0127ARIZ.txt

129

1 BEFORE THE

2 FEDERAL ENERGY REGULATORY COMMISSION

3

4 - - - - - - - - - - - - - - - - - - x

5 IN THE MATTER OF: :

6 ARIZONA PUBLIC SERVICE COMPANY : Docket Number

7 vs. : EL99-44-003

8 IDAHO POWER COMPANY :

9 - - - - - - - - - - - - - - - - - - x

10

11 Hearing Room 6

12 Federal Energy Regulatory

13 Commission

14 888 First Street, N.E.

15 Washington, D. C.

16

17 Thursday, January 27, 2000

18

19 The above-entitled matter came on for hearing,

20 pursuant to notice, at 10:05 a.m.

21 BEFORE:

22 HONORABLE PETER H. YOUNG

23 ADMINISTRATIVE LAW JUDGE

24 APPEARANCES:

25 (AS HERETOFORE NOTED.)

130

1 ADDITIONAL APPEARANCES:

2 On behalf of Arizona Public Serice Company:

3 HOWARD WEIR, ESQ.

4 Morgan, Lewis and Bockius

5 1800 M Street, N.W.

6 Washington, D.C. 20036

7 [phone]; FAX: [phone]

8

9 On behalf of Idaho Power Company:

10 LARRY G. TAYLOR, ESQ.

11 DAVID B. RASKIN, ESQ.

12 JANE I. RYAN, ESQ.

13 Steptoe and Johnson

14 1330 Connecticut Avenue, N.W.

15 Washington, D.C. 20036

16 [phone]; FAX: [phone]

17 E-MAIL: [e-mail]

18

19 On behalf of Idaho Power Company:

20 JAMES R. THOMPSON, ESQ.

21

22 On behalf of Idaho Public Utilities Commission:

23 CHERI C. COPSEY, ESQ.

24

25 -- continued --

131

1 ADDITIONAL APPEARANCES:

2 On behalf of Utah Associated Municipal Power Systems:

3 TIMOTHY K. SHUBA, ESQ.

4 Shea and Gardner

5 1800 Massachusetts Avenue, N.W.

6 Suite 800

7 Washington, D.C. 20036

8 [phone]; FAX: [phone]

9

10 On behalf of Avista Corporation:

11 CHERYL RYAN, ESQ.

12 Van Ness Feldman

13

14

15

16

17

18

19

20

21

22

23

24

25

132

1 P R O C E E D I N G S

2 (10:05 a.m.)

3 PRESIDING JUDGE: Go on the record, please.

4 We are here today to conduct a hearing in Arizona

5 Public Service Company versus Idaho Power Company, Docket

6 Number EL99-44-0003.

7 The Commission initiated these proceedings to

8 address certain specific issues in its June 17, 1999 Order

9 setting complaint for hearing, denying complaint in part,

10 and establishing hearing and settlement procedures in Docket

11 Number EL-44-000.

12 We'll start with appearances.

13 MR. MCGRANE: Good morning, Your Honor.

14 John McGrane, Morgan, Lewis & Bockius, 1800 M

15 Street, Washington, D.C., on behalf of Arizona Public

16 Service Company.

17 I'd also like to enter the appearance of Mary Ann

18 Huntington, also of Morgan, Lewis & Bockius.

19 And Howard Weir, W-E-I-R, also of Morgan, Lewis &

20 Bockius.

21 I'd also like to enter the appearance of Barbara

22 Muller Champion of Pinnacle West Capital Appropriations,

23 also for APS.

24 MR. MORGANS: Good morning, Your Honor.

25 Gary Morgans with the law firm of Steptoe &

133

1 Johnson, LLP. Our address is 1330 Connecticut Avenue,

2 Northwest, Washington, D.C. 20036.

3 I'm appearing on behalf of Idaho Power Company.

4 I'd also like to enter the appearance of David B.

5 Raskin, who is seated to my left, as well as Jane I. Ryan.

6 They are both with the law firm of Steptoe & Johnson.

7 I'd also like to enter the appearance of James R.

8 Thompson of the Idaho Power Company.

9 Thank you.

10 MS. COPSEY: My name is Cheri C. Copsey, Deputy

11 Attorney General for the State of Idaho. I represent the

12 Idaho Public Utilities Commission.

13 MS. C. RYAN: Good morning, Your Honor. My name

14 is Cheryl Ryan here from the law firm of Van Ness Feldman.

15 I'm here today for Avista Corporation.

16 PRESIDING JUDGE: Are there any other

17 appearances?

18 MR. REUSCH: Your Honor, on behalf of the

19 Commission's Trial Staff, I'm Charles F. Reusch.

20 With me today is Cynthia A. Govan, Commission

21 Staff Counsel.

22 PRESIDING JUDGE: Any other appearances?

23 (No response.)

24 PRESIDING JUDGE: Hearing none, we'll turn to the

25 Joint Stipulation of Contested Issues.

134

1 I want to advise the parties that the issues, as

2 reflected on the Joint Stipulation, will be controlling for

3 the balance of this proceeding.

4 Therefore, I want to recite those issues at this

5 time.

6 The issues, as I have them, are as follows:

7 1. Assuming Idaho Power was authorized to claim

8 a TRM requirement in this case, was the specific requirement

9 it claimed reasonable.

10 Issue 2. Whether it is appropriate to set aside

11 any transmission capacity for CBM in this case.

12 Issue number 3. If so, what amount of

13 transmission capacity is reasonable for Idaho Power to set

14 aside for CBM, and how much of that CBM requirement should

15 be of the Brownlee East path, rather than on another path.

16 I assume that the loop flow issues that were

17 raised are subsumed under Issue Number 1.

18 Is that correct?

19 MR. MCGRANE: That's my assumption, Your Honor.

20 PRESIDING JUDGE: There will be loop flow issues

21 in this proceeding, correct?

22 MR. MCGRANE: Yes, Your Honor.

23 MR. MORGANS: Yes, Your Honor.

24 PRESIDING JUDGE: Thank you.

25 Does anyone have anything to add to the Joint

135

1 Stipulation of Issues or any challenges to the issues as

2 they have been presented?

3 (No response.)

4 PRESIDING JUDGE: Hearing none, the Joint

5 Stipulation of Contested Issues, as recited, is adopted for

6 use in this proceeding, and parties are notified that these

7 stipulations constitute a due process of acknowledgment with

8 respect to the issues as stipulated.

9 A few preliminary housekeeping matters. Hearing

10 hours will be from 10:00 a.m. to 12:30 p.m., and from 2:00

11 p.m. to 4:30 p.m. each day. That is flexible and we can

12 accommodate the parties as necessary.

13 I originally allocated through Friday, February

14 4th, for this hearing. Inclement weather has now wasted two

15 of those hearing days and I wonder how many days the parties

16 anticipate that this hearing will take.

17 Will we indeed finish, in your estimation, by

18 February 4th?

19 MR. MCGRANE: I think we'll finish well before

20 the 4th, Your Honor, I hope.

21 PRESIDING JUDGE: What is your best estimate of

22 how long the hearing will take?

23 Anyone?

24 MR. MORGANS: I've spoken I think with most of

25 the parties to get a rough idea of the total amount of cross

136

1 examination. My best estimate is, and I think also our goal

2 is to try and finish the hearing by the end of the day

3 tomorrow.

4 PRESIDING JUDGE: Good.

5 (Laughter.)

6 PRESIDING JUDGE: In the interest of convenience

7 to the witnesses, I will accommodate whatever scheduling

8 that requires. If we need to start early, if we need to run

9 late, abbreviate the lunch hour or whatever is required,

10 there's no reason to drag witnesses back here for Monday if

11 that's not necessary.

12 Turning to Exhibits, the Exhibits submitted for

13 the first time at hearing must be identified on the record

14 with a number greater than the last prefiled exhibit number

15 and by a caption or title.

16 Any material which has not been premarked but

17 which is to be used in examining the witness must be marked

18 for identification before the witness is questioned in

19 reliance on those materials.

20 Copies must be provided to the Court Reporter and

21 to all other counsel and to me before they are referenced on

22 the record.

23 There will be no prefiled supplemental testimony.

24 Any supplemental testimony which is required will be

25 presented orally at hearing.

137

1 Also, I require at least 24 hours advance written

2 summary provided to all parties of any such non-prefiled

3 testimony.

4 Items By Reference or for Official Notice must be

5 presented to me hard copy. They will not be noticed

6 otherwise.

7 The procedure regarding the examination of

8 witnesses will be as follows:

9 Direct examination, cross examination, and

10 redirect examination for each witness in seriatim. That

11 way, once a witness has been presented and cross examined,

12 the witness may be excused. Each party who desires to cross

13 examine that witness will have the opportunity while the

14 witness is on the stand.

15 Is that clear to everyone.

16 Briefing schedule, page limitations, that sort of

17 thing we will establish at the end of the hearing. I do

18 encourage the parties to think about those matters in

19 advance.

20 Who will be the first witness?

21 MR. MCGRANE: Your Honor, David A. hansen will be

22 the first witness for Arizona Public Service Company.

23 PRESIDING JUDGE: Mr. Hansen.

24 MR. MCGRANE: Your Honor, while Mr. Hansen is

25 taking the stand, if I could raise two issues?

138

1 We do have an Item By Reference that we would

2 like to have in this case. That is the Idaho Power

3 Company's open access tariff. I have a few copies for Your

4 Honor and I think we have about another dozen copies for

5 other parties.

6 Would you like to deal with that now, or after

7 Mr. Hansen's testimony?

8 PRESIDING JUDGE: Will you be questioning Mr.

9 Hansen on the open access tariff?

10 MR. MCGRANE: No.

11 PRESIDING JUDGE: Why don't we do it when it

12 comes up.

13 MR. MCGRANE: I'm not sure it's going to come up

14 in the case. It is something that has been referred to in

15 testimony in the case, and we just thought it would be good

16 to have it as a formal Item By Reference in the record.

17 PRESIDING JUDGE: All right, why don't you do it

18 now then?

19 MR. MCGRANE: Your Honor, we have two extra

20 copies.

21 (Handing document to Presiding Judge.)

22 MR. MCGRANE: Your Honor, this is for Item By

23 Reference, the Idaho Power Company Open Access Transmission

24 Tariff.

25 (Pause.)

139

1 PRESIDING JUDGE: Does anyone have any objection

2 to receiving, as an Item By Reference, Idaho Power Company

3 Open Access Transmission Tariff, Original Volume Number 5,

4 first revised.

5 MR. MORGANS: No objection, Your Honor.

6 PRESIDING JUDGE: Hearing none, that item is

7 noted as an Item By Reference at this time.

8 (The document referred to was

9 marked as Item By Reference

10 Number 1, and identified and

11 received in evidence.)

12 MR. MCGRANE: Your Honor, another item, we have a

13 data response we received after our rebuttal testimony was

14 filed in response to some discovery that we did after that

15 period as well, that we would like to introduce as an

16 Exhibit in the record again. I'm not sure that it's going

17 to come up in testimony.

18 I've talked to Mr. Morgans and he, at least, does

19 not have any objection to just moving it into the record.

20 What I'd like to do is give copies to everyone so

21 they can look at it and be prepared to respond at the time

22 Mr. Hansen's testimony is completed.

23 PRESIDING JUDGE: That's fine. Why don't you

24 distribute it. What I will do is allow the parties a

25 reasonable opportunity over the lunch break to review it,

140

1 and then if you want to move it, you can mark it, and then

2 if you want to move it into evidence when we reconvene after

3 lunch, to give the parties time to review it and object to

4 it, if they feel that's necessary.

5 MR. MCGRANE: That's fine, Your Honor.

6 I have not marked this yet because I actually

7 didn't know how we were going to deal with it. I could mark

8 this APS-50.

9 PRESIDING JUDGE: That's a data response?

10 MR. MCGRANE: The caption is Idaho Power Company

11 Response to Data Request APS13-5.

12 Your Honor, I've marked your copies and copies

13 for the Reporter. I'm not sure how many copies we have but

14 there should be enough for at least one for every party, if

15 they could mark it as APS-50.

16 PRESIDING JUDGE: Is there any objection for

17 marking, for identification purposes only, the document

18 consisting of one page, entitled "Idaho Power Company

19 Response to Data Request APS/13-5."

20 (No response.)

21 PRESIDING JUDGE: Hearing none, that document is

22 marked for identification as APS-50 at this time.

23 (The document referred to was

24 marked for identification as

25 Exhibit Number APS-50.)

141

1 PRESIDING JUDGE: Are we ready to proceed with

2 Mr. Hansen?

3 MR. MCGRANE: Yes, Your Honor.

4 Whereupon,

5 DAVID A. HANSEN

6 was called as a witness herein, and having been first duly

7 sworn, was examined and testified as follows:

8 MR. MCGRANE: I'd like to mark for

9 identification, Your Honor, Exhibits APS-1 through -25 and

10 APS-29 through -46, the prefiled testimony of David Hansen.

11 PRESIDING JUDGE: One through 25?

12 MR. MCGRANE: And 29 through 46.

13 PRESIDING JUDGE: Is there any objection to

14 marking, for identification purposes, Exhibits designated

15 APS-1 through APS-25 or APS-29 through APS-46?

16 (No response.)

17 PRESIDING JUDGE: Hearing none, those Exhibits

18 are marked for identification at this time.

19 (The documents referred to

20 were marked for identifica-

21 tion respectively, as

22 Exhibits Numbers APS-1

23 through APS-25 and APS-29

24 through APS-46.)

25 MR. MCGRANE: Your Honor, it's my understanding

142

1 that you already have copies of that testimony?

2 PRESIDING JUDGE: I do.

3 MR. MCGRANE: Your Honor, I'd like to make just

4 one comment on the prefiled testimony. Upon reviewing some

5 of the testimony, there were -- for example, APS-15 consists

6 of tables and charts.

7 PRESIDING JUDGE: Fifteen?

8 MR. MCGRANE: Also 23 and 34. Upon reviewing

9 this, we found that it may be difficult for some of the

10 parties and Your Honor to read some of that information and

11 so we went back and copied from the original some additional

12 copies that appeared to be more readable copies of that

13 material.

14 We have, I think, substituted it for the

15 Reporter's copy. If Your Honor would like some substitute

16 copies, we can give them to you.

17 PRESIDING JUDGE: I'll take them.

18 (Handing document to Presiding Judge.)

19 DIRECT EXAMINATION

20 BY MR. MCGRANE:

21 Q Mr. Hansen, could you please state your full name

22 for the record?

23 A My name is David Alan Hansen.

24 Q And by whom are you employed?

25 A Arizona Public Service.

143

1 Q What is your position with Arizona Public Service

2 Company?

3 A My position is Director of Bulk Power Marketing

4 and Resource Operations.

5 Q Are you the same David A. Hansen who had prepared

6 under your supervision and submitted as prefiled testimony,

7 Exhibits 1 through 25 and 29 through 46?

8 A Yes, I am.

9 Q Do you have any corrections to any of that

10 testimony?

11 A Yes, I do. Do you want me to start and go

12 through them?

13 Q Yes.

14 A With respect to my direct testimony, the first

15 correction is on page 11 of 31.

16 PRESIDING JUDGE: Would you reference it by

17 Exhibit Number please? That would be APS-1.

18 THE WITNESS: Okay. Under Exhibit APS-1, page 11

19 of 31, on line 3, I need to insert the word "to" between

20 able and receive.

21 The next correction is on page 12 of the same

22 Exhibit, line 5. I'd like to insert the word "it" in

23 between the words "and" and "had."

24 Same Exhibit, page 14 of 31, line 3, put brackets

25 around the word "to."

144

1 At page 15, line 20, same exhibit, insert the

2 word "cheap" in between the words "import" and "northwest."

3 PRESIDING JUDGE: Give me that line number again,

4 please.

5 THE WITNESS: Page 15, line 20.

6 MR. RASKIN: I'm sorry, what was the correction,

7 sir?

8 THE WITNESS: To insert the word "cheap" in

9 between the words "import" and "northwest."

10 Page 18, line 17 of the same Exhibit, the year of

11 the date should be 1999.

12 PRESIDING JUDGE: So that would read January 5th,

13 1999?

14 THE WITNESS: That's correct.

15 Page 21, line 7 of the same exhibit, replace the

16 word "loosen" with "loosing."

17 Same page, same exhibit, line 14, delete the

18 number "62" and replace it with the number "42."

19 Page 23, line 2, same exhibit, replace the word

20 "even" with the word "event."

21 PRESIDING JUDGE: Where was that again, sir? I'm

22 sorry.

23 THE WITNESS: Page 23, line 2.

24 Page 28, line 4, replace the word "effect" with

25 the word "affect."

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1 Page 30, line 15, replace the number "1999" with

2 "1998."

3 PRESIDING JUDGE: The date there is December 24,

4 1998?

5 THE WITNESS: This particular copy doesn't have a

6 page 30.

7 (Handing document to witness.)

8 THE WITNESS: December 24, 1998.

9 Page 30, line 21, the word "interconnection"

10 should be plural.

11 Page 31, line 1, the phrase "of the capacity"

12 should read "on the capability."

13 In my rebuttal testimony, which is Tab 29 --

14 MR. RASKIN: I'm sorry to interrupt, Your Honor,

15 but could I get a clarification in one of the changes in the

16 witness' direct testimony before we move on?

17 PRESIDING JUDGE: Yes.

18 Can everyone ensure that the microphones on the

19 tables are left covered? We are getting a lot of feedback.

20 Address your clarification request to me, please.

21 MR. RASKIN: Your Honor, the change on Exhibit

22 21, on Exhibit APS-1, line 14, the witness changed the

23 number "62" to "42." Was the intent to make it 42 through

24 63, or 42, 63?

25 PRESIDING JUDGE: Mr. Hansen, what was your

146

1 intent in the phrase of the parenthetical at 62 through 63?

2 THE WITNESS: My intent was to change the 62 to

3 42 and leave the "dash 63" as it is.

4 PRESIDING JUDGE: So you're talking now about 21

5 pages?

6 THE WITNESS: That was my intent.

7 PRESIDING JUDGE: Or 21 lines I guess that would

8 be.

9 MR. MCGRANE: Your Honor, if we might go off the

10 record for a moment?

11 PRESIDING JUDGE: Let's go off the record.

12 (Discussion off the record.)

13 PRESIDING JUDGE: Go back on the record, please.

14 In the time off the record, the witness has

15 reviewed the materials and has indicated that the

16 parenthetical on page 21 of Exhibit APS-1, lines 13 through

17 14, should read as follows:

18 Porter Deposition at 42, 63.

19 THE WITNESS: May I go ahead?

20 PRESIDING JUDGE: Yes, you may proceed.

21 THE WITNESS: In the rebuttal testimony, which is

22 Exhibit APS-29, the first correction is on page 8, line 12.

23 Replace the word "some" with the word "one." And the word

24 "were" with the word "was."

25 The next correction is on the same Exhibit, page

147

1 17 of 33. Line 21, after the quotation mark, add the

2 following: "(emphasis added)".

3 MR. RASKIN: I'm sorry, Your Honor. That wasn't

4 clear to me. Maybe I just wasn't hearing you right. I

5 apologize.

6 PRESIDING JUDGE: My understanding is on page 17

7 of Exhibit APS-29, at line 21, the end of the quotation

8 carrying over from line 20, "on a non-firm basis" with non-

9 firm underlined, the witness has indicated that there should

10 be an explanatory parenthetical at the end of that sentence

11 indicating emphasis added.

12 MR. RASKIN: Thank you, Your Honor.

13 PRESIDING JUDGE: Is that correct, Mr. Hansen?

14 THE WITNESS: That's correct.

15 The next correction is on page 19, line 16 of the

16 same Exhibit. Replace the number "11-1" with "11-2."

17 The next correction is on page 21 of 33, same

18 Exhibit, line 21, after "IPC-16" add the phrase "at 21."

19 The next correction is page 27, line 4, replace

20 the reference Exhibit IPC-4 with the reference Exhibit

21 IPC-11.

22 PRESIDING JUDGE: Let me interrupt you here.

23 This is already a substitute page, is it not?

24 MR. MCGRANE: Yes, Your Honor. If you are

25 referring to the letter we sent out earlier this week, where

148

1 we stated some corrections.

2 PRESIDING JUDGE: I got it by fax apparently late

3 Monday, and we were closed for business Tuesday and

4 Wednesday, so the first I saw it was this morning. I just

5 inserted it myself, and I just wanted to clarify that this

6 correction being made is being made to the substitute page.

