HomeMy WebLinkAbout20020905Volume 4, pg 353-404.pdf
1 (The following proceedings were
2 had in open hearing.)
3 (Monsanto Exhibit Nos. 201 through
4 209 were admitted into evidence.)
5 COMMISSIONER SMITH: Do you have
6 questions, Mr. Olsen?
7 MR. OLSEN: I don't.
8 COMMISSIONER SMITH: Mr. Woodbury?
9 MR. WOODBURY: Yes, I do.
10
11 CROSS-EXAMINATION
12
13 BY MR. WOODBURY:
14 Q. Good morning, Mr. Smith.
15 A. Good morning.
16 Q. Looking at your testimony on page 6,
17 you talk about the 1995 contract and viable options
18 available to Monsanto, and I think those are set out
19 in Exhibit 202, pages 3 and 5, which is PacifiCorp's
20 Application, and you recite the Soda Springs
21 Municipal Electric provider. And is this still an
22 option available to Monsanto?
23 A. The City of Soda Springs has a
24 municipal electrical and provide electricity to the
25 city. Monsanto is contiguous to that city of Soda
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HEDRICK COURT REPORTING SMITH (X)
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1 Springs. The City of Soda Springs has continued to
2 offer and, in fact, tried to entice Monsanto to be
3 annexed to the City and receive not only electrical
4 services but other services from the City of
5 Soda Springs. So, yes, it continues to be an
6 option.
7 Q. When was the last enticement made?
8 A. Formally, I wouldn't say that -- it's
9 been several years, but informally, the City
10 continues to work with us. In fact, two years ago
11 there was a feasibility study performed by the City
12 which we participated in looking at that option
13 again.
14 Q. So Monsanto's located outside the city
15 limits?
16 A. Most of Monsanto's property is outside
17 of the city limits, that's correct.
18 Q. But some of it is?
19 A. Some property we now currently own is
20 within the city of Soda Springs. Our plant is
21 outside the city.
22 Q. And what type of a rate was offered by
23 the City?
24 A. The City of Soda Springs currently
25 receives its power from Bonneville Power.
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Bonneville Power has provided the City with a
2 release such that they can go out to the marketplace
3 to acquire power should they annex some additional
4 industrial load outside the city of Soda Springs.
5 The City, in conjunction with Monsanto, had talked
6 to many electrical providers that had proposed to
7 serve Monsanto through the City of Soda Springs.
8 Q. Would the City have provided you with
9 a long-term firm contract?
10 A. I believe that would be correct, yes.
11 Q. And how would that have affected --
12 how would that have been affected by the rising
13 prices in 2000 and 2001?
14 MR. BUDGE: You know --
15 COMMISSIONER SMITH: Mr. Budge.
16 MR. BUDGE: I thought the few
17 preliminary questions maybe were okay in this field
18 because the original Application to approve the '95
19 agreement went into that subject, but it seems like
20 we're diving way beyond what his direct testimony
21 was.
22 COMMISSIONER SMITH: Mr. Woodbury.
23 MR. WOODBURY: I'm simply exploring
24 the continued availability of the options that were
25 present in the '95 agreement, and if they're no
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 longer available options, that's the answer that I'm
2 looking for.
3 COMMISSIONER SMITH: Well, I don't
4 think that's what your question asked.
5 MR. WOODBURY: No, my question sort
6 of -- it would have depended on how the contract was
7 structured.
8 COMMISSIONER SMITH: It's probably
9 speculative.
10 Q. BY MR. WOODBURY: The second option
11 that you -- that you noted -- that was noted was a
12 new process, a wet process, purified wet acid for
13 phosphorus, and it was indicated that that would
14 reduce the Monsanto's load from 163 megawatts to
15 45 megawatts. Is this still an option available to
16 Monsanto at the Soda Springs location?
17 A. The -- the documents you refer to were
18 prepared by PacifiCorp, they were not prepared by
19 us, and I would say that their characterization is
20 not completely accurate.
21 The option is to purchase product from
22 the marketplace, one of which options would be
23 through providers of purified wet acid. Certainly,
24 there are folks also in the world that provide
25 phosphorus -- elemental phosphorus -- that we could
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 have also explored. So the option was to purchase
2 product from some other person, and, yes, that
3 option still exists today.
4 Q. And if you purchase your product from
5 some -- from either China or Europe, then -- your
6 elemental phosphorus -- then that would just affect
7 your mining operation, or would it affect your
8 furnace?
9 A. It would affect our whole process.
10 Q. Okay. On page 6, you state that
11 the -- that Soda Springs plant can remain
12 economically feasible and continue operating at full
13 capacity, provided you're able to secure a new,
14 long-term contract at a reasonable price. Are there
15 any other factors affecting the continued viability
16 of the Soda Springs plant?
17 A. At this point in time, based on the
18 knowledge I have of the process, the factor that
19 affects our viability is economics. There are other
20 issues that we deal with on a regular basis, but
21 none of which singly would affect our viability.
22 Q. You state on page 13 -- you're talking
23 about Monsanto's need for price certainty and
24 stability, and you say that that's critical to the
25 Company -- that being Monsanto's -- planning and
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 operational decisions, and I think I gathered from
2 somewhere and -- in the testimonies that were filed
3 that those decisions are sometimes made ten years
4 out?
5 A. That is correct. In fact, in the
6 testimony of Mr. Schettler, he goes to point out in
7 detail some of the specific reasons for the need for
8 this price certainty, yes.
9 Q. But also indicated that Monsanto was
10 today at a crossroads and essentially some of the
11 planning that started out at that point is at a
12 point where decisions have to be made and money
13 invested?
14 A. That's correct, we are at a
15 crossroads.
16 Q. And those decisions are being deferred
17 pending the outcome of your contract negotiations or
18 the Commission's Decision with respect to your
19 contract?
20 A. I would not -- well, certainly the
21 decisions may be deferred. Our progress towards
22 making those are not. We are pursuing as if we were
23 to receive a rate that would be -- allow us to be
24 economically feasible.
25 So should we receive a rate that makes
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 us not economically feasible, decisions in progress
2 towards those areas I anticipate could be stopped
3 and would be stopped.
4 Q. What --
5 MR. BUDGE: I believe those kind of
6 questions really should be directed to
7 Mr. Schettler, who is addressing capital
8 expenditures and budgeting issues.
