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1 BOISE, IDAHO, THURSDAY, FEBRUARY 21, 2002, 9:34 A.M.
2
3
4 COMMISSIONER KJELLANDER: Hello. Good
5 morning. This is the time and place for hearing in
6 Case No. IPC-E-01-43, also known as In the matter of
7 the Petition of the Commission Staff requesting that
8 the Commission investigate the buyback rates in the
9 Letter Agreement entered into by Idaho Power Company
10 and Astaris LLC.
11 I'm Paul Kjellander; I'm the Chairman
12 of today's proceedings. And to my right is
13 Commissioner Dennis Hansen, and to my left is
14 Commissioner Marsha Smith. We comprise the
15 Commission and will be deliberating on the matter
16 once it's fully submitted.
17 As we start off today, we'll first
18 begin with the appearances of the party, and since
19 it is the Staff, the Commission Staff, that brought
20 this case, we'll begin there.
21 MR. HAMMOND: Thank you,
22 Mr. President. My name is John Hammond. I'm a
23 deputy attorney general representing the Commission
24 Staff in this matter.
25 COMMISSIONER KJELLANDER: Good
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 morning, Mr. Hammond.
2 Let's move now to Counsel for Astaris.
3 MR. POMEROY: Good morning,
4 Mr. President and Commissioners. I'm Bob Pomeroy of
5 the law firm of Holland and Hart, representing
6 Astaris. With me today also at Counsel table is
7 Mr. Jim Tarpey, and next to -- to Jim's left is
8 Mr. Thor Nelson. They're also with the law firm of
9 Holland and Hart.
10 COMMISSIONER KJELLANDER: Mr. Tarpey,
11 for the record, could we get your name spelled for
12 us?
13 MR. TARPEY: Yes. It's T, as in
14 Thomas, A-R-P, as in Peter, E-Y.
15 COMMISSIONER KJELLANDER: And, Thor,
16 your last name again is?
17 MR. NELSON: Nelson, N-E-L-S-O-N.
18 COMMISSIONER KJELLANDER: Good. Thank
19 you and welcome.
20 MR. NELSON: Thank you.
21 COMMISSIONER KJELLANDER: Let's move
22 now to Idaho Power.
23 MR. RIPLEY: Larry D. Ripley,
24 appearing on behalf of Idaho Power Company.
25 COMMISSIONER KJELLANDER: Good
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 morning, Mr. Ripley.
2 MR. RIPLEY: Good morning.
3 COMMISSIONER KJELLANDER: And
4 Mr. Richardson.
5 MR. RICHARDSON: Peter Richardson of
6 the law firm of Richardson and O'Leary, appearing on
7 behalf of the Industrial Customers of Idaho Power.
8 COMMISSIONER KJELLANDER: And good
9 morning to you too.
10 Is there anyone else who needs to be
11 recognized for purposes of cross-examination? If
12 not then, are there any preliminary matters that
13 need to come before the Commission at this time?
14 MR. POMEROY: Mr. Chairman, we had
15 filed a Motion regarding the Commission's authority,
16 a Motion to Dismiss, at the end of January. That's
17 been fully briefed. We're prepared to argue that in
18 lieu of or as a part of our opening this morning.
19 COMMISSIONER KJELLANDER: Okay. Are
20 there any comments in response to that?
21 MR. HAMMOND: To the extent that there
22 is argument at this point, we have a few comments.
23 We have submitted a Response Brief to their Motion.
24 They have filed a Reply Brief, and there may be some
25 points in that that we would want to address, so I
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 guess I would reserve my right to make argument if
2 they should do so right now.
3 COMMISSIONER KJELLANDER: Further
4 comment from any of the other parties to the case?
5 MR. RIPLEY: We submitted a Brief and
6 see no need for any Oral Argument.
7 COMMISSIONER KJELLANDER:
8 Mr. Richardson.
9 MR. RICHARDSON: We don't have a
10 position on Oral Argument, Mr. Chairman.
11 COMMISSIONER KJELLANDER: Thank you.
12 Well, Mr. Pomeroy, is there anything
13 new you can add beyond the Briefs that we do have as
14 we proceed?
