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1 BOISE, IDAHO, TUESDAY, JANUARY 29, 2002, 9:35 A.M.
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4 COMMISSIONER SMITH: Good morning,
5 ladies and gentlemen. This is the time and place
6 set for a prehearing conference in Idaho Public
7 Utilities Commission Case No. PAC-E-01-16, further
8 identified In the matter of the Application of
9 PacifiCorp dba Utah Power and Light Company for
10 approval of interim provisions for the supply of the
11 electric service to Monsanto Company.
12 And we'll take the appearances of the
13 parties, whom, interestingly enough, are appearing
14 by telephone. So let's start with PacifiCorp.
15 MR. ERIKSSON: This is John Eriksson
16 with Stoel Rives for PacifiCorp. Also on the phone
17 from PacifiCorp is David Taylor.
18 COMMISSIONER SMITH: All right. And
19 for Monsanto?
20 MR. BUDGE: This is Randy Budge here
21 in Pocatello, and with me here is Jim Smith from
22 Monsanto.
23 COMMISSIONER SMITH: Okay.
24 MR. HAMMOND: John Hammond, deputy
25 attorney general, with Commission Staff. With me is
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1 Randy Lobb.
2 COMMISSIONER SMITH: All right. I
3 guess the purpose of today's conference is to --
4 what is the purpose of today's conference? Are the
5 parties going to tell us they have hammered out a
6 new Contract and it will be filed within two weeks?
7 Is that what you're going to tell us?
8 MR. ERIKSSON: No, we're not ready to
9 tell you that.
10 COMMISSIONER SMITH: Well,
11 Mr. Eriksson, then what do we hope to accomplish
12 today?
13 MR. ERIKSSON: Well, we believe that
14 this case could be consolidated with the spread case
15 that PacifiCorp filed on January 7th -- that's the
16 PAC-E-02-1 -- and that it would facilitate both
17 cases to do so; but I don't know that it's necessary
18 to address -- you know, resolve that today. I think
19 we would be agreeable with continuing this, really,
20 until scheduling on the spread case and address it
21 at that time.
22 COMMISSIONER SMITH: That issue?
23 MR. ERIKSSON: Yes, address the
24 consolidation issue. It may be that there's
25 agreement on it; I don't know.
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1 COMMISSIONER SMITH: So that's an
2 issue that you see but you're not thinking it should
3 be addressed today, so what are you thinking should
4 be addressed today?
5 MR. ERIKSSON: Well, if everybody was
6 agreeable to consolidation, we think that could be
7 addressed today and we believe it would be
8 appropriate to consolidate; but if not all the
9 parties are ready to agree to that or if they
10 disagree with it, then I would suggest that today
11 the scheduling be continued until, you know, a
12 future date, and it may be that that future date
13 would be the scheduling conference in the spread
14 case or a date after that scheduling conference if
15 consolidation doesn't occur.
16 COMMISSIONER SMITH: Okay. Well, let
17 me just take a stab at this, and the other
18 Commissioners may have a different view, but in my
19 view, we don't have a lot of time to waste or delay
20 or procrastinate in figuring out the new terms of
21 Contract between Monsanto and Utah Power and Light.
22 It seems to me that we only have -- I mean, we have
23 a limited time within which to get a new one
24 hammered out and I don't think delaying it is going
25 to make it easier, but if I'm wrong, you can tell me
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1 so.
2 And, Mr. Budge, I'd be interested in
3 your thoughts on what we were to accomplish today.
4 MR. BUDGE: Okay. Thank you.
5 Looking at the Order, I think the only
6 thing that we thought was on the schedule would be
7 setting some sort of a schedule for this day -- or,
8 for this case going forward. And I do think that
9 it's important that we -- whether today or at some
10 point certain in the future -- set a schedule that
11 would result in the Commission being in a position
12 to timely and orderly establish a rate for Monsanto
13 as a customer of PacifiCorp in the event the parties
14 are unable to negotiate an Agreement. The question
15 regarding that schedule brings a couple of issues to
16 light.
17 I did want to make the Commission
18 aware of where we are on the case pending in U S
19 District Court which will resolve the legal issue of
20 when the Contract terminates. In that case,
21 PacifiCorp has filed an Answer to the Complaint.
22 Monsanto has recently filed a Motion for Judgment on
23 the Pleadings in order to decide that termination
24 date as a matter of law. PacifiCorp has not filed
25 their Response or Brief yet but will be shortly, and
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1 they're going to file a similar Motion for Judgment
2 on the Pleadings. And that procedure squarely puts
3 it in the District Court's hands to decide as a
4 matter of law whether the Contract ended the end of
5 last year, 31, 2001, or whether it will terminate
6 the end of this year, December 31, 2002. There's
7 not any discovery going on in that case or any
8 reason to believe that Decision will be delayed.
