20071119Boise.pdf

ORlG\NAL
.BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
----------------------------------x Case No. PAC-E-07-05
IN THE MATTER OF THE APPLICATION
OF PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF CHAGES TO
ITS ELECTRIC SERVICE SCHEDULES
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(J(' ~(J
HEAING BEFORE THE IDAHO PUBLIC UTILITIES COMMISS!èN
CHAIRM MACK A. REDFORD, COMMISSIONER MASHA H.. SMITH
and COMMISSIONER JIM KEMPTON
At the offices of IDAHO PUBLIC UTILITIES COMMISSION
472 WEST WASHINGTON STREET
BOISE, IDAHO
9: 30 a.ID.
REPORTER'S TRASCRIPT OF PROCEEDINGS.
Tuesday, Novemer 6, 2007
Reported by
DEBORA ANN KRIDLER
CSR No. 754
POST OFFICE BOX 578
BOISE, mAHO 83701
20-336-920.HEDRICK
COURT REPORTING
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1 APPEARANCES:
2 FOR THE COMMISSION STAFF:
3 NEIL PRICE, Deputy Attorney General
and SCOTT D. WOODBURY, Deputy Attorney General
Office of the Attorney General
472 West Washington
Boise, Idaho 83720
[phone]
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FOR ROCKY MOUNTAIN POWER:
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JUSTIN LEE BROWN, Senior Counsel
ROCKY MOUNTAIN POWER
201 South Main, Suite 2300
Salt Lake City, Utah 84111
[phone]
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FOR MONSANTO COMPANY:
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RANDALL C. BUDGE, At torney a t Law
RACINE, OLSON, NY, BUDGE & BAILEY, CHTD.
201 East Center
Pocatello, Idaho 83204
[phone]
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FOR AGRIUM, INC.:
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CONLEY WARD, Attorney at Law
GIVENS PURSLEY
601 West Bannock
Boise, Idaho 83701
[phone]
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FOR IDAHO IRRIGATION PUMPERS ASSOCIATION:
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ERIC L. OLSEN, Attorney at Law
RACINE, OLSON, NY, BUDGE & BAILEY, CHTD.
201 East Center
Pocatello, Idaho 83204
[phone]
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FOR COMMUNITY ACTION PARTNERSHIP ASSOCIATION OF IDAHO:
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BRAD M. PURDY
2019 N. 17th Street
Boise, Idaho 83702
(208) 384-129925
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I N D E X
WITNESS DIRECT CROSS REDIRECT RECROSS VOIR DIRE
BRIAN DICKMAN 10
(By COIDIDissioner SIDi th)34
36 39RANDY LOBB
(By ChairIDan Redford)39
EXHIBITS
FOR I DENT I FI CAT ION
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IN EVIDENCE
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STIPULATION
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---000---
CHAIRMAN REDFORD: Okay. Why don't we get
started.
First of all, I'd like to introduce the
COIDIDis sioners. To IDY left is Marsha SIDi th. And to IDY
right is JiID KeIDpton. JiID KeIDpton is a relatively new
COIDIDis s ioner, like IDe. So any of our foibles or anything
else, IDust take that into consideration. And I' ID
Mack Redford.I'ID chairing this hearing.
This hearing is in the IDatter of the application
of Pacific Power dba Rocky Mountain Power for approval of
changes to its electric service schedules. And--
(Interruption in the proceedings.)
CHAIRMAN REDFORD: Hello?
MR. KAJANDER: Hello.
CHAIRMAN REDFORD: Okay. Who is this again?
MR, KAJANDER: Jerrod Kaj ander wi th Monsanto.
CHAIRMAN REDFORD: Okay. Thank you.
Would you please state your full naIDe for us?
MR. KAJANDER: Jerrod RaIDond Kaj ander. And
that's spelled K-A~J-A-N-D-E-R.
CHAIRMAN REDFORD: Okay. Thank you.
We're just now starting the hearing, so you
haven't IDissed anything. And you're -- you represent
Monsanto?
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MR. KAJANDER: Energy procureIDent for Monsanto.
CHAIRMAN REDFORD: Thank you very IDuch.
Well, as I -- oh, by the way, you're on a
speaker are phone that is broadcast throughout the
hear ing rooID.
As I stated, the naIDe of the IDatter -- and this
is case No. PAC-E-07-05.
First thing I'd like to do is take the
appearances of parties, please. For the applicant Rocky
Mountain Power?
MR. BROWN:Yes.Justin Lee Brown, counsel for
Rocky Mountain Power. And with IDe is the Idaho
Regulatory Affairs Manager Brian DickIDan.
CHAIRMAN REDFORD: For the COIDIDission staff?
MR. WOODBURY: Scott Woodbury and Neil Price,
Deputy Attorneys General for COIDIDission Staff.
CHAIRMAN REDFORD:For Monsanto, we've got you
on the phone, sir.
here?
Is your -- is Monsanto's counsel
MR. BROWN:Actually, COIDIDission Chair, the
IDatters have reached a settleIDent in this case. And
presently, co-counsel. for the COIDpany, as well as counsel
for Monsanto, Randy Budge, is currently working on
finalizing SOIDe language in an electric service
agreeIDent.And we would actually request, so that we
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could get theID here and get the stipulation filed with
the COIDIDission, a brief recess.
I apologize for the delay. There was SOIDe IDinor
word SUbIDi tting that caIDe up at the end that they're
trying to work on. And they had requested a brief 20 to
30-IDinute recess.
CHAIRMAN REDFORD: Let IDe just get, if I could,
past the appearances.
MR. BROWN: Absolutely. I just want to let you
know Mr. Budge is not present at the tiIDe.
Is the counsel for MonsantoCHAIRMAN REDFORD:
going to be here?
MR. BROWN: Yes, he will.
CHAIRMAN REDFORD: Idaho Irrigation PUIDpers
Association?