7 MR. MCGRANE: Yes, it is, Your Honor.

8

9

10

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12

13

14

15

16

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18

19

20

21

22

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24

25

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1 MR. REUSCH: Your Honor, does APS have additional

2 copies of the substitute page 27?

3 MR. MCGRANE: Yes, we do, Your Honor.

4 MR. REUSCH: Might I get one?

5 MR. MCGRANE: Yes.

6 Your Honor, if we could just mention this. We

7 also made some changes to Exhibit 41, which I think the

8 witness is getting to as well, but in that same letter, we

9 had copies of those substitute pages of that Exhibit. We

10 also have extra copies of the letter Ms. Huntington sent out

11 to the parties.

12 PRESIDING JUDGE: That would be this document?

13 MR. MCGRANE: Yes, Your Honor.

14 PRESIDING JUDGE: I was going to ask where this

15 belongs.

16 This is what Exhibit?

17 MR. MCGRANE: Forty-one, Your Honor.

18 (Pause.)

19 PRESIDING JUDGE: Did the other parties, apart

20 from the Staff, receive this fax?

21 MR. MORGANS: Yes, Your Honor.

22 PRESIDING JUDGE: Anyone who didn't receive it?

23 (No response.)

24 BY MR. MCGRANE:

25 Q Mr. Hansen, would you continue with your

150

1 corrections if you have any further?

2 A Yes.

3 The next one --

4 Let me clarify where I left off. We left off on

5 page 27, line 4, replace Exhibit IPC-4 with a Reference

6 Exhibit IPC-11.

7 The next correction is on the same page, line 11.

8 Replace the Reference Exhibit IPC-4 with the Reference

9 Exhibit IPC-11.

10 The next correction is on page 28 of 33, same

11 Exhibit, line 19. Replace the word "calculating" with the

12 word "calculations."

13 PRESIDING JUDGE: What page is that? I'm sorry.

14 THE WITNESS: Page 28 of 33, line 19.

15 PRESIDING JUDGE: And the correction is what?

16 THE WITNESS: To replace the word "calculating"

17 with the word "calculations."

18 MR. MCGRANE: Your Honor, if I could interject,

19 with regard to these corrections that were sent out earlier,

20 when we sent that out by fax, we had submitted a redlined

21 version so the parties could see the corrections.

22 Would you like the witness to go over those as

23 well on the stand?

24 (Pause.)

25 PRESIDING JUDGE: I don't see the need for that

151

1 unless some other party would like to hear that explanation.

2 (Pause.)

3 PRESIDING JUDGE: Is there any desire to hear an

4 explanation of the redline form?

5 (No response.)

6 BY MR. MCGRANE:

7 Q Mr. Hansen, do you have any other corrections?

8 A Yes.

9 In what was just discussed, does that include

10 Exhibit 41, so I don't need to rehash that here?

11 Q Yes.

12 A The other correction I wanted to make -- in Mr.

13 Durick's testimony, he noted with respect to my direct

14 testimony, that APS made the statement that our request was

15 the only transmission request Idaho had denied.

16 The fact is that based on the way, the timing of

17 how Idaho responded to APS' Data Request Number 23,

18 specifically being in several parts, there was some

19 information that was overlooked in there, so I was incorrect

20 in making that statement.

21 That's the last correction I have.

22 PRESIDING JUDGE: Could you clarify what you

23 corrected?

24 THE WITNESS: Yes.

25 Let me see if I can say this better.

152

1 Mr. Durick's testimony basically states that I

2 was incorrect in saying that APS' request was the only

3 request Idaho had denied. They provided answers to a data

4 request in different parts in total that basically confirmed

5 what Mr. Durick said, so the statement that ours was the

6 only one was incorrect.

7 I agree with Mr. Durick.

8 PRESIDING JUDGE: Do you have a modification to

9 your testimony to indicate that fact, or are you just making

10 us aware of that?

11 THE WITNESS: I'm just making you aware of it.

12 MR. MCGRANE: Your Honor, if it would clarify the

13 record, I can refer the witness to a place in his testimony.

14 PRESIDING JUDGE: He's going to have to do that,

15 or I'm going to strike what he just said.

16 BY MR. MCGRANE:

17 Q Mr. Hansen, could you look at APS-1, page 15,

18 lines 6 and 7.

19 A Yes.

20 Q Is this the reference that you're trying to

21 correct?

22 A Yes, it is.

23 Q Is the substance of your correction today that

24 sentence beginning with "Apparently"?

25 A Yes, it is.

153

1 PRESIDING JUDGE: So, Mr. Hansen, you would, on

2 Exhibit Number APS-1, page 15, lines 6 through 7, delete the

3 sentence reading "Apparently, APS' 1996 request is the only

4 other firm request for transmission service that Idaho has

5 denied," along with the reference to Exhibit APS-11?

6 THE WITNESS: That's correct.

7 MR. MCGRANE: If I could, Your Honor?

8 BY MR. MCGRANE:

9 Q Mr. Hansen, are you sure you want to delete the

10 reference to APS-11?

11 (Pause.)

12 A Okay, Exhibit APS-11 should remain. That is part

13 of the main question. It addresses the issue of why Idaho

14 would want to prevent APS from getting transmission service,

15 so I would not want to omit that.

16 Q So, Mr. Hansen, your correction would be to

17 strike the sentence beginning with "Apparently" and

18 continuing, "comma, APS's 1996 request is the only other

19 firm request for transmission service that Idaho has

20 denied"?

21 A That's correct.

22 Q Do you have any other corrections?

23 (Pause.)

24 A No, that's all the corrections I have.

25 Q Mr. Hansen, if you were asked these same

154

1 questions that are presented in your prepared testimony

2 today on the stand, would your answers be the same as those

3 provided in your testimony?

4 A Yes, they would.

5 MR. MCGRANE: Your Honor, the witness is

6 available for cross examination.

7 PRESIDING JUDGE: Have the parties worked out a

8 cross examination schedule priority?

9 MR. RASKIN: Yes, Your Honor.

10 I will be cross examining Mr. Hansen first.

11 Ms. Copsey, representing the Idaho Public

12 Utilities Commission, will follow.

13 And Mr. Reusch I believe will follow that.

14 PRESIDING JUDGE: Proceed.

15 CROSS EXAMINATION

16 BY MR. RASKIN:

17 Q Mr. Hansen, I'd like to turn first to your

18 Exhibit APS-25. This is a proposal which APS has made to

19 sell generation reserves to Idaho Power in lieu of CBM on

20 the Brownlee East Path, is it not?

21 A Yes, it is.

22 Q And I think the proposal is to sell power from

23 the APS generation system, is that correct?

24 A Not necessarily, no.

25 Q Excuse me, but if you go down to about two-thirds

155

1 of the way down, you say that APS can reliably meet this

2 reserve obligation as proven by its history of operating the

3 5,000 megawatt system within WSCC standards.

4 Do you see that?

5 A Yes, I do.

6 Q Would you also turn to your testimony, your

7 direct testimony, at page 27.

8 PRESIDING JUDGE: That would be Exhibit APS-1?

9 MR. RASKIN: APS-1, page 27, lines 4 through 10.

10 BY MR. RASKIN:

11 Q Actually, excuse me, line 8, where you say that

12 APS is a 5,000-megawatt system.

13 And I believe that in both places, you are trying

14 to make the point that APS could be counted upon to provide

15 reliable generation because it has its own 5,000 megawatt

16 system.

17 Isn't that correct?

18 A That's correct.

19 Q Can you make that statement for the term of this

20 transaction, even though it's true today, Mr. Hansen?

21 PRESIDING JUDGE: Clarify the transaction,

22 please.

23 BY MR. RASKIN:

24 Q Can you make that statement for the term of the

25 wheeling transaction that you're seeking from Idaho Power

156

1 Company, even if it is true today?

2 PRESIDING JUDGE: Is that APS-25?

3 MR. RASKIN: No, Your Honor. The Idaho Power

4 wheeling transaction is the transmission service transaction

5 that's the subject of this complaint proceeding.

6 THE WITNESS: I'm sorry, I don't understand your

7 question.

8 BY MR. RASKIN:

9 Q Can you say today, on the stand, that for the

10 term of the wheeling transaction you've requested from Idaho

11 Power Company that APS will have a 5,000 megawatt system of

12 generation to use to reliably supply reserves to Idaho Power

13 Company?

14 A To the best of my knowledge, yes.

15 Q Are you aware of a restructuring settlement that

16 APS entered into with the Arizona Corporation Commission and

17 others which was filed late last year?

18 A I'm aware of it, yes.

19 Q In that settlement, did not APS agree that it

20 would divest all of its generating assets to an unregulated

21 affiliate?

22 A Repeat your question.

23 MR. RASKIN: Your Honor, could I have the

24 Reporter repeat the question, please?

25 PRESIDING JUDGE: Read back the question, please.

157

1 (Readback.)

2 THE WITNESS: Yes, it did.

3 BY MR. RASKIN:

4 Q Therefore, APS is proposing to sell generating

5 asset to meet Idaho Power's reliability that it will not own

6 once that divestiture takes place, isn't that correct?

7 A No, it's not.

8 Q Would you please explain that?

9 A The proposal, as we've structured it, would

10 provide for APS to deliver to Idaho Power the firm purchases

11 we were making using the transmission they provided us.

12 If you read page 27 of 31 before when it talks

13 about relying on the APS system, it talks about additionally

14 us having generation at Four Corners, but there is nothing

15 that would preclude APS, if we had the transmission service

16 that we requested of Idaho, there is nothing that would

17 preclude us from taking the firm purchases, capacity

18 purchases that we made and transport it on that transmission

19 path, and simply delivering those to Idaho at their system

20 without ever coming south into the APS system.

21 Q What firm purchases are you talking about?

22 A The firm purchases that we would make in the

23 northwest that we need this transmission capacity for.

24 Q I think you and I are not communicating well.

25 Your testimony makes the point that your proposal is

158

1 reliable because APS has a 5,000 megawatt system of

2 generation and the reality is you do not have a 5,000

3 megawatt system of generation for the entire term of this

4 transaction.

5 Is that correct?

6 A That's correct.

7 (Pause.)

8 Q Under the Arizona Restructuring Settlement that

9 we've been discussing, will Arizona Public Service remain in

10 the wholesale marketing business?

11 A Can you tell me what you mean by marketing?

12 Q Will APS be buying and selling power in the

13 wholesale market for its own account?

14 A To the extent they don't contract out to a third

15 party as provider of last resort, they'll have wholesale

16 procurement needs, and my guess is that they'll buy in bulk

17 and there'll be hours when their load isn't exactly what

18 they bought and they'll have to liquidate those.

19 So, yes, I would guess again, assuming they don't

20 contract out that obligation to someone else, that APS will

21 have a need to be buying and selling power in the wholesale

22 market.

23 Q Will APS be in the northwest looking for

24 opportunities to buy and sell power across the Idaho Power

25 System?

159

1 A Again, as provider of last resort, in particular

2 under fixed price tariffs, if those are the cheapest

3 resources available, my guess they would pursue those.

4 Q Explain how the provider of last resort works

5 under your settlement, please?

6 A You know, I have not read the exact settlement.

7 My understanding is that sufficient --

8 Do you want me to convey to you what I believe?

9 Q Yes, sir.

10 A My understanding is that the utility, Arizona

11 Public Service, will have an obligation to serve those

12 customers who elect not to choose a different supplier for

13 their electricity needs.

14 Q And it will have to enter into --

15 Excuse me.

16 It will have to issue an RFP or request for

17 proposals for other parties to supply the power for that

18 supplier of last resort.

19 Isn't that correct?

20 A I believe there is a stipulation in there that

21 requires that some of those obligations are managed through

22 an RFP process.

23 Q Is it not the intent of the restructuring that

24 APS become a distribution wires company, and that all of its

25 merchant competitive functions be separated out into

160

1 affiliates?

2 A Not having drafted that, I don't know what the

3 intent was, but that seems consistent with what I've heard.

4 MR. RASKIN: Your Honor, I have, and am prepared

5 to distribute, solely for your ease of reference, a copy of

6 a decision of the Arizona Corporation Commission, September

7 of last year, approving, with clarifications and

8 qualifications, the settlement proposal to restructure APS.

9 Now, it is an official order of the ACC so it's

10 not necessary for me to have it marked as an Exhibit. On

11 the other hand, it would probably make your job a lot easier

12 to the extent we wish to refer to it.

13 PRESIDING JUDGE: We'll mark it as an Exhibit.

14 MR. RASKIN: Your Honor, I ask that the Order of

15 the Arizona Corporation Commission, in the matter of the

16 Application of Arizona Public Service Company for approval

17 of its plan for stranded cost recovery, et cetera.

18 The order is dated September 23rd, 1999, be

19 marked for identification as Exhibit IPC-23.

20 Your Honor, for the record, this copy of the

21 order was downloaded from the Arizona Corporation

22 Commission's Web site, so it does not have the date of the

23 order identified on the Exhibit.

24 PRESIDING JUDGE: Is there any objection to

25 marking for identification purposes, --

161

1 MR. MCGRANE: Your Honor, I'm going to take a

2 look at it first.

3 (Pause.)

4 MR. MCGRANE: Your Honor, we're just marking it

5 for identification at this point?

6 PRESIDING JUDGE: Yes. It has not yet been

7 marked for identification.

8 Have you had an opportunity to review it,

9 essentially to have it marked?

10 MR. MCGRANE: Yes, Your Honor.

11 PRESIDING JUDGE: Is there any objection to

12 marking, for identification purposes only, the opinion and

13 order presented by counsel before the Arizona Corporation

14 Commission?

15 (No response.)

16 PRESIDING JUDGE: Hearing none, that document is

17 marked for identification purposes only, IPC-23, at this

18 time.

19 (The document referred to was

20 marked for identification as

21 Exhibit Number IPC-23.)

22 BY MR. RASKIN:

23 Q Mr. Hansen, today when you make purchases and

24 sales in the wholesale market such as the types of

25 transaction you would like to make over the Idaho system, do

162

1 the benefits of those transactions redound to ratepayers or

2 shareholders of Arizona Public Service?

3 MR. MCGRANE: Your Honor, I would object to this

4 question. I'm not sure how it's relevant to any of Mr.

5 Hansen's testimony.

6 MR. RASKIN: Your Honor, we believe it's relevant

7 to the question of the offer to sell us generating reserves.

8 I believe that when APS sells its generating plants to its

9 unregulated affiliate, it will not have the right or the

10 ability to access those generating plants, and that

11 therefore it is important to establish that there is a split

12 between the regulated part of APS' business, which will

13 remain with APS, and the unregulated portion of the

14 business, which will be transferred over to its competitive

15 affiliates. And I'm trying to establish a foundation for

16 that transition so that we can understand.

17 PRESIDING JUDGE: How does your question do that?

18 MR. RASKIN: This question establishes what would

19 happen today, and I'm going to follow it up with questions

20 about what will happen after they separate the company into

21 regulated and unregulated sections, so that I can understand

22 how their proposed settlement would apply.

23 PRESIDING JUDGE: Would you please read the

24 question back?

25 (The Reporter read the record as requested.)

163

1 PRESIDING JUDGE: The objection is sustained.

2 MR. MCGRANE: Your Honor, I don't know if it is

3 appropriate at this time, but I have a further objection to

4 the line of inquiry Mr. Raskin appears to be heading down.

5 I think Mr. Hansen has already indicated that he

6 was not directly involved in the restructuring process in

7 Arizona and is not that familiar with that process.

8 PRESIDING JUDGE: We'll let him respond as

9 appropriate, and we'll let counsel continue with the line of

10 questioning.

11 BY MR. RASKIN:

12 Q Mr. Hansen, does Arizona Public Service

13 contemplate transferring the transmission service it

14 proposes to purchase from Idaho Power Company in this

15 proceeding to its unregulated affiliates?

16 A Those discussions have not taken place.

17 Q There have been no discussions of that issue?

18 A Not with me, no.

19 Q Thank you. In your direct testimony, did you

20 revise the proposal contained in Exhibit number APS-25?

21 (Pause.)

22 A We do have a revised proposal other than the

23 power sale.

24 Q In your direct testimony, did you revise it in

25 your direct testimony?

164

1 (Pause.)

2 PRESIDING JUDGE: Mr. Hansen, are you going to go

3 through your entire direct testimony?

4 THE WITNESS: No, sir. Was your question has

5 this been revised?

6 BY MR. RASKIN:

7 Q No, my question was did you, in your direct

8 testimony, revise the proposal that was set forth in Exhibit

9 APS-25?

10 A I believe not.

11 Q Would you turn to page 27 of APS-1, lines 10 and

12 11, please. At lines 10 and 11, there is a sentence which

13 reads:

14 If APS could not meet the capacity needs at Four

15 Corners, APS would be willing to divert the northwest path

16 back to Idaho.

17 Do you see that sentence?

18 A Yes, I do.

19 Q When you refer to the northwest path, are you

20 referring to the transmission service that you purchased

21 from Idaho Power Company?

22 A Yes, I am.

23 Q And when you say divert, do you mean to say that

24 you would give that transmission back to Idaho Power

25 Company?

165

1 A Yes, I do.

2 Q So you are, in lines 10 and 11, agreeing to make

3 your transmission service interruptable in certain

4 circumstances, are you not?

5 A I am not sure how you use the term

6 "interruptable."

7 Q You just told me that, when you used the word

8 "divert," you said you would interrupt your transaction and

9 give the transmission back to Idaho Power Company in certain

10 circumstances.

11 A Yes.

12 Q That is how I define interruptable.

13 A Let me ask a clarification question, if I may.

14 Are you suggesting that APS is proposing to accept it on a

15 non-firm basis?

16 Q I am asking you. You said you would divert--

17 PRESIDING JUDGE: Clarify the question for the

18 witness.

19 BY MR. RASKIN:

20 Q The clarifying question is I am asking whether

21 APS, on lines 10 and 11 of page 27, is agreeing that, in

22 certain circumstances, it will interrupt its transmission

23 service and return the transmission capacity back to Idaho

24 Power.

25 A Yes.

166

1 Q By the way, was that offer to interrupt

2 transmission--your transmission service transaction

3 contained in Exhibit number APS-25?

4 (Pause.)

5 A I believe, indirectly, yes it was.

6 Q Would you show me, sir, where it was in Exhibit

7 25? I did not see it.

8 A If you look under Reliability of Redispatched

9 Product, it says: APS will provide the 200 megawatts of

10 purchases to Idaho at the APS-Idaho interconnect at Borah-

11 Brady using -- in parentheses, if necessary, APS firm

12 transmission rights across the Pacific core system.

13 Forget the "if necessary." If we are not using

14 that, then the only alternative is to give them back the

15 transmission for their use.

16 Q Does it say that you will give back the

17 transmission?

18 A Not explicitly, no.

19 Q In fact, that sentence talks about the fact that

20 you are going to deliver the 200 megawatts using your

21 transmission service on the Pacific core system, doesn't it?

22 A If necessary, perhaps, as an alternative.

23 Q So your position is that Idaho Power Company and

24 the Judge, and a third party reading APS-25, would be able

25 to understand that you are offering to interrupt your

167

1 transmission service when you made this proposal?

2 A My position is that, given this proposal, both

3 companies have had ample dialogue around the materials here

4 that they would have a clear understanding of how they would

5 take that, yes.

6 Q Mr. Hansen, was Exhibit number APS-25 submitted

7 to the Commission as well as included as an exhibit in this

8 case?

9 PRESIDING JUDGE: Define the Commission, please.

10 BY MR. RASKIN:

11 Q To the Federal Energy Regulatory Commission in a

12 filing outside of the sub-docket.

13 A Yes, I believe it was. My understanding was that

14 we weren't necessarily allowed to discuss the things that

15 took place in the settlement process.

16 Q I am talking about this being filed outside the

17 settlement process as a filing with the Commission.

18 A I'm not sure.

19 Q Assuming, subject to check, that it was, do you

20 think the Commission or its staff could read this document

21 and understand that, implicit in this proposal, was an offer

22 by APS to interrupt transmission service on the Idaho

23 system?

24 A My opinion was yes, having reviewed Mr.

25 Oxendine's testimony. I don't have that same opinion.

168

1 Q Let me take you to your direct testimony, page

2 25, line 16.

3 MR. RASKIN: Excuse me, Your Honor, Exhibit APS-

4 1, page 25, line 16.

5 THE WITNESS: Page 25?

6 BY MR. RASKIN:

7 Q That's correct. I am going to read you the

8 sentence from your testimony:

9 APS proposal is attached here, too, as Exhibit

10 APS-25, paren, APS Proposal, close paren, and is also on

11 file with the Commission.

