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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 353 HEDRICK COURT REPORTING SMITH (X) P.O. BOX 578, BOISE, ID 83701 Monsanto 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. 354 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 355 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 356 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 357 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 358 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 359 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. 360 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 361 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 -- 362 HEDRICK COURT REPORTING SMITH (X) P.O. BOX 578, BOISE, ID 83701 Monsanto 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? 363 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 364 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 365 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 366 HEDRICK COURT REPORTING SMITH (X) 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 367 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 25 368 HEDRICK COURT REPORTING SMITH (X) 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 369 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? 370 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, 371 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? 372 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. 373 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? 374 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? 375 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? 376 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 1,000 377 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 378 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 379 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 380 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 382 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 383 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 -- 387 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 389 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 390 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 25 393 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 399 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 25 400 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 401 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.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 404 HEDRICK COURT REPORTING SCHETTLER (Di) P.O. BOX 578, BOISE, ID 83701 Monsanto