MR. OLSEN: Mr. Chair, Eric Olsen for Idaho
Irrigation PUIDpers Association.
CHAIRMAN REDFORD: AgruiID.
MR. WARD: Conley Ward Givens Pursley for
AgriuID.
COIDIDuni ty ActionCHAIRMAN REDFORD: Thank you.
Partnership Association?
MR. PURDY: Brad Purdy on behalf of COIDIDuni ty
Action Partnership Association. Thank you.
CHAIRMAN REDFORD: I believe that concludes
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Is counsel forthere is a TiIDothy Shirts (phonetic).
Mr. Shirts here?
MR. BROWN: He's not. I spoke wi th hiID on the
phone. He won't be attending. He thought that IDaybe
they would call in, but signed the stipulation, and have
agreed to it. But he's not planning on IDaking the trip
to Boise.
CHAIRMAN REDFORD:My records indicate that that
If there's anyone else IDakingconcludes the appearances.
an appearance, please let us know. Thank you.
At this tiIDe, I think it's appropriate to take
up any preliIDinary IDatters. And I believe you had a
IDotion to IDake or a request?
MR. BROWN: Yes. The -- as I IDentioned earlier,
the parties in this proceeding have been able to work
together and reach a settleIDent on the application. We
have a stipulation that's been signed by, I believe, all
parties. And I believe that's sOIDething that Monsanto's
signing as we speak.
Part of that stipulation was an aIDendIDent or a
restated -- an electric service agreeIDent that they're
perforIDing kind of the final word subIDitting on, if you
will. And they should be here shortly. And we just as k
for a brief recess so that they could finish that up.
And we can file the application for approval of the
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stipulation either in open hearing or file it with the
COIDIDission and proceed wi th the hearing and the request
for the approval and stipulation.
CHAI RMAN REDFORD:Okay.We'll take a -- it's
your request for a half hour recess?
MR. BROWN: Yeah. They had indicated
10:DO o'clock should be sufficient, so --
CHAIRMAN REDFORD:Okay.Well, are there any
objections?
Hearing no objections, we'll take a half hour
recess, and COIDIDence again at five IDinutes after 10: 00.
Thank you very IDuch.
Thank you.
MR. BROWN: Okay.
CHAIRMAN REDFORD:
(Recess taken.)
CHAIRMAN REDFORD:Well, let's go back on the
record.
And one thing that I would like to ask all of
you, IDainly because IDyself and COIDIDissioner KeIDpton are
fairly new to this process, I'd like to IDake sure that we
keep the acronyIDs to a very IDiniIDuID. And if you are
going to IDention an acronyID, we'd like you also to give
us a little overview, or at least identify what the
acronyID stands for. And I'ID going to be pretty strict
about that, because we're still trying to get our arIDS
around the acronyIDs.
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I believe is there further -- excuse IDe, I'd
like to take your appearance, Mr. Budge.
MR. BUDGE: Thank you, Mr. ChairIDan. Randall C.
Budge appearance on behalf of intervener Monsanto
COIDpany.
CHAIRMAN REDFORD:Thank you.
We just concluded a half hour recess at which
tiIDe I understand that there are finalizations to a
stipulation.And I wondered if we've gotten -- if we've
got ten the st ipula t ion. And second, I want to know if
there are any further preliIDinary IDatters to take before
the COIDIDission at this tiIDe. If there are --
COMMISSIONER SMITH: We're IDissing Mr. Brown.
CHAIRMAN REDFORD: Why don't we go off the
record a IDinute until we get here.
(Off the record.)
CHAIRMAN REDFORD: Are there further preliIDinary
IDatters to go into at this tiIDe?
MR. BROWN: We don't have any, no.
CHAIRMAN REDFORD: Well, then, you're ready to
proceed with the application?
MR. BROWN:Yes.
CHAIRMAN REDFORD:Okay.Proceed.
What we'll do is we i II take the testiIDony in the
order in which it appears in the notice of the parties,
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Pacificorp -- excuse IDe, no we won't.The intervenors,
COIDIDission staff, and then any rebuttal you have.
MR. BROWN:Okay.
CHAIRMAN REDFORD:So go ahead and proceed.
MR. BROWN:Okay. As I indicated earlier, the
parties have been able to reach an agreeIDent on a
stipulation.We're probably filing it siIDultaneously
outside right now, the application.But I've got copies
of the stipulation with IDe.I've got the Idaho
Regulatory Affairs Manager Brian DickIDan to call as a
witness to sponsor the stipulation and explain the
stipulation to the COIDIDission at this tiIDe.And so I'd
like to call Brian DickIDan to the stand.
CHAIRMAN REDFORD:Please proceed to the witness
stand.And COIDIDissioner SIDi th will swear you in.
BRIAN DICKMAN,
called as a witness, having been first duly sworn, was
exaIDined and testified as follows:
DIRECT EXAMINATION
BY MR. BROWN:
Q. Will you please state your naIDe and spell your
last naIDe for the record?
A. Brian DickIDan, D-I-C-K-M-A-N.
Q. And with WhOID are you currently eIDployed?
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Pacificorp, doing business as Rocky Mountain
I'ID the Manager of Regulatory Affairs for Idaho
A.
Power.
jurisdiction.
Q. And were you involved in the preparation of the
Idaho general rate case?
A. Yes, I was. As part of IDY duties, I IDanage the
process of putting -- of cOIDpiling, preparing the
COIDpany's filings wi th the COIDIDission, and was directly
involved in the preparation of this rate case, including
its direct -- our direct testiIDony and our rebuttal
testiIDony.
Q. And the COIDpany filed its direct case on
June 8th, 2007; is that correct?
A. That's correct.
Q. And what was the aIDount that was originally
sought at that tiIDe?
A. In the original filing, the COIDpany requested an
overall increase to its revenues of $18.47 IDillion or
10.3 percent.
