HomeMy WebLinkAbout20020904Volume 2, pg 44-140.pdf
1 (The following proceedings were
2 had in open hearing.)
3 MR. FELL: And we move for the
4 admission of Exhibits 4 through 8, and 9 through 11.
5 COMMISSIONER SMITH: Without
6 objection, those exhibits will be admitted.
7 (PacifiCorp Exhibit Nos. 4 through
8 11 were admitted into evidence.)
9 MR. FELL: Mr. Griswold --
10 Madam Chair, I have one question I'd like to ask
11 Mr. Griswold. There was -- Monsanto testimony
12 offered the Application of PacifiCorp in a
13 Utah Power proceeding regarding Geneva Steel, and
14 this is a Utah customer. Their exhibits also
15 included a -- the Orders in Utah regarding the
16 Magcorp contract. Since the -- or, actually just
17 within the last few days, on August 27th, a contract
18 was signed with Geneva Steel, and we would like to
19 offer that contract into the record. And we can do
20 it now or we can do it with Mr. Griswold when he
21 comes back for his other rebuttal, but I want to
22 make the contract available to the parties at the
23 earliest time if that would be now. So if you'd
24 like, I could offer -- Mr. Budge, do you want me to
25 offer it now or should I -- would you like to read
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HEDRICK COURT REPORTING GRISWOLD (Di)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 it overnight?
2 MR. BUDGE: I would -- how about if we
3 do both: Offer it now and I'll try to read it
4 overnight.
5 MR. FELL: Very well. Let me
6 circulate a copy.
7 Madam Chairman, based on a number we
8 have in our prefiled testimony, this would be
9 Exhibit No. 23.
10 COMMISSIONER SMITH: All right. We
11 will mark Exhibit 23.
12 (PacifiCorp Exhibit No. 23 was
13 marked for identification.)
14 Q. BY MR. FELL: Mr. Griswold, would you
15 please identify what Exhibit 23 is?
16 A. It's a -- the electric service
17 agreement between PacifiCorp and Geneva Steel.
18 MR. FELL: Madam Chairman, I would
19 like to defer questions about the content of this
20 until his surrebuttal testimony. It really relates
21 to the response to the Monsanto proposal.
22 We move for admission of Exhibit 23 as
23 well.
24 COMMISSIONER SMITH: How about if we
25 just identify it for now and we will admit it
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HEDRICK COURT REPORTING GRISWOLD (Di)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 tomorrow.
2 MR. FELL: That's fine.
3 Mr. Griswold then is available for
4 cross-examination.
5 COMMISSIONER SMITH: Thank you.
6 Mr. Olsen, do you have any questions
7 for Mr. Griswold?
8 MR. OLSEN: No, your Honor.
9 COMMISSIONER SMITH: Mr. Woodbury.
10 MR. WOODBURY: Thank you, Madam Chair.
11
12 CROSS-EXAMINATION
13
14 BY MR. WOODBURY:
15 Q. Mr. Griswold, turn first to your
16 direct testimony. You're speaking of the 1995
17 agreement, and that is the -- this agreement that
18 you're presently operating under with Monsanto. Is
19 that correct?
20 A. That's correct.
21 Q. And you indicate that interruptibility
22 in the '95 agreement is for system integrity only;
23 that there is no economic interruption.
24 Did the Company ask for economic
25 interruption in the '95 agreement?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. I wasn't involved in the actual
2 negotiations, so I don't know specifically the
3 answer to that.
4 Q. What is your -- do you have an
5 understanding as to whether or not it was requested
6 by PacifiCorp?
7 A. I understand it was removed from the
8 '95 agreement, but I don't know the answer to
9 whether it was requested by Monsanto or by
10 PacifiCorp at the time.
11 Q. Moving to your interruptible -- or,
12 your rebuttal testimony, you speak starting on
13 page 5 with respect to Mr. Schettler's
14 representation that there are only -- that the '95
15 agreement can -- can be used with just minimal
16 changes, and you itemized -- you disagree with his
17 representation and indicate the points -- your
18 points of dispute. Is that correct?
19 A. That's correct.
20 Q. Is it -- it's still PacifiCorp's
21 position that there should be two agreements: One
22 for sale and purchase?
23 A. Yes, it is still our position.
24 Q. And although there can be a common
25 termination date in both agreements?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. Yes.
2 Q. The power factor calculation that you
3 speak of as being wrong in Section 4.14 of the '95
4 agreement, do you, in the -- in your proposal,
5 correct that power factor calculation?
6 A. First, the calculation's not
7 necessarily wrong, but it's not consistent with how
8 the rules and regs define power factor correction
9 and calculation. So what we're trying to do is
10 standardize the calculation of power factor
11 correction.
12 Q. And have you incorporated that in
13 your -- in your proposal in this case?
14 A. I have, yes.
15 Q. Yes. You state that Section 2.3
16 carries forward the requirement that PacifiCorp
17 match any third-party offer for power sales to
18 Monsanto, and you say the retail direct access does
19 not exist.
20 Did it exist when you negotiated the
21 1995 contract?
22 A. No, it did not.
23 Q. And why was that clause then included?
24 A. I don't know the answer to that.
25 Q. You state that the -- the
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Section 4.1.5 with the most-favored-nation clause is
2 one-sided and no longer appropriate.
3 Could you explain why it was
4 appropriate then and is not appropriate now?
5 A. No, I don't have the answer to that
6 because I was not involved in the '95 negotiation,
7 so I'm -- I don't have the answer to why it was
8 included in the '95 agreement.
9 Q. Well then can you explain why it's not
10 appropriate now?
11 A. If you look at it, it always means
12 that no matter what transaction you do with another
13 customer -- another retail customer -- we would have
14 to provide that same thing to Monsanto; and each
15 transaction with a retail customer, whether it's the
16 sale of power or the purchase of resource from them,
17 should stand on its own.
18 Q. The '95 agreement Section point -- 2.1
19 was the term of the agreement, and did that contain
20 a termination date?
21 A. Yes: December 31, 2000.
22 Q. And there was also what's called an
23 evergreen clause?
24 A. That's correct.
25 Q. And you state that that clause needs
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 to be rewritten and clarified, and have you proposed
2 the new language, the Company's preferred language,
3 in your proposal?
4 A. No, I have not. I have not provided
5 the contract language within our proposal.
6 Q. And this is the subject matter of your
7 Federal District Court litigation?
8 A. That is correct.
9 Q. And do you know the status of that
10 litigation?
11 A. Yes, I do.
12 Q. And is that set for -- that's set for
13 hearing when?
14 A. The hearing I believe is the fall of
15 2003, so approximately a year from now.
16 Q. August 2003?
17 A. August or September, that fall period.
18 Q. And is it your understanding that any
19 Decision by this Commission as to a rate would not
20 be implemented until the Federal District Court
21 makes its Decision the end of next year?
22 A. My understanding of what this hearing
23 is about is to set an interim rate which would then,
24 once the court case is done, would be a true-up to
25 the actual rate. So the court case will decide what
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 the true-up should be.
2 Q. So you agree what I said.
3 Is there -- given the fact that it
4 won't be applied even trued-up backwards until the
5 end of next year, does it make sense to determine
6 that rate now rather than closer to the time when
7 the Federal District Court will make its Decision?
8 A. No, I think the -- I mean, this
9 Commission's responsibility is to set an interim
10 rate that would be in place effective when they make
11 their Decision that would then be trued-up when the
12 court case decides the termination clause.
13 Q. It's PacifiCorp's position that any
14 contract that's agreed to should have separate
15 prices both for the firm sale and the purchase of
16 the interruptibility?
17 A. That's correct.
18 Q. Looking at your Exhibit 10 and the
19 terms that it contains as set forth in your rebuttal
20 testimony as starting upon page 7, with respect to
21 the sale component, the firm sale, PacifiCorp's
22 proposing that there be an annual reopener. Is that
23 still your position? That's Point No. 5, I think.
24 A. Would you -- I guess would you clarify
25 what you mean by "reopener"?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Q. Well, that's the way I read on page 8,
2 item 5: Once per year adjustment to all price
3 components in the electric service agreement based
4 on overall average Idaho jurisdictional rate
5 increase or decrease for that calendar year.
6 Is that not a reopener provision?
7 A. Are you in the exhibit now?
8 Q. No, I'm in your rebuttal testimony.
9 A. Oh, I'm sorry. I was looking --
10 Q. It's basically -- it's a discussion of
11 your Exhibit 10 and the points that you include.
12 A. Yes, Item 5 is a price adjustment to
13 the price components within the electric service
14 agreement.
15 Q. On an annual basis?
16 A. On an annual basis, that's correct.
17 Q. And you understand PacifiCorp's stated
18 need for price certainty in its contract? Not
19 PacifiCorp, but Monsanto's?
20 A. Yes, they have stated that, that's
21 correct.
22 Q. And do you think that having a price
23 reopener satisfies Monsanto's requirements?
24 A. No. However, the point to remember is
25 that if the agreement is based on cost of service
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 and cost of service changes, it should reflect the
2 actual cost of service that's associated with
3 Monsanto.
4 Q. Item 6, you talk about allocation of
5 the electric service on the basis of situs, the
6 electric service agreement, and I think the Company
7 is proposing that interruptibility be allocated on
8 the basis of system, sort of a hybrid type proposal
9 in this case. Is that correct?
10 A. Yes, the interruptible -- the separate
11 interruptible agreement would be system allocated,
12 correct.
13 Q. And is the issue of situs versus
14 system with respect to treatment of interruptible
15 customers, isn't that an issue that's presently
16 being debated in another docket?
17 A. Yes.
18 Q. And that's part of the -- a multistate
19 process?
20 A. That's correct.
21 Q. And as part of the reopener that
22 you're proposing in this case for that interruptible
23 portion, aren't you asking that it essentially be
24 revisited should other jurisdictions decide that
25 issue differently, or does that pertain only to the
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 the valuation of the interruptibility?
2 A. Could you re-ask the question?
3 Q. Is PacifiCorp willing to abide by this
4 Commission's determination with respect to site
5 jurisdiction or would the Company be coming in
6 asking for an adjustment if allocation is -- if that
7 allocation is determined differently in its other
8 jurisdictions?
9 A. And for clarification, are you
10 speaking about the electric service agreement or the
11 interruptible agreement?
12 Q. Let's speak about the interruptible
13 portion.
14 A. The interruptible is deemed to be, as
15 we proposed, a system-allocated agreement which
16 would -- which would be allocated across the
17 system. So, yes, there -- if there is other
18 jurisdictions that deem that the system allocation
19 is incorrect or needs to be adjusted, yes.
20 Q. So any cost that cannot be spread --
21 costs to other jurisdictions, the Company would be
22 coming back, asking that they be absorbed within
23 Idaho on a situs basis, even though you're proposing
24 to handle those on a system basis?
25 A. I guess I don't -- I don't know if we
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 would come back to ask Idaho to pick up the -- any
2 differences. What we would -- what we've asked for
3 is that if the agreement is, from a system
4 allocation perspective, is not -- things are --
5 things are allocated differently throughout the
6 states, that the interruptible agreement get
7 reopened to either change the terms and conditions
8 to comply with -- with the system allocation,
9 whatever the Order comes out to be. It's not we're
10 asking anybody to absorb it; it's we need to
11 readjust it to make sure it does work.
12 Q. Did you participate in any of the
13 Company's merger cases?
14 A. No.
15 Q. Would Mr. Taylor be a better witness
16 to ask questions regarding the merger?
17 A. Yes.
18 Q. In your Exhibit 10 proposal,
19 essentially are you recalculating numbers that you
20 intend to come back with based upon Monsanto's
21 surrebuttal? Are you going to -- are you intending
22 to introduce an additional exhibit in your -- in
23 your -- when you come back to speak of Monsanto's
24 offer?
25 A. I guess I'd like to defer that
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 question, because we really haven't had a chance to
2 review it. If it -- if there -- it's deemed that
3 there's something of value to submit a further
4 exhibit, yes, we would do that. At this point, I
5 don't -- I don't have an answer to that.
