authorizes Lessee to operate and maintain the Noxon Rapids and the
Cabinet Gorge Developments of the Clark Fork Project. The Clark Fork Project is
located, in part, on the Clark Fork River in Bonner County, Idaho, and Sanders County,
Montana. This Lease pertains to a portion of the Clark Fork Project located solely on
lands owned by the State of Montaa \vithin Montana;.B. The original Hcenses for the Cabinet Gorge Project and the Noxon Rapids
Project were issued byFERC on January 9,1951 and May 12,1955, respectively. From
that time, until March, 2004, the Lessee believed that it had obtained all propert rights
from the State of Montana necessary for those projects and the Clark Fork Project~
C. In October, 2003, Richard Dolan and Denise Hayman commenced an
action in U.S. Distrct Court in Missoula, Montana against Lessee and other companies,
which raised questions as to the ownership and uncompensated use of navigable
riverbeds by the Lessee. In March 2004, Lessor intervened as a plaintiff
in the action.
(State ex reI. Richard Dolan v. PPL Montana LLC, et at, Cause No. CV-03 167-M-
LBE). The United States District Court ultimately dismissed the lawsuit due to lack of
jurisdiction;
D. In November 2004, PPL Montana, LLC ("PPL Montana"), PacifiCorp and
Lessee fied a declaratory judgment action in Montana First Judicial Distrct Court, Lewis
and Clark County as PPL Montana. et at. v. State of Montana (Cause No. CDV-2004-
846) (the "Lawsuit") in order to determine its rights, if any, to utilize navigable riverbeds,
without compensation to the State of Monta. In December, 2004, the State filed an
Answer, Counterclaims and a Motion for Summary Judgment and alleged, among other
things, that Lessee and other companies had an obligation under the provisions of the
Montana Hydroelectrc Resources Act, Mont. Code Ann. § 77-4-201, et seq., to
compensate Lessor for the use of state-owned riverbeds being used for hydroelectric
power generation purposes;.
IFG_PR_004-Attachment B_pdf Page 1 of 12
.
E. The Montana First Judicial District Court determined in the Lawsuit that
the State of Montana O\\l1S the riverbed of the Clark Fork River in Sanders County,
Montana in trust for Montana's common public schools, and therefore has a duty to
obtain the full market value of that use by the Lessee. Therefore the State is entering into
this lease to comply with the State's trust duty to obtain the full market value for the
disposition of any interest in State school trst lands;
F. Pursuant to the Memorandum of Negotiated Settlement Terms signed on
October 19,2007, and the Consent Judgment entered on November 19,2007, the
Lessor
and Lessee agreed to resolve all claims made in the Lawsuit through the issuance of the
following lease by the State Board of Land Commissioners;
Wherefore, the Parties hereby agree to the following:
LEASE TERMS
1. Leased Premises. Subject to all the terms and conditions contained
herein, the Lessor hereby leases to the Lessee and the Lessee hereby leases from the
Lessor those lands below the Clark Fork River for which Avista has not already acquired
a right of use within the Clark Fork Project in Sanders County, Montana (the "Leased
Premises") as more particularly described in Exbibit A, for the following term described
herein..2. Lease Term. The term of this Lease ("Term") will be deemed to have
commenced on January 1,2007, and wil terminate on the earlier of: (a)
February 28,
2046; or (b) the termination oftheFERC License.
3. Payment Date. On or before the first day of February of each year
("Payment Date"), Lessee wil pay to Lessor an annual rent ("Rent") for occupying the
Leased Premises during the preceding calendar year during which the Lease is in effect.
1fthe first day of February is a Saturday, Sunday, Montana or federal holiday, the
payment wil be due on or before the next following business day.
4. Rent. The amount of the Rent shall be detennined as follows:
4. i. On or before the Payment Date of February i, 2008, the Lessee
will pay to the Lessor the sum of Four Milion and 00/100 Dollars
($4,000,000.00) ("Base Rent") as Rent for the Leased Premises for the year 2007.
4.2 Thereafter, continuing on February 1 st of each subsequent year
(the "Adjustment Date") during the Term of
this Lease, the Lessee wil pay to the
Lessor an adjusted annual Rental for the prior year, calculated as follows:
4.2. i The base ("Base Index") for computing the adjustment is
the Consumer Price Index for the month of January 2007 (the "Index
Date") as shown in the Consumer Price Index ("CPI") for all Urban.
2
,
IFG_PR_004-Attachment B.pdf Page 2 of 12
.
Consumers! All Items, based on the latest year used as a base year by the
U.S. Departent of Labor's Bureau of Labor Statistics.
4.2.2 The index for the Adjustment Date wil be computed as a
percentage of the Base Index (the "Percentage Adjustments"). For
example, assuming the Base Index on the Index Date is 200 and the index
figure on the Adjustment Date is 210, the Percentage Adjustment to be
applied is 210 divided by 200, yielding 105%.
4.2.3 The Rent for the period beginning on the Adjustment Date
and continuing until the next Adjustment Date wil be equal to the Base
Rent plus the Percentage Adjustment. For example, if the Percentage
Adjustment for year 2008 is i 05%, Rent for year 2008 would be the
product of $4,000,000 as multiplied by 105%, which equals
$4,200,000.00.
.
4.2.4 If the CPI is no longer published, another comparable
index, generally recognized as authoritative ("Substitute Index") wil be
substituted by agreement of the Parties. If the Paries are unable to agree
on a Substitute Index within thirt (30) days after demand by either Party,
either Part may apply to the chief officer ofthe Research & Analysis
Bureau of the Workforce Services Division of the Montana Department of
Labor & Industr, or its successor or equivalent, to select the Substitute
Index.
4.2.5 If the lease terminates or Avista's obligation to pay rent
ceases prior to the end of any calendar year, Rent wil be prorated taking
into account the portion of the year during which the Lease is in effect.
4.3 Not later than June 30, 2016, the Parties wil meet and
confer to determine whether the annual Rent as determined herein remains
consistent with the principles of law as applied to the facts. In the event
either Part believes the annual Rent is no longer is consistent with
applicable law applied to the facts, the Parties wil negotiate in good faith
to determine an appropriate adjusted rental rate.
4.4 If the parties do not agree upon an adjusted rental rate by
September 30, 2016, the parties wil engage in advisory arbitration and
submit the arbitrator's recommendation to the Board of Land
Commissioners for approvaL.
4.5 AU payments required by this Lease wil be made to the
Montana Department of Natural Resources and Conservation, i 625
Eleventh Avenue, P.O. Box 201601, Helena, MT 59620-1601, or to such
other payee as designated in writing by the State of Montana..
3
IFG_PR_004-Attachment B.pdf Page 3 of 12
.
4.6 Parties agree that Rent as determined in accordance with
this Lease is the full market rental value of the Leased Premises for the
Temi of this Lease.
4.7 In the event of a dispute over rental amounts, rental
payments made shall be made by the Lessee under protest. Any rental
payments made under protest sha11 be place-d in aninterest-beanng escrow
account by the Lessor. The rate of interest sha11 be equal to the the rate of
return of the unified investment program administered by the board of
investments pursuant to § 17-6-20 i, MCA. The validity of any payment
made under protest shall be resolved by a MAPA contested case hearing
as provided by paragrph 10 of this Hydropower Site Lease. The
prevailing part in any such rental dispute will be entitled to the disputed
rentals as well as the interest accrued upon those rentals.
5. Reopeners. The Paries agree that the amount of Rent due under this
Lease may be reopened and adjusted if any of the following events occur:
.
5. i Most Favored Nations Clause. If, co-party to the Lawsuit, PPL
Montana, either by litigation through judgment and any appeals, or through
settlement, receives a detennination that the full market rental value of its land
interests at issue in the litigation is based upon factors, that if applied to Lessee,
would result in a more favorable rental rate than the Rent established by Sections
4.1, 4.2 and 4.3 of this Lease, then the Rentwìl be adjusted by an amount
necessary to reflect the more favorable detennination. For purposes of
this
clause, a more favorable detennination wil occur if the aggregate annual rent
determined for PPL Montana by settlement or litigation Ç'Detennined PPL Rent")
is less than 48% of the aggregate amount of base year rent claimed by Lessor in
its case in chief against PPL Montana ("Claimed PPL Rent") in the Lawsuit. In
the event of a more favorable detennination, the $4 milion base annual Rent
established by Section 4.1 of this Lease to be paid by Lessee wil be reduced
retroactively starting on the date of final judgment on the PPL Montana claims, or
date of settlement, by a percentage equal to the Detennined PPL Rent divided by
the Claimed PPL Rent. (See Exhibit B for an illustration of the calculation.)
5.2 Reopener for Subsequent Governmental Action. If, during the
Term of this Lease, the Board of Land Commissioners, the Montana Legislature,
the Department of Natural Resources and Conservation, or any other State entity
with jurisdiction, enacts or adopts a rental statute, rule, or policy applicable to
leases issued under the Hydroelectric Resources Act that would result in a rent
payment more favorable to Lessee, then the Rent shall be modified retroactively
startng on the date of enactment or adoption to incorporate the more favorable
tenns.
.
4
IFG_PR_OO4-Attachment B.pdf Page 4 of 12
.
5.3 Reopeuer for Subsequent Judicial Determination.
5.3.1 If, during the Term of this Lease, the reach of the Clark
Fork River within the boundaries of the Leased Premises is determined by
a court of competent jurisdiction to be not navigable for title purposes, or
that the State of Montana otherwise does not have title to the riverbed of
the Clark Fork River in Sanders County, Lessee's obligation to pay Rent
shall cease.
5.3.2 If, during the term of this Lease, a court of competent
jurisdiction determines that compensation in the nature of rent owed to the
State is less than what is set forth in this Lease, Lessee's obligation to pay
Rent wil be reduced from the date of determination to reflect a method of
calculating Rent that is consistent with the court's detennination.
6. Assignments. This Lease is assignable by the Lessee only wìth the prior
written approval of the Lessor. However, the the Lessor shall approve assignent of this
lease to any successor-in-interest to the above-described FERC license who possesses the
apparent financial ability to carr out the lessee's duties under this lease.
.7. Improvements. The Lessee is authorized to construct, operate and
maintain any and all improvements ("Improvements") necessary to conduct the
operations described in the above-described FERC License, as such license may be
amended from time to time. Lessor and Lessee acknowledge that ownership of any
Improvements following the end of the Term shan remain with Lessee, subject to the
provisions of the Federal Power Act and any interests ofthe United States.
8. Indemnifcation. As a condition of the grant the above-described Lease,
the Lessee, and its successors and assign, hereby agree to indemnify, defend with
counsel acceptable to the State, and hold harmless the State of Montana, the State Board
of Land Commissioners, the Montaa Department of Natural Resources and
Conservation, and their offcers, agents,employees, and representatives from and against
all claims and liabilities arising in whole or in part or in any manner out of the Lessee's
design, placement, allowance, existence, constrction, inspection, public use, operation,
and maintenance of any improvements upon the above-described lands, including all
repairs, restoration and rebuilding made at any time thereafter, whether or not due to the
alleged negligence ofthe state. This duty to defend and indemnify shall extend to all
actions, administrative proceedings, judgments, damages, punitive damages, penalties,
fines, costs, liabilities, interest, or losses, sums paid in settlement of claims, attorney's
fees, consultant fees, expert witness fees, as well as any fees, costs, or expenses incurred
by the State in enforcing this indemnity. Notwithstanding anything to the contrry in this
paragraph. the Lessee shall have no liabilty for losses to the extent they are caused by or
result from the actions or omissions of Lessor. The duty to defend and indemnify shall
survive the termination of the above-described Lease.
.
5
IFG_PR_004-Attachment B.pdf Page 5 of 12
.
9. Control and Design Indemnification - During the existence of the above-
described Lease, the Lessee, and its successors, and assigns, shall have control and
possession of the above-described Property for hydropower purposes, and the State shall
have no liabilities, obligations or responsibilities whatsoever with respect thereto or with
respect to any plans or specifications submitted to any Governmental Authority. TIie
State is not the agent of the Lessee and the Lessee is not the agent of the State. Any
review of such plans or specifications by the Lessor is solely for its own purposes, and
the Lessor expressly disclaims any warranty concerning the appropriateness of any such
plans or specifications for any purpose. The Lessee hereby covenants and agrees to
indemnify, defend with counsel acceptable to the State, and hold the State of
Montaa.
the State Board of Land Commissioners, the Montana Departent of Natural Resources
and Conservation, and their offcers, agents, employees, and representatives hannless
from and against any and all claims arising in whole or in part or in any maner out of the
design or the use of such plans and specifications, whether or not due to the alleged
negligence of the state Notwithstanding anything to the contrary in this paragraph, the
Lessee shall have no liabilty for losses to the extent they are caused by or result from the
actions or omissions of Lessor. The duty to defend and indemnify shall survive the
tennination of the above-described Lease.
.10. Breach and Reversion and Remedies. The Lessee's failure to pay the
above-described rental by the due date or the Lessee's breach of any other duty or
condition under this Hydropower Site Lease, shall result in the terniination cancellation
of the above-described Lease, and the reversion of the Leased lands to the State.
However, prior to any cancellation, the Lessee shall be given written notice of such
breach and 30 days opportunity to cure the breach before the cancellation shall become
effective. Should any dispute arise as to the Lessee's duties under this Hydropower Site
Lease, it shall be given the opportnity for a contested case hearing under the Montana
Administrative Procedures Act, §§2-4-601, MCA before the Montana Department of
Natural Resources and Conservation. In such instances, the tenn of this Hydropower Site
Lease shall be extended until a court of final jurisdiction reviews the outcome of the
MAPA hearing.
11. Taxes. The intent of both parties is that this Lease shall not Fesi:lt iA a
affect any tax payments or assessments owed by the Lessee, and by entering into this
Hydropower Site Lease, the Lessee does not waive any rights or obligations as to the
payment of taxes.
12. No Warranty of Tjtle. It is understood and agreed that this lease is
issued only under such title as the State of Montaa may now have or hereafter acquire,
and. other than a reduction in rent due as provided in paragraph 5.3 above, that the Lessor
shall not be liable for any damages sustained by the Lessee in the event the Lessor does
not have the title to the leased lands or the Lessee is found to have possessed a prior right
or easement for its operations upon the leased lands described herein..
6
IFG_PR_004-Attachment B.pdf Page 6 of12
.
1 3. Interference. The Parties recognize that the leased premise is a public
waterway of the State of Montana and subject to the rights ofthe public for the
recreational use of streams. TIie Lessor further reserves the right to issue additional
leases for the use of the above-described lands, provided that such leases and uses shall
not in any manner interfere with the Lessee's operation of the Clark Fork Project. Lessor
wil notify Lessee in writing prior to granting any third part the use or occupy any
portion of the Leased Premises for any purpose. Lessor also wil not use, nor wil Lessor
permit its employees, lessees, licensees, or agents to use, any portion of the Leased
Premises in any way, which interferes with the operations of Lessee or the rights of
Lessee under this Lease or the FERC License. Lessor wil cause such interference to
cease within fort-eight hours after written receipt of notice of interference from Lessee.
In the event any such interference does not cease within the cure period then the Parties
acknowledge that Lessee wil suffer irreparable injury, and Lessee wil have the right, in
addition to any other rights that it may have at law or in equity, to elect to enjoin such
interference upon notice to Lessor.