9 MR. WOODBURY: That would be fine.
10 Q. BY MR. WOODBURY: On page 14 of your
11 testimony -- page 13 -- you talk about the 1992
12 contract, and I think at one point you also
13 identified it as a 1991 contract, but you set out
14 the -- the increase in the rates that were set forth
15 in that contract. In 1995, had that contract not
16 been replaced, it would have been a $25 per megawatt
17 hour?
18 A. That is correct.
19 Q. I think that was a question that was
20 asked of somebody yesterday?
21 A. Yes.
22 Q. And increasing to $26 in 1997.
23 On page 14, in your discussion of the
24 '95 contract, you talk about the one-time cash
25 payment of $30 million and as part of the
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 consideration. And there was some discussion
2 yesterday with respect to a quote attributed to
3 Mr. Racine as far as Monsanto's position
4 characterizing the effective rate for the '95
5 contract, and that I think came out of the comments
6 of Monsanto in support of the Application before the
7 Commission. And you don't dispute that that was --
8 that representation was made, do you, that the --
9 that the effective rate would be 23 cents?
10 A. I would not dispute that Mr. Racine
11 made that comment. I would dispute that that is not
12 the rate, in fact, that should be used here in the
13 analysis.
14 Q. Mr. Racine was filing comments on
15 behalf of Monsanto?
16 A. That is correct, but I would point out
17 that the contract itself which both parties signed
18 specifically states otherwise, and the Order that
19 the Commission -- the Application and the Order --
20 the Application specifically states otherwise and
21 the Order defers a Decision on how to treat it.
22 Q. Okay.
23 A. Mr. Racine at the time was just making
24 a comment that there may be other ways to look at
25 it.
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 I participated in those negotiations
2 and was a part of that, and at PacifiCorp's absolute
3 insistence, this was always to be treated as a
4 buyout.
5 Q. Were the comments filed by Mr. Racine
6 reviewed by yourself or Monsanto prior to filing?
7 A. I believe they must have been, yes.
8 Q. So Mr. Racine wasn't being a lone
9 ranger in his making up stuff?
10 A. Mr. Racine's comments were not what
11 was signed by both parties and not what was ordered
12 by the Commission.
13 Q. Page 16, you talk about the Federal
14 District Court case which involves the termination
15 date of the '95 contract, and you indicate that the
16 trial is scheduled for August 4th. Is that a Court
17 trial or jury trial?
18 A. I don't know. You'd probably have to
19 defer that to my counsel.
20 Q. You also indicate that mediation is
21 scheduled. Is that still scheduled and what is the
22 date?
23 A. We -- and I believe at the time I
24 prepared this, it was scheduled. My attorney's been
25 working on that to get it to date and I'd have to
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 defer that to whether or not -- we had acceptance on
2 a date and I heard that there was some maybe
3 waffling a little bit as to whether that date would
4 be acceptable, so I'd have to defer that question to
5 him.
6 Q. You state on page 17 any new rate
7 established by this Commission would take effect on
8 the date that the U.S. District Court determined
9 that the '95 contract ends based upon agreement with
10 this Commission for true-up.
11 Are there -- let's say the District
12 Court issues its Opinion, and is Monsanto committed
13 to abide by that Opinion or it does have appeal
14 rights?
15 A. Any Decision that the Court ultimately
16 hands down to Monsanto, we will abide by. Whether
17 we chose to exercise our option to appeal that I
18 think I have to defer until we saw the Order. At
19 this point in time, we believe we have an
20 exceptional chance and an expected ruling in our
21 favor.
22 Q. Have you had any discussions with your
23 Counsel as far as the appeal of any Decision and any
24 bonding requirement or --
25 A. I have not --
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1 COMMISSIONER SMITH: Mr. Budge.
2 MR. BUDGE: I would like to object to
3 that. I think we're clearly beyond direct.
4 Furthermore, I think he wants to ask
5 about some privileged communications.
6 COMMISSIONER SMITH: Mr. Woodbury.
7 MR. WOODBURY: Madam Chairman, I asked
8 whether he had any discussions with his counsel, and
9 he answered, No.
10 COMMISSIONER SMITH: So you're moving
11 on.
12 MR. WOODBURY: I'm moving on.
13 COMMISSIONER SMITH: Great.
14 Q. BY MR. WOODBURY: Page 19, you talk
15 about additional curtailment offers in 2000, 2001 --
16 December 2000, January 2001 -- and you stated that
17 Monsanto was contacted by another utility that was
18 desperate for energy, and then you state Monsanto
19 was willing to curtail one furnace for up to a week.
20 Is this the same event that you're
21 talking about, December 2000, January 2001? Were
22 those two separate events?
23 A. Yes.
24 Q. And did they both involve a utility
25 that contacted you?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. Yes, they did.
2 Q. And did you believe you had the right
3 to sell power that you would otherwise be entitled
4 to to that utility?
5 A. That option is expressly prohibited by
6 the contract. In fact, if I had that belief, I
7 would have never contacted PacifiCorp. We would
8 have just made the exchange.
9 Q. On page 24, you indicate that if
10 the -- the contract price is increased from 18.5 to
11 31.4, that the Soda Springs plant, in your opinion,
12 would be in a death spiral?
13 A. That's correct.
14 Q. Could you elaborate on that, and is
15 this just your personal opinion or based upon
16 discussions with others within the Company?
17 A. First, let me elaborate.
18 As a facility becomes uncompetitive,
19 it loses sales and customers; hence, it has to
20 curtail its production. As it curtails its
21 production, the remaining production becomes
22 higher-priced, and, in fact, they lose more
23 customers; hence, the term "death spiral." This --
24 an illustration of this was, in fact, the
25 FMC/Astaris plant, which we are all intimately
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 familiar with.
2 As to whether or not that's my
3 personal belief or that's -- that's certainly my
4 personal belief. Is it the belief of many of the
5 other folks that work at Monsanto? I would say,
6 yes, they have expressed the same sentiments to me
7 as well.
8 Q. Have you discussed what course of
9 action Monsanto would take should the Commission set
10 that price at 31.4?
11 A. Frankly, that question probably would
12 be best directed to Mr. Schettler. Mr. Schettler is
13 our senior manager and would be a part of making
14 that decision.