6 Q. Is it reasonable to talk about this
7 if, in fact, the offer is different now?
8 A. The offer is different, that is
9 correct, from Monsanto.
10 MR. WOODBURY: Madam Chair, no further
11 questions.
12 COMMISSIONER SMITH: Thank you,
13 Mr. Woodbury.
14 Mr. Budge.
15 MR. BUDGE: Thank you.
16
17 CROSS-EXAMINATION
18
19 BY MR. BUDGE:
20 Q. Mr. Griswold, I want to just clarify
21 one of your responses regarding the termination of
22 the contract and the true-up, and as to how you
23 envisioned that would work.
24 COMMISSIONER SMITH: Mr. Budge, is
25 your microphone on?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 MR. BUDGE: Excuse me. I'm sorry.
2 Q. BY MR. BUDGE: Let me start again just
3 to clarify one of your responses to Mr. Woodbury
4 regarding the termination of the existing '95
5 contract and how the true-up might work. I wasn't
6 real clear about your answer.
7 Is my understanding correct that this
8 Commission will set the rate in this proceeding for
9 Monsanto under a new contract going forward? Is
10 that your understanding?
11 A. That's my understanding.
12 Q. And is it your understanding also that
13 the Court then will determine when the old contract
14 terminates?
15 A. That is correct.
16 Q. And so once that date is determined by
17 the Court, then the true-up mechanism already in
18 place in this proceeding would kick in, perhaps?
19 A. Yes, that's correct.
20 Q. And so let's just assume for
21 discussion purposes the Court ruled the old contract
22 terminated the end of last year, which is
23 PacifiCorp's position. Then from that date, from
24 January 1 of 2002, the true-up would then apply; and
25 to the extent there's any difference between the
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 18.50 paid under the old contract and the new rate
2 that might be set by the Commission, the true-up
3 would be applied to that difference and Monsanto
4 would pay the difference plus the specified interest
5 rate in the true-up Order?
6 A. That's my understanding.
7 Q. And, similarly, if the Court were to
8 rule that the contract ends at the end of this year,
9 or some future date for that matter, then that would
10 also be the date at which the new rate would go into
11 effect and there may not be a true-up?
12 A. Yes, that's my understanding.
13 Q. Would you please turn to your direct
14 testimony on page 3, and if you would look to line 1
15 through 4, you make a statement there that
16 PacifiCorp was required to purchase power to serve
17 Monsanto, and you give an example there that at
18 times you had to pay up to $150 per megawatt hour to
19 serve Monsanto's load at the lower price. Do you
20 see that testimony?
21 A. Yes, I do.
22 Q. Isn't it a fact, Mr. Griswold, that
23 color -- the Company doesn't color-code resources
24 from its various -- or, excuse me -- doesn't
25 color-code electrons from various resources going to
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 a particular customer?
2 A. That's correct.
3 Q. And would it be accurate to say that
4 PacifiCorp acquires resources to serve its entire
5 load, not a particular customer?
6 A. That is correct.
7 Q. So to the extent that that statement
8 that you made implies that you were buying power at
9 150 to serve Monsanto, that wouldn't be accurate.
10 Correct?
11 A. No, it's not accurate. However, it
12 was meant to point out that if there was the option
13 to interrupt them at that point, we would not have
14 to have purchased an amount higher -- our
15 higher-cost purchases from the market at that time.
16 Q. And if, in fact, the interruptibility
17 that's now proposed by Monsanto which is basically
18 unlimited economic interruptibility for 1,000 hours,
19 had that, in fact, been in place back in 2001 when
20 you referred to, then isn't it a fact that the
21 Company could have avoided to the extent of the
22 interruption of Monsanto the power purchases at this
23 high market price?
24 A. Yes. However, I guess the economic
25 curtailment structure is -- at this point is still
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 not defined, so it's kind of difficult to go back
2 and apply it.
3 Q. Just a hypothetical question: Had it
4 been available in '95, you could have interrupted
5 Monsanto and avoided some high market prices? That
6 was my only point.
7 A. If, in fact, if you look at the
8 economic curtailment and you, in fact, gave them
9 notice and they physically interrupted, then, yes,
10 we would avoid purchasing.
11 If they invoke their buy-through
12 clause, then the load would still be there. We
13 would just serve them from some known, higher-priced
14 market.
15 Q. And then, in fact, wasn't the Company
16 purchasing power on the market back in that 2000 end
17 of the year and early 2001 time frame in prices that
18 were as high as $500 per megawatt hour?
19 A. For short durations, yes.
20 Q. And those were some of the costs that
21 were, in fact, the Company sought to recover from
22 all of its ratepayers, including Idaho, in the
23 recent power surcharge case concluded earlier this
24 year?
25 A. That's my understanding, yes.
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Q. In the Commission Staff's Data Request
2 No. 18, the Company was asked the following
3 question:
4 Please provide a detailed list of all
5 interruptions of service to Monsanto under the
6 contract over the last ten years, 1992 to 2001.
7 And the Company's response to that
8 request was as follows:
9 There were no interruptions of
10 Monsanto pursuant to its power sales contract during
11 this period.
12 Are you familiar with that response?
13 A. Yes, I am.
14 Q. Would you accept it, subject to check?
15 A. I would accept it, subject to check,
16 yes.
17 Q. Have you had an opportunity now to
18 review Monsanto's Exhibit 201 and 204 that
19 summarizes what their records show regarding the
20 actual interruptions of their load during this time
21 period?
22 A. I have reviewed it, yes.
23 Q. And would you agree that Exhibit 201
24 accurately reflects the curtailed history and
25 interruptions of Monsanto during the period
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 reflected in that exhibit, which I think is 1986 to
2 2001?
3 A. I accept some of it because we have no
4 other -- we tried to find our own records. We have
5 no records historically.
6 Q. So what you're saying is the Company
7 has not made any opportunity to -- has not made any
8 attempt to compare its records with those of
9 Monsanto's because the Company doesn't have records
10 of interruptions?
11 A. We have records of interruptions for
12 the '95 agreement because that dealt with the system
13 integrity issue, and those I've provided in our
14 direct testimony of less than five times under the
15 '95 agreement.
16 Q. And that's different than what
17 Monsanto's exhibit reflects?
18 A. That is correct.
19 Q. And do you have any basis to challenge
20 Monsanto's exhibit if you have no records that
21 you've compared?
22 A. I believe we did ask for them to
23 provide background, their records of showing their
24 interruptions.
25 Q. Well, I don't think that was
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 responsive of my question. My question is you
2 haven't made any attempt based upon review of the
3 Company's records, because you don't have any such
4 records, to determine if Monsanto's records are
5 inaccurate?
6 A. Prior to '95, no.
7 Q. Okay. And with respect to
8 Exhibit 204, which reflects the number of
9 interruptions by Monsanto in the years 2000, 2001,
10 and 2002 up through July pursuant to the operating
11 agreement, would you agree that those interruption
12 records compiled by Monsanto are accurate as
13 reflected in Exhibit 204?
14 A. Subject to check.
15 Q. Okay. Let me ask you another
16 question:
17 Regarding how fast Monsanto curtails
18 when the Company requests a curtailment, would you
19 agree it's in a matter of seconds?
20 A. Based on reviewing their records,
21 their records state that it's in a matter of
22 seconds. Our -- could I finish? Our records
23 don't -- do not track the amount of time that it
24 takes Monsanto to shut their furnace down.
25 Q. And as you look at those exhibits over
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 that course of years, you can see several thousands
2 of times that Monsanto's been interrupted for
3 various purposes under various agreements. Would it
4 be accurate to say that there's never been a time
5 that PacifiCorp called upon Monsanto to curtail its
6 load that Monsanto did not respond?
7 A. As a general answer, yes, I would
8 agree that they have been responsive.
9 Q. So when you value and look at Monsanto
10 as a possible resource to meet peak load, is it then
11 not accurate to say that the interruption of
12 Monsanto is a resource that's reliable and available
13 at all times on seconds' notice?
14 A. I would agree with the exception of a
15 second's notice, because we've typically, if you
16 look at historical, not always needed it within
17 seconds, unless there's some sort of emergency
18 condition. So I do agree that they have been
19 reliable. They've -- they have been a good customer
20 for curtailment resources, and they have always
21 abided by whatever notice requirements we've given.
22 Q. And if we contrasted Monsanto as a
23 resource to other resources the Company might have
24 available to meet peak load, let's talk about going
25 to market. Would there be times that the Company
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 may attempt to go to the market to meet peak loads
2 that they may have difficulties making the purchase
3 or they may have difficulties moving the power from
4 one location to another due to transmission
5 constraints?
6 A. Yes, sir, there could be those
7 situations.
8 Q. So those are problems that may make it
9 difficult to go to the market at all times. Would
10 you agree?
11 A. I would agree. However, I think we go
12 to the market, and if it's not there, then we have
13 to look for other resources.
14 Q. And if the Company chose to build its
15 own peaker plants and rely on that as its primary
16 resource, isn't it a fact that there are times that
17 a peaker plant may not be available; in other words,
18 you could turn a switch on and there might be
19 mechanical problems and it's not there?
20 A. Yes. In any mechanical system, you
21 always have availability.
22 Q. And there may be a period of time that
23 the Company is experiencing curtailment or
24 interruption of its gas supply that that peaker may
25 not be available for some reason. Correct?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. Yes, but it depends on the gas
2 contract you have for the peaker.
3 Q. And on that point, isn't it true that
4 the Company's gas supply contracts basically have
5 curtailment or interruptible provisions from the
6 supplier?
7 A. I'm not the fuel person for the
8 Company, so I can't answer that.
9 Q. Would that be a question Mr. Watters
10 could better answer?
11 A. Possibly.
12 Q. You know, at the same time that --
13 strike that question.
14 You made the comment that you weren't
15 involved in the '95 negotiation so you weren't sure
16 whether it was Monsanto or the Company that chose to
17 eliminate the economic curtailment from that
18 contract. Correct?
19 A. Correct.
20 Q. The testimony of Monsanto as presented
21 in this case said that the Company was willing to
22 eliminate that provision. Have you run into
23 anything to the contrary that indicated Monsanto was
24 coming to PacifiCorp, saying, Take out the
25 interruptibility clause?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. We have no -- we have no written
2 records of -- of that from either side.
3 Q. And isn't it true, Mr. Griswold that
4 during this same general time frame back in the '95
5 era that the economic curtailment provisions were
6 eliminated from the Monsanto contract, that the
7 Company was also going about a program or process of
8 eliminating curtailment from other special contract
9 customers? For example, Renco, Kennecott, and
10 Geneva all had had contracts whose interruptible
11 terms were removed in that general time frame of
12 renegotiation?
13 A. Yes; however, the reason for
14 eliminating in those cases was related to the
15 mechanism for buy-through power. We had become
16 involved in litigation with those customers and,
17 therefore, the clause was causing more problems than
18 it was worth for curtailment.
19 Q. Turning further down on page 3 of your
20 direct testimony, line 7 to 8, you indicate that on
21 a going-forward basis, the Company prefers to have
22 separate agreements for firm and interruptibility;
23 and the explanation you give here is to clearly
24 define any terms and conditions for
25 interruptibility, including the months of the year,
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1 hours of the day, load to be interrupted, frequency,
2 notification period, et cetera.
3 Wouldn't you agree, Mr. Griswold, that
4 there is no reason that those specific terms could
5 not be incorporated in a single integrated
6 contract? And I can appreciate the Company's
7 preferences otherwise, but there's no reason it
8 can't be written in one contract. Correct?
9 A. That -- in order for clarifying the
10 terms and conditions, that is correct.
11 Q. And, in fact, in the Magcorp case,
12 that's what you ended up with was a single contract
13 that addressed both firm and interruptible rates.
14 Correct?
15 A. No, the Magcorp case is simply an
16 interruptible contract. There was no firm contract.