12 That is your own testimony. Does it refresh your

13 recollection as to whether this was filed with the

14 Commission?

15 A Yes, my opinion is that this offer, again,

16 hopefully not violating anything, that offer was provided

17 and discussed with the Commission during the settlement

18 process--during the settlement procedures.

19 Q I assume you did participate in drafting this

20 sentence in your direct testimony.

21 A Yes.

22 Q When you drafted that sentence, you intended to

23 mean that it was submitted in settlement discussions that

24 are privileged, and not that it was filed with the

25 Commission publicly as a public document.

169

1 A What I meant to say is that my opinion is that

2 the Commission has seen APS's proposal to provide that

3 service back to Idaho.

4 Q Was the document filed with the Commission, Mr.

5 Hansen?

6 A I don't know that for sure.

7 MR. RASKIN: Your Honor, I would like to have

8 marked for identification, as Exhibit IPC-24, a response by

9 Arizona Public Service to staff data request 1-3.

10 PRESIDING JUDGE: Any objection to marking for

11 identification a one-page document designated response to

12 staff data request 1-3?

13 (No response.)

14 PRESIDING JUDGE: Hearing none, that document is

15 marked for identification for purposes only IPC-24 at this

16 time.

17 (The document referred to was

18 marked Exhibit No. IPC-24 for

19 identification.)

20 BY MR. RASKIN:

21 Q Am I correct, Mr. Hansen, that, in this data

22 response, APS is answering staff's question asking for

23 specification of the proposal that you made in your direct

24 testimony?

25 A May I see a copy of what you are looking at?

170

1 Q I'm sorry.

2 (Handing document to witness.)

3 PRESIDING JUDGE: Counsel, from now on, when you

4 submit a document to me marked for identification, it needs

5 to be distributed to the witness, myself, to the court

6 reporter, and to all opposing counsel.

7 If you do not have adequate copies to do that,

8 you will have to wait until you do.

9 MR. RASKIN: Okay, Your Honor.

10 (Pause.)

11 THE WITNESS: Now, can you repeat your question?

12 BY MR. RASKIN:

13 Q Yes. This data request asks you for information

14 about the substance of your proposal that we have been

15 discussing previously, does it not?

16 A Yes, it does.

17 Q In that response, you say that your proposal is

18 to structure your use of Brownlee-East transfer capability.

19 When you refer to your use of Brownlee-East transfer

20 capability, are you talking about the transmission service

21 that you are proposing to purchase from Idaho Power?

22 A Yes, I am.

23 Q And you say that you will structure it so Idaho

24 may interrupt your schedule instantaneously? Does that mean

25 that you are structuring this so that Idaho Power can

171

1 interrupt the transmission service that you purchased from

2 them instantaneously?

3 A Under the conditions specified there, yes.

4 Q Now, I would like to turn to your rebuttal

5 testimony for a second, Mr. Hansen. I believe, in your

6 rebuttal testimony, you present yet another proposal to

7 Idaho Power Company, is that right?

8 A That's correct.

9 Q If I understand the proposal in your rebuttal

10 testimony, we are no longer talking about selling Idaho

11 Power generation reserves, isn't that correct?

12 A That's correct.

13 Q So would this third new proposal-- I would like

14 to turn to page 32, lines 15 and 16 of Exhibit APS-29, your

15 rebuttal testimony.

16 A What were those pages?

17 Q Page 32, lines 15 and 16. At lines 15 and 16,

18 you say: In any event, the purpose of APS's settlement

19 proposal is to ensure, et cetera.

20 Are you talking about the proposal that we've

21 been discussing?

22 A When you say "we've been discussing"--

23 Q I'm sorry. I wasn't clear. Are you referring to

24 the revised proposal that you made in your rebuttal

25 testimony that I just questioned you about?

172

1 A Yes, I am.

2 Q Are you negotiating a settlement in your rebuttal

3 testimony, Mr. Hansen?

4 A Not intentionally.

5 Q You describe it as a settlement proposal. I am

6 wondering are we having public negotiations of a settlement?

7 A That comment, I am sure, was carried over from

8 when this proposal first surfaced, and that was during

9 settlement discussions.

10 Q Are you presenting this as a settlement proposal?

11 (Pause.)

12 A I'm not sure I understand your question.

13 Q You describe it in your own testimony as a

14 settlement proposal, and so I am asking you are you making a

15 settlement proposal in your rebuttal testimony?

16 A No, what I am doing is basically providing a

17 proposal that alleviates Idaho's concerns for reliability.

18 Q In fact, this is the third proposal that you have

19 made, as we discussed earlier, isn't that correct?

20 A I believe so.

21 Q And this settlement proposal includes the

22 concession that you will agree to interruption of the

23 transmission service in certain circumstances, isn't that

24 correct?

25 A That's correct.

173

1 Q The complaint that APS filed in this case,

2 however, was about a request for firm transmission service,

3 was it not?

4 A That's correct.

5 Q Does firm transmission service under Idaho

6 Power's OATT include interruption for the specified

7 contingencies that you are discussing in your settlement?

8 A Ask your question again.

9 MR. RASKIN: Ask the reporter to repeat the

10 question, please, Your Honor.

11 (The Reporter read the record as requested.)

12 MR. RASKIN: Your Honor, I will rephrase my

13 question now that I have heard my own question.

14 BY MR. RASKIN:

15 Q Does firm transmission service from your Idaho

16 Power open access transmission service include the right to

17 interrupt the service during the contingencies that have

18 been specified in your settlement proposal?

19 A Well, I don't have Idaho's OATT committed to

20 memory. I don't believe it calls for those specifically.

21 PRESIDING JUDGE: Counsel, would this be a

22 logical time to give the court reporter about a 10-minute

23 break?

24 MR. RASKIN: Certainly, Your Honor.

25 (Recess.)

174

1 PRESIDING JUDGE: Go ahead.

2 MR. RASKIN: Before I begin, I would like to ask

3 a clarification. I've made enough copies of exhibits to

4 provide one to Your Honor, one to the witness, two to the

5 court reporter, and one to each party.

6 I have not made enough copies to give each lawyer

7 in the room a separate copy.

8 PRESIDING JUDGE: Each party is adequate. I just

9 need those documents to be provided, because it doesn't

10 serve any meaningful purpose for me to ask if there's an

11 objection to something parties haven't seen.

12 MR. RASKIN: I agree it is inappropriate not to

13 give each party-- Thank you.

14 PRESIDING JUDGE: Do I take it from that that

15 IPC-23 has been distributed to every party?

16 MR. RASKIN: Every party, yes, and 24, also.

17 PRESIDING JUDGE: You may go ahead.

18 MR. RASKIN: Your Honor, I would like to have

19 marked for identification as Exhibit IPC-25 excerpts from

20 the deposition of Ajay Kumar Sood dated September 23, 1999.

21 This deposition was taken by APS in Boise, Idaho.

22 PRESIDING JUDGE: Is there any objection to

23 marking for identification excerpts from the transcript of

24 the deposition of Ajay Kumar Sood dated September 23rd, 1999

25 in Arizona Public Service Company versus Idaho Power

175

1 Company, Docket number EL99-44-000?

2 (No response.)

3 PRESIDING JUDGE: Hearing none, that document is

4 marked, for identification, IPC-25, at this time.

5 (The document referred to was

6 marked Exhibit No. IPC-25 for

7 identification.)

8 BY MR. RASKIN:

9 Q Mr. Hansen, when you drafted your direct

10 testimony, did you know that Idaho Power's merchants' group

11 had requested firm transmission service over the same

12 transmission path that APS had requested in each of 1997,

13 '98, and 1999, and that Idaho Power's transmission delivery

14 group had rejected those requests for transmission services?

15 A No, I don't recall that.

16 Q In reviewing this deposition testimony from Mr.

17 Sood, would you agree with me that Mr. Sood is confirming

18 that he did, indeed, request such transmission service--firm

19 transmission service--and that the Idaho delivery group

20 denied that request?

21 MR. MCGRANE: Your Honor, I would object to the

22 question. I think Mr. Sood's deposition has to speak for

23 itself.

24 I don't see what good it does to have Mr. Hansen

25 review it or interpret what it says.

176

1 MR. RASKIN: Your Honor, Mr. Hansen's testimony

2 takes the position that Idaho Power Company is favoring its

3 merchant group in favor of APS.

4 I am seeking to impeach that testimony by showing

5 him that, before APS requested this very firm transmission

6 service, the merchant group had requested it and it had been

7 denied, so that there is no favoritism here.

8 It is impeachment testimony, and it is perfectly

9 appropriate for me to ask him that question.

10 PRESIDING JUDGE: Is this the witness's

11 testimony?

12 MR. RASKIN: This is Mr. Sood's testimony which

13 impeaches this witness's testimony.

14 PRESIDING JUDGE: The objection is sustained.

15 You will have to go about it in a different way.

16

17

18

19

20

21

22

23

24

25

177

1 MR. RASKIN: Your Honor, could I understand your

2 ruling so that I can figure out how to go about it more

3 appropriately?

4 PRESIDING JUDGE: My ruling is that this

5 deposition, asking the witness about this deposition

6 testimony is improper impeachment with this witness'

7 testimony.

8 If you want to ask the witness about the company

9 position or something of that nature, that's fine. But this

10 is not the witness' testimony, and it has to speak for

11 itself, as opposing counsel has indicated.

12 MR. RASKIN: Thank you, Your Honor.

13 (Pause.)

14 BY MR. RASKIN:

15 Q Mr. Hansen, I'd like to refer you to your

16 rebuttal testimony, page 15. That's Exhibit APS-29 where

17 you're discussing the interruptibility of the FMC load.

18 PRESIDING JUDGE: Counsel, could you give me that

19 reference again?

20 MR. RASKIN: It's Exhibit APS-29, Mr. Hansen's

21 rebuttal testimony, at page 15.

22 PRESIDING JUDGE: Thank you.

23 BY MR. RASKIN:

24 Q Mr. Hansen, is it your position that whatever

25 portion of the FMC load is curtailable, it should be counted

178

1 twice in calculating the available transmission capacity on

2 the Brownlee East Path?

3 A I'm not sure I understand your question.

4 Q Do you believe that in doing the calculation of

5 ATC for the Brownlee East Path, you should count the FMC

6 curtailable load once or twice in that calculation?

7 A In what context are you counting it?

8 Q In any context. Can it be accounted for twice,

9 or is that double counting.

10 A I think it can be accounted for twice.

11 Q You do? The same megawatts and interruption can

12 be accounted for twice?

13 A Yes.

14 (Pause.)

15 Q Am I correct then, in understanding your

16 testimony, that your testimony is taking the position that

17 it is to be counted twice?

18 A To which part of my testimony are you referring?

19 Q On page 15, for example, at line 5, you may

20 oblique reference to the fact that Mr. Durick has included,

21 taken into account the curtailability of the FMC load in

22 determining the TTC or path rating.

23 Is it your position that to the extent Mr. Durick

24 took it into account, you can take those same megawatts of

25 curtailability into account in a second place in the

179

1 calculation and thereby use the curtailability twice in

2 determining ATC?

3 A Yes.

4 (Pause.)

5 MR. RASKIN: Your Honor, I've got no more

6 questions. I believe Exhibit IPC-23 probably should be

7 included as an Item By Reference, although if you'd like to

8 make it an exhibit, that's fine.

9 And I move the introduction of IPC-24 and 25 into

10 evidence.

11 PRESIDING JUDGE: I would like to make IPC-23 an

12 exhibit. Therefore, is there any objection to receiving

13 into evidence Exhibits previously marked for identification

14 IPC-23, IPC-24 or IPC-25?

15 MR. MCGRANE: Your Honor, I think we would object

16 to the introduction of IPC-23 and IPC-25.

17 I think the question on the last one, IPC-25, was

18 Dr. Sood's testimony in the deposition, and I think the

19 question that corresponded with the marking of that exhibit,

20 the objection was sustained to that question so I see no

21 need for that exhibit to be introduced.

22 And IPC-23, my concern is this is an Arizona

23 Corporation Commission Opinion and Order on the settlement.

24 I'm not sure that it reflects the full substance of that

25 process where a settlement is submitted with the Commission

180

1 and the Commission addresses certain of the things in the

2 settlement that does not necessarily address each and every

3 item of the settlement.

4 PRESIDING JUDGE: That would go to the weight of

5 the document, wouldn't it?

6 MR. MCGRANE: Yes, it would definitely go to the

7 weight, Your Honor, but I think it's incomplete as stated,

8 and I think we would object to its introduction.

9 PRESIDING JUDGE: On that reasoning, any

10 Commission Order approving a settlement would be incomplete.

11 MR. MCGRANE: I don't think so, Your Honor,

12 because I think the settlement has some independent, that

13 is, if it were being introduce for any kind of substance, I

14 think that would be correct, Your Honor.

15 The fact that we have an Order from the

16 Commission saying a settlement is in a public interest tells

17 us basically nothing about the settlement itself. This

18 Order addresses certain provisions of the settlement but not

19 the entire settlement as far as I've been able to tell from

20 looking through it.

21 PRESIDING JUDGE: Let's deal with first things

22 first. Apparently there is no objection to the receipt into

23 evidence of IPC-24, is that correct?

24 MR. MCGRANE: That's correct.

25 PRESIDING JUDGE: The document previously marked

181

1 for identification as IPC-24 is received in evidence at this

2 time.

3 (The document previously

4 identified as Exhibit Number

5 IPC-24 was received in

6 evidence.)

7 PRESIDING JUDGE: Counsel, would you like to

8 address IPC-23, please?

9 MR. RASKIN: Yes, Your Honor.

10 Your Honor, I think that an order of a

11 Commission, whether or not it's admitted as evidence, can be

12 cited in brief and official notice can be taken of it.

13 Therefore, I don't believe anything more is required.

14 That being said, if Mr. McGrane believes that it

15 makes an incomplete record, he has the right to supplement

16 it by submitting a copy of the settlement on redirect, or

17 any other information that he wishes to in order to complete

18 the record.

19 So I don't believe that there's a basis for the

20 objection to IPC-23.

21 PRESIDING JUDGE: IPC-23 is received into

22 evidence at this time.

23 (The document previously

24 identified as Exhibit Number

25 IPC-23 is received in

182

1 evidence.)

2 PRESIDING JUDGE: IPC-25?

3 MR. RASKIN: IPC-25, Your Honor, I believe it is

4 standard practice in this Commission to receive into

5 evidence depositions or portions of depositions taken in the

6 same proceeding.

7 It was just ruled that that information must

8 speak for itself, and I'm not allowed to ask the witness to

9 interpret it or give his views of something he said based on

10 it.

11 But I believe that I am allowed to admit it and

12 have it admitted and let it speak for itself, for whatever

13 weight Your Honor wishes to give it.

14 PRESIDING JUDGE: You are submitting it on its

15 own terms as an admission against interest, is that correct?

16 MR. RASKIN: I am submitting it as evidence which

17 rebuts and impeaches statements in this witness' testimony.

18 MR. MCGRANE: Your Honor, again, this is the

19 deposition of one of the Idaho witnesses. It's a portion of

20 that deposition. If the concern of Mr. Raskin is that some

21 other reference, I believe we had part of Mr. Sood's

22 testimony as an Exhibit in our case, if his concern is that

23 we need the entire deposition in order to make a full record

24 for the Commission, he should have put in the entire

25 deposition.

183

1 PRESIDING JUDGE: That's not his concern.

2 MR. MCGRANE: Again, Your Honor, --

3 PRESIDING JUDGE: His concern is that apparently

4 Mr. Sood's deposition testimony is inconsistent with Mr.

5 Hansen's testimony.

6 Is that correct?

7 MR. RASKIN: That's correct.

8 PRESIDING JUDGE: IPC-25 is admitted into

9 evidence at this time and it will be accorded the

10 appropriate weight.

11 (The document previously

12 identified as Exhibit Number

13 IPC-25 is received in

14 evidence.)

15 MS. COPSEY: Your Honor, I have some questions

16 for Mr. Hansen.

17 PRESIDING JUDGE: Then apparently I was not clear

18 on the procedure. What we're going to do is each party is

19 going to cross examine the witness and then redirect on that

20 cross examination will take place.

21 MS. COPSEY: Thank you.

22 PRESIDING JUDGE: So now redirect on the cross

23 examination which just took place will occur, and then the

24 next cross examiner will proceed.

25 MS. COPSEY: Thank you.

184

1 REDIRECT EXAMINATION

2 BY MR. MCGRANE:

3 Q Mr. Hansen, I just have a few questions on

4 redirect.

5 Mr. Raskin asked you several questions concerning

6 the APS proposal in this case to Idaho to facilitate a

7 provision of transmission services.

8 Do you recall those questions?

9 A I recall him asking them.

10 Q In certain of those questions, he asked you

11 whether it was part of your proposal that the deliveries for

12 the transmission service that APS would get from Idaho could

13 be interrupted under specified circumstances.

14 Do you recall those questions?

15 A Yes, I do.

16 Q In your opinion, or in your view of your

17 proposal, does the word, interrupt under specified

18 circumstances, connote non-firm service?

19 A No, it does not.

20 Q Would APS be willing to accept non-firm service

21 in view of its request in this case?

22 A No, it would not.

23 (Pause.)

24 Q I believe you indicated a general understanding

25 of, or your general understanding of the restructuring

185

1 process underway in Arizona.

2 Do you recall that?

3 A Yes.

4 Q Based on your understanding of that restructuring

5 process, would the entity resulting from Arizona

6 restructuring, from the restructuring of APS in the

7 restructuring process that is involved in the provider of

8 last resort function, is that entity or the proposed entity

9 at all involved in the proposal APS is making in this case?

10 A Could you ask that again?

11 Q I would refer to that entity as the Wires

12 Company. That's how it's referred to in the Arizona

13 restructuring. Is the Wires Company involved in the

14 proposal that is presented in your testimony for providing

15 alternative either power deliveries or transmission service

16 to Idaho is APS is successful in getting firm service?

17 A No, they are not.

18 Q Does the wholesale marketing function of Arizona

19 Public Service Company continue to be involved in the

20 generation market after restructuring, as you understand it?

21 A You're referring to my department?

22 Q Yes.

23 A And your question would we still be involved in

24 wholesale power marketing after the restructuring?

25 Q Yes.

186

1 A Yes, we will.

2 Q Do you know whether Idaho's open access

3 transmission service provides for reassignment of

4 transmission rights?

5 Excuse me, if I could just rephrase that. I

6 think I may have misspoken.

7 Do you know whether the Idaho Power open access

8 transmission tariff provides for the reassignment of

9 transmission rights?

10 A I do not recall that, no.

11 MR. MCGRANE: I have no further questions, Your

12 Honor.

13 CROSS EXAMINATION

14 BY MS. COPSEY:

15 Q Mr. Hansen, are you familiar with the FMC

16 contract that's filed at APS Exhibit 21?

17 A Yes, I am.

18 Q Do you know the date that it became effective?

19 A I believe the date here is December 30, 1997.

20 Q But that's not the date it became effective, is

21 it?

22 Do you want to turn to page 22 of Exhibit 21 to

23 see if that refreshes your recollection?

24 I draw your attention to Section 14.

25 A Section what? I'm sorry.

187

1 Q Section 14.

2 (Pause.)

3 A Okay, now what was your question?

4 Q Are you aware of when the contract became

5 effective?

6 A No, I'm not.

7 Q If I were to tell you that it was May 1st, 1998,

8 would that surprise you?

9 A I don't know why it would.

10 MS. COPSEY: Your Honor, I thought that it would

11 already be in the record, but I think after lunch I will

12 introduce an Exhibit into the record that shows that the

13 effective date was May 1st, 1998. I'll get copies for all

14 counsel.

15 BY MS. COPSEY:

16 Q At page two of your rebuttal testimony, that's

17 APS-29, you state that the CBM calculation is overstated

18 because it does not take into account the interruptible,

19 curtailable load.

20 A What was that reference, I'm sorry?

21 Q I'm sorry, it's actually at lines 18 through 20.

22 A On which page?

23 Q Page two of your rebuttal testimony, APS-29.

24 Have you got that in mind?

25 A Yes.

188

1 Q As I read your testimony, doesn't your position

2 depend on whether the FMC contract allows Idaho Power to

3 load-shed FMC from generation outages as well as

4 transmission problems?

5 A Repeat your question, please.

6 Q As I understand your testimony, doesn't your

7 position depend on whether the FMC contract allows Idaho

8 Power to load-shed FMC for generation outages as well as

9 transmission problems?

10 A I believe it does.

11 Q So if we can establish that the FMC contract does

12 not permit Idaho Power to shed FMC's load for generation

13 outages that do not affect transmission, would you change

14 your position?

