HomeMy WebLinkAboutVOLUME4.txt
1 BOISE, IDAHO, FRIDAY, FEBRUARY 22, 2002, 8:30 A.M.
2
3
4 COMMISSIONER KJELLANDER: Good
5 morning, and we will be back on the record for
6 Case No. IPC-E-01-43. And when we broke from
7 yesterday's session, we were in the middle of
8 cross-examination for Mr. Ripley from Idaho Power.
9 I believe he was about ready to launch into a new
10 area, so that was our breaking point. So on the
11 stand we had Mr. Seder.
12 You are still sworn.
13 So I believe if everyone is set,
14 Mr. Ripley, are you ready?
15 MR. RIPLEY: Thank you, Mr. Chairman.
16 Yes.
17 COMMISSIONER KJELLANDER: Let's go.
18
19
20
21
22
23
24
25
311
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 ALAN SEDER,
2 produced as a witness at the instance of Astaris,
3 being previously duly sworn, resumed the stand and
4 was further examined and testified as follows:
5
6 CROSS-EXAMINATION
7
8 BY MR. RIPLEY:
9 Q. Good morning, Mr. Seder.
10 A. Good morning.
11 Q. Mr. Seder, I'm told at the break
12 yesterday that there's one issue that remains
13 somewhat unclear as to Astaris's position, and that
14 is this:
15 Do you believe, as the Astaris policy
16 spokesperson in this proceeding, that it is
17 appropriate for the Idaho Commission to investigate
18 whether or not Astaris made its decision to close
19 the Pocatello plant before or after the March
20 Voluntary Load Reduction Agreement?
21 A. Well, there's a presumption in that
22 that I'm the policy person for the Company, and I'm
23 not sure that's a correct presumption at this point.
24 I really don't know what the
25 Commission should consider in this case. I think
312
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 that's a matter of -- of public utility law and
2 Commission procedures, and I'm -- I just don't know.
3 Q. Well, assume for me for the moment
4 that Astaris knew it was going to close the plant
5 before it entered into the Voluntary Load Reduction
6 Agreement. Can you assume that for me?
7 A. Well, it's obviously against the facts
8 that we presented, but I can assume that, yes.
9 Q. All right. Now, if that were true, do
10 you believe the Commission is entitled to take that
11 into consideration and cause a modification to the
12 Astaris Voluntary Load Reduction Agreement?
13 A. Again, I think that you're asking me
14 to respond to a matter of what the policy and
15 procedures of the Commission is, and that's not my
16 area of expertise. My area of expertise is in
17 running my own business.
18 Q. All right. Then let me turn to page 2
19 of your prepared testimony, line 17 through 20. If
20 that isn't your area, then what's the purpose of
21 your statement that you will explain that Astaris's
22 subsequent decision to shut down its last remaining
23 production furnace and cease its Pocatello
24 operations before 2003 was neither known nor
25 expected when the Buyback Contract was negotiated,
313
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 executed, and approved?
2 A. Well, my purpose in that testimony was
3 to present that fact, they didn't know, I mean, as
4 it states.
5 Q. Now, are we to believe that the
6 decision to close the Pocatello plant was never
7 memorialized in a written document between Astaris
8 and its two parents?
9 A. I'm not sure I understand the
10 question.
11 Q. Well, if I look at this record, there
12 is nothing in this record other than your statement
13 that the decisions to close the Pocatello plant were
14 made after the Voluntary Load Reduction Agreement,
15 and I'm asking you --
16 A. Well, let me rerespond to that a
17 minute. I think I understand what you're asking,
18 and I think there's a -- an assumption in there
19 that's not correct.
20 There was in a Staff Response --
21 actually, I'm sorry, it was not the Staff Response.
22 It was actually in my testimony, and it was in some
23 of the documents around discovery that attempted to
24 show what our intent was prior and during the time
25 of the -- the Buyback Agreement going into effect.
314
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 And those documents show, and as my testimony
2 supports, our intent was to go to a one-furnace
3 operation, and once the buyback went in place, we
4 immediately went into a one-furnace operation.
5 Q. But my question remains surely there
6 was some correspondence between Astaris's parents --
7 FMC and Solutia -- and Astaris concerning the
8 closure of the Pocatello plant. Was that just done
9 over the phone?
10 A. There were certainly documentation
11 about the process that ultimately led to the closure
12 of the Pocatello facility. That documentation
13 though, in the sequence of events as they occurred,
14 occurred well after the buyback went into place.
15 Q. But, why didn't Astaris and why didn't
16 you, in preparing your testimony, present those
17 documents to the Commission so the Commission could
18 be assured that, indeed, the Voluntary Load
19 Reduction Agreement was entered into before the
20 decision to close the Pocatello plant?
21 A. I think you're asking me a question
22 that is more related to how our attorneys produce
23 documents in this, and the discovery process is not
24 something I am that familiar with at the end of the
25 day. I put the testimony forward, discovery
315
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 documents were presented. I don't know what
2 exchange occurs to determine whether they were
3 sufficient or not for the Commission.
4 Q. All right. Now, in looking at the
5 transaction -- that is, the Voluntary Load Reduction
6 Agreement -- do you believe that in looking at that
7 Agreement, the Commission looked at the entire
8 contractual arrangement between Idaho Power Company
9 and FMC, subsequently Astaris, for the receipt of
10 power from Idaho Power Company to Astaris?
11 A. I can't speak for what the Commission
12 looked at or didn't look at in this and how they
13 viewed it. That's the Commission's mind, not mine.
14 Q. Well, at the time that Astaris entered
15 into the Voluntary Load Reduction Agreement, it
16 intended, as you've testified, to continue a
17 one-furnace operation. Is that correct?
18 A. Yes. Our intent was to continue with
19 one-furnace operation.
20 Q. All right. Do you believe that the
21 decision to then close the plant was a change in
22 circumstances that gave -- that would give rise to a
23 reconsideration of the appropriateness of the
24 Voluntary Load Reduction Agreement?
25 MR. POMEROY: I'm going to object to
316
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 that question as calling for a legal conclusion. If
2 he's asking if there's a change in circumstances,
3 this witness can answer. He then went on to say --
4 Mr. Ripley then asked is this something that leads
5 to a reconsideration in Commission policy or
6 practice or under the law or what have you --
7 MR. RIPLEY: I didn't say anything
8 about the law, Mr. Chairman.
9 MR. POMEROY: I know you didn't say
10 that, but to ask whether it leads to a
11 reconsideration seems, to me, to be asking for a
12 legal interpretation.
13 COMMISSIONER KJELLANDER: Mr. Ripley.
14 MR. RIPLEY: I believe that this
15 witness has stated that he is the one that entered
16 into the negotiations with Idaho Power Company; that
17 he continued to negotiate with Idaho Power Company
18 throughout all of 2001. He is the one that
19 represented to the Commission that it was going to
20 be a one-furnace operation under his testimony.
21 I believe I'm entitled to inquire as
22 to whether or not he considered the fact that they
23 were now going to close as having any affect upon
24 the decision to enter into the Voluntary Load
25 Reduction Agreement and the result that it could
317
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 have upon the Commission.
2 COMMISSIONER KJELLANDER: I think with
3 that as the parameter, then let's go forward with
4 that question and response.
