ROS1122M.txt

1 BOISE, IDAHO, TUESDAY, NOVEMBER 22, 1994, 9:00 A. M.

2

3

4 COMMISSIONER MILLER: Well, good morning,

5 everyone. Let's see, I think when we left off yesterday,

6 Mr. Orndorff, you had concluded your examination of

7 Mr. Duvall?

8 MR. ORNDORFF: No.

9 COMMISSIONER MILLER: No? All right, let's

10 recall Mr. Duvall, then, and we'll continue with your

11 examination.

12

13 GREGORY N. DUVALL,

14 produced as a witness at the instance of PacifiCorp,

15 having been previously duly sworn, resumed the stand and

16 was further examined and testified as follows:

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18 COMMISSIONER MILLER: Mr. Orndorff.

19

20 CROSS-EXAMINATION

21

22 BY MR. ORNDORFF: (Continued)

23 Q Good morning, Mr. Duvall.

24 A Good morning.

25 Q On Page 2 of your testimony,

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Wilder, Idaho 83676 PacifiCorp

1 Lines 19 through 21, you discuss QF purchases by

2 PacifiCorp. Since PacifiCorp purchased Utah Power, how

3 many qualified facility projects has PacifiCorp purchased

4 in Idaho?

5 A I don't believe there have been any new

6 projects since the close of the merger which was 1989.

7 Q How large is PacifiCorp's system?

8 A How large?

9 Q Yes.

10 A In terms of what measures?

11 Q Average megawatts as shown on your RAMPP-3

12 study.

13 A Somewhere in maybe the 6,000 range.

14 Q On Page 2, again, Lines 21 through 24, you

15 discuss resource location and transmission limitations.

16 Do you know if these considerations were brought to the

17 attention and raised in the Commission Case U-1500-170?

18 A As I recall, that case was for setting

19 avoided costs for facilities under 10 megawatts and in

20 that context it was not raised. It was certainly brought

21 to Rosebud's attention early in this process.

22 Q In looking at PacifiCorp's projected growth

23 between 1994 and 1999, would you expect the east side of

24 your system to grow more than 40 megawatts? That includes

25 Utah, eastern Idaho, eastern Wyoming, western Wyoming.

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Wilder, Idaho 83676 PacifiCorp

1 A Yeah, I think Mr. Weaver has provided

2 information on load growth and I would defer that question

3 to him. He's prepared to respond.

4 Q We've covered a lot of this so I'm trying to

5 move along here. On Page 5, Line 6 of your testimony, you

6 refer to, I believe the word is, "law." Which law are you

7 referring to there?

8 A I don't know specifically. I think this is

9 covered real well in the prehearing brief that Mr. Fell

10 filed with the Commission. I believe everything is

11 specified in that.

12 Q I mean, when you say "law," what are you

13 trying to say? Are you talking about a code section?

14 MR. FELL: The question has been answered,

15 Mr. Chairman.

16 MR. ORNDORFF: I object. It has not.

17 COMMISSIONER MILLER: I think that

18 Mr. Orndorff is entitled to pursue this to some extent.

19 If it gets repetitive or argumentative, then we'll sustain

20 the objection.

21 Q BY MR. ORNDORFF: What were you referring to

22 in your testimony with the word "law"? Is it a code

23 section?

24 A What that generally refers to is the types

25 of things referred to in Mr. Fell's prehearing brief. I

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1 don't happen to have a copy of that.

2 Q My concern is you're not referring to a

3 statute; is that correct?

4 A I don't know what the specific reference to

5 any statute might be.

6 Q Down two lines below, you've got, "The

7 utility cannot demonstrate the readiness of the

8 developer." If the utility cannot demonstrate the

9 readiness of a developer, then is it logical that the

10 developer has to tell the utility he's ready, willing and

11 able to perform?

12 A I think telling the utility you're ready,

13 willing and able to perform is not a demonstration of your

14 readiness. I think the demonstration of the readiness is

15 well documented in the Commission's prior orders and so

16 forth.

17 Q Isn't that last answer inconsistent with

18 your testimony? That means the utility is demonstrating

19 ready, willing and able.

20 A No, it's not. That response was no, it's

21 not inconsistent.

22 Q I believe we talked just briefly about the

23 Hermiston contract and the development effort that went

24 into the Hermiston contract yesterday. Is my

25 understanding correct that the Hermiston contract was

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1 signed on October 7th, 1993?

2 A That's correct.

3 Q And that at the date of the signing of that

4 contract the developer did not have executed fuel

5 agreements?

6 A The developer did not have executed fuel

7 agreements, but did have letters of intent specifying the

8 fuel arrangements, the firm fuel arrangements available

9 for the project.

10 Q How much security did the developer put down

11 in Hermiston the date he signed it?

12 A The contract required two letters of credit

13 to be issued for Hermiston shortly after signing;

14 otherwise, the contract would have terminated. Those were

15 issued. The first was for a million-and-a-half dollars

16 and the second one was for $5 million; so a total of

17 $6.5 million in letters of credit.

18 Q How soon after the contract was signed were

19 the letters issued?

20 A I believe they had a ten-day period.

21 Q And have such letters of credit been

22 returned to the developers?

23 A The first letter of credit, the

24 one-and-a-half million dollar letter of credit, was to

25 basically, we were interested in making sure this was a

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1 real project and there were no fuel contracts and that did

2 concern us, and the million-and-a-half dollars basically

3 said if you don't have definitive signed firm fuel

4 agreements and transportation agreements in place by

5 December 31st, which was less than two months after

6 signing the contract, that was what the letter of credit

7 was for. They did not need that deadline. They paid us a

8 million-and-a-half dollars and we returned the letter of

9 credit to them.

10 The second letter of credit for $5 million

11 is to cover delays in construction. Construction began

12 about a week ago and we are not to a point where delaying

13 construction has occurred. That will be returned to them

14 upon satisfactorily completing the construction and

15 commercial operation date in a timely fashion.

16 Q Did you have the opportunity in 1992 to

17 review the Rosebud security proposal that we looked at

18 yesterday?

19 A I did not review it in detail.

20 Q Has Hermiston obtained financing?

21 A I haven't checked today. Their target date

22 was to have financing today.

23 MR. ORNDORFF: That's all I have,

24 Mr. Chairman.

25 COMMISSIONER MILLER: Thank you,

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1 Mr. Orndorff.

2 Commissioner Nelson, any questions?

3 COMMISSIONER NELSON: Thank you.

4

5 EXAMINATION

6

7 BY COMMISSIONER NELSON:

8 Q I believe the only question in my mind,

9 Mr. Duvall, was when this project was proposed to be at

10 Arco, did you visit that site?

11 A We visited that site in February, I believe

12 it was. The record will show that.

13 Q Was this site within PacifiCorp's service

14 territory?

15 A Well, we didn't know at the time of the

16 proposal, we didn't know at the time that the complaint

17 was filed. That was one of the purposes of the site

18 visit. We did find out that it was in PacifiCorp's

19 service territory, and yesterday I had mentioned that it

20 wasn't clear from the information whether it was north or

21 south of the town of Arco and that was real important,

22 because north of town was not in our service territory and

23 south was; so that was one of the purposes of the site

24 visit.

25 COMMISSIONER NELSON: Okay, thank you. That

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1 was all I had.

2 COMMISSIONER MILLER: Redirect, Mr. Fell.

3 MR. FELL: Mr. Chairman, I'd like to offer a

4 procedural proposal. A great deal of the documents that

5 have been submitted through Mr. Duvall actually fall in

6 between and are mixed in with chronology and documents

7 that our witness Thomas Ramisch sponsors and testimony

8 that he sponsors. We will probably end up having to go

9 through this in series, first with Mr. Duvall and then

10 with Mr. Ramisch and I think that's, unfortunately, very

11 time-consuming and we do not have much time. Tomorrow is

12 the busiest air traffic day of the year. If we don't

13 finish today, we cannot finish at this session.

14 I would propose that we put Mr. Ramisch on,

15 that we spread his direct testimony on the record and

16 allow both Mr. Duvall and Mr. Ramisch to sit as a panel to

17 go through -- I will want to supplement the testimony to

18 explain these documents and the negotiation process that

19 was all introduced yesterday through Mr. Orndorff's

20 exhibits and I think it would be most efficient and

21 actually most accurate to have both of them up there

22 together; so I move that we use that procedure.

23 COMMISSIONER MILLER: Any objection,

24 Mr. Orndorff?

25 MR. ORNDORFF: No, I don't think so,

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Wilder, Idaho 83676 PacifiCorp

1 Mr. Chairman. I think it will be revealing.

2 COMMISSIONER MILLER: All right.

3 COMMISSIONER NELSON: Do you have redirect

4 of Mr. Duvall?

5 MR. FELL: I do, but I could do it once

6 Mr. Ramisch's testimony is spread on the record, then I

7 could conduct it with both of them because I have

8 questions to go through with both of them.

9 COMMISSIONER MILLER: So the idea would be

10 that your examination of Mr. Duvall would be your redirect

11 examination. Your examination of Mr. Ramisch in addition

12 to his prefiled testimony would be supplemental direct of

13 some sort.

14 MR. FELL: That's correct, and, frankly, if

15 it would be cleaner for the record, I could do a little

16 bit of -- I could do what redirect I have for Mr. Duvall

17 based on the questions that have been asked this morning

18 and then we could draw a line at that and then go on to

19 basically our rebuttal or supplemental testimony on the

20 exhibits and negotiations.

21 COMMISSIONER MILLER: Well, since they're

22 kind of stand-alone issues with Mr. Duvall, why don't you

23 do those first and that will help keep things clearer, I

24 think, and then we'll experiment with this panel idea.

25 MR. FELL: Very well, and I only have a few

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Wilder, Idaho 83676 PacifiCorp

1 questions on that.

2

3 REDIRECT EXAMINATION

4

5 BY MR. FELL:

6 Q Mr. Duvall, you were asked about Idaho

7 qualifying facility contracts since the merger. Are you

8 familiar with the contract that was entered into with

9 Firth Cogeneration Partners?

10 A Yes, I am. I forgot about Firth and also, I

11 believe, Buffalo Hydro.

12 Q That's correct, and with regard to the Firth

13 contract, wasn't that also a contract where the developer

14 was claiming grandfathered status for superseded prices?

15 A Yes, it was.

16 Q Did the Company object to that in that case?

17 A No.

18 Q Does PacifiCorp own fluidized bed combustion

19 generation projects?

20 A PacifiCorp does not own any. My

21 understanding is that Pacific Generation which is a

22 subsidiary of PacifiCorp has an interest in one fluidized

23 bed facility at Pozo.

24 COMMISSIONER NELSON: Where?

25 THE WITNESS: Pozo, California.

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1 MR. FELL: Mr. Chairman, we'll take the rest

2 up as part of our direct testimony. Thank you; so at this

3 point, perhaps the best thing would be to excuse

4 Mr. Duvall for a minute while I introduce Mr. Ramisch and

5 put his testimony on the record.

6 COMMISSIONER MILLER: If you could step down

7 for a minute, Mr. Duvall.

8 (The witness left the stand.)

9

10 THOMAS RAMISCH,

11 produced as a witness at the instance of PacifiCorp,

12 having been first duly sworn, was examined and testified

13 as follows:

14

15 DIRECT EXAMINATION

16

17 BY MR. FELL:

18 Q Mr. Ramisch, would you please state your

19 name, business address and present position with

20 PacifiCorp?

21 A My name is Thomas Ramisch. Business address

22 is 825 N.E. Multnomah in Portland, Oregon. My position is

23 manager of resource acquisitions and technical services.

24 Q Have you prefiled direct testimony in this

25 case?

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Wilder, Idaho 83676 PacifiCorp

1 A Yes, I have.

2 Q And have you also prefiled exhibits that

3 have been marked for identification or rather identified

4 as Exhibits 102 through 111?

5 A Yes.

6 Q Mr. Ramisch, if I were to ask you today the

7 questions that are contained in your testimony, would your

8 answers be the same?

9 A Yes, they would.

10 MR. FELL: Mr. Chairman, I move that

11 Mr. Ramisch's prefiled direct testimony be spread on the

12 record as if read and that his Exhibits 102 through 111 be

13 identified as marked.

14 COMMISSIONER MILLER: If there's no

15 objection, it will be so ordered.

16 (The following prefiled testimony of

17 Mr. Thomas Ramisch is spread upon the record.)

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Wilder, Idaho 83676 PacifiCorp

1 Q Please state your name, business address and

2 present position with PacifiCorp (the Company).

3 A My name is Thomas Ramisch. My business

4 address is 825 NE Multnomah, Portland, Oregon 97232, and

5 my present position is Resource Acquisition/Technical

6 Services Manager.

7 Q Please briefly describe your education and

8 business experience.