15 MR. TARPEY: I'm not sure that we
16 would necessarily add as it relates to the law,
17 because I think the issues have certainly been
18 briefed extensively in what has been -- the issues
19 have been covered very extensively in what's been
20 filed. I think in the sense of how it may relate to
21 the testimony that will be coming, there is some
22 merit in having some discussion around that, and
23 that was what the intent was in walking through this
24 was to cover some of that. So I hesitate about
25 saying we have anything brand new to present to the
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 Commission.
2 COMMISSIONER KJELLANDER: I guess at
3 this point all the Commissioners have had an
4 opportunity to review all of the written testimony
5 that's been briefed, and unless there's something
6 new -- and I don't want to deny you the opportunity
7 to have additional Oral Arguments in that specific
8 arena, but if there's nothing new, I'm wondering
9 what we gain by that.
10 MR. TARPEY: And that's fine. I
11 appreciate what you're indicating and I think for
12 purposes of the hearing and the testimony and such,
13 just proceeding with the witnesses will be fine by
14 us.
15 COMMISSIONER KJELLANDER: Okay. Why
16 don't we just take a quick break because we do have
17 an opportunity as the Commission if we decide to
18 rule on that Motion, and we can at least give you a
19 sense of where we're headed with regard to the
20 Motion to Dismiss, whether or not we want to take it
21 under advisement or just deal with it up front,
22 because it could have an impact on the proceedings
23 today.
24 MR. TARPEY: Okay. And if I could
25 just make one comment on that:
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 I know that there is a lot of the
2 Motion that has been filed, while it is directed as
3 a Motion to Dismiss, that to a large extent, some of
4 that depends upon the evidence that comes in and how
5 you hear that evidence and what you decide with
6 regard to that. So in a large respect, many of the
7 issues, even though they are in a legal sense, may
8 need to wait until the end of the hearings.
9 There is one issue which as a matter
10 of law does not require evidence, and that is the
11 issue of what -- of the retroactivity argument that
12 we have raised that has been briefed by both sides,
13 and that is, if a Decision is made to abrogate this
14 Contract, any such Decision would only be effective
15 as of the date of a Final Decision at this
16 Commission.
17 Like I say, that has been briefed.
18 That is not something that relies upon any of the
19 evidence that's coming forth. We think it's very
20 clear under Idaho law that it's -- any Decision
21 would be effective only as, again, the date of a
22 Final Decision, and the relief being asked by Staff
23 goes back to a date early in January. And, again, I
24 think the Idaho law is very clear that that's not
25 permissible. So that is one issue that you're going
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 to want to think about as you're having those
2 deliberations.
3 COMMISSIONER KJELLANDER: Thank you,
4 Mr. Tarpey.
5 In light of the fact that that sort of
6 approaches the concept of Oral Argument, we'll move
7 to Mr. Hammond to see if he has comment.
8 MR. HAMMOND: Yes. The Commission
9 Staff respectfully disagrees with the argument
10 that's been raised by Counsel regarding retroactive
11 ratemaking. We believe that as laid out in this
12 case, there was sufficient notice that this was an
13 issue, and although the case law they have cited is
14 Idaho law, it's not applicable to the current
15 situation. And I think we briefed that point and I
16 think I'll just leave it at that.
17 COMMISSIONER KJELLANDER: Thank you,
18 Mr. Hammond.
19 Is there additional comment from other
20 parties? If not, we will go off the record and the
21 Commission will deliberate privately on that matter,
22 and then return and tell you where we're at as we
23 move forward today. Thank you.
24 MR. TARPEY: Thank you.
25 (Discussion off the record.)
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 COMMISSIONER KJELLANDER: We'll go
2 back on the record.
3 The Commission has had an opportunity
4 to review the Briefs, and at this point what we will
5 do is take it under advisement and we'll go ahead
6 and proceed with the case, and we'll make a final
7 ruling on that when we kick out the Final Order in
8 relationship to this case. So, again, we will now
9 move forward, and Mr. Hammond, if you could just
10 kind of give us a heads-up on the direction you
11 choose to go with the order of witnesses?
12 MR. HAMMOND: Thank you,
13 Mr. President, and Commissioners. At this point,
14 Staff would call Keith Hessing as its first Staff
15 witness.
16 COMMISSIONER KJELLANDER: And is it
17 your intent to do the direct testimony and the
18 rebuttal separately?