17 There's no firm load within that contract.
18 Q. But it's all contained within a single
19 contract?
20 A. Yes, that is correct.
21 Q. And I believe all of the prior
22 Monsanto contracts have always been a single
23 contract?
24 A. That is correct.
25 Q. Would you please refer, Mr. Griswold,
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 to your rebuttal testimony on page 1, and towards
2 the bottom of that page if you have that available?
3 A. I do have it available.
4 Q. At the bottom of page 1 of your
5 rebuttal, beginning on line 21, you make the
6 following statement:
7 All times during our contract
8 negotiations, we have indicated we are willing to
9 align the terms of all the contracts such that they
10 were of the same length.
11 When you refer to "all times during
12 our negotiations," what time period are you
13 referring to? What's the beginning date and the
14 ending date that you're talking about here? And I
15 don't need an exact date, just approximately when
16 did the negotiations begin and when did they end
17 that you're talking about here?
18 A. Well, I became involved in the
19 negotiations in late 2000, and when we had our first
20 real negotiating meetings with Monsanto that began
21 in, oh, probably first quarter of 2001 and continued
22 on through there, I would suggest that as my
23 recollection is, it's probably around the middle of
24 the summer when we really began talking about -- the
25 summer of 2001 -- began talking about -- seriously
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 about -- what the structure would look like of the
2 agreement; and at that time, we talked about
3 different interruptible products such as operating
4 reserves, superpeak, superpeak product. And it was
5 during those times that we talked about making sure
6 that those agreements aligned. That was the
7 beginning.
8 Q. So when you're saying that they were
9 to be aligned, you were talking about -- when you
10 say, "all during the contract negotiations," you got
11 involved during 2000 and continuing right up until
12 recently?
13 A. Yes.
14 Q. And so was that the time period that
15 you're saying the Company was proposing to Monsanto
16 that they could have an interruptible contract and a
17 firm of the exact same terms?
18 A. Starting in summer of 2001.
19 Q. And so is the Company now conceding in
20 this case that whatever -- should this Commission
21 decide to provide two different contracts, one for
22 firm and one for interruptible, the Company is now
23 willing to concede that that would be in a single --
24 they would be contracts of the same term or
25 duration?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. Yes, we've, as I said, since our
2 negotiations, we've always looked to provide
3 something of different -- for different agreements
4 to be coterminus or have the same term.
5 Q. You referred to your Exhibit 9
6 attached to your rebuttal, which was a
7 Frank Mitchell letter of November 5, 2001, to the
8 Commission, and you claim that that supports your
9 position that you've always been offering contracts
10 of the same length?
11 A. Uh-huh. Yes.
12 Q. And the only sentence that I can find
13 in that exhibit that comes anywhere close to that
14 would be the last sentence of Paragraph 1 that
15 states: Our intent is to align the terms of all the
16 agreements such that Monsanto receives the lowest
17 net energy cost over that term.
18 There isn't anywhere in that letter
19 that specifically says the firm contract and the
20 interruptible contract will be the same length.
21 A. No, not in this letter, but I would
22 direct you to Exhibit 4 in my direct testimony
23 and --
24 Q. Let me get to that, if I could.
25 A. Sure.
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Q. Okay. Exhibit 4 is your --
2 A. Exhibit 4 is a matrix that we were --
3 we were utilizing with Monsanto as we went through
4 the negotiating meetings that -- the regular
5 negotiating meetings that we had through the summer
6 and fall and of 2001, and we went through and looked
7 at a lot of different products that you could use
8 for either interruptibility or curtailment.
9 Q. Was this document -- excuse me for
10 interrupting -- was this a document that was
11 presented to Monsanto?
12 A. In the meeting, yes, in one of the
13 meetings. We had a meeting.
14 Q. And where in that document does it say
15 that we will give you a firm contract and
16 interruptible contract that have the same term?
17 A. Well, if you look specifically at the
18 first row, which is the coverage of operating
19 reserves, and if you move over to the payment
20 column, you'll see in there prices for 2002, 2003,
21 2004; and the power supply agreement that we had
22 discussed with Monsanto was for 2002 through 2004.
23 Three-year electric service agreement and this is
24 the three-year operating reserve agreement we had
25 proposed. The reason there's no specific proposal
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 around operating reserves is if you look over to the
2 comments and status column, you'll see it says Use
3 existing agreement template.
4 Q. What you're referring to is the
5 existing operating agreement template?
6 A. Right.
7 Q. And the existing operating agreement
8 template is the same one you gave to Monsanto for
9 the years 2001, -2, and -3. Correct?
10 A. 2000, 2001, and we have a short one in
11 place right now.
12 Q. And all of those agreements were
13 short-term agreements, correct, less than a year?
14 A. No, the 2000 -- some of those were a
15 year in length and were extended for beyond a year.
16 Q. There weren't any of them what you
17 would consider long-term agreements?
18 A. Well, in -- I guess in the case of the
19 existing operating reserve agreements, we already
20 had an electric service agreement in place with
21 Monsanto that was long-term, so what we were looking
22 to do was to purchase operating reserve from them at
23 that point. Going forward with a new agreement, our
24 analysis and discussion with them was simply around
25 here's an electric service agreement for three
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 years, here's interruptible agreements for three
2 years, and the one that we could -- everybody
3 understood and everybody agreed was workable was the
4 operating reserve because they had been providing
5 it.
6 The second point that I wanted to make
7 is if you look down through here, you see other
8 products that we had looked at and proposed with
9 Monsanto and there's a number of terms sheets that
10 have been provided in Discovery, and in those term
11 sheets we typically look to try to define terms and
12 conditions and prices that made the most sense for
13 Monsanto, and recognizing that we were in a
14 negotiation, what we did was we provided to them
15 simply one year -- a one-year snapshot of what, for
16 example, a superpeak product would be, and what that
17 product was was to say here's the value we pay for
18 it, here's the terms and conditions with it. Is
19 this something that Monsanto can work with from a
20 product perspective? And we continued to go back
21 and forth on those because the hours were not
22 valuable enough, they wanted to do something with
23 more notice, they only want to use one or two
24 furnaces. We tried to look at different scenarios.
25 Because of that, we had the only proposals on a
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 one-year basis and as an example of what that
2 product would be. Our intent was once we found a
3 product that would work in combination with the
4 operating reserve was to align it with the
5 three-year electric service agreement.
6 Q. Let's go back to what the point is and
7 your testimony. You're contending that you always
8 told Monsanto that you were going to have a term of
9 the same length, and what's troubling to Monsanto
10 quite frankly, Mr. Griswold, that never during the
11 negotiations and never during the course of these
12 proceedings did they have any indication that the
13 Company was willing to do that until you filed your
14 rebuttal testimony. And as I look at your rebuttal
15 testimony, you submit in support of your contention
16 that Monsanto always knew about it was a letter that
17 you sent to the Commission November 5 of 2001, and
18 you've admitted earlier there's nothing in the
19 letter that specifically says that, and I want to
20 ask you this question relating to it:
21 Isn't it a fact that that letter was
22 not copied or sent to Monsanto, it was simply a
23 letter to the Commission?
24 A. That's correct.
25 Q. So there's no way Monsanto could know
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 what you may be telling the Commission about what
2 was going on if you didn't copy them with the
3 letter. Correct?
4 A. No, they did not receive the letter.
5 Q. And isn't it a fact that Monsanto was
6 not invited to that meeting where you were
7 discussing your negotiations with Monsanto?
8 A. That is correct. However, let me
9 clarify that.
10 Q. Well, let's just stick with the
11 questions -- answering the questions I've got if we
12 could. You can clarify it later if your counsel so
13 desires.
14 But my question is is there ever a
15 time that you can produce an interruptible contract
16 that's ever been presented to Monsanto either during
17 the course of negotiations or during any of the
18 filings in this proceedings where you're offering
19 them that contains the terms of interruptible
20 agreement that's of the same length of the firm
21 agreement; and if you have one, we've never yet seen
22 an interruptible agreement, and that's why I'm
23 asking you: Do you have the proposed interruptible
24 agreement that you indicate for the first time in
25 your rebuttal testimony that you're now offering
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Monsanto? Is there such an agreement?
2 A. No, because we never got to the
3 position of writing the actual agreement. We still
4 were discussing prices and commercial terms and
5 conditions.
6 Q. You've submitted exhibits in this case
7 that reflect in your proposed pro forma firm
8 agreement way back in 2000, 2001. Correct?
9 A. I don't understand your question.
10 Q. Well, I think the question is isn't it
11 a fact that the Company's pro forma firm service
12 agreement for Monsanto has been in circulation to
13 Monsanto since the very day you got involved in
14 negotiations, way back in 2000 or 2001?
15 A. No, we never submitted a -- we
16 submitted a template contract to them in I believe
17 it was November 2001 which reflected the cost of
18 service and the contract structure we would propose
19 to use.
20 Q. That's my point. We've had our firm
21 agreement, and one of the things we're struggling
22 with, you've never presented to us to this day an
23 interruptible agreement. Correct?
24 A. Not with the contract terms in it,
25 correct.
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Q. Have you read the Company's
2 Application that was filed in this case December 5
3 of 2001?
4 A. I have read it, yes.
5 Q. Isn't it a fact that nowhere in that
6 Application is any indication given to Monsanto that
7 the Company will provide interruptible service?
8 A. Subject to check, and I can't answer
9 that.
10 Q. Would you also accept, subject to
11 check, that Paragraph 6, page 3, of the Application
12 states: The Company proposes to provide firm
13 service to Monsanto in accordance with the Company's
14 electric service Schedule 9;
15 And then you go on to say in the last
16 sentence: The basis for the Company providing firm,
17 rather than interruptible, service to Monsanto and
18 the pricing therefore is set forth in the testimony
19 of David L. Taylor.
20 Would you accept that as the statement
21 from the Application, subject to check?
22 A. Yes.
23 Q. And if that statement says that you're
24 going to provide firm, rather than interruptible,
25 wouldn't you think a reasonable customer might think
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P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 that you don't want to give us interruptible?
2 A. No, because we've had those
3 conversations with them through the period.
4 Q. Okay. Have you read the testimony
5 that was submitted by Mr. Taylor in this case in
6 support of the Application?
7 A. Yes, I have.
8 Q. Would you accept, subject to check,
9 that there's nowhere in Mr. Taylor's testimony that
10 he makes any mention of an interruptible contract
11 for Monsanto having the same term as the firm
12 contract?
13 A. I would accept that, subject to check.
14 Q. Now I'd like to refer you to your own
15 testimony that was filed in June of this year.
16 Isn't it a fact that in your own direct testimony
17 filed in June of 2002, that you don't give any
18 indication in there that the Company would provide
19 Monsanto an interruptible contract, long-term in
20 nature, the same as a firm contract?
21 A. In the actual testimony, no.
22 Q. In fact, on page 3, lines 11 through
23 13 of your direct testimony, you make this
24 statement: Because these resources are considered
25 short-term, the alternate -- alternative -- is to
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 purchase a resource from the wholesale market and
2 must be compared to market.
3 So isn't it a fact, Mr. Griswold, that
4 you're talking about purchasing interruptions from
5 Monsanto on a short-term basis?
6 A. Yes, based on that sentence, yes.
7 Q. Well, let's look to page 4, line 7
8 through 10 of your direct testimony. Do you have
9 that? It states there: Our approach correctly
10 aligns the cost for both supply of power to Monsanto
11 based on cost of service as firm load and the
12 purchase of interruptibility back from Monsanto as a
13 short-term resource. Correct?
14 A. That is correct.
15 Q. Now, have you had an opportunity to
16 read the Company's Responses to Data Requests?
17 A. Not all of them, no.
18 MR. BUDGE: Madam Chair, could I
19 approach the witness?
20 COMMISSIONER SMITH: Yes, Mr. Budge.
21 MR. BUDGE: We'll mark what we'll
22 identify as Monsanto Exhibit No. -- get the right
23 exhibit.