15 Q. You also discuss in your testimony
16 PacifiCorp's dealings with other industrial
17 customers Magcorp and Geneva Steel, and you
18 recommend on page 25 that those Decisions be used as
19 precedent by this Commission.
20 Is Monsanto indicating that they would
21 accept a contract structured along the terms of
22 Magcorp? Wasn't the Magcorp contract a three-year
23 contract?
24 A. Well, if you read the Order, you'll
25 see that Magcorp -- and let me preface my statement
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 by the fact I am only generally familiar with the
2 information. I didn't participate in that. I
3 reviewed the Order several times and so my knowledge
4 is limited to that Order. But if you read that
5 Order, Magcorp specifically requested the term which
6 they received, and I believe that's a two-year term,
7 if I'm not mistaken, but I could be mistaken about
8 it.
9 Q. Expiration 12/31/04?
10 A. Okay.
11 Q. But --
12 A. But are there parts and pieces of
13 that?
14 Q. That term would not be acceptable to
15 Monsanto, would it?
16 A. The term of duration of the contract,
17 no, that is not, would not be acceptable to
18 Monsanto.
19 Q. And that contract also included a
20 reopener?
21 A. I believe that's correct, yes.
22 Q. And that would not be acceptable
23 either to Monsanto?
24 A. No.
25 Q. And you state that the -- that the
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P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Utah Commission deferred interjurisdictional
2 allocation to the multistate process. Did they
3 change that Decision on reconsideration? Was there
4 a reconsideration?
5 A. There was a reconsideration, yes.
6 Q. And?
7 A. Did they change it? I know that they
8 classified it as experimental, and I know that in
9 the end, that was an issue. And I think if I
10 remember right from that, that they did, in fact,
11 allow the Company to treat that as a situs contract.
12 I would, however, point out that based on the amount
13 of customers in Utah, the effects to them would be
14 minor in doing that compared to the effects of other
15 Idaho customers and the size of Monsanto.
16 Q. What aspects of the Magcorp contract
17 and the Utah Commission's Decision do you wish to
18 have this Commission look at as being precedential?
19 MR. BUDGE: Are you referring to
20 page 25, his answer, lines 14 through 16?
21 MR. WOODBURY: Actually I'm referring
22 to his Exhibit 208, and also I'm referring to his
23 statement on page 25, line 14, that the Decision
24 should be used as precedent.
25 MR. BUDGE: Okay. I just wanted to
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 refer him to what part of the answer you're
2 referring to, so page 25, lines 14 through 16.
3 THE WITNESS: Well, I think in my
4 testimony I state that it's a single contract; it
5 has an established term; it has a
6 specifically-defined interruptions; and, in fact,
7 the interruptibility which is provided by Magcorp I
8 think is, from my perspective, is less flexible and
9 less valuable than what Monsanto has offered to
10 provide.
11 Q. BY MR. WOODBURY: Have you had the
12 opportunity to review the Geneva Steel contract?
13 A. It was provided yesterday, but I have
14 not had an opportunity to review the document.
15 Q. Thank you.
16 MR. WOODBURY: Madam Chair, I have no
17 further questions.
18 COMMISSIONER SMITH: Thank you,
19 Mr. Woodbury.
20 Do you have questions, Mr. Fell?
21 MR. ERIKSSON: I will be doing the
22 cross.
23 COMMISSIONER SMITH: Oh, Mr. Eriksson.
24
25
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P.O. BOX 578, BOISE, ID 83701 Monsanto
1 CROSS-EXAMINATION
2
3 BY MR. ERIKSSON:
4 Q. Mr. Smith, before we go further, can
5 you refer to your correction on page 26 to the 168
6 megawatts --
7 A. Yes.
8 Q. -- instead of 166, and just explain to
9 me what the basis of the 168 is?
10 A. Yes. Monsanto has three furnaces, and
11 their electrical usage for number seven is
12 46 megawatts, for number eight is 49 and a half
13 megawatts, and for number nine is 67 megawatts.
14 In addition to those, there is two
15 megawatts of auxiliary load that is also associated
16 with each of those furnaces, so when you interrupt a
17 furnace for a single hour, the reality is you are
18 probably only going to get 46 megawatts, because --
19 on number seven -- because we will continue to
20 maintain the auxiliary load because we only expect
21 an hour's interruption.
22 But if you look at what we offer to
23 provide, we offer to provide interruptions up to
24 eight hours. In a situation where you would be
25 taking a furnace for eight hours, not only would you
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 get the 46 megawatts associated with number seven,
2 but you would also receive two additional megawatts
3 of auxiliary load; hence, the total of 168.
4 Q. Is that two on each then --
5 A. Yes.
6 Q. -- would be correct to add?
7 And is this under the proposal where
8 all three furnaces could be interrupted at once?
9 A. That is correct. And you will notice
10 in Mr. Schettler's exhibit referencing the
11 conditions of the curtailment that is for both.
12 Q. Okay. And if only two furnaces could
13 be curtailed at once as in your original proposal,
14 the number would be 166?
15 A. If two furnaces were curtailed, it
16 could be a combination of several numbers, yes.
17 Q. All right. We'll leave it there.
18 Now, on the issue of the number of
19 interruptions in your direct testimony, you talked
20 about the interruptions increasing substantially
21 after the 1990 -- 1988 merger of PacifiCorp and
22 Utah Power?
23 A. Yes.
24 Q. And are you aware that the merger
25 actually occurred in 1989?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. I'm sorry, could you restate that
2 question?
3 Q. Are you aware that the
4 PacifiCorp/Utah Power merger actually occurred in
5 1989, rather than 1988?
6 A. Okay.
7 Q. You would accept that?
8 A. I would accept that.
9 MR. BUDGE: Subject to check.
10 Q. BY MR. ERIKSSON: So the higher level
11 of interruptions that existed in 1988 was prior to
12 the merger?
13 A. I would like to check that, yes.
14 Q. But if you accept that the merger
15 occurred --
16 A. Subject to check, yes.
17 Q. Okay. And on page 13 of your
18 testimony, you discuss price certainty and stability
19 for a set period as being critical to Monsanto's
20 planning and operational decisions. Do you recall
21 that?