14. Miscellaneous.
.
14.1 AmendmentlWaiver. This Lease cannot be amended, modified or
revised unless done in writing and signed by an authorized agent of Lessor and an
authorized agent of the Lessee. No provision may be waived except in a writing
signed by both Parties.
14.2 Binding Effect. The terms and conditions contained in this Lease
wil run with the Leased Premises and bind and inure to the benefit of
the Parties,
their respective heirs, executors, administrators, successors and assigns.
14.3 Entire Agreement. This Lease and the Consent Judgment
attached hereto as Exhibit C, an being a part hereof, constitute the entire
agreement of the Parties hereto.
14.4 Governing Law. This Lease will be governed by and construed
according to the laws of the State of Montana.
14.5 Force Majeure. If either party is prevented from complying with
any tenns or provisions of this Hydropower Site Lease due to impossibility,
including, but not limited to, riot, war, rebellion, accident, or other causes beyond
the control of such part, then upon written notice to the other part, the affected
provisions or requirements of this Hydropower Site Lease shall be suspended
during the period of such disability.
14.6 Notice. When notice is required under any of the terms of this
agreement, notice shall be made to the following address and each part wil
further notify the other when there is any change in the address listed here:.
7
IFG_PR_004-Attachment B.pdf Page 7 of 12
.
For the State of Montana:
Director, Department of Natural Resources and Conservation
State of Montana
1625 Eleventh Avenue
P. O. Box 201601
Helena, MT 59620-160 i
For Avista Corporation:
President, Avista Corporation
1411 East Mission Avenue
P.O. Box 3727
Spokane, W A 99202-3727
Additional copy to:
Registered Agent, State of Montana, for Avista Corporation.
.
.
8
IFG_PR_004-Attachment B.pdf Page 8 of 12
.
LESSOR
STATE OF MONTANA:
By:1Y~
V,lricWIts:
STATE OF MONTANA )
: ss.
County of LEwis .¡ CL( )
This instrment was acknowledged before me on~.I~ 30 , 2008 by Mary
Sexton, Director of the Montana Departent of Nat al Res rees and Conservation, for
the State Board of Land Commissioners, on behalf of whom instrment was executed.
.
IN WITNESS WHEREOF, I have hereunto set my hand and notary public seal
the day and yea fita~:1/¿ f: ~
_~ Pnn d ortYed name: :: ~ , ~ E ;: ¡(Ð-O(i q
:~,_,_.~ Notary Public for the State of Montana
(SEÂl:) Residing at ~ ' Montana
My commissiO';;: og:V/2I0 9
.
9
IFG_PR_004-Attachment B.pdf Page 90f12
.
LESSEE
AVISTA CORPORATION:
By:~tWl~
tBJ /1J;StG(JIts:
STATE OF WASHIGTON )
: ss.
County of Spokane )
This instrent was acknowledged before me on J 4:fc 1 3 i ' 2008 by
1"6'._ tf VIlJ~r/s= as fru. J CG- 1(;4.41.'/ of#ivista Corporation, on
behalf of whom instrent was exectfte. I
IN WIlNSS WHEREOF, I have hereunto set my hand and notaral seal the day
and year first above wrttn.
Prnte~;d inrte t e-"
Nota Public for the State of Washington
(SEAL) Residing at -5 Ac/ k, of e ' Washingtn
My commissiëf expires: ? el Hi :l O' f ;z
.
.10
IFG_PR_004-Attachment B.pdf Page 10 of 12
.
EXHIBIT ll A"
DESCRIPTION OF LEASED PREMISES
The leased premises include 3,158 acres, more or less, which the partes stipulate
represents the area of streambed below the water of the Clark Fork River and bounded by
the low water mark, runing between the upstream boundary of the Clark Fork Project to
the downstream boundar of the Clark Fork Project. The Clark Fork Project is described
by the maps, plans, specifications, and statements described and designated as exhibits
that are on fie with and approved by the Federal Energy Regulatory Commission as part
of the license for the Clark Fork Project, Project No. 2058. The Project lies generally
within the following Sections:
Township 27 North, Range 35 West, MPM
Section: 24
Tu\vnship 27 North. Range 34 West. MPM
Sections: 18, 19,20,21,25,26,27,28,33,34,35, and 36
Township 27 North, Range 33 West, MPM
Sections: 30, 3 i, and 32.Township 26 North, Range 33 West. MPM
Sections: 3,4,5,8,9, 10, 13, 14, 15,23, and 24
TO\vnship 26 Nort, Range 32 West, MPM
Sections: 18, 19, 20, 29, 32, and 33
Township 25 North, Range 32 West. MPM
Sections: 3,4,5,9, 10, iI, 14, 15,22,23,26,27, and 28
Township 24 North, Range 32 West MPM
Sections: i, 2, 3, 4, 10, 11, 12
Township 24 North, Range 3 i West, MPM
Sections: 6, 7, 8, 9, 14, 15, 16, 17, 18,21, 22, 23, 25, 26, 27, 35, and 36
Township 24 North, Range 30 West, MPM
Section: 31
Township 23 North, Range 30 West. MPM
Sections 5, 6, 7,8,16,17, 18,21,26,27,28, 34, and 35
Township 22 North. Range 30 West, MPM
Sections: 3, 10, 11, 13, 14,23,24,26,35, and 36.
11
IFG_PR_004-Attchment B.pdf Page 11 of 12
.
Township 21 North. Range 30 West, MPM
Section: 1
Township 21 North, Range 29 West, MPM
Sections: 6 and 7
.
.
12
IFG_PR_004-Attchment B.pdf Page 12 of 12
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0ll A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-005
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
05/04/2009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Regulation
[phone]
Please provide a copy of any cour order or judgment approving the "Montana Riverbed
Litigation" Settlement Agreement.
RESPONSE:
Please see "IFG _PR _ 005-Attachment-A.pdf' which is a copy of the "Final Order and Judgment
on Avista-State Claims" and IFG PR 005-Attchment-B.pdf which is a copy of the "Consent
Judgment between Avista Corporation and The State of Montana".
I.
.
.
A. Mc1n.tosh
; '. ¡ ,.:.. ¡ 1 '.1 "", '. t,.",
MONTANA FIRST JUDICIAL DISTRICT COURT
LEWIS AND CLARK COUNTY
PPL MONTANA, LLC, a Delaware Limited
Liabilty Corporation; A VISTA
CORPORATION, a Washington
Corporation,
)
) Cause No. CDV 2004-846
)
) .
) FINAL ORDER AND
) JUDGMENT ON
) A VISTA.STATE CLAIMS
)
)
)
)
Plainti ffs,
v.
STATE OF MONTANA,
Defendant.
Upon consideration of the motion for final approval of the settlement between
Plaintiff Avista Corporation ("Avista") and Defendant the State of Montana ("State") as
to all claims between them in this action, and pursuant to Mont. R. Civ. P. 54, it is hereby
ORDERED that:
I. The Court hereby approves the Agreement and Consent Judgment and the
settlement embodied therein between A vista and the State attached 'as Exhibit A to their
FINAL. ORDER AND JlJDGI\ENT ON A VISTA-STATE CLAIMS
PAGE. I
IFG_PR_005-Attachment-A.pdf Page 1 of 2
"
. joint motion for final approval, and finds that the said Agreement and Consent Judgment
and settlement are, in all respects, fair, reasonable, and adequate.
2. Having certified that no just reason for delay exists, this Court hereby
dictates entry of this Final Order as a final judgment pursuant to Rule 54(b) of the
Montana Rules of Civil Procedure. Judgment is hereby rendered on all of the claims
between A vista and the State in this action on the terms and conditions set fort in the
Agreement and Consent Decree entered as an order of the Cour on the 19~ day of
1J.,2007.
3. A vista and the State shall each pay its own costs and fees related to their
claims against each other.
4. Without affecting the finality of this Final Order in any respect, this Court.hereby reserves jurisdiction over such matters as may properly come before the court,
including implementation and administration of the settlement.
APPROVED AND ENTERED this ~ day of 1£4/.
: ¡H.oMA~. C.. HONZE_
HONORABLE THOMAS C. HONZEL
District Court Judge
,2007.
.
FINAL ORDER AND JUDGMENT ON AVISTA-STATE CLAIMS
PAGE2
IFG_PR_005-Attachment-A.pdf Page 2 of 2
.
.
.
.:. \' ::.'. ..: . .
... A. M.GtotDsh
í--'.I :.:,,~' ;'l r.."1 ;. u"
MONTANA FIRST JUDICIAL DISTRICT COURT
LEWIS AND CLAR COUNTY
PPL MONTANA, LLC, a Delaware Limited
Liabilty Corporation; A VISTA
CORPORATION, a Washington
Corporation,
Defendant.
)
) Cause No. CDV 2004-846
)
)
)
)
)
)
)
)
)
CONSENT JUDGMENT
BETWEEN
A VIST A CORPORATION
AND
THE ST ATE OF MONTANA
Plaintiffs,
V.
STA TE OF MONTANA,
This Agreement and Consent Judgment ("Agreement") is made and entered into
by A vista Corporation ("A vista"), on the one hand, and the State of Montana ("State"),
on the other hand with respect to all claims that were or could have been made between
them in this action.
NOW, THEREFORE, the paries hereto agree and stipulate, and it is hereby
ORDERED, ADJUDGED, AND DECREED, as follows:
CONSENT JUDGMENT BETWEEN A VISTA AND THE STA TEPAGE I
IFG_PR_005-Attachment-B.pdf Page 1 of 8
.JURISDICTION
1.The Court has jurisdiction over the parties and the subject matter. Mont. R.
Civ. P. 4B; Mont. Code Ann. § 3-5-302.
PARTIES
2. Plaintiff Avista Corporation ("Avista"), is a Washington corporation,
registered to do business in Montana. Avista's principal place of business is in Spokane,
Washington.
3. Defendant State of Montana ("State") is one of the fift states of the Union
and was granted statehood in 1889.
.TERMS
4.Upon approval and entry of this Agreement by this Court, this Agreement
and Consent Judgment constitutes a final judgment between A vista, on the one hand, and
the State, on the other hand, in accordance with its terms.
5. Lease of Clark Fork Project Riverbeds. Avista and the State agree to
enter a lease of a power site, consisting of 3, 158 acres of Clark Fork riverbed being used
by Avista in connection with the Clark Fork Project (which includes both the Noxon
Rapids project, and that portion of the Cabinet Gorge project within Montana), pursuant
to the provisions of the Hydroelectric Resources Act, Mont. Code Ann. §§ 77-4-201,
et seq. The duration of the lease wil be not less than the remaining term of Avista's
. FERC license. Rent wil be paid in arrears, with payment due on or before each
CONSENT JUDGMENT BETWEEN AVISTA AND THE STATE
PAGE 2
IFG_PR_005-Attachment-B.pdf Page 2 of 8
.February I for the previous calendar year. The initial amount of the rent wil be
$4 milion per year. The rent wil be adjusted each year as follows:
a. Beginning with calendar year 2008, and continuing through calendar
year 2016, the base amount 01'$4 millon per year shall be adjusted upward by the
increase in the Consumoer Price Index (CPI) annual average for the calendar year
for which payment is due.
b. Not later than June 30, 2016. the parties wil meet and confer to .
determine whether the annual rental remains consistent with the principles of law
as applied to the facts. In the event either party believes the annual rental no
longer is consistent with applicable law applied to the facts, the paries wil
.negotiate in good faith to determine an appropriate adjusted rental rate. If
the
paries do not agree upon an adjusted rental rate by September 30, 2016, the
paries wil engage in advisory arbitration and submit the arbitrator's
recommendation to the State Board of Land Commissioners ("Land Board") for
approvaL.
The rent agreed upon represents full market value for the lease of 3,158 acres of
Clark Fork riverbed owned by the State and used by Avista in connection with the
Clark Fork Project. The lease between Avista and the State fully complies with all
applicable terms of the Hydroelectric Resources Act.
6. Board of Land Commissioners Approval; Public Notice and Comment.
Avista and the State jointly recommended to the Board of Land Commissioners ("Land
. Board") the approval of the terms contained in this Agreement through an agenda item
CONSENT JUDGMENT BETWEEN AVISTA AND THE STATE
PAGE 3
IFG_PR_005-Attachment-B.pdf Page 3 of 8
. publicly noticed on November 9,2007 for the Land Board's regular monthly meeting on
November 19, 2007. After such public notice and an opportunity for public comment,
the Land Board approved the terms contained in this Agreement.
7. Most Favored Nations Clause. If co-party PPL Montana, LLC, either by
litigation through judgment and any appeals, or through settlement, receives a
determination that the full market value of its land interests at issue in the liigation is
based upon factors more favorable to it than those contained in the settlem,ent with
Avista, the Avista rent wil be adjusted by an ámount necessary to renect the more
favorable determination. For purposes of this clause, a more favorable determination wil
occur if the aggregate annual rent determined for PPL Montana by settlement or litigation
.("Determined PPL Rent") is less than 48 percent of
the aggregate amount of base year
rent ("Claimed PPL Rent") claimed by the State in its case in chief at trÍal against PPL
Montana. If this occurs, the $4 milion base rent to be paid by A vista shall be reduced
retroactively staring on the date of final judgment on the PPL Montana claims, or the
date of the settlement, by a percentage equal to the Determined PPL Rent divided by the
Claimed PPL Rent. See Attachment A for an ilustration of the calculation.
8. Reopener for Subsequent Governmental Action. If, during the term of
the Avista lease, the Land Board, the Montana Legislature, the Deparment of Natural
Resources and Conservation, or any other State entity with jurisdiction, enacts or adopts a
rental statute, rule, or policy applicable to leases issued under the Hydroelectric
Resources Act that would result in a rent payment more favorable to A vista than the rent.
CONSENT JUDGMENT BETWEEN AVISTA AND THE STATE
PAGE 4
IFG_PR_005-Attachment-B.pdf Page 4 of 8
. set forth in paragraph 5, the rent paid by Avista shall be modified retroactively staring on
the date of enactment or adoption to incorporate the more favorablt? tenns.
9. Reopener for Subsequent Judicial Determination. If, during the tenn of
the Avista lease, the reach of the Clark Fork River within the boundaries of Avista's
FERC license is detennined by a court of competent jurisdiction to be not navigable for
title purposes, Avista's obligation to pay rent shall cease. If, during the term of the
Avista lease, a court of competent jurisdiction determines that (a) the shared net benefits
method is not a lawful method to calculate the full market value of land interests; or (b)
no compensation or reduced compensation in the nature of rentals is owed to the State of
Montana for occupancy of state-owned riverbeds, and the application of such
.determination or detenninations would result in a rent payment more favorable to Avista
than the rent set forth in paragraph 5, or otherwise extinguish Avista's obligation to pay
rentals, Avista's obligation to pay rent wil be modified retroactively staing on the date
of detennination to reflect a method of calculating rent that is consistent with the court
detennination or determinations, or Avista's obligation to pay rent shall cease,
accordingly.
RELEASES AND COVENANTS NOT TO SUE
10. Avista and the State forever release and covenant not to sue or to fie any
administrative claim against the other with respect to any and all civil claims between
Avista and the State that were or could have been made in this action and all claims.