Q. And part of the proceeding, there were several
intervening parties that were represented here today that
filed direct testiIDony in response to the application on
or about SepteIDber 28th; is that correct?
A. That's correct.
Q. And then the COIDpany prepared a rebuttal phase
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to its case filed on or about October 25th 2007; is that
correct?
A. Yes.
Q. Did the COIDpany revise its original filing in
its rebuttal case?
A. Yes, we did.
Q. And could you please explain what the revised
position was?
CHAIRMAN REDFORD: Hang on just for a IDinute.
We've got -- hello? Okay. Let IDe -- you're going to be
on the speaker phone. Can you hear IDe?
MR. KAJANDER: Yes, I can.
CHAIRMAN REDFORD: Okay. Thank you very IDuch.
THE WITNESS: Yes, for the COIDpany' s rebuttal
case, we revised the request for the overall revenue
increase to 15.4 IDillion for an overall rate increase of
8.6 percent. That w~s partially IDade up of corrections
that had been identified through the discovery process in
the case as well as the COIDpany adopting SOIDe of the
adjustIDents proposed by intervenors, IDainly the staff.
BY MR. BROWN:
Q. Okay. And at or about the tiIDe the COIDpany was
preparing its rebuttal case, it began settleIDent
negotiations with SOIDe of the intervening parties; is
that correct?
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A. That 1 s correct, yes.
Q. And are you faIDiliar wi th the stipulation
agreeIDent that was reached by the parties in this case?
A. I aID.
Q. And what was the aIDount of the stipulation the
parties agreed to?
A. The overall revenue increase agreed to by the
parties were -- at least not objected to by Monsanto
would be $11.5 IDillion for an overall increase of
6.4 percent.
MR. BROWN: At this tiIDe I'd like to IDark the
a copy of the stipulation as stipulation Exhibit 1, if I
IDay approach the Court Reporter.
CHAIRMAN REDFORD: Certainly.
MR. BROWN: And I also have copies for the
COIDIDissioners as well.
(Stipulation Exhibit No. 1 was IDarked for
identification. )
BY MR. BROWN:
Q. And what I just handed you, Mr. DickIDan, is
identified as stipulation Exhibit 1, which is the
stipulation agreed to by the parties to this proceeding.
Could you please explain what the parties agreed
to regarding the revenue requireIDent in the case?
Certainly.As described, we had IDadeA.
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significantadj ustIDents to the overall rate increase in
the COIDpany' s rebuttal case, and IDade further adj ustIDent s
to an overall to arrive at the overall revenue
increase of 11.5 IDillion, for the IDOSt part, that
representation, a black box settleIDent, without
identifying specific issues or adjustIDents IDade to that,
to the revenue requireIDent increase requested.
The iteIDs that are called out are a specified
return on equi ty and cost of capi tal and capi tal
structure. Specifically, the return on equity would be
10.25 percent. In addition, the COIDpany describes and
the parties agree to the deferred accounting iteIDs that
had been called out in the case. There are a nUIDber that
the COIDIDission had previously authorized deferred
accounting treatIDent. And the COIDpany had sought
reIDaking treatIDent in this case. And this stipulation
would spell out how cost recovery would proceed in the
future.
Q. And the overall revenue requireIDent would
produce an authorized rate of return 8.27 percent; is
that correct?
A. That's correct.
Q. Would you please also explain the cost of
service rates spread and rate design cOIDponents of the
stipulation?
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Yes.Yes.A.
The stipulation, as a table detailing the rate
spread agreed to by the parties, the $11.5 IDillion
increase results in an equal percentage rate increase for
the residential and irrigation custoIDers of 4.89 percent.
AgriuID and the COIDpany agreed to a revenue increase, a
rate increase for AgriuID of 6.25 percent. And Monsanto
has agreed to a rate increase of 13.5 percent to its firID
revenues. Street and aerial lighting are also affected
with a rate increase of 75.29 percent.
Q. And as part of the cost of service rate spread
rate design, did the COIDpany reach rate plan agreeIDents
with AgriuID and Monsanto?
A. Yes, we did. As part of the agreeIDent with both
AgriuID and Monsanto, the COIDpany has agreed to certain
rate increases into the next few years.For exaIDple --
and we can get into the stipulation details further on,
but Monsanto and AgriuID have both agreed to rate
increases effective January 1, 2008, January 1, 2009 and
January 1, 2010 as part of the stipulation.
Q. And how does the COIDpany propose to handle cost
of service IDethodology in between that tiIDe, given the
rate plan?
A. Because of the rate plans agreed to, the rate
increases for Monsanto and AgriuID would be fixed at that
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point.The COIDpany has reserved the right to file a
general rate case during the terID of those rate plans,
but has agreed that any cost of service shortfall that
appears in the -- in any of those rate cases for AgriuID
and Monsanto would not be recovered as a part of that
case.In other words, the COIDpany would not be able to
recover any shortfall attributed to either AgriuID or
Monsanto.
In addition, all parties have agreed that, for
the terID of those rate plans, the cost of service
IDethodology as proposed in this case would reIDain
constant. The idea being that, in the event a rate case
is filed in the interiID, another party IDight propose
different IDethodologies, or be able to IDanipulate the
cost of service such that costs were shifted to custoIDers
that agreed to certain increases, therefore, prohibiting
the COIDpany froID recovering any of those costs, strictly
due to a IDethodology change.
So all parties agreed IDethodology reIDains
through the terID, but have not agreed to the actual
IDethodology. They reserve the right to challenge that
IDethodology once the terID of the rate plans has expired.
Q. The COIDpany is also getting into the details of,
I guess, the three parties that the COIDpany reached
specific agreeIDents on, the Idaho Irrigation PUIDpers
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Association, Monsanto and AgriuID.
Would you please explain the agreeIDents that
were reached with the irrigation custoIDers in our case?