15 (Pause.)

16 A Say that again.

17 Q If we can establish that the FMC contract does

18 not permit Idaho Power to shed FMC's load for generation

19 outages where those generation outages do not affect

20 transmission, would you change your position?

21 A I guess I'm not sure of that.

22 PRESIDING JUDGE: Do you understand the question?

23 THE WITNESS: Yes, I do.

24 BY MS. COPSEY:

25 Q You're not sure whether your position would

189

1 change?

2 A No, I'm not.

3 Q Isn't your position that interrupting the FMC

4 load for the two-unit Jim Bridger generation outage is

5 consistent and allowed for under FMC's contract?

6 A Yes, I do believe that.

7 Q Isn't it also your position that doing this does

8 not change the service contract by FMC?

9 A Are you asking me if that violates the contract?

10 Q Yes.

11 A I believe it does not.

12 Q If you're wrong and Idaho Power can't interrupt

13 or shed FMC's load, in the event of the loss of a two Jim

14 Bridger unit, what happens to Idaho Power's calculation of

15 CBM? How does that affect it?

16 A I think I'd have to go back and relook at that.

17 Q Who approved the FMC contract, what regulatory

18 agency?

19 A As a retail customer, I believe it was the Idaho

20 Public Utility Commission.

21 Q In fact, if you want to look at Exhibit 21 again,

22 APS Exhibit 21, could you look at section 18 that's found at

23 page 23, and tell me what the parties have agreed to.

24 A Give me that reference one more time.

25 Q Page 23 of APS Exhibit 21.

190

1 A And which particular part are you referring to?

2 Q Section 18.

3 A Okay, what's your question.

4 Q What have the parties agreed to as to where the

5 interpretation, what law binds the interpretation of this

6 contract?

7 MR. MCGRANE: Your Honor, I would object. This

8 question is asking for a legal conclusion.

9 PRESIDING JUDGE: Sustained.

10 BY MS. COPSEY:

11 Q Is the FMC contract subject to FERC approval?

12 MR. MCGRANE: Objection. Asking for a legal

13 conclusion.

14 MS. COPSEY: Your Honor, he's already testified

15 that as a retail contract, it'd be subject to the Idaho

16 Public Utilities Commission. So obviously he knows.

17 MR. MCGRANE: Your Honor, I'm not sure that's

18 what he testified. I think he testified that he believes,

19 as a retail sale, it would be. I don't think he has

20 testified as to what the legal obligation is, which is the

21 subject of this question.

22 PRESIDING JUDGE: Rephrase your question,

23 counsel.

24 BY MS. COPSEY:

25 Q Is it your understanding that retail contracts

191

1 are subject to FERC approval?

2 A I don't know in all cases if they are or are not.

3 Q In Arizona, if an Arizona customer, retail

4 customer has a contract with your company, do they submit it

5 to the FERC?

6 MR. MCGRANE: Objection. I'm not sure how that's

7 relevant.

8 MS. COPSEY: Let me ask some foundation

9 questions.

10 BY MS. COPSEY:

11 Q Are you familiar with Arizona retail customer

12 contracts?

13 MR. MCGRANE: Your Honor, I would object again.

14 I'm not sure what the relevance is of Arizona retail

15 contracts to what the law is with regard to Idaho retail

16 contracts.

17 PRESIDING JUDGE: She's working up to it.

18 Proceed.

19 BY MS. COPSEY:

20 Q Are you familiar with Arizona's retail contracts?

21 A I can't recall any, no.

22 Q According to your testimony, you are employed as

23 the director of both power marketing and resource

24 operations, is that correct?

25 A Yes, that's correct.

192

1 Q Do you deal with retail customers at all?

2 A In the aggregate, we serve that load, yes.

3 Q Are you suggesting that you don't know whether an

4 Arizona retail customer would bring complaints that it had

5 with your company to the FERC or to some other body?

6 A That's correct.

7 Q So you don't know whether an Arizona retail

8 customer could bring a complaint here before the FERC?

9 A That's correct.

10 Q Do you know whether retail customer contracts are

11 controlled by the open access tariff provisions?

12 A Say that again.

13 Q Do you know whether retail customer contracts are

14 controlled by the open access tariff provisions?

15 A Not for certain, no.

16 Q Let's turn to Exhibit APS-21 again, and let's

17 look at Section 8, which is found at pages 17 and 18 of APS-

18 21. You've testified that you are familiar with the FMC

19 contract, is that not correct?

20 A Yes.

21 Q And you've testified that the FMC contract

22 specifically provides that it is to be approved by the Idaho

23 Public Utilities Commission, is that not correct?

24 A Yes.

25 Q Let's look at Section 8. Section 8 starts out

193

1 and it reads: Idaho Power may temporarily interrupt or

2 load-shed all but 17,000 kilowatts of FMC-furnished load

3 during emergency conditions.

4 Is that right, at the bottom of the page?

5 A Yes.

6 Q Let's look at the next sentence. Would you agree

7 that the next sentence goes on to define what those

8 emergency conditions are?

9 A In part, not in total.

10 MR. MCGRANE: I would object to this, Your Honor.

11 She's asking for an interpretation of this provision that is

12 contained in an Exhibit. Presumably, it'll be in the record

13 and can speak for itself.

14 MS. COPSEY: Your Honor, this witness has

15 testified --

16 PRESIDING JUDGE: This witness just answered your

17 question. This a moot argument.

18 MS. COPSEY: Fine. I thought we were going to

19 have to argue the objection.

20 BY MS. COPSEY:

21 Q Mr. Hansen, you indicated in part. What else

22 would define those emergency conditions?

23 A This agreement does not identify those.

24 Q It's your testimony that the agreement does not

25 identify the emergency conditions?

194

1 A What I'm telling you is that, if you read it, it

2 says, such emergency conditions include but are not limited

3 to, so that implies that there are other conditions which

4 aren't specified.

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195

1 Q Let's continue reading. It says: Such emergency

2 conditions include but are not limited to unacceptable

3 conditions, paren, in loading voltage frequency, et cetera,

4 on Idaho Power's transmission system.

5 Stop there for a moment. It is emergency

6 conditions on Idaho Power's transmission system.

7 What does the language "resulting from" mean to

8 you?

9 A Ask your question again.

10 Q What do the words "resulting from" mean to you?

11 A It means they are a result of that event.

12 Q It goes on to say: --resulting from transmission

13 and generation system outages.

14 Isn't it true that the rest of the sentence

15 actually modifies transmission system?

16 A It would appear that way, yes.

17 Q Does the section in any way indicate that FMC can

18 be load-shed for economic reasons?

19 (Pause.)

20 A As I read it, it does not provide for economic

21 reasons.

22 Q Now, if a generation outage occurs, like, for

23 example, the Jim Bridger units going down and such outage

24 has no impact on the transmission system, doesn't Idaho

25 Power have a contractual obligation to transmit power to FMC

196

1 and fulfill its contract?

2 MR. MCGRANE: Objection. Asks for a legal

3 conclusion.

4 MS. COPSEY: Your Honor, he has testified at

5 length suggesting that the two Jim Bridger unit outage, in

6 fact, would cause them to load-shed FMC?

7 MR. MCGRANE: He has testified to his

8 understanding of the contract, not to what it says.

9 PRESIDING JUDGE: The witness has to testify to

10 his understanding. If you rephrase the question, he may

11 answer it.

12 BY MS. COPSEY:

13 Q Is it your understanding, having now read Section

14 8 and identified that, resulting from modifies transmission

15 system, is it your understanding that a generation outage,

16 like the Jim Bridger units going down, if it has no impact

17 on the transmission system, doesn't Idaho Power have a

18 continuing contractual obligation to transmit power to FMC?

19 A No, that's not my understanding.

20 Q Can you point to the language that we give them

21 the authority to do so and explain it?

22 A Yes, it's indirect, but clearly it says the

23 emergency conditions are not limited to--

24 Q You've already testified, however, that

25 generation outages modify transmission system.

197

1 A That's correct.

2 Q In other words, that's correct. In other words,

3 the generation outage has to affect the transmission system,

4 isn't that correct?

5 A That is one of the conditions that is identified.

6 Q Now, if Idaho Power tried to shed FMC's load when

7 the Bridger units go down and FMC believed that the contract

8 called for them to continue service, do you know what

9 regulatory agency FMC would turn to?

10 (Pause.)

11 A I believe it would be the Idaho Public Utility

12 Commission.

13 Q And it is not your understanding that they would

14 turn to FERC, is it?

15 A I don't know that they're not allowed to.

16 Q Let's take a moment and see how FMC's load has

17 been treated by Idaho Power. You would agree that, how they

18 have actually treated it since the effective date of the

19 contract, is relevant, wouldn't you?

20 A What's your question?

21 Q Would you agree that, how Idaho Power has treated

22 FMC's load since the effective date of this contract, is

23 relevant?

24 A I don't have a clear understanding in all

25 circumstances and on a daily basis how Idaho is treating the

198

1 FMC load?

2 Q But that's not the question. The question is, if

3 I could show you how it was treated, would that be relevant

4 to our discussion?

5 A I'd have to see what you showed me.

6 Q Let's look at your rebuttal testimony again, APS-

7 29, at page 19. Just give me a second. I can't find the

8 quote that I was using.

9 (Pause.)

10 Q Okay, at line 7, you say: In fact, Idaho has

11 interrupted all or part of the FMC load in response to the

12 loss of Jim Bridger units on several occasions. Do you have

13 that part?

14 A Yes.

15 Q In fact, you refer to APS-39 as your authority

16 for that, is that right?

17 A That's correct.

18 Q Isn't it true that your testimony is misleading,

19 however?

20 A Well, I didn't think so, no.

21 Q Let's turn to Exhibit 39, then. Do you have 39

22 in front of you -- APS-39?

23 A Yes, I do.

24 Q This is an Idaho Power data response to a data

25 request, APS11-1, isn't it?

199

1 A That's correct.

2 Q And, in that request, Idaho Power is requested to

3 identify all times when Idaho Power curtailed services to

4 FMC since July 1, 1996, is that right?

5 A Yes.

6 Q For your answer, I would like you to assume--and

7 I will provide that after the lunch break--I would like you

8 to assume that the effective date of the contract is May 1,

9 1998.

10 In looking down that list, could you identify how

11 many times and for what purpose Idaho Power has load-shed

12 FMC or curtailed service to FMC since May 1, 1998?

13 A I believe it's twice.

14 Q Could you identify the dates and what it was for?

15 A June 12, 1998 -- the test of the MS transfer trip

16 functionality for load-shedding purposes. October 27, 1999

17 -- test of load-shedding devices on transmission system.

18 Q You would agree that neither of those are for

19 outages of the Jim Bridger generation units?

20 A That's correct.

21 Q Have there been any Jim Bridger outages since the

22 new contract went into effect May 1, 1998?

23 A I believe there was. I don't recall the date.

24 Q Let's turn to APS-36. Do you have that in front

25 of you?

200

1 A Yes, I do.

2 Q This is an Idaho Power Company response to data

3 request APS9-14, is that correct?

4 A Say that again. Your APS-36?

5 Q Yes, I think I just turned to the wrong one. I'm

6 sorry. It's APS data request 70. It's APS Exhibit 36. I

7 would like to refer to page 1 first.

8 Could you identify when the Jim Bridger units

9 have gone out since May 1, 1998?

10 A It looked like the one at the bottom of the page,

11 9/2/98.

12 Q Could you turn over to the next page, please?

13 A 9/3/98 and 8/6/99.

14 Q Was FMC load shed on any of those dates? You can

15 refer back to, I think, it is Exhibit 39.

16 (Pause.)

17 A What was the other point? The reference that you

18 gave me?

19 Q 39.

20 A 39, and what was-- The data request was which

21 one? 26?

22 Q APS-39, and its response to data request APS11-1.

23 Again, could you tell me if it shows that there was a load-

24 shed of FMC load on any of the dates in which there has been

25 a loss of Jim Bridger units since May 1, 1998?

201

1 A Okay, my question was what was your reference

2 back to APS data request 70? What tab was that?

3 Q That was 36.

4 (Pause.)

5 A No, there was not.

6 Q So, at least the record establishes that the FMC

7 contract has not been implemented as though shedding can

8 occur for generation outages alone.

9 MR. MCGRANE: Objection, Your Honor. There's a

10 reference to the record as a whole.

11 MS. COPSEY: I'll rephrase my question.

12 BY MS. COPSEY:

13 Q Based on those two exhibits, APS-36 and APS-39,

14 isn't it true that no load has been shed for strictly

15 generation purposes?

16 A Yes.

17 Q So isn't it true that, contrary to your statement

18 in your rebuttal at 19, there are no times in which the FMC

19 load has been shed for Bridger outages since the new

20 contract went into effect?

21 A Which statement are you referring to?

22 Q The statement at lines 7 and 8, where you say:

23 In fact, Idaho has interrupted all or part of the FMC load.

24 A What page, I'm sorry?

25 Q Page 19.

202

1 A I believe that statement to be correct.

2 Q Based on what you have just read in Exhibits 39

3 and 36?

4 A My statement there doesn't qualify as being after

5 May 1st.

6 Q So you would agree, then, your statement is

7 misleading at best, wouldn't you, because all the outages

8 that have occurred as a result or in conjunction with the

9 Jim Bridger units outage occurred prior to the existence of

10 this contract?

11 A I don't believe that's misleading.

12 Q Let's turn to page 14 of your testimony, at APS-

13 29.

14 PRESIDING JUDGE: How long do you anticipate

15 going?

16 MS. COPSEY: I have-- We could take a break now.

17 It won't take me long. That way, I can get those--

18 PRESIDING JUDGE: This would probably be a

19 convenient time to take the lunch break, and you can get

20 whatever exhibit it is that you want to introduce as far as

21 the May 1st, 1998 effective date.

22 MS. COPSEY: That's correct.

23 PRESIDING JUDGE: We'll stand adjourned until

24 2:00 o'clock.

25

203

1 (Whereupon, at 12:35 p.m., the hearing was

2 recessed, to reconvene at 2:00 p.m. this same day.)

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204

1 A F T E R N O O N S E S S I O N

2 (2:05 p.m.)

3 PRESIDING JUDGE: Ms. Copsey, do you have the

4 Exhibit that you wanted to present?

5 MS. COPSEY: Yes, Your Honor.

6 I've given two copies to the Reporter and there's

7 one for you. That will be IPU-2.

8 PRESIDING JUDGE: Is there any objection to

9 marking for identification a one-page document indicating

10 that it is Idaho Power Company Response to Data Request

11 APS\14-4?

12 (No response.)

13 PRESIDING JUDGE: Hearing none, that document is

14 marked for identification IPU-2 at this time.

15 (The document referred to was

16 marked for identification as

17 Exhibit Number IPU-2.)

18 (Whereupon,

19 DAVID A. HANSEN

20 was recalled as a witness herein, and having been previously

21 duly sworn, was examined and testified as follows:

22 CROSS EXAMINATION (Continued)

23 BY MS. COPSEY:

24 Q Mr. Hansen, I'd like to refer you to what has

25 been marked as IPU-2. The question was asked of Idaho Power

205

1 APS\14-4 the Data Request, the question was asked about how

2 emergency conditions allow Idaho Power to trip the second

3 block and also the first block.

4 In response, Idaho Power indicated that the

5 related document is the current contract between Idaho Power

6 and FMC, which became effective 5/1/98.

7 Is that what this document says?

8 A Yes, it is.

9 Q You don't have any knowledge, other than this,

10 that this would be correct? There's nothing that would

11 alert you to the fact that this might be incorrect?

12 A Nothing that I can call to mind.

13 Q Can you turn to page 17 of APS-29, please.

14 At APS-29, page 17, you state that Idaho's

15 integrated resource plan recognizes the FMC mode as not

16 firm, and you refer to APS-38.

17 A What line are you on?

18 Q I'm sorry. You write it down before you come in,

19 and for some reason, it doesn't -- I'm sorry, it's actually

20 on page 16. You indicate that -- it's lines 19 through 21

21 -- Ms. Miller and Mr. Durick failed to mention that the FMC

22 contract allows Idaho to interrupt all but 17 megawatts,

23 internal documents. Then you go on at the bottom, internal

24 documents refer to the FMC as interruptible.

25 You turn over to the next page, and then you say,

206

1 at line on page 17, Idaho's integrated resource plan

2 recognizes that the FMC's load is not firm.

3 Do you see that?

4 A Yes, I do.

5 Q In part, you reference Exhibit APS-39 which you

6 say is excerpts from Idaho's 1999 long-term financial

7 forecast on 1997 integrated resource plan?

8 A Yes.

9 Q Could you turn to APS-38, please?

10 Isn't it true that the sales and load forecasts

11 for the 1997 integrated resource plan was prepared in May

12 1997?

13 A Where are you referring to on that?

14 Q Page one.

15 A What was your question?

16 Q Isn't it true that it was prepared in May 1997?

17 A Yes.

18 Q That would be one year before the effective date

19 of the FMC contract, isn't that correct?

20 A Yes.

21 Q So what relevance is the plan to an

22 interpretation of the contract?

23 You site to this document in support of your

24 statement. What relevance is it?

25 A I believe the relevance of the plan is similar to

207

1 the Exhibit we went over before that demonstrates that FMC

2 is interruptible, has been treated that way.

3 Q If the plan was prepared a year before, or it was

4 actually published a year before this contract was

5 negotiated and approved and became effective, what relevance

6 does this plan have?

7 A I believe it establishes the foundation for how

8 FMC is treated as a customer.

9 Q Isn't it true that FMC has been a customer of

10 Idaho Power since early in either the 1940s or the 1950s?

11 A I don't recall.

12 Q You don't know?

13 In preparation for preparing your testimony, did

14 you review the FMC contract?

15 A Yes, I did.

16 Q Which one did you review?

17 A I reviewed the one that's attached as my Exhibit.

18 In addition, I also reviewed the one that the

19 IPUC provided.

20 Q So you didn't review any of the earlier

21 contracts?

22 A To the extent they were included in the binder,

23 the big binder that the IPUC provided for FMC data, I would

24 have reviewed them, not necessarily studied it but certainly

25 reviewed it.

208

1 Q And this plan was prepared more than a year

2 before the new contract, isn't that correct?

3 A Thereabouts, yes.

4 Q If the language in this contract is not clear --

5 A Which contract?

6 Q In the FMC contract that is relevant to the

7 proceeding here, which is the 1998 contract.

8 If it's not clear what regulatory agency has

9 authority to determine what the language means --

10 A Can you ask that question again?

11 Q If the language is unclear in this document?

12 A Which language?

13 Q If any language in this document is unclear, what

14 regulatory agency has the authority to determine what it

15 means?

16 MR. MCGRANE: Your Honor, I would object as

17 asking for a legal conclusion. If you want to ask him what

18 he knows or what his understanding is, that would be okay.

19 PRESIDING JUDGE: Rephrase the question.

20 MS. COPSEY: Certainly.

21 BY MS. COPSEY:

22 Q Let's turn to Exhibit APS-21. And I'd like you

23 to turn to page 22 of APS-21.

24 You would agree that Section 4 specifically makes

25 the Idaho Public Utilities Commission the regulatory agency

209

1 that must approve this contract, would you not?

2 A Ma'am, there's no Section 4 on page 22.

3 Q Section 14.

4 A What was your question?

5 Q Please refer to Section 14 on page 22 of APS-21,

6 where is starts, Commission approval. What Commission is

7 listed in that section as required to approve this contract?

8 (Pause.)

9 A Ma'am, it doesn't say.

10 Q Could you then turn to page one of the same

11 Exhibit and look at Section 2.1, and tell me what the term

12 "Commission" -- how it is defined?

13 A It's defined as the Idaho Public Utilities

14 Commission or its successor.

15 Q Can you turn back to page 22, Section 14. When

16 it says "the Commission" what are they referring to?

17 A Based on this definition, it would be the Idaho

18 Public Utilities Commission or its successors.

19 Q Thank you.

20 Are you familiar with retail storage contracts

21 with Arizona?

22 A Not generally, no. I've seen a few over the

23 years, but for the most part those are negotiated outside of

24 my department.

25 Q Have you ever been involved in the negotiation of

210

1 a retail contract?

2 A Yes.

3 Q Can you briefly explain what that involvement

4 was?

5 A In the past, similar to FMC, we have load within

6 our territory that provided for curtailments or

7 interruptions to benefit the system operations. They would

8 solicit input from our department regarding the nature of

9 the interruptions and all the operational characteristics

10 that would surround those interruptions.

11 Q How many retail contracts have you been involved

12 with?

13 (Pause.)