CONSENT JUDGMENT BETWEEN AVISTA AND THE STATEPAGES
IFG_PR_005-Attachment-B.pdf Page 5 of 8
.relating to or arising from this action; provided, however, that nothing in this Agreement
shall affect or impair claims to enforce this Agreement.
ENTRY OF FINAL JUDGMENT AND RETENTION OF JURISDICTION
II. The Court tinds that this Agreement is fundamentally fair, just and
reasonable and directs that this consent judgment be entered as a final judgment with
respect to all claims between A vista and the State in this action. The Cour further
certifies that there is no just reason for delaying performance of this Agreement and entry
of final judgment between A vista and the State.
12. The Court shall retain jurisdiction of this matter for the purose of entering
such further orders, direction, or relief as may be appropriate for the construction,
. implementation, or enforcement of this Agreement.
13. This Agreement can be modified only with the express written consent of
the Paries to the Agreement and the approval of the Court.
THE FOREGOING Agreement and Consent Judgment between Avista, on the
one hand, and the State, on the other hand, is hereby
APPROVED AND ENTERED this -' day of ~teL, ,2007.
'. ilQN18S. C. HONzel,
HONORALE THOMAS C. HONZEL
Distrct Court Judge
.
FOR PLAINTIFF A VISTA CORPORATION1 ,. 4 çz,/.. f!J..
l~//..~ #-1:#1 A:C- .L.Y''' 7
FOR ~:D~~ATE OF MONTANA
/J ( l'i' .--- Date:fJ
Date: ¡1#..:r.l ¡r:t J-câ ?
A ~""J1"íV; ./1 2ub7
:' . tI
CONSENT JUDGMENT BETWEEN A VISTA AND THE STATE
PAGE 6
IFG_PR_005-Attachment-B.pdf' Page 6 of 8
.
.
.
ATTACHMENT A
IFG _PR_ 005-Attachment -B .pdf Page 7 of 8
.1
.
ATIACBNT A. .
If th De PPL Ren is less th 48% of the Cla PPL Re Avi anua
rent sh be recculat ac to followig formula:
Anua Reccu A vist Ren == A x (D + C) Wh:
A == $8,416,510 (Amount of ap rent claied by th Sta in the
Sta's Conteon 9.A of the PI Orde)
D = De PPL Rent
)
3
IFG _PR_ 005-Attachment-B .pdf Page 8 of 8
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-09-0l / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-006
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
0412912009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Regulation
[phone]
Please provide a copy of pages 32, 33 and 34 of the Direct Testimony of Elizabeth M. Andrews
filed in Case No. A VU-E-08-01.
RESPONSE:
Please see IFG_PR_006-Attachment-A.pdf.
production and transmission components of these additions
as discussed further by Ms . ~DOX .This adj us tment
decreases Idaho net operating income by $1,016, 000 and
increases rate base by $716, 000.
The adjustment in colum (PF8) , Pra FarI Asset
Mangeient, pro forms in the O&M expense associated with
the ASSet Management Program as described further by Mr.
Kiney.This adjustment decreases Idaho net operating
income by $.625,000.
The adjustment in colum (PF9) , Pro FarI Spakane
River Relicensing, includes the processing costs associated
with the Company's Spokane River relicensing efforts.
These costs include actual life-to-date expenditures from
April 2001 through Decemer 31, 2007, and 2008 pro forma
expenditures through Decemer 31, 2008.Mr. Howard
provides additional details regarding these costs f and
exlains that the Company anticipates a final license
approved by the Federal Energy Regulatory Commission (FERC)
by December 2008.This adjustment decreases Idaho net
operating income by $793, 000 and increases rate base by
$12, Ö19 ,UOÒ.
'the adjustment in colu:(PFlO), Pro Form Coeur d'
Alene Tribe Settlement, includes cost associated with the
Lake Coeur d' Alene Tribe settlement agreement as described
further by Company witness Ms. Pessemier. For compensation
.Andrews, Di 32
Avista Corporation
IFG _PR_ 006-Attachment-A.pdf Page 1 of 3
.for trespass, the settlement includes the payment of $25.0
2 million in 2008,$10.0 million in 2009 and $4.0 million in
3 2010 for resolution of the past trespass and §10 (e)
4 charges.The future §lO (e) payments are $400,000 flat
5 arLT'ual payrnents for the first 20 years of the license and
6 $700,000 flat annual payments for the remaining 30 years of
7 the licensè. The Compai"1Y is proposing, in this filing, that
8 the first two payments of $25.0 million a.Yld $10.0 million,
9 together with the 2008$400,000 first a.nnual payment be
10 deferred and amortized. The deferred payments including a
11 return on the balance would bè aiortized over the average
12 remaining life of the Post Falls project.The pro form
13 adjustment includes one year aiItortization of the deferred.14 balance, and the 2009 anual payment of $400,000.
This
is adjustment decreases Idaho net operating income by $270, 000
16 and increases rate base by S8,264/000.
17 The adjustrnent in column (PFll), Pro Form Montana
18 Riverbed Lease, includes costs associated with the Monca.T'a
19 Riverbed lease settlement as described further by Mr.
20 Vermillion. In this settlement, the Company agreed to pay
21 the State of Montana $4.0 million anually begiri.ning in
22 2007, with annual inflation adjustments, for a lO-year
23 period for leasing the riverbed under the Noxon Rapids
24 Project and the Montana portion of the Cabinet Gorge
25 Project.The first two annual payments were deferred by
.Andrews, Di 33
Avista Corporation
IFG _PR_ 006-Attachment-A.pdf Page 2 of 3
Avista as approved in Case No. AVU-E-0710. The Company is
proposing that the deferred payments i including accrued
interest, be amortized over the remaining eight years of
the agreemen t .The pro forma adjustment includes one-
eighth of the deferred balance amortization and the 2009
annual lease payment. This adjustment decreases Idaho net
operating income by $1,197 r 000 and increases rate base by
$1,758,000.
Q. Please turn to page 9 and explain the adjustments
shown there.
A. The adjustment in colum (PF12) f Pro Forma
Colstrip Mèreury Emssion. O&M, includes additional 2009 O&M
costs assöciated with the mercury control project at
Colstrip as further described by Mr. Vermillion.This
adjustinent decreases Idaho net operating income by
$341,000.
The adjustment in còlumii (PF13), Pro Fo:i Incentives,
adjusts 2007 test year incentive expense to the actual 2007
incentive e:;-pense paid in 2008 for the 2007 incentive plan.
The Company's main employee incentive plan uses Customer
Satisfaction and Reliability targets as the initial step in
issuing incentive payouts. Actual payouts are dictated by
utility O&M cost savings. S.ince the executive plan is
slightly different than the main employee iucenti ve plan,
this adjustment removes any part of the 2007 executive
.~..drews i pi 34
Avista Corporation
IFG _PR_006-Attachment-A.pdt Page 30t 3
.
.
.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-09-0l 1 A VU-G-09-01
Idaho Forest Group
Production Request
IFG-007
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
04/29/2009
Scott MorrslRchard Storro
Patrck Ehrbar
State & Federal Regulation
[phone]
REQUEST:
If you believe the Idaho Public Utilities Commission has previously approved the costs associated
with the CDA Settlement Agreement and the Montana Riverbed Litigation Settlement Agreement
for rate making puroses, please identify the Commission Order containing such approval. (Direct
Testimony of Scott Morrs, pg. 5).
RESPONSE:
The recovery of costs associated with the CDA Settlement Agreement and the Montana Riverbed
Litigation Settlement Agreement were approved in the Company's previous rate case
(A VU- E-08-0 1 and A VU-G-08-0 1, Order No. 30647). The costs were addressed on pages 6 & 7
in the Stipulation (IFG_PR_007-Attachment-A.pdf) which was later approved by the
Commission on September 30, 2008 (IFG_PR_007-Attachment-B.pdf).
The CDA Settlement Agreement is addressed at Paragraph 9 (b) of the Stipulation, as follows:
"(b.) Confidential Litigation - Company Witness Andrews describes confidential
litigation at pages 32 and 33 of her prefied direct testimony (unedacted). Inasmuch as
that matter is stil pending and has yet to be finally resolved, but is expected to reach
resolution in the near future, the Paries have agreed to defer as a regulatory expense item
(in Account 186 - Miscellaneous Deferred Debits) on the Company's balance sheet
depreciation associated with Idaho share of the aforementioned costs with a carng
charge on the deferal as well as a carng charge on the amount of costs not yet included
in rate base for subsequent recovery in rates. The carng charge wil be the customer
deposit rate (presently 5%). This deferral, together with a carng charge, wil continue
until the earlier of twelve (12) months from the date of resolution of the litigation or until
the conclusion of Avista's next general rate case (GRC)." (emphasis added)
The Montana Riverbed Litigation Settlement is addressed at Paragraph 9 ( c) of the Stipulation, as
follows:
"(c.) Montana Riverbed Litigation - On November 1, 2007, Avista filed an
Application with the Commssion (Case No. AVU-E-07-10) requesting an accounting
order authorizing deferral of settlement lease payments and interest accruals relating to
the recent settlement of a lawsuit in the State of Montana over the use of the riverbed
related to the Company's ownership of the Noxon Rapids and Cabinet Gorge
hydroelectrc projects located on the Clark Fork River. The Commission, in its Order
.
Response to IFG Request No. 007
Page 2
No. 30492, authorized the deferal of settlement lease payments and delayed a decision
on interest, until the matter was addressed in this general rate filing. The Paries have
agreed to the Company's requested amortization of costs, together with recovery of
accrued interest on the Idaho share of deferrals at the customer deposit rate (presently
5%)."
.
.
.
.David J. Meyer, Esq.
Vice President and Chief Counel of
Reguatory and Governenta Afairs
A vista Corporation
1411 E. Mission Avenue
P. O. Box 3727
Spokane, VVashin~on99220
Phone: [phone], Fax: [phone]
BEFORE THE IDAHO PUBLIC UTlITIES COMMSSION
IN THE MATTER OF TH APPLICATION
OF AVISTA CORPORATION FOR TH
AUTORITY TO INCREASE ITS RATES
AN CHAGES FOR ELECTRIC AN
NATU GAS SERVICE TO ELECTRIC
AN NATU GAS CUSTOMERS IN TH
STATE OF IDAHO
)
) CASE NOS. A VU-E-08-0l
) AVU-G-08-01
)
) STIPULATION
)
)
.Ths Stipulation is entered into by and aIong A vista Corporation, doing
business as A vista Utilties ("A vista" or "Compay"), the Sta of the Idao Public
Utilities Coinission ("Staff"), Potlath Corpration ("Potlatch"), and the Coinunty
Action Parership Association of Idaho ("CAPAI). These entities are collectively
referred to as the "Paries," and represent all pares in the above-referenced cases. The
Pares understad this Stipulation is subject to approval by the Idaho Public Utilities
Commission ("!PUC" or the "Commssion").
I. INRODUCTION
1. The terms and conditions of ths Stipulation ar set fort herein. The Pares
agree that ths Stipulation represents a fai, just and reasonable compromise of the issues
raised in the proceeding and that ths Stipulation and its acceptace by the Commssion.represent a reasonable resolution of multiple issues identified in this matter. ThePares,
Stipulation Page 1 of 12
IFG _PR_ 007 -Attachment-A. pdf
.
.
.
Stipulation Page 2 of12
I FG _PR_ 007 -Attachment-A. pdf
.subsequently held in the Commission offces on July 31, 2008, and wa attended by
representatives of all Pares.
6. Based upon the setement discussions among the Paries, as a compromise
ófpositions in ths case, and for other consideration as set fort below, the Pares agree
to the followig terms:
.
DI. TERMS OF THE STIPULATION
7. Revenue Requiement. The Paries agree that A vist shall be allowed to
implement revised taff schedules designed to recover $23,163,000 in additiona anua
electrc revenue and $3,878,000 in additiona anua natual gas revenue, which represent
an 11.98% and 4.7% increase in electrc and natual gas anua base taff revenues,
respectively. In determg these revenue increaes, the Paries have ageed to varous
adjustments to the Company's fiing, which are suar in the Tables below and are
reflected in Appendix I and will be fuer explained in prefied testimony to be fied by
the Pares in support of the Stipulation. In addition, certn elements of the revenue
increases are fuer discussed imediately below:
(a.) Cost of Capita. The Pares agree that Avista's cost of capita shal be
determined using a capita strctue consisting of 47.94% common stock equity, and
52.06% long-term debt. Avista's authorized retu on equity shall be 10.20%; the cost of
debt shall be 6.84%. These components produce an authorized rate of retu of 8.45%.
(b.) Other Adjusents. The Sum Table of Adjustments, as set fort
imediately below, describes the remg revisions to the Company's originally-fied
electrc and natual gas revenue requirements:.
Stipulation Page 3 of12
IFG _PR _007 -Attachment-A. pdf
.
.
.
SUMMARY TABLE OF ADJUSTMENTS TO ELECTRIC REVENUE REQUIREMENT
OOOs of Dollars
Revenue
Reauirement Rate Base
I Amount As Filed
.$32,328 $54.266
Adlustments:
Return on Equity Adjust return on equity to 10.20%(2,485)0 ..
Power Supply -Priest RapidslWanapurn Contracts $(614)(735)
(use average of '08 & '09 figures)0
-Elimiiiation of PPM Wind integration costs $(109)
-Reflect Kootenai Transmission. contrct $( 12)
Labor-Non-Exec Remove 50% of 2009 non-executive labor expense (296)0
Labor-Executive Remove 2009 executive labor expense (39)0
Transmission Rev/Exp.Remove 2009 revenues and expenses 81 0
Capital Additions 2008 Includes capital investment and depreciation
through December 2008 152 1,327
Asset Management Remove 50% of 2009 expenses (489)0
Spokane River Relicensing Remove adjustment (establish deferral)(2,831)(12,039)
Confidential Litigation *Remove adjustment (establish deferral)(1,514)(8,264)
Colstrip Mercury Emission O&M Remove adjustment (533)0
Executive incentives Remove executies' incentives (103)0
CS2 Levelized Adjustment Remove 2009 deferrd return (114)0
Carrn Financial Instrments Add net revenues from sale of CFls
(CFls)(427)0
Miscellaneous A&G EXp~nses Remove various A&G expenses, including dues,(502)0
sponsorships, A&G study, 50% of Directors &
Offcers' insurance, and 50% of Board of Diretor
expenses
Production Propert Flow through impact of Prouction & Transmission 320 997
adjustments
Restate Debt Interest Flow through impact of Rate Base adjustments 350 0
Total Adjustments $-'9,165)$ '17.979)
23,163 I $ 530,287 II Adjusted Amounts I $
* Please see Andrews' Direct unredacted testimony at Pages 32-33.
Stipulation Page 4 of12
IFG _PR_ 007 -Attachment-A. pdf
.
.
.