5 THE WITNESS: Well, my thought on that
6 is certainly the closure of the plant and that
7 change -- that change from what our original intent
8 was to what ultimately through the sequence of
9 events following the buyback event led to the
10 closure of the facilities certainly changed
11 circumstances. I -- I can't speak to whether that
12 has a material impact or not. I heard in earlier
13 testimony from others that -- I believe it was
14 Mr. Hessing -- that it really wasn't material to
15 this case, but that's what he said.
16 Q. BY MR. RIPLEY: Well, what do you
17 think?
18 A. He's closer to what the Commission
19 should think than what I think the Commission should
20 think. I mean, I don't know what the Commission
21 should think.
22 Q. What do you think though? What is
23 your opinion?
24 A. My opinion is simply the deal as we
25 structured it said nothing about using anything
318
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 more -- you know, anything more than not using more
2 than 70 megawatts, and we're meeting the requirement
3 of that Contract. We're certainly not using more
4 than 70 megawatts.
5 Q. Now, at page 3 of your testimony, you
6 describe the underlying Electric Service Agreement,
7 namely at pages 13 through 16 -- at, excuse me,
8 lines 13 through 16, page 3. Do you see that?
9 A. Yes, I see it.
10 Q. Who requested that arrangement? Was
11 that Idaho Power Company or was that FMC that
12 desired a two-block: One go to the market, one
13 embedded cost?
14 A. Again, I was not party to the
15 negotiation of the ESA Agreement. I can only read
16 what was in the ESA Agreement and what that -- what
17 that is, so I can't speak to what was in people's
18 minds and what their negotiation would have been at
19 the time of the Agreement.
20 Q. So you don't have any history as to
21 what led up to the FMC Agreement that you've
22 referred to as the ESA?
23 A. I mean, that -- I wasn't there, so I
24 don't know what was requested.
25 Q. And you've never inquired from anyone?
319
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 A. Not really. I mean, I have an
2 Agreement and I operated from the Agreement that was
3 in front of me.
4 Q. All right. On page 4 of your
5 testimony, you state In December of 2000,
6 Idaho Power approached Astaris.
7 Do you see that?
8 A. Yes.
9 Q. And do you state that that -- on
10 line 11 -- That ultimately led to our agreeing to
11 sell Idaho Power an option to purchase a portion of
12 Astaris's power during peak load conditions for a
13 period in late December?
14 How many days was involved in that
15 transaction?
16 A. I'm not sure of the specifics of that
17 arrangement. I was only involved at the very
18 beginning discussions, and I believe it ultimately
19 was passed off to some of the personnel at the plant
20 at that time.
21 Q. Well, did you -- did you negotiate the
22 Agreement?
23 A. That specific -- the specific
24 Agreement in December, I was involved with the very
25 early setting of the parameters under which we would
320
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 do it.
2 Q. And the parameters were three days,
3 wasn't it?
4 A. That wasn't one of the parameters that
5 we talked about. The parameters that I dealt with
6 were the volume of power that we could afford to
7 give up, and the level of pricing which we could
8 afford to do it at and make it economically viable.
9 Q. All right. But the parameters of the
10 level of the amount of power was 40 megawatts?
11 A. I believe that's in the right range,
12 yes.
13 Q. Twenty megawatts of secondary and --
14 20 megawatts of second block and 20 megawatts of
15 first block?
16 A. That sounds right.
17 Q. Did Idaho Power Company ever ask you
18 to suspend or curtail your operation?
19 A. Did they actually ask us to do that?
20 No, as far as I know.
21 Q. So Idaho Power Company paid you for
22 the potential of curtailing part of your load for
23 three days and it never occurred?
24 A. I believe there was some nominal
25 option fee that was paid to have that right, yes.
321
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Yes, Idaho Power Company paid you for
2 the right to curtail part of your load. Correct?
3 A. I believe that's correct, yes.
4 Q. And then it never had to utilize that
5 ability to curtail you, or at least it never
6 curtailed you?
7 A. I believe that's correct, yes.
8 Q. And that was for three days?
9 A. You've said that. I don't have
10 anything in front of me that verifies that, but I'm
11 taking your word that it was three days.
12 Q. Now, did that -- was that type of
13 arrangement contemplated under the Electric Service
14 Agreement, do you know?
15 A. I don't know. It was Idaho Power that
16 approached us and asked us to go into an
17 arrangement, and we talked about different ways of
18 meeting what was represented to Astaris as an
19 emergency need with a potential difficult situation
20 coming up for Idaho Power, and we came to an
21 Agreement about helping out in that situation.
22 Q. Now -- excuse me. Does that complete
23 your answer?
24 A. Yes.
25 Q. So you don't know and you just
322
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 accepted whatever Idaho Power Company told you as to
2 the arrangements that could be entered into as far
3 as that transaction was concerned?
4 A. Well, in that specific instance, yes.
5 As I recall, we were in the middle of a series of
6 management meetings, we were doing several things.
7 I was called out of a meeting to go and talk on the
8 phone with a trader from Idaho Power, and we talked
9 for a brief period of time and came to some
10 conclusions. And so, no, I can't say that I
11 immediately ran back to my office and looked at a
12 document. I assumed that Idaho Power was exercising
13 something within that document.
14 Q. Now, during that same period of time,
15 are you aware that Simplot entered into the same
16 type of transaction?
17 A. I'm not aware of what Simplot entered
18 into.
19 Q. Now, would it be fair to say that the
20 December transaction that's referred to in your
21 testimony was limited to a specific weather event?
22 A. I believe that's how it was
23 represented to me, yes.
24 Q. The weather event was a projected
25 Siberian express, if I remember correctly. Is that
323
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 right?
2 A. If you say so.
3 Q. Now, going on to line 17, you say
4 During discussions in January of 2001.
5 Who initiated those discussions? Was
6 that Idaho Power Company or was that Astaris through
7 you?
8 A. As I recall, the discussions in
9 January were initiated by Astaris.
10 Q. And so you asked Idaho Power Company
11 to come up with a Proposal?
12 A. No, not at that time. In fact, what
13 we were doing at that time was trying to find ways
14 to get additional power to be able to operate our
15 furnaces at our budgeted levels of two-plus
16 furnaces. And we brought several different
17 Proposals to Idaho Power to provide and make
18 something work, and Idaho Power basically rejected
19 each of them.
20 And, ultimately, I asked Idaho Power,
21 you know, We're trying to work through a difficult
22 situation here, and I keep giving Proposals and all
23 I get back is a, "No." No direction as to what
24 we -- what might work. And so I had -- I had asked,
25 Is there some deal in here somewhere that can help
324
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 us out during this time frame of this power
2 situation?
3 Q. "This power situation." Was that at a
4 time when market costs for power were
5 extraordinarily high?
6 A. Yes, that -- that was the experience
7 through late 2000 and early 2001.
8 Q. And FMC, under its Electric Service
9 Agreement, had chosen to go to the market for its
10 second block of power?
11 A. That was the opportunity that Astaris
12 had through the FMC Agreement assigned to us, yes.
13 Q. Was that what was causing your
14 problem, that the market price for the second block
15 was at a level that was too high for you?
16 A. Yes.
17 Q. And so you asked Idaho Power Company
18 for some type of relief from this market price
19 situation?