14 A I would say probably two of them.

15 Q Do you remember the names of those contracts?

16 A One of them would have been Cypress, which was a

17 mining customer that we had, and that would have been about

18 maybe three years ago. I'm not real sure, it's been a long

19 time.

20 The other I can't recall what the other would

21 have been. It seems like there's been more than one.

22 Q Do you recall, with respect to Cypress, what

23 regulatory agency approved that contract?

24 MR. MCGRANE: Objection, Your Honor. I fail to

25 see the relevance of a contract in Arizona and which

211

1 regulatory agency has authority over that, and the contract

2 in this case.

3 MS. COPSEY: Actually, I'll tie it up if you will

4 allow me to proceed with this line of questioning.

5 PRESIDING JUDGE: Go ahead.

6 BY MS. COPSEY:

7 Q I'm only asking do you recall?

8 A I recall that the Arizona Corporation Commission

9 was involved with that contract. I do not know if that was

10 the only regulatory agency involved with that contract.

11 Q How many retail contracts have you actually

12 interpreted?

13 A Me, personally?

14 Q Yes.

15 A You're talking about retail contracts in general?

16 Q Yes.

17 A I would say probably 30 or 40 of them.

18 Q Have you ever had occasion for a retail customer

19 to disagree with your interpretation?

20 A These were contracts served in the State of

21 California. I did not interface with the customers.

22 Q Is the Arizona Public Service Corporation a party

23 to the FMC contract?

24 A Not to my knowledge.

25 Q Do you know if the Arizona Public Service

212

1 Corporation participated in the negotiation of this

2 contract?

3 A No, I do not.

4 Q Do you know if the Arizona Public Service

5 Corporation participated in the drafting of the contract?

6 A You're referring to?

7 Q The FMC contract?

8 A You're referring to APS the company, not the ACC

9 the jurisdictional body? I didn't understand the question

10 you asked.

11 Q I'm referring to the company that you represent,

12 the Arizona Public Service Corporation.

13 Did they participate in either the negotiation or

14 the drafting of the FMC contract in 1998?

15 A No.

16 Q How do you know what the parties intended in

17 using the language they did in the FMC contract?

18 A Can you be more specific as it relates to my

19 testimony?

20 Q Well, in your testimony, you purport to interpret

21 what this contract means, is that correct?

22 A Yes. But let me clarify that I'm not trying to

23 guess as to what was in the minds of the people that drafted

24 the contract, I'm simply reading what the words say.

25 Q That's because you don't know what was in the

213

1 minds of the parties, is that correct?

2 A That's correct.

3 Q You've indicated in your testimony that Idaho

4 Power should rely on what you contend is an interruptible

5 load in calculating CBM, is that correct?

6 A Where's that in the testimony?

7 Q It's actually throughout your whole testimony.

8 You indicate at the very beginning, you said the CBM

9 reservations overstated. This is on page 2 of APS-29, at

10 the bottom of the page, page 19, I mean line 19.

11 It doesn't take into account the interruptible

12 load of the FMC Corporation, and you go on to explain if

13 that interrupted FMC load during the two Jim Bridger

14 generation outages is consistent with the FMC it would not

15 reduce your liability.

16 And in arriving at that, if you read all of your

17 testimony, you are contending that Idaho Power should rely

18 on what you contend to be an interruptible load in

19 calculating CBM.

20 Isn't that correct?

21 A That's correct.

22 Q How does Arizona calculate CBM?

23 MR. MCGRANE: Objection. Not relevant to this

24 case.

25 MS. COPSEY: It's very relevant to this case.

214

1 PRESIDING JUDGE: I think we've been through that

2 on the motions, haven't we, counsel?

3 MR. MCGRANE: We went through it on the motions

4 in the context of discovery, Your Honor. I think

5 admissibility or asking questions on this on the stand is a

6 different issue.

7 The issue here, we have never addressed anything

8 about industry practice generally, or any other aspect of

9 CBM.

10 In fact, with regard to industry practice, the

11 only thing APS has said in its testimony, Mr. Hansen, is

12 that if it is part of an historical practice and if there is

13 justification for it, that using CBM to adjust ATC is

14 permissible.

15 The total focus of the company's testimony has

16 been Idaho, in this particular instance, did not do it

17 properly or is not doing it in a permissible way, but it's

18 changing it in response to a request for service.

19 The only matter at issue here is what Idaho did

20 with regard to CBM and TRM and its system, and not what APS

21 does or does not do in Arizona.

22 MS. COPSEY: Your Honor, if you look at, if I can

23 find it here, what are the stipulated issues, one of the

24 stipulated issues and actually a main issue here, is the

25 reasonableness of the CBM calculation.

215

1 I would contend that if in fact, Arizona, which

2 we would assume is doing it properly, if Arizona in fact

3 calculates CBM in the same way in which Idaho calculates it,

4 that goes to the reasonableness of Idaho's calculation.

5 And I want, in this particular case, I would

6 represent that Mr. Hansen's group that he supervises in fact

7 calculates CBM.

8 And so I want to know how Arizona calculates its

9 CBM. And we have discovery that would be relevant to this

10 issue.

11 MR. RASKIN: Your Honor, may I weigh in on this?

12 PRESIDING JUDGE: No, you cannot.

13 It is, at the very least, relevant. You may

14 proceed.

15 BY MS. COPSEY:

16 Q First let me establish, Mr. Hansen, does the

17 group that you supervise become involved in the calculation

18 of CBM?

19 A Yes, ma'am.

20 Q What is the name of your group?

21 A Bulk Power Marketing and Resource Operations.

22 Q So your group is a marketing group, is that

23 correct?

24 A And a resource operations group, yes.

25 Q Do you include interruptible load in calculating

216

1 CBM?

2 A No, ma'am.

3 MS. COPSEY: Your Honor, I'd like to have marked

4 for identification, IPU-3.

5 PRESIDING JUDGE: Is there any objection to

6 marking for identification a one-page document which

7 indicates it is the answer to Interrogatory IPCO-48?

8 (No response.)

9 PRESIDING JUDGE: Hearing none, that document is

10 marked for identification purposes as IPU-3 at this time.

11 (The document referred to was

12 marked for identification as

13 Exhibit Number IPU-3.)

14 BY MS. COPSEY:

15 Q I'd just like you to review that document for a

16 moment. That in fact is Arizona's response to a data

17 request from Idaho Power Company, Data Request Number 48, is

18 that correct?

19 A That's correct.

20 Q Does that response address the way in which APS

21 treats interruptible customers for the purposes of

22 establishing CBM?

23 (Pause.)

24 A Can you repeat your question, please?

25 MS. COPSEY: Can I have it read back, please?

217

1 (Readback.)

2 THE WITNESS: It addresses how APS treated

3 interruptible customers for purposes of calculating

4 operating reserves.

5 PRESIDING JUDGE: Was that responsive, counsel?

6 MS. COPSEY: I'm just trying to figure out if it

7 is. Just give me a moment.

8 (Pause.)

9 BY MS. COPSEY:

10 Q Isn't it true that halfway through the answer, it

11 says that the interruptibility of these customers does not

12 accommodate the instantaneous relief necessary for a

13 capacity benefit, and are not included in the CBM

14 calculations?

15 A That's correct.

16 MS. COPSEY: Thank you. I have no further

17 questions.

18 MR. MCGRANE: Your Honor, I have no redirect.

19 MS. COPSEY: I'd like to move as Exhibits into

20 evidence, IPU-2 and -3.

21 PRESIDING JUDGE: Is there any objection to

22 receiving into evidence either document marked for

23 identification IPU-2 or IPU-3?

24 (No response.)

25 PRESIDING JUDGE: Hearing none, those Exhibits

218

1 are received into evidence at this time.

2 (The documents previously

3 identified as Exhibits

4 Numbers IPU-2 and IPU-3 were

5 received in evidence.)

6 PRESIDING JUDGE: Is there any other cross

7 examination of this witness?

8 MR. REUSCH: No, Your Honor.

9 PRESIDING JUDGE: Mr. Hansen, that concludes your

10 testimony. Thank you very much for your time. You are

11 excused.

12 (Witness excused.)

13 MR. MCGRANE: Your Honor, I'd like to move into

14 evidence, APS Exhibits 1 through 25 and 29 through 46.

15 PRESIDING JUDGE: Is there any objection to

16 receiving into evidence either Exhibits designated APS-1

17 through -25 or APS-29 through -46?

18 MR. RASKIN: Yes, Your Honor. I have objections.

19 PRESIDING JUDGE: Let's hear them.

20 MR. RASKIN: Your Honor, we object to the

21 introduction into evidence of APS-1, page 22, line 1 through

22 page 23, line 10. And APS-29, page 11, line 12 through page

23 12, line 12 and page 16, line 7 through page 21, line 5.

24 PRESIDING JUDGE: Hang on.

25 Why don't you repeat the whole thing?

219

1 MR. RASKIN: APS-1, page 22, line 1 through page

2 23, line 10 and APS-29, page 11, line 12 through page 12,

3 line 12, and page 16, line 7 through page 21, line 5.

4 I have a further objection, Your Honor. This

5 objection is all on one ground.

6 PRESIDING JUDGE: What would that be?

7 MR. RASKIN: Your Honor, under Rule 602 of the

8 Rules of Evidence, a witness may not testify to a matter

9 unless evidence is introduced sufficient to support a

10 finding that the witness had personal knowledge of the

11 matter.

12 In these various pieces of testimony, Mr. Hansen

13 is testifying as to the meaning of a contract that was

14 entered into between Idaho Power Company and FMC and was

15 approved by the Idaho Public Utilities Commission.

16 APS was not a party to that contract, and Mr.

17 Hansen just admitted, during cross examination, that he does

18 not know what was in the mind of the parties.

19 The reality is that a contract represents what

20 the two parties intended. It is a reflection of their

21 intent. And a person that was not a party to a contract is

22 not competent to testify about what other people intended in

23 their contract.

24 Neither can Mr. Hansen claim to be an expert in

25 Idaho retail service contracts. He acknowledges he has no

220

1 experience with retail service contracts in Idaho, and that

2 his involvement in any contract of a retail nature has been

3 minimal, so now showing has been made that his testimony

4 could be approved as that of an expert on this subject.

5 So he is neither a competent fact witness nor a

6 competent expert witness, and so the testimony is not

7 admissible.

8 (Pause.)

9 MR. MCGRANE: Your Honor, if I may?

10 PRESIDING JUDGE: You may. Please do.

11 MR. MCGRANE: In his testimony, Mr. Hansen is

12 giving his understanding of the meaning of these particular

13 contracts and applying it to the situation of trying to get

14 transmission service from Idaho Power Company.

15 Obviously the agreements speak for themselves.

16 The agreements are in the record. There'll be legal

17 arguments about those, but I think it is relevant to this

18 case as to his understanding of those agreements, and the

19 import of that understanding into the record in this case.

20 We've had a number of questions today about Mr.

21 Hansen's understanding of jurisdiction and of this contract.

22 I think what he says in his testimony is as relevant as

23 those questions and those answers.

24 PRESIDING JUDGE: Mr. Raskin?

25 MR. RASKIN: Your Honor, there is no disagreement

221

1 between the parties to this contract about what it means

2 that's been presented to you. The parties are the

3 individuals who understand what their intent was, and the

4 only parties who understand, together with the Idaho PUC,

5 which had to approve it.

6 Mr. Hansen has not provided -- I'm not going to

7 prevent Mr. McGrane from taking the contract and making an

8 argument. He's got a tough row to hoe because the only time

9 a court gets involved in interpreting a contract is when the

10 parties dispute it or when there's a regulatory

11 disagreement.

12 This is not even a FERC jurisdictional contract.

13 But he can make the arguments he's going to make.

14 The point I'm making right now is that this

15 witness has no personal knowledge about what this contract

16 means and therefore his testimony cannot be admitted under

17 Rule 602.

18 MR. MCGRANE: Your Honor, if I could respond

19 briefly?

20 First, I'm not sure there's anything in the

21 record of this case that indicates that the parties agree as

22 to the meaning of this contract, and if there is, I'd like

23 some reference to that. I haven't seen any input from FMC

24 as far as the meaning of this contract.

25 Second, if we're going to exclude all discussion

222

1 of contracts unless the two parties involved come in and

2 have a dispute, opportunities or options that are available

3 in order to provide transmission service, we're just never

4 going to be able to see what those are because all of a

5 sudden we're going to preclude people from filing testimony

6 as to the plain meaning of this agreement.

7 Again, parties bring disputes to the Commission

8 if they have a dispute on a jurisdictional contract, but the

9 plain meaning of the contract is one thing. I don't know

10 why another person who is involved in the market, and can

11 read this contract and give their understanding in

12 conjunction with some proposals that he's making, why that's

13 inappropriate.

14 He's just giving his understanding as to what the

15 contract provides. We will take the opportunity to argue as

16 to the legal merits of this issue.

17 MR. RASKIN: Your Honor, I want to make clear

18 that Mr. McGrane is arguing relevance. We can argue

19 relevance on brief and talk about it.

20 I'm arguing competency. The basis for my

21 objection to introducing this testimony is that this witness

22 is not competent to testify about this contract, and Mr.

23 McGrane is not responding to that.

24 PRESIDING JUDGE: If he is indeed incompetent to

25 testify, it will be accorded zero weight. I'm not going to

223

1 exclude it.

2 Do you have further objections?

3 MR. RASKIN: I'm not going to make any further

4 objections, Your Honor.

5 PRESIDING JUDGE: Apart from the objections

6 already discussed, does any party have any other objection

7 to receiving into evidence Exhibits designated APS-1 through

8 -25 or APS-29 through -46?

9 (No response.)

10 PRESIDING JUDGE: Hearing none, the Exhibits

11 marked for identification APS-1 through -25 and APS-29

12 through -46 are received in evidence at this time.

13 (The documents previously

14 identified as Exhibits

15 Numbers APS-1 through APS-25

16 and APS-29 through APS-46 are

17 received in evidence.)

18 PRESIDING JUDGE: I do note for the record that

19 if it is established to my satisfaction that the witness is

20 not competent with respect to the contracts, his testimony

21 will be weighted accordingly.

22 MR. RASKIN: Thank you, Your Honor.

23 PRESIDING JUDGE: How about APS-50?

24 MR. MCGRANE: Yes, Your Honor.

25 PRESIDING JUDGE: Has everyone seen APS-50?

224

1 MS. COPSEY: For the record, I don't have a copy

2 of something that says APS-50, so I'm not sure what we are

3 referring to.

4 MR. MCGRANE: Just for the record, it is Idaho

5 Power Company's response to Data Request APS\13-5.

6 MS. COPSEY: Thank you.

7 PRESIDING JUDGE: Is there any objection to

8 receiving the document previously marked for identification

9 APS-50 into evidence?

10 MS. COPSEY: No, Your Honor.

11 PRESIDING JUDGE: Hearing none, the document

12 previously marked for identification APS-50 is received into

13 evidence at this time.

14 (The document previously

15 identified as Exhibit Number

16 APS-50 was received in

17 evidence.)

18 PRESIDING JUDGE: Who's our next witness?

19 MR. MCGRANE: Your Honor, I would like to call

20 Randy A. Young to the stand.

21 (Whereupon,

22 RANDY A. YOUNG

23 was called as a witness herein, and having been first duly

24 sworn, was examined and testified as follows:)

25 MR. MCGRANE: Your Honor, I'd like marked for

225

1 identification, Exhibits APS-26 through -28, and -47 through

2 -49, which constitute the prefiled testimony of Randy A.

3 Young.

4 PRESIDING JUDGE: Is there any objection to

5 marking for identification the Exhibits designated APS-26

6 through APS-28 or APS-47 through APS-49?

7 (No response.)

8 PRESIDING JUDGE: Hearing none, those documents

9 are marked for identification at this time.

10 (The documents referred to

11 were marked for identifica-

12 tion as Exhibits Numbers

13 APS-26 through APS-28 and

14 APS-47 through APS-49.)

15 DIRECT EXAMINATION

16 BY MR. MCGRANE:

17 Q Mr. Young, could you state your full name for the

18 record?

19 A Randy Alan Young.

20 Q By whom are you employed?

21 A I'm employed by Arizona Public Service Company.

22 Q Can you tell us what your current position is

23 with the Company?

24 A I am currently a transmission consultant with

25 Resource Operations.

226

1 Q Are you the same Randy A. Young that submitted

2 prepared testimony that's been marked for identification?

3 A Yes, I am.

4 Q Do you have any corrections to that testimony?

5 A Yes, I have some corrections.

6 On APS-26, page 6, line 3, delete the "s" from

7 the word "its."

8 On page 11, line 1, replace the number "59" with

9 "minus 5."

10 On that same page, page 11, line 15, add an "s"

11 to the word "interconnection."

12 On page 11, line 19, replace the phrase "of the

13 capacity" with the phrase "on the capability."

14 Go to Exhibit 47, on page 2, line 13, insert the

15 word "on" between the words "based" and "Idaho's."

16 MS. COPSEY: Could that be repeated? I'm sorry I

17 missed it.

18 THE WITNESS: Yes.

19 On page 2, line 13, insert the word "on" between

20 the words "based" and "Idaho's".

21 On page 4, line 2, replace the word "adverse"

22 with the word "average."

23 On page 6, line 13, delete the second "that."

24 PRESIDING JUDGE: There are three thats.

25 THE WITNESS: Delete the second one, I'm sorry.

227

1 MS. COPSEY: Could you read the sentence because

2 I'm confused as to which "that."

3 THE WITNESS: On line 13, he claims that Idaho

4 recognized prior years loop flow and the fact that it ..."

5 That's how it should read correctly.

6 On page 9, line 20, replace the word "platinum"

7 with the word "super."

8 PRESIDING JUDGE: Super?

9 THE WITNESS: Super.

10 Page 13, line 2, replace the word "for" with the

11 word "from."

12 MS. COPSEY: I'm sorry, where is that?

13 THE WITNESS: Page 13, line 2, replace the word

14 "for" with the word "from."

15 And Exhibit Number 48, page 9 and 10, should be

16 the coversheet for Ron Schellberg's deposition testimony,

17 not Vern Porter's deposition testimony since those are the

18 pages from Ron Schellberg's deposition.

19 PRESIDING JUDGE: Say that again.

20 THE WITNESS: In Exhibit APS-48, pages 9 and 10,

21 it states that it's the deposition of N. Vernon Porter. It

22 should be the deposition of Ron Schellberg. It's the wrong

23 coversheet.

24 That concludes my corrections.

25 MR. MCGRANE: Your Honor, if it would be --

228

1 PRESIDING JUDGE: This was never fixed?

2 MR. MCGRANE: We didn't fix this. We actually

3 noticed this more recently, but if you like, we can do

4 substitute pages of this and put the correct coversheet in.

5 PRESIDING JUDGE: I think you need to in this

6 case since it is obviously an official document.

7 MS. HUNTINGTON: We do have replacement pages.

8 PRESIDING JUDGE: You have the replacements?

9 Then why don't we replace them if we could.

10 (Handing document to counsel and to Presiding

11 Judge.)

12 (Pause.)

13 BY MR. MCGRANE:

14 Q Mr. Young, if I asked you the same questions as

15 those that are contained in your prepared testimony today,

16 would your answers be the same?

17 A Yes, sir.

18 MR. MCGRANE: Your Honor, I'd like to make the

19 witness available for cross examination.

20 CROSS EXAMINATION

21 BY MS. RYAN:

22 Q Good afternoon, Mr. Young. My name is Jane Ryan

23 with the firm of Steptoe & Johnson. I'll be asking

24 questions on behalf of Idaho Power.

25 You work in the Resource Operations Department at

229

1 APS, correct?

2 A Yes.

3 Q That is under the Bulk Power Marketing

4 Department, correct?

5 A That's correct.

6 Q Is it correct to say that what you do is you

7 provide services to APS' trading group and marketers

8 regarding access to non-APS transmission?

9 A Yes. But I also advise on some APS issues.

10 Q Let me ask you just to refer to your direct

11 testimony, APS-26, at page 2, lines 18 and 19.

12 In describing your job description, you state,

13 I'll provide services to the trading group and marketers

14 regarding access to non-APS transmission.

15 Is that correct?

16 A Which sentence were you on again, or which line?

17 Q At the bottom of the page, the last sentence

18 basically.

19 A On page 2?

20 Q Of Exhibit APS-26.

21 (Pause.)

22 A That's correct.

23 Q You don't mention there anything about any APS-

24 oriented services that you provide, do you?

25 A Not in this testimony I do not.

230

1 Q Are you responsible for any of the assessments

2 that APS makes to determine if it has available transmission

3 capacity on its system to sell to others?

