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1 (The following proceedings were had in
2 open hearing.)
3 COMMISSIONER KJELLANDER: Is there any
4 order in terms of cross that we need to follow on
5 this? Should we begin with Mr. Richardson?
6 MR. RICHARDSON: Thank you,
7 Mr. Chairman. I have no questions for this witness.
8 COMMISSIONER KJELLANDER: Move to
9 Mr. Hammond.
10 MR. HAMMOND: We don't have any
11 questions.
12 COMMISSIONER KJELLANDER: Such a good
13 record moving here. And Mr. Nelson?
14 MR. NELSON: Yes, Mr. Chairman, we
15 have just a few brief ones.
16
17 CROSS-EXAMINATION
18
19 BY MR. NELSON:
20 Q Good afternoon, Mr. Said. My name is
21 Thorvald Nelson. I'm an attorney representing
22 Astaris in this case.
23 A Good afternoon.
24 Q I would like to refer you to, just
25 briefly, to page 13 of your direct testimony, please.
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1 A (Witness complying.)
2 Q If you could let me know when you
3 found that?
4 A I'm there.
5 Q On line 10 of that direct testimony,
6 you offer -- you state that, "The Company is entitled
7 to recover 90 percent of the Idaho jurisdictional
8 portion (85 percent) of the Astaris VLR payments from
9 Idaho customers." Do you see that sentence?
10 A Yes, I do.
11 Q Okay. And just so the record is
12 clear, "VLR" in your testimony is an abbreviation for
13 Voluntary Load Reduction?
14 A That's correct.
15 Q That's what we've been calling the
16 letter agreement or buyback agreement; is that
17 correct?
18 A Those terms have been used
19 synonymously, yes.
20 COMMISSIONER KJELLANDER: Is your
21 microphone on, Mr. Said?
22 THE WITNESS: It is now. Excuse me.
23 Q BY MR. NELSON: I'm curious, Mr. Said,
24 could you explain why, in your opinion, Idaho Power
25 is entitled to recover 90 percent of the payments
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1 that are made under the VLR to Astaris?
2 A Sure. I would refer to Staff Exhibit
3 No. 111, which includes the voluntary load reduction
4 amendment to the agreement. And on page 7 of that
5 exhibit, Condition No. 7 of the letter agreement
6 states, "The payments to be made to Astaris, referred
7 to in paragraph four above, are conditioned upon the
8 Idaho Public Utilities Commission issuing an order
9 finding such payments may be treated as the power
10 supply expense for purposes of Idaho Power's power
11 costs adjustment."
12 And then I would refer to Exhibit
13 No. 6, which is Order No. 28695 issued in Case
14 No. IPC-E-01-9, which is the Commission's approval of
15 VLR. On page 6, the last paragraph under the section
16 entitled "Order," it says, "It is further ordered
17 that the reasonably incurred payments made by Idaho
18 Power to Astaris for purchases of energy should be
19 treated as a purchase power expense and then flowed
20 through Idaho Power's PCA mechanism."
21 As a power supply expense recognized
22 in the Company's power cost adjustment, the standard
23 treatment of those expenses is to first
24 jurisdictionalize the expenses: 85 percent to Idaho,
25 and then share those jurisdictionalized amounts, 90
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1 percent to customers.
2 Q Let me ask a simpler question then
3 perhaps. Would you agree with me, Mr. Said, that
4 before the costs of the VLR, as you described it,
5 would be recovered through the PCA, the Commission
6 would have to make a determination that those costs
7 were prudent?
8 A I believe that's what occurred, yes.
9 Q Okay. And do I understand what your
10 testimony is then, you believe the Commission has
11 already made that determination that the costs,
12 whatever they may be in the VLR, are prudently
13 incurred by Idaho Power?
14 A I believe that they have issued an
15 order stating at the time of that order, that they
16 were viewed as prudent, yes.
17 Q Okay. Does the fact that the market
18 price for electricity has changed since that order,
19 in any way change your opinion that the costs to the
20 VLR paid from Idaho Power to Astaris are prudent?
21 A At this point in time, until an order
22 states that they are not prudent, I would say, yes,
23 they are prudent.
24 Q And would it be Idaho Power's -- would
25 it be your position and Idaho Power's position, that
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1 whatever the costs are, regardless of the market,
2 that they have been and continue to be prudently
3 incurred? And when I talk about costs, I'm talking
4 about the costs that Idaho Power pays to Astaris
5 under the VLR.
6 A The costs that we are paying to
7 Astaris under the VLR have been deemed prudent at
8 this point in time, yes.
9 Q I understand that. And in your
10 opinion, do those continue to be prudent going
11 forward through the rest of the life of the VLR?
12 A Unless the Commission determines that
13 those prices are no longer prudent.
14 MR. NELSON: Okay. Can I have just
15 one second?
16 (Pause in the proceedings.)
17 MR. NELSON: Thank you, Mr. Chairman.
18 I have no more questions. Thank you, Mr. Said.
19 COMMISSIONER KJELLANDER: We move now
20 to redirect, Mr. Ripley.
21 MR. RIPLEY: Just one.
22
23
24
25
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1 REDIRECT EXAMINATION
2
3 BY MR. RIPLEY:
4 Q Mr. Said, if I could refer your
5 attention to Exhibit No. 111, page 7 of 8, which is
6 the last page of the March 2001 agreement.