22 A. Yes.
23 Q. Now, price certainty and stability is
24 an important issue for Monsanto because of the
25 long-term, fixed-price contract you want. I mean,
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 that is the basis, that's the reason you need, in
2 your view, a long-term, fixed-price, electric supply
3 contract?
4 A. Could you restate that question,
5 please?
6 Q. Is price certainty and stability a
7 basis for your desire to have a long-term,
8 fixed-price electric supply contract?
9 A. Yes, it is.
10 Q. And with respect to the proposal which
11 Monsanto made to have interruptions of up to 1,000
12 hours per year on its entire load, does that
13 proposal provide you with price certainty and price
14 stability for five years?
15 A. Based on the actions we would take, it
16 would, yes.
17 Q. And if those actions involved -- would
18 those actions involve buying through the
19 interruption?
20 A. Those actions could take on a couple
21 aspects. One could be to buy through. The other
22 could be to secure the additional product that we
23 would lose from another source.
24 Q. And do you know what the price is that
25 you would have to pay if you were to buy through?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. The price of the power?
2 Q. Right.
3 A. No, I do not, but I do know what the
4 price is of the product that I could replace that
5 with.
6 Q. But with respect to a buy-through, you
7 wouldn't have price certainty; and that price would
8 vary over time, so you wouldn't have price stability
9 if you were to buy through?
10 A. That would be correct.
11 Q. Now, you've also discussed in your
12 testimony the proposal by PacifiCorp as representing
13 a 70-percent increase in price. Is that correct?
14 A. That's correct.
15 Q. And that percentage that you represent
16 is based on the 1995 contract rate?
17 A. That is correct.
18 Q. There's been discussion about the
19 comments submitted by Mr. Racine.
20 MR. ERIKSSON: May I approach the
21 witness?
22 COMMISSIONER SMITH: Yes, you may.
23 Q. BY MR. ERIKSSON: Mr. Smith --
24 MR. ERIKSSON: Can I have this
25 marked? I don't know what the next number is.
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 COMMISSIONER SMITH: I believe it
2 should be number 24.
3 (PacifiCorp Exhibit No. 24 was
4 marked for identification.)
5 Q. BY MR. ERIKSSON: Mr. Smith, what has
6 been marked as Exhibit No. 24 states that it's
7 comments of Monsanto in support of the Application
8 of PacifiCorp. Do you recognize this document?
9 A. I do.
10 Q. And I take it you have reviewed it
11 recently?
12 A. I have read it, yes.
13 Q. I don't believe it's anywhere else in
14 the record in this case, although it's been talked a
15 bit about.
16 If you would turn to the second page
17 and in Paragraph No. 3, if you would look four lines
18 up from the bottom of that and read that sentence
19 that starts there on the left?
20 A. I'm sorry, could you point that out
21 again? Paragraph 3?
22 Q. Paragraph No. 3.
23 A. Yes.
24 Q. Four lines from the bottom of the
25 paragraph, starts: The rate Monsanto pays?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. Okay.
2 The rate Monsanto pays for power will
3 include a one-time 30 million payment and an
4 additional 1.85 cents per kWh for all energy
5 delivered over the life of the agreement. The
6 average rate over the term of the agreement is
7 expected to still be slightly higher than the rate
8 paid by the other elemental phosphorus producers in
9 Idaho.
10 Q. And these comments were not followed
11 up by any other comments by Monsanto in that case?
12 Was anything else filed by Monsanto regarding these
13 comments?
14 A. I'm not -- I don't know the answer.
15 Q. The 70-percent figure that you talked
16 about also does not take into account the credits
17 that Monsanto would receive for interruptibility.
18 Is that correct?
19 A. The 70 percent?
20 Q. Right.
21 A. The 70 percent is a reflection of the
22 price between 18 and a half and 31.4.
23 Q. And to the extent we have an
24 interruptibility credit as has been proposed, the
25 percentage would be lower. Correct?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. The difference would be higher.
2 Q. The difference between 18 and a half
3 and the effective rate, if you combine 31.4 and an
4 interruptibility credit?
5 A. You're correct, but you're comparing
6 apples to app- -- or, oranges.
7 Q. With respect to the position of
8 Monsanto in terms of continued operations on page 21
9 of your testimony, lines 13 through 16, you state
10 this is because -- well, maybe I should back up.
11 Starting at page -- or, line 11,
12 states: Shortly after the PacifiCorp/ScottishPower
13 merger in 1999 negotiations began, as Monsanto felt
14 it important to start discussions as soon as
15 possible with new PacifiCorp management. This is
16 because Monsanto's ability to secure a continuous
17 and long-term power supply contract is critically
18 important for long-term planning and capital
19 expenditure purposes.
20 Did Monsanto recently complete a new
21 administration building at its Soda Springs
22 facility?
23 A. Yes, that's correct.
24 Q. And, ballpark figures, what was the
25 cost of that building?
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HEDRICK COURT REPORTING SMITH (X)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. I -- I -- I'm not completely aware of
2 that. I would accept it was, you know, several
3 million dollars.
4 Q. A sizable capital expenditure?
5 A. Yes. I also know the purpose for the
6 expenditure as well.
7 Q. And it was made at a time when you
8 knew the 1995 contract was expiring?
9 A. Yes. It was in reaction to the fact
10 that the buildings that we were currently in were
11 basically in the position to be condemned because of
12 earthquake concerns, and safety of our employees is
13 of utmost concern for Monsanto.
14 MR. ERIKSSON: That's all I have.
15 Thank you.
16 COMMISSIONER SMITH: Thank you,
17 Mr. Eriksson.
18 Do we have questions from the
19 Commission? Commissioner Hansen.
20
21 EXAMINATION
22
23 BY COMMISSIONER HANSEN:
24 Q. Mr. Smith, I guess one question I have
25 is the new offer in Monsanto now offers up to 1,000
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 hours of economic curtailment. And my question
2 would be with that amount of curtailment, could
3 Monsanto still meet its commitment in production and
4 would it require the use of the three furnaces, or
5 could this mean that you would be shutting down one
6 furnace?
7 A. I think there's a couple questions
8 that were asked that and I am not aware, and based
9 on the pricing, I've been assured that it's not our
10 intent at this point to shut down a furnace.
11 The 1,000 hours will affect the amount
12 of production of the facility, but we believe that
13 that production can be offset with purchases from
14 other producers.