20 A. We really didn't ask for relief. The
21 approach that we used in this was to see if there
22 was some way for us to move around Block 1 power
23 purchases in time that would be beneficial to both
24 Idaho Power, Astaris, and the ratepayers, that would
25 allow us to take more power earlier and forego some
325
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 power later. And the concepts that we brought
2 forward were, as we understand it, or understood it,
3 traditionally there were spring runoff and there
4 were lower power costs out there during the spring
5 time frame, and there were summer peaks which tended
6 to be at much higher cost, so the kind of idea we
7 had was was there a way for us to take more power
8 perhaps during spring runoff and then get back an
9 equivalent amount of power during the summer peaks
10 so that there would be some differential value that
11 could be shown in that.
12 But the plan here would have been to
13 be able to make more material early on, giving
14 Astaris time to bring in additional raw materials,
15 and then take a shutdown period to basically pay
16 back the power, and then return to normal operations
17 hopefully thereafter.
18 Q. During this time, did Idaho Power
19 Company consider those Proposals, explain why they
20 might not work, what their reluctance to enter into
21 those Agreements were? Did they simply reject or
22 was there discussions and negotiations?
23 A. At first, there was simple rejection.
24 After we continued to press for why
25 that wouldn't work or whether there was some other
326
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 alternative, Idaho Power then began to explain that
2 the shape of the power curve or demand curve was
3 fundamentally different than it had historically
4 been, so our base assumption was incorrect.
5 Q. Now, when Idaho Power suggested that
6 Astaris sell its 120 megawatts of Block 1, did it
7 say, "Sell it," or did it say, "We will pay you to
8 curtail"?
9 A. Well, without having the specific
10 document in front of me --
11 I guess I could pull it up here. It's
12 my exhibit, I believe.
13 Q. Is that your Exhibit 201?
14 A. Yes, I believe that's correct.
15 Q. On line 3, doesn't it say, Mr. Seder,
16 Idaho Power Company is willing to initiate
17 discussions with you concerning the reduction of
18 electrical consumption?
19 A. Yes, those are the words on line 3.
20 Q. And as you've testified, this was then
21 rejected by Astaris?
22 A. That's my testimony.
23 Q. Now, after that then in your
24 testimony, commencing at line 8 --
25 A. Which page are we on?
327
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Oh, excuse me. Page 6.
2 -- you then discuss a 50-megawatt what
3 you refer to as a buyback arrangement as the ideal
4 lower-cost alternative. Do you see that?
5 A. Yes, I do.
6 Q. Now, prior to the time that that offer
7 was made, did Mr. Sibley of Astaris meet with
8 Mr. Packwood of Idaho Power Company?
9 A. Yes, I believe he did.
10 Q. And what was the substance of those
11 discussions, do you know?
12 A. As I understand it, what Mr. Sibley
13 spoke about was whether there was a lesser quantity
14 of power that could be sold back to Idaho Power than
15 a complete shutdown design.
16 Q. And after that discussion, the
17 50-megawatt Proposal came forward?
18 A. Yes, basically the Proposal came a few
19 days after that meeting.
20 Q. Now, for the record, could you
21 identify who I referred to as "Mr. Sibley," to your
22 understanding?
23 A. Yes. Mr. Sibley is the CEO and
24 president of Astaris LLC.
25 Q. Now, what did you mean in your
328
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 testimony when you stated on line 13, page 6, A
2 50-megawatt buyback from Astaris was considered an
3 ideal lower cost alternative?
4 Was that from Astaris's viewpoint?
5 A. No, that was from the viewpoint of
6 Idaho Power, as it was stated to me.
7 Q. Now, did that include the fact that
8 Astaris would continue to purchase 120 megawatts of
9 power?
10 A. I'm not sure what the "that" refers
11 to.
12 Q. Well, when it was the ideal lower-cost
13 alternative, did that lower-cost alternative include
14 the fact that Astaris would continue to purchase 120
15 megawatts of power under its take-or-pay obligation?
16 A. I don't know when the statement was
17 made to me that it was ideal. It was not made in
18 connection with 120 megawatt purchase.
19 Q. You don't know what Idaho Power was
20 taking into consideration when it stated it was an
21 ideal lower-cost alternative?
22 A. I think it would be safe to say that I
23 couldn't read Idaho Power's mind what they were
24 considering.
25 Q. So you didn't know?
329
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 A. No.
2 Q. Then on page 14, line 13, you say
3 Astaris parents FMC and Solutia made a preliminary
4 decision on September 14, 2001, and the final
5 decision to close the Pocatello operation was not
6 made until October 5, 2001.
7 Do you see that?
8 A. Yes, I do see that.
9 Q. After September 14th, did Mr. Sibley
10 again meet with Mr. Packwood?
11 A. I'm not sure.
12 Q. After September 14th, did Astaris
13 continue to negotiate with Idaho Power Company to
14 request additional Voluntary Load Reduction
15 Agreements?
16 A. The answer is, yes, we did have
17 conversations with Idaho Power about whether there
18 was a possibility of additional voluntary load
19 reductions.
20 Q. Did you convey to Idaho Power Company
21 in September or October that the plant was going to
22 be closed?
23 A. The events around the closure of the
24 Pocatello facility constituted material events for
25 our parent companies, which are publicly-traded
330
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 companies, and we were restricted from communicating
2 to anyone.
3 Q. So you were negotiating with Idaho
4 Power Company for a voluntary load reduction after
5 Astaris had decided to close the plant?
6 A. I'm not absolutely clear on the timing
7 of all of the meetings and discussions, but it's
8 quite possible that we had conversations after the
9 preliminary decision.
10 Q. When you say, "preliminary decision,"
11 I'm asking you after October 5, 2001, when you state
12 in your testimony a final decision to close the
13 Pocatello operation, after October 5, 2001, did you
14 have negotiations with Idaho Power Company
15 requesting a voluntary load reduction?
16 A. I believe that Astaris had discussions
17 about the remaining 70 megawatts.
18 Q. And those discussions included payment
19 for a voluntary load reduction?
20 A. That's -- I think that's fair, yes.
21 Q. Now, is it Astaris's position as far
22 as the 70 megawatts is concerned that you don't need
23 a voluntary load reduction in order to get a credit
24 from Idaho Power Company?
25 A. Could you say that again, please?
331
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Yes. Is it Astaris's position that
2 really you don't need a Voluntary Load Reduction
3 Agreement in order to obtain a credit from Idaho
4 Power Company for the 70 megawatts of take-or-pay
5 power?
6 A. I think what you're talking about is a
7 legal position that -- that I don't have an opinion
8 on.
9 Q. Well, let me ask you this: Today, who
10 has ownership and is responsible for the operation
11 of the Pocatello plant?
12 A. The ownership of the facility has been
13 passed to FMC.
14 Q. Have you notified Idaho Power Company
15 of that?
16 A. I don't know.
17 Q. Is, at the current time then, Astaris
18 providing power to FMC?
19 A. The answer to that, I believe, is
20 "yes."
21 Q. Is there interaccount billing?
22 A. I don't know what the structure of
23 that is. Effectively, as I understand it, there is
24 the ability to sell power across affiliates at that
25 site, and FMC and Astaris are certainly affiliated
332
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 with. That's -- you know, that's really beyond my
2 area of expertise or scope at this point.