19 MR. HAMMOND: Yes.
20 COMMISSIONER KJELLANDER: Thank you.
21 MR. HAMMOND: Staff would call
22 Keith Hessing.
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HEDRICK COURT REPORTING COLLOQUY
P.O. BOX 578, BOISE, ID 83701
1 KEITH HESSING,
2 produced as a witness at the instance of the Staff,
3 being first duly sworn, was examined and testified
4 as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR. HAMMOND:
9 Q. Good morning.
10 A. Good morning.
11 Q. Sir, could you please state your name
12 and spell your last name for the record?
13 A. My name is Keith Hessing. My last
14 name is spelled H-E-S-S-I-N-G.
15 Q. And, Mr. Hessing, by whom are you
16 employed and in what capacity?
17 A. I'm employed by the Idaho Public
18 Utilities Commission as a Staff member. I'm a Staff
19 engineer here.
20 Q. Are you the Keith Hessing that filed
21 direct testimony and prepared the attached exhibits
22 to your testimony, 101 through 111, in this case?
23 A. Yes.
24 Q. Do you have any corrections or changes
25 or clarifications that need to be made to your
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HEDRICK COURT REPORTING HESSING (Di)
P.O. BOX 578, BOISE, ID 83701 Staff
1 testimony?
2 A. Yes. There are a few corrections that
3 need to be made with my direct testimony.
4 I would direct your attention to
5 page 12, line 21.
6 Q. And can you tell me what the
7 correction that needs to be made on that page is?
8 A. Yes. Where it says "25 percent," that
9 should read "23.5 percent."
10 And then on page 17, line 2. On that
11 page, "2.6 million" should read "3.6 million."
12 On the same page, page 17, line 5,
13 "10.1 million" should read "11.1 million."
14 Q. Are there other corrections?
15 A. Yes, on page 20, lines 13 and 14.
16 Those two lines should read "Approximately 8.2
17 percent of Idaho Power's jurisdictional energy,
18 derived from Staff Exhibit No. 105."
19 Q. Mr. Hessing, there's a piece of your
20 prefiled testimony that deals with or is entitled
21 "Escrow." Astaris and the Commission Staff reached
22 an Agreement on a Memorandum of Understanding or
23 Statement of Understanding after your direct
24 testimony was filed in this case. That is part of
25 the record, and what affect does that have on your
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HEDRICK COURT REPORTING HESSING (Di)
P.O. BOX 578, BOISE, ID 83701 Staff
1 testimony?
2 A. If the Commission determines that the
3 changes in the Contract rates that Staff is
4 proposing should be effective at the beginning of
5 this case when they open this investigation, then
6 seven thirty-firsts -- the Agreement was reached on,
7 I believe January 8, 2002 -- seven thirty-firsts of
8 the costs for January, the cost difference, would
9 then not be included, so there's a small amount of
10 the difference in cost proposed by Staff that would
11 not be included in that ratio for the month of
12 January only.
13 Q. And so under that Statement of
14 Understanding, Staff and the parties agree that we
15 would not pursue the escrow issue --
16 A. That's my understanding.
17 Q. -- at that time?
18 Mr. Hessing, if I asked you the
19 questions that are set forth in your prefiled
20 testimony, would your answers be the same today,
21 even with those corrections?
22 A. With those corrections, they would.
23 MR. HAMMOND: I would move that the
24 prefiled direct testimony of Keith Hessing be spread
25 upon the record in its entirety, with the
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HEDRICK COURT REPORTING HESSING (Di)
P.O. BOX 578, BOISE, ID 83701 Staff
1 corrections and clarifications stated previously by
2 Mr. Hessing as if read, and that Exhibits 101
3 through 111 be marked for identification,
4 admitted -- and admitted for the record.
5 If there are no objections, we would
6 make Mr. Hessing available for cross.
7 COMMISSIONER KJELLANDER: And without
8 objection then, we will spread the testimony across
9 the record as if read, and admit Exhibits 101
10 through 111.
11 (The following prefiled direct
12 testimony of Mr. Hessing is spread upon the record.)
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HEDRICK COURT REPORTING HESSING (Di)
P.O. BOX 578, BOISE, ID 83701 Staff