9 A I received a Bachelor of Science degree in

10 Mechanical Engineering from the University of Maryland. I

11 am a registered professional engineer in Oregon,

12 Washington, California, and Alaska. From 1969 to 1974, I

13 worked for Potomac Electric Power Company in plant

14 engineering and start-up assignments. From 1974 to 1980 I

15 performed similar duties in addition to project

16 engineering for a coal mine for Pacific Power & Light

17 Company. From 1980 to 1987, I worked on project siting,

18 and start-up for coal and geothermal plants for Northwest

19 Energy Services Company in Bellevue, Washington, and for

20 Stone and Webster Engineering Corporation in Denver,

21 Colorado. In 1987 I returned to PacifiCorp, joining the

22 technical services group, which analyzed cogeneration

23 opportunities with industrial customers. I transferred to

24 my current position in May 1993.

25 Q Please describe your present duties.

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1 A I am responsible for the management and

2 coordination of the acquisition activities associated with

3 new generation

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1 resources, including generation from qualifying facilities

2 (QFs) as required by the Public Utility Regulatory

3 Policies Act of 1978 (PURPA). I also oversee the

4 technical review of industrial generation opportunities

5 that are potential candidates for Company resources.

6 Q Please describe the purpose of your

7 testimony.

8 A The purpose of my testimony is to describe

9 the history of negotiations with Rosebud; to show that

10 Rosebud is not entitled to grandfathered prices because

11 they were not ready, willing and able to sign a contract

12 at the time of their complaint, they did not diligently

13 pursue negotiations, and that PacifiCorp did not obstruct

14 negotiations; and to establish that the prices applicable

15 to Rosebud are those to be established under the current

16 avoided cost case.

17 Q When did Rosebud first introduce their

18 project to PacifiCorp?

19 A On September 24, 1992, Rosebud introduced a

20 40 MW project which had been bid to Bonneville Power

21 Administration (Bonneville) for an Arco, Idaho, site.

22 This project was not selected by Bonneville. As bid to

23 Bonneville, it was coal-fired and as presented to

24 PacifiCorp, it would be coke-fired. Rosebud requested a

25 "long term power purchase agreement," with no mention of

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1 the proposed term, and included the Bonneville proposal, a

2 letter from a potential fuel supplier, and a photograph of

3 a plant.

4 Q Did you receive subsequent information from

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1 A On October 7, 1992, Rosebud sent a follow-up

2 letter (attached to Mr. Duvall's testimony as Exhibit 101,

3 page 1) threatening to complain to the Idaho Commission if

4 PacifiCorp did not respond by November 1, 1992.

5 Additionally, on October 12, 1992, Rosebud sent a copy of

6 the FERC "Notice of Self Certification as a Qualifying

7 Cogeneration Facility."

8 Rosebud claimed in their October 7 letter that they

9 were ready, willing and able to sign a long-term agreement

10 even though we had not had any discussion of the project

11 or contract terms. It appeared from the Bonneville

12 proposal that the entire plan for the Arco project was

13 that it would be similar to the Colstrip plant. We have

14 since learned through discovery that no additional

15 documents about the Arco project exist.

16 Q When did you respond to Rosebud?

17 A On October 22, 1992, we wrote a letter to

18 Rosebud expressing our concern over their threat to file a

19 complaint considering the size and history of the project

20 as known at that time. This letter outlined the areas of

21 investigation which were required for such a project. We

22 also expressed our willingness to schedule a meeting to

23 discuss pertinent details. This letter is attached to

24 Mr. Duvall's testimony as Exhibit 101, pages 2 and 3.

25 Q Did Rosebud respond with any information
related to the areas of investigation?
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Ramisch, Di
PacifiCorp

1 A No. Rosebud's October 27, 1992, response is

2 provided as Exhibit 101, page 4 to Mr. Duvall's testimony.

3 They did not respond to our offer to schedule a meeting

4 and instead accused PacifiCorp of refusing to negotiate.

5 Q Rosebud's October 27, 1992, letter and their

6 testimony refer to a two year period and an earlier Arco

7 project. How does this relate to the negotiations?

8 A These references relate to a cogeneration

9 plant proposed by Rosebud twice in 1990. These proposals

10 were both withdrawn by Rosebud shortly after they were

11 presented.

12 Q Had PacifiCorp ever indicated an

13 unwillingness to negotiate?

14 A No. PacifiCorp's October 22, 1992, letter

15 indicated that negotiations would be required and, as

16 stated above, that PacifiCorp would be contacting Rosebud

17 shortly to start the discussions.

18 Q What happened after PacifiCorp received

19 Rosebud's October 27 letter?

20 A Rosebud sent a draft contract of their own

21 form on November 3, 1992. PacifiCorp still had not

22 received any further information about the project.

23 Q Did PacifiCorp provide specific information

24 as to what was needed to proceed with discussions?

25 A Yes. On November 11, 1992, PacifiCorp wrote

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PacifiCorp

1 to Rosebud and listed the information required to develop

2 a power purchase agreement. Again, we expressed our

3 willingness to meet and

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1 discuss the project. This letter, attached as Exhibit

2 102, also stated our concerns about transmission capacity

3 limitations involved with moving power from the Arco site

4 to the western portions of PacifiCorp's system.

5 Q Did Rosebud provide the requested

6 information prior to filing their complaint on November

7 13, 1992?

8 A No. Rosebud had provided no information

9 beyond the Bonneville proposal. The Bonneville proposal

10 did not contain significant, basic information about the

11 project. Specifically, it did not contain any discussion

12 of engineering design, interconnection and wheeling

13 arrangements from the project to PacifiCorp's system, a

14 permitting plan, or a fuel plan. In short, negotiations

15 had not started, not because of PacifiCorp's refusal to

16 negotiate but simply because Rosebud was demanding a

17 contract for an undefined project and had not provided

18 basic information as requested. Rosebud had ignored two

19 offers to schedule meetings to discuss project details.

20 Despite these facts, Rosebud claimed a second time that

21 they were ready, willing and able to sign a contract.

22 Clearly, as of November 1992, this claim was false.

23 Q On what basis do you contend that Rosebud

24 was not ready, willing and able to sign a contract in

25 November 1992?

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PacifiCorp

1 A At that time, Rosebud had not even taken the

2 fundamental step of proving the viability of the Arco

3 site. As I discuss

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1 later, a simple visit to the site proved that the Arco

2 site was not viable. In addition, Rosebud had not

3 diligently pursued negotiations or provided basic

4 information from which to develop a contract. If the

5 Commission determines that the complaint must be

6 meritorious at the time it was filed, it is clear that

7 Rosebud has not established the facts necessary to entitle

8 them to grandfathered status.

9 Q The Commission held a pre-hearing conference

10 on January 20, 1993. PacifiCorp was requested to continue

11 the negotiation with Rosebud, and to develop prices for

12 Rosebud's use in determining project viability. What

13 actions did PacifiCorp take to advance the negotiations

14 after the pre-hearing conference?

15 A The transmission/interconnection was the

16 first area taken on. PacifiCorp provided a standard

17 estimate for a preliminary interconnection study to

18 Rosebud. Rosebud balked at paying the $2,000 estimated

19 cost, misrepresented the nature of the estimate in

20 subsequent correspondence, and ultimately refused to pay

21 for a study. This study is always performed for a QF

22 interconnecting with our transmission system, and it is

23 always paid for by the QF under a letter agreement such as

24 was sent to Rosebud. Despite Rosebud's refusal to pay for

25 the preliminary interconnection study, a site visit

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1 between Mr. Blendu of Rosebud and PacifiCorp's

2 Vance Witbeck and John Lowe was arranged and held on

3 February 26, 1993.

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1 Q What was the result of the site visit to

2 review the transmission situation?

3 A Several interconnection options for the Arco

4 site were discussed, none of which were attractive to

5 Rosebud. As described in Mr. Blendu's testimony,

6 Exhibits 18 and 19, the costs of interconnection at Arco

7 were too great for Rosebud. PacifiCorp did not express

8 any dissatisfaction with any of the Arco interconnection

9 options. Rosebud initiated a discussion of other sites,

10 primarily around Goshen, as alternatives. Rosebud then

11 moved the site for the project to Montpelier, Idaho, to

12 facilitate a lower cost interconnection. The relocation

13 was entirely of Rosebud's instigation and for their

14 benefit.

15 On April 7, 1993, a field visit was made to the

16 Montpelier site and the Ovid substation where interconnection

17 would likely occur. A standard interconnection study for

18 the Montpelier site has been discussed, but has not been

19 done. Our letter to Rosebud dated April 28, 1993, Exhibit

20 103, confirms Rosebud's request to put the study on hold.

21 Q What other areas did PacifiCorp investigate

22 following the January 20, 1993, pre-hearing conference?

23 A PacifiCorp internally reviewed the petroleum

24 coke market and fluidized bed boiler technology. The

25 Company also developed informational pricing for Rosebud.

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1 Q Did PacifiCorp provide Rosebud with the

2 pricing information

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1 discussed in the January pre-hearing conference?

2 A Yes. These were provided by letter of April

3 16, 1993, attached as Exhibit 104.

4 Q To the best of your knowledge, did Rosebud

5 use the prices you provided to investigate fuel supply and

6 project viability?

7 A No, they never provided any evidence that

8 they did. In mid-June Rosebud sent us their pricing

9 proposal for sale of firm power.

10 Q Had Rosebud provided any of the project

11 information requested in 1992 to further define their

12 proposal for the firm power sale?

13 A No.

14 Q Was PacifiCorp in a position to move the

15 project forward at that time?

16 A No. The interconnection issue had been put

17 on hold by Rosebud, and we had heard nothing as to their

18 advancement of fuel planning, permitting, or further plant

19 description for the new Montpelier location. On August 2,

20 1993, without having done anything itself to advance

21 project development or contract negotiations, Rosebud

22 accused PacifiCorp of being unwilling to negotiate, and

23 asked the Commission to set a hearing schedule. Further

24 discussion of these topics occurred in a conference on

25 September 2, 1993.

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1 Q In Rosebud's letter of August 2, 1993,

2 Rosebud accused PacifiCorp of withdrawing the prices

3 contained in its April

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1 16, 1993, letter. Please explain.

2 A The prices we provided on April 16, 1993,

3 were for informational purposes to investigate fuel

4 supplies and project viability. This is precisely the

5 purpose in the Commission's order from the January

6 conference. We explained this to Rosebud in another

7 letter to Rosebud dated June 28, 1993, attached as Exhibit

8 105.

9 At the September 2, 1993, conference Rosebud

10 accused PacifiCorp of withdrawing the prices through the

11 Company's June 28, 1993, letter and characterized this as

12 bad faith negotiations. The outcome of the September 2

13 conference was a recognition that the Company had complied

14 with the Commission's instructions to provide

15 informational pricing for the Rosebud project. Page 30 of

16 the conference transcript is attached as Exhibit 106 as

17 evidence.

18 The Commission determined that further negotiations

19 were warranted and requested PacifiCorp to provide Rosebud

20 a letter describing the information required to develop a

21 contract. The Commission also stated that if Rosebud felt

22 it was unnecessary to provide the requested information,

23 they could notify the Commission and formal hearing

24 proceedings would be commenced. These instructions appear

25 on page 40 of the transcript included as Exhibit 107.

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1 Q Did PacifiCorp provide Rosebud with a list

2 of required information needed to facilitate negotiations

3 as further

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1 discussed in the September 2, 1993, conference?

2 A Yes, by letter dated September 16, 1993,

3 attached as Exhibit 108.

4 Q Did Rosebud provide the information

5 requested in this letter?

6 A They did not provide any information, and on

7 October 15, 1993, and again on November 17, 1993, we

8 encouraged Rosebud to respond with whatever information

9 they could or wanted to provide and simply state whatever

10 objections they might have. These letters are attached as

11 Exhibits 109 and 110.

12 We note that finally in June 1994 most of this

13 information was provided in connection with PacifiCorp's

14 development of its July 11, 1994, contract proposal.

15 Mr. Blendu includes some of this information as his

16 Exhibits 1 through 6. This level of project information

17 is typical of what a developer can provide when it is

18 mature enough to be ready, willing and able to sign a

19 contract. Since Rosebud did not prepare this information

20 until May 1994, this reinforces our position that they

21 were not ready, willing and able to sign prior to May

22 1994.

23 Q Did PacifiCorp provide a draft power

24 purchase agreement to Rosebud even without the requested

25 information?

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PacifiCorp

1 A Yes. A draft was provided on October 15,

2 1993. PacifiCorp reemphasized its willingness to meet and

3 discuss the relevant information needed to move this

4 agreement along.