A.Yes.First off, the irrigators, through the
Idaho Irrigation PUIDpers Association, have agreed to an
increase of 4.89 percent to schedule 10 nearing the
irrigation schedule. In addition, I have agreed that the
COIDIDiss ioner.
COMMISSIONER SMITH: Mr. DickIDan, could you just
refresh IDY IDeIDory on what schedule 10 is as opposed to
the others?
THE WITNESS:Yes.Schedule 10 is the schedule
for our pUIDping operations, electric PUIDPS used for
irrigation. For interjurisdictional cost allocation in
this case, the parties have agreed that the incentive
paYIDents for the irrigation load control IDanageIDent
prograID -- that's the prograID the COIDpany uses and runs
in collaboration with the irrigators to IDanage their load
and turn it off during peak periods. We have agreed
that, for purposes of this case, this settleIDent, the
cost of those incentives would be assigned to the Idaho
jurisdiction.
So those costs, and also the resul ting benefi ts
of that load being turned off during the peak periods
are -- reIDain with the State of Idaho. In addition, we
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1 also reached agreeIDent with the irrigators ward regarding
2 the level of paYIDents for that load IDanageIDent prograID.
3 And we currently have two prograID~. There's a scheduled
4 firID prograID, we call it, that a custoIDer IDay sign up at
5 the beginning of the year and their PUIDP would be
6 curtailed during specific -- a specific schedule during
7 the SUIDIDer.
8 There's also now a dispatchable prograID we
9 initiated in 2007 as a pilot prograID. We propose to
10 continue that prograID. And it is operated where the
11 COIDpany can call on an individual custoIDer as it needs,
12 and can IDanage the load for individual PUIDPS as the
13 COIDpany needs. The price paid for that load IDanageIDent
14 will reIDain the saIDe as is currently in schedule 72 for
15 the scheduled prograID at $11.19 per kilowatt year or
16 season. We've agreed that the dispatch of the price paid
17 for the dispatchable prograID will increase froID $11 as
18 was paid in 2007 to a IDiniIDuID of $23 per KW season.
19 We also agreed to a tiered structure for that
20 prograID. And as it is detailed in the stipulation,
21 there's a table that will show possible participation
22 level. If the irrigators -- if enough custoIDers
23 participate in the prograID such that there is less than
24 150 IDegawatts under the control of the COIDpany, those
25 custoIDers would receive a credit of $23 per kilowatt
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year. If they can get participation between
150 IDegawatts and 174 IDegawatts, the credit would rise to
$26. And above 175 IDegawatts, the credit would rise to
$ 2 8.
BY MR. BROWN:
Q. Did the COIDpany change any of the terIDS in terIDS
of the nUIDber of opt-outs froID the prograID and how that's
struct ured?
A. Yes. As part of the pilot prograID in 2007 for
the dispatchable prograID, the COIDpany had ~greed to
previously agreed with the pUIDpers to SOIDe operational
terIDs.One of those is, during the season, if the
COIDpany calls on a particular custoIDer to curtail their
load, and that custoIDer deeIDS it iIDpossible or
unnecessary for theID to curtail at that IDoIDent, they had
five opportuni ties throughout the season to opt out of
that curtailIDent of that event. Two of those were at no
cost to the irrigator.And three of theID would -- in the
event that they utilize those opt-outs those additional
three tiIDes, the custoIDer would have to reiIDburse the
COIDpany, essentially, for the cost of IDarket power during
that event.
As part of this stipulation, the PUIDpers
Association and the COIDpany have agreed that they will
still have five opt-out opportunities, but they will have
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to reiIDburse the COIDpany for each of those opt-out
opportuni ties.
Q. And part of the stipulation, the COIDpany agreed
to provide the pUIDpers a IDethodology on valuation of the
dispatchable load prograID credi t; is that correct?
A. That's correct.
Q. Could you please explain the purpose of that,
and how that ties in with the stipulation at valuation of
the credi t?
A. Yes. We continue to work wi th the PUIDpers
Association to develop a IDethodology that's sustainable
that can value and provide a fair value for this load
IDanageIDent prograID. The nUIDbers represented in this
stipulation are a result of a cOIDproIDise on negotiated
agreeIDent. And the COIDpany has COIDIDi tted to provide the
PUIDpers Association with a IDodel or a IDethodology that
could be used to calculate this value into the future.
We have COIDIDitted to do that by DeceIDber 7th,
2007, at which tiIDe we will work with the PUIDpers
Association to ensure that both the COIDpany and the
Association agree on that IDethodology. If, in the event
there i s a dispute, we would file a request wi th the
COIDIDission to resolve that dispute.
Q. And if participation levels reach or exceed
175 IDegawatts and gets to the $28 per kilowatt hour year
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A. That's correct. There was great deIDand for this
dispatchable pilot prograID. It was a successful prograID.
In fact, it was difficult to keep up with the requests.
And the COIDpany and the PUIDpers Association have agreed
that, given the possibility of increased deIDand in 2008,
we will do all in our power to IDeet those requests.
Q. As part of the COIDpany' s original filing, I
believe COIDpany witness Carol Roffney (phonetic) had
proposed certain changes.
What i s the status of those changes? And how are
they treated in the stipulation?
A. The parties have agreed to defer consideration
of the issues raised by COIDpany witness Carol Roffney.
Specifically, she addressed collection agency costs, fees
for reconnect ion of service, and line extension changes.
Parties have agreed that those issues will no longer be
considered by the COIDpany or COIDIDunity Action Partners
Association of Idaho or other parties in this proceeding,
but reserve the right to raise those issues again in the
future.
Q. And then with respect to COIDpany's custoIDer
AgriuID, could you please explain what the COIDpany and
AgriuID were able to agree to?