9 We -- the case is set for a scheduling
10 conference February 5th; however, being aware that
11 this scheduling conference was before the Court's,
12 we went ahead and did schedule an available hearing
13 date for Oral Argument, which is now set for
14 April 23rd at eight a.m. So, essentially, the
15 Motions are there before the Federal Court, the
16 mechanisms in place, the Court will hear Arguments
17 April 23rd.
18 Judge Winmill tends to be very prompt
19 in rendering Decisions. I would expect within 30
20 days at the outside. Normally I would have expected
21 sooner than that from the date we argue it; however,
22 I understand he has the other PacifiCorp Snake River
23 cases, jury trial is ongoing at the same time, so it
24 might be he won't render a Decision in a matter of
25 days. It could be a matter of a few weeks. But it
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1 looks like by the end of April at the earliest,
2 mid-May at the latest, we will know for sure when
3 the Court decides.
4 With the Orders that we now have in
5 place that do require if the Contract ends last
6 year, it does require that the Monsanto do a true-up
7 to the new rate whenever it's set with interest back
8 to January 1. It doesn't seem like there's any
9 urgency to set a schedule in this case going forward
10 until we get a ruling from the Federal Court. If
11 the Commission's inclined to go ahead and set a
12 schedule now, that's okay too, but I think as
13 John Eriksson suggested, maybe we could defer that
14 until the scheduling conference on the new
15 PacifiCorp's spread case, the E-02-1 case. I don't
16 think that's set but I assume it will be set here in
17 a few weeks, and that might be a good time to set
18 the schedule in that case, in this case. And while
19 Monsanto is not prepared to respond to the
20 suggestion the cases should be consolidated, we will
21 certainly be prepared by that other prehearing
22 conference.
23 On that consolidation issue, it may be
24 appropriate and it may not. At this point, we
25 haven't really thought it through. There are
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1 certainly some common issues, one being cost of
2 service studies will be an issue in both cases. And
3 whether it's appropriate to consolidate or not, at
4 this time we would say, "No," but we would certainly
5 take a hard look at that and be prepared to provide
6 an answer when the scheduling is done in the other
7 cases.
8 COMMISSIONER SMITH: Are there any
9 comments from the Commissioners?
10 Commissioner Hansen.
11 COMMISSIONER HANSEN: Well, I -- I
12 guess Mr. Budge probably kind of touched on where
13 I've been coming from, but, to me, the cost of
14 service I think is pretty much a major point in both
15 cases, and I guess, to me, whether you look at them
16 separately in each case, it has to be decided in
17 both cases. So I guess it seems reasonable to me
18 that you would combine them unless there's reason
19 like you indicated that there may be reason,
20 Mr. Budge, that it isn't in the best interest to do
21 that, but just my own personal feelings that it
22 seems like right now that it would be.
23 The timing issue, just my comments
24 there: I -- if the parties feel like there isn't a
25 time crunch and we can wait until after the Decision
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1 by the District Judge, I think that makes a big
2 difference too.
3 So that would be my comment.
4 COMMISSIONER SMITH: Commissioner
5 Kjellander.
6 COMMISSIONER KJELLANDER: I guess my
7 general reaction is it doesn't really matter to me
8 what happens in the District Court. The bottom line
9 is that in the worst-case or best-case scenario,
10 depending upon where you sit, there has to be some
11 kind of Contract or Tariff set by January 1, 2003,
12 and the longer we put this off, the more painful
13 it's going to be as we head towards that barrier.
14 So I'm thinking that we ought to get cooking on that
15 and get going, and get the schedules set and
16 running. I mean, these two sides have had how many
17 years of negotiation? At least multiple months.
18 And I'm reminded of a first-grade
19 report card in the category that states Works well
20 and plays well with others. I'm not thinking you'd
21 all perform very well if we were to issue a grade on
22 that related to your performance so far.
23 I guess my sense is at what point is
24 it you need to discuss bringing in an arbitrator and
25 is this the time and get things going, because this
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1 is -- this has gone on quite a while and you clearly
2 set up your barriers, and I think delaying it is, in
3 my mind, just a stall tactic for both sides and I'm
4 not looking forward to that. We're the Commission
5 that's going to have to make the ultimate Decision
6 here. You've thrown it in our laps, and I'm ready
7 to get going with it.