SUMMARY TABLE OF ADJUSTMENTS TO NATURAL GAS REVENUE REQUIREMENT
OOOs of Dollars
Revenue
Reauirement Ráte Base
i Amount As Filed $4,725 $85,690
dA liustment:
Return on Equity Adjust return on equit to 10.20%(389)0
Labor-Non-Exec Remove 50% of 2009 non-executive
labor expense (73)0
Labor-Executive Remove 2009 executive labor
exoense (9)Ö
Capital Additions 2008 Includes capitl investment and
depreciation through December
(103)(531)2008
Incentives Remove executives' incentives (23)0
Miscellaneous A&G Expenses Remove vanous A&G expenses,(260)0
including dues, sponsorships, A&G
study, 50% of Directors & Offcers'
insurance, and 50% of Board of
Director expenses
Restate Debt Interest Flow through impact of Rate Base
adjustments 10 0
Total Adjustments $(847)$(531)
I Adjustèd Amounts I $3,878 1$ 85,159 I
8. Rate Effective Date. The Pares request that the Commssion issue its
order approving theretal rates contaed in ths Stipulation to become effective October
1,2008.
9. Accounting Treatment for Certn Costs.
(a.) Spokane River Relicensing - The Company included the processing costs
associated with its Spokane River relicensing effort, whch expenditus included actu
life-to-date costs from April 2001 though December 31, 2007, and 2008 pro forma
expenditues though December 31, 2008. (See Andrews' Dirct Testimony at page 32)
Although the Company anticipates receivig a final license from the Federa Energy
Reguatory Commission ("FERC") in the near futur, tht has yet to occur. The
Stipulàtion Page 5 of12
I FG _PR_ 007 -Attachment-A. pdf
.
.
relicensing costs will remai in CWIP (Constrction Work in Progress) and the
Company will continue to acrue AFUDC until issuace of the license, at which time the
relicensing costs will be trsferr to plant in serice and depreciation wil begi to be
recorded. The Paries have ageed to defer as a reguatory expense item (in Account 186
_ Miscellaneous Deferred Debits) on the Company's balance sheet depreciation
assoiated with Idao's shae of the aforementioned relicensing costs and related
protection, mitigation, or enhancement expenditus, until the earlier of twelve (12)
months from the date of the issuace of the license or the conclusion of A vista's next
general rate case ("GRC"), together with a carg charge on the deferral~ as well as a
caring charge on the amount of relicensing costs not yet included in rate base. The
carin chage for deferals and rate base not yet included in establishig rtes would be
the cusmer deposit rate at that time (presently 5%).
(b.) Confdential Litigation - Company Witness Andrews describes
confidential litigation at pages 32 and 33 of her prefied diect testimony (unedacted).
Inasmuch as that matter is stil pending and has yet to be finally resolved, but is expected
to reach resolution in the near futue, the Paries have agreed to defer as a reguatory
expense item (in Account i 86 - Miscellaneous Deferred Debits) on the Company's
balance sheet depreciation associated with Idao shar of the aforementioned cost with
a carg chage on the deferr as well as a carg chage on the amount of costs not
yet included in rate base for subseuent reovery in rates. The carng charge will be
the customer deposit rate (presently 5%). Ths deferr, together with a carg chage,
will continue until the earlier of twelve (12) month from the date of resolution of the
litigation or until the conclusion of Avista's next general rate case (GRC).
.
Stipulation Page 6 of12
IFG _PR_ 007 -Attachment~A.pdf
.(c.) Montaa Riverbed Litigation - On November 1,2007, Avist filed an
Application with the Comnssion (Case No.A VU-E-07-lO) requestng an accounting
order authorizig deferr of setement lease payments and interest accrus relatig to
the recent settlement of a lawsuit in the State of Montaa over the use of the riverbed
related to the Company's ownership of the Noxon Rapids and Cabinet Gorge
hydroelectric projects located on the Clark Fork River. The Commission, in its Order
No. 30492, authorized the deferral of settlement lease payments and delayed a decision
on interest, until the matter was addressed in this general rate filing. The Pares have
ageed to the Company's requested amortzation of costs, together with recovery of
acrued interest on the Idao shae of deferrls at the customer deposit rate (presently
5%).
.
(d.) Revenues Associated with Sale of Carbon Finacial Intrents (CFIs) -
On May 22, 2008 A vista filed a request with the Commission (Case No. A VU-E-08-2) to
defer the revenues associated with the sale of Carbon Financial Intrents (CFIs) on the
Chicago Climate Exchage. The Company's Application was approved on Augut 5,
2008 in Order No. 30610. Idaho's shae of the revenues, net of expenses, from the CFI
sales is $850,571. These dollars will be amorted over a two-year period beginnng in
the calenda month of the effective date of new retal rates resultig from ths Stipulation,
with a carg charge on the unamortd balance at the customer deposit rate. The
revenue requiement included in ths Stipulation has ben reduced for the CFI revenues,
in order to flow these benefits though to customers.
10. PCA Authorized Level of Expense. Appendix 3 sets fort the agreed-upon
level of power supply expense, retail load and revenue credt resultig from ths
.
Stipulation Page 70f12
IFG _PR_ 007 -Attachment-A. pdf
.
.
Stipulation, tht will be used in the monthy Power Cost Adjustment ("PCA") mechanism
calculations.
11. Prudency of Energy Effciency Expenditus. The Pares agee tht
Avista's expenditus for electrc and natu gas energy effciency progr from
November 1, 2003 though December 31, 2007 have been prudently incurd.
12. Rate Spread. Appendix 2 shows the impact on each service schedule of
the agreed-upon electric and natu gas increaes. The proposed electrc revenue
increase of $23,163,000 represents an overl increase of 1 1.98% in base raes, and with
one exception, is spread on a unform percentae basis to all schedules. Schedule 25P
(for Potlatch's Lewiston plant),however, will receive an increase of 10.36%, in order to
reflect a Schedule 25P rate tht is no higher th the talblock rate of
Schedule 25. With
ths chae, the relative rate of retu for Schedule 25P would move approximately one-
halfway toward unty, more consistnt with the movement of other service schedules.
All other'schedules will receive a 12.33% increas.
The spread of the increased natual gas revenue requiement of $3,878,000 is set
fort in Appendix 2, and represents an overall increase of 4.7% in base rates. It reflects a
reduction to what the Company had propose by way of an increase for each of the gas
servce schedules proportonal to the reduction in the overal ircrea.
13. Rate Design. The Paries age to chages in the elecc customer and
demand charges as set fort in the Company's fiing, and sumarzed in Appendix 2.
Ths includes an increase in the residential monthy basic charge from $4.00 to $4.60.
The energy rates within each electrc service schedule are increased by a uniform
percentage.
.
Stipulation
IFG _PR_ 007 -Attachment-A. pdf
Page 80f12
.With respect to natual gas rate design, the Pares agree to apply the increase in
rates withn each servce schedule in the samè maner 'as proposed by the Company. The
monthy basic chage for the residential schedule will increase from $3.28 to $4.00, as
proposed by the Company.
14. Cusomer-Related Issues.
(a.) Low-Income DSM Fundig - At present, $350,000 per yea is
provided to Idaho service (CAP) agencies for proposed fuding of low-income Dei:-
Side Manement (DSM). The Pares agree to increase the anua level of fuding to
$465,000 for such programs (which includes adnistative overhead). The continuation
and level of such fudig wil be revisited in the Company's next general rate fiing.
(b.) Funding for Outreach for Low-Income Conservation -The Paries
agree tht anua fuding in the amount of $25,000 will be provided to Idaho (CAP)
agencies for the purose of underwting the dedication of agency personnel to assist in
low-income outreach and education concerng conservation. The dollars will be fuded
though the DSM Tarff Rider (Schedules 91 and 191), and will be in addition to the
$465,000 of Low-Income DSM Funding. The continuation and level of such fuding will
be revisited in the Company's next general rate fig.
.
.
Stipulation
IFG _PR_007 -Attachment-A. pdf
Page 90f12
. (c.) Establishment of Generic Workhops - Avista agees to support and
actively paricipate in any Commssion-established workshops for the purose of
examinng issues sUlunding energy afordabilty and cusomers' abilty to pay energy
, bils with respect to all jursdictiona utilties. As par of ths process, A vista agrees to
explore the feaibilty of establishing a Low-Income Rate Assistace Progr (LIRA),
Or similar progr, to assist low-income residential customers in Idaho.
15. The Pares agee that ths Stipulation represents a compromise of the
positions of the Paries in this cae. As provided in RP 272, other than any testimony
filed in support of the approval of ths Stipulation, and except to the extent necessar for
a Par to explai before the Commission its own statements and positions with respect to
the Stipulation, all statements made and positions taen in negotiations relating to ths
. Stipulation shall be confdential and will not be adssible in evidence in ths or any
other proceeding.
16. The Pares submit ths Stipulation to the Commssion and recommend
approval in its entiety pursuat to RP 274. Pares shal support ths Stipulation before
the Commssion, and no Par shall appeal a Commission Order approving the
Stipulation or an issue resolved by the Stipulation. If ths Stipulation is challenged by any
person not a par to the Stipulation, the Pares to ths Stipulation reserve the right to file
.
testimony, cross-examne witnesses and put on such case as they deem appropriate to
respond fuly to the issueS presented, includig the right to raise issues tht are
incorporated in the settement term embodied in ths Stipulation, Notwthstading this
reservation of rights, the Paries to ths Stipulation agre tht they will continue to support
the Commssion's adoption of the terms of ths Stipulation.
Stipulation
IFG _PR_ 007 -Attachment-A. pdf
Page 10 of 12
.17. If the Commission rejects any par or all of ths Stipulation or imposes any
additiona matenal conditions on approval of ths Stipulation, each Par reseres the
right, upon wrttn notice to the Commssion and the other Pares to ths proceedig,
withn 14 days of the date of such action by the Commission, to withdrw from ths
Stipulation. In such case, no Par shal be bound or prejudiced by the terms of ths
Stipulation, and each Par shal be entitled to seek reconsideration of the Commssion's
order; file testmony as it chooses, cross-exame witnesses, and do all other things
necessar to put on such case as it deems appropriate. In such case, the Pares
imediately will request the prompt reconvenig of a prehearg conference for puroses
of establishig a procedural schedule for the completion of the case. The Paries agree to
cooperate in development of a schedule that concludes the proceding on the earliest
possible date, tang into account the needs of the Paries in parcipating in heangs and
preparg testímony and briefs.
18. 'The Pares agre that ths Stipuation is in the public interest and thåt all
of its terms and conditions are fair, just and reasnable.
19. No Par shall be bound, benefited or prejudiced by any position asserted
in the negotiation of ths Stipulation, except to the extnt expressly sted herein nor
shal ths Stipulation be constred as a waiver of the rights of any Par uness such rights
are expressly waved herein. Execution of ths Stipulation shal notbe deemed to
constitute an acknowledgment by my Par of the validity or invalidity of any parcular
method, theory or principle of regulation or cost recovery. No Par shall be deemed to
have agreed that any method, theory or principle of reguation or cost recovery employed
in arvig at ths Stipulation is appropriate for resolving any issues in any other
.
.
Stipulation
IFG _PR_ 007 -Attachment-A. pdf
Page 11 ofl2
.procing in the futu. No fidings of fact or conclusions of law other th those stated
herein shal be deemed to be iiplicit in ths Stipulation.
20. The obligations of the Parties under ths Stipulation ar subject to the
Commission's approval of ths Stipulation in accordace with its terms and conditions
and upon such approval being upheld on appe, if any, by a cour of competent
jursdiction.
2 i. Ths Stipulation may be executed in counterpar and each signed
counterpar shall constitute an original document.
-;'1
DATED ths .-day of Augu, 2008.
A vista Corpration Idao Public Utilities Commssion Sta
.BY~tf~dJ el'
Attorney for A vista Corporation
By
Scott Woodbur
Attorney for !PUC Sta
Potlatch Corporation Communty Action Parership Association
By By
Bra M. Pudy
.
Stipulation Page 12 of 12
IFG_PR_007 -Attachment-A. pdf
.
.
.
08/07/2008 16: 45 FEDEX KINKO' 5 5122 PAGE 02208--336-2537
ar e;xpressly waived herein. Exection of this Stipulation shal not be deemed to
constitute an acknowledgment by any Pary of the validity or invaidity of any
paricular
method theo or principle of reguation or cost reovery. No Par shall be deemed to
have agr tha.t any method, theory or prnciple of reguation or cost revery employed
ii arving at this. Stipulation is approat fot'resolvig any issues in any other
proeding in the futu. No fidis of fac or conclusions of law
other than those stated
herein sha be deemed to be implicit in ths Stipulation.
20. The obligations of the Pares under this Stipulaon are subject to the
Commssion's approva of this Stipulaton in acordance with its term and conditions
and upon such approval being upheld on app, if any, by a cour of competent
jurdiction.
21.Thi StipUtion may be executed in counterpar and eah signed
countear shall constitute an origial document.
DATED ths :tdAY of August, 2008.
A vista Corpraon Idaho Public Utilities Commission Sta
By.By
Scott Woodbur
Attrney for lPUC StaDavid J. Meyer
Attrney for A vista Corpration
Potlath Corporation Community Action Parnership Association
By ?~£lBY,I ;:. sz~ ~~
Stipulation Page 11 of 12
I FG _PR_007 -Attachment-A. pdf
08/01/2008 THU 14: 52 (TX/RX NO 5446) II 002
.
A'PPENIX 1
.
.
IFG _PR_ 007 -Attachment-A. pdf
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AVISTA UTIESIDAHO EL
PREST ANDPROPQEÐ.RATE eoPONENTSBYSCliOULE
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aiid, Sóulé 59dèittal.& FåltiEnêaitR. Adj; ($d,1 òi.
IFG _PR _007 -Attachment-A. pdf
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Case No. AVU-E~1&.,AVu--Q1... . . Page2of4
.AVlSTAUTILmES:
ID,AOGAS
PRøpOSen"INCREAé'~YSeR\lçESëHÊDULE'
1z:MON'SëNP$ Ôí;t;$if3iaR 31, 2001
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Offce of the Secretary
Service Date
September 30, 2008.BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF A VISTA CORPORATION FOR THE
AUmORI TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AND NATUR GAS CUSTOMERS IN THE
STATE OF IDAHO
)
) CASE NOS. A VU-E-08-01
) A VU-G-08-01
)
)
) ORDER NO. 30647
)
.
On April 3, 2008, A vista Corporation dba A vista Utilties (A vista; Company) filed an
Application with the Idaho Public Utilties Commission (Commission) for authority to increase
its rates and charges for electrc and natual gas service in Idaho. The Commission in this Order
approves the Stipulation offered as a proposed settlement of the rate issues in Case Nos. AVU-E-
08-01 and A VU-G-08-01. The Paries to the Stipulation are: Avista; Potlatch Corporation
(potlatch); the Community Action Parership Association of Idaho (CAP AI); and Commission
Staff. The Commission finds the proposed settlement to be fair, just and reasonable and in the
public interest.
Rate changes approved with an effective date of October 1,2008, increase authorized
anua base tarff revenues for electrc service by $23.2 milion, or 11.98%, and for natual gas
servce by $3.9 milion, or 4.7%. The net amount of actual increase wil var by class of
customer and usage. An average electric residential customer (Schedule 1) using 977 kilowatt
hours of electrcity per month will see a $7.89 per month increase. This includes an increase in
the basic monthly customer service charge from $4.00 to $4.60. An average residential natual
gas customer (Schedule 101) using 65 therms per month wil see an increase of $4.03 per month.
This includes an increase in the monthy basic customer service charge from $3.28 to $4.00.