15 Q. I guess another question I'd have is
16 PacifiCorp chooses to rely more on a standard tariff
17 with unique individual characteristics to be
18 addressed separately like interruptible discounts.
19 If you were to get what you thought was a fair
20 discount for interruptibility, could Monsanto
21 achieve as good a package with the standard tariff
22 as with the special contract?
23 A. I've seen the standard tariff, and I
24 don't believe the standard tariff offers Monsanto
25 what we need to continue to plan our business and
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 remain competitive in Idaho.
2 As to giving PacifiCorp what they
3 want, two -- two contracts, one for firm service and
4 one for interruptibility, frankly, I've been working
5 for the last three years to get one contract done.
6 I can't imagine trying to get two contracts done.
7 Q. So -- so what then is the major
8 difference you see between -- if you could get the
9 price set that was agreeable, then what do you see
10 then as the major difference between the standard
11 tariff and the special contract?
12 A. Well, as I understand, the standard
13 tariff was anytime that PacifiCorp would come in for
14 a rate case or an Application, our pricing could be
15 subject to change. Certainly, that could go up and
16 that could go down.
17 What Monsanto is really looking for is
18 an opportunity to get a competitive rate that lasts
19 for a period of time that allows us to make capital
20 and business decisions.
21 Am I answering your question?
22 Q. I think we're probably getting there,
23 pretty close. I guess then that would lead me to
24 page -- page 12, line 20 through 22, and I guess
25 what point are you trying to make in answering that
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 question?
2 A. Well, I think the point that we were
3 trying to make is the fact that in a long-term
4 special contract, in exchange for a fixed term --
5 longer fixed term -- we forgo any credits, but we
6 also would forgo any increases, and that has some
7 benefit to us. And the fact of the matter is we
8 were not affected by the recent surcharge so our
9 prices didn't go up, but we also didn't receive the
10 credit associated with the merger that the other
11 customers did and our price didn't go down, but we
12 had a price that we were able to make decisions on
13 for a long period of time.
14 Q. And on page 13, line 1 through 5, you
15 talk about the decrease the customers receive -- the
16 tariff customers receive -- but isn't it true that
17 if you would have been a tariff customer, you
18 wouldn't have received a reduction; you would have
19 received an increase, would you not?
20 A. An increase from the BPA?
21 Q. No, in your tariff.
22 A. Yes. I apologize. No, the BPA credit
23 did not go to Monsanto, that's correct, but the
24 credit that would have gone to Monsanto if we would
25 have been a tariff customer, I believe, would have
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 been a credit that came from the merger, and we did
2 not receive that.
3 Q. On page 19, line 13, the question was
4 asked During the period of high energy prices in
5 2000 and 2001, did Monsanto offer PacifiCorp any
6 additional curtailment?
7 And your answer on line 16 is Yes.
8 Is that correct?
9 A. Yes, that's correct.
10 Q. You go on to say that Monsanto had
11 been contacted by another utility that was desperate
12 for energy.
13 Does Monsanto have the ability to sell
14 power to others under Idaho law?
15 A. Well, Monsanto's contract specifically
16 prohibits us to make a sale, so I'm not exactly sure
17 what Idaho law and the code, but I know that our
18 contract specifically prevents us from doing that.
19 Hence, that is why we contacted PacifiCorp, because
20 the opportunity did exist, and I know that through
21 PacifiCorp we could have exercised that option.
22 Q. So did Monsanto want to offer its
23 power back to PacifiCorp under energy exchange or
24 the reasonable price, or did Monsanto want to sell
25 it directly to others using PacifiCorp as a marketer
381
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 for the very high Mid-C prices?
2 A. Monsanto saw this as an opportunity to
3 help the system and potentially help other
4 customers, as well as themselves, and we -- we
5 approached the Utility in an attempt to do that. So
6 my --
7 Q. Okay, I guess I'll come back and ask
8 it this way: So in your offering, would have
9 PacifiCorp also benefitted and gained from
10 Monsanto's offering of additional curtailment at
11 that time, or was it just mainly for Monsanto to
12 take advantage of the high prices at that time?
13 A. PacifiCorp absolutely would have
14 benefitted. The fact of the matter was -- is that
15 the company who we were purchasing natural gas from
16 at the time had offered in the first time nearly
17 $20 million for a week's worth of interruption, and
18 we were more than prepared to split that, and, in
19 fact, our suggestion was a split somewhere to the
20 FMC arrangement with Idaho Power. But, we couldn't
21 do that without PacifiCorp's approval, and certainly
22 they couldn't make the same without us agreeing.
23 Q. On page 25, line 6 through 13 -- and
24 this was part of the discussion you had with
25 Mr. Woodbury -- but there you indicate I think on
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 line 14 that this case with Magcorp should be used
2 as a precedent for this Monsanto proceeding, but as
3 he asked you a lot of the detailed questions or
4 asked you detailed questions about that agreement,
5 it seemed like Monsanto would be opposed to that.
6 So I guess I'm a little confused. Could you just
7 kind of maybe summarize in what way it should be
8 used as a precedent in this proceeding?
9 A. Well, I would agree that a comparison
10 between what Magcorp received and what Monsanto is
11 asking for is an apples and oranges comparison.
12 However, as Monsanto points out through
13 Mr. Rosenberg, there are many ways to look at the
14 request Monsanto has made, and one is to compare
15 with what other customers are receiving. While it
16 is, indeed, a fact that this is an apple to oranges
17 comparison, there are aspects of the Order that
18 Magcorp received that we think you can look at to
19 point out what other -- or, industrial customers are
20 receiving.
21 For instance, some of the things you
22 could look at is they received a single integrated
23 contract. Certainly, the value that was placed on
24 interruptibility when you look at that can be
25 compared, to a certain extent, to what Monsanto's
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 offering. The fact of the matter is, Monsanto's
2 offering additional curtailment and much more
3 flexible curtailment than Magcorp is offering.
4 So I think there are parts of what the
5 Utah Commission ordered for Magcorp that can be used
6 as references and in making a Decision here, but I
7 would agree with you that this is not an apples to
8 apples comparison.