24 COMMISSIONER SMITH: 239.
25 MR. BUDGE: Is that our next number?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Thank you.
2 A VOICE: 240. There's --
3 MR. BUDGE: I think it's 239.
4 MR. FELL: Isn't 239 Dr. Rosenberg's
5 last exhibit that we were missing?
6 COMMISSIONER SMITH: Let's be at ease
7 for a moment.
8 (Discussion off the record.)
9 COMMISSIONER SMITH: Okay, we'll go
10 back on the record, and we're marking as Exhibit 240
11 the document that Mr. Budge is now passing out.
12 (Monsanto Exhibit No. 240 was
13 marked for identification.)
14 Q. BY MR. BUDGE: Exhibit 240 is a copy
15 of the Company's Response to Monsanto Data Request
16 No. 140, and if you'll note at the top, that Request
17 by Monsanto was referring to the Company's Response
18 given to Staff Data Request 1.26 and 1.27 in the
19 PAC-E-00-06 case. Do you see those Responses?
20 A. I do, yes.
21 Q. And the first Response says PacifiCorp
22 intends to enter into no more long-term
23 interruptible service contracts.
24 And you go on to say that load
25 curtailment designed on a short-term basis will be
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 looked at.
2 And you state again in 1.27 that the
3 Company tends to discontinue the practice of
4 offering interruptible service as a retail purchase
5 option.
6 And Monsanto asked you about that
7 policy in particular, and you indicated, as you can
8 see from the Company's Response on No. 140, that the
9 Company is working towards implementation of the
10 policy as -- implementation of the policy as current
11 contracts expire.
12 Do you see that?
13 A. Yes, I do.
14 Q. And then if you look at the end of the
15 Response to No. 141 where Monsanto says Please state
16 the reasons for this policy change; and the Company
17 responds, just referring to the last sentence,
18 quote: It's unfair for the larger body of customers
19 if the Company pays more for interruptibility in the
20 form of long-term interruptible rates than it would
21 pay for short-term purchases of interruptibility on
22 an as-needed basis.
23 Wouldn't you agree, Mr. Griswold, that
24 these Responses indicate that the Company does not
25 intend to enter into any long-term interruptible
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 contracts?
2 A. Based on these statements, yes, but
3 the -- I guess there needs to be a definition of
4 short-term versus long-term, and from our
5 perspective, short-term is reflective of an
6 agreement that's one to three years in nature,
7 versus a long-term agreement of could be five and
8 longer.
9 Q. I'd like to hand you what we will mark
10 as Monsanto Exhibit 241, give you an opportunity to
11 familiarize yourself with that exhibit.
12 (Monsanto Exhibit No. 241 was
13 marked for identification.)
14 COMMISSIONER SMITH: Mr. Budge, would
15 this be a good time to take a short break?
16 MR. BUDGE: Certainly.
17 COMMISSIONER SMITH: We'll be in
18 recess for about eight minutes.
19 (Recess.)
20 COMMISSIONER SMITH: We'll go back on
21 the record. Mr. Budge.
22 MR. BUDGE: Thank you.
23 Q. BY MR. BUDGE: Mr. Griswold, your
24 Exhibit 9 is the letter sent to the Commission
25 November 5, 2001, and I've handed you Exhibit 241
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 which is a letter a month or so later dated
2 December 12, 2001, that Mr. Mitchell sent to
3 Monsanto. Have you had an opportunity to review
4 that letter?
5 A. Yes.
6 Q. And have you seen that letter before?
7 A. Yes.
8 Q. In the introductory paragraph,
9 Mr. Mitchell says that he is specifically responding
10 to a letter from Mr. Schettler regarding various
11 contract negotiation terms.
12 And then if you look at the bottom of
13 page 2, the second to the last sentence where they
14 have been discussing interruptibility agreements,
15 says: However, drastic changes in the wholesale
16 market over the last couple of years have shown us
17 that interruptibility can have very different values
18 at different points in time. Recognition of those
19 different values can best be dealt with in separate,
20 shorter-term agreements.
21 Is there anything in that letter,
22 Mr. Griswold, that would give Monsanto some
23 indication that the Company was talking about
24 anything but a short-term agreement for
25 interruptibility?
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. No. However, our proposal to Monsanto
2 for electric service was for three years also.
3 Q. Excuse me for interrupting, but let me
4 just ask you the question again so you can be
5 responsive. The question was do you see anything in
6 that letter that would give Monsanto indication that
7 the Company was proposing anything other than a
8 short-term curtailment agreement?
9 Let me ask it a different way. The
10 language I just read to you that says the Company
11 wants short-term curtailment agreements, wouldn't
12 that give the reader indication that that's what the
13 Company is proposing: Short-term agreements?
14 A. Yes, to provide short-term
15 interruptible agreements; but we've also, as I was
16 trying to clarify, our proposal for our electric
17 service agreement was short-term also, it was three
18 years. That's the definition for short-term is less
19 than -- three years and less.
20 Q. Okay. Excuse me for interrupting.
21 Let's turn back to your direct testimony on page 6,
22 beginning on line 7. You made this statement: In
23 addition, numerous other demand-side proposals were
24 presented to Monsanto during negotiations that were
25 never agreed.
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 And you include these in your
2 Exhibit No. 7, and I'd like to turn you to your
3 Exhibit No. 7. Do you have that available?
4 A. I do, yes.
5 Q. Exhibit 7 is a term sheet of the terms
6 that were being proposed, correct, the Company's
7 term sheet?
8 A. There's several term sheets here, but
9 the first one is for operating reserves. Is that
10 what you're pointing to?
11 Q. No, the first one is entitled Monsanto
12 Load Curtailment. Correct?
13 A. There's several of them, so let me
14 make sure I'm on the right one.
15 Q. Let's start with page 1, Monsanto Load
16 Curtailment. Do you have that?
17 A. I have it.
18 Q. What does line 4 say regarding the
19 term?
20 A. The term under this draft sheet was
21 June 1, 2002, through September 30, 2002.
22 Q. Four months is the proposal here
23 you're saying for the operating -- or, the
24 interruption agreement. Correct?
25 A. Yes, that's correct. However, it was
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 to look specifically at a four-month summer period
2 and no other months of the year. So you can't have
3 a longer term than a specific term once you're
4 trying to address.
5 Q. Let's go back to the third page of
6 that proposal. And, again, this is all part of your
7 interruptible proposal to Monsanto. Correct?
8 A. It's one of many, that's correct.
9 Q. And what does the third page reflect
10 regarding the term of that interruptible proposal?
11 A. I'm sorry, I'm missing where you're --
12 what you're addressing.
13 Q. Page 3, line 4, shows -- of the
14 document I have of Exhibit 7 -- shows as a term
15 January 1, 2002, through December 31, 2002?
16 A. Yes, I see that. That is --
17 Q. Would you agree that that's the term
18 of that proposal?
19 A. Correct.
20 Q. And if you go back four more pages, if
21 you would, to the second to the last page of your
22 exhibit, which is the operating reserve portion, and
23 what did you state there is the term of that portion
24 of the curtailment agreement?
25 A. The term for this specific term sheet
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 is down on the fourth line. It's March 1, 2002,
2 through September 31, 2002.
3 And as I've indicated before, all of
4 these term sheets were to reflect specific
5 conditions we had during the discussions before we
6 submitted a term sheet, so if we were talking about
7 a year-long product, it was a year term. If we were
8 talking about four summer months, it was four summer
9 months. If we were talking about in this case with
10 operating reserves going through the remainder of
11 the year, this is, what, ten months, nine months?
12 Q. Would you agree that each of the
13 proposals contained in your Exhibit 7 reflect a
14 proposed curtailment term of something less than a
15 year?
16 A. Well, with the exception of the one
17 that says a year, so a year or less, that's correct,
18 but that's what was requested.
19 Q. Referring back to your Exhibit 9,
20 makes a statement in there that -- about the meeting
21 on October 25th regarding negotiations with Monsanto
22 was the topic of that meeting, and you indicate in
23 the last paragraph that PacifiCorp continues to
24 negotiate in good faith.
25 There's one matter that arose out of
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 this testimony, Mr. Griswold, that's particularly
2 troubling to Monsanto, and that has to do with the
3 nature of settlement negotiations between the
4 parties that have gone on over this contract and
5 otherwise, and is it your understanding that when
6 PacifiCorp and Monsanto sits down to negotiate
7 settlement of this case or the litigation elsewhere
8 and the parties have an express understanding that
9 those matters are to be maintained confidential,
10 what does that mean to you?
11 A. Well, first, what it means to me is --
12 there's two things I want to address. One is
13 settlement negotiations and negotiations, and as has
14 been described is that the discussions and
15 negotiations have started since 1999 and continued
16 on and it did continue on in good faith, and in
17 those negotiations we did not sign any
18 confidentiality agreement relative to those
19 negotiations.
20 When we filed our case, the case that
21 we're sitting here now for, which was in December of
22 2001, anything after that where we had negotiations
23 would be considered, in my mind, settlement
24 negotiation.
25 Q. So let me just ask you more
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 specifically, when you sit down to negotiate
2 settlement with Monsanto, isn't it the clear
3 understanding of both parties that those discussions
4 are to be maintained within the confines of that
5 room and the parties that are within it? Would you
6 agree to that?
7 A. Those -- it was not agreed that those
8 under -- when we were negotiating prior to when we
9 did this -- when this case --
10 Q. Are you familiar with Rule 408 of
11 evidence in discussions with your counsel?
12 MR. FELL: Objection, Madam Chairman.
13 COMMISSIONER SMITH: Mr. Fell.
14 MR. FELL: It's a legal question.
15 COMMISSIONER SMITH: Use your mike.
16 MR. FELL: Objection on the basis that
17 that calls for a legal evaluation of the Commission
18 Rules.
19 MR. BUDGE: My question is simply if
20 he's familiar with the Rule based upon discussion
21 with Counsel as to the confidentiality -- I didn't
22 quite get my question -- as to the confidentiality
23 of settlement discussions.
24 COMMISSIONER SMITH: I'll allow him to
25 answer that question.
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Q. BY MR. BUDGE: Are you familiar with
2 the Rules of Evidence that do not allow confidential
3 settlement negotiations to be brought into evidence
4 based upon discussions you may have had with Counsel
5 for the Company?
6 A. I have not read the Rules. I'm
7 familiar with anything after the -- that we filed
8 our order for the interim, that those -- and sat
9 down for negotiations -- those were considered
10 confidential.
11 Q. So let me just ask it to you this way:
12 When we have settlement negotiations
13 with you, do you consider those confidential? Are
14 those things that can be divulged to the public and
15 brought out in these proceedings or other court
16 proceedings?
17 A. I consider those confidential.
18 Settlement negotiations I consider confidential, and
19 have been treated confidential.
20 Q. What does it mean to you when you say
21 they're confidential?
22 A. They're not entered into evidence.
23 They're not used publicly. They're between the
24 parties in the room.
25 Q. Well that being the case, why is it
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HEDRICK COURT REPORTING GRISWOLD (X)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 then that you feel in your testimony it's
2 appropriate to bring to another body the substance
3 and discussions of settlement negotiations that you
4 deem confidential? Is that not troubling to you?
5 MR. FELL: Objection again. The
6 question is unclear, really, that Mr. Budge is
7 moving back and forth between the presentation of
8 this letter as evidence in this proceeding and the
9 conversation that occurred with the Commission back
10 in the fall of 2001, and it would help for me and
11 for the witness if he would clarify which activity
12 he's objecting to here.
13 COMMISSIONER SMITH: Mr. Budge.
14 MR. BUDGE: I'll direct my question.
15 I don't mean to belabor the point, but it's somewhat
16 of phenomenon to come into a rate hearing and find
17 testimony -- if this were a court proceeding and the
18 questions were asked about confidential settlement
19 negotiations, quite obviously I would have an
20 opportunity to object and I would certainly expect
21 that this body or a court would certainly look at
22 Rule 408 and say, If this is settlement negotiation,
23 then we don't talk about it here.