The Commission in ths Order also anounces the contemporaneous establishment of
a generic docket to examine energy affordabilty issues (GNR-U-08-01, Order No. 30644),
approves increased fuding for low-income weatherization, and authorizes fuding for low-
income outreach and conservation education. An intervenor funding grt of $3,400 is approved
for the Communty Action Parership Association ofIdaho (CAP AI).
.
ORDER NO. 30647 1
IFG _PR_ 007 -Attachment-B.pdf Page 1 of 23
. Initial Application
On April 3, 2008, A vista fied an Application with the Commission for authority to
recover $32.3 milion (16.7%) in additional anual electric revenue and $4.7 milion (5.8%) in
additiona anual natur gas revenue. Tr. p. 81.
Electric
.
The proposed revenue increase for electrc servce requested in this case, the
Company states, is driven primarly by increased power supply costs (including higher retail
loads, reduced hydro generation, increased fuel costs, increased Mid-Columbia purchases, and
increased trsmission expenses), capita investments in generation, trsmission and
distrbution plant to increase capacity and reliabilty, varous hydro relicensing costs, and the
Company's investment in advanced meter reading (AMR). Tr. pp. 83-85.
Natural Gas
Driving the natural gas rate request in ths case is Avista's investment in expanding
the natual gas storage and delivery capacity at its Jackson Prairie Storage Facilty and the
Company's investment in advanced meter readg (AMR). Tr. p. 85. The proposed rate chage
for natual gas customers does not reflect changes in the cost of natur gas purchased by A vista
to serve customers. Changes in the cost of naturl gas are reflected in the Company's anual
Purchased Gas Adjustment.
Evidence in support of the Company's need for a rate increase for electric and natural
gas is based on a 2007 test year. Tr. p. 83. The Company in its initial Application proposed an
average rate of retur on rate base of 8.74%, with a 47.94% common equity ratio and a 10.8%
retu on equity. Also identified was a cost of debt of 6.84% and a long-term debt component of
52.06%. Tr. p. 88. Avista alleges that unless it is authorized to increase its rates, the Company's
rates will not be fair, just and reasonable and it will not have the opportity to realize a fair
retu on its investment.
The Company's base rates and charges for electric and natual gas service were last
adjusted in 2004 (Case Nos. A VU-E-04-01lAVU-G-04-0l, Order No. 29602). An additional
electric fate adjustment related to the Coyote Springs II generating project was implemented
April 12,2005 (Case No. A VU-E-05-01).
.
ORDER NO. 30647 2
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.Stipulation and Proposed Settlement (hereafter "Stipulation")
On July 28, 2008, the Commission Staff fied with the Commission a Notice of Intent
to Engage in Settlement Discussions. RP 272. A settlement conference was subsequently held
on July 31, 2008, wherein all paries to the case as of that date (the Settlement Paries) were
present and paricipated. Pursuat to settlement discussions, the Settlement Pares entered into a
Stipulation that purort to resolve all issues raised in this proceeding. RP 272-276. The
Stipulation was fied with the Commission on August 8, 2008. Tr. Exh. 101. Under the terms of
the Stipulation, Avista is authorized to recover $23.2 millon (11.98%) in additional anua
electrc revenue and $3.9 milion (4.7%) in additional anual natural gas revenues. Stipulation'¡
2. The Stipulation represents a compromise of the positions of the Settlement Paries in this
proceeding. Stipulation'¡ 15. The Settlement Paries represent that the Stipulation is in the
public interest and that all of its terms and conditions ar fair, just and reasonable. Stipulation'¡
18.
.
Partes of Record
A Notice of Application and Notice of Intervention Deadline was issued by the
Commission on April 16, 2008, setting a May 9, 2008 deadline for intervention. Two paries
timely fied for, and were granted, intervention - Potlatch Corporation (potlatch) and
Community Action Parership of Idaho (CAP AI). On August 18, 2008, Bennett Forest
Industries, Inc. (Bennett Forest) fied an untimely Petition for Intervention and was granted
intervention with qualified parcipatory rights. Order No. 30632, Augut 27, 2008. Bennett
Forest did not parcipate in settement negotiations or sign the Stipulation, but in post-hearg
wrtten comments filed September 5, 2008, states it "does not oppose approval of the Settlement
Stipulation." Bennett Comments p. 4.
Public WorkshopslHearings
Public workshops for A vista customers were held in Moscow and Coeur d Alene on
July 23 and 24, 2008, respectively for the purose of explaining the Company's initial
Application and to provide an opportty for customers to ask questions of Commission Staf.
On August 28, 2008, a technical and evidentiar hearing on the Settlement Stipulation
was held in Boise. Public hearings in nortern Idaho were held in Lewiston and Sandpoint on
August 27 and 28, 2008. At the technical hearing the following paries appeared by and through
their respective counsel:.
ORDER NO. 30647 3
IFG _PR_ 007 -Attachment-B. pdf Page 30f23
.A vista Corporation David J. Meyer
Potlatch Conley E. Ward
CAP AI Brad M. Purdy
Commission Staff Scott D. Woodbury
Bennett Forest Industries, Inc. Dean 1. Miler
Pursuat to Rule 274 of the Commission's Rules of Procedure, "when a settlement,
be it active or passive, is presented to the Commission, the Commission will prescribe
procedures appropriate to the natue of the settlement to consider the settlement." As reflected in
the Commission's Rules, the Commssion is not bound by settements. RP 276. Proponents of a
proposed settlement car the burden of showing that the settlement is reasonable, in the public
interest, or otherwise in accordance with law or regulatory policy. RP 275. On Augu 12,2008,
the Proposed Settlement was noticed, an August 22 deadline for supporting testimony was set,
public and technical hearings on the settlement were scheduled, and a September 5 deadline for
public comments was established.
Settement Terms
The terms of the Stipulation are described and discussed below. Testimony
supporting the Stipulation was presented on August 28, 2008 by A vista witness Kelly Norwood,
Vice President of State and Federal Regulation for the Company; Commission Staf witness
Randy Lobb, Administrator of the Utilties Division; and Terr Ottens, Policy Director of
CAPAI.
Cost of Capital- Stipulaton' 7a
The Settlement Pares agree that Avista's cost of capital will be determined using a
capital structure consistig of 47.94% common stock equity and 52.06% long-term debt, the
same as proposed in the original Application. Avista's authorized return on equity (ROE) wil be
10.2% (Application 10.8%); its cost of debt 6.84%. These components produce an authorized
rate of retu (ROR) of 8.45% (Application 8.74%). rr. pp. 86-88.
A 10.2% retur on equity, Staf states, is within the range Staff would have
recommended if the case were fully litigated. It is a retur that was approved in Avista's recent
Washington settlement and is reasonable, Staff contends, given the improved financial
performance of the Company and improved credit rating upgrades for A vista by Stadard & Poor
.
.
ORDER NO. 30647 4
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.
.
.
and Moody's. It also recognizes the ongoing capital requirements of the Company and the need
for investment gre ratings. Tr. p. 45.
Revenue Requirement - Stiulation' 7
In supporting testimony, Staf states it established an overall revenue requirement
taget that it believed could be achieved with reasonable and reliable certainty and then
negotiated adjustments that had debatable and less compellng justification to arve at an overall
revenue requirement compromise. Tr. p. 42. Pusuant to Paragraph 7 of the Stipulation, Avista
will be authorized to recover $23,163,000 in additional anual electrc revenue and $3,878,000
in additional anual natural gas revenue, representing an 11.98% and 4.7% increase in electrc
and natual gas anua base tarff revenues, respectively.
In determining these revenue increases the paries have agreed to varous adjustments
to the Company's filing. Exh. 101, Appendix 1. Individual adjustents, the Company states,
should not be viewed in isolation; rather they should be viewed in total as part of the entire
Stipulation, and are the result of hard bargaining and compromise. Tr. p. 86. The Stipulation
sumarizes the adjustments made by the Settlement Pares to the Company's electric general
rate case fiing and discUsses specific accounting treatment for (a) Spokane River relicensing, (b)
confidential litigation, (c) Montaa riverbed litigation, and (d) revenues associated with sale of
carbon financial instrents (CFIs). Stipulation ~ 9a-d; Tr. pp. 88-93. Other adjustments are
detaled in Stipulation ~ 7(b) in a sumar table. The natue of the adjustments consist of (a)
deferral of pending capital and expense additions; (b) removal of proformed test year costs as not
"known and measurable" or not "used and useful"; and (c) elimination or reduction of
inppropriate or unjustified costs. Tr. p. 40. The Proposed Settlement is based upon a 2007
historical test year adjusted for known and measurable expense changes and major capita
additions though 2008. Tr. p. 40. As proposed, the revised taiff schedules would become
effective October 1, 2008. Stipulation ~ 8.
Staff states that for natural gas service, $3 milion of the agreed $3.8 milion increase
is associated with acquisition of Jackson Prairie Natural Gas Storage and installation of
automated meters (AM), both planed for completion in the four quarer of2008. Additional
storage wil provide benefits to gas customers through the anual Purchased Gas Adjustment
(PGA). Automated Meter Readng (AMR) will provide savings in meter reading and customer
ORDER NO. 30647 5
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.service expense. The technology would allow for time of use or critical peak pricing; although
additional changes would be required for data storage and biling. Tr. pp. 44, 85, 114-115.
Cost of Service
In its investigation, Staff reviewed Avista's cost of service (COS) models for electric
and gas service and found that the methodology has not changed from the Company's 2004
genera rate case filing. Tr. p. 37. The electrc load data used in the Company's cost of service
model was generated in the 1980s and was statistically updated in 1993 (i.e., adjusted based on
changes in customer counts and load per customer that occured between 1980 and 1993). Tr.
pp. 49, 60. Given the age of the load data, Sta believes that cost of service results in this case
can be used only as a general guideline for assigning revenue responsibilty and canot be used
to make meangful changes in class revenue contrbution or justify significant changes in rate
design. Tr. pp. 37-39. Avista concedes that the present load study information is dated, but
contends that does not mean it's bad data, or that it's not representative of the cost to serve
customers. Tr. p. 126. While Avista has agreed to engage in new load studies, the Company is
only now selectng the hourly meters. The information necessar to update the cost of service
analysis will not be available until late 2009. Tr. pp. 49, 75. Consequently, the Paries agreed to
use the current results to move all classes halfway to COS as specified by the study. Tr. p. 49.
Rate Spread - Stipulation ~ 12
Appendix 2 to the Stipulation reflects the impact on each service schedule of the
ageed-upon electrc and natual gas increases. As reflected in Stipulation' 12, the proposed
electrc revenue increase of $23.2 milion represents an overall increase of 11.98% in base rates
and, with one exception, is spread on a uniform percentage basis to all schedules. However,
Schedule 25P for the Potlatch Lewiston facilty will receive an increase of 10.36% in order to
reflect a Schedule 25P rate tht is no higher than the tail block rate of Schedule 25. The
Schedule 25P adjustment can be supported by cost of service and load data, the Company states,
because Schedule 25 and 25P customers have hourly meters. Tr. p. 105. The Schedule 25P
Potlatch plant is a high load factor customer and is three times the combined size of all Schedule
25 customers (Le., 100 aMW). Tr. pp. 112-113. With this change the relative rate of retu for
Schedule 25P wil move approximately halfway toward unity (Le., toward full cost of service),
and be more consistent with the movement of other service schedules. All other schedules will
receive a 12.3% percent increase. Tr. pp. 49-50, 98, 104. The monthly bil of a residential
.
.
ORDER NO. 30647 6
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..
.
.
electrc customer using 977 kWhmonth (the average for Avista) will increase by $7.89/month.
Tr. p. 54. The proposed increase by customer class and a comparison of present and proposed
rate components are set fort in Attachment 1 to this Order.
The spread of the increased natural gas revenue requirement of$3.8 millon is also set
forth in Appendix 2, and represents an overall increase of 4.7% in base rates. It reflects a
reduction to what the Company had proposed by way of an increase for each of the gas service
schedules proportional to the reduction and the overall increase. An average gas customer who
uses 65 thermslmonth will see an increase of $4.03/month. Tr. pp. 50, 54, 98.
Rate Design - Stipulatin' 13
Neither Avista nor Sta believes major changes in rate design are waranted given
the imprecise and dated nature of the Company's cost of service studies. Tr. p. 51. Ayista, Staf
notes, remains the only electrc utility in Idao with tre residential tiered rates - a second block
differential of 13% for usage over 600 kWh/month. Tr. p. 52. The paries to the Stipulation in ~
12 agre to an increase in the electric and demand charges as recommended in the Company's
original filing, and sumarized in Appendix 2. This includes an increase in the residential
monthy basic charge from $4.00 to $4.60. Ths increase, Staf states, represents the increasing
monthly costs of metering and biling. All' other rate components are increased by a uniform
percentage to generate the required revenue. Tr. pp. 52, 90. In fied written comments, the
Idaho Community Action Network (ICAN) opposes an increase to the base rates, which it states
disproportionately impacts low-income customers and customers on fixed incomes.
Regarding natural gas rate design, the Settlement Paries agree to apply the increase
in rates within each service schedule in the same maner as proposed by the Company in its
original filing. The monthly base charge for the residential schedule wil increase from $3.26 to
$4.00. Tr. pp. 52, 90. As with the electrc base rate, lCAN similarly opposes any increase to the
base rate for gas.
As reflected in Staff testimony, Staff and Avista discussed adjusting block size and
rate differentials in the futue once acurate cost of service data is available. They will also
investigate whether there are economies of scale (bundling of electrc/gas service) thatcould
allow reduce monthly customer charges when a customer taes both gas and electric service.
Tr. p. 52.
ORDER NO. 30647 7
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.
.
.
peA Authorized Level of Expense - Stipulation' 10
Stipulation Exhibit 101, Appendix 3 (Atthment 2 to this Order) specifies the use of
2009 power supply costs for use in the Company's monthy Power Cost Adjustment (PCA)
calculations and in the treatment of power supply costs associated with retal load and revenue
credit. Stipulation iI 10; Tr. p. 40.
Sta concludes that the inputs and assumptions used by A vista including those
related to fuel prices and loads, ar reasonable. Tr. p. 47. Staff agreed with the Company's
proposal to use 2009 loads in the calculation of base power supply costs recognizing that
normalized power supply costs included in base rates are always based on an estimate or a
forecast. Tr. pp. 47, 48. In addition, Staf notes tht the Company included a hydro mitigation
adjustment in its calculation that reduces the base rate power supply costs and a production
propert adjustment that reduces the base rate revenue requirement for generation to serve 2009
loads. Appendix 3 of the Stipulation notes that the retail revenue credit will be $41.45/MWh for
October-December 2008 and then $53.63/MWh for 2009. The Company benefits from using
2009 loads by reducing its exposure to the retail revenue adjustment embedded in the PCA. Tr.
p. 48. Adjustments to the Company's proposed power supply costs were discussed durng
settement negotiations and an anual $735,000 reduction in the Priest Rapids contract price
recoverable in rates was incorporated. Tr. pp. 48, 49.
Prudency of Energy Effciency Expenditures - Stipulation' 11
The Settement Paries in Stipulation iI 11 agree that Avista's expenditures for electric
and natual gas energy effciency programs from November 1, 2003 through December 31, 2007
were prudently incured.