9 Q. One last question: Does it worry you
10 that with the changes in the utility industry over
11 the last couple years or even this last year with
12 Enron, BPA is asking for huge increases, and so
13 forth, what assurance do you have that the City
14 could even supply you a long-term agreement? I
15 mean, I know you've said it's been a couple years
16 since you really talked to them, but does it worry
17 you with these changes that maybe those same
18 opportunities don't exist there anymore?
19 A. Certainly today those opportunities
20 might not exist. The fact of the matter is we have
21 not chosen to go with the City of Soda Springs.
22 We're here before the Commission requesting a
23 contract with PacifiCorp. So as we -- is that an
24 option? Certainly is an option, but it's not an
25 option that we've exercised.
384
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Q. I see. Thank you very much.
2 A. You bet.
3 COMMISSIONER HANSEN: That's all the
4 questions that I have.
5 COMMISSIONER SMITH: Commissioner
6 Kjellander.
7 COMMISSIONER KJELLANDER: Thank you.
8
9 EXAMINATION
10
11 BY COMMISSIONER KJELLANDER:
12 Q. And good morning, Mr. Smith.
13 A. Good morning.
14 Q. I'd like to just ask a couple of
15 questions relating to the contract negotiations
16 breaking down, and just to I guess more or less
17 clarify Monsanto's position, it's been your
18 Company's position that there were effectively two
19 main nonstarter issues that made it impossible for
20 you to get to an agreement, is that correct from
21 your perspective, one issue being a single
22 integrated contract not being on the table, and the
23 other issue being the system versus situs issue?
24 A. Those are definitely two big issues.
25 Obviously, another issue would be price that was
385
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 very big.
2 Q. Okay.
3 A. So I guess to answer your question, I
4 would agree that those were two significant items
5 that contributed to us not to come to, but I
6 wouldn't necessarily characterize them as just two.
7 Q. But those were the two that couldn't
8 allow you to get to price. Is that correct?
9 A. I would agree.
10 Q. Okay. If the Commission were to offer
11 some guidance or sideboards on those specific
12 issues, do you think through your review of the
13 negotiations and where they have been that it's
14 possible for the two sides to sit down and come to
15 some conclusion then on what the price might be? In
16 other words, is it possible for there to be some
17 continued negotiations to resolve this issue as it
18 relates to price if there's some guidance given on
19 those two main issues?
20 A. Commissioner Kjellander, I would hope
21 that that would be the case. My experience over the
22 last three years and some of the responses that we
23 received from PacifiCorp based on their policies
24 regarding special contracts would lead me to really
25 question whether that ability -- whether that
386
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 guidance would actually lead to coming up with
2 contracts. The fact of the matter is, Magcorp
3 received guidance from the Commission and it's my
4 understanding they still haven't generated a
5 contract, even though the Commission made an Order
6 on price and many other terms. So I would like to
7 believe that we can, but my experience over the last
8 three years in trying to come up with a contract
9 with them has been so frustrating that I just don't
10 know.
11 Q. Are negotiations ongoing now?
12 A. A few days ago there was a last-ditch
13 effort by the companies to try to, one last time, to
14 get something done, and Mr. Schettler -- and he can
15 testify to this -- flew to Portland in one
16 last-ditch effort, and the results of that was that
17 they had -- we were still significantly apart.
18 Q. Okay. Thank you.
19
20 EXAMINATION
21
22 BY COMMISSIONER SMITH:
23 Q. Mr. Smith, I just wanted to ask you
24 about your conversation with Commissioner Hansen
25 about your offer to sell power --
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. Yes.
2 Q. -- in 2001. It's my understanding
3 from your testimony, pages 17 through 19, that at
4 that time, Monsanto was actually part of
5 PacifiCorp's operating reserves and you were
6 curtailed on numerous occasions for that purpose,
7 according to your testimony?
8 A. Yes. Monsanto did have a furnace
9 during the December period of time that was under
10 operation, one furnace, and during the January we
11 had two furnaces; but, remember, we had three
12 furnaces.
13 Q. So you do understand that to the
14 extent you were their operating reserves, they
15 couldn't curtail that because that would require
16 them to go out and obtain other reserves in order to
17 meet the reliability criteria?
18 A. I wouldn't necessarily agree with
19 that. Okay?
20 Q. All right.
21 A. But there's a couple reasons why I
22 wouldn't. The operating reserve agreements have
23 provisions in them that when Monsanto shuts down,
24 that they stop paying us and we stop being a
25 reserve.
388
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Q. Because you're not available as a
2 reserve because you're already down.
3 A. That's correct.
4 In addition to that, Monsanto has
5 three furnaces, so under the scenarios that we
6 looked at, though it may have been a little risky
7 for Monsanto, we would have had to do some things
8 operationally, we could have taken down a third
9 furnace.
10 Q. So you still have a third one that is
11 not part of the agreement?
12 A. Is not part of that.
13 Q. Thanks. Do you have a copy of
14 Exhibit 22 of Mr. Taylor?
15 A. I don't.
16 Q. I think it would be really helpful. I
17 just had a couple of questions.
18 MR. BUDGE: (Indicating.)
19 THE WITNESS: I do now.
20 Q. BY COMMISSIONER SMITH: Okay. Thank
21 you. And I assume you've looked at this previously?
22 A. Yes, I have, although it is a graph.
23 I'm not looking at the numbers; I did look at the
24 graph.
25 Q. Okay. I guess it appears to me that
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Monsanto's rates if you start with the 1990 were
2 slowly escalating, and then in, you know, 1995, they
3 were somewhere near $25 a megawatt hour.
4 A. Yeah, I think, subject to check, I
5 believe they were about 24 and a half, something in
6 that range, yes.
7 Q. And then we had the agreement where
8 Monsanto paid a lump sum of 30 million?
9 A. That is correct.
10 Q. And that's shown there. And whether
11 you think of that as the buyout or prepayment, the
12 effect on the Monsanto rate was pretty significant,
13 the new contract bringing rates down?
14 A. Yes. Although, I believe Mr. Taylor
15 makes two mistakes with this graph.
16 Q. Okay.
17 A. The first is if you look at the
18 prepayment, he assigns that all to '80 -- '96 and
19 '97, so you see the light-blue marks that go way
20 up. It appears also that --
21 Q. No, no. I think -- let's see.
22 A. He shows the prepayments.
23 Q. The prepayment is the yellow.
24 A. Well --
25 Q. If you assigned all of that to the
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 term of the contract --
2 A. That's correct.
3 Q. -- you get the yellow.
4 A. That's correct. But the light blue
5 also indicates the 1995 effective price.