5 Q Did Rosebud respond to this offer to

6 negotiate?

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1 A No.

2 Q Did Rosebud respond in any way to the draft

3 power purchase agreement you provided them?

4 A Yes. Rosebud returned a markup of this

5 draft to PacifiCorp on October 27, 1993. Rosebud had a

6 significant number of comments on this draft, but it did

7 provide a reasonable starting point for discussions about

8 very important contract elements.

9 Q Did you negotiate in any direct way with

10 Rosebud after this?

11 A Yes. Our discussions were scheduled in

12 December in conjunction with other Commission matters to

13 which we were both parties. There was one short delay due

14 to John Lowe's injury to his shoulder and our first

15 negotiation was held on December 30, 1993.

16 Q Were the contract terms resolved at that

17 meeting?

18 A No. This was a discussion involving Jim

19 Fell and John Lowe of PacifiCorp and several Rosebud

20 personnel. We discussed Rosebud's comments in their

21 October 27, 1993, letter. We also explained the level of

22 detail needed to complete the contract and exhibits,

23 particularly the project description and fuel plan. A

24 copy of PacifiCorp's contract for the Hermiston project

25 was provided to Rosebud at their request.

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PacifiCorp

1 Q Could the Rosebud contract be considered

2 ready for signature after that meeting?

3 A No. The project parameters had not been

4 sufficiently defined

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1 at that time. We had no plant description, no evidence of

2 project engineering, no interconnect study, no fuel plan,

3 no permit identification or plan, and not even a definite

4 statement of contract term. Rosebud told us in the

5 meeting that they were not ready to proceed with the

6 interconnection study. The meeting did, however,

7 accomplish a clarification of PacifiCorp's form of

8 contract and the level of detail that would be sufficient

9 to complete the contract and exhibits.

10 Q Had there been any further progress or

11 negotiations by January 14, 1994, when the Commission

12 effectively suspended the availability of the old avoided

13 costs?

14 A No, nothing further had transpired.

15 Q In your meeting of December 30, 1993, did

16 you suggest to Rosebud that the Hermiston contract would

17 be an appropriate starting point for development of the

18 Rosebud contract?

19 A No. PacifiCorp had recently signed the

20 Hermiston contract with U.S. Generating Company, and

21 Rosebud had asked about it. An informational copy was

22 provided to Rosebud under confidentiality for their

23 understanding of the terms and prices. We never

24 represented that the Hermiston contract would be utilized

25 as a specific model for the Rosebud contract. Rosebud

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1 did, however, present us with their version of a contract

2 for the Montpelier project on January 31, 1994, which they

3 claimed was based on the Hermiston contract.

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1 Q Did you respond to Rosebud concerning this

2 contract draft?

3 A Yes. At that time, Rosebud had asked

4 PacifiCorp to wait until the Commission had issued its

5 decision on the Idaho Power Company/Rosebud case before

6 resuming discussions. We told Rosebud then that we would

7 review the Hermiston-style draft, but that it would be

8 compared to the standard Idaho form which was sent to

9 Rosebud in October 1993. We pointed out that there were

10 fundamental differences between the two contracts and

11 expressed our willingness to discuss these differences.

12 Our letter to Rosebud, dated February 26, 1994, is

13 attached as Exhibit 111.

14 Q Did you continue negotiations with Rosebud

15 after the Idaho Power order was issued?

16 A Rosebud took a position after the Order

17 No. 25454, granting grandfathering to Rosebud's Mountain

18 Home project, that grandfathering had also been granted to

19 Rosebud's project in this case. We disagreed with Rosebud

20 on this point as they were not ready, willing and able to

21 sign a contract at the time of the complaint and still

22 were not. Nonetheless, we offered to continue negotiating

23 the contract except for the pricing as requested by

24 Rosebud. This led to a third pre-hearing conference on

25 May 11, 1994.

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PacifiCorp

1 Q Did you offer Rosebud a contract after the

2 May 11 pre-hearing conference?

3 A On June 7, 1994, we met with Rosebud and

4 reviewed the earlier

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PacifiCorp

1 markup of the standard form contract and discussed for the

2 first time some of the characteristics of the proposed

3 plant. Subsequent to this meeting, Rosebud finally

4 provided a plant description, some basic engineering

5 drawings which were prepared in May 1994, and a fuel plan

6 as had been requested many times previously. Based on

7 this information, and subsequent related correspondence in

8 late June, PacifiCorp provided a contract draft to Rosebud

9 on July 11, 1994, in accordance with the methodology and

10 agreement in the May 11, 1994, pre-hearing conference.

11 There were still some unknown areas, but this draft was to

12 serve as a basis for further negotiations in the form of a

13 counter-proposal from Rosebud within sixty days.

14 Q Did you receive Rosebud's counter-proposal

15 in that time frame?

16 A No. All that Rosebud did as a response was

17 to file proposed rates with the Commission on July 14,

18 1994, three days after they received our proposal.

19 Rosebud did not include any contract terms to go along

20 with their proposed rates. This response by Rosebud

21 merely repeated their posture throughout the entire time

22 since they first contacted PacifiCorp, that prices are the

23 only point of discussion for developing a contract and

24 that the Commission's hearing room is the appropriate

25 forum to carry on the negotiations.

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Ramisch, Di
PacifiCorp

1 Q Do you agree with Mr. Roberts' assertion in

2 his testimony,

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1 Page 14, lines 4-7, that "Rosebud and PacifiCorp have

2 continuously negotiated on the form of the contract and

3 but for the rates being in dispute, the parties have

4 nearly resolved all contract issues"?

5 A No. Significant information is still to be

6 discussed such as the interconnection study and the

7 facilities it will specify, the maximum capacity to be

8 delivered, and the term of the agreement. The extent of

9 the differences can be observed in the draft agreement

10 attached to Mr. Roberts' testimony, his Exhibit 22, which

11 was never presented to PacifiCorp. With a cooperative

12 party, these differences and any missing information could

13 be negotiated in a relatively short period of time.

14 Rosebud has never been a cooperative party when it comes

15 to negotiations.

16 Q Can you explain the issue of project size as

17 it arises in Rosebud's testimony?

18 A Throughout the discussions and

19 correspondence on this project since the Bonneville

20 proposal was presented, it has been referred to as a 40 MW

21 project. However, the energy to be produced by the

22 project has varied from 308,352 MWH per year to 340,000

23 MWH per year. This variance is what has led PacifiCorp to

24 question Rosebud as to the exact size of the plant. The

25 only engineering data Rosebud has provided was prepared in

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Ramisch, Di
PacifiCorp

1 May 1994. In fact, they have stated that no other

2 documents about the plant size exist. Mr. Roberts even

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PacifiCorp

1 claims that the Arco plant and the Montpelier plant are

2 the same. We believe that these plants can only be

3 considered the same because they are conceptually like the

4 Colstrip plant. Both Arco/Montpelier and Colstrip employ

5 fluidized bed boiler technology, but the Colstrip plant is

6 different. These plants do not use the same fuel, they

7 have entirely different fuel transportation and delivery

8 issues, and local siting and interconnection issues are

9 always unique. It is clear that at the time of the

10 complaint, and in January 1994, Rosebud had not defined

11 the project or pursued contract negotiations sufficiently

12 to be ready, willing and able to contract for the sale of

13 its output. PacifiCorp dealt with these issues in part in

14 establishing the pricing approach in our July 11, 1994,

15 proposal, which deals with capacity and energy separately.

16 Q Does this complete your direct testimony?

17 A Yes.

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402

Ramisch, Di
PacifiCorp

1 (The following proceedings were had in

2 open hearing.)

3 MR. FELL: Now, then, I think before we

4 bring Mr. Duvall back to the stand, it would be

5 appropriate for me to identify some exhibits through

6 Mr. Ramisch that will be used in the further testimony.

7 Mr. Chairman, my records show that our last exhibit is

8 numbered 126.

9 COMMISSIONER MILLER: Correct.

10 MR. FELL: Thank you.

11 (Mr. Eriksson distributing documents.)

12 MR. FELL: The first exhibit that we have

13 distributed is a one-page electrical transmission diagram

14 for the Arco area and I would like to identify this as

15 Exhibit 127.

16 (PacifiCorp Exhibit No. 127 was marked

17 for identification.)

18

19 DIRECT EXAMINATION

20

21 BY MR. FELL: (Continued)

22 Q Mr. Ramisch, are you familiar with this

23 electrical diagram?

24 A Yes, I am.

25 Q And is it as I described?

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 A Yes, it's a very simplified one-line diagram

2 of the various transmission lines and substations in the

3 Arco, Idaho area.

4 MR. FELL: And the next exhibit is a letter

5 dated June 14, 1994, from Mr. Orndorff to Mr. Lowe of

6 PacifiCorp. I would like to mark this as Exhibit 128.

7 (PacifiCorp Exhibit No. 128 was marked

8 for identification.)

9 Q BY MR. FELL: Mr. Ramisch, would you please

10 explain briefly what this June 14, 1994, letter is about?

11 A This is a letter that Rosebud provided to

12 Pacific shortly after we had a negotiation session in June

13 of 1994. We had gone over once again with Rosebud at that

14 meeting our continuing request for information related to

15 a fuel plan and a description of the facility, et cetera.

16 This letter was prepared by Rosebud after that meeting and

17 transmitted the information that we had been requesting

18 for some time, including several preliminary engineering

19 drawings that had been prepared in May, May of '94. It

20 also includes some water analysis of a well in Billings,

21 Montana.

22 MR. FELL: The next exhibit that we have

23 circulated is a letter from Mr. Orndorff dated June 29,

24 1994, to Mr. Lowe and I would like to have this marked as

25 Exhibit 129.

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 (PacifiCorp Exhibit No. 129 was marked

2 for identification.)

3 Q BY MR. FELL: Mr. Ramisch, would you please

4 explain what this letter is?

5 A This is a second letter following the June

6 discussions I mentioned earlier that was prepared by

7 Rosebud for Pacific's use in preparing our proposal that

8 was requested and agreed upon after the May, 1994

9 prehearing conference. We had a 60-day period in which to

10 prepare and present a proposal to Rosebud and during that

11 period we had the meeting and we got these two pieces of

12 correspondence from Rosebud to provide information to

13 enter into that proposal.

14 COMMISSIONER MILLER: Can I interrupt for

15 one second? Mr. Eriksson, when you were distributing

16 these, some error occurred and Commissioner Nelson didn't

17 get a copy of this exhibit.

18 MR. FELL: The third document is a set of

19 handwritten notes which I would like to have marked as

20 Exhibit 130.

21 (PacifiCorp Exhibit No. 130 was marked

22 for identification.)

23 Q BY MR. FELL: Mr. Ramisch, would you please

24 explain what these handwritten notes are?

25 A These are Mr. Fell's notes from the

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 December 30, 1993, negotiating session between PacifiCorp

2 and Rosebud and they were used as part of my testimony

3 regarding what occurred in the December 30, 1993, meeting.

4 MR. FELL: Mr. Chairman, as a matter of

5 clarification for the record, Mr. Ramisch did not attend

6 the December 30 meeting. As the notes show, Mr. John Lowe

7 was PacifiCorp's representative. If there is any question

8 about the authenticity of these notes, we would be able to

9 bring up Mr. Lowe to say just what Mr. Ramisch has said,

10 but with that, we ask that the exhibits identified as

11 Exhibits 127, 128, 129 and 130 be identified as marked or

12 marked as identified, whichever way it goes.

13 COMMISSIONER MILLER: Those are marked for

14 identification.

15 MR. ORNDORFF: Mr. Chairman, I guess I might

16 as well start off saying I object to 130. Mr. Lowe is not

17 going to be offered as a witness. Whether the minutes are

18 authentic or not is not the issue. If they are being

19 offered for purposes of what they say and the contents of

20 them, Mr. Lowe needs to join this panel so I can have an

21 opportunity to cross-examine him. I don't think

22 Mr. Ramisch who was not at the negotiating session can

23 possibly discuss what Mr. Lowe's thoughts were and what

24 was said and not said based on just a handwritten set of

25 notes.

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 COMMISSIONER MILLER: At this point the

2 exhibit is only marked. Why don't we wait and see what

3 use is proposed of it. If we get to a point where that

4 becomes clearer, then you can state your objection then

5 and we'll deal with it at that time.

6 MR. ORNDORFF: Okay.

7 MR. FELL: And, Mr. Chairman, Mr. Lowe is

8 here and we can accommodate that if we need to. I'd like

9 to ask Mr. Ramisch a few questions for him to respond to

10 with regard to some clarification, but beyond that, we're

11 just about ready to go with the panel.