3 Q. Well, when in your testimony you are
4 referring to "Astaris" as the three -- Astaris
5 Idaho, Astaris, FMC -- we don't know when you're
6 talking about FMC, when you're talking about
7 Astaris, or when you're talking about Astaris
8 Delaware in your testimony. You just lump them.
9 Would that be correct?
10 A. That's one way to interpret it, yes.
11 Q. Well, one reading this record without
12 having privy to just what you and I conversed about
13 would naturally assume, would they not, that they're
14 all one and the same, as far as your testimony?
15 A. Well, certainly Astaris and FMC are
16 not all one and the same. We're different. Excuse
17 me.
18 Q. Setting aside for the moment the legal
19 interpretation, is it your testimony that Astaris is
20 an affiliate of FMC? Is that your understanding?
21 A. You know, I don't know exactly what
22 the definition of an "affiliate" would be in a legal
23 sense.
24 Q. Well, let me ask you this:
25 It doesn't make any difference to
333
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Astaris what the Agreements provide for, does it?
2 You just operate it?
3 A. No, it does matter what Agreements say
4 at the end of the day, and the simple fact is that
5 Astaris is -- the Agreement hadn't been assigned and
6 Astaris is purchasing the power.
7 Q. All right.
8 MR. RIPLEY: If I could approach the
9 Commission and the witness?
10 COMMISSIONER KJELLANDER: Okay.
11 MR. RIPLEY: I would ask,
12 Mr. Chairman, that there be marked for
13 identification as Exhibit No. 7 a document which is
14 entitled In the District Court of the Fourth
15 Judicial District of the State of Idaho, Complaint
16 for Declaratory Judgment, FMC Corporation versus
17 Idaho Power Company. This a 41-page document. I
18 would ask that it be marked for identification as
19 Exhibit 7.
20 COMMISSIONER KJELLANDER: And without
21 objection, it will be marked for identification as
22 Exhibit No. 7.
23 (Idaho Power Company Exhibit No. 7
24 was marked for identification.)
25 Q. BY MR. RIPLEY: Mr. Seder, have you
334
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 ever seen this document before?
2 A. I believe I saw a draft of this
3 document at one point in time.
4 Q. All right.
5 MR. RIPLEY: Mr. Chairman, I desire to
6 use this document to pursue prior inconsistent
7 statements of the witness. I would ask that it be
8 admitted as Exhibit No. 7 on the grounds that it is
9 a judicial document which was provided to us, as you
10 will see on page 41, by the Counsel of Holland and
11 Hart, which is Counsel for Astaris. We do not
12 desire to use it for evidentiary purposes at this
13 time, but only to ask the witness certain questions
14 in relation to what he has already testified to.
15 COMMISSIONER KJELLANDER: Please go
16 ahead.
17 MR. POMEROY: Thank you, Mr. Chairman.
18 I don't have any objection to it being marked as an
19 exhibit or coming into the record. I'm a little
20 concerned about where exactly it is going or what
21 Mr. Ripley is going to do with it, but if this
22 witness knows about particular statements in this
23 document, it's probably acceptable for Mr. Ripley to
24 ask about it. I'd just like to be sure we
25 understand that this witness has already said he saw
335
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 a draft of this document, and we may need some
2 foundation on how much he actually knows about
3 what's in here. And if we're asking him to again to
4 reach legal conclusions, I will object, but let's --
5 for now, let's see where it goes, reserving my right
6 to object at a later point.
7 COMMISSIONER KJELLANDER: Thank you
8 for that comment.
9 And at this point then, we would admit
10 Exhibit No. 7 into the record.
11 (Idaho Power Company Exhibit No. 7
12 was admitted into evidence.)
13 COMMISSIONER KJELLANDER: And,
14 Mr. Ripley, if you would like to proceed?
15 MR. RIPLEY: Thank you, Mr. Chairman.
16 Q. BY MR. RIPLEY: Let me refer you to
17 page 18 -- or, line -- page 4 of this document,
18 line 18.
19 COMMISSIONER KJELLANDER: Mr. Ripley,
20 for clarification, are you talking about Section 18,
21 or are those line numbers on the side? Ours isn't
22 lined.
23 MR. RIPLEY: You're absolutely right,
24 Mr. Chairman. I am in error. There are no lines in
25 this document. I am referring to Section 18.
336
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 COMMISSIONER KJELLANDER: Thank you.
2 MR. RIPLEY: Which is on page 4 of
3 41. Thank you.
4 Q. BY MR. RIPLEY: Here, Mr. Seder, this
5 document says In an effort to resolve the dispute
6 between the parties, Plaintiffs have made
7 considerable efforts to meet with representatives of
8 Idaho Power and to negotiate a resolution of the
9 dispute. These efforts by Plaintiffs include
10 Proposals, meeting, and teleconferences with
11 Idaho Power held on seven different occasions from
12 June through November 2001. And despite all these
13 efforts, Idaho Power has failed to negotiate in good
14 faith.
15 My question to you is from your
16 testimony in this proceeding, I received the
17 impression that it was Astaris that was responding
18 to offers of Idaho Power Company. In this document,
19 it appears that it is Astaris that is the
20 affirmative party and is requesting relief or
21 Proposals from Idaho Power Company. Which is the
22 case, in your opinion?
23 MR. POMEROY: Can we get a
24 clarification of whether this relates to the Letter
25 Agreement which Mr. Seder has said was part of some
337
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 earlier discussions, or whether Mr. Ripley is
2 confining his questions to the period that's
3 referenced in this document, June through November,
4 2001?
5 COMMISSIONER KJELLANDER: I think
6 that's a fair enough question, Mr. Ripley.
7 MR. RIPLEY: All right, then let's go
8 back to the fact that on Section 17 just above that,
9 it says As a result of Plaintiff's planned shutdown
10 of the two remaining furnaces and closure of the
11 Pocatello facility, a dispute has arisen as to their
12 responsibilities and obligations under the
13 provisions of the Agreements.
14 Now, as I understand it, the
15 Agreements that is contained in this document is
16 more fully set forth under the Sections 10, 11, 12,
17 13, 14, and 15, which I'll certainly be happy to
18 give Mr. Seder time to read that, see if he agrees
19 that what we're talking about is the very same thing
20 we're talking about in this proceeding.
21 COMMISSIONER KJELLANDER: Mr. Seder,
22 would you like a few moments to review that?
23 THE WITNESS: Please.
24 COMMISSIONER KJELLANDER: Okay, what
25 we'll do is -- I think at this point we'll go at
338
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 ease for about ten -- will ten minutes be sufficient
2 or do you need 15? How about if we give you 15.
3 THE WITNESS: Thank you.
4 COMMISSIONER KJELLANDER: And we'll
5 return here at 9:30.
6 (Recess.)
7 COMMISSIONER KJELLANDER: We'll be
8 back on the record. And when we left, Mr. Seder was
9 reviewing the Complaint for Declaratory Judgment,
10 and Mr. Ripley was in the process of launching some
11 questions related to that specific document.