8 And that's my thought.
9 COMMISSIONER SMITH: Thank you.
10 Any further comments, Mr. Eriksson or
11 Mr. Budge?
12 MR. ERIKSSON: Well, just to advise
13 the Commission that the parties are --
14 COMMISSIONER SMITH: This is
15 Mr. Eriksson?
16 MR. ERIKSSON: Yes. I'm sorry.
17 -- you know, continuing discussions
18 and would hope to have resolution rather than having
19 the Commission resolve the whole matter; but in any
20 event, we do recognize that -- the need to get this
21 done this year, certainly.
22 MR. BUDGE: This is Randy Budge.
23 I agree with what John says. I think
24 the parties are still negotiating in good faith and,
25 unfortunately, they haven't made a lot of progress.
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1 I think, in part, that is as a result of the
2 undecided issue as to when the Contract ends, and
3 once that issue is decided, then I think the parties
4 will have a much more clear road map as to where
5 they need to go with the case and we'll soon know if
6 they're able to negotiate a Contract or if not under
7 the Commission to set a rate.
8 I certainly understand Commissioner
9 Kjellander's position that we haven't been
10 successful so far, and as to whether or not the
11 matter is in the Commission's lap for Decision, I
12 don't think it is quite yet because we still need to
13 find out if the Contract ends last year or next
14 year; but certainly we agree some type of a schedule
15 needs to be set that provides the Commission
16 adequate time to have the Discovery, conduct a
17 hearing, and render a Decision before the end of
18 next year.
19 COMMISSIONER SMITH: Commissioner
20 Kjellander.
21 COMMISSIONER KJELLANDER: Thank you,
22 Mr. Chairman -- or, Madam Chairman. I'd just like
23 to point out to the parties that in December, this
24 Commission established a going-forward rate for the
25 remainder of this year that includes a true-up
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1 provision with interest. So it doesn't, to me,
2 really matter when the Contract ends or doesn't end.
3 When the new rate's set, there's already a mechanism
4 in place by an Order that this Commission
5 established that has a true-up with an interest
6 component to it. So I guess waiting until the Court
7 makes some Decision one way or the other, to me,
8 doesn't really matter; there still has to be a
9 Contract or a Tariff established for Monsanto that
10 has to be in place eventually.
11 COMMISSIONER SMITH: This year.
12 COMMISSIONER KJELLANDER: Absolutely.
13 I guess if I sound a bit frustrated,
14 it's probably because I am.
15 COMMISSIONER SMITH: Mr. Hammond, does
16 the Staff want to weigh in on the issue of
17 consolidating or waiting, or do they have a
18 position?
19 MR. HAMMOND: Well, as far as the
20 consolidation goes, Randy Budge had brought that up
21 yesterday, but -- when I spoke with him -- but I
22 don't believe there was -- I don't remember that it
23 was a particular case but just the possibility with
24 all the PacifiCorp filings at this point. I don't
25 think at this point we're ready to say whether, from
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1 our standpoint, that's a good idea or not.
2 The one thing that Mr. Lobb has
3 informed me is that in terms of the I guess they're
4 calling the spread case or the IRP or whatever, that
5 the cost of service study needs to be done and in
6 place for the irrigation tariff before the
7 irrigation season starts. I guess that's a concern
8 in that case, but -- perhaps.
9 As far as this case goes, the
10 Commission Ordered that it would suspend
11 PacifiCorp's Application to set an interim rate for
12 five months and 30 days. We have that barrier. If
13 that is a concrete wall, it can't be gone through,
14 then we certainly need to move this thing along. If
15 for some reason that -- those deadlines that the
16 Commission set can be -- are flexible in the
17 parties' views or the Statute provides some
18 flexibility in rules, then I suppose this thing
19 could take -- the Commission could spread that
20 schedule out.
21 But I tend to agree that something --
22 we need to have a goal here, and that is to get this
23 thing moving forward whether or not the Court rules
24 in favor of one party or the other. There has to be
25 a tariff rate or a Contract in place one way or the
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1 other, and once this litigation is ended, we don't
2 want the parties stalling -- or, I shouldn't say,
3 "Stalling," but taking another seven or eight months
4 to set a Contract rate. We want things to move
5 along accordingly in either case.
6 I think the problem is that we do have
7 a case before us or a case before the Commission the
8 Commission has to take action on, so we can't just
9 sit on our hands and wait for the parties to come to
10 some sort of resolution. They filed the case here
11 asking for some sort of relief, and unless there's
12 some change in that stance, then the Commission will
13 handle that matter, I assume.