24 But we're left in this proceeding with
25 the troubling situation in that the evidence is
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1 prefiled, it's already presented before the
2 Commission, and we have a situation that parties who
3 obviously are having difficulty negotiating and are
4 doing our best and the Rules of Evidence are
5 designed to make sure that parties lay the cards on
6 the table, have full and free and open discussions.
7 We don't expect to get into a situation where we
8 come back in in testimony and the witness chooses to
9 go in and testify about what we thought were
10 confidential settlement negotiations.
11 So if he has a different
12 understanding -- I mean, he's testifying that he
13 doesn't think they should come into evidence, yet,
14 in fact, that's what he's done is put them into
15 evidence, and it sure makes it difficult for these
16 parties to be able to communicate.
17 COMMISSIONER SMITH: Mr. Fell.
18 MR. FELL: What evidence is he
19 talking -- is Mr. Budge talking about? I would
20 appreciate it if he would be precise about that. Is
21 it a letter? Is it Exhibit No. 9 that Mr. Budge is
22 objecting to? Or is he objecting to the fact that
23 conversations occurred in the fall of 2001, which is
24 not an evidentiary issue in this particular case?
25 MR. BUDGE: I'm objecting to both.
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1 The letter states that "we had a meeting October
2 25th regarding negotiations with Monsanto." So
3 apparently the subject was negotiations with
4 Monsanto. That, I think, is objectionable.
5 Number two, Mr. Griswold has testified
6 in his testimony several times, some of which I've
7 pointed out, he's testifying that during negotiation
8 with Monsanto, we told him this and we didn't tell
9 him that. And I don't want to get in a position
10 that we have to rebut by having some Monsanto person
11 say, No, we didn't tell us that in negotations. So
12 I'm trying to cross-examine based on this record in
13 this case, which is an absolute different story from
14 the pleadings presented to this Commission that he
15 now states in his testimony.
16 COMMISSIONER SMITH: Mr. Fell.
17 MR. FELL: So let me take them one at
18 a time.
19 As to the discussions with this
20 Commission in November of 2001 --
21 COMMISSIONER SMITH: October.
22 MR. FELL: October, thank you, of
23 2001.
24 -- there was no proceeding before the
25 Commission. There was no dispute that was
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1 engaged -- in which the parties were engaged in
2 settlement. It was a discussion with a customer, a
3 customer that represents approximately half the load
4 of Utah Power in this state, and it is a matter of
5 significant public interest to the Commission. So
6 one would think that would be an all right
7 conversation until a proceeding were commenced over
8 that.
9 As to discussions that were presented
10 in Mr. Griswold's testimony, Mr. Griswold has not
11 sought to admit anything that Monsanto has said in
12 those discussions. He has only sought to admit
13 things that Mr. Griswold or PacifiCorp has proposed
14 in those negotiations, and the Rules regarding
15 admissibility into evidence have to do with
16 admissibility of statements or conduct of the other
17 parties in settlement discussions, so I don't think
18 he's violated that either.
19 COMMISSIONER SMITH: Mr. Budge, can we
20 move on?
21 MR. BUDGE: Why don't we move on. Let
22 me go into a different topic. Thank you for your
23 patience in allowing us lawyers to sometimes do what
24 we like to do, and that's argue.
25 Q. BY MR. BUDGE: Mr. Griswold, would you
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 please turn to page 7 of your direct testimony,
2 lines 18 through 20?
3 Let's see. That doesn't seem to be
4 right. I think I misspoke. I believe that's your
5 rebuttal testimony. Yes, I'm sorry. I meant
6 rebuttal testimony, page 7, line 18 through 20.
7 Excuse me.
8 Have you been able to arrive at that?
9 A. I have, yes.
10 Q. When you make the statement here that
11 the term of both agreements would be effective
12 September 1 or when the Commission issues an Order
13 approving the Agreements, you're not attempting to
14 concede when the '95 contract terminates, are you?
15 A. No, this is pretty clear in that it
16 says this is the interim price that would be
17 charged.
18 Q. And I think from our earlier
19 questions, you or the Company acknowledges that the
20 old contract will terminate whenever the Court
21 decides that?
22 A. We're waiting for the Court's
23 Decision, yes.
24 Q. And whatever the Court decides
25 regarding true-up mechanism, the Company is -- or,
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1 excuse me -- regarding a termination date, the
2 Company still stands by its prior agreement that the
3 true-up mechanism that was contained in the previous
4 Order last December still applies?
5 A. That is correct, yes.
6 Q. On page 8, lines 13 through 15, this
7 is your Item No. 5 where you talk about the prices
8 that Monsanto's contract have will be adjusted once
9 per year based on the overall average Idaho
10 jurisdictional rate increase or decrease for that
11 calendar year.
12 Is it our understanding -- excuse
13 me -- is our understanding correct that the Company
14 then effectively wants to tie the firm service
15 contract proposed by the Company to Idaho tariff
16 rates?
17 A. Yes, the overall -- the overall
18 average Idaho jurisdictional rates, yes, is correct.
19 Q. So would this be an annual adjustment
20 regardless, or would only be an adjustment if, in
21 fact, a general rate case is filed or some other
22 proceeding that results in the changing of the rates
23 of all the other tariff customers?
24 A. It would be an adjustment only if
25 there's been a rate case and an overall adjustment.
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1 Q. In the separate curtailment agreement
2 the Company proposes, I didn't note anywhere in your
3 term sheet that that would also be subject to
4 adjustment.
5 A. Let me look and then respond.
6 It's -- I agree it's not clear based
7 on the proposal that's in here, that it just says an
8 annual -- other provision, it just says annual price
9 adjustment, so it's not clear whether it's electric
10 service and the interruptible.
11 Q. Could you clarify for us what the
12 Company's intention is regarding the adjustment of
13 the interruptible contract proposed?
14 A. Well, as in the other agreements that
15 we had with other customers, it works on both sides
16 of the fence, so our intent would be to have some
17 sort of adjustment on both sides. So if prices --
18 if there was an adjustment on one side, you should
19 have a corresponding adjustment on the other side.
20 Q. So is the interruptible agreement
21 subject to the same tariff customer adjustment
22 feature as the firm, or is it tied to some different
23 mechanism or index?
24 A. We didn't propose any other index.
25 We're just looking for the separate agreements. No,
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1 we did not propose a separate.
2 Q. Are you proposing that now?
3 A. A separate one?
4 Q. Yes, you are proposing a separate --
5 A. Separate agreement, correct.
6 Q. I understand that, but what I don't
7 understand is are you proposing it would also be
8 subject to adjustment?
9 A. If -- I guess what I've said before
10 was we -- with the other customers where we have
11 separate agreements we put the same adjustment in
12 both sides, so that if there is --
13 Q. Let's talk specifically your proposal
14 for Monsanto, because then we'll have an
15 understanding of it and be able to respond at some
16 point. So the interruptible will be subject to an
17 annual reopener adjustment?
18 A. We would propose that both the
19 electric service agreement and the interruptible
20 agreement have a price -- the same price adjustment
21 on both sides.
22 Q. All right. So that would be whatever
23 adjustments happen to tariff rates, up or down,
24 affect both contracts identically?
25 A. Right. Right.
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1 Q. Let me ask you a hypothetical if I
2 may, Mr. Griswold:
3 Let's assume that Monsanto's 1995
4 contract had been similarly tied to tariff rates.
5 Can you tell me what would have happened to
6 Monsanto's rates as a result of the recent deferred
7 accounting power supply case that concluded this
8 spring? I think it was PAC-E-02-1.
9 A. I cannot. I don't know what the
10 percentages were.
11 Q. When I look at Exhibit 223 --
12 MR. FELL: Madam Chair, that question
13 would be better asked to Mr. Taylor, who's familiar
14 with that case and the rate design issues -- or,
15 rate solution, rather.
16 COMMISSIONER SMITH: Thank you,
17 Mr. Fell.
18 MR. BUDGE: That's fine.
19 Q. BY MR. BUDGE: So from what -- from
20 Counsel's comments, you didn't participate in that
21 case directly?
22 A. No, I did not.
23 Q. Okay. Have you had an opportunity to
24 look at Monsanto's Exhibit 207, which is
25 PacifiCorp's average retail base rates?
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1 A. Subject to check, yeah.
2 Q. Is that a document that was actually
3 prepared by PacifiCorp? Do you recognize that as
4 one of the Company's documents?
5 A. Without having the document in front
6 of me, I don't know. I can't answer that.
7 Q. Would you agree, subject to check,
8 that that exhibit reflects that the overall rates of
9 Idaho's customers have actually gone down over this
10 period from 1988 through 2002?
11 A. Subject to check, I won't disagree
12 with that.
13 Q. And would you know whether or not that
14 exhibit reflects the further reductions of the Idaho
15 retail rates as a result of the recent 02 case?
16 A. I would not. You would, as Mr. Fell
17 has said, better to check with Mr. Taylor.
18 Q. Thank you. I had some questions
19 regarding your Exhibit 10 which is the draft terms
20 for Monsanto's electric contract that you provided
21 in your rebuttal testimony, if you could turn to
22 that. This is simply a term sheet again, not the
23 detailed terms of either contract. Correct?
24 A. That is correct.
25 Q. And would you agree, Mr. Griswold,
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1 that this is the first time in this proceeding that
2 Monsanto has been presented any proposal from the
3 Company regarding the terms of curtailment of
4 Monsanto?
5 A. No, I disagree with that. We've -- as
6 in our direct testimony, I've submitted several term
7 sheets around curtailment options.
8 Q. This would be the first term sheet
9 that suggested a coterminus term for the
10 interruptible power and the firm power?
11 A. Yes. This is a -- and to clarify,
12 this is a specific proposal that reflects the 800
13 hours of interruptibility proposed by Monsanto,
14 which includes system integrity or emergency
15 curtailment as they have designated it, operating
16 reserves, and economic curtailment.
17 Q. So even though you testified that
18 we've seen your proposed firm service contract,
19 we're still yet to see the Company's interruptible
20 contract. Correct?
21 A. The actual contract or a proposed term
22 sheet?
23 Q. No, not term sheet, an actual
24 contract.
25 A. Actual contract? No, there's been no
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1 actual contract delivered to Monsanto.
2 Q. And that's not been developed yet.
3 Correct?
4 A. No, we were still working, as I said,
5 on what the commercial terms would go into it. So
6 what you would take would be to take these terms and
7 conditions and prices as shown in the interruptible
8 pieces and build a specific agreement that defines
9 the duration and defines each of those products
10 within that agreement. So, no, we have not done the
11 agreement, but the core of it sits here.
12 Q. When Monsanto was left with somewhat
13 of a dilemma that we didn't have the Company's
14 specific proposal for curtailment until here in
15 August, would you agree it makes it somewhat
16 difficult for us to evaluate what the Company wants
17 and provides the most value in the way of
18 curtailment?
19 A. I think what -- I think we provided
20 throughout the negotiation a series of term sheets
21 to try and define two things: What was
22 operationally could be provided by Monsanto, and
23 what was financially workable between the two
24 companies. We did not arrive at a -- the basis for
25 a interruptible agreement based on the term sheets
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1 we provided.
2 Q. When I review your Exhibit 10 that we
3 got here in August a couple weeks ago, PacifiCorp
4 proposes 300 hours of operating reserves and
5 500 hours of economic curtailment. Where did those
6 numbers come from?
7 A. Those were the numbers that -- the
8 hours that were provided from Mr. Schettler's direct
9 testimony from -- I don't know the exhibit number,
10 but it was Appendix A, whatever the attachment was.
11 Q. You just took Monsanto's numbers and
12 put them in there?
13 A. Yes, because until this -- until we
14 saw that, there had been really no commitment from
15 Monsanto on how many hours they could -- could --
16 were willing to provide for curtailment, for
17 economic curtailment, or commitment to hours that
18 they would provide in order to put together a term
19 sheet and price that product and put a term sheet
20 together.