12 MR. RIPLEY: Yes, and I believe I had
13 asked Mr. Seder to review Paragraph 18 on page 4 of
14 41 of Exhibit No. 7, and I had asked him if that
15 paragraph did not say In order to resolve the
16 dispute between the parties; and at that time,
17 Counsel had interposed an objection on behalf of
18 Astaris that "dispute" needed to be defined, and I
19 had asked Mr. Seder if he would review the Contract
20 to see if he agrees that the dispute involved the
21 Electric Service Agreement and the Amendment to that
22 Electric Service Agreement which has been referred
23 to in this proceeding as the voluntary load
24 reduction.
25 Q. BY MR. RIPLEY: Have you done that,
339
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Mr. Seder?
2 A. Yes, I have.
3 Q. And is that the dispute that is
4 involved with the interpretations and the
5 applications of the Electric Service Agreement and
6 the Voluntary Load Reduction Agreement?
7 A. Again, as I had mentioned, I had only
8 seen a draft of this. This is not my specific work.
9 But based on the review time that I have had
10 available, it appears to relate to those Agreements.
11 Q. And Paragraph 18 discusses that the
12 parties have met on several different occasions from
13 June through November, 2001. And would you accept,
14 subject to check, that one of those meetings was a
15 meeting by Mr. Sibley on November 6th with
16 Mr. Packwood of Idaho Power Company to discuss these
17 Agreements?
18 A. Again, I did not prepare the
19 documents, so when there are seven meetings referred
20 to, I have no idea whether they're referring to a
21 meeting that included that.
22 Q. Let me ask you this: Were you aware
23 that Mr. Sibley met with Mr. Packwood in regard to
24 the Astaris Agreements on November 6, 2001?
25 A. That's quite possible. You know, I
340
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 don't recall the specific date or --
2 One of the issues that we have here is
3 as from day one or from the beginning of this
4 testimony, I stated that I had a different role in
5 the organization. I'm now VP of sales and
6 marketing. And so my testimony is intended to
7 relate to the time when I was the director of
8 business development and intimately involved in all
9 of these discussions. That involvement has fallen
10 off dramatically over the last few months of 2001
11 and beyond. So I'm not -- I've not been directly
12 involved with all of these -- these things that
13 you're putting before me, and I -- and I have to
14 tell you that when you're running a business and
15 you're the VP of sales and marketing and you have an
16 organization with 60-some people in it, they tend to
17 take up your time and draw your attention, and you
18 tend to focus on them.
19 Q. Well, Mr. Seder, wasn't it you that
20 contacted Idaho Power Company in November and
21 December to try to arrive at some kind of negotiated
22 resolution?
23 A. November and December?
24 Q. Of 2001?
25 A. Of 2001? I'm not sure -- I'm really
341
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 not sure about where the transition dates are in
2 this, you know. The discussions -- the time line of
3 these discussions, I want to make sure there's a
4 clear separation of discussions. We talked earlier
5 about discussions that were related to discussions
6 we had that led up to the Buyback Agreement being
7 set in place, we talked about discussions that were
8 related to negotiating the Buyback Agreement, and
9 then a series of events occurred which changed
10 basically Astaris's intent at the time of the
11 buyback to continue one-furnace operation.
12 It was about in the June time frame
13 that we began seriously evaluating whether we should
14 close down the Pocatello facility or not, and at
15 that point, I did have conversations and with Rick
16 Gale and I believe yourself on occasion on this
17 subject. But all the meetings in here, I don't
18 recall whether I was involved with seven or not.
19 Certainly some of the latter meetings I was not.
20 And a meeting that you're referring to Mr. Sibley, I
21 would not have been involved with.
22 Q. Wouldn't Mr. Sibley have advised you
23 as to the conversation he had with Mr. Packwood
24 relative to the Electric Service Agreement and the
25 Voluntary Load Reduction Agreement?
342
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 A. Mr. Sibley is the CEO of the Company.
2 He can choose to advise or not advise whoever he
3 wants. And I don't recall whether we had a
4 conversation or not.
5 Q. Now, on page 7, Paragraph 19, this
6 document states that --
7 MR. POMEROY: I'm sorry.
8 MR. RIPLEY: Did I say "page" again?
9 MR. POMEROY: I'm not sure what you
10 mean.
11 Q. BY MR. RIPLEY: Section 19,
12 Exhibit No. 7, page 5 of 41, Sections 19, 20, and
13 21, do those paragraphs comport with your
14 understanding, Mr. Seder, that since Astaris is not
15 consuming the power that it is purchasing under the
16 take-or-pay, it is entitled to a credit when that
17 power is then sold or used by Idaho Power Company
18 for someone else?
19 A. You'll have to forgive me, Mr. Ripley.
20 I'm not sure what you mean, "comport," the word
21 "comport" means.
22 Q. Does that jive with your
23 understanding? Do you agree, how about that? Do
24 you agree that Idaho Power Company, if it sells or
25 uses the energy that's dedicated to the FMC/Astaris
343
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 take-or-pay, that Astaris is, or FMC is, entitled to
2 a credit?
3 A. Again, if you're referring to this
4 specific work, this is not my work. This is a legal
5 document. You're asking me to interpret a legal
6 document. I really can't do that. I can go back to
7 the discussion perhaps that we had yesterday about
8 take-or-pay and what, as a businessman, my thoughts
9 would be on that, if that would be helpful.
10 Q. Well, no, I think we've tread that
11 ground. My question is simply this:
12 As the spokesperson for Astaris in
13 this proceeding and the discussions of the Electric
14 Service Agreement, Voluntary Load Reduction
15 Agreement, do you believe that if Idaho Power
16 Company sells or consumes the power that was
17 originally intended to be used under the Electric
18 Service Agreement take-or-pay, that then Astaris or
19 FMC is entitled to a credit?
20 A. Again, I think there's a legal
21 judgment in there. I'll go back to as a
22 businessperson, my understanding and my experience
23 in a take-or-pay arrangement is that the intent of a
24 take-or-pay is to keep the selling party whole in
25 the process. And, you know, if -- again, my
344
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 experience is that in the normal course of business,
2 "take-or-pay" means if you don't take it, you end up
3 paying for it. But also in my experience in the
4 business, if the buying party comes to a point where
5 it's clear or that they are unable to take any
6 longer or cannot take any longer, that typically
7 there is some sort of deal worked out to -- to come
8 to some conclusion about how you're going to handle
9 that situation, and often that involves the fact
10 that with the principle of keeping the selling party
11 whole, that that -- if there are ways for them to
12 receive additional funds or whatever, that can be an
13 offset to keeping that party whole. That's just my
14 experience in business.
15 Q. Why isn't that same rationale
16 attributable to the Voluntary Load Reduction
17 Agreement?
18 A. In what way?
19 Q. Astaris is shut down. It's shut its
20 plant down. Astaris is being paid to reduce its
21 consumption and Astaris has decided not to consume.
22 Why isn't your rationale equally attributable to
23 that situation?
24 A. You know, the issue there is we're
25 meeting the Agreement that was put forward, which
345
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 was to be compensated for not consuming. So there
2 is no failure to perform or anything else in that,
3 that I understand.
4 Q. Well, how is Idaho Power Company
5 failing to perform when it says, all right, Here
6 comes 70 megawatts; and you say, I don't want it,
7 sell it somewhere else and reduce the price?