7 A Yes.
8 Q Do you have that?
9 A Yes, I do.
10 Q Let us assume that the Commission
11 decides to determine that the payments under this
12 agreement are too high and no longer prudent, and
13 would order that they not be flowed through the Idaho
14 Power's power cost adjustment. Can you assume that
15 for me?
16 A I can.
17 Q In that event, would Idaho Power then
18 cease to making the payments to Astaris?
19 A That's my understanding that upon my
20 discussions with you, that legally we might view the
21 contract -- the amendment to the contract null and
22 void.
23 Q Because it's conditioned upon fairable
24 PCA treatment; isn't that correct?
25 A That's correct.
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1 MR. RIPLEY: That's all the questions
2 I have.
3 COMMISSIONER KJELLANDER: I think at
4 this point, since we're about just a few minutes
5 before where he need to be heading across the street,
6 what we'll do is go off the record.
7 (Mr. Said excused.)
8 (A recess was had and reconvened at
9 4:15 p.m.)
10 (Commissioner Smith not present.)
11 COMMISSIONER KJELLANDER: Back on the
12 record. And being back on the record now, I believe
13 we were ready for direct testimony from Astaris. And
14 Mr. Pomeroy?
15 MR. POMEROY: Yes. Thank you,
16 Mr. Chair. And good afternoon again.
17 COMMISSIONER KJELLANDER: Can you get
18 your microphone, please?
19 MR. POMEROY: Thank you, Mr. Chair.
20 Good afternoon again.
21 Astaris would call Mr. Alan W. Seder
22 to the stand.
23
24
25
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1 ALAN W. SEDER
2 produced as a witness at the instance of Astaris,
3 having been first duly sworn, was examined as
4 follows:
5 DIRECT EXAMINATION
6
7 BY MR. POMEROY:
8 Q Now, that you've been sworn, would you
9 state your name and business address for the record,
10 please?
11 A My name is Alan Seder. My business
12 address is 622 Emerson Road, Suite 500, St. Louis,
13 Missouri, 63411.
14 Q By whom are you employed and in what
15 capacity?
16 A I am employed by Astaris, LLC. I am
17 currently the VP in sales and marketing. At the time
18 that the transaction was entered into, I was the
19 director of business development and the lead
20 negotiator for Astaris on the buyback arrangement.
21 Q In this document, did you prefile
22 testimony and documents that have been marked as
23 Exhibits 201 and 202?
24 A Yes, I did.
25 Q Do you have a copy of that before you?
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1 A Yes, I do.
2 Q Do you have any corrections or
3 clarifications to make in your prefile testimony at
4 this time?
5 A I have one correction to make. It's
6 around Exhibit 202, which is referenced on page 8 of
7 my testimony as effectively the current buyback
8 agreement that's in place. I had inadvertently put
9 in here the parallel agreement, which was entered
10 into with Idaho Power in the event that we were to
11 take this buyback arrangement to the off-system
12 rather than on-system.
13 So that's not correctly referenced.
14 And, in fact, what I intended to put in is the
15 exhibit that Mr. Hessing had labeled as Exhibit 111.
16 So there is an exhibit like that already in the
17 record.
18 Q Are there any other corrections or
19 clarifications you need to make?
20 A No.
21 Q If I were to ask you the same
22 questions today as are recited in your prefile
23 testimony, would your answers be the same?
24 A Yes.
25 MR. POMEROY: Mr. Chairman, at this
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1 time we would move the prefile testimony be spread
2 upon the record of Mr. Seder as if read, and offer
3 it, and our Exhibits 201 and 202 for the record, and
4 tender Mr. Seder for cross-examination.
5 COMMISSIONER KJELLANDER: And without
6 objection?
7 MR. RIPLEY: Well, we have an
8 objection from the standpoint from -- we have an
9 objection insofar as Exhibit 202 is concerned. That
10 was never a document that became an agreement between
11 the parties as Mr. Seder has testified to.
12 Exhibit 111 is the agreement; is it not? Am I
13 mistaken?
14 COMMISSIONER KJELLANDER: That is
15 correct. From his testimony what he said is Exhibit
16 No. 111 more accurately reflects and is the
17 agreement. And as I recall from his testimony,
18 Exhibit 202 was a standby in the event that it went a
19 different direction.
20 MR. RIPLEY: So are they withdrawing
21 Exhibit 202?
22 MR. POMEROY: No. We're just offering
23 it as a picture to fill in what was going on at the
24 time of the buyback agreement. We acknowledge that's
25 not the document that he's described in his
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1 testimony, and he's now corrected what it is.
2 MR. RIPLEY: Well, Mr. Chairman, if I
3 understand the testimony of Mr. Seder, he said he
4 inadvertently included the wrong exhibit. Now, I
5 find that it's not inadvertent, that they intend to
6 include it in the record. I don't know what for.
7 COMMISSIONER KJELLANDER: Can we get
8 there by not admitting Exhibit 202 and instead,
9 referencing Exhibit 111?
10 MR. POMEROY: Certainly.
11 COMMISSIONER KJELLANDER: Why don't we
12 do that for the record then. 202 is not a number
13 that's been admitted. When we refer to that specific
14 agreement, we will be referring to Exhibit 111. It's
15 already in the record and admitted, and that will get
16 us there.
17 So without further objection then, the
18 testimony will be spread across the record as if
19 read, and Exhibit 201 will be admitted.
20 (The following prefiled testimony of
21 Mr. Seder is spread upon the record.
22 (Astaris' Exhibit Nos. 201 and 202
23 were prefiled and marked for identification.)
24
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