20180702Avista to Clearwater_PR_03 - Attachment C1.pdf

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AVISTA CORP.
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: MONTANA DATE PREPARED: 03/28/2018
CASE NO.: D2017.9.71 WITNESS: Jason Thackston
REQUESTER: Public Service Commission RESPONDER: Jason Thackston
TYPE: Data Request DEPT: Energy Resources REQUEST NO.: PSC - 028 TELEPHONE: [phone]
EMAIL: [e-mail]
REQUEST:
You state “The Ownership and Operating Agreement for Colstrip Units 3 & 4 does not provide for a single owner – or any combination of owners other than all six owners collectively – to commit to a
retirement date for the Colstrip generating units.” 18:23-19:3.
a.By making this statement under oath to a state regulatory commission, are you committing that
neither Avista nor Hydro One will take a contrary view of the meaning of the Ownership and
Operating Agreement in any future proceeding before this commission or any other court orcommission?
b.Please provide the Ownership and Operating Agreement, including a citation to the section or
page number that supports this statement.
c.Imagine a scenario where a jurisdiction requires Avista either to divest itself of or to end payments
by regulated utility customers in support of Colstrip Units 3 & 4, but where the ownerscollectively have not determined to retire the units. What resolution does Avista see for this
potential impasse?
d.Can Avista, under the Ownership and Operating Agreement, stop paying for operating expenses or
incremental capital expenditures associated with its share of Colstrip Units 3 & 4 if another owner
desires to continue operating the plant but Avista does not? Please explain, providing citations tothe Ownership and Operating Agreement where appropriate.
RESPONSE:
a.Avista cannot make a blanket statement with respect to any position that anyone else may make inany future proceeding before this commission or any other court or commission. The statementrelies upon Avista’s current understanding of the Ownership and Operating Agreement provisions
as detailed in (b) below.
b.PSC_DR_028(AVA) Attachment A includes the Colstrip Ownership and Operating Agreement,
with Amendments 1 through 4. There are provisions throughout the agreement and amendmentsthat support the statement, and nothing in the agreement allows any one owner (or any
combination of less than all owners) to retire Colstrip Units 3 & 4. Of particular note are the
following sections of the agreement:
i.On page 1, in the first recital, the owners are referenced as tenants in common.
ii.On page 3, Section 2(a), the owners are listed as tenants in common.iii.On page 12, Section 12(a), the owners are required to provide their pro rata share of coalsufficient to generate the minimum energy required by Section 13(d).
iv.On page 14, Section 13(d), the owners are each generally required to receive a minimum
share of generation unless all owners agree to a shutdown.
v.On page 30, Sections 31 and 32 provide that the Ownership and Operating Agreement willcontinue so long as Colstrip or any part thereof is, or can be made, capable of producingelectricity consistent with Prudent Utility Practice.
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c. This request is speculative, and Avista cannot imagine all possible resolutions to this scenario. Below are two possible ways that, depending on other factors including existing market and
regulatory conditions, Avista may be able to address such an impasse:
i. Avista might be able to operate as an independent power producer, selling the generation it
is required to continue receiving in the open market as opposed to using the output to
benefit its regulated customers. ii. Assuming that another owner or a third party is willing to purchase Avista’s share, Avista
could divest its ownership of Colstrip by selling its share to one of the other owners or to a
third party.

d. This request is speculative and the answer would depend upon specific facts and circumstances. The Ownership and Operating Agreement generally requires all six owners to pay their pro rata
share of approved operating expenses and incremental capital expenditures associated with their
share of Colstrip Units 3 & 4. Review and approval of operating and capital expenditures are
generally governed by Section 17 beginning on page 18 of the Ownership and Operating
Agreement, included as PSC_DR_028(AVA) Attachment A.
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