8 A. Again, you know, I personally am not
9 alleging that Idaho Power is doing that or not. I
10 mean, the issue, in my mind, is from -- again, from
11 a businessperson standpoint, is in a take-or-pay
12 situation, do you or do you -- and perhaps that's
13 what this document is all about is asking the
14 question should you or should you not apply the
15 funds that you might receive from that to offset
16 keeping you whole as take-or-pay would indicate.
17 Q. Thank you, Mr. Seder.
18 MR. RIPLEY: That's all the questions
19 that I have.
20 COMMISSIONER KJELLANDER: Thank you,
21 Mr. Ripley.
22 I think we move to Mr. Richardson. Is
23 that correct?
24 MR. RICHARDSON: Yes. Thank you,
25 Mr. Chairman.
346
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 CROSS-EXAMINATION
2
3 BY MR. RICHARDSON:
4 Q. Mr. Seder, you're closing the
5 Pocatello facility. Correct?
6 A. That is correct.
7 Q. But you're still, as I understand it
8 from your testimony, using about three megawatts of
9 power there?
10 A. Yes, there is three megawatts of power
11 being used at the site.
12 Q. So you're still an Idaho Power
13 ratepayer. Correct?
14 A. Yes, we are.
15 Q. So from a ratepayer's perspective and,
16 as Mr. Ripley's established, as a prudent
17 businessman, do you think it is reasonable for
18 Idaho Power to continue to incur costs to keep 120
19 megawatts available to serve the Pocatello facility
20 through the term of the -- 2003, the term of the
21 ESA?
22 A. I'm not sure I understand the
23 question.
24 Q. Do you think it's reasonable for
25 Idaho Power to incur costs to keep 120 megawatts
347
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 on-line and available to serve the facility at
2 Pocatello when you're only consuming three
3 megawatts?
4 A. Well, I -- I -- given that we've told
5 them that we're only consuming three megawatts, I
6 would expect that -- and that we would notify them
7 if there were any change in that plan going
8 forward -- I would expect that they take some action
9 to be able to utilize that power elsewhere.
10 Q. And what about beyond the 2003 time
11 period? Do you think it's reasonable for
12 Idaho Power to plan and incur costs to serve 120
13 megawatts beyond 2003 at the Pocatello facility?
14 A. I think with the plan going forward
15 and the fact that there's just a provision in the
16 Contract to negotiate in good faith, that it's not
17 likely that they should be holding ready to provide
18 120 megawatts to us.
19 Q. Now, if you had known that the Letter
20 Agreement was subject to abrogation in terms of the
21 payments, what would Astaris have done differently?
22 A. Well, there's a couple of courses they
23 could have taken. I mean, if we're talking about
24 abrogation of the deal, if we had any inkling that
25 that was a possibility, we would not have entered
348
HEDRICK COURT REPORTING SEDER (X)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 into the deal to begin with.
2 I think there may be one other
3 possibility in this, which is if the Commission had
4 approved this as an off-system deal and we have --
5 had fallen back to the secondary Agreement with
6 Idaho Power to take that power, my understanding
7 then would have been that Idaho Power would have
8 immediately sold that power and locked in the
9 benefit and value of it, and there wouldn't be any
10 risk going forward.
11 Q. Thank you, Mr. Seder.
12 MR. RICHARDSON: That's all I have,
13 Mr. Chairman.
14 COMMISSIONER KJELLANDER: Questions
15 from members of the Commission? Commissioner Smith.
16
17 EXAMINATION
18
19 BY COMMISSIONER SMITH:
20 Q. I just want to see if I have this
21 correct. In this forum, Astaris is asking that
22 Idaho Power be held to its obligation to pay for the
23 load reduction under the Agreement. Is that
24 correct?
25 A. That is correct.
349
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Okay. And in another --
2 A. Excuse me.
3 Q. But in a second forum, it seems that
4 Astaris is asking to be relieved of its obligation
5 to pay for power that it is obligated to take
6 because it can no longer take the power. Is that
7 correct?
8 A. Again, with my interpretation, I'm not
9 sure that's entirely correct. I think to the extent
10 that Idaho Power has a way to offset a portion of
11 the take-or-pay cost, to that extent, I think that's
12 the kind of relief that is being sought here.
13 Q. Right. Astaris is asking to be
14 relieved of its obligation?
15 A. A portion of it.
16 Q. Thank you.
17 COMMISSIONER SMITH: That's all I
18 have, Mr. Chairman.
19 COMMISSIONER KJELLANDER: Commissioner
20 Hansen.
21
22 EXAMINATION
23
24 BY COMMISSIONER HANSEN:
25 Q. I just wanted to verify that I heard
350
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 you correctly yesterday. Do you agree or not that
2 Idaho Power currently has the obligation or
3 responsibility to provide Astaris 120 megawatts upon
4 demand?
5 A. I believe that as it stands right now,
6 we have put before Idaho Power that we are looking
7 to consume only three megawatts, and that as far as
8 the disposition of power until we change that, they
9 can basically do what they need to do with the
10 remaining power.
11 I think the remark that I made around
12 it in my testimony was that, as a businessman, if
13 I'm continuing to pay for something, I would expect
14 that I have some right to use it at some point in
15 time.
16 Q. So currently then, do you feel that if
17 you were to demand or notify Idaho Power you wanted
18 to take or Astaris wanted to take 120 megawatts of
19 power, they would be required to deliver that? Is
20 that correct? Or could they tell you, No, all we're
21 going to deliver you is the three megawatts?
22 A. Well, again, I guess I think what I'd
23 have to say is I think that we have a right to that
24 power as long as we're paying for it and we gave a
25 reasonable notice then going forth, we could require
351
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 that. We continue to be under Contract, we continue
2 to purchase it.
3 Q. You say, "reasonable notice." Does
4 that mean that 24 hours, one hour, a week, a month?
5 How much time do you think you would have to notify
6 in order to have that 120 megawatts?
7 A. I don't know, but I would be very
8 happy to talk to Idaho Power about what that would
9 be. At this point from a practical standpoint, we
10 have furnaces that are at a dead stop that as it
11 stands right now are slated to be on a plane and to
12 be dismantled, and odds are that it would be very
13 difficult for us to return to any significant level
14 of power.
15 Q. So just in your own mind -- and I
16 agree, you probably have to discuss with
17 Idaho Power -- but in your own mind, are you
18 thinking it would probably take some amount of
19 time -- a week or a month, some greater time than a
20 day or so -- many hours' notice that Idaho Power
21 would have ample time to maybe come up or make
22 adjustments to provide you that power then? And I
23 realize you said you didn't know exactly, but in
24 your own mind, what would you just guess at a time?
25 A. Well --
352
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Or what would you say would be
2 reasonable?
3 A. If, as they claim, they're holding
4 ready now to do it for us, then that would be a very
5 short time frame. I think there's a number of
6 factors that go into it though, and, you know, we
7 would certainly if we had a change, change
8 directions, give -- give a lot of notice. From
9 this, from the standpoint of knowing that locking in
10 power between months and different days and all of
11 that has different implications, I think we would
12 work to be as accommodating as we could.
13 You know, again, I don't see us
14 moving -- I don't think it's very likely that
15 anybody is going to use any more power than three
16 megawatts or maybe a little more as the facility
17 goes in remediation.
18 Q. But would you say that it's likely if
19 you did notify them that they would have probably
20 30 days' notice?