12 Q BY MR. FELL: Mr. Ramisch, Mr. Blendu

13 testified that Rosebud to the best of his recollection

14 first asked for a contract in May of 1992; is that

15 correct?

16 A Was it Mr. Blendu or Mr. Roberts?

17 Regardless, we didn't get any correspondence or requests

18 from Rosebud in May of 1992. This project was brought to

19 us in September of 1992.

20 Q And when the project was submitted to

21 Pacific with that September, 1992 letter, could you please

22 tell us to the best of your knowledge whether the document

23 that has been identified as Exhibit 60 entitled "Arco

24 Generation Supporting Documentation" was included in the

25 package that PacifiCorp received?

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 A To the best of my knowledge, that document

2 was not included in the proposal and I think this a pretty

3 good example of the sort of information that we asked for

4 in response to the proposal. We indicated shortly after

5 we received it that we would need to set up some

6 negotiations and discussions and review the information

7 required. Rosebud never was willing to have that meeting

8 and I think if something like that had occurred, it

9 probably would have brought to light real early that we

10 didn't have all the information they thought we had.

11 Q Now, then, referring to the letters that we

12 have marked as Exhibit 128 and 129, that is, the June 14,

13 1994, and June 29, 1994, materials, was the information

14 contained in these documents the information of the sort

15 that you were looking for in the correspondence in 1992

16 and thereafter?

17 A Largely, it is. If we get into reviewing my

18 testimony, I happen to have marked in my copy of

19 Exhibit 102, which was our November -- excuse me, it's not

20 102. I think it's 108. It's our letter of September 16,

21 1993, which followed the second prehearing conference

22 where we listed a lot of information we would desire to

23 prepare a contract. A lot of that information, the vast

24 majority of the information, we requested at that time is

25 included in these two letters. We can get into more

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CSB REPORTING RAMISCH (Di)
Wilder, Idaho 83676 PacifiCorp

1 detail on that if you want to go through the testimony.

2 I'm not sure what sequence you want to follow here, but

3 this is the kind of information we had been asking for

4 since the fall of 1992.

5 Q And, Mr. Ramisch, I would like to have

6 you -- this is the last question or perhaps a series, but

7 I'd like to have you take a look at Exhibit 127 and please

8 explain that diagram.

9 A I think probably the easiest way to describe

10 this --

11 MR. ORNDORFF: Mr. Chairman, can I interject

12 for a moment? I've asked Mr. Blendu to come and be

13 present for this explanation. I'd like to defer that

14 until he is present and has an opportunity to hear the

15 explanation rather than redo it again.

16 COMMISSIONER MILLER: What is his --

17 MR. ORNDORFF: He'll be here any minute. I

18 called 10 minutes ago.

19 COMMISSIONER MILLER: All right, could we

20 defer this, Mr. Fell, until Mr. Blendu can be here to hear

21 the testimony?

22 MR. FELL: Yes, we can.

23 COMMISSIONER MILLER: Thank you.

24 MR. FELL: With that, then I would like to

25 start with the panel and have Mr. Duvall join Mr. Ramisch.

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1 COMMISSIONER MILLER: Off the record for a

2 moment.

3 (Off the record discussion.)

4 COMMISSIONER MILLER: All right, let's give

5 this a try. Mr. Fell.

6

7 GREGORY N. DUVALL & THOMAS RAMISCH,

8 recalled as witnesses at the instance of PacifiCorp,

9 having been previously duly sworn, resumed the stand and

10 were further examined and testified as follows:

11

12 DIRECT EXAMINATION

13

14 BY MR. FELL:

15 Q All right, now, Mr. Duvall, yesterday a

16 number of exhibits were submitted through

17 cross-examination of you and they relate to the history of

18 the negotiation process with Rosebud Enterprises. Would

19 you please explain from your perspective how PacifiCorp

20 approached the negotiations with Rosebud from the

21 beginning and through the process?

22 A MR. DUVALL: PacifiCorp's approach to

23 Rosebud was to negotiate a firm contract, a contract for

24 firm power as opposed to as, if and when available or at

25 the convenience of the developer-type power. This was for

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Wilder, Idaho 83676 PacifiCorp

1 firm power, just as if the utility owned the resource-type

2 power. The other principle that we approached this under

3 was that there needed to be a balance between the QF

4 interest, legitimate QF interest, as well as legitimate

5 customer interest. It was clear that, and rightfully so,

6 that Rosebud represented the QF interest and we were put

7 in a position to represent the customer's interest; so we

8 were interested in finding out exactly what it is we were

9 to purchase on behalf of the customers.

10 Q And in negotiating a contract of this sort,

11 would you please explain what sorts of contract issues are

12 significant?

13 A MR. DUVALL: Well, the contract itself needs

14 to be a legally enforceable obligation for the delivery of

15 power over a specified term, and in that context, there's

16 a number of things that we need, including milestones, a

17 term, a fuel plan, a site, information on site control,

18 demonstrated capacity, maximum and minimum energy

19 obligations, schedulability, interconnections, project

20 description, and so on, and each one of those have to be

21 negotiated to develop the contract.

22 Q How do those issues relate to this notion

23 you described as negotiating a firm power resource?

24 A MR. DUVALL: They each relate in terms of

25 how they would support a firm purchase, a firm resource,

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Wilder, Idaho 83676 PacifiCorp

1 and that is, for example, a fuel plan that indicated that

2 there would be a firm supply of fuel so we could count on

3 firm power, including transportation and so on.

4 Q I'd like to go through some of the, go

5 through the chronology of the negotiations that occurred

6 here. The documents that were identified yesterday

7 provided a written record of what transpired and I would

8 like to have you explain more fully as to how the

9 negotiations occurred. Would you please start with the

10 receipt of the September 24, 1992, proposal and take us

11 through the end of the year and up to what might be

12 considered the next event?

13 A MR. DUVALL: Okay. After the numerous

14 documents that have been presented in this case, I've kind

15 of gone through and characterized them in terms of time

16 periods in the negotiation and I'll go through that. The

17 first was what I call the proposal to the complaint which

18 was about a six-week period beginning in late September

19 and ending on October or November 11th at the time of the

20 complaint.

21 After receiving the proposal, we responded

22 in approximately three weeks to Rosebud saying that we had

23 questions about the proposal and would like to meet to

24 discuss them. A series of correspondence went back and

25 forth and a meeting never occurred, negotiations never

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1 occurred, and the complaint was filed on November 13th.

2 At that point there was sort of what I would

3 call a holding pattern until the first prehearing

4 conference, went through the Christmas holidays, and that

5 prehearing conference was January 20th. After that

6 started about a three-month period of fairly intense

7 activity.

8 Q Excuse me, Mr. Duvall, would you please

9 explain what transpired, briefly what transpired, at the

10 January 20, 1993, prehearing conference?

11 A MR. DUVALL: Okay. At the prehearing

12 conference, I think it was characterized as the chicken

13 and egg prehearing conference, we were --

14 MR. ORNDORFF: I've got to object,

15 Mr. Chairman. I mean, this is getting out of hand. This

16 is getting to be a rehash of the whole case and that was

17 not the purpose as advertised by Mr. Fell. I specifically

18 object to a prehearing conference in the record referred

19 to as a chicken and egg prehearing conference and I

20 recommend or I move to have that struck from the record.

21 COMMISSIONER MILLER: Well, it is a peculiar

22 expression for a proceeding before the Commission.

23 MR. FELL: Mr. Chairman.

24 COMMISSIONER MILLER: But nonetheless, I

25 think this whole area was opened up by the examination

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1 yesterday and I think that once opened up, I think

2 everybody has a right to review it; so I don't know what

3 you mean by chicken and egg, but we'll leave that in the

4 record, assuming it's not going to be pursued much

5 further.

6 MR. FELL: I think he's about to explain

7 it. It's a very simple explanation, really.

8 A MR. DUVALL: If it helps, it's already in

9 the record of the prehearing conference. The principle

10 was that we were interested in getting more information

11 about the project, Rosebud was interested in getting

12 prices, and we said we needed information before we could

13 give him firm prices, he said he needed prices before he

14 could give us information, and it was decided that we were

15 to give him illustrative prices, estimated prices, so he

16 could go determine project feasibility.

17 After that prehearing conference, what

18 occurred was that we actively pursued integration --

19 interconnection studies which finally culminated in

20 Rosebud's refusal to pay for those studies. We visited

21 the Arco site on February 26th. Rosebud found that it was

22 not viable. Rosebud moved the site to Montpelier,

23 selected that on March 15th.

24 We visited the Montpelier site on

25 April 7th. We provided the informational pricing promised

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1 on April 16th and the Montpelier interconnection study was

2 put on hold at the end of April.

3 Q BY MR. FELL: Mr. Duvall, did the Company

4 agree to provide status reports of its activities during

5 this time?

6 A MR. DUVALL: Yes, we provided status reports

7 during that time, and also in conjunction with all that

8 did our own investigation into the petroleum coke fuels

9 market for us to understand the characteristics of the

10 project better.

11 Q And, Mr. Duvall, there has been some

12 discussion about PacifiCorp's pursuit of the

13 interconnection study and the letter or the commitment

14 from Mr. Orndorff to pay for that study. Would you please

15 put before you Exhibits 68 and 69, which Exhibit 68 is the

16 February 22, 1993, letter from me to Mr. Woodbury, and

17 Exhibit 69 is a follow-up letter from Mr. Orndorff to

18 Mr. Woodbury.

19 A MR. DUVALL: Okay. Exhibit 68 is the one we

20 talked about yesterday where it states: "On Friday,

21 Mr. Orndorff and I reached agreement on the preliminary

22 interconnection study." The "I" there refers to

23 Mr. Fell. "He will pay the $2,000 advance and will be

24 responsible for actual costs up to $4,000. PacifiCorp may

25 stop work if actual costs reach $4,000."

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1 That was, as I characterized yesterday, a

2 non-standard arrangement, but we were willing to agree to

3 it. That was on February 2nd. Two days later, on

4 February 24th, Exhibit 69, Mr. Orndorff wrote back and

5 said Rosebud will not pay for such system integration

6 studies. His question to me yesterday was whether we

7 provided him a contract with those terms in it and,

8 obviously, by these correspondence he did not want one.

9 Q Now, then, would you please pick up, I think

10 you had gotten to the point of PacifiCorp's April, 1993

11 informational pricing letter.

12 A MR. DUVALL: Right. The next period of time

13 was about a three-month period ending in early August

14 which was really, we had given the prices to Rosebud, we

15 had visited the sites and so on, dealt with the

16 interconnection issue, this was really a time for Rosebud

17 to determine the project feasibility. We during that time

18 rather than hear back about feasibility, we heard back

19 with a different price proposal. That was on June 18th.

20 We responded on June 25th that it was not acceptable and

21 we needed more project information, and Rosebud requested

22 a second prehearing conference on the 2nd of August.

23 Between August 2nd and September 2nd was

24 another sort of dead time or a holding pattern between the

25 request for the prehearing conference and the prehearing

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Wilder, Idaho 83676 PacifiCorp

1 conference. At that prehearing conference, the prices

2 that we had provided were discussed, determined that they

3 were adequate and that we needed more information. We

4 agreed to provide a specific information request to

5 Rosebud and Rosebud was to if they believed that they were

6 entitled to prices without answering that information

7 request, they were to come back to the Commission to set

8 for hearing; otherwise, they were to respond to the

9 request. They did neither.

10 Q Mr. Duvall, you referred to the prices as

11 being adequate. What did you mean by that expression?

12 A MR. DUVALL: That what was requested were

13 informational prices to determine project feasibility.

14 That's what was given. There appeared to be no objections

15 to them by anyone.

16 Q Very well, and at that conference, then,

17 what was determined to be the next step?

18 A MR. DUVALL: Well, the next step was for us

19 to provide a data request and there's where we took off

20 into the next section of time, which I categorize from

21 basically September through December. We did provide the

22 information request on September 16th. We also sent a

23 draft contract on October 15th. We got the contract

24 returned with comments on October 27th and basically got

25 general objections to the data request from Rosebud. We

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1 said provide what you can and we still received nothing.

2 We got a letter in late November claiming

3 that we were acting in bad faith and in the end of

4 December, we ended up having a negotiating session at

5 which we provided the Hermiston contract to Rosebud at

6 their request. We discussed their comments on the

7 contract that they had returned to us and we talked more

8 about information needs.

9 Q Mr. Duvall, you mentioned that we wrote to

10 Rosebud and told them that they should respond to what

11 information requests they could or did not object to.

12 Would you identify the letters that do that and I refer

13 you for your benefit to Mr. Ramisch's Exhibits 109 and 110

14 and ask whether those are the letters you're referring to?