A. Yes. Specifically, AgriuID's rate schedule 401,
which is their special contract rate, will be increased
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6.25 percent effective January 1st, 2008.AgriuID also
has load on schedule 9, our cOIDIDercial schedule. It's a
sIDall aIDount of load, but they are -- they are not -- the
rate for schedule 9 will not be adjusted as part of the
stipulation.
In addition, the COIDpany and AgriuID have agreed
to a rate plan as previously IDentioned, effectively
increasing AgriuID's rates 6.25 percent in 2008, 3 percent
January 1st, 2009, and 7 percent January 1st, 2010. And
the COIDpany has agreed to seek no further rate increases
for AgriuID prior to January 1, 2011.
Q. SO froID the tiIDe period, if the COIDIDission were
to accept the stipulation and issue an order froID the
tiIDe new rates go into effect January 1st, 2008 to
January 1st, 2010 -- I believe we touched on this
earlier.
Could you please explain the cost of service
IDethodology and how that's being locked in place for
purposes of AgriuID' s rate plan?
A. Yes. If the COIDpany were to file another rate
case in the interiID and that cost of service study showed
a shortfall for AgriuID' s special contract, or the need
for additional rate increases, the COIDpany has agreed not
to seek such rate increases prior to January 1st, 2011.
Q. But if the COIDpany were to file a rate case
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requesting rates to go in effect after that tiIDe period,
after January 1st, 2011 -- or yeah, 2011, the
COIDpany i s then free to -- the cost of service IDethodology
is then not locked in. It's deterIDined based upon
whatever IDethodology's filed with rate case requested
going after January 1st, 2010?
A. That's correct.
And just to be clear, an exaIDple would be,
during the year 2010, the COIDpany could decide it would
need to file a rate case for a rate increase effective
January 1, 2011. So the COIDpany would actually file the
rate case during 2010. Could even use a historical test
year, whatever conventions are in place at the tiIDe. The
COIDpany would prepare its rate case. And at that point,
all parties could participate as norIDal, could challenge
any of the results that the COIDpany had filed. And
ultiIDately, the result would be SOIDe sort of change
effective January 1, 2011.
Q. With respect to the COIDpany's custoIDer Monsanto,
could you please explain what the COIDpany and Monsanto
were able to agree to?
A. Yes. The agreeIDent between the COIDpany and
Monsanto for Monsanto's firID rate is siIDilar to that
agreed to with AgriuID. Monsanto's agreed to a rate
increase effective January 1, 2008 of 13.5 percent. It
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has also agreed wi th the COIDpany to a rate plan wi th the
saIDe effective dates as AgriuID. January 1, 2009 would be
an increase of 3 percent to the Monsanto firID rates. And
effective January 1, 2010 would be an increase of
5 percent to Monsanto firID rates.
Q. And again, siIDilar to AgriuID, the COIDpany's
agreed not to have rates change prior to January 1st,
2011; is that correct?
That is correct.The terID of rat~ plan for bothA.
cOIDpanies is the saIDe, and the saIDe scenario would apply.
Q. With regard to the cost of service IDethodology,
and what that's established during the length of the rate
plan and any rate changes sought by the COIDpany at the
conclusion of the rate plan would then be based upon a
new cost of service IDethodology, whatever's filed by the
COIDpany?
A. Yes.
Q. And then, did the -- could you please explain
what the COIDpany and Monsanto agreed to wi th regard to a
new electric service agreeIDent?
A.Yes.The COIDpany and Monsanto have agreed to
sOIDe IDinor -- relatively IDinor changes to its electric
service agreeIDent as part of the rate increases effective
both in each year, January 2008, 2009 and 2010. There
are changes to the price or the credit given back to
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Monsanto for its curtailIDent.
In addition, the Monsanto has agreed to increase
the nUIDber of hours that it is available for econoIDic
curtailIDent. Currently, in the 2007 agreeIDent and
through 2008, Monsanto's available for 800 hours of
econoIDic curtailIDent. In 2009, that will increase to
830 hours. And in 2010, increase to 850 hours.
In addi tion, Monsanto's agreed to IDodify the
nature of its operating reserves purchased by the
COIDpany. Currently they -- each reserve event can last
for a IDaxiIDuID of 60 IDinutes, one hour. The change in
this stipulation would be to increase that IDaxiIDuID
duration to a IDaxiIDuID of two hours per event.However,
each of those events IDight not last a total of two hours.
If it lasts for SOIDe portion, sayan hour and 15 IDinutes,
that portion of an hour would count as a full hour
towards the total hours of operating reserves that the
COIDpany can call on Monsanto for the year. That
agreeIDent helps the COIDpany, provides addi tional value to
the COIDpany.
Q. And that is a redacted version of that agreeIDent
attached to the stipulation as attachIDent 1?
A. Yes.
Q. And it's IDY understanding that counsel for
Monsanto has filed a nonredacted version wi th the
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COIDIDis sion as a confidential docuIDent.
Part of the agreeIDent wi th Monsanto was that
Monsanto also agreed not to seek any changes to its
curtailIDent credits prior to January 1st of 2011 as well;
is that correct?
A. That's correct.
Q. And Monsanto and the COIDpany have agreed that
this stipulation's a black box in terIDS of no party
agreed to a certain IDethodology and to the valuation of
the curtailIDent; is that correct?
A. Yes.
MR. BROWN: I'd like to IDark as stipulation
Exhibit No.2 -- it's preIDarked, actually. And if I IDay
approach the wi tness.
CHAIRMAN REDFORD: Certainly.
(Stipulation Exhibi t No. 2 was IDarked for
identification. )
BY MR. BROWN:
Q. Mr. DickIDan, could you please identify what has
been preIDarked as stipulation Exhibit No.2?
A. Yes. These are worksheets that would provide
the specific rate spread and rate design resulting froID
the COIDpany's overall settleIDent of the overall revenue
increase of $11.5 IDillion.