21 A. No, I would think at least that, yes.
22 Q. Thank you.
23 COMMISSIONER HANSEN: That's all I
24 have.
25
353
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 EXAMINATION
2
3 BY COMMISSIONER KJELLANDER:
4 Q. Mr. Seder, I just have a couple
5 questions.
6 If this Commission had known that the
7 plant was going to be shut down during the time of
8 which the initial Letter Agreement was being
9 negotiated, do you think that the Commission would
10 have moved forward in trying to approve that Letter
11 Agreement?
12 A. You're kind of asking me to talk about
13 the road not taken.
14 Q. Let me rephrase that.
15 If we had known that the plant was
16 going to close down and that there was no need to
17 have a Letter Agreement to get the reduction because
18 it would have occurred naturally, would there even
19 be an Agreement ever presented to the Commission?
20 Would that make any sense at all from any
21 perspective at all?
22 A. Well, as a hypothetical, it's hard to
23 prove the negative in my head here on this, because
24 I've -- I've been in so many different situations
25 that almost every situation arises with a little
354
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 different twist. At the moment, I'm not conceiving
2 anything that makes a tremendous amount of sense,
3 other than perhaps some release of obligations and
4 consideration for, you know, how one would exit.
5 Q. Let me rephrase this in a very simple
6 statement.
7 Would you pay for anything you knew
8 you could get for free?
9 A. I know some people who would do that.
10 I probably wouldn't.
11 Q. Let me move on then to the next
12 question. I thought I heard in your testimony today
13 that September 14th -- which is on page 14, lines 13
14 and 15 -- that on September 14th, 2001, there was a
15 preliminary decision made by Astaris, FMC, and
16 Solutia to shut down the last furnace, and then the
17 final decision to close the Pocatello operation was
18 made October 5th.
19 Did I hear correctly that during that
20 time frame, or even after October 5th, that there
21 may have been some discussions initiated by your
22 company with Idaho Power to enter into some kind of
23 similar negotiations related to further curtailment
24 and payment for that curtailment?
25 A. Yes. Actually, what I believe had
355
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 said was that sometime in early June, we began on a
2 path of a special project that we had in place. We
3 actually gave it a formal name, Project PEACE, which
4 was an acronym for Pocatello Expedited and Advanced
5 Closure Evaluation. And one of a list of many
6 things that we began evaluating at that point in
7 early June was whether there -- whether or not there
8 was some sense or opportunity to do another
9 voluntary load reduction type program.
10 Q. Was it public on September 14th that
11 there had been a preliminary decision to close the
12 plant? Was that --
13 A. I believe the public date or --
14 because, in fact, the decision had really not been
15 made. It was a contingent decision at that stage of
16 the game, and it was really only formally approved
17 by Astaris's board on the 5th. And I'm trying to
18 recall now. I think it may have been the 10th of
19 October or so it was publicly announced.
20 Q. Okay. So, after September 14th but
21 before October 5th when the Company had made a
22 preliminary decision to close the plant, you were in
23 discussions with Idaho Power with regard to an
24 additional curtailment proposal that would have
25 eventually or could have eventually led to a similar
356
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Letter Agreement that would have been brought to
2 this Commission. Is that correct?
3 A. Yes, that's correct.
4 Q. If that -- and this is a
5 hypothetical -- if that Agreement had been reached
6 prior to October 5th, would that have been brought
7 to this Commission and proposed to us for a
8 Curtailment Agreement? Would it have been proposed
9 similarly to us?
10 A. In other words -- well, I'm not sure
11 which aspect of it you're referring to, but it would
12 be different.
13 Q. It would be different, but it would
14 be --
15 A. And the nature -- one of the natures
16 of difference would be that it would have been
17 connected with a total shutdown of facility.
18 Q. But you would have been receiving some
19 kind of curtailment from that without us perhaps
20 knowing some of the details about a complete closure
21 of the plant which has subsequently occurred?
22 A. Well, the negotiations -- no, no,
23 that's not the case. The negotiations from the
24 get-go related to closing down the facility
25 entirely. So if there had been some sort of an
357
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 arrangement that were put together that made sense,
2 that would have been an element.
3 Q. So essentially then, the Agreement
4 that you would have brought to us as you've just
5 described would have been tied to If this Agreement
6 is signed, we'll close down the plant, in essence?
7 A. In essence.
8 Q. And on October 5th, even without an
9 Agreement, you closed down the plant?
10 A. Well, we closed down the plant in
11 December, but, yeah.
12 Q. You announced on the 5th. And I guess
13 what I'm trying to get to is that last year when the
14 Agreement comes forward, I've heard some people say
15 that we were negotiating in good faith; but given
16 what we see from September 14th to October 5th, I
17 guess I'm trying to get to why should this
18 Commission believe that negotiations were occurring
19 in good faith when we see this time table and we see
20 what could have happened, and then we see what did
21 happen? Can you see what I'm getting to? When we
22 start to get to the essence of good-faith
23 negotiations regarding the decision-making process
24 that we want to make, the Company wants to make, you
25 want to make, why should we believe that when we see
358
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 here on lines 13 and 15 and we listen to your
2 description there that perhaps everything is not as
3 straightforward as it may have appeared?
4 A. Line 13 and 15 of where?
5 Q. Of page 14, and based upon what you've
6 just described to me.
7 A. The issue here is, in my mind,
8 fundamentally different. The intent was different
9 when we went into the first arrangement back on the
10 Buyback -- or, first Buyback Arrangement. The
11 discussions that we had with Idaho Power were very
12 open and I think in good faith that this was around
13 a closure. No deal materialized out of it. I fully
14 believe that the deal, if a deal had materialized
15 out of it, all of those aspects of it, the fact that
16 it were related to closure would have been part of
17 it. So, I mean, it's a different circumstances,
18 different deal. When people are evaluating things,
19 they're going to talk about a range of
20 possibilities.
21 Now, if I had brought -- if I had
22 brought forward a deal that didn't mention the fact
23 that it had total closure in it and then closed a
24 week later, that would be, in my mind, bad faith.
25 Q. Okay. How would you describe a
359
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 situation where you don't get a deal that was tied
2 to closure, yet you still close, assuming that the
3 deal was supposed to be tied directly to We won't
4 close unless this deal goes through, and then you
5 close. How would you describe that?
6 A. Well, you're isolating the deal to one
7 element of it, which is around the power. And there
8 were many, many elements that needed to align for
9 this deal for closure to occur or not to occur.
10 And, in fact, other elements aligned that allowed
11 the closure of the facility to occur without a power
12 deal. Now, it's quite possible those other elements
13 wouldn't have aligned and we would have actually
14 needed the power deal to close, but in the end, the
15 circumstances didn't line up that way.
16 Q. Well, thank you, Mr. Seder, and that
17 completes my questions. I appreciate your
18 responses, and I guess at this point, we're ready
19 for redirect.
20 MR. POMEROY: I thank you,
21 Mr. Chairman.
22
23
24
25
360
HEDRICK COURT REPORTING SEDER (Com)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 REDIRECT EXAMINATION
2
3 BY MR. POMEROY:
4 Q. Mr. Seder, in the just the last few
5 questions you were asked, there was a question about
6 whether there was any -- whether it would be fair
7 for the Commission to believe your testimony and
8 what you said about the background of the Letter
9 Agreement. Do you recall those questions?
10 A. Yes.
11 Q. And I gather that the issue of concern
12 is was there, in Astaris's mind, any sort of a
13 hidden plan -- or, plan to close, hidden or
14 otherwise -- a plan to close at Pocatello? Was that
15 the case at the time of the Letter Agreement?