4 A No, I'm not.

5 Q To be more specific, you're not responsible for

6 evaluating the extent to which APS needs to reserve

7 capability for TRM, is that correct?

8 A That's correct.

9 Q And you evaluate other utilities' transmission

10 systems, correct?

11 A That's correct.

12 Q And you're evaluating those systems for purposes

13 of determining whether there's capability on them that APS

14 can put to its own use, is that correct?

15 A That's correct.

16 Q Mr. Young, are you a member of any WSCC

17 Committees that address transmission system reliability

18 issues?

19 A Currently, no.

20 Q In your direct testimony, you state that it is

21 not reasonable to use one year of operating experience as

22 the basis for setting a TRM reservation, correct?

23 PRESIDING JUDGE: Give us a reference please?

24 MS. RYAN: Yes, Your Honor. Page 9 of Exhibit

25 APS-26, lines 11 through 12.

231

1 (Pause.)

2 THE WITNESS: Well, I state in the testimony,

3 well it's in response to an individual request for

4 transmission.

5 BY MS. RYAN:

6 Q You stated especially when it's in response but

7 not only when it's in response.

8 Is that correct?

9 A That's what it states, especially in response to

10 an individual's request for transmission service.

11 Q Let me just ask you then this question. Would

12 you agree with this statement: It is not reasonable to use

13 one year of operating experience as the basis for setting a

14 TRM reservation?

15 A Yes, I'd agree to that.

16 Q You, however, then proceed in your direct

17 testimony to analyze loop flow in the Idaho Power System for

18 just one year, 1999, isn't that correct?

19 A Would you repeat that question again?

20 Q You proceed, in your direct testimony, to analyze

21 loop flow in Idaho's Power System for just one year, 1999,

22 isn't that correct?

23 A I was trying to follow the methodology that Idaho

24 was applying at the time.

25 Q Mr. Young, I asked you a yes or no question.

232

1 Would you just answer yes or no?

2 Did you analyze loop flow on Idaho Power's System

3 for just one year in your direct testimony?

4 (Pause.)

5 A My direct testimony?

6 Q If you need a reference, I can give you one.

7 PRESIDING JUDGE: That would be helpful in every

8 case.

9 MS. RYAN: Yes, Your Honor.

10 Pages 10 to 11, the bottom of page 10 in Exhibit

11 APS-26. I'm referring to the statement that starts on page

12 12 -- excuse me, page 10, line 12, and then your analysis

13 chart which is on page 13, excuse me, page 11.

14 THE WITNESS: So is your question did I evaluate

15 July 1999 separate?

16 BY MS. RYAN:

17 Q My question is, you analyzed loop flow on Idaho

18 Power's system for just one year, 1999, isn't that correct?

19 A I think the evidence on page 11 shows that there

20 were three months' worth of one year's data looked at.

21 Q But it's just one year, 1999?

22 A Correct.

23

24

25

233

1 Q Based on that, you conclude that Idaho Power

2 would have no need to reserve any TRM for loop flow, is that

3 correct?

4 A If they followed their methodology for

5 determining what their TRM needs were, yes.

6 Q I am talking about the methodology you used. You

7 averaged 1999 data only in your direct testimony.

8 A Which, according to Idaho, you used the most

9 recent data. There was testimony that was the most recent

10 data in their methodology.

11 Q Do you agree that, based on 1999 data alone,

12 there would be no need to reserve TRM for loop flow?

13 A With the average methodology that Idaho was

14 applying at the time, yes.

15 Q Putting aside, under any methodology, would you

16 agree that it is appropriate, based on '99 data alone, to

17 not reserve any TRM for the loop flow?

18 MR. MCGRANE: Your Honor, I'd like to object.

19 The question is not understandable -- "any methodology."

20 MS. RYAN: Let the witness say if he understands

21 the question.

22 PRESIDING JUDGE: Counsel, any comments you have

23 you'll address to me.

24 MS. RYAN: I'm sorry, Your Honor.

25 PRESIDING JUDGE: If the witness does not

234

1 understand the question, he will either let me know or let

2 you know.

3 I have to admit I don't understand your question,

4 either.

5 MS. RYAN: Let me rephrase it.

6 BY MS. RYAN:

7 Q Using 1999 data as you did--only '99 data as you

8 did in your direct testimony, Exhibit APS-26--is it your

9 position that there is no need to reserve TRM for loop flow

10 on the Idaho Power system?

11 A As they determine the need for TRM, yes. Their

12 methodology.

13 Q Mr. Young, are you aware of any utility, not

14 including Idaho Power, that has calculated a TRM for a path

15 on its system by averaging adverse loop flow with beneficial

16 loop flow for all hours of its peak market?

17 A Could you give me the question one more time?

18 Q Are you aware of any utility, not including Idaho

19 Power, that has calculated a TRM for a path on its system by

20 averaging adverse loop flow with beneficial loop flow for

21 all hours of its peak market?

22 A No, I am not aware of anybody who does that

23 besides Idaho.

24 Q Would you agree that, in planning for a

25 transmission system capacity, a utility should plan for its

235

1 peak load?

2 A Yes, it should.

3 Q Would you agree that TRM is designed to provide a

4 margin for uncertainties that may adversely affect

5 transmission system conditions?

6 A That's the purpose of it, right.

7 Q Do you agree that beneficial loop flow that

8 occurs in the 3:00 to 4:00 p.m. hour on a given day does not

9 mitigate adverse loop flow that occurs in the 3:00 to 4:00

10 p.m. hour on the following day?

11 A It kind of depends on the methodology that the

12 utility is using.

13 Q I'm not asking you about any methodology. I'm

14 just asking you whether beneficial loop flow, if loop flow

15 is occurring on a particular day in the 3:00 to 4:00 p.m.

16 hour, does it mitigate adverse loop flow that occurs in the

17 3:00 to 4:00 p.m. hour on the following day?

18 A No, it does not.

19 Q Mr. Young, was APS's request for transmission

20 service from Idaho a request for service in all hours year

21 round?

22 A Yes, it was.

23 (Pause.)

24 MS. RYAN: I have no further questions, Your

25 Honor.

236

1 REDIRECT EXAMINATION

2 BY MR. MCGRANE:

3 Q Mr. Young, I just have one question. Did Idaho

4 Power Company average adverse and beneficial loop flows in

5 their methodology to calculate TRM which was used at the

6 time they denied APS's request for transmission service?

7 A Yes, they did.

8 MR. MCGRANE: No further questions.

9 MS. COPSEY: Your Honor, I just have a few

10 questions.

11 CROSS-EXAMINATION

12 BY MS. COPSEY:

13 Q Can you turn to APS-26? That's your direct

14 testimony. On page 4, starting with line 11, you are

15 responding to a question, which is:

16 Does APS contend generally that marketing and

17 merchant personnel should have no role whatsoever in

18 providing information for the calculation of CBM?

19 What group calculates CBM at APS?

20 A Calculates CBM or applies it on the system?

21 Q We'll start with calculates.

22 A That would be the merchant function, I believe.

23 Q What group applies it on the system?

24 A That's the merchant function.

25 Q Let's turn to pages 5 through 7. I'm just going

237

1 to generally ask you first a general question. In this

2 portion, starting at line 3, you spend a great deal of time

3 discussing the flaws in Idaho's 330-megawatt CBM

4 reservation.

5 In particular, starting at line 9, you discuss

6 the FMC contract. How did you arrive at the conclusions

7 that are contained from pages 5 through 7 with reference to

8 the FMC contract?

9 A Could you be more specific as to which

10 conclusions you're referencing?

11 Q Let's start with the first conclusion. You say

12 the CBM--this is at line 6--actually, line 5 on page 5:

13 Finally, Idaho's 330-megawatt CBM reservation

14 fails to take into account the fact that-- I'm sorry. I

15 got the wrong one.

16 Starting at line 3, you say: First, Idaho's

17 reservation of 330 megawatts for CBM does not take into

18 account Idaho's interruptable load.

19 Are you referring to FMC's load in that

20 statement?

21 A Yes, I am.

22 Q And you characterize it as interruptable, is that

23 correct?

24 A According to the contract, all but 17 megawatts

25 could be interrupted.

238

1 Q What documents did you review in arriving at

2 those conclusions?

3 A That was the FMC contract that was submitted.

4 Q Are you familiar with retail contracts for

5 Arizona?

6 A No, I'm not.

7 Q Have you ever been asked to interpret a retail

8 contract for Arizona?

9 A Not in Arizona, no.

10 Q Does Arizona have retail contracts, to your

11 knowledge?

12 A Yes, they do, to my knowledge.

13 Q How do you know that?

14 A We have retail customers.

15 Q How do you know that you have retail customers?

16 A We're a very large utility.

17 Q Are you familiar with those retail customers in

18 your contracts?

19 A Not the ones in Arizona, no.

20 Q What's your background to interpret contracts?

21 A I worked for a year in retail marketing, where we

22 were acquiring customers in California.

23 Q So you are familiar with retail contracts with

24 California?

25 A Yes.

239

1 Q Does the open access tariff apply to retail

2 contracts, in your experience?

3 A In what regard?

4 Q For the interpretation of those contracts, for

5 example?

6 (Pause.)

7 A I would assume it would.

8 Q Really? Would those real contracts, that you

9 worked on with California-- Were you involved in the

10 negotiation of those contracts?

11 A With the customers, no.

12 Q Who were you involved with?

13 A The team of employees who were drafting the

14 contract.

15 Q Based on your recollection, did those contracts

16 need to be approved by FERC?

17 A No.

18 Q Were you ever involved in any of those customer

19 contracts, where there was a dispute as to what the terms of

20 the contract meant?

21 A Indirectly, with a customer?

22 Q Indirectly, directly, in any way.

23 A No, I was not involved in any disputes.

24 Q Do you know where those disputes would go if

25 there was a dispute?

240

1 A I'm not sure which department would handle that.

2 Q Would they go to FERC, to your knowledge?

3 (Pause.)

4 A I would assume that would be a possibility.

5 Q To go to FERC? To your knowledge, is the Arizona

6 Public Service Corporation a party to the FMC contract?

7 A No, they're not.

8 Q To your knowledge, did Arizona Public Service

9 participate in either the negotiation or drafting of the FMC

10 contract?

11 A No, they did not.

12 Q Have you ever been requested to interpret the

13 retail contract?

14 (Pause.)

15 A In what regard?

16 Q In any regard.

17 A I have read contracts and had my opinion of the

18 contract. I would not say that it was requested of me,

19 though.

20 Q Let me just make sure I understand. Your

21 testimony is that you're not familiar with any of the

22 Arizona retail customers' contracts.

23 A That's correct.

24 Q And you don't have any involvement at all in

25 administering the Arizona retail customer contracts?

241

1 A Correct.

2 MS. COPSEY: I have no further questions.

3 MR. MCGRANE: No redirect, Your Honor.

4 PRESIDING JUDGE: Is there any other cross-

5 examination for this witness?

6 MS. GOVAN: Yes, Your Honor, from staff.

7 CROSS EXAMINATION

8 BY MS. GOVAN:

9 Q Cynthia Govan for the staff. I have a few

10 questions regarding TRM.

11 How does APS calculate TRM on its system?

12 A That's a question you will have to ask

13 transmission operations, I suppose.

14 Q Are you familiar at all with how they do it?

15 A I am not familiar with how they came up with

16 their number, no.

17 Q Do you know what method they used with respect to

18 how they factor in loop flow with respect to calculating

19 TRM?

20 A It's my understanding APS does not factor in loop

21 flow for TRM calculations.

22 Q At all?

23 A That's what I believe, right.

24 Q Do you believe it is appropriate to determine

25 loop flow effect by averaging beneficial and adverse loop

242

1 flow over a period of time in determining TRM?

2 MR. MCGRANE: I object to this. I think it's

3 been asked and answered.

4 PRESIDING JUDGE: It has been asked and answered,

5 but why don't we let staff ask it as well?

6 (Laughter.)

7 BY MS. GOVAN:

8 Q Maybe we could just get a clarification of your

9 answer to that question.

10 A As a transmission customer or trying to be a

11 transmission customer, we're at the mercy of the

12 transmission provider to meet whenever methodology they say

13 we have to meet.

14 In this regard, Idaho said they based it on

15 average loop flow--beneficial and adverse--for '98, which

16 was their prior year, which they said was their prior way of

17 calculating it, so that was what was available.

18 Q Maybe that's where the confusion lies. That was

19 not my question. My question was whether you believe it's

20 appropriate to average beneficial and adverse loop flow over

21 a period of time?

22 A I would not have done it Idaho's way, which means

23 I would not favor averaging the two. We're stuck with

24 whatever methodology they come up with at the time.

25 Q Is that a No or a Yes.

243

1 A I would not have done it that way.

2 PRESIDING JUDGE: Yes or No?

3 THE WITNESS: No, I would not have done it that

4 way.

5 MS. GOVAN: I think that's all the questions I

6 have.

7 MR. MCGRANE: No further questions, Your Honor.

8 PRESIDING JUDGE: Is there any other cross-

9 examination of this witness?

10 (No response.)

11 MR. MCGRANE: Your Honor, I would like to move

12 the admission of APS Exhibits 26 through 28 and 47 through

13 49.

14 PRESIDING JUDGE: May I assume the same

15 objections? Let me ask it this way. Is there any objection

16 to receiving into evidence documents, previously marked for

17 identification, APS-26 through -28, or APS-46 through -49?

18 MS. RYAN: Your Honor, I didn't go through and

19 mark the pages, since I understood your ruling on the

20 previous objection.

21 But, obviously, Idaho Power has the same concerns

22 about the testimony on the FFC contract that we had coming

23 from Mr. Young as we had coming from Mr. Hansen.

24 PRESIDING JUDGE: I thought you might. I will

25 overrule that objection for the reasons I have previously

244

1 stated.

2 But, I did want to give you the opportunity to

3 put it on the record.

4 MS. RYAN: Thank you, Your Honor.

5 PRESIDING JUDGE: Are there any other objections?

6 (No response.)

7 PRESIDING JUDGE: Hearing none, exhibits

8 previously marked for identification APS-26 through 28 and

9 APS-47 through 49 are admitted into evidence at this time.

10 (Exhibit Nos. APS-26 through 28

11 and APS-47 through 49 were

12 received.)

13 PRESIDING JUDGE: Why don't we take a 10-minute

14 break before we come back with the next witness, who will

15 be--

16 MS. RYAN: Mr. Porter for Idaho Power.

17 (Recess.)

18

19

20

21

22

23

24

25

245

1 MR. MCGRANE: Your Honor, a preliminary matter.

2 PRESIDING JUDGE: Yes.

3 MR. MCGRANE: Your Honor, Arizona Public Service

4 Company would like to request that during the cross

5 examination of the Idaho witnesses, that the witnesses who

6 are not testifying be excused from the room.

7 PRESIDING JUDGE: Is there a reason for that?

8 MR. MCGRANE: Yes, there is, Your Honor.

9 We have, I think this came up in the depositions

10 as well. We are trying to demonstrate or bring out on cross

11 examination, as we've tried to in the deposition, some

12 details of the activities of the Idaho personnel in

13 discussing matters with each other.

14 And frankly, we think that the testimony will be

15 more forthcoming and more honest if the other witnesses are

16 not here to hear testimony by other personnel.

17 PRESIDING JUDGE: Mr. Morgans?

18 MR. MORGANS: Your Honor, several things. First,

19 I'm flabbergasted that we just went through this just a few

20 minutes ago. We went through cross examination of Mr.

21 Hansen and Mr. Young, and Mr. Young was in the room when Mr.

22 Hansen was being cross examined. I'm flabbergasted that

23 having gone through that procedure, that counsel would

24 request a different procedure than he just adhered to.

25 PRESIDING JUDGE: You had that option as well,

246

1 didn't you?

2 MR. MORGANS: We did have that option, but

3 counsel, by having followed that practice for his own

4 witnesses, I think recognizes by its own practices that's a

5 reasonable practice. Of course, it's universally the

6 practice at the FERC that the other witnesses can hear the

7 cross examination of the witnesses.

8 I don't think that -- the difficulties of the

9 preparation of the other witnesses, the limitations that are

10 created by this on the other witnesses and counsel's

11 preparation for the subsequent cross examination of the

12 other witnesses far outweighs counsel's need.

13 It makes it very difficult, and I've found this

14 in the depositions, it makes it very difficult to prepare

15 the subsequent witnesses for the deposition when there is a

16 box around which I can discuss with the witness, but I'm

17 constrained in my discussions with the subsequent witnesses,

18 what I can discuss as opposed to the normal procedure where

19 I'm not constrained.

20 I was constrained. I'm not challenging Your

21 Honor's order, I'm not suggesting it was incorrect in any

22 way, Your Honor, but I was constrained in my discussions,

23 and I followed them scrupulously when I was preparing the

24 next witnesses to make sure that there were no discussions

25 of the prior witness' testimony.

247

1 My other witnesses were also restrained because

2 they could not consult with the witnesses. This was a

3 cooperative effort among my witnesses.

4 The witnesses worked closely together in the

5 preparation of the studies that were done. They worked

6 closely in preparation, frankly in preparation for cross

7 examination, and they worked closely in the preparation for

8 this hearing. And that's going to impinge upon that I think

9 unreasonably.

10 MR. MCGRANE: Your Honor, I think this

11 cooperative attitude is exactly what we're concerned about.

12 We don't want them to cooperate about a story about who said

13 what to whom when what we want is the actual facts about

14 what happened.

15 That was our concern in the depositions and it's

16 our concern now.

17 PRESIDING JUDGE: Didn't you get adequate

18 information and adequate protection in the deposition, in

19 the various depositions, that if that indeed was the case,

20 you would be able to impeach the various witnesses with?

21 MR. MCGRANE: I believe we did, Your Honor, on

22 the matters that were fully discussed during the

23 depositions.

24 What we're concerned about is that there are some

25 additional areas that come up now that we won't get that

248

1 kind of truthfulness.

2 PRESIDING JUDGE: How do you respond to Mr.

3 Morgans' point with respect to his daily preparation for the

4 witnesses?

5 You have to admit that you do put them in

6 somewhat of a box, as he puts it.

7 MR. MCGRANE: Your Honor, we're not trying to

8 limit his preparation of his witnesses at all. I guess we

9 would be concerned if he prepared his witnesses by showing

10 them the transcript of the testimony from the day before,

11 just so that they could have a consistent story.

12 But otherwise, we have no intent to interfere

13 with his preparation of the witnesses in any way.

14 MR. MORGANS: Except for the limitations that are

15 being imposed, there's no restriction. But there are

16 substantial restrictions on the preparation of my cross. I

17 discovered them last time.

18 And as I'm sure you're understanding what I'm

19 saying, I'm not in any way quibbling with Your Honor's

20 ruling.

21 PRESIDING JUDGE: I understand, and I don't take

22 that sort of thing personally even if you do.

23 (Laughter.)

24 MR. MORGANS: But we went through that process

25 and we found that it did impinge on my ability to prepare

249

1 the next witnesses, and it also impaired on what we had

2 intended to be -- and had no notice of this from counsel --

3 we had intended to be our preparation of our cross, and we

4 have been working in a cooperative effort in this manner.

5 I'll just say for the record that I've been

6 practicing before this Agency since 1978, partly as an

7 employee, now on the outside. I've never seen this request

8 granted.

9 And I don't think, given the particular hardships

10 it imposes upon me in the preparation of my case, as a

11 defendant in this case, it's reasonable, particularly in

12 light of the fact that we've already had depositions where

13 they had this opportunity to go through this.

14 We abided by that. And I think it's unfair to

15 impose this restriction at this time.

16 MR. MCGRANE: Your Honor, if I could just

17 interject. I know of at least one instance where this has

18 occurred before the Commission.

19 PRESIDING JUDGE: It has occurred. It's not

20 common. It has occurred, and the fact that it has not

21 occurred before the Commission would not be controlling

22 anyway.

23 It's a tough decision but, on balance, I'm going

24 to allow the witnesses to remain in the room. The bases for

25 allowing the witnesses to remain in the room are two.

250

1 First, as I indicated, we did go through that

2 procedure with the depositions. And I think, if there is

3 any inconsistency, that deposition testimony may be used to

4 bring out that inconsistency, particularly if on examination

5 here at hearing there is all of a sudden consistency.

6 I am also sensitive to the point that Mr. Morgans

7 raised about the difficulty it imposes, particularly in a

8 case as we have today, where we basically have a two-day

9 hearing, hopefully.

10 So I am going to deny the motion to exclude the

11 other witnesses.