Q. And thi sis for al 1 the schedules tha tare
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iIDpacted by the stipulation?
A. Yes.
MR. BROWN: I have no further questions for
Mr. DickIDan at this tiIDe.
We'd IDove to adIDi t Stipulation Exhibi t 1 and 2.
CHAIRMAN REDFORD: Is there any objection to
a dID iss ion 0 f Ex hi bit 1 and 2' - ~ t hat's Ex hi bit 1 and 2 to
the stipulation?
MR. BROWN: Correct.
CHAIRMAN REDFORD: Hearing no objection, they
will be adIDitted.
( S tip u 1 a t ion Ex hi bit Nos. 1 and 2 we rea dID itt e d
into evidence.)
CHAIRMAN REDFORD: Okay. Are there any further
questions by the -- of the parties, by the Intervenors?
Any testiIDony or cross-exaIDination?
MR. BUDGE:Excuse IDe, yeah, Chai rIDan,
COIDIDissioner and COIDIDissioner, just one point of
clarification.
Wi th respect to Monsanto redacted agreeIDent
that's attached to the stipulated settleIDent, I would
note for the record that I did file, just iIDIDediately
before we went back on the record, an attorneys
cert if ica te in cOIDpliance with the COIDIDi s s ion's rules to
identify the confidential aspects of the Monsanto
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electric service agreeIDent that were redacted.
There were really just two iteIDs that were
redacted froID that docuIDent.One is the dollar aIDount of
the interruptible credit under the new agreeIDent. The
second one is the size of the Monsanto three furnaces
that aresubj ect to curtailIDent.And that redactIDent was
consistent with what Monsanto did with the previous
agreeIDent that was approved in 2006, and is in effect now
as well as with previous agreeIDents.
A point of explanation, I just want the
COIDIDission to be aware that our rationale in doing that
is to IDake sure we do not IDake a public record
inforIDation that our cOIDpeti tors could find out in order
to calculate the net rate of Monsanto's electric costs,
which are a significant proprietary aspect of their
business. We found out a couple cases ago, not long
after the rate case, that SOIDe of our Chinese cOIDpetitors
were able to get on the internet and use technology and
tell us exactly what our rates were. And so we've had a
practice of redacting that inforIDation SiIDPlY to protect
that proprietary confidential inforIDation.
And I did file under seal with the COIDIDission
this IDorning the original and copies of a clean version
on yellow paper of that docuIDent that would reflect that
confidential inforIDation IDOSt available to you.
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CHAIRMAN REDFORD:I just have one question.
You filed that confidential docuIDent; is that
correct?
MR. BUDGE: Correct, under seal.
CHAIRMAN REDFORD: Under seal.
And these are IDatters of public record. If
there should be an appeal taken to of SOIDe part of
this case, or if there's a Freedom of Information Act
request, how do you suggest tha t the COIDmi s sion handle
those?
MR. BUDGE: I think the stipulation filed with
the redacted copy of the agreeIDent is part of the public
record. The portion that is filed under seal would not
be part of the public record unless that seal, I believe,
were opened pursuant to some agreeIDent of the parties and
order of the COIDIDission.
Most of the parties in this proceeding, the
attorneys in part and the consultants in part, have
signéd on to the protective agreement that governed a
nUIDber of confidential matters relating to the rate case.
So those parties who signed the protecti ve agreeIDent
would have the confidential information available. But
what's a public record in the COIDmission' s file, as I
understand that, would simply be the stipulation and the
redacted version of the electric service agreement. The
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confidential one will be put in an envelope under seal
and not part of that public record, as I understand it.
CHAIRMAN REDFORD: So it's not part of the
record?
MR. BUDGE: That's correct.
CHAIRMAN REDFORD: So in reviewing the record
for a final deci s ion in this ma t ter, the COIDmi ss ion is
left wi th a lot of blank holes.
MR. BUDGE:No, I don't believe so, because the
confidential docuIDent on yellow paper was filed an
original and three. And so each 0 f the commi s s ioner s
will have a copy of that available for their
consideration in reviewing the stipulation.
And similarly, a nUIDber of the staff members who
worked on this case that have signed the protective
agreeIDent previously will also have it available. So
it's completely available to be considered by the
COIDIDission as the COIDIDissioner IDay desire.
CHAIRMAN REDFORD:Well, just it seems difficult
to IDe that we don't have a complete record, because it is
a public record.
Are you sure you want to put that under seal and
handle it that way?
MR. PRICE: Mr. Chairman?
CHAIRMAN REDFORD: That would seeID to me to
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be --
MR. BUDGE:Yeah, we're qui te certain that's the
best way to handle it. I think it's worked quite well in
the past, Mr. Chairman, that this isn't anything
particularly new. At least the last two or three
agreements that I've been invol ved wi th have been handled
in either the saIDe way or something very siIDilar.So I
think it does work very well. And it does IDake available
all the inforIDation that's necessary for the Commission
in evaluating the IDatters as well as the parties that
signed the protective agreeIDent, while at the same time
protecting the proprietary interests of Monsanto who
wishes to protect that confidential inforIDation froID
being sought out by cOIDpetitors, but could use it to
their advantage.
MR. PRICE:Mr. ChairIDan, if I may interject, I
believe the ComIDission has a rule and procedure regarding
this confidential filing. Rule 67 outlines how that
information IDay be treated in subsequent proceedings.
And I think that I would just refer the COIDmission to
that rule.
CHAIRMAN REDFORD: It's rule 67?
MR. PRICE: Correct.
In particular, subsection B starts off with
confidential inforIDation.
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CHAIRMAN REDFORD: Okay. Fine. Thank you.
Do you have anything further Mr. Budge?
MR. BUDGE: Nothing further. Thank you.
CHAIRMAN REDFORD: Moving right along.
COIDmis s ion staff have any quest ions -- or excuse
me, before that, are there any COIDment s or exaIDina t ion by
any of the other intervenors?