Customer-Related Issues - Stipulation' 14
. Low-Income DSM Funding (Stipulation' 14a)
Curently only 10% of homes receiving LIHEAP benefits are weatherized. Tr. p.
140. The Settlement Paries agree to increase the anual level of funding provided to Idaho
service (CAP) agencies for low-income demand-side management (DSM) weatherization
programs from $350,000 to $465,000, which includes administrative overhead. The increased
fuding will come from the Company's existing DSM tariff riders. Tr. pp. 54,93,94.
In filed wrtten comments, the Idaho Communty Action Network (lCAN) states that
weatherzation benefits cost an average of $3,366 per household. ICAN believes that the
ORDER NO. 30647 8
IFG _PR_ 007 -Attachment-B.pdf Page 8 of 23
.
.
.
$115,000 increase to low-income weatherization is too little. Even if weatherization costs have
not increased at all in thee years, a $115,000 increase will serve only an additional 34
households. ICAN states that low-income weatherization program funding should be increased
to $700,000.
Staff notes that the ratio of customers to dollars committed for weatherization is fairly
similar for Avista and Idaho Power. In fact, Avista's investment, Staff contends, is greater th
either Idaho Power and PacifiCorp. Tr. p. 63.
. Funding/or Outreach/or Low-Income Conservation (Stipulation' 14b)
CAP AI is concerned that the combined proposed increases in fees and rates will add
to the already unwieldy energy cost burden tht low-income famlies in Idao face. Tr. p. 138.
The Settlement Pares agree that anual fuding though the DSM tarff rider in the amount of
$25,000 will be provided to Idaho (CAP) agencies for the purose of underwiting agency
personnel assisting in low-income outreach and conservation education. Tr. p. 94.
. Establishment o/Generic Workshops on Energ Affordability (Stipulation' 14c)
A vista agrees to support and actively parcipate in any Commission-established
workshops for the purose of examining issues surounding energy affordabilty and abilty of
customers to pay energy bils. As par of this process, A vista agrees to explore the feasibility of
establishing a Low-Income Rate Assistance Program (LIRAP), or something similar. Tr. p. 94.
Reference new Commission Docket No. GNR-U-08-0l. Staff suggests that universal service and
alternative rate designs be included as discussion topics in the workshops. Tr. p. 57. The
Commission noted at hearing that sometimes what is done by working groups on the outside can
format the strctue of the legislative review of those issues and how legislation is developed.
Tr. p. 124.
A vista identifies the following additional programs that are available to assist
customers with the proposed rate increase: Energy Effciency progras, Project Share, Comfort
Level Biling, Payment Arrgements, the Customer Assistance Referral and Evaluation
Servces (CARES) program, and customer service automation. Tr. pp. 95-98.
Customer Comments and Testimony
The Idaho Community Action Network (lCAN) appeared at the Commission's
August 27 hearng in Lewiston and also submitted written comments. ICAN opposes the rate
hike and the Proposed Settlement and urges the Commission to continue with the rate case
ORDER NO. 30647 9
IFG _PR_ 007 -Attachment-B. pdf Page 90f23
.
.
.
process, including investigation and prepartion of testimony by Commission Staf and public
hearings afer Staf testimony has been made public. The role of the Corrission, ICAN
contends, "is to protect the interests of the customers, rather th the utilty company's
shareholders." ICAN Comments p. 1. ICAN appear to believe that the settlement was
negotiated by the utilty and the intervening paries before Commssion Staff had time to review
the Compary's filing. While the CAP agencies and other organzations may speak for some
consumers, ICAN contends they canot speak for all consumers. ICAN is concerned about
settlement negotiations being conducted in a secret meeting without public input.
The opposition of ICAN to the proposed increase is generally representative of other
written comments fied by customers, customers on fixed incomes who budget every penny. Tr.
p. 10. Many customers cite a newspaper aricle in the Spokesman Review reporting a 72%
quarerly jump in Avista profits as reaon to deny the Company's proposed rate increase. The
Company explains the inaccuracy of the Spokesman Review headline beginning at Tr. p. 130,
concluding that for calendar year 2007 the Company stil failed to realize the overall Idaho retur
authorized by the Commission. Profit or earngs, the Company contends, is really the interest
piece for the investor; and if tht retu is not attactive enough, investors will tae their money
someplace else. Tr. p. 133.
Customers also cite what they believe to be excessive executive compensation for
A vista employees. The Spokesman Review reports a total anual compensation for the top five
Avista executives of approximately $3.6 milion. In its testimony, Staf notes that the Settlement
in Idaho is based on anual rate base compensation of $1.45 milion for the top five executives,
or 40% of the total $3.6 milion compensation. While still seemingly high, Staff states that if all
compensation included in rates for the top 12 executives were eliminated, the effect would be a
rate reduction of less than 0.5%.
Commission Findings
The Commission has reviewed and considered the filings of record in Case Nos.
AVU-E-08-0l and AVU-G-08-0l including Stipulation provisions and the comments of
customers. The supporting context for the Commission's deliberation regarding the
reasonableness of the Stipulation terms is the Commission's August 28, 2008 transcript of the
technical and evidentiar hearing in this case. The Commission is also informed by the
transcripts of Lewiston and Sandpoint, Idao proceedings where customers and other pares of
ORDER NO. 30647 10
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.interest were provided the opportunity to raise their concerns and give testimony on the
Settlement Stipulation, and by filed public comments, including the wrtten comments of Bennett
Forest. The Commission finds that the established record fonns a sufficient basis for decision
and that no fuer hearing, or procedure is required.
Settlements are reviewed under Commission Ru1es of Procedure 274-276. We
incorporate by reference the submitted Stipu1ation (and Proposed Settlement) as if set fort
herein in its entirety. See Tr. Exh. 101.
The Commission finds it necessar to correct the misperception of some at public
hearing and in wrtten comments tht the settlement process is a private and secret process that
excludes paricipation and does not provide for representation of all customers. The
Commission's Rules of Procedure establish the framework for settlements. RP 271-276.
Settements may involve one or more paries. If Commission Sta is involved in settlement
negotiations, Staf must provide other paries with notice. Staf must also give all other pares
an opportty to paricipate in or be apprised of the coure of the settlement negotiations before
a final settlement involving Staff is reached. RP 272. The problem in a general rate case
affecting different customer classes is that not all customer interests are the same. In fact,
customers often have opposing interests. The only truly common interest of all customers is to
limit the increase allowed the Company. Commission Staf, whether processing a case though
hearng or through settlement, represents the interests of all customer classes. This is the
objective of the Staff regardless of the process followed, and is a result, Staf believes, that ca
sometimes be best achieved though settlement. Tr. p. 39.
Paricipants in settlement negotiations must be paries of record. Early on in this rate
case the Commission issued a Notice of Intervention Deadline. One of the stated puroses of
intervention, as set forth in our Notice, is "to paricipate in settlement or negotiation
conferences." Without intervenor status, public paricipation in the settlement process in this
case was limited to testifying at the public hearings or fiing written comments.
As a general rue, settlement tals are not initiated until paries are familar with a
utilty's application, have paricipated in the discovery process, have a familarity with the issues
presented in the case and have developed pary positions and goals. Parcipants are expected to
have a good grasp of the case they themselves would present, including the witnesses they would
use and the testimony they would file. Only then are they able to sit down and engage in
.
.
ORDER NO. 30647 11
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, . constrctve and fritfu dialogue. Negotiations do not always result in settlement. Unless all
parcipants agree to the contrar, the positions taken in negotiations are confidential. RP 272.
This condition of confidentially allows for candid discussions by the paries and an opportity
for compromise. The advantage of a negotiated settlement is that the paries themselves are able
to craf mutually acceptable terms. Even then however, under Rule 275 of the Commission's
Rules of Procedure, proponents of a proposed settlement carr the burden of proof showing that
the settlement is reasonable, in the public interest, or otherwse in accordance with the law or
reguatory policy.
As stated in Rule 276
The Commission is not bound by settlements. It wil independently review
any settlement proposed to it to determne whether the settlement is just, fair
and reasonable, in the public interest, or otherwise in accordance with law or
regulatory policy. When a settlement is presented for decision, the
Commission may accept the settlement, reject the settlement, or state
additiona conditions under which the settlement wil be accepted. ...
.We find that the process used and notice given in this case complies with the letter and spirt of
the Commission's Settlement Rules. IDAPA 31.01.01.271-276.
As reflected in the August 28, 2008 transcript of proceedings, the Company in this
case initially requested authority to recover $32.3 millon (16.7%) in additional anual electric
revenue and $4.7 milion (5.8%) in additional anual natual gas revenue. Tr. p. 81. In the
Stipulation, the Settlement Paries agree that the Company wil be authorized to recover $23.2
milion (11.98%) in additional anual electrc revenue and $3.9 milion (4.7%) in additional
anua natual gas revenue. Stipulation' 7.
In arving at their recommended rate increase for the Company's Idaho electric and
gas operations, the Settlement Pares agree that the cost of capita for A vista will be determined
using a capita strctue consisting of 47.94% common stock equity and 52.06% long-ter debt.
Avist's agreed authorized retur on equity (ROE) will be 10.2%, a reduction from the 10.8%
ROE originally requested; the Company's cost of debt is recognized to be 6.84%. These
components produce an authorized rate ofretum of 8.45%. Stipulation' 7a.
The Commssion at hearg inquired of the Company regarding its intentions to
update its "cost of service" study as par of its next general rate case filing. Under Commssion
Rules of Procedure (Rule l21.01.e), a general rate case by Avista must be accompanied by.
ORDER NO. 30647 12
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."appropriate cost of service studies." Bennett Forest in post-hearing comments suggests that "in
the absence of a curnt cost of service study, it is difficult for the Commission to make a record-
based evidentiar finding tht allocations to customer classes, and resulting rates, are fair, just
and reasonable. Avist is a multi-jursdictiona utility. Once the Company's Idaho jursdictional
costs ar determined the next step is to allocate those costs among the different customer classes.
This assigning of cost responsibilty is generally done with a cost of service study. Certy the
Commssion's preference in decision-making is to have good studies and the most recent and
best information available. We prefer actual data to statistical estiates or forecasts. Avista
informs the Commission that it may not have complete load data that it can roll into a cost of
servce study until late 2009. Tr. p. 75. A cost of service study, while usefu, is not a pedect
tool for assigning system and servce costs to customer classes. Load data is only one element of
a cost of service study. Ths Commission relies on a cost of service study as a starting point to
allocate costs, but in the end we must, and do, consider other factors such as rate continuity,
equity and proportonality. We expect as always tht the Company in its rate filings wil comply
with the Commission's procedural requirements. Avista states a cost of service study will be
provided in its next rate case. Presently only Schedule 25 and Schedule 25P customers have
hourly meters. Tr. p. 105. The Company contends that the completed load data for other classes
will result only in a fine-tung as opposed to a major shift in dollars, whether it be across
customer classes or withn schedules. Tr. p. 126. In this case the Commission finds the
Company-fied cost of service study to be suffcient to determine rate design in this case. We
direct the Company in its next general rate case to provide updated load data as par of its COS
study or, in the alternative, show how the lack of such an update affects COS-based revenue
allocations to customer classes.
The Commission finds the Stipulation and negotiated settlement terms submitted in
these cases to be fair, just and reasonable and in the public interest. As represented, we find that
the Settlement is a compromise by all Settlement Paries. We find the proposed $23.2 millon
(11.98%) authonzed increase in electric revenue and $3.9 millon (4.7%) authorized increase in
natual gas revenue to be fair, just and reasonable, as is spreading the increase to customer
classes in the maner set forth in the Stipulation, including the proposed increase in base charges
for electrc and gas residential customers. Idaho Code § 61-502. We find the proposed uniform
percentage spread of the rate adjustment to be reasonable given the age of the COS data. We
.
.
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I FG _PR_ 007 -Attachment-B .pdf Page 13 of 23
.also find the adjustment made for Schedule 25P reasonable and find it to be supported by
Potlatch's relative load characteristics compared to Schedule 25. The resultat average chages
in electrc and gas rates for the Company's customer service schedules that we find reasonable to
approve are set fort in Attchment to this Order. The effective date of implementation is
October 1,2008.
The Commission also authorizes an increase in the base charges for residential
electric and gas customers. We do so in par because it is an integral term of a negotiated
stipulation. Stipulation' 13. Testimony reflects also tht the increase in the base charge is
justified by the increased monthly cost of metering and biling. Tr. p. 52.
The Stipulation provides for an increase in weatherization program benefits
(Stipulation , l4a), and fuding for low-income outreach and conservation education
(Stipulation'14b). The fuding is payable from the Company's existing DSM taff
riders, and
involves simply a re-allocation of DSM dollars. The increase in weatherization fuding is not as
much as ICAN recommends, but as Sta notes, is grater than either Idao Power or PacifiCorp
in the ratio of customers to dollars committed. Tr. p. 63. The Commission has iiutiated a
generic case (GNR-U-08-0l, Order No. 30644) to examne energy affordabilty issues.
Stipulation , l4c. In that case, we direct A vista and our other major energy providers (Idaho
Power, PacifiCorp and Intermountan Gas) to paricipate. We encourage CAPAI, ICAN and
other staeholders to also paricipate.
In addressing energy afordabilty for low-income customers, we ar reminded by
Bennett Forest that large increases in electric rates also have serious consequences for Schedule
25 industrial customers, many of whom, like Bennett Forest, operate in a competitive market and
do not necessarly have the abilty to raise prices to recover increases in operating costs. In
calendar year 2007 Bennett Forest report it purchased almost 25 millon kilowatt hours of
electric energy from A vista, at a cost of almost $1.1 milion. There can be no denying that the
cumulative increase to Bennett Forest resulting from increases in ths docket and the Company's
PCA docket are sigiuficant and will have operational consequences. Bennett Forest requests no
change to the Stipulation. Stil, in its comments, it reminds this Commission that "rate shock" is
a shortnd expression for regulatory policy that favors rate stabilty and disfavors abrupt and
significat changes to current rates. This Commission is not oblivious to the consequences of its
rate orders. The volatilty in the energy markets however shows no sign of abating. A vista in
.
.
ORDER NO. 30647 14
IFG _PR_ 007 -Attachment-B .pdf Page 14 of 23
.
.
.
ths case anounces its intent to file another rate case in early 2009. A phase-in of rates does not
appear to be a viable option.
Opportty for real near-term relief for customers, including Bennett Forest, lies in
their abilty to enact energy effciency and conservation measures and reduce their energy
demand. At hearing, Beiuett Forest inquied about progrs to mitigate rate impacts for large
customers. Tr. p. 110. A vista stated that it has a number of energy effciency progrs for its
industrial customers and Company engineers who will go to customer sites to work with
customers to identify cost recovery measures. We encourage Bennett Forest to take advantage of
ths opportity.
Intervenor Funding
Intervenor fuding is available pursuat to Idaho Code § 6l-6l7A and Commission
Rules of Procedure 161 though 165. Section 61-617 A( 1) declares that it is the "policy of
(Idaho) to encourage paricipation at all stages of all proceedings before this Commission so tht
al affected customers receive ful and fair representation in those proceedings." The statutory
cap for intervenor fuding that can be awarded in anyone case is $40,000. Idaho Code § 61-
6l7A(2). Accordingly, the Commission may order any regulated utilty with intrastate anual
revenues exceeding $3.5 milion to pay all or a portion of the costs of one or more paries for
legal fees, witness fees and reproduction costs not to exceed a total for all intervening pares
combined of $40,000.