21 Q. And, similarly, isn't it true that the
22 Company hadn't given anything to Monsanto indicating
23 what it desired or needed in the way of hours in
24 order to utilize Monsanto curtailment as a valuable
25 demand-side resource to the Company?
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1 A. No, I disagree. I think if you look
2 at the term sheets that we've provided, all of those
3 term sheets value the transaction that we were
4 willing to enter into with Monsanto for the specific
5 product that they would be willing to offer. So
6 those term sheets are all term sheets that we've
7 offered and were willing to enter into.
8 So, you know, I do think that we've
9 tried to be flexible to meet Monsanto's operating
10 constraints and criteria, and price the products
11 that they're capable and willing to provide to us.
12 In several cases with the term sheets that we did
13 provide to them, we actually proposed a lot more
14 hours of interruptibility than they have indicated
15 either in their testimony or in negotiations they
16 were willing to provide.
17 Q. Referring to Exhibit 10, I just need
18 you to clarify a couple of calculations for me if
19 you would, please.
20 On page 1 when you're summarizing
21 interruptibility down there towards the bottom, you
22 reflect 95 megawatts, 300 hours in operating
23 reserves, and then you show 46 megawatts, 500 hours
24 of economic curtailment. When I total that up, it
25 comes to 141 megawatts that you use for your
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1 calculations. Correct?
2 A. If you -- if you add those numbers.
3 The key is to look at the word "minimum" after them,
4 after that.
5 Q. Well, but you did your calculations
6 based on the 141 megawatts?
7 A. We did our calculations based on the
8 95 and the 46, correct.
9 Q. But if you turn to page 2 down towards
10 the bottom where you define "interruptible load,"
11 you have 162 megawatts?
12 A. Correct, and let me explain that to
13 you.
14 Q. Okay, if you would, please.
15 A. Okay. If you go through and look at
16 the individual products and you had -- if you go
17 through the discussions or you look at some of the
18 discussions we've had with Monsanto and you key --
19 we keyed in on operating reserves and not being able
20 to hold the same furnaces for the same price, and
21 the 95 is a reflection of them providing 95
22 minimum -- and that's the key there is the word
23 "minimum" -- and the actual operating agreements
24 we've had in the past is that they want the
25 flexibility to use -- to manage which furnaces they
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1 provide so that they're not caught with a safety
2 issue at the site. And so in the operating reserve
3 agreements we have in place, they have the ability
4 to provide, using either the 46-, the 49-, or the
5 67-megawatt furnace, they can provide 95 total. So
6 they could actually be providing more than 95 if one
7 of the other furnaces was not available.
8 So when we looked at the economic
9 curtailment, we said and what -- and responding to
10 their Exhibit A, their interruptible criteria, we
11 said we'll hold 95, minimum of 95, but give them the
12 flexibility around the furnace that they would
13 choose for economic curtailment; and that's why it
14 says 46 minimum, to allow them that flexibility.
15 Q. And now that Monsanto has proposed to
16 make all three furnaces available at 1,000 hours, it
17 would resolve any need to recalculate those
18 numbers. Correct?
19 A. That's correct, because --
20 Q. That's part of what you want to do on
21 your rebuttal and have more time to do?
22 A. Correct.
23 Q. Let me ask you a couple questions.
24 What you call -- what you call system integrity
25 interruption portion or some people call emergency
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1 interruption, is it true under the existing contract
2 and on the Company's proposed contract that all
3 three furnaces would be available for that type of
4 interruption?
5 A. That is my understanding, yes.
6 Q. And with respect to the emergency
7 interruptions, is it also your understanding that
8 there is no limit on the number of those
9 curtailments?
10 A. That's -- yes, that's my
11 understanding.
12 Q. And those interruptions can occur
13 without any notice to Monsanto. Correct?
14 A. For emergency conditions. And let me
15 go back and clarify it.
16 There are limits in that, you know,
17 they have specified no more than one curtailment per
18 day and some limits around operationally how they
19 can recover, and that's fine. It's hours per year,
20 yes. There's no defined hours, except that it's
21 part of the total hours that -- that -- of a total
22 800 hours that have been proposed.
23 Q. But those system integrity hours and
24 interruptions are in addition to the economic
25 curtailment?
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1 A. Correct.
2 Q. Is that your understanding?
3 A. So they come out of the reserves is
4 where they come out of.
5 Q. Are you in agreement with Mr. Watters
6 that based on the Company's analyses that have been
7 set forth here, the Company is placing a greater
8 value on economic interruptions than they are with
9 operating reserve interruptions? Your calculations
10 indicated and that seemed to be a new concept to us,
11 so that's why I ask.
12 A. Well, I think if you -- if you look at
13 it from the -- simply the perspective of what --
14 what we were shown was that we've got in there an
15 economic curtailment and we calculated it on the 46
16 minimum, okay, so that reflects a smaller furnace
17 load being taken off for curtailment. It does not
18 reflect a buy-through component on it.
19 Q. Well, all things being equal because
20 Monsanto is attempting to provide a curtailment
21 proposal for the Company that will give you the
22 greatest value, so all things being equal is the
23 Company saying that you place a greater value on
24 economic curtailment than on operating reserve
25 curtailment?
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1 A. It's difficult to answer that without
2 knowing specifically what the conditions of the
3 product are, both for reserves and for economic, and
4 we're trying to address that tonight in our -- after
5 this is over.
6 Q. I have a few questions regarding your
7 buy-through of the economic curtailment. The
8 Company, as I understand it, says that they want to
9 have a buy-through tied to the Palo Verde index. Is
10 that correct?
11 A. That's correct.
12 Q. And that's different than has
13 traditionally been the case on previous buy-through
14 contracts with Monsanto?
15 A. That is correct, yes.
16 Q. And is the Palo Verde index
17 traditionally the more expensive index in the
18 Western grid?
19 MR. FELL: Madam Chair, this is
20 Mr. Watters' testimony. The cross-examination
21 relates to Mr. Watters' testimony.
22 COMMISSIONER SMITH: Mr. Budge.
23 MR. BUDGE: If he knows. I guess if
24 he wants to defer, that's fine.
25 Q. BY MR. BUDGE: Would you prefer to
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1 defer that to Mr. Watters?
2 A. Yeah, I prefer to defer it, because
3 he'll address it and he's addressed it in his
4 testimony.
5 Q. So any questions regarding the
6 buy-through that was proposed in your exhibits
7 should go to Watters?
8 A. Correct.
9 Q. That's fine. Anything to shorten you
10 up and load him up.
11 Could you refer to page 9, line 8, of
12 your rebuttal testimony? You make the statement
13 there that the interruptible agreement would be
14 subject to reopeners for either party based on
15 interruptibility cost developed in other proceedings
16 or task forces, or the WECC operating reserve
17 criteria changes.
18 What other proceedings are you
19 referring to?
20 A. Well, there's a number of proceedings
21 going on where they are trying to address
22 interruptibility.
23 Q. So, one of the proceedings would be
24 the Utah Task Force proceeding trying to value
25 interruptibility. Correct?
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1 A. That is correct, yes.
2 Q. And so what you're saying is if they
3 come up with a new value for interruptibility, the
4 Company should be able to reopen?
5 A. Either party.
6 Q. Isn't it true then that Monsanto may
7 not be able to participate in some of these
8 proceedings?
9 A. Well, my understanding is that, at
10 least from the initial task force, is that the -- at
11 least the Idaho Commission Staff was invited to
12 participate.
13 Q. I guess my question is when you talk
14 about other proceedings, if some other state has a
15 task force or a proceeding and Monsanto is not a
16 customer of that case, our contract may be subject
17 to reopen by some proceeding that we not only don't
18 participate in but can't participate in?
19 A. I think if it provides information on
20 how interruptibility should be valued for all
21 customers, then I think that's information that
22 should be useful throughout the system, because
23 they're all being -- you treat them as system
24 allocated.
25 The other -- I guess the other one is
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1 the MSP proceeding.
2 Q. But if I look at your Exhibit 10 on
3 page 5 of five, there are three other reopeners that
4 are also laid out there. One of them is if the
5 rates of tariff rate customers changes. But without
6 going into the details of those other openers,
7 suffice it to say that there are a number of
8 different conditions upon which the Company could
9 come in and reopen. Correct?
10 A. Right. Correct.
11 Q. And so would you envision that
12 whenever any of these multitude of reopeners might
13 get triggered, the Company is going to bring a new
14 case before this Commission to try to redo our
15 contract?
16 A. All of these allow changes by either
17 party, so if, for example -- benefit to Monsanto is
18 that if they see something in another jurisdiction,
19 they have the option also.
20 Q. So we could be looking -- in the past
21 we've essentially had a special contract for a set
22 term, and we have stable and known rates for the
23 term of that contract.
24 A. Right. That's correct.
25 Q. And what the Company wants to do now
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1 is have a contract for a set term, but we have a
2 multitude of reopeners. Correct?
3 A. We have specifically-defined
4 reopeners, correct.
5 Q. But there are numerous ones there?
6 A. There are one, two, three reopeners.
7 Q. And does Monsanto not -- is Monsanto
8 not faced with the risk of each time one of these
9 reopeners may be triggered, that we're back into
10 another case like this with PacifiCorp before the
11 Commission to decide whether or not that reopener
12 should result in an adjustment of our rate?
13 A. If you look at these reopeners, they
14 are designed to be once a year; but on the other
15 hand, it doesn't necessarily mean that you would
16 trigger those reopeners. They're just allowed to
17 address changes that might occur. Even if you have
18 a fixed contract, that doesn't prevent Monsanto or
19 PacifiCorp from coming back to the Commission on it.
20 Q. So then reopeners might be less than
21 once a year, but it could be more than once a year?
22 A. But they're specific. If you look at
23 these, they're specifically saying not more than
24 once a year.
25 Q. And that raises a potential for roller
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1 coaster rates from time to time. Would you agree?
2 A. It could provide increases; it could
3 provide decreases.
4 Q. And I suppose whether you're in the
5 customer's shoes or Monsanto's shoes or PacifiCorp's
6 shoes, some roller coasters are more fun to ride
7 than others?
8 A. I guess I don't know how to answer
9 that.
10 Q. Is it true, Mr. Griswold, that at no
11 time in this proceeding has PacifiCorp ever proposed
12 to Monsanto that there be a transition of its rates
13 towards what the Company contends is full cost of
14 service tariff rate, base rates?
15 A. To clarify, are you asking if we've
16 looked at gradualism?
17 Q. Any gradualism proposed by the
18 Company?
19 A. No, we have not, in this proposal.
20 Q. Isn't it true that in the Magcorp case
21 when they also were faced with a proposed 70-percent
22 increase, that you did propose to transition their
23 rates over two years?
24 A. There was -- yes, there was a -- and
25 this was before I was involved in it, and my
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1 understanding was that they looked at a -- an
2 averaging of the current price with the tariff price
3 out here over the remaining life of their contract.
4 Q. So there was a two-year transition?
5 A. Yeah, there was a two-year transition.
6 However, that was during the existing term of the
7 contract, versus after the -- instead of with a new
8 contract.
9 Q. The Company made a statement in its
10 Response to Request No. 132 regarding the benefits
11 of Monsanto's high load factor, and the Company made
12 this statement. It said: Monsanto's load factor
13 and usage patterns allows -- or, excuse me -- shows
14 a higher off-peak usage volume than most typical
15 commercial and industrial customers, and does allow
16 PacifiCorp to sell additional power in the off-peak
17 hours. This does benefit the operation of
18 PacifiCorp's generation plants and allows them to
19 operate more efficiently.
20 Is it your belief that because
21 Monsanto has a high load factor and consumes power
22 off peak, that that adds value to the system? Is
23 that what the Company's essentially saying?
24 A. Yes, with all customers who have a
25 better than average -- better than the average
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P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 industrial commercial customer who have a better
2 than average load factor, they do, in fact, use more
3 power during the off-peak hours.