15 A MR. DUVALL: Yes, they are.

16 MR. FELL: And Exhibit 110 is the same

17 letter that's been included as Rosebud's Exhibit 76 and,

18 for the record, let me explain that Rosebud's Exhibit 76

19 has an attachment to it which was not included with

20 Mr. Ramisch's so that the full package is Exhibit 76.

21 Q BY MR. FELL: Now, then, Mr. Duvall, would

22 you please explain what transpired after this exchange of

23 correspondence and the receipt of the contract, the

24 marked-up contract from Rosebud?

25 A MR. DUVALL: And after the negotiating

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1 session that I just discussed.

2 Q Perhaps you might, which negotiating session

3 are you referring to?

4 A MR. DUVALL: This was the December 30th,

5 1993, negotiating session with Rosebud where we provided

6 the Hermiston contract, discussed the comments on their

7 contract and discussed informational needs.

8 Q And Exhibit 130 are my notes from that

9 meeting?

10 A MR. DUVALL: That's correct.

11 Q And then what transpired after that meeting?

12 A MR. DUVALL: Between December 30th and about

13 May 11th of '94, basically we were waiting for Rosebud to

14 respond to the information or Rosebud was to respond. We

15 did get an unsolicited markup or redraft of a Hermiston

16 version-type contract which was on January 31st. Rosebud

17 indicated they were waiting for the Idaho Power Order in a

18 letter on February 26th and the Idaho Power Order was

19 issued on April 20th, and after a few correspondence that

20 indicated that that Order was for Idaho Power and it

21 wasn't for us, that we had our own issues with Rosebud

22 here, a prehearing conference was set on May 11th.

23 Q Excuse me, Mr. Duvall, before we get to

24 that, what was the Company's response to the late January,

25 1994 Hermiston markup that Rosebud sent to PacifiCorp?

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1 A MR. DUVALL: Generally, the response was

2 that we had, we were not proposing that as the contract

3 between us and Rosebud and that if Rosebud wanted that to

4 be the contract that that was fine, but we would need to

5 move on a different course than using the standard

6 contract that had been marked up that we were working

7 from.

8 Q Thank you.

9 A MR. DUVALL: At the May 11th prehearing

10 conference, it was suggested by Mr. Orndorff that we use

11 the same 60-day procedure that was set out for Idaho Power

12 or 120-day procedure, I guess, 60 days for the Company to

13 make a proposal and 60 days for Rosebud to respond. We

14 agreed to that. Following that prehearing conference, we

15 met with Rosebud on June 7th to discuss the contract. We

16 received the two data responses that were just entered

17 today on June 14th and on June 29th. We submitted our

18 proposal to Rosebud on July 11th and Rosebud submitted

19 their proposal three days later on July 14th.

20 Q Did Rosebud engage in any negotiations with

21 PacifiCorp after PacifiCorp's July 11 proposal?

22 A MR. DUVALL: No.

23 MR. FELL: I note, Mr. Chairman, that

24 Mr. Blendu has arrived.

25 COMMISSIONER MILLER: Yes.

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1 MR. FELL: And this would be a convenient

2 time to ask Mr. Ramisch about Exhibit 127.

3 COMMISSIONER MILLER: All right, let's get

4 127 before us which is the electrical diagram; is that

5 correct?

6 MR. FELL: Yes, it is.

7 Q BY MR. FELL: Mr. Ramisch, when we

8 identified Exhibit 127, I believe you indicated that you

9 did not agree with Mr. Blendu's characterization of the

10 transmission system in the Arco area or with his

11 characterization rather of what his options were; is that

12 fair?

13 A MR. RAMISCH: I think what I wanted to get

14 back to is I think it's in his rebuttal testimony, but

15 that's coupled with his Exhibit 16 which is a May 15,

16 1990, letter from PacifiCorp to Mr. Orndorff. Back in

17 1990 when the first Arco project came up, there was a --

18 this letter was sent to indicate what the transmission

19 situation in the Arco area was. Then at the site visit

20 ultimately for the current project in February of '93, the

21 various substations and transmission lines were physically

22 observed.

23 Q Would you please explain the electrical

24 diagram, that is, Exhibit 127, and then we can elaborate

25 on that testimony based on that diagram?

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1 A MR. RAMISCH: Yes, sort of in the center of

2 that diagram is a portrayal of the Arco site that Rosebud

3 had picked out. I would caution, too, that this is not a

4 geographic representation. It's strictly a schematic.

5 The north and south and east and west relationships of

6 these things may tend to confuse people, but if you look

7 at it strictly schematically, there's a site which can go

8 by electrical interconnect either to what is referred to

9 in the center of the top line, the Arco sub PacifiCorp,

10 there could be an interconnect to that substation, and

11 when the options were discussed, this is the one that

12 would have required upgrading several miles, maybe as many

13 as 20, between the Arco sub and the Scoville sub over at

14 the upper left. That is the 69 kV line that did not have

15 the carrying capacity for a 40 megawatt project.

16 The other option would have been to

17 interconnect to PacifiCorp's 230 line at the bottom of the

18 diagram. Another interconnection option that was

19 discussed apparently at the site visit was to go to the

20 right on this diagram from the site directly to the Lost

21 River/Bonneville substation and interconnect at that

22 substation. That would have required wheeling on the

23 Bonneville system to get back to PacifiCorp.

24 The line configuration was discussed in the

25 May 15th letter that we had 69 kV line interconnecting

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1 with the Arco sub and that our 230 line connected with the

2 Lost River/Bonneville sub. The one point I think that was

3 clarified by the field group was that while our schematic

4 diagram upon which the May 15th letter was based indicated

5 electrically that this 230 line interconnected with the

6 substation, the Lost River substation, point of fact was

7 there is a change of line ownership without any other

8 physical changes occurring between the Rosebud site and

9 the Lost River substation. The electrons wouldn't see

10 anything that they went through, they would go down the

11 same wire, but there's a change of ownership there.

12 Q Mr. Ramisch, what is the implication of that

13 change of ownership? Not electrically, I mean to Rosebud,

14 what would be the implication of that portion being owned

15 by BPA?

16 MR. ORNDORFF: I have to object. I don't

17 even understand the question. I mean, this is getting way

18 out of hand.

19 COMMISSIONER MILLER: Overruled.

20 MR. FELL: Thank you.

21 Q BY MR. FELL: Please explain -- well, let me

22 ask it differently. If a portion of the line was owned by

23 BPA, would that then require wheeling through BPA's

24 system?

25 A MR. RAMISCH: No, I don't think that would

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1 require wheeling through BPA's system. If Rosebud went to

2 the bottom of this diagram and connected to PacifiCorp's

3 230 line, they wouldn't have to wheel through Bonneville,

4 but they would have to build a substation of some sort to

5 make that 230 interconnection, put the appropriate

6 breakers and protective devices in a new substation.

7 The alternative that would involve wheeling

8 would be to build a parallel 230 line of their own to the

9 Lost River substation and let the protective devices in

10 the Bonneville substation serve that purpose; so there

11 were two options for interconnect, and if they in fact

12 connected to the Lost River substation, then to get back

13 to PacifiCorp they would have to pay Bonneville wheeling.

14 Q When you refer to the May 15 letter, you're

15 referring to the May 15, 1990, letter which is

16 Exhibit 16. At the time of that 1990 letter -- would you

17 turn to that letter, please?

18 A MR. RAMISCH: I have it.

19 Q There's a reference in the third paragraph

20 to the BPA 230 interconnection and PacifiCorp's point of

21 interconnection. Would you explain the application of

22 that information to the situation in 1990?

23 A MR. RAMISCH: Let me take a minute to read

24 that paragraph, make sure I do have it clear. This

25 paragraph refers to that original Arco project. This was

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1 the 30 megawatt cogen project being located north of Arco

2 outside of our service territory and there had been some

3 references, I think early on, to a desire to interconnect

4 with PacifiCorp's system at Goshen, and the point of this

5 paragraph, I believe, is to clarify where PacifiCorp's

6 system was in relationship to Bonneville's system and also

7 in relationship to Goshen.

8 Q Would it be reasonable to rely on this

9 paragraph if one were relocating the project site south of

10 Arco to what is shown on this electrical diagram?

11 A MR. RAMISCH: I think that one could rely on

12 the paragraph in a general sense, that there's several

13 different entities, in this case three, there's Lost

14 River, there's Bonneville, there's PacifiCorp, all in the

15 vicinity and I think this just emphasizes the need to go

16 to the site to decide whose line is whose and where the

17 ownership changes actually exist. If somebody desires to

18 interconnect to our system, certainly, there's no

19 substitute for actually going out and looking and just

20 determining exactly what facilities are available and who

21 owns them.

22 There's another point I think that I want to

23 make and it relates more to what Mr. Blendu said

24 yesterday. His impression, I believe, is that the little

25 indicator called "Open" on the top line of this diagram,

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1 he seems to indicate that that open switch, if you will,

2 is on the left side of this diagram of the Arco

3 substation. At the PacifiCorp line there that says

4 "69 kV" between Scoville and Arco is a normally open line

5 that is not normally used. In fact, the Scoville sub

6 through that 69 kV line feeds the Arco sub in our service

7 territory in Arco. That is a normally closed line.

8 MR. FELL: That completes the questions I

9 have. These witnesses are available for

10 cross-examination.

11 COMMISSIONER MILLER: All right, I think

12 that would give us an appropriate time for our morning

13 break.

14 MR. ORNDORFF: Could we take a little longer

15 morning break? After having an hour of supplemental

16 direct, I think I would like a little bit more time to get

17 organized.

18 COMMISSIONER MILLER: We'll take a break

19 until 10:30, 20 minutes.

20 (Recess.)

21 COMMISSIONER MILLER: All right, I think

22 we're ready to go back on the record.

23 Mr. Orndorff, are you prepared?

24 MR. ORNDORFF: Well, I'm trying.

25 Mr. Chairman, I'd like to reply to Mr. Ramisch's

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1 discussion of the Arco interconnect situation by offering

2 Mr. Blendu up to give us his story of what happened rather

3 than me trying to cross-examine Mr. Ramisch about

4 electrons. There is some considerable disagreement in how

5 he characterized what was going on.

6 I don't want to belabor the point, but if

7 the Commission wants to hear more on the subject, we

8 certainly are prepared to explain why their story is a bit

9 inconsistent with what really happened. I believe

10 Mr. Blendu is the only one that was actually there for

11 that discussion; so I'd propose that we do that rather

12 than me trying to cross-examine Mr. Ramisch on electrons.

13 COMMISSIONER MILLER: Do you have

14 cross-examination on other topics?

15 MR. ORNDORFF: Yes, I do.

16 COMMISSIONER MILLER: Why don't you do that

17 and then we'll see where we end up.

18 MR. FELL: Mr. Chairman, before we start, I

19 would like to know whether or not Mr. Orndorff intends to

20 object to Exhibit 127, because if he does, then I would

21 call Mr. Lowe -- I'm sorry, not 127, 130, the notes from

22 the December 30, 1993, meeting. If that's the case, then

23 I would call Mr. Lowe to authenticate those notes.

24 MR. ORNDORFF: Mr. Chairman, I perhaps

25 misunderstood when the notes were marked. It turns out

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1 they are not Mr. Lowe's notes. They are in fact

2 Mr. Fell's notes and Mr. Fell is not a witness in this

3 case and I think that we all have to play our roles and I

4 just don't believe that that's consistent with any

5 procedure to put as an exhibit the notes of an attorney

6 who is not a witness. Mr. Lowe undoubtedly has some

7 independent recollections and he certainly can testify to

8 those, but as to Mr. Fell's notes, I believe that's going

9 a bit far; so I will object to that.

10 COMMISSIONER MILLER: Let's try and

11 compartmentalize these things. Why don't we set that

12 aside for the moment. Mr. Fell, you now understand there

13 will be an objection to that exhibit; so let's finish the

14 cross-examination of these witnesses, you can call a

15 witness to offer Exhibit 130, and then we'll consider

16 objections to it.

17 MR. FELL: Very well. Thank you.

18

19

20

21

22

23

24

25

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1 CROSS-EXAMINATION

2

3 BY MR. ORNDORFF:

4 Q Mr. Ramisch, you never participated in any

5 Rosebud negotiations; is that correct?

6 A MR. RAMISCH: No, that's incorrect.

7 Q Which ones did you participate in?

8 A MR. RAMISCH: Specifically, face to face

9 with Rosebud, I was at the June 7th meeting in your

10 offices.

11 Q What year?

12 A MR. RAMISCH: 1994, and I was at two of the

13 prehearing conferences as well.

14 Q Okay, Mr. Ramisch, I'd like you to look at

15 Exhibit 102. This, I believe, Mr. Duvall said I should

16 inquire of you on and you were the competent respondent to

17 my questions on this exhibit. Is that your understanding?