6 Q. As a buyout.
7 A. As a buyout. So it is my opinion that
8 if you look at the blue and if you look at the
9 yellow, he's double-counting.
10 Q. Well, I just think he's demonstrating
11 it two different ways.
12 A. Okay.
13 Q. You don't look at -- you didn't pay
14 them both.
15 A. That's correct.
16 Q. You could either look at as a
17 prepayment over the life of the contract and you'd
18 have the yellow bar, or you could look at it as a
19 buyout of the two years and you get the light-blue
20 bar.
21 A. Okay.
22 Q. Okay. But my question was if Monsanto
23 had continued at the 24.50 or close to $25 rate,
24 would you still be here today?
25 A. That requires me to --
391
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Q. Speculate?
2 A. -- speculate, so based on your
3 understanding that that is a speculation, a business
4 went out between that time, there was FMC. Would
5 that have been us? Could that have been us? It
6 certainly could have been us.
7 Q. Well, knowing -- having the briefings
8 I've had from both your company and FMC on the
9 business of manufacturing elemental phosphorus and
10 moving to the wet acid process, my recollection was
11 that at this point in time, there was the sense that
12 if the power rates didn't go down, the business
13 could not continue economically?
14 A. And I -- your characterization is
15 exactly correct. I don't -- it's speculating. I
16 don't know how long Monsanto would have operated our
17 facility at a loss, but the reality is our company
18 is made up of businessmen that are paid not to
19 operate things at losses, and if there is product
20 available at a lesser cost, then I would expect then
21 only logic would tell me that they would go that
22 route.
23 Q. Exactly.
24 A. And, in fact, I see the point in time
25 that we are now is just as critical.
392
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Q. Well, and that's what I see too, and
2 I'm trying to figure out what's the appropriate
3 action in terms of an electric rate which requires
4 fairness to all of this Company's customers, so I
5 mean it just --
6 A. In our attempt to address that, what
7 we are attempting to do is add interruptions to
8 continue to justify the rate we have, and we believe
9 through our analysis and calculations that we have
10 done that. Obviously, it becomes your Decision to
11 decide.
12 Q. Well, unless the Company has enough
13 resources that the value of the interruptions won't
14 push you to where you need to be.
15 A. Yeah.
16 Q. Okay. Thank you. That's all I had.
17 COMMISSIONER HANSEN: I had one.
18 COMMISSIONER SMITH: Commissioner
19 Hansen.
20
21
22
23
24
25
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HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 EXAMINATION
2
3 BY COMMISSIONER HANSEN:
4 Q. Just as a follow-up, I'm just kind of
5 curious: If the rates got to a point where it's not
6 economical to run let's say all three furnaces, do
7 you perceive following the same kind of path maybe
8 as FMC or Astaris? Would it be more economical if
9 you shut down one furnace and just ran two furnaces,
10 or do you see a complete it's either all or nothing?
11 A. It is my belief, based on my knowledge
12 of the operation, that if you shut down a furnace,
13 particularly for a permanent-type situation, that
14 it's just a matter of time. Now, could you shut it
15 down for a few months and then bring it back up,
16 that may be an option; but when you shut down
17 permanently, I believe that you enter that death
18 spiral and it's only a matter of time.
19 COMMISSIONER SMITH: We've all seen
20 the spreading of fixed costs over fewer units of
21 production.
22 COMMISSIONER HANSEN: That's all I
23 had.
24 COMMISSIONER SMITH: All right.
25 Redirect, Mr. Budge?
394
HEDRICK COURT REPORTING SMITH (Com)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 MR. BUDGE: Just to respond to one
2 question Mr. Smith deferred to me as to what the
3 status of mediation was, at the time that Mr. Smith
4 filed his testimony, there was a mediation date
5 scheduled. It was canceled. There is no mediation
6 date scheduled, simply the trial date which he
7 indicated in his testimony, which is August whatever
8 it is of 2003.
9 As to -- if I could just clarify a
10 couple questions?
11
12 REDIRECT EXAMINATION
13
14 BY MR. BUDGE:
15 Q. Mr. Smith, you described in response
16 to a question from Commissioner Kjellander as to
17 whether or not there was any ongoing negotiations,
18 and I think you described Mr. Schettler's visit to
19 Portland here a few weeks ago. That was discussed
20 in his rebuttal testimony. Correct?
21 A. That is correct.
22 Q. Since that time, is it accurate to say
23 that there have been no negotiations and there are
24 none ongoing today?
25 A. That is my understanding. We have
395
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 exchanged pieces of data as a reflection of this
2 hearing, but no negotiations.
3 Q. You were asked a question by
4 PacifiCorp's Counsel regarding rate certainty, price
5 stability?
6 A. Yes.
7 Q. And the question was asked that if
8 Monsanto was interrupted, it may not have the price
9 certainty it desires. Do you recall that
10 question --
11 A. Yes.
12 Q. -- from Mr. Eriksson?
13 Isn't it a fact, Mr. Smith, if the
14 interruptions are taken and Monsanto chooses not to
15 buy through, that its price would then be the set
16 rate established by the Commission for the new
17 contract, whatever that rate ends up being?
18 A. Could you ask that question again?
19 Q. Yeah. Let's just assume
20 hypothetically that the Commission accepted
21 Monsanto's request to price the new contract at
22 18 and a half with either the 800 hours or the 1,000
23 hours of interruptibility. The question asked of
24 you previously is if the interruption does not
25 eliminate some of the price uncertainty.
396
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 My question to you was if the new
2 contract is at a fixed price such as 18 and a half
3 and the Company chooses to interrupt, if Monsanto
4 elects not to buy through, then you do know with
5 certainty that your price is the 18 and a half.
6 Correct?
7 A. That is correct.
8 Q. And if the price is altered from that,
9 it is simply as a result of Monsanto choosing to buy
10 through?
11 A. That is also correct.
12 Q. And the buy-through would be a matter
13 within your control?
14 A. Yes. Whether we bought through or
15 purchased product from somebody else, that is in our
16 control.