4 Q. And that type of value doesn't get
5 reflected in the Company's cost of service studies,
6 does it?
7 A. I'm not the person to answer that.
8 Mr. Taylor would be.
9 Q. Direct that to Mr. Taylor?
10 A. Yes.
11 Q. Let me ask you this: When you go to
12 the market and buy peak, there's some indication
13 that the Company has to buy a product that's 16
14 hours.
15 A. That's the -- yes, that is the current
16 wholesale standard product is a 16 hour block,
17 correct.
18 Q. And the peak load that the Company has
19 difficulty meeting is essentially an eight-hour peak
20 or four-hour superpeak?
21 A. There is, yes. Our peak is not a
22 16-hour block, so you end up having to either try
23 and meet that, or buy standard products and fit them
24 together.
25 Q. So your choice would either be to sell
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1 that excess off or to have it utilized by your
2 customers?
3 A. Correct. There are new products being
4 developed to try and address the superpeak in the
5 West, and there is now a superpeak product which is
6 more of an eight-hour block which is in the
7 development for trading.
8 Q. In Monsanto's rebuttal, they give an
9 alternate offer of providing 1,000 hours of economic
10 interruptions totally on all three furnaces, same
11 short or no notice available, except in the instance
12 that all three furnaces are taken at one time.
13 Let me ask you this, if you know,
14 Mr. Griswold: How can the Company best utilize that
15 to enhance value to the Company, and, in turn,
16 Monsanto?
17 A. Well, I think we, you know, we
18 would -- well, I think we're going to defer that
19 question, because that's the piece we're trying --
20 we're looking at now as part of the proposal from
21 Monsanto.
22 Q. And to the extent that you're able to
23 analyze that further and give us an answer, we could
24 have that, perhaps, as well in between the
25 proceedings?
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1 A. Correct.
2 Q. And do you understand, Mr. Griswold --
3 and if not, let me just make it clear -- that our
4 intention is to make the interruption available
5 within some of the operational constraints that we
6 have in such a way that it maximizes value to the
7 Company?
8 A. Yes, we understand that, but we also I
9 think from our point is to make it -- we want to
10 make whatever product we put in place with Monsanto
11 something that doesn't cause adverse effects to
12 Monsanto operationally. So there's a balance there
13 between what we need and what Monsanto can provide,
14 and we just have to find the balance.
15 Q. Just a few questions in a couple other
16 areas if I may:
17 We talked earlier about the policy
18 change of the Company that according to Response 140
19 said that in 2000, PacifiCorp's senior management
20 made the decision not to offer long-term
21 interruptible contracts. That was the exhibit we
22 discussed earlier?
23 A. Correct.
24 Q. Is it true that this policy change
25 was, in fact, driven by interjurisdictional cost
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1 allocation problems the Company was experiencing?
2 A. Well, I believe the actual -- I mean,
3 if you go to the Answers, there's a list of reasons
4 that the best thing to do would be to look at the
5 list of reasons that were given for the change.
6 Q. So part of it, that's one mechanism to
7 solve your interjurisdictional cost allocation
8 problem: We'll just get rid of interruptible rate
9 contracts on a long-term basis and simply go with
10 short-term products. Correct?
11 A. I think it's more reflective of at the
12 time of trying to put the value with what the
13 interruptible product was, versus having it be a
14 fixed discount to a cost to service, because you can
15 never -- you never could track that value across it.
16 Q. Are you familiar with the fact that
17 the modified PITA accord provided that all special
18 contracts would be allocated to the system?
19 COMMISSIONER SMITH: Mr. Budge.
20 MR. BUDGE: Yes.
21 COMMISSIONER SMITH: Just so a reader
22 of this transcript might understand, could you
23 please identify "PITA"? How about --
24 MR. BUDGE: I hope I can.
25 PacifiCorp --
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1 COMMISSIONER SMITH:
2 Interjurisdictional Task Force.
3 MR. BUDGE: -- Interjurisdictional
4 Task Force. I always thought it was the pita that
5 we get for lunch.
6 MR. FELL: Have we identified it now?
7 It's the PacifiCorp Interjurisdictional Task Force
8 Allocations, P-I-T-A.
9 MR. BUDGE: Thank you.
10 Q. BY MR. BUDGE: But -- do you want me
11 to repeat that question?
12 A. I think that probably better be
13 deferred to Mr. Taylor.
14 Q. When I look at the PacifiCorp's Data
15 Responses, they identify seven special contract
16 customers that have been moved from interruptible
17 rates to tariff rates, and the Response states that
18 there's only a handful of interruptible customers
19 remaining. That would seem to indicate that
20 PacifiCorp has gone about implementing the policy of
21 eliminating interruptible contracts. Would you
22 agree?
23 A. No, I disagree. What we've done is
24 we've moved them to a cost of service or a tariff
25 for providing service to them, and then if there is
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1 an opportunity to acquire interruptibility from
2 them, we've -- we've put agreements in place for
3 those.
4 Q. And essentially in other instances,
5 you propose to use short-term agreements?
6 A. No. In fact, in all cases what we
7 have with customers who have gone to tariff or cost
8 of service and provided us a -- some sort of
9 agreement relative to interruptibility or
10 generation, those have been coterminus.
11 Q. Well, when you read the Company's
12 policy and you take it in conjunction with their
13 summary of all the interruptible contracts that used
14 to exist and have now been moved to firm tariff rate
15 contracts, the conclusion would seem to be that in
16 order to meet new load growth, the Company wants to
17 either build its own plants or go to the market, as
18 opposed to demand-side resources. Would you agree
19 with that?
20 A. No, I think that we've looked at a
21 portfolio and, in fact, that portfolio is actually
22 being addressed going forward in our integrated
23 resource plan process, but specifically, there is --
24 where we've been able to, we've acquired resources
25 from customers, large or small, for interruptibility
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HEDRICK COURT REPORTING GRISWOLD (X)
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1 or curtailment. So we consider it an important part
2 of our resources.
3 MR. BUDGE: Can I have just a moment,
4 please?
5 COMMISSIONER SMITH: Certainly. We'll
6 be at ease for a few minutes.
7 (Discussion off the record.)
8 COMMISSIONER SMITH: Okay, we'll be
9 back on the record now so Mr. Budge can say that.
10 MR. BUDGE: Thank you. I have no
11 further questions for Mr. Griswold. Thank you.
12 COMMISSIONER SMITH: Thank you,
13 Mr. Budge.
14 Do we have questions from the
15 Commissioners? Commissioner Hansen.
16
17 EXAMINATION
18
19 BY COMMISSIONER HANSEN:
20 Q. I'm surprised I have a couple of
21 questions with all the questions that probably have
22 been asked, but probably more for clarification, if
23 I understand you correctly, PacifiCorp's position
24 has been opposed to a five-year contract. Is that
25 correct?
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HEDRICK COURT REPORTING GRISWOLD (Com)
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1 A. That's correct. Back when they were
2 looking at the original when we went through this
3 original review of special contracts, it was also
4 from a Company's perspective looking at risks
5 associated with longer-term special contracts,
6 whether they were wholesale or retail, and the
7 Company put in place based on risk policies was to
8 limit longer-term contracts or any contract of three
9 years in a special contract.
10 Q. Well, I guess this is where I need you
11 to clarify. On page 7 of your rebuttal testimony on
12 line 18 through 20, if I read that correctly, there
13 you are agreeing to a contract that would last four
14 years and four months. Is that correct?
15 A. That's correct.
16 Q. And I guess my question would be
17 what's so significant about eight months? I mean,
18 why would you go four years and four months, but
19 you're opposed to five years?
20 A. Well, what we did was we aligned it to
21 a calendar year because we simply said, We'll start
22 in September and we'll go to the end of 2006, and
23 that's the only reason that is four years and four
24 months. That's because we're using -- for electric
25 service part of this, there's no reason why it
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HEDRICK COURT REPORTING GRISWOLD (Com)
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1 couldn't be a five-year agreement for the electric
2 service and then a interruptibility agreement that
3 would be five years in duration. There's nothing
4 that limits it. Our issue was to, on the electric
5 service side, was to unless it was specifically for
6 electric service based on kind of the cost of
7 service components, that you didn't really want to
8 have a long-term agreement in place.
9 Q. Well, using -- is it critical to use a
10 calendar year, December 31st? Is that critical to
11 use that as a cutoff of a contract?
12 A. No, only -- only it was done so it
13 worked with some of our billing folks so that they
14 had calendar year.
15 We actually, you know, from a Company
16 perspective operate on a fiscal year which is
17 different than a calendar year, so we're not opposed
18 if you wanted to make it a -- you know, not begin or
19 end on the beginning of the year or end of the year,
20 that there's no reason that you couldn't do that.
21 Q. So really then if I understand
22 correctly, you move closer to the five year?
23 A. Correct.
24 Q. One other question then and this is
25 regarding Mr. Woodbury asked you the importance of
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1 setting the rate now when the court case is a year
2 away, and this may not even ever be a likelihood,
3 but I'm just kind of curious:
4 If the Commission were to set the rate
5 at 18.50 as it is now and as requested by Monsanto,
6 what value would it be to PacifiCorp having the
7 court hearing?
8 A. There probably is no dollar value
9 associated with it, but I think that part of our
10 issue is the language around termination is very
11 unclear, and Monsanto has actually proposed using
12 similar language going forward.
13 Q. So it goes a little bit beyond just
14 whether there would be a true-up or not?
15 A. Correct.
16 Q. Just one other quick question, and I
17 know Mr. Budge discussed this somewhat with you, but
18 just so I understand it, the Company's position,
19 does the large load that is interruptible such as
20 Monsanto have a high enough value so it should
21 always be utilized first by PacifiCorp before
22 PacifiCorp builds peakers or relies on the market
23 for purchases?
24 A. That's a hard question to answer and
25 it's probably a question you would want to ask
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HEDRICK COURT REPORTING GRISWOLD (Com)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 Mr. Watters, because he will go through the
2 different pieces of interruptibility as it compares
3 to peakers.
4 Q. Okay. One last question; maybe if
5 this isn't for you, you could refer it:
6 Do you agree that Monsanto's
7 interruptibility provides a value to all PacifiCorp
8 customers, not just Idaho?
9 A. The interruptibility, yes, we believe
10 it should be system allocated.
11 Q. Thank you.
12 COMMISSIONER HANSEN: That's all I
13 have.
14 COMMISSIONER SMITH: Commissioner
15 Kjellander.
16
17 EXAMINATION
18
19 BY COMMISSIONER KJELLANDER:
20 Q. If I could get some clarification on
21 your rebuttal testimony, is PacifiCorp now proposing
22 that the interruptibility contract be firmed up; in
23 other words, a known quantity of interruptibility
24 for a known price? Is that now the Company's
25 position?
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HEDRICK COURT REPORTING GRISWOLD (Com)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. That's always been our position. In
2 order to value interruptibility, you needed to know
3 very specifically things like duration, notice, how
4 many megawatts, you know, what are the constraints
5 around the interruptibility.
6 Q. Then why the reopener as a piece of
7 this, because doesn't that seem to conflict with the
8 issues associated with certainty?
9 A. We can -- I mean, I think the things
10 you're seeing is that there's a lot of interest in
11 trying not only here with this Commission but with
12 other Commissions and other industrial customers to
13 understand what's the value of interruptibility, and
14 it varies depending upon where it is in our system.
15 It depends on what the customers have to offer. And
16 we're going through some -- some task force and some
17 analyses even through the IRP process to try and
18 define more standardized interruptible products.
19 Maybe the best thing to do is develop
20 an interruptible tariff that's got very specifically
21 defined conditions that a customer can sign up for,
22 an interruptible rider. And, you know, if you put
23 in place a interruptible agreement that's five years
24 or four years in duration here and things come along
25 that change what those values are, we're just trying
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HEDRICK COURT REPORTING GRISWOLD (Com)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 to provide flexibility for both parties that it may
2 make more sense to go to one of these other products
3 or go to a tariff or do something different.