18 A MR. RAMISCH: Yes.

19 Q Do you have that exhibit?

20 A MR. RAMISCH: I do.

21 Q Okay, the second paragraph, I believe, on

22 this November 11th letter, the letter acknowledges the

23 size of the facility is 40 megawatts. Do you see that in

24 the second paragraph?

25 A MR. RAMISCH: Yes, you're proposing a 40

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1 megawatt plant, yes.

2 Q And it's coke-fired. Do you see that second

3 line in the second paragraph?

4 A MR. RAMISCH: Yes.

5 Q Fluidized bed generating project, and then

6 it acknowledges we sent PacifiCorp a copy of a bid to

7 BPA.

8 A MR. RAMISCH: That's correct.

9 Q Okay, then you on Paragraph 3, attached is a

10 basic information required for PacifiCorp in the

11 negotiations for a power purchase agreement and it then

12 goes on to say that the attachment in required in Oregon.

13 Now, turning to the attachment, it says, I believe the

14 attachment says, on Roman I, "Pacific Power & Light

15 Company's (Pacific's) general procedure...." Is this a

16 procedure the Company uses on a routine basis in

17 negotiating with QFs?

18 A MR. RAMISCH: Yes, it is.

19 Q Do you have a general procedure for Idaho?

20 A MR. RAMISCH: I would say generally our

21 procedure is the same in all states, and if you go back to

22 the November 11th cover letter, the part that you were

23 reading from, Point 3 on the first page, it says, "This

24 document was prepared for Oregon projects, but the

25 information requirements apply generally"; so I think that

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1 that is a pretty accurate introduction to the document.

2 Q Let me ask you this question, then,

3 Mr. Ramisch: If PacifiCorp doesn't follow their own

4 general procedures, who authorizes that deviation?

5 A MR. RAMISCH: I think I just said earlier

6 that we do follow our own general procedures.

7 Q Assuming you don't, is there a procedure for

8 not following a procedure?

9 A MR. RAMISCH: I don't assume we don't follow

10 procedures.

11 Q Now, let's turn to this attachment. I'm

12 looking now at Page 3 of 7 of Exhibit 102, and we start

13 off with Roman I which we just looked at, it's called

14 general procedures, we go to then "A," it talks about

15 qualifying facilities of greater than 100 kilowatts and

16 that's certainly the Rosebud project, isn't it?

17 A MR. RAMISCH: Yes.

18 Q No. 1 is, I believe, "Upon developer's

19 request, Pacific will provide its current generic power

20 purchase agreement and avoided cost price information."

21 When you received the September 24th letter, which I

22 believe is in the complaint and also it's Exhibit A to the

23 complaint and it's also Exhibit 58 -- didn't we put it in

24 as 58? Okay, it's Exhibit A, I believe, to Exhibit 122,

25 the complaint, do you have that letter?

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1 A MR. RAMISCH: Yes.

2 Q When you received that letter and Rosebud

3 requested a contract, did you send a generic contract to

4 them?

5 A MR. RAMISCH: No, I don't think we did.

6 Q Did you follow the procedure?

7 A MR. RAMISCH: Yes, I think we did.

8 Q Well, it seems to me if I read 1, "Upon

9 developer's request," who authorized you to deviate?

10 There's a request.

11 A MR. RAMISCH: Did you request -- you

12 requested a long-term power purchase agreement for 40

13 megawatts of capacity and related energy pursuant to Idaho

14 law and so forth. I would interpret your request on

15 September 24th to be a specific contract for the Arco

16 project.

17 Q Does it say in Procedure No. 1 that you

18 don't send it if there's a specific request?

19 A MR. RAMISCH: No, it doesn't say that.

20 Q Let's go to No. 2. No. 2 says, "The

21 developer should provide Pacific with general project

22 information including but not limited to: technology...."

23 Did you have an explanation of technology?

24 A MR. RAMISCH: Yes, we did.

25 Q Did you have an explanation on size?

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1 A MR. RAMISCH: We had a statement of size.

2 Q Did you have a notice of QF?

3 A MR. RAMISCH: No, I don't think we had that

4 in September. That came in October.

5 Q When you sent the letter on November 11th,

6 did you have a copy of a notice of self-certification that

7 was sent to you on October 12th? I believe it's Exhibit B

8 to Exhibit 122.

9 A MR. RAMISCH: Yes.

10 Q You did have, then, a notice of

11 self-certification, okay. In the notice of

12 self-certification, was there a location? I believe it

13 says Arco. It's Exhibit B to 122 or the complaint.

14 A MR. RAMISCH: The location in the FERC

15 certification is in the immediate vicinity of Arco, Idaho.

16 Q Okay, then we go to "d," proposed on-line

17 date, was that covered in the September 24th letter?

18 A MR. RAMISCH: I believe it was.

19 Q Okay, dropping down to No. 3, it says, "Upon

20 developer's request, PacifiCorp will provide currently

21 effective specific avoided cost price information...."

22 Did you provide that information after you received the

23 September 24th letter?

24 A MR. RAMISCH: We asked for more information

25 so we could develop specific avoided cost price

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1 information for a project in Idaho greater than 10

2 megawatts. There wasn't any prices that fit that.

3 Q Well, I'm looking at the procedure you sent

4 us and you told me that you don't deviate from these

5 procedures. I've gone through 1, I've gone through 2 and

6 I'm now on to 3.

7 MR. FELL: Mr. Chairman.

8 COMMISSIONER MILLER: Yes.

9 MR. FELL: I object. This is argument. The

10 document itself has more than those paragraphs. It has

11 paragraphs that talk about providing information for

12 drafting the agreement and that sort of thing. Right now

13 I think Mr. Orndorff is just arguing with the witness.

14 COMMISSIONER MILLER: Why don't we confine

15 our questions to what happened and what was done or not

16 done. Sustained.

17 Q BY MR. ORNDORFF: You did not send under

18 Procedure 3 at any time Rosebud specific avoided costs as

19 required, specific avoided cost price information, you did

20 not send Rosebud that information?

21 A MR. RAMISCH: Yes, we did. We sent that in

22 July of 1994 once we had some technical information and

23 fuel plans, et cetera upon which to modify the published

24 prices.

25 Q Well, the specific information you requested

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1 of Rosebud was, let's see, a transmission agreement, you

2 specifically asked for a transmission agreement?

3 MR. FELL: Could Mr. Orndorff refer to the

4 exhibit he's referring to?

5 COMMISSIONER MILLER: Do you have an exhibit

6 number, Mr. Orndorff?

7 MR. FELL: The time period is also important

8 because of the question about whether this was in or out

9 of the service territory.

10 MR. ORNDORFF: I'm having trouble actually

11 finding the letter, but I'm reasonably sure --

12 MR. FELL: Let me refer Mr. Orndorff to

13 Exhibit 101, the second page, there's an October 22, 1992,

14 letter.

15 MR. ORNDORFF: Okay, maybe that will help.

16 Q BY MR. ORNDORFF: Mr. Ramisch, in looking at

17 101, is it your understanding that PacifiCorp required

18 Rosebud to come up with fuel agreements?

19 A MR. RAMISCH: This letter says, "It is

20 particularly important to identify..." and I'll jump down

21 a line "...characteristics of the project and any

22 reliability issues associated with the fuel supply."

23 MR. ORNDORFF: Okay, Mr. Chairman, it might

24 be helpful if I took 10 minutes and get reorganized.

25 COMMISSIONER MILLER: We'll take 10

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1 minutes.

2 (Recess.)

3 COMMISSIONER MILLER: All right, we'll go

4 back on the record. Mr. Orndorff.

5 MR. ORNDORFF: Thank you, Mr. Chairman.

6 Q BY MR. ORNDORFF: Mr. Ramisch, would you go

7 to Exhibit 104?

8 A MR. RAMISCH: Yes, sir.

9 Q And that second paragraph on the second

10 page, I'm looking at the language that starts after the

11 second line, it says, "and," and then on to the third

12 line, "commitments for fuel supply have been made by the

13 parties." Now, looking at that language and the fuel plan

14 that you've included as Exhibit 128, can you tell me if

15 the fuel plan is a commitment that's referred to in that

16 letter?

17 A MR. RAMISCH: I believe that the fuel plan

18 included with Exhibit 128 is a reasonably complete

19 starting point for getting into the terms of the power

20 purchase agreement and that's the way we used it when it

21 was presented in June.

22 Q I realize that's the way you used it in

23 June, but in Exhibit 104, weren't you looking for

24 commitments from third parties for purposes of

25 feasibility?

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1 A MR. RAMISCH: I think what we were looking

2 for is commitments from Rosebud that you had assessed the

3 feasibility of the supplies and could present something to

4 us that showed us you were confident and we could

5 establish our own confidence level that there would be

6 fuel for a long-term agreement, a firm power purchase

7 agreement. Keep in mind this is a waste fuel. We're

8 talking in early '93 here. PacifiCorp had been through a

9 whole rash of waste wood-related products in the mid to

10 late '80s elsewhere in our service territory, many of

11 which never came to fruition.

12 Q If I look at Exhibit 105, the last paragraph

13 on the page, the second and third line talk about project

14 development commitments including fuel supply. Do you see

15 that?

16 A MR. RAMISCH: Yes.

17 Q Is Rosebud's commitment to itself to develop

18 a fuel supply really what you were talking about in

19 Exhibits 104 and 105?

20 A MR. RAMISCH: No, we were looking for some

21 evidence that there is a long-term fuel supply committable

22 to this project. The purpose of these, of the prices that

23 were being discussed in this Exhibit 105, is what

24 Mr. Duvall talked about that was discussed at some length

25 in the January, 1993 prehearing conference.

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1 Q Did you have a chance to review the

2 November 3rd letter and the attached power sales agreement

3 that is in, I believe it's, Exhibit A to Exhibit 122,

4 Appendix A to 122?

5 A MR. RAMISCH: I think it's Exhibit C in this

6 Exhibit 122. I think there's multiple exhibits.

7 Q Yeah, there are. Have you had a chance to

8 review that?

9 A MR. RAMISCH: I've reviewed that. I think

10 this was characterized yesterday as sort of an example

11 format by Mr. Roberts.

12 Q What does the heading on the document say?

13 A MR. RAMISCH: "Draft #2, November 3, 1992."

14 Q I believe on my copy it says, "Firm Energy

15 Sales Agreement" --

16 A MR. RAMISCH: That's the next part down.

17 Q -- "Between Utah Power and Light Company and

18 Rosebud Enterprises." Is that what yours says?

19 A MR. RAMISCH: Yes, it is.

20 Q Now, looking at that draft and Exhibit 128,

21 is the amount of energy specified in Exhibit 122,

22 specifically on Page 11, 6.1.1?

23 MR. FELL: Excuse me, I got lost in that

24 question. Could Mr. Orndorff ask it again for my

25 benefit?

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1 MR. ORNDORFF: I asked Mr. Ramisch if the

2 amount of energy is specified in Exhibit 122, Exhibit C.

3 A MR. RAMISCH: Yes, there's an amount of

4 energy specified there. It's 336,384,000 kilowatt-hours

5 annually, and I would point out that that's a different

6 number than was presented in the Bonneville proposal back

7 in September and there was no clarification presented with

8 this as to why it was different this time. This number

9 has jumped all over the place. As a matter of fact, we

10 have numbers in various places from Rosebud from 308,000

11 up to 340,000, and I think this is a perfect example of

12 our questions as to what is the product you are proposing

13 to sell.

14 Q BY MR. ORNDORFF: Did you call Rosebud and

15 ask them?

16 A MR. RAMISCH: We didn't call, make a

17 specific call, relative to that number in this

18 correspondence.

19 Q In fact, Mr. Ramisch, I don't believe that

20 after receiving the September 24th letter there was any

21 contact with Rosebud prior to October 22nd, was there?

22 A MR. RAMISCH: I don't know if there was any

23 contact. That was our first correspondence.

24 Q Now, looking at Exhibit 128 and again at

25 Exhibit 122, Appendix B to that power sales agreement, I

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1 believe there's an appendix for interconnection at Arco.

2 Do you see that?

3 A MR. RAMISCH: I don't --

4 Q Have you reviewed that?

5 MR. FELL: Excuse me, what is the question?

6 A MR. RAMISCH: I don't know what your

7 question is.

8 Q BY MR. ORNDORFF: Okay, do you have the

9 Appendix B on Exhibit 122?

10 A MR. RAMISCH: Yes.

11 Q It says at the top of it, "Special

12 Facilities, Point of Delivery, Metering and Operation

13 Date, Project No. Blank, Rosebud..." and goes on. Do you

14 have that document in front of you?