MR. OLSEN: Eric Olsen for the Idaho Irrigation
PUIDpers.
I looked through the stipulation as filed, and
represents the agreement that we have reached wi th the
COIDpany and the testiIDony that fairly represents the
So I'ID in agreement with whatsUIDmary of those terIDS.
has been presented.
CHAIRMAN REDFORD: Well, hearing no --
MR. WARD: Mr. Chairman, I would like to echo
Mr. Olsen's reIDarks. Agrium too agrees with the
testiIDony that's presented here today and wi th the
stipulation and rate agreeIDent that we are -- that was
previously described.
CHAIRMAN REDFORD:So you have a confidential
.filing?
MR. WARD: We do not.
CHAIRMAN REDFORD: Okay.Thank you.
The COIDIDis sion Staff, do you have any quest ions?
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MR. PRICE:The staff has no questions for this
witnes s, Your Honor.
CHAIRMAN REDFORD:Is there anything further?
Any other witnesses you want to call?
COMMISSIONER SMITH: Do we get a chance?
CHAIRMAN REDFORD: I' ID sorry, excuse IDe,
CcimIDissioner SIDith.
COMMISSIONER SMITH: Yes.
VOIR DIRE EXAMINATION
BY COMMISSIONER SMITH:
Q. Mr. DickIDan, I guess I'm looking at the
stipulation, page 4, where you have your li ttle chart
that shows the cost of service, percent in dol lar, and
then rate spread in dollar. It looks to IDe like nobody
was there representing street lighting; is that fair?
A. Specifically, I don't believe so. I don't
believe there was a representative.Al though, the
Company relies on the COIDIDission Staff --
Q. Right
A. -- to take an active role in reviewing those
rate schedules that aren't represented.
Q. That probably wasn't their top priority, though,
was it, just based on some public testiIDony we had when
we had the hearings froID people who are concerned with
that, like IDayors and people who do Ci ty budgets and pay
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street lighting bills.
I guess, how did street lighting get so far from
its cost of service? Or is the question did the cost of
service calculation IDethodology change to suddenly shift
IDore cost to street lighting, or what happened?
Because, this is so totally opposite. Usually
street lighting is way above its cost of service, and
here it's the opposite.So I'm -- do you know what
happened here?
A. I know SOIDe of the very high level reasons what
happened. I can refer to COIDpany witness Bill Griffith
to give SOIDe IDore details if desired. He explained to me
that, in recent years, they were above their cost of
service. And the Company made an adj ustIDent to decrease
those rates. And in the meantime, costs have increased
significantly, and so now there is a significant swing in
the other direction.
CHAIRMAN REDFORD: Okay.
COMMISSIONER SMITH: Thank you, Mr. Chairman.
CHAIRMAN REDFORD: You're welcoIDe.
COIDmis s ioner Kempton?
MR. KEMPTON: I have nothing.
CHAIRMAN REDFORD: Call your next witness.
MR. BROWN: We were not planning on having any
additional witnesses to speak to the stipulation unless
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COIDmissioner SIDith would like to address the cost of
service issue with Mr. Griffith, he is available.
COMMISSIONER SMITH: I'm all right. Thank you.
CHAIRMAN REDFORD: Well, if you don't have any
further witnesses and there is no questions, then
Mr. Dickman can be excused.
THE WITNESS: Thank you.
CHAIRMAN REDFORD: Does the COIDmission Staff
have anything to present?
MR. PRICE: Mr. ChairIDan, we would like to call
Mr. Randy Lobb as a wi tness.
RANDY LOBB,
called as a witness, having been first duly sworn, was
exaIDined and testified as follows:
DIRECT EXAMINATION
BY MR. PRICE:
Q. Good IDorning. Can you please state your name
and spell your last for the record?
A. My naIDe is Randy Lobb. That's L-O-B-B.
Q. And for whom do you work, and in what capacity?
A. I work for the Idaho Public Utilities
ComIDission.
COIDmission.
I aID the adIDinistrator of the Utili ties
Q. And in that capacity, did you assign a staff to
.
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work on the instant case of Pacificorp rate increase case
that we're here about today, and oversee the case
developIDent and direct staff in its investigation of this
proposed rate increase?
A. Yes, I did.
Q. And could you -- did you also review the
testiIDony and exhibits filed in this case?
A. Yes.
Q. Were you involved in preparation for the public
workshops which were conducted in Rexburg and Soda
Springs regarding this case?
A. Yes, I was.
Q. And at those workshops, to your knowledge, did
customers have an opportunity to hear froID staff
regarding the COIDpany' s application to increase rates and
to question staff and representatives of the Company?
A. Yes, they did.
Q. And also, in your capaci ty of director of the
utilities division, did you have responsibility for
coordinating a staff settlement negotiation with
Pacificorp and the intervener parties?
A. Yes.
Q. Have you reviewed 'the settlement documents that
have been presented in this case? And do the terms
accurately and cOIDpletely reflect staff's agreement?
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A. Yes, they do, does.
Q. And do these terms of settlement compare
favorably wi th the staff's case in chief and the
testimony and exhibits it prefiled in this case?
A. Yes, I believe it does.
Q. And do you have any COIDIDents regarding the
overall reasonableness of the rate spread set forth in
paragraph 9 of the settlement docuIDent?
A. Just briefly.
The staff believes that the stipulation and the
rate spread proposal generally cOIDplies wi th cost of
service principles. We believe that the rate spread
represents a reasonable balancing of the interest of the
various custoIDer classes and should be accepted by the
COIDmission.
Q. Do you have any other cOIDmentsregarding this,
the overall case?
A. No, I do not.
MR. PRICE: Okay. With that, I would present
Mr. Lobb to the COIDIDission for questioning.
CHAIRMAN REDFORD: First of all, do we have any
questions of the applicant or any of the intervenors?