4 Q. Going back then to your rebuttal
5 testimony on page 9, line 8, where they're referring
6 again to the possibility of the reopeners and you
7 mentioned several of those, is the WECC operating
8 reserve criteria proposed changes one of the more
9 likely to actually occur in the region? Is that
10 your anticipation?
11 A. That -- yes, that's our anticipation,
12 but the issue is we don't know where they're going
13 to come out on it. You know, they're looking to
14 look to change the amount of reserves that you are
15 going to have to hold. They're looking for more
16 short notice. When I say "short notice," we're
17 talking about less than a second of automatically
18 responding to frequency adjustments. So that
19 would -- you know, until we know what those
20 conditions are, you really can't define what the
21 value is of a product.
22 Q. Mr. Budge was asking in some of his
23 rebuttal whether or not you knew how quickly, in
24 essence, that they could turn down some of their
25 furnaces and provide some of that in a matter of
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HEDRICK COURT REPORTING GRISWOLD (Com)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 seconds. I think I saw somewhere in testimony that
2 it was ten seconds to initiate the curtailment and
3 60 seconds to have it fully operational as one of
4 the proposed WECC standards. Have you checked with
5 the Company to find out whether or not they can meet
6 even some of these proposals that are out there on
7 the table?
8 A. No, we haven't gone through any
9 discussions about whether they could, like spinning
10 reserves or frequency response reserves, which is
11 the new one that they're proposing. Their condition
12 right now is with nonspinning reserves is they have
13 a I think a six or seven minute window in which to
14 shut down. So we typically look at when we make the
15 call and we have to know that within that period of
16 time they do respond. But as far as the looking at
17 whether they can be spinning reserves for us, we're
18 not even sure if we'll be able to hold those kind of
19 reserves on customers yet.
20 Q. Okay. Let's say then based on page 9,
21 line 8, about the possibility of the reopener, if
22 you do reopen it, is it the Company's intention then
23 to pitch a proposal that the interruptibility that
24 would be proposed would be of similar value, the
25 exact same value, then to Monsanto?
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HEDRICK COURT REPORTING GRISWOLD (Com)
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1 A. That would be our intent would be to
2 sit back down and say we no longer have to hold
3 let's say nonspinning reserves for a much lower
4 amount, therefore, what would be a substitute
5 product, interruptible product, that Monsanto could
6 provide that would have value to us and still meet
7 their same value for them.
8 Q. What happens though if the Company
9 can't meet those types of operational
10 interruptibilities and still be able to manage its
11 company? What happens then? Does the rate then
12 have to go back up because that piece of
13 interruptibility has to go away and the value goes
14 away with it? Is there any other option other than
15 that?
16 A. Well, I think from our perspective is
17 if they can't meet the new criteria, then what we
18 would look toward is a different interruptible
19 product. Maybe, for example, if at the end of the
20 day we have an agreement that has economic
21 curtailment in it as a piece, you look at adding
22 something into that.
23 Q. And you feel good about your Company's
24 ability to negotiate this with Monsanto?
25 A. I think I feel better about
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P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 negotiating the interruptible part than the cost of
2 service.
3 Q. Let's move to your direct testimony if
4 we could and just briefly, and I don't have much,
5 and I appreciate your stamina. In your direct
6 testimony, you make some comparisons to the high
7 market rate during the Western energy crisis to help
8 illustrate that Monsanto's proposal of 18.5 is
9 unacceptable. And I guess from that then, doesn't
10 that then assume that you believe that market rates
11 are going to return to a degree of volatility and be
12 high again? Is that correct?
13 A. It's hard to say. I mean, if you look
14 at some of the measures that have been put in place
15 to alleviate high power prices, including the FERC
16 caps, we know that the FERC caps are increasing.
17 However, we also know that there is increased
18 generation coming into the West.
19 Do we expect them to ever repeat and
20 return to that level? I don't know. I don't know
21 the answer to that.
22 Are we trying to put measures in place
23 to deal with that? Yes, we are.
24 Q. So then is that an unfair comparison
25 to even make in reference to the volatility of the
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1 Western energy crisis that we've just come through?
2 A. I think it was only to illustrate that
3 if we had interruptibility in there other than
4 system integrity, that we would have been able to
5 use it or we would have likely have used it to help
6 us through that period of time. That was kind of
7 the intent of pointing to that.
8 Q. Okay.
9 A. I mean, but, you know, you -- when you
10 look at $150 versus a retail customer who's at let's
11 say six cents, it's still higher than that, so it's
12 just to make a point that if we have an
13 interruptible agreement, we want to be able to have
14 very clear terms of when you can use it.
15 Q. Okay. I'll save any questions that I
16 have with economic curtailment probably for the
17 rebuttal. That would probably be best. I guess
18 with that, thanks.
19 COMMISSIONER SMITH: Do you have
20 redirect, Mr. Fell?
21 MR. FELL: Just a few.
22
23
24
25
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1 REDIRECT EXAMINATION
2
3 BY MR. FELL:
4 Q. Mr. Griswold, you'll recall the
5 exchange --
6 COMMISSIONER SMITH: Mr. Fell, is your
7 mike --
8 MR. FELL: I beg your pardon.
9 Q. BY MR. FELL: Mr. Griswold, you recall
10 the exchange with Mr. Budge regarding reconciling
11 statements about the Company's policies regarding
12 short-term interruptibility contracts versus how
13 these negotiations were conducted or versus the
14 longer term now being proposed. Would you please
15 just explain and summarize now what your point is
16 with regard to the Company's policies regarding the
17 longer-term interruptible contracts and how you, as
18 a negotiator with Monsanto, conducted your
19 negotiations?
20 A. Sure, I'd be glad to.
21 I guess in some of the questions we've
22 had today, we've talked about our senior management
23 group and the policy they put in place to move
24 interruptible customers to firm service or cost of
25 service structure and then purchase interruptibility
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HEDRICK COURT REPORTING GRISWOLD (Di)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 from them. If you look at that as the general
2 policy and then you include the point about our
3 corporation putting a limit on special contracts of
4 three years because of risk, it kind of defined the
5 playing field that we've used with all of our
6 special customers in -- particularly as their
7 contract terminated.
8 Through our negotiations with
9 Monsanto, we've provided and discussed those --
10 that -- those policies with them and in hopes of
11 making them realize that at the end of the day, they
12 would have a structure that gave them power at the
13 cost of service, and we would acquire from them a
14 valuable resource whether it's interruptibility or
15 curtailment -- in other customers it could be their
16 generation -- and you would have the lowest combined
17 net price and have the things allocated correctly.
18 We've in both cases provided Monsanto
19 a cost to service structure for electric -- for the
20 electric service side of it, and we've also put into
21 place with them a number of proposals that attempted
22 to look at the -- what are the conditions for
23 interruptibility, including what furnaces or what
24 load, what kind of notice was required, what kind of
25 duration was required, and try to build those all
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HEDRICK COURT REPORTING GRISWOLD (Di)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 together so you would have a kind of a combined
2 structure with a customer that would give them
3 stability through -- at that point, it was through
4 the three-year period.
5 Q. And as a balance between what the
6 customer wants on stability and what the Company
7 wants in regard to purchasing resources, what is it
8 the Company is looking for in purchasing resources?
9 A. Well, first it has to be a prudent --
10 a prudent decision to purchase a resource. It has
11 to have clearly defined terms so that we know what
12 we're purchasing, we know it's there when we
13 purchase it and when we need it the most, and we
14 value it accordingly. So, we've attempted in our
15 case to try and define here's the notices that make
16 the most sense, and line -- align those with
17 Monsanto's operation. It doesn't make any sense for
18 us to have agreements in place that Monsanto cannot
19 perform against or impacts their business adversely.
20 Likewise, when we need a resource to have in place,
21 whether it's for economic curtailment or reserves,
22 we want to know when we call on it that it's there.
23 Q. And this is maybe too apparent, but is
24 the policy regarding the length of term of contracts
25 related to the relationship between risk and term?
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P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. Yes.
2 Q. In that sense, the Company has decided
3 to try to find a balance between the riskiness of
4 longer-term commitments and the requirements of the
5 customers for predictability?
6 A. Yes, we -- if you look at the electric
7 service side and the thing that makes us -- makes it
8 able for us to do the longer-term electric service
9 agreement is having a separate -- it's really based
10 on cost of service for the -- for the customer, and
11 it's basically the customer's own, quote, tariff so
12 that it's -- we're able to have a longer term
13 agreement for them, then it's a matter of aligning
14 the interruptibility to go along with that that the
15 customer can provide.
16 Q. Now, switching to another subject,
17 Mr. Woodbury asked questions about whether it
18 matters what the timing of the Commission's Decision
19 is on this new contract because you have this
20 proceeding going in Federal Court.
21 Whatever comes out of the proceeding
22 in the Federal District Court, don't you need a new
23 rate effective for the year 2003?
24 A. Yes, that's our belief, yes.
25 Q. There were also some questions
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1 regarding the Company's discontinuance of some of
2 these economic curtailment contracts with other
3 customers, and you mentioned that the Company was --
4 I think that the drift of the testimony was that the
5 Company was disinclined to enter into some of these
6 economic curtailment contracts that they had with
7 other customers in the past. What was it about
8 those contracts that was unsatisfactory?
9 A. The main thing was the price for
10 replacement power. And I don't have the text in
11 front of me, so let me try and just summarize it.
12 It looked at prices that we would see
13 internally versus an external known market index,
14 and therefore, there was always questions about and
15 concerns that where the prices came from that the
16 customer was paying for without some sort of
17 auditability, and in decision, you know, questions
18 about our decision-making on purchasing power.
19 We ended up in litigation on a number
20 of those, and because of that litigation our path is
21 to choose a known, referenced, easily-viewed liquid
22 market index that's out there that everybody can see
23 that's representative of power that you would
24 acquire for the customer.
25 Q. And that's the reason that you're
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1 proposing for the buy-through the Palo Verde market
2 hub?
3 A. That's correct.
4 MR. FELL: I have no more questions.
5 COMMISSIONER SMITH: Thank you,
6 Mr. Fell.
7 Thank you, Mr. Griswold.
8 Mr. Griswold is stepping down; he is
9 not excused.
10 (The witness left the stand.)
11 MR. FELL: Our next witness will be
12 Mr. Stan Watters.
13
14 STAN K. WATTERS,
15 produced as a rebuttal witness at the instance of
16 PacifiCorp, being first duly sworn, was examined and
17 testified as follows:
18
19 DIRECT EXAMINATION
20
21 BY MR. FELL:
22 Q. Mr. Watters, would you please state
23 your name and position with PacifiCorp?
24 Please state your name and position
25 with PacifiCorp.
139
HEDRICK COURT REPORTING WATTERS (Di-Reb)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp
1 A. I'm Stan K. Watters. I'm the vice
2 president of trading and origination for PacifiCorp.
3 Q. Mr. Watters, are you sponsoring
4 prepared rebuttal testimony in this case?
5 A. I am.
6 Q. And are you also sponsoring Exhibits
7 numbered 12 through 16?
8 A. I am.
9 Q. Now, in your prefiled testimony, would
10 you please turn to page 9, line 7, and do you have a
11 correction on that line?
12 A. Yes, I do. Instead of "on an annual
13 basis," it should read "on a monthly basis."
14 Q. And with that correction, if I were to
15 ask you today the questions that are contained in
16 your prefiled testimony, would your answers be the
17 same?
18 A. Yes, they would.
19 MR. FELL: I move that Mr. Watters'
20 testimony be spread on the record as if read.
21 COMMISSIONER SMITH: If there's no
22 objection, it is so ordered.
23 (The following prefiled rebuttal
24 testimony of Mr. Watters is spread upon the record.)
25
140
HEDRICK COURT REPORTING WATTERS (Di-Reb)
P.O. BOX 578, BOISE, ID 83701 PacifiCorp