On September 10, 2008, the Community Action Parership Association of Idaho
(CAPAI) filed a Petition for Intervenor Funding. Idaho Code § 61-617A; RP 161-165. CAPAI
is dedcated to promoting self~suffciency through removing the causes and conditions of povert
in Idaho's communties. Tr. p. 136. The organization was created by federa law to help
admster federal low-income programs. Tr. p. 145. CAPAI advanced the low-income
consumer issues addressed in Stipulation 'i l4a, b and c. CAPAI requests $3,400. Petition, Exh.
A.
Rule 162 of the Commission's Rules of Procedure provides the form and content
requirements for a Petition for Intervenor Funding. The petition must contan: (l) an itemized
list of expenses broken down into categories; (2) a statement of the intervenor's proposed finding
or recommendation; (3) a statement showing that the costs the intervenor wishes to recover are
reasonable; (4) a statement explaining why the costs constitute a significant financial hardship
ORDER NO. 30647 15
IFG _PR_ 007 -Attachment-B.pdf Page 15 of 23
. for the intervenor; (5) a statement showing how the intervenor's proposed finding or
recommendation differed materially from the testimony and exhibits of the Commission Staf;
(6) a statement showing how the intervenor's recommendation or position addressed issues of
concern to the general body of utilty users or customers; and (7) a statement showing the class
of customer on whose behalf the intervenor appeared. The Petition for Intervenor Funding filed
by CAPAI comport with the procedural and techncal requirements of the Commission's Rules.
Commission Findings
Submitted for Commission consideration is the Petition for Intervenor Funding filed
by the Community Action Parership Association of Idaho. The Commission has reviewed the
Petition, the Stipulation and the testimony of the Petitioner.
Idaho Code § 61-617 A includes a statement of policy to encourage paricipation by
intervenors in Commssion findings. The Commssion determines an award for intervenor
fuding based on the following considerations:
(a) A finding that the parcipation of the intervenor has materially
contrbuted to the decision rendered by the Commission; and.(b) A finding that the costs of intervention are reaonable in amount and
would be a signficant financial hardship for the intervenor; and
( c) The recommendation made by the intervenor differed materially from
the testimony and exhibits of the Commission Staf; and
(d) The testimony and paricipation of the intervenor addressed issues of
concern to the general body of users or consumers.
.
Idaho Code § 61-617 A. We find that the Petition of CAP AI satisfies the substative findings
that we are required to make to justify an award. IDAPA 3 1.01.01. 1 65.01.a-e. We find tht the
parcipation and presentation of CAP AI, as reflected in its testimony and the Stipulation,
materially contributed to the Commission's decision. CAPAI's parcipation adds an informed
perspective to the hearng record. We find that the recommendation of CAP AI differed
materially from the testimony of Commission Staff and provided measurable form and substance
to the Settlement Stipulation.
This paricular case was resolved by way of settlement and not litigation. CAP AI is a
non-profit corpration overeeing a number of agencies that assist with issues related to the
causes and conditions of povert in Idaho. We find it fair, just and reasonable to award the total
ORDER NO. 30647 16
IFG _PR _ 007 -Attachment-B. pdf Page 16 of 23
.request of CAP AI in the amount of $3,400 and find that the public interest is well served by such
award. We find the itemized costs of CAPAI to be reasonable and recognize that the cost to
CAPAI of paricipating in this proceeding constitutes a significant financial hardship. We find
that CAP AI wa professional and economical in the marshallng of its time and effort.
The Commission finds that the intervenor fuding award to CAP AI is fair and
reasonable and will fuer the purse of encouraging "paricipation at all stages of all
proceedings before the Commission so that all afected cusomers receive full and fair
representation in those proceedings." Idaho Code § 61-617 A(l).
CONCLUSIONS OF LAW
The Idaho Public Utilities Commission has jurisdiction over A vista Corporation dba
A vista Utilties, an electric utility. and the issues presented in this case, pursuant to the powers
granted it under Title 61 of the Idaho Code and pursuat to the Commission's Rules of
Procedure, IDAPA 31.01.01.000 et seq., including specifically Rules 272 through 280 as pertns
to settements.
'.ORDER
In consideration of the foregoing and as more paricularly described and quaified
above, IT IS HEREBY ORDERED and the Commission hereby accepts the Stipulation and
Proposed Settlement tendered in Case Nos. AVU-E-08-01 and AVU-G-08-0l approving a $23.2
milion (11.98%) authorized increase in anual base taiff revenues for electric service and a $3.9
millon (4.7%) authorized increase in anual base tariff revenues for natural gas service for an
effective date of October 1, 2008. Reference Order No. 30647, Attachment 1. The Company is
directed to fie amended tariffs comportng with ths Order.
IT is FURTHER ORDERED that the Community Action Parership Association of
Idaho's Petition for Intervenor Funding is grted in the amount of $3,400. Reference Idaho
Code § 61-6l7A. Avista is directed to pay said amount to CAPAI within 28 days from the date
of ths Order. IDAPA 31.01.01.165.02. Avista shall include the cost of this award of intervenor
fuding to CAPAI as an expense to be recovered in the Company's next general rate case
proceeding from the residential customer class. Idaho Code § 61-617 A(3).
THIS IS A FINAL ORDER. Any person interested in this Order may petition for
reconsideration withn twenty-one (21) days of the service date of this Order. Within seven (7)
.
ORDER NO. 30647 17
IFG _PR_ 007 -Attachment-B.pdf Page 17 of 23
.. days afer any person has petitioned for reconsideration, any other person may cross-petition for
reconsideration. See Idaho Code § 61-626.
DONE by Order of the Idaho Public Utilties Commission at Boise, Idao this 30-t
day of September 2008.
.
.
NT
l
í\RSHA H. SMITH, COMMISSIONER
ArrEST:
~Æi~
Commission Secretar
blslO:AVU-E-OS-OI_AVU-G-OS-Ol_sw3
ORDER NO. 30647 18
IFG _PR_ 007 -Attachment-B. pdf Page 18 of 23
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Increase :~Rate
(!!)(t) .(9)
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ATTACHMENT 1
Case No. AVU-E-OS.01/AVU-G-OS..1Ordèa4ó?aH
Page 2 of4
I FG _PR_ 007 -Attachment-B.pdf
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ATTACHMENT 1
Case No. AVU-E-oS-o1/AVU-G-OS-01
Or_N&1IOei7
Page 3 of4
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-09-0l / A VU-G-09-01
Idaho Forest Group
Production Request
IFG-008
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
04/29/2009
Scott MorrslRchard Storro
Toni Pessemier
American Indian Relations
[phone]
)
REQUEST:
To the extent the CDA Settlement involves payments as compensation for damages resulting from prior acts of
trespass or other past conduct of Avista, please provide a complete description ofthe maner in which curent
customers of A vista Corporation are benefitted by such payments.
RESPONSE:
Please see Avista's response 008C, which contains TRAE SECRET, PROPRIETARY or
CONFIDENTIA information and exempt from public view and is separately fied under IDAPA 31.01.01,
Ru1e 067 and 233, and Section 9-340D, Idaho Code, and pursuant to the Protective Agreement between Avista
and IPUC Staff dated January 8, 2009.
First, it is important to note that A vista has not admitted to trespass. In 2001, the United States Supreme Cour
held that the United States, as Trustee for the Tribe, and not the State ofIdaho, owned the bed and bans of
the
Lake with the boundares of the Reservation. It was not until the legal process was concluded with the
Supreme Cour's decision in 2001 that Avista definitively knew that it was potentially exposed to a trespass
claim by the Tribe. Avista made sound management decisions over the years. If Avista's management had
agreed to either compensate the Tribe for trespass or pay usage charges prior to the United States Supreme
Cour's ruling, it could have been crticized for imprudently makg payments before the ownership issue was
resolved.
Even after the Supreme Cour's decision, as Avista and the Tribe entered into a unique mediation process,
Avista stil had a reasonable basis on which to assert that its use ofthe Lake was authorized, either though the
rights it had previously obtained or by virte of a permit issued to Avista by the United States in 1909. As a
result, durng the mediation process in which multiple, extensive briefs were submitted by the paries to the
Honorable Wiliam Canby of the United States Cour of Appeals for the Ninth Circuit for advisory opinions on
the issues of liability and damages, Avista expressly denied that it was in trespass. However, given Judge
Canby's advisory opinions, as well as Avista's potential exposure to a significant verdict, including
prejudgment interest for its historical use of the bed and bans now held to be Tribal lands, A vista determined
that it would be prudent to address the trespass claim though a comprehensive settlement agreement with the
Tribe.
With regards to the settlement, in the final analysis, it does not give either pary all the outcomes that might be
obtained or desired under varous scenaros, including the possibility of successful litigation in federal court.
However, this must be weighed against the likelihood that formal litigation could last decades, could
potentially subject A vista to a significant amount in past damages; and could render future operation of the
Post Falls HED impracticable. Therefore, considering the risks of litigation, together with the potential
exposure and other considerations involved, the settlement allows Avista's continued operation of the Post
Falls HED, which preserves a valuable, low cost resource for our customers, and reflects a reasonable and fair
compromise, and a legitimate cost of present and future operations.
Page 1 of2
.
.
.
As explained in the Memorandum attached to Avista's response 008C:
. The settlement presents a full and final resolution of the Tribe's claim to trespass and §lO(e) anual
charges regarding Avista's use of the lake as a reservoir from 1907 to the present and though the term
of a new FERC license for the Post Falls hydroelectric development (HED). As such, the settlement
presents a full and fial resolution of disputed issues regarding more than 100 years of hydroelectric
generation by A vista utilizing Tribal lands, as well as up to 50 years in the futue;
. The settlement eliminates Avista's potential exposure to a significant verdict for its historical use of
that portion of the lake located within the Reservation;
. The settlement also resolves a number of critical issues pertaining to Avista's application with FERC
to relicense the Post Falls HED, including the imposition of conditions under §4(e). The dispute
between Avista and the Tribe over §4(e) conditions has been lengthy, involved, and contentious,
resulting in protracted and expensive reguatory and legal proceedings;
. Finally, the settlement provides for water rights, rights of way and other authorizations necessar from
the Tribe. In this respect, the settlement provides certainty to Avista and its customers.
For all of the foregoing reasons, curent customers are benefitting from the settlement.
Page 2 of2
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0l / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-009
DATE PREPARD:WISS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
04/2912009
Scott MorrslRchard Storro
David Meyer
State & Federal Regulation
[phone]
To the extent the Montana Riverbed Settlement involves payments as compensation for damages
resulting from prior acts of trespass or other past conduct of A vista, please provide a complete
description of the maner in which current customers of A vista Corporation are benefitted by
such payments.
RESPONSE:
Please see Avista's response 009C, which contains TRAE SECRET, PROPRIETARY or
CONFIDENTIAL information exempt from public view and is separately filed under IDAP A
31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code, and pursuant to the Protective
Agreement between Avista and !PUC Staff dated January 8, 2009.
Page 1 of 1
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
IDAHO
A VU-E-09-0l 1 A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-OIO
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
05/0412009
Elizabeth Andrews
Joe Miler
State & Federal Reg.
[phone]
Please provide a work paper and/or other supporting documentation that shows the calculation of
the values shown in Exhibit No. 10, pg. 9 of 11, Colum PFll, lines 28 though 39.
RESPONSE:
Please see the previously provided workpapers for Company witness Andrews. The above
calculations can be found within the "Electrc Only Workpapers" in the folder labeled "PF - CDA
Tribe".
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0ll A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-Oll
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/04/2009
Elizabeth Andrews
Joe Miler
State & Federal Reg.
[phone]
Please provide a work paper and/or other supporting documentation that shows the calculation of
the values shown in Exhibit No. 10, pg. 9 of 11, Colum PFll, lines 28 though 39.
RESPONSE:
Please see the previously provided workpapers for Company witness Andrews. The above
calculations can be found withn the "Electrc Only Workpapers" in the folder labeled "PF -
Montana Lease".
..
.
.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-09-01 / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-012
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Jeane Pluth
State & Federal Reg.
[phone]
REQUEST:
Please provide a statement of your rationale for including amounts associated with the CDA Tribe
Settlement in rate base.
RESPONSE:
In Case Nos. A VU-E-08-0l and A VU-G-08-0l (see Order No. 30647), the Idaho Commission
accepted the terms of a settlement resolving all issues in the rate cases. That Settlement expressly
resolved the ratemaking treatment associated with the CDA Tribe litigation, allowing for the
subsequent recover in rates of costs associated with the litigation. It was based on a thorough
review in A VU-E-08-0l of the circumstaces surounding the litigation and the terms of the CDA
Tribal settlement. The rate case settlement, at Paragraph 9 (b), provides:
"(b.) Confidential Litigation - Company Witness Andrews describes confidential
litigation at pages 32 and 33 of her prefied direct testimony (unedacted). Inasmuch as
that matter is stil pending and has yet to be finally resolved, but is expected to reach
resolution in the near future, the Paries have agreed to defer as a reguatory expense item
(in Account 186 - Miscellaneous Defered Debits) on the Company's balance sheet
depreciation associated with Idaho share of the aforementioned costs with a carng
charge on the deferal as well as a carng charge on the amount of costs not yet included
in rate base for subsequent recovery in rates. The carying charge wil be the customer
deposit rate (presently 5%). This deferral, together with a carying charge, wil continue
until the earlier of twelve (12) months from the date of resolution ofthe litigation or until
the conclusion of Avista's next general rate case (GRC)." (emphasis added)
.
.
.
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-09-0ll A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-013
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Liz Andrews
State & Federal Reg.
[phone]
REQUEST:
If you believe inclusion in rate base of amounts associated with the CDA Tribe Settlement is
required or permitted by F ASB 71, please explain in detail the basis of your opinion.
RESPONSE:
Accounting methodologies are determined based on Generally Accepted Accounting Principles
(GAA) together with accounting and rate making treatment granted by regulatory commissions.
Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types
of Regulation (FAS 71), applies specifically to regulated utilties.
F AS 71 provides the following guidance:
Rate actions of a regulator can provide reasonable assurance ofthe existence of an asset. An
enterprise shall capitalize all or par of an incurred cost that would otherwise be charged to
expense ifboth of the following criteria are met:
a. It is probable that futue revenue in an amount at least equal to the capitalized cost
wil result from inclusion of that cost in allowable costs for rate-making puroses.
b. Based on available evidence, the futue revenue wil be provided to permit recovery
of the previously incured cost rather than to provide for expected level of similar futue
costs. If the revenue wil be provided though an automatic rate-adjustment clause, the
criterion requires that the regulator's intent clearly be to permit recovery of the
previously incured costs.
As discussed in Avista's response to IFG-012, the Idaho Commission provided ths assurance by
accepting the terms of the Settlement which expressly provided for the subsequent recovery in
rates of the CDA Tribe litigation costs. That Settlement, at Paragraph 9 (b), approved Avista's
proposed accounting which included the unamortized costs in rate base.
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMÀTION
IDAHO
A VU-E-09-0l 1 A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-014
DATE PREPARD:
WITSS: '
RESPONDER:
DEPARTMNT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Liz Andrews
State & Federal Reg.