16 A. At the time of the Letter Agreement,
17 there was no plan to close the facility. Our plan
18 was to go from a two-furnace operation to a
19 one-furnace operation, and as we -- as we entered in
20 and began to execute against that Agreement, that
21 was our plan going forth.
22 Q. And you turned down just roughly the
23 same time frame, in February, an opportunity to be
24 paid for a full shutdown, didn't you?
25 A. That is correct.
361
HEDRICK COURT REPORTING SEDER (DI)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. Does that in any way -- do you see
2 that as consistent with the clarity of the lack of
3 plan on a shutdown at that time?
4 A. I believe that is -- is very
5 consistent with that. We -- and what our thinking
6 and plans were going forward. If we had had an idea
7 that anywhere in a reasonable time frame of that
8 shutdown offer that we were actually going to shut
9 down, we would have engaged in a negotiation around
10 that, and we, in fact, did not.
11 Q. Has -- has Astaris in any way you're
12 aware of misled or deceived anybody about its
13 intentions with respect to the Letter Agreement and
14 the plant closure?
15 A. I do not believe so.
16 Q. Mr. Ripley drew a comparison between
17 how a take-or-pay issue ought to be handled and
18 changing a price in the Letter Agreement. Do you
19 recall the discussion you had with Mr. Ripley on
20 that?
21 A. Yes, I do.
22 Q. And is it fair to say your principle
23 was that a seller in a take-or-pay setting should be
24 made whole?
25 A. Yes.
362
HEDRICK COURT REPORTING SEDER (DI)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. And that is the Astaris position with
2 respect to a take-or-pay issue?
3 MR. RIPLEY: Mr. Chairman, I realize
4 this is an administrative agency, but nonetheless, I
5 think Counsel has gone beyond the bounds of
6 legitimate cross-examination and he's leading the
7 witness, and I would object on the grounds that he's
8 asking his witness leading questions.
9 MR. POMEROY: I could rephrase the
10 question.
11 COMMISSIONER KJELLANDER: Thank you.
12 Q. BY MR. POMEROY: In your mind, is the
13 take-or-pay issue and changing the price in the
14 Buyback Contract the same sort of issue?
15 A. No, I don't see it as the same sort of
16 issue.
17 Q. Why not?
18 A. I see the first as -- the buyback
19 arrangement -- as an Agreement where Astaris agreed
20 to sell back a portion of the power and, in fact,
21 engage in a process of shifting our business very
22 dramatically, taking both -- making large
23 expenditures and taking substantial risk, and that
24 we, in fact, have performed against that Contract,
25 which states we were not to exceed 70 megawatts.
363
HEDRICK COURT REPORTING SEDER (DI)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 And in the -- in the case of the
2 take-or-pay, what we're talking about is, in my
3 mind, again a concept of keeping the seller whole
4 and, you know, if there is absolutely nothing there
5 that they can save or offset with, then stays the
6 same. If there is, there's some level of
7 mitigation.
8 Q. In the instance of the changing of the
9 Contract price for the load reduction, if the price
10 is changed as the Staff recommends, is anybody
11 proposing to make Astaris whole?
12 A. As I understand it, no.
13 Q. And in the case of a take-or-pay, is
14 Astaris proposing it be sure Idaho Power is made
15 whole?
16 A. Yes. As I interpret it, yes.
17 Q. You were asked a question, I
18 believe -- I'm not sure from whom; I don't have a
19 note -- but about whether Astaris is asking to be
20 relieved of its obligation in the take-or-pay case.
21 Do you remember that?
22 COMMISSIONER KJELLANDER: Could we get
23 you a little closer to your microphone?
24 MR. POMEROY: Sorry.
25 Q. BY MR. POMEROY: You were asked a
364
HEDRICK COURT REPORTING SEDER (DI)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 question about whether Astaris was asking in the
2 take-or-pay case to be relieved of its obligation.
3 Do you remember that?
4 A. Yes, I do.
5 Q. Is Astaris in the take-or-pay case, as
6 you understand it, asking instead to just an offset?
7 A. Well, the -- I may have previously
8 showed my ignorance of a term of what "relieved of
9 obligations" are, and as I reflect on that, in fact,
10 we would be seeking an offset rather than relief.
11 Q. Bottom line, what Astaris is asking is
12 that sellers be made whole?
13 A. That's the principle before it, yes.
14 Q. Okay.
15 MR. POMEROY: I think that's all I
16 have, Mr. Chairman.
17 COMMISSIONER KJELLANDER: Thank you.
18 Thank you, Mr. Pomeroy.
19 And, Mr. Seder, you are excused, and
20 thank you for having your testimony crossed over two
21 days. We appreciate your presence. Thank you.
22 THE WITNESS: Thank you.
23 (The witness left the stand.)
24 COMMISSIONER KJELLANDER: And I
25 believe we're ready for your next witness.
365
HEDRICK COURT REPORTING SEDER (DI)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 MR. TARPEY: We'd like to call
2 Ms. McCarvill.
3 COMMISSIONER KJELLANDER: And we're
4 going to have to get the microphone closer to you.
5 Before we swear you in, why don't we
6 do ourselves a favor and take about a ten-minute
7 break.
8 (Recess.)
9 COMMISSIONER KJELLANDER: And it looks
10 like we have all the principal parties back, and we
11 were I think almost to the point where we were going
12 to swear in the witness.
13
14 MARGARET M. McCARVILL,
15 produced as a witness at the instance of Astaris,
16 being first duly sworn, was examined and testified
17 as follows:
18
19 EXAMINATION
20
21 BY MR. TARPEY:
22 Q. Would you please state your name and
23 business record -- business address for the record?
24 A. Margaret McCarvill, 622 Anderson Road,
25 Suite 500, St. Louis, Missouri.
366
HEDRICK COURT REPORTING McCARVILL (Di)
P.O. BOX 578, BOISE, ID 83701 Astaris
1 Q. And by whom are you employed and in
2 what capacity?
3 A. Astaris LLC. I am the chief financial
4 officer and vice president for business development.
5 Q. Ms. McCarvill, has testimony and
6 exhibits of yours been submitted in this proceeding?
7 A. Yes.
8 Q. And do you have any changes to make to
9 that testimony or the exhibits?
10 A. No.
11 Q. If I were to ask you the questions set
12 forth in that testimony, would your answers be the
13 same?
14 A. Yes.
15 MR. TARPEY: Mr. President, I would
16 move that the testimony and exhibits be spread
17 across the record as if read, and that the exhibits
18 be admitted.
19 COMMISSIONER KJELLANDER: And without
20 objection, the testimony and exhibits -- the
21 testimony will be spread across the record as if
22 read, and the exhibits will be admitted.
23 (The following prefiled direct
24 testimony of Ms. McCarvill is spread upon the
25 record.)
367
HEDRICK COURT REPORTING McCARVILL (Di)
P.O. BOX 578, BOISE, ID 83701 Astaris