14 COMMISSIONER SMITH: Commissioner
15 Hansen.
16 COMMISSIONER HANSEN: Well, I guess
17 I'm a little bit confused on the consolidating these
18 two cases, because it was my understanding that this
19 Commission wanted to try to resolve the cost of
20 service before the irrigation season started in May
21 of this year in Southeastern Idaho; and so I guess,
22 to me, I see the consolidation issue, whether you
23 have it or not, they're going to coincide right
24 along. I mean, if we don't consolidate them, you're
25 going to have two separate cases going at the very
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1 same time, because we want to get that cost of
2 service study done before the summer irrigation
3 season starts. That was my impression when that
4 case was filed.
5 And I guess the other question I'd
6 have for both Mr. Eriksson and Mr. Budge is both of
7 you have indicated to me or indicated I think here
8 today that, all of a sudden, there is going to be a
9 big change in your attitude of how you're
10 negotiating on a new Contract as soon as you find
11 out from the District Judge whether or not the
12 Contract -- what date the Contract is up or
13 terminates. And I guess my question would be what
14 is it that's preventing you from those negotiations
15 now that you want to wait until you see the Contract
16 when it's determined? Because like Commissioner
17 Kjellander said, no matter what that outcome is, by
18 the end of the year, at the latest, there's got to
19 be a price set. So I guess that's a question I'd
20 like to know from both of you is why is this -- this
21 judge's Decision going to change things in your
22 negotiation?
23 MR. ERIKSSON: This is John Eriksson.
24 I'm not aware that from PacifiCorp's
25 standpoint, you know, the judge's Decision does
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1 really make a difference in terms of the need to be
2 at the table and negotiate a new Contract. It needs
3 to be done regardless.
4 MR. BUDGE: This is Randy Budge.
5 I'm not sure it changes a lot either.
6 If I gave that impression that suddenly the dam was
7 going to break when that Decision comes through and
8 things were going to be easier, that was an error on
9 my part, and I apologize for that.
10 I think that in negotiations the
11 parties have been -- were meeting regularly and
12 proceeding with a good-faith effort, but all of that
13 broke down when this case got filed in November and
14 there really have been no direct meetings or
15 communications in the interim period and probably
16 won't be now until, you know, who knows, until the
17 Court decides. But I think -- I think we made
18 efforts to continue to discuss and move things
19 along; they just haven't been successful.
20 I think the Commission is absolutely
21 right: There's a very good chance the matter will
22 come back into the Commission's hands for Decision,
23 and if we wanted to set a schedule with, you know --
24 gearing towards a hearing sometime in the middle of
25 the summer -- you know, June or July or August --
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1 that would certainly be appropriate to us.
2 The only -- the only comment we made
3 that we could defer that until the scheduling on the
4 other case is because we assumed that it will be
5 scheduled shortly and we can have an answer on
6 whether we should consolidate the two cases. At
7 this point, we don't see that they should be
8 consolidated, but we are -- we do recognize there is
9 a common cost of service issue that's going to be
10 addressed in both cases, and since the thought has
11 been brought up, we're willing to look at it and see
12 if we couldn't stipulate to that.
13 COMMISSIONER SMITH: Well, it appears
14 to me that there isn't anything else we can usefully
15 accomplish this morning. I will comment that if
16 we're going to have cost of service done in time to
17 have rates set for the irrigation season, which
18 probably starts the end of April, first of May,
19 Friday is February and this case isn't even
20 scheduled. I'm just astounded.
21 So, the Commission obviously has its
22 work cut out for it. And, Mr. Budge, I don't know
23 how it's going to work if we're going to finish up
24 cost of service before the end of April and you want
25 a hearing in July. So I guess we'll go back to our
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1 drawing board, figure out what works for us, and I
2 guess people can accommodate that.
3 If there's nothing further to come
4 before the Commission, then we will adjourn the
5 prehearing, thank the parties for their
6 participation this morning, and we'll advise you of
7 the schedule.
8 Thank you. We're adjourned.
9 (The hearing adjourned at
10 9:58 a.m.)
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1 AUTHENTICATION
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4 This is to certify that the foregoing
5 is a true and correct transcript to the best of my
6 ability of the proceedings held In the matter of the
7 Application of PacifiCorp dba Utah Power & Light
8 Company for approval of interim provisions for the
9 supply of electric service to Monsanto Company, Case
10 No. PAC-E-01-16, commencing on Tuesday, January 29,
11 2002, at the Commission Hearing Room, 472 West
12 Washington, Boise, Idaho, and the original thereof
13 for the file of the Commission.
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17 __________________________________
WENDY J. MURRAY, Notary Public
18 in and for the State of Idaho,
residing at Meridian, Idaho.
19 My Commission expires 2-5-2002.
Idaho CSR No. 475
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