MR. BROWN: I'm sorry, I have a brief -- one
question, two questions for Mr. Lobb.
CHAIRMAN REDFORD:Go ahead.
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CROSS-EXAMINATION
BY MR. BROWN:
Q. Mr. Lobb, in your capacity as director, do you
bel i eve t hat the s tip u 1 a t ion rep res e n t s jus t , fa i r ,
reasonable rates that's in the public interest?
I think it does.It generally reflects theA.
staff case in chief.
Q. Okay. And given your faIDiliarity with the
positions of the parties filed in the case and through
the testiIDony, that the settlement is within the range of
reasonableness given the position of the parties?
A. Yes, I believe that it is.
MR. BROWN: Thank you. No further questions.
CHAIRMAN REDFORD: I have one question of
Mr. Lobb.
VOIR DIRE EXAMINATION
BY CHAIRMAN REDFORD:
Q. The rates for Monsanto and AgriuID are, in
effect, fixed for a term until 2011?
A. I believe they have escalators each year.
Q. And I understand that this stipulation does not
iIDpact the COIDpany if it wants to file another rate
increase. It just won't be asking for additional rates
from Agrium or Monsanto?
A. The extent it impacts the COIDpany is unclear.
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It will depend upon what the filing is and what cost of
service shows for Agrium and Monsanto. They won't be
able to get any addi tional revenue froID Monsanto ånd
Agri UID through a general ra te case during that period.
Q. If there is a shortfall in the Company's
revenue, do the other custoIDers pick up that shortfall
that would otherwise have been attributed to Monsanto and
Agrium?
A. No. The Company will be responsible for,
essentially, eating that difference in cost of service
between the revenue provided by Monsanto and Agrium and
what the cost of service says those cOIDpanies -- those
customers should be providing. We were careful to
address that issue to IDake sure that any shortfall that
can cost the service from those two custoIDers were not
recovered froID other customer classes in a subsequent
rate case.
CHAIRMAN REDFORD:Thank you, Mr. Lobb.I have
no further questions.
Is there any -- as a result of IDY questions, are
there any further questions by the parties?
MR. BROWN:No questions, thank you.
CHAIRMAN REDFORD: You IDay step down, Mr. Lobb.
THE WITNESS: Thank you.
CHAIRMAN REDFORD: Do you have further witnesses
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to call?
MR. BROWN: No, I don't.
CHAIRMAN REDFORD:Do the intervenors have any
4 witnesses they want to call?
5 Staf.f? You've called Mr. Lobb. Any other
6 further witnesses?
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MR. PRICE: No further witnesses.
CHAIRMAN REDFORD: And is there any rebuttal by
9 the COIDpany?
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MR. BROWN: No.
CHAIRMAN REDFORD: Well, I think that the -- you
12 have moved and they've been admi t ted the agreement and
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the schedule.
I believe you have a IDotion you'd like to IDake.
COMMISSIONER SMITH: Oh, sure.
16 Mr. Mayor and I move the COIDIDi s sion incorporate
17 by reference into the hearing record the pretrial
18 testimony of the parties that is in the Commission
19 Secretary's official file.
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Second.MR. KEMPTON:
CHAIRMAN REDFORD:All in favor?
COMMISSIONER SMITH:Aye.
MR.KEMPTON:Aye.
CHAIRMAN REDFORD:Well,hearing nothing
further,unless the parties would like to .IDake SOIDe sort
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of closing statement, it appears that the record is
complete as far as the stipulation is concerned.
Are there any closing statements by anyone?
MR. BROWN: I have none other than sorry about
the delay this IDorning. We appreciate the recess so that
we could get things finalized and presented, so --
COMMISSIONER SMITH:Do COIDIDi s s ioner s get to say
things?
CHAIRMAN REDFORD: Yes, they do.
COMMISSIONER SMITH: I guess I would just like
to thank the parties for their efforts in getting to this
point and being able to present us with a stipulation.
And while the COIDIDission is not obligated to accept it,
and we will review it very carefully, I think the first
glance is that you've probably done a pretty good job at
weighing interests and balancing theID. And I appreciate
all the work and effort that went into that -- I know
went into that. And I'd just like to acknowledge it.
MR. BROWN: Thank you.
CHAIRMAN REDFORD: Yes, for IDe as well, I
appreciate your diligence.
COIDIDi s s ioner KeIDpton?
MR. KEMPTON:We 1 l, Mr. Pre sid en t , sam e co mm e n t
from my side. I think as we listened to the testimony
and we heard the concern that was evidenced from the
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ratepayers through legislative IDembers who participated
in the hearings to representatives of industry,
irrigators, AgriuID, Monsanto, there was no question that
there were very wide and variant concerns about impacts.
And I think at least on the cursory inspection that we've
had and the opportuni ty to see this IDorning and the lack
of protest on this settlement stipulation, I think it's a
very good piece of work.
CHAIRMAN REDFORD: Well, the COIDIDission will
take this IDatter under adviseIDent. And if there's
nothing else COIDe forth today, we'll stand in recess
until further notice.
MR. BROWN: Thank you.
CHAIRMAN REDFORD: Thank you.
(Hearing concluded at 10:55 a.ID.)
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REP 0 R T E R'S C E R T I F I CAT E
I, Debora Ann Kreidler, a Notary Public in and
for the State of Idaho, do hereby certify:
That said hearing was taken down by me in
shorthand at the time and place therein naIDed and
thereafter reduced into typewri ting under IDY direction,
and that the foregoing transcript contains a full, true,
and verbatim record of the said hearing.
I further certify that I have no interest in the
event of the action.
WITNESS IDY hand and seal NoveIDber 16, 2007.
~~~
NOTARY PUBLIC in and for the State of Idaho;
residing at Boise, Idaho.
My comIDission expires September 6, 2012
CSR No. 754
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