12 We have Mr. Porter?

13 MS. RYAN: Yes.

14 Whereupon,

15 N. VERNON PORTER

16 was called as a witness herein, and having been first duly

17 sworn, was examined and testified as follows:

18 DIRECT EXAMINATION

19 BY MS. RYAN:

20 Q Please state your name for the record?

21 A My name is Newell Vernon Porter.

22 Q By whom are you employed?

23 A Idaho Power Company.

24 Q What is your job description and title?

25 A I'm the Manager of Grid Operations.

251

1 Q Mr. Porter, do you have before you your prepared

2 direct testimony, Exhibit IPC-13, together with documents

3 submitted in support of that testimony, which are Exhibits

4 IPC-14 through IPC-22?

5 A I do.

6 MS. RYAN: At this time, Your Honor, I would like

7 to ask that these Exhibits IPC-13 through IPC-22 be marked

8 for identification.

9 I've already given two copies to the Reporter.

10 PRESIDING JUDGE: Is there any objection to

11 marking for identification, Exhibits designated IPC-13

12 through IPC-22?

13 (No response.)

14 PRESIDING JUDGE: Hearing none, those Exhibits

15 are marked for identification at this time.

16 (The documents referred to

17 were marked for identifica-

18 tion as Exhibits Numbers

19 IPC-13 through IPC-22.)

20 BY MS. RYAN:

21 Q Mr. Porter, was the testimony that's just been

22 identified prepared by you or under your direction and

23 supervision?

24 A It was.

25 Q Do you wish to make any corrections to your

252

1 testimony?

2 A I do. I have two typographical errors, one on

3 page 4, line 11. The correct spelling of nomogram should be

4 N-O-M-O-G-R-A-M.

5 The second error is on page 20, line 11, the word

6 "and" should be "an."

7 Q With these corrections, do you adopt the answers

8 appearing in your direct testimony as your sworn testimony

9 in this proceeding?

10 A I do.

11 MS. RYAN: The witness is available for cross

12 examination.

13 CROSS EXAMINATION

14 BY MS. HUNTINGTON:

15 Q Hi, Mr. Porter, Mary Ann Huntington. I'm

16 representing Arizona Public Service Company.

17 I just have a few questions.

18 On page 6, line 16 of your testimony, you refer

19 to an ATC working group white paper. Does that white paper

20 instruct transmission providers how to calculate TRM for

21 loop flows?

22 A It provides general methodologies on how to do

23 that, so the answer is no.

24 Q You also include, as an attachment to your

25 testimony, I believe it's as Exhibit 16, a document entitled

253

1 "Determination of Available Transfer Capability Within the

2 Western Interconnection."

3 Is that correct?

4 A Correct.

5 Q Does that document instruct transmission

6 providers how to calculate TRM for loop flows?

7 A Once again, it provides general methodologies,

8 how to decide and what components to include in your TRM,

9 but it does not tell you how to calculate for any specific

10 aspect of TRM.

11 Q Are either of these documents included in Idaho's

12 open access transmission tariff?

13 A No, they are not.

14 Q If you would refer to page 12 of your testimony.

15 PRESIDING JUDGE: IPC-13?

16 MS. HUNTINGTON: Yes, IPC-13, lines 10 to 13.

17 BY MS. HUNTINGTON:

18 Q There you testify that in the spring of 1998,

19 Idaho reduced TTC on the Brownlee East Path by 150 megawatts

20 because Idaho expected to reach nomogram limits on the path

21 before it would get to the WSCC.

22 Is that correct?

23 A That's correct.

24 Q I want to be absolutely clear.

25 In the spring of 1998, Idaho reduced TTC on the

254

1 Brownlee East Path because of nomogram limits?

2 A That's correct.

3 Q Then in the summer of 1998, that's when APS

4 requested transmission service?

5 A Yes.

6 Q And in the winter of 1998 and 1999, that's when

7 Idaho evaluated APS' request and set aside 200 megawatts for

8 loop flows, using the July 1998 average loop flows?

9 A I believe the TRM calculation was done before the

10 winter of '98-'99, some time in the fall of '98.

11 Q After APS submitted its request?

12 A The formalized calculation of TRM occurred after

13 the APS request. However, we were already reserving

14 components of that TRM, as you stated, in 1998 in the summer

15 to give us the margin we needed to maintain reliability.

16 Q But in the summer of 1998, you reduced TTC for

17 nomogram limits and in the fall of 1998, you used the one-

18 month average loop flow in the calculation.

19 I'm just trying to get to the calculation.

20 A The calculation was for loop flow based on one

21 month, July of 1998, correct.

22 Q In October, this year, you submitted your direct

23 testimony, in which you support the super-peak method that

24 looks only at adverse loop flows only during certain peak

25 hours of certain peak months, is that correct?

255

1 A Repeat that one more time.

2 Q In October of this year -- or excuse me -- in

3 October of 1999, you submitted direct testimony in this

4 proceeding. That direct testimony supports what you called

5 a super-peak method which looks only at adverse loop flows

6 only during certain peak hours of certain peak months of the

7 year.

8 A That is how we calculate the loop flow component

9 of TRM, correct. That is what we are using right now to

10 justify the reasonableness of our 200 megawatt TRM.

11 Q Right now.

12 So in the past one-and-a-half to two years, Idaho

13 has used at least three different methods to support its

14 need to set aside transmission for nomogram limits and for

15 loop flows?

16 A I wouldn't necessary say it's three different

17 methods. I would say that certainly --

18 MS. HUNTINGTON: I'm sorry. Could you instruct

19 the witness to answer the question.

20 PRESIDING JUDGE: The witness was answering the

21 question and you interrupted him.

22 Proceed, sir.

23 THE WITNESS: I wouldn't say there were three

24 different methodologies. TRM is a term that's evolved

25 recently. We've had extreme operating problems in 1997.

256

1 We've struggled tremendously with nomogram limitations and

2 being prudent in realizing that we needed to set aside some

3 capacity for margin.

4 We set aside this 150 megawatts of TRM, well it

5 wasn't TRM, it was 150 megawatts of capacity to protect

6 ourselves for reliability purposes.

7 The methodology that we used in '98 was in

8 connection with your request. We now needed to formalize

9 our TRM and it was a reasonable balance of many factors,

10 including the fact that we had generally beneficial loop

11 flows in '97 and terrific loop flows in '98.

12 We were able to -- we came up with a number and

13 that number was 200 megawatts,and then, yes, we did, based

14 on the 1999 data that we received for loop flow, we did

15 modify the way we looked at loop flow, okay.

16 So I guess in reflecting upon the direct question

17 you asked, we did modify our loop flow calculations several

18 times.

19 MS. HUNTINGTON: Your Honor, I would like to move

20 to strike. That was a rambling, very long answer, and I

21 think the last sentence of the answer was really the only

22 responsive part. Other than that, it seemed to me more of a

23 speech to me than an answer.

24 PRESIDING JUDGE: I took it as an explanation,

25 and I'm going to let it stand.

257

1 But I'm also going to allow you to ask the

2 question again and not have such a long answer.

3 BY MS. HUNTINGTON:

4 Q Can I ask you again, Mr. Porter, in the past one-

5 and-a-half to two years, isn't it true that Idaho has used

6 at least three different methods to support its claimed need

7 to set aside transmission for nomogram limits and for loop

8 flows?

9 A Yes.

10 Q At the time, APS requested service, did Idaho use

11 any of these methodologies in its planning studies?

12 A What do you mean in its planning studies?

13 Q For planning purposes?

14 A Obviously, in 1997 -- excuse me -- in 1998, we

15 used, we set aside the 150 megawatts of TTC for nomogram

16 limits. We planned that the next year, we'd set it aside.

17 Yes, we did plan it. That was planned.

18 Obviously in 1998, when we set aside the 200-

19 megawatt TRM, that was planned for the future. That's what

20 TRM is for, to look out in the future and predict how much

21 margin do you need.

22 So, yes, every time we do a TRM calculation,

23 we're planning for the future.

24 Q At the time APS requested transmission service,

25 did you use the super-peak method that you support in your

258

1 testimony that was filed in October for planning purposes?

2 A So you're referring to the 1998 calculation of

3 TRM?

4 Q No. I believe I'm referring to the October 1999

5 method that you supported in your testimony. I referred to

6 it in a shorthand way as the super-peak method. You talked

7 about super-peak hours. So when I refer to the super-peak

8 method, I'm referring to the methodology you support in your

9 testimony.

10 Was that method used in evaluating APS' request

11 at the time APS requested transmission service?

12 A Let me see if I understand.

13 You're asking me, using the October 1999

14 calculation, --

15 Q Methodology.

16 A Methodology in evaluating the APS request?

17 Q Actually what I was trying to get at is the

18 method that you support in your testimony, the super-peak

19 method. At the time you were looking at APS' request, did

20 Idaho use that super-peak method in planning the study?

21 A So back in '98, when we were looking at it? No.

22 Q If you could refer to page 15 of your testimony,

23 lines 8 to 9. You state there that Idaho curtailed

24 transmission service on the Brownlee East on three occasions

25 for the better part of three months during the summer of

259

1 1998?

2 A That's correct.

3 Q Were any of Idaho's firm retail customers

4 curtailed because of loop flow problem in the summer of

5 1998?

6 A Do you mean service to the native load customers,

7 or do you mean were they shed?

8 Q We'll address each individually.

9 Was any firm retail load shed as a result of

10 those loop flow problems?

11 A Not that I'm aware of.

12 Q Was service to any firm retail customers

13 curtailed because of loop flow problems?

14 A Yes.

15 Q Those were firm customers?

16 A Yes.

17 (Pause.)

18 MS. HUNTINGTON: May I approach the witness and

19 show him something that's been filed in APS' testimony as

20 Exhibit 5?

21 PRESIDING JUDGE: This is APS-5?

22 MS. HUNTINGTON: This is APS Exhibit 5, page 8.

23 (Handing document to witness.)

24 BY MS. HUNTINGTON:

25 Q Just take a minute to review and familiarize

260

1 yourself with this page 8.

2 (Pause.)

3 MS. RYAN: Your Honor, could counsel tell us what

4 pages she's referred the witness to?

5 MS. HUNTINGTON: I thought I did. Page 8, the

6 top quarter, page 8.

7 (Pause.)

8 BY MS. HUNTINGTON:

9 Q Do you recall being on this telephone

10 conversation which, if you'll refer to page 1, is a

11 November 20th, 1998 telephone call?

12 A Obviously my recollection of this phone call is

13 very foggy, but obviously I was there.

14 Q Would you agree that in this transcript, Mr.

15 Hagen, who was with Idaho, that he states that we never shed

16 firm loads, although we did shed interruptible on at least

17 one occasion.

18 Does this refresh your recollection?

19 A It looks like that's what he said. I don't

20 recall him saying that, but that's what the transcript says.

21 Q Would you like to reconsider your answer to my

22 previous request about whether Idaho had shed firm retail

23 customers because of loop flow in the summer of 1998?

24 A Would I like to reconsider what I said?

25 Q In other words, this document that you're

261

1 referring to indicates that interruptible customers' load

2 was shed in the summer of 1998, but that no firm customer

3 load was shed in 1998.

4 A Didn't I just say that we didn't shed any firm

5 customer load?

6 PRESIDING JUDGE: Yes, you did.

7 THE WITNESS: I guess I'm misunderstanding your

8 question.

9 BY MS. HUNTINGTON:

10 Q Would you say that only interruptible customers

11 were shed, that no firm customers were shed?

12 A I don't think I said a word about interruptible

13 customers.

14 Q I'm asking you now. In the summer of 1998, were

15 any firm retail customers shed, or was it only interruptible

16 customers' loads that were shed?

17 A In 1998, according to this, Dave Hagen has said

18 that we did shed interruptible load, but he doesn't say, and

19 I don't know why it was shed. I'm not sure if it was an

20 outage or if it was something for what reason. He just

21 simply made that statement.

22 Q But that no firm customers were shed?

23 A That no firm customers were shed with respect to

24 this statement. I see where you're getting at, I see where

25 you're getting at.

262

1 According to this statement, he says that

2 interruptible load was shed, but I stand by my statement

3 earlier that I'm aware of no firm customers that were shed.

4 Q Okay, thank you.

5 I think we're done with this. I'll take it.

6 (Pause.)

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

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24

25

263

1 At the time Idaho evaluated APS' request for

2 transmission service, Idaho used what it thought was a

3 reasonable method for TRM, is that correct?

4 A That is correct.

5 Q And that was the one-month average method, is

6 that correct?

7 A There was more to it than that, as I explained a

8 little bit in my speech. It was really a reasonable balance

9 of many factors. We chose 200 megawatts because it

10 reflected a balance between the generally beneficial loop

11 flow that we had in 1997, the extreme loop flow we had in

12 1998, 200 was the average of overall hours.

13 We had hours up to 800 and beyond of loop flow,

14 and we had nomogram problems. That 200 was the reasonable

15 balance among all that.

16 Q And 200 was the mathematical average?

17 A Yes, it was.

18 MS. HUNTINGTON: That's all I have.

19 PRESIDING JUDGE: Ms. Ryan, is there any

20 redirect?

21 MS. RYAN: No, Your Honor.

22 PRESIDING JUDGE: Is there any other cross

23 examination of this witness?

24 (No response.)

25 PRESIDING JUDGE: None?

264

1 (No response.)

2 PRESIDING JUDGE: That concludes your testimony.

3 Thank you very much, Mr. Porter, you are excused.

4 (Witness excused.)

5 PRESIDING JUDGE: Who is our next witness, and

6 how long do we anticipate the witness will take?

7 MR. MORGANS: Your Honor, our next witness is

8 H. Charles Durick, on behalf of Idaho Power Company.

9 MR. WEIR: Your Honor, if the Court would indulge

10 me?

11 My name is Howard Weir. I'm one of Mr. McGrane's

12 and Ms. Huntington's partners. It's a pleasure to be here.

13 I'll be conducting the next two cross examinations.

14 I think I might be a while with Mr. Durick, Your

15 Honor.

16 PRESIDING JUDGE: Can you define "a while"?

17 MR. WEIR: What times does Your Honor regularly

18 end the trial day?

19 PRESIDING JUDGE: I don't care. FERC normally

20 likes us, for any number of reasons, to conclude the day's

21 proceedings around 4:30.

22 In order to get the entire proceeding in the two

23 days in which we hope to get it in, if we need to run a

24 little later than that, I'm amenable to that.

25 I don't know, since we will be back here

265

1 tomorrow, if that is even necessary. I don't know what the

2 extent of cross examination for the witnesses will be.

3 MR. WEIR: I suspect, Your Honor, that I will

4 take a couple of hours with Mr. Durick.

5 PRESIDING JUDGE: Then I guess we'll put him on.

6 There's no way we'll finish up with him today, so we'll put

7 him on and get as far as we can by 4:30, and then resume

8 with him in the morning.

9 MR. WEIR: Right.

10 MS. RYAN: Your Honor, I'd like to move the

11 admission of Exhibits IPC-13 through IPC-22.

12 PRESIDING JUDGE: Is there any objection to

13 receiving into evidence documents previously marked for

14 identification IPC-13 through IPC-22?

15 (No response.)

16 PRESIDING JUDGE: Hearing none, Exhibits

17 previously marked for identification IPC-13 through IPC-22

18 are admitted into evidence at this time.

19 (The documents previously

20 identified as Exhibits

21 Numbers IPC-22 through IPC-22

22 were received in evidence.)

23 Whereupon,

24 H. CHARLES DURICK

25 was called as a witness herein, and having been first duly

266

1 sworn, was examined and testified as follows:

2 DIRECT EXAMINATION

3 BY MR. MORGANS:

4 Q Please state your name for the record.

5 A My name is Henry Charles Durick.

6 Q By whom are you employed and in what capacity,

7 Mr. Durick?

8 A I'm employed by Idaho Power Company. I'm the

9 manager of Delivery Planning.

10 Q Mr. Durick, do you have before you your prepared

11 testimony, Exhibit Number IPC-1, together with documents

12 submitted in support of that testimony, Exhibit Numbers

13 IPC-2 through -9 inclusive.

14 A Yes, I do.

15 Q Is this your prepared testimony and exhibits in

16 this proceeding?

17 A Yes.

18 MR. MORGANS: Your Honor, at this time, I'd like

19 to request that Exhibits IPC-1 through -9 be marked for

20 identification.

21 PRESIDING JUDGE: Is there any objection to

22 marking for identification the documents previously

23 designated IPC-1 through IPC-9?

24 (No response.)

25 PRESIDING JUDGE: Hearing none, those documents

267

1 are marked for identification at this time.

2 (The documents referred to

3 were marked for identifica-

4 tion as Exhibits Numbers

5 IPC-1 through IPC-9.)

6 BY MR. MORGANS:

7 Q Mr. Durick, were the testimony and exhibits you

8 previously identified and marked as IPC-1 through IPC-9

9 prepared under your direction and supervision?

10 A Yes.

11 Q Do you have any corrections to make to the

12 testimony and exhibits at this time?

13 A Yes, I do.

14 Q If you could walk us through those slowly, sir.

15 A On page 7, line 21, the word "unites" should be

16 "united."

17 PRESIDING JUDGE: Could you say that again, sir?

18 I'm sorry.

19 THE WITNESS: On page 7, line 21, western Unites

20 States should be "western United States."

21 And on page 13, line number 11, the date 6/2/96

22 should be 7/2/96; 6/3/96 should be 7/3/96.

23 On Exhibit IPC-4, the Exhibit line at the top of

24 that says IBC-4 and it should be IPC-4.

25 MR. MORGANS: I think that's corrected in your

268

1 copy already, Your Honor.

2 PRESIDING JUDGE: Yes.

3 MR. MORGANS: These corrections, I would note,

4 Your Honor, have been made on the copy that was given to the

5 Reporter.

6 BY MR. MORGANS:

7 Q Does that complete the corrections, Mr. Durick?

8 A Yes, it does.

9 Q With these corrections, do you adopt Exhibits

10 IPC-1 through IPC-9 as your prepared direct testimony and

11 exhibits in this proceeding?

12 A Yes, I do.

13 Q If I were to ask you the questions that appear in

14 IPC-1 today, would your answers be the same?

15 A Yes, they would.

16 MR. MORGANS: Your Honor, Mr. Durick is available

17 for cross examination.

18 CROSS EXAMINATION

19 BY MR. WEIR:

20 Q Mr. Durick, my name is Howard Weir. I'm with

21 Morgan, Lewis & Bockius.

22 We have met before, have we not?

23 A Yes, we have.

24 Q You remember me?

25 A I do.

269

1 Q As I understand it, you are the manager of

2 Delivery Planning for Idaho Power?

3 A That's correct.

4 Q And you've been in Transmission Planning for

5 Idaho Power for some 25 years, have you not?

6 A Over that, yes.

7 Q And you're also active in the Western Systems

8 Coordinating Council for, what, 20 years or more?

9 A About that.

10 Q Now you've worked extensively with that group in

11 developing, what, procedures for rating transmission

12 facilities, is that fair?

13 A I have worked on that, yes.

14 Q Have you worked on reliability criteria?

15 A Yes, I have.

16 Q Have you also worked on transmission system

17 planning?

18 A Yes, I have.

19 Q Now, when did you begin your position of manager

20 of Delivery Planning for Idaho Power?

21 A I believe that was 1986.

22 Q And you still hold that position today,

23 obviously?

24 A Yes, I do.

25 Q In that position, you're responsible for main

270

1 grid and distribution planning. Is that correct?

2 A I am, now.

3 Q You are now.

4 Did you have that responsibility in 1998?

5 A Yes.

6 Q Are you also responsible for load forecasting?

7 A Yes, sir.

8 Q And responsible for customer research?

9 A Yes.

10 Q What's customer research?

11 A That is the group that analyzes customer load

12 data primarily for cost-of-service analysis for retail rates

13 typically used in the rate design phase of a retail rate

14 case for cost allocation purposes.

15 Q You have a double E, do you not?

16 A Yes, I do.

17 Q University of Florida, was it?

18 A Yes, sir.

19 Q As I understand it, the written testimony you

20 submitted to the Commission -- and you have that in front of

21 you, do you not, your written testimony?

22 A Yes, sir.

23 Q That's going to cover three areas. Idaho's

24 evaluation of APS' request for service. Am I right about

25 that?

271

1 A Yes.

2 Q Idaho's CBM reservation of 330 megawatts over the

3 Brownlee constraint?

4 A That's covered in there.

5 Q And CBM's capacity benefit margin?

6 Do I have that right?

7 A Yes.

8 Q You know these terms of art aren't all that

9 familiar to me.