15 A MR. RAMISCH: Yes.

16 Q Did you review that?

17 A MR. RAMISCH: Yes, I reviewed that.

18 Q When did you review it?

19 A MR. RAMISCH: I can't recall the specific

20 time frame. When I first became involved in the project I

21 did. This is just a blank form that has no location other

22 than Arco, Idaho. It doesn't have any specific project

23 data or sizes in it.

24 Q Now, looking at the November 3rd draft,

25 which is in 122, are there milestones in that contract,

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1 proposed milestones?

2 MR. FELL: Mr. Chairman, this is

3 Mr. Orndorff's document. If he could lead the witness to

4 what he's -- the witness should not be in a position of

5 having to read this whole document to find out whether

6 Mr. Orndorff included milestones or not.

7 COMMISSIONER MILLER: Try to make your

8 question a little more specific. It will probably move

9 things along, Mr. Orndorff.

10 Q BY MR. ORNDORFF: Let me ask you this:

11 Rather than paw through these documents given where we are

12 today, if there were milestones in the November 3rd draft,

13 would they necessarily have been -- let me ask you this,

14 strike that. Did you call Rosebud about wanting

15 milestones in November of 1992?

16 A MR. RAMISCH: No, we didn't call

17 specifically with a request about milestones.

18 Q So when I look at Exhibit 129 and you have

19 there contractual milestones, this is now a letter dated

20 in 1994, I mean, it's not a surprise to you that you could

21 develop those milestones. I asked you a question. I

22 guess you --

23 A MR. RAMISCH: I didn't understand the

24 question in there.

25 Q Oh, okay. In looking at the milestones in

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1 Exhibit 129, would you normally expect to find milestones

2 in an agreement?

3 A MR. RAMISCH: Yes.

4 Q When you looked -- looking at Exhibit 67,

5 have you read this letter before?

6 A MR. RAMISCH: Yes, I've read Exhibit 67.

7 Q You heard Mr. Duvall testify or speak to the

8 letter?

9 A MR. RAMISCH: Yes.

10 Q What was your reaction when you read the

11 letter? I'm looking specifically at the second paragraph

12 where Mr. Faull said, "I countered that the Idaho

13 Commission has a long history of determining generic

14 avoided costs based on the assumption that reliability

15 would be ensured by contract language." What was your

16 reaction to that language?

17 A MR. RAMISCH: I didn't have any particular

18 reaction to it.

19 Q Did you feel like you should offer Rosebud

20 rates based on reliability being ensured under the

21 contract?

22 A MR. RAMISCH: I think our track record is

23 pretty clear on the information we were requesting in

24 order to develop prices for this project. There were

25 numerous outstanding data requests as of February 18th

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1 when this letter was written.

2 Q When you say "data requests," what are you

3 referring to?

4 A MR. RAMISCH: I would refer to our

5 November 11th, 1992, letter and a series of correspondence

6 in there that said let's sit down and talk about it, let's

7 explore what's behind this Bonneville proposal, virtually

8 all of the correspondence up to this time, including, I

9 think, some discussions in the prehearing conference.

10 Q Tell me which letter or correspondence you

11 say that you're referring to as let's sit down and talk

12 about this project.

13 A MR. RAMISCH: I'll start with our first

14 letter October 22, 1992, third paragraph it says, "As you

15 know, 40 megawatt projects do not qualify for standard

16 purchase contracts. A project of this size requires

17 individual investigation and negotiation," and at the

18 bottom of that page, "...would be willing to schedule a

19 meeting for that purpose." That was, I think, the first.

20 If we move on --

21 Q I'm sorry, I don't understand. I don't see

22 a date for a meeting. What I see is, "PacifiCorp is

23 working on your request, but it is not reasonable to

24 expect a detailed response by November 1."

25 MR. FELL: Objection.

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1 MR. ORNDORFF: Maybe I missed something in

2 the letter.

3 MR. FELL: Objection. This is

4 argumentative. If the purpose of Mr. Orndorff's question

5 is to ask the witness where a set of maybe six precise

6 words are actually used, six words that Mr. Orndorff has

7 created or developed here, that's the best the witness can

8 do is say where the substance of that statement was made

9 and that's what he's done.

10 COMMISSIONER MILLER: I consider the

11 question to be argumentative.

12 MR. ORNDORFF: Okay.

13 Q BY MR. ORNDORFF: Do you have any other

14 documents that you want to refer to as offering to meet?

15 A MR. RAMISCH: The November 11th letter,

16 1992, which is Exhibit 102, "PacifiCorp would be willing

17 to meet with you in a few weeks to discuss your proposal

18 further."

19 Q Are there any rates offered in that letter?

20 A MR. RAMISCH: No. The main text of the

21 letter explains why we need information to develop those

22 rates.

23 Q So, let me see, Mr. Ramisch, see if we can

24 boil this all down, what this case revolves down to is

25 whether PacifiCorp has an obligation to give avoided costs

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1 for a project over 10 megawatts when a developer asks for

2 avoided costs.

3 MR. FELL: Objection. This should be saved

4 for Mr. Orndorff's brief. This is not a factual question.

5 COMMISSIONER MILLER: Would you read the

6 question back for me?

7 (The last question was read back by the

8 Notary Public.)

9 COMMISSIONER MILLER: I think on the whole

10 it's an argumentative statement designed to elicit an

11 opinion about a question of law and an overall

12 characterization of the case. I think the parties'

13 positions are pretty clear.

14 Q BY MR. ORNDORFF: Mr. Ramisch, would you

15 turn to your September 16th letter, which I believe is

16 another letter that I was told to inquire of you,

17 September 16th, '93?

18 MR. FELL: Exhibit number, please?

19 MR. ORNDORFF: I'm looking for it,

20 Mr. Fell. I believe it's your 108.

21 COMMISSIONER NELSON: That's correct.

22 A MR. RAMISCH: Yes.

23 Q BY MR. ORNDORFF: Now, this request, is this

24 an additional request to the general procedures or where

25 did this emanate from?

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1 A MR. RAMISCH: Let me go back to the general

2 procedure issue. We were talking about that earlier and I

3 think --

4 Q I didn't ask that question.

5 COMMISSIONER MILLER: That is

6 non-responsive. Try and respond to the question posed to

7 you.

8 A MR. RAMISCH: Could you repeat the question,

9 please?

10 Q BY MR. ORNDORFF: Could you explain to me

11 where Exhibit 108 came from in relation to the general

12 procedures which I believe is Exhibit 102?

13 A MR. RAMISCH: Exhibit 108 came from the

14 agreements reached in the September 2, 1993, prehearing

15 conference. Up until that prehearing conference,

16 including the time represented by the general procedures

17 referred to earlier, PacifiCorp had been requesting

18 general and specific information from Rosebud about this

19 project in order to draft a power purchase agreement. We

20 were asked in the prehearing conference in September to

21 list -- I'll quote from my Exhibit 107 which are some of

22 the transcript from that prehearing conference. We were

23 asked, "...as precisely as possible the type of

24 information PacifiCorp believes it must have in order to

25 proceed further."

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1 We were particularly frustrated at this

2 point. It had been a year since we had first seen a

3 snapshot of this project and we had asked for information

4 repeatedly. We were asked to provide a request as

5 precisely as possible and that's what led to the

6 September 16th letter.

7 Q I see. To go back to my question, is the

8 September 16th letter consistent with the general

9 procedures that is Exhibit 102?

10 A MR. RAMISCH: The general procedures in 102

11 are just that. By September of 1993, those procedures had

12 largely been superseded by a procedure where we were

13 agreeing to certain activities emanating from at this

14 point two prehearing conferences. The general procedures

15 led to a more specific set of procedures directed right

16 here with this Commission.

17 Q Okay, Mr. Ramisch, was it your view in the

18 September 16th, '93 letter that until Rosebud answered

19 these questions, PacifiCorp would not give Rosebud avoided

20 costs?

21 A MR. RAMISCH: It's my view as of

22 September 16th of '93 that our requests had all been aimed

23 at obtaining information upon which to provide those

24 prices. We weren't refusing to provide the prices. We

25 only wanted information upon which to base those prices.

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1 Q I think I heard you weren't refusing to give

2 Rosebud avoided cost prices?

3 A MR. RAMISCH: That's correct.

4 Q Did Rosebud request avoided cost prices?

5 A MR. RAMISCH: Certainly.

6 Q Did you give it to them?

7 A MR. RAMISCH: We had provided prices in

8 April for your use in determining fuel feasibility and so

9 forth.

10 Q Were those prices an offer to purchase?

11 A MR. RAMISCH: No, they weren't. They

12 weren't intended to be by the agreement in the January

13 prehearing conference.

14 Q Were they specific avoided cost prices?

15 A MR. RAMISCH: No.

16 Q So before we could get specific avoided cost

17 prices, is it your view we had to respond to the items in

18 Exhibit 108?

19 MR. FELL: Mr. Chairman, I'd like a

20 description of what Mr. Orndorff means by "specific

21 avoided cost prices."

22 MR. ORNDORFF: I believe it's in

23 Exhibit 102, the November 11th letter, and it's Item 3,

24 I, 3. It's PacifiCorp's own language. If we turn to

25 Exhibit 102, I think we can all look at it again.

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1 MR. FELL: What I read is the words "and

2 avoided cost price information."

3 COMMISSIONER MILLER: What's the exhibit

4 number?

5 MR. ORNDORFF: What I'm looking at is

6 "specific avoided cost price information." That is in

7 Roman I, A, 3. That is the language that PacifiCorp has

8 in their general procedures, and he said that the

9 November -- clearly said that the Exhibit 104 were not

10 those prices.

11 MR. FELL: I think this is getting

12 confusing.

13 COMMISSIONER MILLER: You're right.

14 MR. FELL: This witness has testified to a

15 lot of this and we both have a different way of looking at

16 these things. I don't think we can answer this question

17 the way it's being posed without going back over what has

18 already been said.

19 MR. ORNDORFF: I think I'm entitled to an

20 answer to my question. It's a fair question. I have

21 three pages of conditions, some of them are not even

22 remotely related to the price per kilowatt and the general

23 procedures. They clearly didn't do it.

24 COMMISSIONER MILLER: Restate your question

25 again as concisely as you can, would you?

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1 MR. FELL: Mr. Chairman.

2 COMMISSIONER MILLER: Mr. Fell.

3 MR. FELL: The witness did say that by

4 January these had been superseded by the Commission

5 process, that we were not operating by these at that time

6 and Mr. Orndorff is just ignoring that statement and

7 trying to get the witness to say something different.

8 COMMISSIONER MILLER: Well, the witness can

9 characterize things the way he wants, but Mr. Orndorff

10 isn't obligated to necessarily accept or adopt that as the

11 fact. Nonetheless, we are pushing up against the

12 duplication and waste of time limitation on

13 cross-examination; so try and state your question as

14 precisely as you can.

15 Q BY MR. ORNDORFF: Mr. Ramisch, the specific

16 avoided costs referred to in Exhibit 102, before Rosebud

17 could receive those, on September 16th, '93, was it

18 necessary that we complied with each item in Exhibit 108?

19 A MR. RAMISCH: No.

20 Q Where in Exhibit 108 did you tell us that?

21 I'd suggest you look at the first paragraph, the last

22 line, where I think it says, "... at a minimum, we would

23 need the following."

24 MR. FELL: I don't understand the question,

25 I'm sorry.

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1 COMMISSIONER MILLER: The question is, does

2 the witness understand the question. Do you understand

3 the question, Mr. Ramisch?

4 A MR. RAMISCH: I think at this stage I

5 don't. I was looking back through this letter to just

6 refresh my mind on all of the things that were asked for

7 in the introductory and the closing paragraphs.

8 MR. ORNDORFF: I believe the letter speaks

9 for itself. I tried to help the witness where it

10 says, "... at a minimum, we will need the following," and

11 three pages of information follows. Some of that

12 information -- well, we can go paragraph by paragraph, but

13 it does not say we don't provide portions of it. It says

14 we have to provide it all.

15 COMMISSIONER MILLER: All right, well, the

16 Commission has the letter, we can read it, and if the

17 witness wants to offer an explanation as to any matter

18 that may augment the meaning of the letter, it can;

19 otherwise, we'll construe the words the way they're

20 written.

21 MR. ORNDORFF: I understand.

22 A MR. RAMISCH: I would like to just, maybe,

23 I'd like to move from the September 16th letter to

24 Exhibits 109 and 110 where we stated subsequently there

25 that I understand you object to some of the information

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1 requested. Please respond to requests to which you do not

2 object. Again, over in Exhibit 110, I am aware that you

3 believe some of the information requests are either

4 unnecessary or excessive. A complete failure to respond

5 leaves us with insufficient information to negotiate a

6 contract.