17 Q. And so is that still consistent with
18 Monsanto's desire for price certainty?
19 A. Yes, I believe so.
20 Q. You also asked or were asked a
21 question about -- I think from Commissioner Hansen
22 as well as from Staff Counsel -- regarding your
23 testimony about the precedential value provided by
24 the Magcorp Decision?
25 A. Yes.
397
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 Q. And you made one comment, one item
2 that you indicated you thought it provided
3 precedent, and that was that the Company and Magcorp
4 had refused to provide a single integrated contract
5 which Magcorp wanted, and I think your testimony was
6 when they went to the hearing, the Utah Commission
7 granted them that. Correct?
8 A. That is correct.
9 Q. Is it also precedent to look at the
10 Magcorp Decision in the context of the fact that
11 PacifiCorp did not offer Magcorp interruptible power
12 and simply wanted to price them as a firm contract?
13 A. I -- I -- yes, I believe that's
14 correct.
15 Q. And at the time you filed your
16 testimony, had PacifiCorp made any specific offer to
17 Monsanto to provide interruptible power under a
18 single integrated contract?
19 A. No, they had not.
20 Q. So at the time you filed your
21 testimony, that issue was the same here as was
22 presented in Utah?
23 A. Yes.
24 Q. And in the Magcorp case, isn't it your
25 understanding that the Company there also wanted to
398
HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 raise their rates to full cost of service, which
2 would have been a 70-percent price increase?
3 A. I know that they wanted to raise the
4 rates to full cost of service. I'm not exactly sure
5 what the increase would be.
6 Q. And that was an issue that was
7 rejected by the Commission in Utah in the sense that
8 they did not accept the Company's full
9 cost-of-service rate and instead priced Magcorp at
10 $21?
11 A. That is correct.
12 Q. So did you consider that Decision of
13 some precedence in that the same issues were
14 presented here in this case?
15 A. Yes, I did.
16 Q. You also answered some questions from
17 Mr. Woodbury about the discussions that went on with
18 the City of Soda Springs about a possible supplier.
19 Do you recall that?
20 A. Yes.
21 Q. And just to clarify the record, those
22 discussions occurred prior to the '95 contract.
23 Correct?
24 A. Yes, they did.
25 Q. Isn't it true that Monsanto has no
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HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 present plans or discussions to obtain its supply
2 from any other source than PacifiCorp?
3 A. That is correct.
4 Q. Okay.
5 MR. BUDGE: No further questions.
6 COMMISSIONER SMITH: Thank you,
7 Mr. Budge.
8 And thank you, Mr. Smith.
9 THE WITNESS: Thank you.
10 (The witness left the stand.)
11 COMMISSIONER SMITH: I think it's time
12 for a break. Why don't we try and be back around
13 10:30.
14 (Recess.)
15 COMMISSIONER SMITH: We'll go back on
16 the record.
17 Mr. Budge, do you have another witness
18 or are you finished?
19 MR. BUDGE: We do. We'll call
20 Daniel R. Schettler, please.
21
22
23
24
25
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HEDRICK COURT REPORTING SMITH (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 DANIEL R. SCHETTLER,
2 produced as a witness at the instance of Monsanto,
3 being first duly sworn, was examined and testified
4 as follows:
5
6 DIRECT EXAMINATION
7
8 BY MR. BUDGE:
9 Q. Would you please state your name and
10 address for the record?
11 A. It's Daniel R. Schettler, 29
12 Briarcliff, St. Louis, Missouri.
13 Q. And did you prefile direct testimony
14 and also rebuttal testimony on behalf of Monsanto?
15 A. I did.
16 Q. And did you also sponsor Exhibit
17 Nos. 210 and 211?
18 A. Yes.
19 Q. And we've also handed out Exhibit 243,
20 which you're also sponsoring?
21 A. That's correct.
22 Q. And Exhibit 243 is part of your
23 rebuttal testimony?
24 A. That's correct.
25 Q. And does that reflect the alternate
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HEDRICK COURT REPORTING SCHETTLER (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 proposal made by Monsanto to offer the additional
2 1,000 hours?
3 A. That's correct.
4 Q. And the pending corrections on
5 Exhibit 243 simply reflect changes to the original
6 proposal which was Exhibit A that you have now
7 penned in on Exhibit 243?
8 A. That's correct.
9 Q. Do you have any corrections that you
10 wish to make to either your direct or rebuttal
11 testimony, or these exhibits?
12 A. Yes, I have one correction, and that
13 is on Exhibit 211 to my direct testimony, and I'm
14 sorry, these aren't -- the pages aren't numbered,
15 but it's Paragraph 3 and it's the fourth line down,
16 beginning of a new page. It says 200,000 kilowatts
17 of interruptible power.
18 COMMISSIONER SMITH: Could you give us
19 a hint as to what page you're on?
20 Q. BY MR. BUDGE: Wait just a moment. I
21 think we're looking at Exhibit 211. Wait just a
22 moment and we'll give everybody a chance to get
23 there.
24 A. We're on Paragraph 3.1.
25 Q. Three point one?
402
HEDRICK COURT REPORTING SCHETTLER (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 A. There are no page numbers.
2 Q. It would be the --
3 A. It's the section on purchase and sale
4 of power.
5 Q. Page 5?
6 A. Okay. It says 200,000 kilowatts of
7 interruptible power. That should be 206,000.
8 That's consistent with Exhibit 210. That's a typo.
9 Q. Are there any other corrections that
10 you have, Mr. Schettler?
11 A. No.
12 Q. Mr. Schettler, if I were to ask you
13 today the same questions that are contained in your
14 prefiled direct and rebuttal testimony, would your
15 answers be the same?
16 A. They would.
17 MR. BUDGE: With that, we would move
18 that Mr. Schettler's testimony be spread, and that
19 the Exhibits 211, 210, and 243 be admitted into
20 evidence, and would tender him for
21 cross-examination.
22 COMMISSIONER SMITH: And that was both
23 his direct and his rebuttal?
24 MR. BUDGE: Yes.
25 COMMISSIONER SMITH: Okay, without
403
HEDRICK COURT REPORTING SCHETTLER (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto
1 objection, it is so ordered.
2 (The following prefiled direct and
3 rebuttal testimony of Mr. Schettler is spread upon
4 the record.)
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HEDRICK COURT REPORTING SCHETTLER (Di)
P.O. BOX 578, BOISE, ID 83701 Monsanto