10 And then also you have some criticisms of written

11 testimony that certain witnesses for my client have

12 submitted to the Commission, do you not, in your testimony?

13 A Yes.

14 Q Now, one of your topics is Idaho's evaluation of

15 APS' request for service, right?

16 A Yes.

17 Q Did you perform -- forget what you did in terms

18 of writing up this testimony -- go back with me to 1998.

19 Are you the one that performed the evaluation of Idaho's

20 request for the 150 megawatts of service over that Brownlee

21 Boise line?

22 You didn't do that, did you? Ron Schellberg did?

23 A Ron Schellberg primarily did that under my

24 direction.

25 Q Now, Mr. Schellberg, if I recall the company's

272

1 organizational chart, reports directly to you, does he not?

2 A Yes, he does.

3 Q His position is what, supervisor of Systems

4 Planning?

5 A Yes.

6 Q He's also had almost, what, 25 years in Systems

7 Planning?

8 A I don't remember how many years he's had, but

9 it's quite a number of years, yes.

10 Q Two decades at least, wouldn't you say?

11 A About that.

12 Q And his position is, let's see if I have this

13 right, he leads the analysis in planning Idaho's bulk

14 transmission system.

15 Did I get that right?

16 A Close enough.

17 Q What does that job entail?

18 I'm sorry, let me back up.

19 Was he performing that function in 1998?

20 A Yes, he was.

21 Q Was he performing that function in 1999?

22 A Yes, sir.

23 Q Go ahead, I'm sorry.

24 Now what does that function entail, what does his

25 job entail?

273

1 A Running analytic studies of the performance of

2 the electric system for the purpose of establishing

3 transmission transfer capabilities. Using that information

4 to determine needs for additional transmission facilities

5 and the potential capacity improvements that come from

6 additional transmission facilities.

7 There's quite a range of work that he does.

8 Q Excuse me. Does he supervise outage studies?

9 MR. MORGANS: Your Honor, may the witness be

10 permitted to finish his answer to the prior question?

11 MR. WEIR: I thought he was finished, Judge. I

12 was just trying to help him along.

13 PRESIDING JUDGE: I don't think the witness needs

14 any help, counsel. Please allow him to finish his answers.

15 If you have a problem with his answers afterwards, object to

16 them.

17 MR. WEIR: I don't really have a problem with it.

18 I thought it might move it along, but go ahead.

19 THE WITNESS: Yes, he does supervise outage

20 studies. And --

21 BY MR. WEIR:

22 Q What does that involve, Mr. Durick, the

23 supervision of outage studies?

24 PRESIDING JUDGE: Counsel, you've just

25 interrupted the witness again. Please be more attentive to

274

1 when the witness is finished with his answer.

2 THE WITNESS: I've probably said enough about

3 what Mr. Schellberg does. There's other things in there

4 too.

5 BY MR. WEIR:

6 Q Let me stop you on the outage studies. What do

7 you mean by supervision of outage studies?

8 A We do a fair amount of study work on the impact

9 of outages of our transmission system. This would be when

10 any kind of facility goes out, we lose a transmission line

11 or two, what are the resulting conditions of the system; and

12 whether those resulting conditions comply with WSCC

13 criteria, and whether that outage and that capacity of the

14 system comply with criteria and meet reliability performance

15 standards.

16

17

18

19

20

21

22

23

24

25

275

1 Q Is Mr. Schellberg also involved in determining

2 near-term operating capabilities of your system?

3 A Yes.

4 Q What does that task involve?

5 A We review transmission transfer capabilities on

6 at least critical parts of our system on a seasonal basis.

7 That work is done in compliance with the WSSC requirements

8 of the WSCC ATC policy and their seasonal analysis, and that

9 work will be done in Mr. Schellberg's group.

10 Q How long has Mr. Schellberg worked with you?

11 A I don't remember exactly. I am sure it is over

12 15 years.

13 Q Have you found him to be a competent employee?

14 A I have.

15 Q Is he someone you have come to rely on over the

16 years?

17 A Yes, I rely on Ron.

18 Q Now, are you aware that Mr. Schellberg, in

19 December, or so, of 1998, authored--and I say authored--he

20 was the principal author, I believe, of something called APS

21 Transmission Service Business Plan.

22 A I remember that document.

23 MR. WEIR: Judge, may I approach the witness?

24 This is Exhibit APS-9. I believe everyone has a copy of it.

25 I believe it would be more convenient to have him look at it

276

1 separately than just hand him that big stack of documents.

2 Take a look at it. If it meets your approval,

3 you can hand it to him.

4 (Handing document to witness.)

5 BY MR. WEIR:

6 Q Mr. Durick, let me show you what is in evidence

7 as APS Exhibit 9, and ask you if this is the business plan

8 that Mr. Schellberg was the principal author on.

9 A I believe it is.

10 Q Look through it and make sure that you agree with

11 me that that is the plan. I don't want to give you

12 something that isn't the right thing.

13 MR. MORGANS: Objection. Asked and answered.

14 The witness just said--

15 MR. WEIR: He believes.

16 THE WITNESS: It's labeled December 4th, Business

17 Plan.

18 BY MR. WEIR:

19 Q Is this something you've seen before?

20 A I have seen this, yes.

21 Q Doesn't this plan find that, with certain

22 upgrades, 150 megawatts of transmission service could be

23 provided to my client in 1999. Do you recall that?

24 A I do believe-- I thought, when this plan was put

25 together, that that amount would be available.

277

1 Q Now, Mr. Schellberg, he didn't submit any

2 testimony in this proceeding, is that correct?

3 A That's right.

4 Q So you've been selected, if I understand this, to

5 explain how Idaho determined that, contrary to what the

6 finding was in the business plan, that the upgrades that

7 were proposed, the RAS shunt capacitor, whatever that is,

8 would not be sufficient to provide service to APS. That's

9 what you're going to tell us about?

10 A Yes.

11 Q Or you told us about in your direct, right?

12 Let's look at that explanation.

13 A Are you talking about my testimony?

14 Q Your testimony--your direct testimony. Forget

15 your deposition testimony for a minute. We may have to come

16 back to that later.

17 Now, as I understand it, the issue you're

18 addressing--one of the issues--is APS's request for

19 transmission service from Lola to Brady--excuse me, over the

20 Brownlee-East constraint. Is that where we are?

21 A Yes.

22 Q That constraint, as I understand it, involves,

23 what, seven circuits?

24 A Yes.

25 Q And these circuits are used to carry power from

278

1 the west side of Brownlee into Idaho's load to the east--the

2 middle part of the state?

3 A In the middle part of our state, yes, sir.

4 Q Now, since July of 1996, the transmission

5 capacity over the Brownlee-East constraint has been

6 deficient, is that correct?

7 A We suffered a loss of capacity in '96.

8 Q By deficient, don't you mean that Idaho's total

9 obligations over the path exceeded the path's capability--

10 its total capabilities?

11 A Yes.

12 Q And the result of this deficiency, that was the

13 product of some power outages in the summer of '96?

14 A Yes.

15 Q Initially, you had what, 2100 megawatts capacity

16 over that system?

17 A Yes, we were using that at the 2100 level.

18 Q And it was dropped to what, 1550?

19 A I believe that's true.

20 Q Since 1996, your company has worked very hard to

21 improve the capacity over that Brownlee-East constrain, has

22 it not?

23 A Yes.

24 Q And your group, the delivery group, has led that

25 effort, has it not?

279

1 A Yes, sir.

2 Q And you also conducted a number of studies of

3 that system to determine how to improve its capacity,

4 correct?

5 A Yes.

6 Q Your group has done that?

7 A Yes, sir.

8 Q By 1998, you had the capacity up to 1850

9 megawatts?

10 A Yes, we did.

11 Q As I understand it, there's a plan in place to

12 create a fifth 230 KV line that will give you, what, another

13 175 or so megawatts of power of a level over that

14 constraint?

15 A That's what we're expecting.

16 Q And that line is due to be in place, when, 2001?

17 A That's when it's scheduled.

18 Q Summer or Fall?

19 A I think it's in time for the summer.

20 Q And that's on schedule?

21 A I believe it is, sir.

22 Q You'd know if it wasn't, wouldn't you?

23 A Not necessarily. If something has recently come

24 up in the permitting process or something like that, I

25 wouldn't necessarily hear about it right away.

280

1 Q Do you know a Dave Hagen that's employed by

2 Idaho?

3 A Yes.

4 Q What part of the company employs him?

5 A He is in the merchant group now.

6 Q When did he join the merchant group?

7 A I'm not altogether sure. I think it was late

8 1998, probably November or December.

9 Q But, prior to that time, wasn't he employed by

10 the delivery group?

11 A Yes, he was.

12 Q Are you aware of a proposal made by Mr. Hagen to

13 get this fifth 230 KV line up and operating--at least a good

14 portion of it--by the summer of 1999? Are you aware of

15 that?

16 A Was it to get it up and running by 1999?

17 Q By the summer of 1999, so that your company would

18 have additional capacity over that Brownlee-East constraint?

19 A He may have proposed that, but right now I'm not

20 remembering that very clearly.

21 Q Let me see if I can help you.

22 PRESIDING JUDGE: Does anyone have an objection

23 to marking for identification a two-page document which

24 appears to be a memorandum from Mr. Durick, the subject of

25 which is the Brownlee-Paddock T-line costs.

281

1 MR. MORGANS: No objection to marking the

2 exhibit, Your Honor.

3 PRESIDING JUDGE: Hearing no objection, that

4 document is marked for identification purposes APS-51 at

5 this time.

6 (The document referred to was

7 marked Exhibit No. APS-51 for

8 identification.)

9 MR. WEIR: I'm going to mark another document, if

10 I may, Judge. This would be APS-52 if no one objects.

11 PRESIDING JUDGE: Is there any objection to

12 marking for identification a similar one-page memorandum

13 from Darel Tracy regarding fifth-line delay?

14 MR. MORGANS: Could I have a second, Your Honor?

15 PRESIDING JUDGE: Certainly.

16 (Pause.)

17 MR. MORGANS: Your Honor, may I inquire of Your

18 Honor--of counsel through Your Honor--regarding the marking

19 of this document?

20 There is a page 1 at the bottom of what has been

21 proposed for identification as Exhibit APS-52.

22 Does this purport to be the complete document or

23 simply part of the document? I'm looking at APS-52.

24 MR. WEIR: It was Exhibit 7 at Mr. Schellberg's

25 deposition. I presume it was complete. Let's look at his

282

1 deposition to ensure that it is. If it is not, we'll get a

2 complete one.

3 (Pause.)

4 MR. WEIR: Judge, Ms. Huntington-- I have it on

5 good authority from her that this is complete.

6 MR. MORGANS: No objection to the marking of the

7 exhibit, Your Honor.

8 PRESIDING JUDGE: Hearing no objection, the

9 document is marked for identification APS-52 at this time.

10 (The document referred to was

11 marked Exhibit No. APS-52 for

12 identification.)

13 BY MR. WEIR:

14 Q Mr. Durick, would you take a moment-- Let me

15 just describe-- I am going to focus on 52 now. Forget 51.

16 If you would just take a moment and look it over, but the

17 document is actually two E-mails.

18 The first one is from a Darel Tracy sent on

19 Monday, April 22nd, 1998. It was sent to you and a number

20 of other people, including Mr. Porter and Mr. Schellberg.

21 There is then a second E-mail. This is the one I

22 want you to focus on, but you can read the other one, as

23 well, from Dave Hagen.

24 This is dated Monday, April 27, 1998, and it also

25 went to you, and the subject of Mr. Hagen's E-mail is Fifth

283

1 Line Delay.

2 A I don't have a copy of those.

3 (Handing documents to witness.)

4 BY MR. WEIR:

5 Q You do now.

6 PRESIDING JUDGE: Have those been marked so that

7 the witness may reference them?

8 MR. WEIR: They have.

9 THE WITNESS: Which one did you ask me to look

10 at?

11 BY MR. WEIR:

12 Q Fair enough. I am sorry. I didn't realize you

13 didn't have a copy. If you read the first one, there are

14 two E-mails.

15 Forget 51 -- 52. This is really the E-mail I am

16 interested in. I am pointing to the one from Mr. Dave Hagen

17 to a cast of thousands.

18 PRESIDING JUDGE: Just so the record is clear,

19 the witness is reviewing APS-52?

20 MR. WEIR: Yes, Your Honor, he is.

21 (Pause.)

22 THE WITNESS: Okay.

23 BY MR. WEIR:

24 Q Mr. Durick, have you had an opportunity to read

25 to your satisfaction APS-52?

284

1 A I've read it through.

2 Q You are listed as a recipient of both E-mails set

3 forth on this exhibit, are you not?

4 A Yes, I am.

5 Q Do you recall receiving these E-mails?

6 A I must have received them.

7 Q You don't have any doubt of that, do you?

8 A No.

9 Q Let me ask you this. Do you recall a

10 discussion-- Strike that. Do you recall, on or about April

11 27, 1998, a discussion with anyone in your delivery group

12 about trying to bring up, if you will, in time, the service

13 on the Brownlee-Boise fifth line?

14 A My recollection is more about the service in the

15 summer of the year 2000 and concern about slipping the line

16 from June to October and missing the ability to have it in

17 for the summer of 2000.

18 Q The summer of 2000. Let me ask you this. Let me

19 refer to Mr. Hagen's E-mail and ask you if this is accurate.

20 In terms of your knowledge of what was going on in your

21 department as of April 27, 1998, he says here:

22 I think the Brownlee-Ontario line is important

23 enough that we should consider construction--

24 Do you see where I am? I want you to follow me

25 if you can.

285

1 --You should consider construction in the summer

2 and Fall of 1999, as opposed to the summer, 2000. The line

3 is being built to help us operate the system during periods

4 of heavy imports, which typically occur in the late Spring

5 and early summer of each year, by mid- to late summer. The

6 hydro available in the northwest diminishes along with the

7 price differential between the northwest and the southwest.

8 We have needed the line for several years for both economic

9 and reliability reasons.

10 Do you see that?

11 A Yes, sir.

12 Q Do you take issue with anything that Mr. Hagen

13 has stated in that paragraph?

14 A I don't believe so.

15 Q I want you to now follow me. Just read along to

16 yourself very carefully this last paragraph, and I want you

17 to read it with the thought whether Mr. Hagen is making any

18 statements that are either misstated or against company

19 policy or what your group is trying to do in April of 1998.

20 He goes on to say: I would like to see us

21 reconsider the slipping in service date for that line. I'm

22 not asking that every part and component be in service by

23 June 1st, '99, but at least the 50 miles from Brownlee to

24 Paddock tap should be completed and tied to the Paddock tap

25 to Ontario line. This gives us something approaching 200--

286

1 He says MW. Megawatts, right?

2 A Yes.

3 Q --more in the Brownlee-East capacity, given that

4 we end up renegotiating our import capacity each season and

5 the continuing dissatisfaction expressed by BPA--

6 Who is BPA?

7 A Bonneville Power Administration.

8 Q --and the Pacific Intertie owners over any west-

9 to-east flows on the mid-point Summer Lake 500 KV line. I

10 believe it is in our best interest to aggressively pursue

11 completion of this line. In its absence, our only recourse

12 during a hot summer is to restrict imports from the

13 northwest and rely on extensive remedial actions, including

14 load-shedding during severe--into outages.

15 Is that an accurate statement of the situation

16 that your group, the delivery group, was facing in late

17 April, 1998?

18 A I see at least what appears to be a date

19 inconsistency here in the first sentence, that sentence

20 where he says he is not asking for every component to be in

21 service by June 1st, 1999, but at least 50 miles should be

22 in by then.

23 But, up above that, he is talking about meeting

24 the June 1st, 2000 in-service date, and he's talking about

25 construction during the Fall of 1999.

287

1 So, I am sitting here thinking that there's

2 something amiss. It is internally inconsistent, because, if

3 it was under construction in the Fall of 1999, it wouldn't

4 be a June in-service date anyway.

5 Q You think he's made an error here?

6 A I think there's something inconsistent here.

7 Q To your knowledge, there had been no

8 recommendation by anyone, at least in your group, to try to

9 bring service forward to 1999--the summer of 1999?

10 A I don't recall an effort to get the line in

11 service that early. As I said, my recollection was more of

12 a--the question for the summer of 2000.

13 Q Are you sure there was no proposal in your

14 company to bring that line forward into the summer of 1999?

15 A There may have been. I don't remember one right

16 now.

17 PRESIDING JUDGE: Is this a logical place to stop

18 for the night?

19 MR. WEIR: I think it is, Judge.

20 PRESIDING JUDGE: We'll stand adjourned until

21 tomorrow morning at 10:00.

22 MR. MCGRANE: Your Honor, the only question is

23 whether we want to start at 9:30 or 9:00 to assure that we

24 finish.

25 PRESIDING JUDGE: I'm amenable to whatever you

288

1 want to do.

2 MR. MORGANS: I think, from my perspective, that

3 will be desirable, Your Honor.

4 MR. WEIR: 9:30.

5 PRESIDING JUDGE: 9:30. We'll make it 9:30.

6 (Whereupon, at 4:40 p.m., Thursday, January 27,

7 2000, the hearing was recessed, to reconvene Friday, January

8 28, 2000 at 9:30 a.m.)

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25

289

1 (FERC - ARIZONA PUBLIC SERVICE COMPANY vs. IDAHO POWER

2 COMPANY; DOCKET NUMBER EL99-44-003; WASHINGTON, D.C.;

3 THURSDAY, JANUARY 27, 2000; VOLUME 3)

4 C O N T E N T S

5 WITNESS DIRECT CROSS REDIRECT RECROSS

6 David A. Hansen

7 by Mr. McGrane 142

8 by Mr. Raskin 154

9 by Mr. McGrane 184

10 by Ms. Copsey 186

11 Randy A. Young

12 by Mr. McGrane 225

13 by Ms. Ryan 228

14 by Mr. McGrane 236

15 by Ms. Copsey 236

16 by Ms. Govan 241

17 N. Vernon Porter

18 by Ms. Ryan 250

19 by Ms. Huntington 252

20 H. Charles Durick

21 by Mr. Morgans 266

22 by Mr. Weir 268

23 RECESSES: A.M. -

24 NOON - 203

25 P.M. - 244

290

1 (FERC - ARIZONA PUBLIC SERVICE COMPANY vs. IDAHO POWER

2 COMPANY; DOCKET NUMBER EL99-44-003; WASHINGTON, D.C.;

3 THURSDAY, JANUARY 27, 2000; VOLUME 3)

4 E X H I B I T S

5 NUMBER DESCRIPTION IDENTIFIED RECEIVED

6 Item by Reference A Idaho Power 139 139

7 Company Open Access

8 Transmission Tariff, Original

9 Volume Number 5, first revised

10 APS-50 Document entitled, "Idaho Power 140 224

11 Power Company Response to Data

12 Request APS/13-5"

13 APS-1 through APS-25 Prefiled testimony of 141 223

14 David Hansen

15 APS-29 through APS-46 Prefiled testimony of 141 223

16 David Hansen

17 IPC-23 Opinion and Order presented by 161 181

18 counsel before Arizona Corporation

19 Commission

20 IPC-24 Response by Arizona Public Service 169 181

21 to Staff data request 1-3

22 IPC-25 Excerpts from deposition of Ajay 175 183

23 Kumar Sood, dated September 23,

24 1999, taken by APS in Boise, Idaho

25 -- continued --

291

1 (FERC - ARIZONA PUBLIC SERVICE COMPANY vs. IDAHO POWER

2 COMPANY; DOCKET NUMBER EL99-44-003; WASHINGTON, D.C.;

3 THURSDAY, JANUARY 27, 2000; VOLUME 3)

4 NUMBER DESCRIPTION IDENTIFIED RECEIVED

5 IPU-2 Idaho Power Company Response 204 218

6 to Data Request APS\14-4

7 IPU-3 Answer to Interrogatory 216 218

8 IPCO-48

9 APS-26 through APS-28 Prefiled testimony 225 244

10 of Randy A. Young

11 APS-47 through APS-49 Prefiled testimony 225 244

12 of Randy A. Young

13 IPC-13 through IPC-22 Direct testimony 251 265

14 of N. Vernon Porter and

15 documents submitted in

16 support of testimony

17 IPC-1 through IPC-9 Prepared testimony 267

18 of H. Charles Durick and

19 documents submitted in support

20 of testimony

21 AP-51 Memorandum from Mr. Durick, 281

22 Brownlee-Paddock T-line costs

23 AP-52 Monday, April 22, 1998 E-mail 282

24 from Darel Tracy

25