[phone]
If you believe inclusion in rate base of amounts associated with the CDA Tribe Settlement is
required or permitted by other F ASB Statement, please explain in detail the basis of your opinion.
RESPONSE:
The Company is relying specifically on FAS 71 and the Order received by the Commission as
stated in A vista's response to IFG-O 13, which provides authority to include the amounts associated
with the CDA Tribe Settlement in rate base.
.
.
.
A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
AVU-E-09-011 A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-015
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMNT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Jeane Pluth
State & Federal Reg.
[phone]
REQUEST:
Please provide a statement of your rationale for including amounts associated with the Montana
Riverbed Litigation Settlement in rate base. Please provide the detailed calculation of the Idaho
jurisdictional amounts included in the Company's revenue requirement.
RESPONSE:
In Case Nos. A VU-E-08-0l and A VU-G-08-0l (see Order No. 30647), the Idaho Commission
accepted the terms of the Settlement. That Settlement, at Paragraph 9 (c), approved Avista's
proposed accounting which included the unamortized costs in rate base, as follows:
"(c.) Montana Riverbed Litigation - On November 1, 2007, Avista fied an
Application with the Commission (Case No. A VU-E-07-1O) requesting an accounting
order authorizing deferral of settlement lease payments and interest accruals relating to
the recent settlement of a lawsuit in the State of Montana over the use of the riverbed
related to the Company's ownership of the Noxon Rapids and Cabinet Gorge
hydroelectrc projects located on the Clark Fork River. The Commission, in its Order
No. 30492, authorized the deferal of settlement lease payments and delayed a decision
on interest, until the matter was addressed in this general rate fiing. The Paries have
agreed to the Company's requested amortization of costs, together with recovery of
accrued interest on the Idaho share of deferrals at the customer deposit rate (presently
5%)."
The detailed calculation of the Idaho jursdictional amounts included in the Company's revenue
requirement is provided in "IFG DR 015-Attachment A". That adjustment is described in
Company witness Ms. Andrews' direct testimony at Page 36, as follows:
"The adjustment in column (PF12), Pro Forma Montana Riverbed Lease, includes costs
associated with the Montana Riverbed lease settlement. In this settlement, the Company
agreed to pay the State of Montana $4.0 millon anually beginning in 2007, with anual
inflation adjustments, for a lO-year period for leasing the riverbed under the Noxon
Rapids Project and the Montana portion of the Cabinet Gorge Project. The first two
anual payments were deferred by Avista as approved in Case No. A VU-E-07-lO. In
Case No. A VU-E-08-0l (see Order No. 30647), the Commission approved the
Company's proposed accounting treatment of the deferred payments, including accrued
interest, to be amortized over the remaining eight years of the agreement staring October
1, 2008. This adjustment includes one-eighth of the deferred balance amortization and
the anual lease payment expense."
..
.
.
Avista Utiltes
Montana Settlement Lease Payment
Annual Expense
TOTAL WA 10
100.00%64.59%35.41%
2010 Annual Payment (2009 Expense)$4,396,445 $2,839,664 $1,556,781
Amortization of Deferral 1,037,322 676,638 360,684
Total 2009 Annual Expense $5,433,767 $3,516,302 $1,917,465
Federal Income Taxes $1,901,818 $1,230,706 $671,113
IFG_DR_015-Attachment A.xls
Annual Expenses Page 1 of7 jmp 5/5/2009
.Avista Utiltes
Montana Settlement Lease Payment
Rate Base Adjustment
PERIOD
Dec 2009
Dec 2010
TOTAL
Divide by 2
Beg/End Mo Avg
Jan 2010
Feb 2010
Mar 2010
Apr 2010
May 2010
Jun 2010
Ju1 2010
Aug 2010
Sep 2010
Oct 2010
Nov 2010.TOTAL
Divide by 12
Ave Monthly Average
......................'IN.?
Deferred
I
Deferred
Balance TaxBal
4,736,382 (1,657,734)
4,059,756 (1,420,915)
8,796,138 (3,078,648)
-;2 -;2
4,398,069 (1,539,324)
4,679,997 (1,637,999)
4,623,611 (1,618,264)
4,567,226 (1,598,529)
4,510,840 (1,578,794)
4,454,455 (1,559,059)
4,398,069 (1,539,324)
4,341,684 (1,519,589)
4,285,298 (1,499,854)
4,228,913 (1,480,119)
4,172,527 (1,460,384)
4,116,142 (1,440,650)
52,776,828 (18,471,890)
-;12 -;12
4,398,069 (1,539,324)
Net Rate Base Adjustment
Washington
Deferral Balance
Deferred Taxes
Net Rate Base Adjustment
.
IFG_DR_015-Attachment A.xls
Rate Base - WA
4,398,069
(1,539,324)
2,858,745
Page 2 of?jmp 5/5/2009
.
.
.
Avista Utiltes
Montana Settlement Lease Payment
Rate Base Adjustment
PERIOD
June 2009
June 2010
TOTAL
Divide by2
Beglnd Mo Avg
July 2009
Aug 2009
Sept 2009
Oct 2009
~ov 2009Dec 2009
Jan 2010
Feb 2010
Mar 2010
Apr 2010May 2010
TOTAL
Divide by 12
Ave Monthy Average
"(c.((':d(d\dT"'. ARCI......
Deferred
I
Deferred
Balance TaxBal
2,614,959 (915,236)
2,254,275 (788,996)
4,869,234 (1,704,232)
+2 +2
2,434,617 (852,116)
2,584,902 (904,716)
2,554,845 (894,196)
2,524,788 (883,676)
2,494,731 (873,156)
2,464,674 (862,636)
2,434,617 (852,116)
2,404,560 (841,596)
2,374,503 (831,076)
2,344,446 (820,556)
2,314,389 (810,036)
2,284,332 (799,516)
29,215,404 (10,225,391)
+12 +12
2,434,617 (852,116)
Net Rate Base Adjustment
Idaho
Deferral Balance
Deferred Taxes
Net Rate_Base Adjustment
IFG_DR_015-Attachment A.xls
Rate Base -ID
2,434,617
(852,116)
1,582,501
Page 3 of 7 jmp 5/5/2009
.
.
.
Avista Utiltes
Montana Settlement Lease Payment
Annual Expense
CPI
Annual
Rent Average WA 10
Year Payment Oate Base Rent Index Annual Rent Allocation Allocation WARent 10 Rent
2007 February 2008 $4,000,000 1 $4,000,000 65.83%34.17%$2,633,200 $1,366,800
2008 February 2009 $4,000,000 1.0428 $ 4,171,200 64.59%35.41%$2,694.178 $1,477.022
2009 February 2010 $4,000,000 1.099111 $4,396,445 64.59%35.41%$2,839,664 $1.556,781
2010 February2011 $4,000,000 1.132085 $ 4,528,338 64.59%35.41%$2,924,854 $1,603,485
2011 February 2012 $4,000,000 1.166047 $ 4,664,188 64.59%35.41%$3,012,599 $1,651,589
2012 February 2013 $4,000,000 1.201028 $4,804,114 64.59%35.41%$3.102,977 $1.701,137
2013 February2014 $4,000,000 1.237059 $ 4,948,237 64.59%35.41%$3,196,067 $1,752,171
2014 February 2015 $4,000,000 1.274171 $ 5,096,684 64.59%35.41%$3,291,949 $1.804,736
2015 February 2016 $4,000,000 1.312396 $ 5,249,585 64.59%35.41%$3,390,707 $1,858,878
2016 February 2017 $4,000,000 1_351768 $ 5,407,073 64.59%35.41%$3,492,428 $1,914,644
$30.578,622 $16,687,243
Note:
2008 CPt of 1.0428% is actual. 2009 CPI of 1.054% is the actual through August 2008.
Each subsequent year in increased by 3%.
IFG_DR_015-Attachment A.xls
Summary Page 40f7 jmp 5/5/2009
.Avista Utiltes
Montana Settement Lease Payment
Washington Deferred Payments at 12/31/08 and Amotization
The interest rate is the Company's weighted cost of debt (7.840% ~ 12/31/07), updated
semi-annually, and compounded semi-annually.
The rate is applied to the average of the beginning and ending month balance, net of
deferred federal income taxes.
Payment Month Beg Bal Payment/Deferral Interest End Bal
Jan-08 $$$
Feb-08 2,633,200 11,182 2,644,382
Mar-08 2,644,382 11,182 2,655,564
Apr-08 2,655,564 11,182 2,666,746
May-08 2,666,746 11,182 2,677,928
Jun-08 2,677,928 11,182 2,689,110
Jul-08 2,689,110 9,734 2,698,844
Aug-08 2,698,844 9,734 2,708,578
Sep-08 2,708,578 9,734 2,718,312
Oct-08 2,718,312 9,734 2,728,046
Nov-08 2,728,046 (9,216)2,718,830
Dec-08 $2,718,830 $2,718,830
January 1, 2009 Deferral of Feb. 2008 Payment, including interest $2,718,830.January 1, 2009 Deferral of Feb. 2009 Payment 2,694,178
Total Deferral Balance $5,413,008
Amortization Period 8
Annual Amortization $676,626
Monthly Amortization $56,385.50
TOTAL WA 10
Payments:100.00%65_83%34.17%
Feb-08 $4,000,000 $2,633,200 $1,366,800
TOTAL WA 10
100.00%64.59%35.41%
Feb-09 $4,171,200 $2,694,178 $1,477,022
.
IFG_DR_015-Attachment A.xls
Jan 1,2009 Deferral-WA Page 5 of 7 jmp 5/5/2009
.
.
.
Avista Utiltes
Montana Settlement Lease Payment
Idaho Deferred Payments at 12/31/08 and Amotization
The interest rate is the Company's customer deposit rate (5.0% ~ 12/31/07), updated
semi-annually.
The rate is applied to the average of the beginning and ending month balance.
Payment Month Beg Bal Payment/Deferral Interest End Bal
Jan-08 $$$
Feb-08 1,366,800 2,848 1,369,648
Mar-D8 1,369,648 5,695 1,375,343
Apr-08 1,375,343 5,695 1,381,038
May-08 1,381,038 5,695 1,386,733
Jun-08 1,386,733 5,695 1,392,428
Jul-08 1,392,428 5,695 1,398,123
Aug-08 1,398,123 5,695 1,403,818
Sep-08 1,403,818 4,650 1,408,468
Oct-08 1,408,468 1,408,468
Nov-08 1,408,468 1,408,468
Dec-08 $1,408,468 $1,408,468
January 1, 2009 Deferral of April 2008 Payment, including interest
January 1, 2009 Deferral of April 2009 Payment
Total Deferral Balance
Amortization Period
Annual Amortization
$1,408,468
1,477,022
$2,885,489
8
$360,686
$30,057Monthly Amortization
TOTAL WA ID
Payments:100.00%65.83%34.17%
Apr-08 $4,000,000 $2,633,200 $1,366,800
TOTAL WA ID
100_00%64.59%35.41%
Apr-09 $4,171,200 $2,694,178 $1,477,022
IFG_DR_015-Attachment A.xls
Jan 1,2009 Deferral -ID Page 6 of 7 jmp 5/5/2009
.
.
.
PERIOD
Dec 2008
Dec 2009
TOTAL
Divide by2
Beg/nd Mo Avg
Jan 2009Feb 2009
Mar 2009Apr 2009May 2009
Jun 2009Jul 2009Aug 2009
Sep 2009Oct 2009Nov 2009
TOTAL
Divide by 12
Ave Monthy Average
Avista Utiltes
Montana Settlement Lease Payment
Rate Base Adjustment
WASHINGTON IDAHO
Deferred
I
Deferred Deferred I Deferred
Balance TaxBal Balance TaxBal
5,413,008 (1,894,553)2,885,489 (1,009,921)
4,736,382 (1,657,734)2,524,803 (883,681)
10,149,390 (3,552,287)5,410,293 (1,893,602)
+2 +2 +2 +2
5,074,695 (1,776,143)2,705,146 (946,801)
5,356,623 (1,874,818)2,855,432 (999,401)
5,300,237 (1,855,083)2,825,375 (988,881)
5,243,852 (1,835,348)2,795,318 (978,361)
5,187,466 (1,815,613)2,765,261 (967,841)
5,131,081 (1,795,878)2,735,204 (957,321)
5,074,695 (1,776,143)2,705,146 (946,801)
5,018,310 (1,756,408)2,675,089 (936,281)
4,961,924 (1,736,673)2,645,032 (925,761)
4,905,539 (1,716,939)2,614,975 (915,241)
4,849,153 (1,697,204)2,584,918 (904,721)
4,792,768 (1,677,469)2,554,860 (894,201)
60,896,341 (21,313,719)32,461,756 (11,361,615)
+12 +12 +12 +12
5,074,695 (1,776,143)2,705,146 (946,801)
Summary by Jurisdictions
Washington
Deferral Balance
Deferred Taxes
Net Rate Base Adjustment
IFG_DR_015-Attachment A.xls
Rate Base - WA&ID
IdahoSystem
7,779,841
(2,722,944)
5,074,695
(1,776,143)
2,705,146
(946,801)
5,056,897 3,298,552 1,758,345
Page 7 of 7 jmp 5/5/2009
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AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
IDAHO
A VU-E-09-0l / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-016
DATE PREPARD:
WITESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Liz Andrews
State & Federal Reg.
[phone]
REQUEST:
If you believe inclusion in rate base of amounts associated with the Montana Riverbed Litigation
Settlement is required or permitted by F ASB 71, please explain in detail the basis of your opinion.
RESPONSE:
Accounting methodologies are determined based on Generally Accepted Accounting Principles
(GAA) together with accounting and rate making treatment granted by regulatory commissions.
Statement of Financial Accounting Standards No. 71, Accounting for the Effects of
Certain Types
of Regulation (FAS 71), applies specifically to regulated utilties.
F AS 71 provides the following guidance:
Rate actions of a regulator can provide reasonable assurance of the existence of an asset. An
enterprise shall capitalize all or par of an incured cost that would otherwise be charged to
expense ifboth of the following criteria are met:
a. It is probable that future revenue in an amount at least equal to the capitalized cost
wil result from inclusion of that cost in allowable costs for rate-making puroses.
b. Based on available evidence, the futue revenue wil be provided to permit recovery
of the previously incured cost rather than to provide for expected level of similar future
costs. If the revenue will be provided through an automatic rate-adjustment clause, the
criterion requires that the reguator's intent clearly be to permit recovery of the
previously incured costs.
As discussed in Avista's response to IFG-015, the Idaho Commission approved the terms of
the
Settlement. That Settlement, at Paragraph 9 (c), approved Avista's proposed accounting which
included the unamortized costs in rate base.
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-0l / A VU-G-09-0l
Idaho Forest Group
Production Request
IFG-Ol7
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/05/2009
Elizabeth Andrews
Liz Andrews
State & Federal Reg.
[phone]
If you believe inclusion in rate base of amounts associated with the Montana Riverbed Litigation
Settlement is required or permitted by other F ASB Statement, please explain in detail the basis of
your opinion.
RESPONSE:
The Company is relying specifically on F AS 71 and the Order received by the Commission as
stated in Avista's response to IFG-016, which is sufficient authority to include the amounts
associated with the Montana Riverbed Litigation Settlement in rate base.