7 I had mentioned earlier that as of September

8 when this letter was written, we were particularly

9 frustrated over a total lack of response for information

10 in the course of a year and we might have gone a little

11 bit too much detail, but, again, I'll go back to

12 Exhibit 107 where I read where we were asked to identify

13 as precisely as possible the information that we would

14 like to have. That's what led to the September 16th

15 letter and that's what happened subsequent to that

16 letter.

17 Q BY MR. ORNDORFF: Can we now move on to

18 Exhibit 76? Would you explain to me how this information

19 request came about?

20 A MR. RAMISCH: I wouldn't characterize

21 Exhibit 76, which also the cover letter is what I was

22 reading from a moment ago as Exhibit 110, I would not

23 characterize this as an information request. It was

24 simply an explanation maybe from yet a different angle for

25 Rosebud explaining that when we evaluate various resources

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1 for purchase, we require and expect a level of information

2 upon which to draft the contract. This Exhibit 76 and its

3 attachment merely provide one more channel, one more

4 example of the type of information that we expect a

5 developer to provide to move his project forward. In this

6 case, it's examples from a competitive bid solicitation

7 which was in compliance with the Washington Commission's

8 rules. We didn't try to in any way impose Washington

9 rules on Rosebud. We just presented a set of documents

10 that explain the kind of information a developer can

11 provide.

12 Q Do you see in the third paragraph there,

13 Mr. Ramisch, where you refer to Sections 6 through 8 of

14 the attachment that you were just referring to?

15 A MR. RAMISCH: Yes.

16 Q If we turn to that attachment now and go to

17 Section 6, would you walk with me through the general

18 evaluation criteria in Section 6, the short list of

19 information you need?

20 A MR. RAMISCH: On Page 7 you said?

21 Q I'm on Page 7, that's true.

22 A MR. RAMISCH: Okay.

23 Q Is the first one in your view, it doesn't

24 really apply to this case?

25 A MR. RAMISCH: That's correct.

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1 Q The proposed -- the next one is, "The

2 proposed project must be technologically mature and

3 commercially available." Does this project have that?

4 A MR. RAMISCH: Yes.

5 Q The next one, "The project developer must

6 demonstrate a reasonable measure of site control, if

7 applicable to the technology or resource." When you sent

8 this out, did we have site control?

9 A MR. RAMISCH: I don't know.

10 Q Did we send you a letter on April 15th?

11 A MR. RAMISCH: Is that letter an exhibit I

12 can refer to?

13 Q Yes, I'm digging for it. 70, I think it

14 is.

15 A MR. RAMISCH: That refers to a suitable site

16 in Montpelier. Whether you had control of that site, I

17 have no idea.

18 Q But you certainly didn't question the letter

19 when you received it, did you?

20 A MR. RAMISCH: I don't recall what our

21 response to that April 15th letter is.

22 Q The next one, "The project developer must

23 demonstrate experience in developing the type of resource

24 proposed." Did you have any doubt that we had experience

25 in developing the project resource that we proposed?

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1 A MR. RAMISCH: No, you had demonstrated that

2 the Colstrip plant was operating.

3 Q Okay, the next one, "The proposed project

4 must conform to all applicable laws and regulations." Was

5 that provision contained in our draft contract, your draft

6 contract, and, in fact, about every draft power sales

7 agreement in the world has that provision, doesn't it?

8 A MR. RAMISCH: Certainly, but we didn't know,

9 I think maybe just as a general reference to this, the

10 sort of information that you could provide may be some

11 portrayal of emissions rules or waste disposal rules, for

12 example, that we could get into the permitting category

13 with that request and have some assurance as to what you

14 intended those permit conditions to be and so forth.

15 Q Well, as a practical matter, if a project

16 developer is successful as we just established in the

17 condition up above, it's probably a pretty good bet that

18 he knows how to permit, wouldn't you think?

19 A MR. RAMISCH: Well, you had permitted a

20 plant in Montana. You had not permitted a solid-fueled

21 plant in Idaho.

22 Q Okay, let's go to the next one, "The project

23 proposal must include a plan and schedule for receiving

24 authorization and permits." That's in Exhibit 60 which

25 you claim you never received.
"The project proposal must demonstrate" --
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1 MR. FELL: Excuse me, before we go on,

2 Mr. Orndorff just said that something was in Exhibit 60.

3 Mr. Orndorff, was it in Exhibit 60 with respect to the

4 Arco, Idaho project? You were talking about a schedule

5 for construction or something, but my recollection is that

6 Exhibit 60 shows a schedule for the Colstrip project.

7 A MR. RAMISCH: Or the Billings project.

8 MR. FELL: Or whatever.

9 MR. ORNDORFF: I think we ought to look at

10 Exhibit 60 and see what's there.

11 MR. FELL: I would be willing to do that,

12 but I don't think this witness should be asked questions

13 on the basis of an incorrect representation of what was

14 there.

15 Q BY MR. ORNDORFF: Do you have Exhibit 60 in

16 front of you?

17 COMMISSIONER MILLER: Hold on just one

18 second. We're now getting into a double problem with

19 Exhibit 60 in that its admission has been challenged and I

20 don't know if we ought to get into this exhibit until we

21 know if it's going to be admitted or not.

22 MR. FELL: On the face of it, it's Colstrip

23 Energy Limited Partnership and I don't want Mr. Orndorff

24 using that and representing that it's something else.

25 MR. ORNDORFF: I guess I don't know -- I'm

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1 looking at Exhibit 60 and it says "Arco Generation

2 Supporting Documentation," and I'm in the back of it where

3 it has a list of all the permits that need to be obtained.

4 COMMISSIONER MILLER: And yesterday we had

5 the problem with Exhibit 60 of whether or not it was ever

6 even really received by PacifiCorp.

7 MR. FELL: It says "Billings Generation

8 Station." I just don't understand how he can use it --

9 MR. ORNDORFF: I don't believe I see

10 anything -- I don't know what Mr. Fell is looking at and

11 if I look at page -- let's see, the back of the enclosure

12 I have what is an Option Development Period and I don't

13 see anything in there that shows any of what Mr. Fell is

14 referring to.

15 MR. FELL: The pages that preceded all say

16 "CELP," which is Colstrip Energy Limited Partnership. I

17 object to his use of that.

18 MR. ORNDORFF: That's a milestone schedule

19 you're looking at, Mr. Fell. I think that's a permitting

20 schedule. It has all the permits listed and it's called

21 "Option Development Period."

22 MR. FELL: If that is the Arco project, it

23 is the only page of this entire document that is specific

24 to Arco, except the cover sheet.

25 MR. ORNDORFF: I suggest Mr. Fell look at

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1 the title page.

2 MR. FELL: I just admitted to that.

3 MR. ORNDORFF: Well, here's another page,

4 Mr. Fell. Maybe you would like to comment on that.

5 MR. FELL: A map.

6 COMMISSIONER MILLER: Let's repeat the

7 question and see exactly where we are.

8 MR. ORNDORFF: Actually, I didn't ask the

9 question. I was going to pass over it.

10 COMMISSIONER MILLER: That would be an even

11 better idea.

12 MR. ORNDORFF: And I think Mr. Fell raised

13 an objection; so I think that's where we are.

14 COMMISSIONER MILLER: All right, let's

15 proceed on then.

16 Q BY MR. ORNDORFF: Okay, the next one, "The

17 project proposal must demonstrate economic feasibility."

18 Is that possible to do without avoided costs,

19 Mr. Ramisch?

20 A MR. RAMISCH: I think in the context of the

21 Washington bid requirements that's entirely possible. The

22 standard for bidding in this case is Washington avoided

23 costs. In the case of the Rosebud project, we have a

24 project that does not qualify for the Idaho avoided costs,

25 but at the risk of getting into Mr. Weaver's area, I think

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1 there's been a lot of discussion about those Idaho prices

2 for 10 megawatt and less projects being the starting point

3 for this project and the characteristics of the project as

4 we have talked about at great length determine where the

5 actual prices fall.

6 Q Okay, the next one, "The project proposal

7 must demonstrate adequate security." What did you

8 understand that to be?

9 A MR. RAMISCH: Just that, that a firm

10 proposal offered in competitive bidding must have adequate

11 security provisions included.

12 Q Did you ever tell Rosebud what adequate

13 security was?

14 A MR. RAMISCH: I don't think we've gotten to

15 the point of fine-tuning that in our draft agreements.

16 Q Did Rosebud propose security arrangements?

17 A MR. RAMISCH: Rosebud included some security

18 language in that November, 1992 contract, but we have not

19 discussed details of security even as far as our July 11,

20 1994, proposal. I believe in our transmittal of that, we

21 referenced it and expected that as you had provided a

22 counterproposal in that subsequent 60-day period that we

23 would know yet another piece of information about the

24 project or pieces of information that would lead to

25 finalization of that section.

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1 Q Have you reviewed Commission Order 21690 on

2 security?

3 A MR. RAMISCH: I have not personally.

4 Q The next one, "The proposed project must be

5 electrically compatible with the Company's existing

6 electrical system." Was that a problem?

7 A MR. RAMISCH: It's an unknown. To this day,

8 we haven't done an interconnect study for the Montpelier

9 site.

10 Q Number 7, Section 7, Ranking Factors, that

11 really is not applicable, is it?

12 A MR. RAMISCH: Well, this whole thing is a

13 Washington document, I'll repeat that, that even as we've

14 walked through those several bullet items in Section 6,

15 we're talking about them in the context of the Rosebud

16 project, but they weren't requested of you specifically in

17 that way by attaching it to this letter.

18 Q Sure. Is there a difference, Mr. Ramisch,

19 between an integration study and an interconnection study?

20 A MR. RAMISCH: I think -- well, let me defer

21 that to Mr. Morris. He's more familiar with those details

22 than I am.

23 Q That's fine, but you testified on direct

24 with respect to the interconnection study letter that we

25 said we weren't interested in an integration study.

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1 MR. FELL: Could we refer to the page and

2 line number that --

3 MR. ORNDORFF: That was your oral direct,

4 Mr. Fell.

5 MR. FELL: Well, then my recollection was

6 that he corrected his word integration and said

7 interconnection. I think he misused the word.

8 MR. ORNDORFF: I don't think he did at all.

9 MR. FELL: I'll let Mr. Ramisch try and

10 answer it, but if that's the context, I think he can

11 answer that.

12 COMMISSIONER MILLER: I hate to have to keep

13 asking, but the proper procedure is if you have objections

14 to state them to the Chair, the Chair will rule and we can

15 avoid arguing back and forth. Why don't we restate the

16 question and we'll see where we are.

17 Q BY MR. ORNDORFF: Well, as you recall,

18 Mr. Ramisch, in your supplemental direct, Mr. Fell asked

19 you about the interconnection study and whether Rosebud

20 had responded they weren't interested in going ahead with

21 the interconnection study. Do you recall that question?

22 A MR. RAMISCH: I recall that question to

23 Mr. Duvall. There was some discussion of that.

24 Q That was this morning, I believe, Mr. Fell

25 asked you that -- was it Mr. Duvall that question was

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1 asked?

2 A MR. DUVALL: Yes.

3 Q Then I apologize, I should ask the questions

4 of Mr. Duvall. Do you recall the question that Mr. Fell

5 asked you on supplemental direct about the interconnection

6 study?

7 A MR. DUVALL: I guess I remember -- I may not

8 remember the exact question, but I think the issue was

9 around the $4,000 cap that was negotiated between you and

10 Mr. Fell.

11 Q That's correct, and then you referred to a

12 letter.

13 A MR. DUVALL: Right, two days later.

14 Q And that letter --

15 A MR. DUVALL: That letter was from you to

16 Scott Woodbury referring to an integration study.

17 Q Is there a difference between an integration

18 study and an interconnection study?

19 A MR. DUVALL: I don't really know. We've

20 talked about an interconnection study and the contract we

21 sent you was for an interconnection study. We told you

22 what the interconnection study was all about. It was

23 looking at what facilities were needed, how much they

24 would cost. We told you the study would cost $2,000 as an

25 estimate and it would be trued up. There was a series of

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1 discussions where you wanted to cap it. We agreed to cap

2 it, sent you a letter stating that agreement, and your

3 response to that was that you would not pay for such

4 integration study. You used a different word, but at

5 least I took it to refer to the interconnection study that

6 had been discussed.

7 Q I think the letter speaks for itself. It

8 does not, though, say interconnection, does it?

9 A MR. DUVALL: Well, it does. It says, "The

10 ability of engineers to physically interconnect the

11 Rosebud plant to PacifiCorp's transmission is a routine

12 engineering task for which Rosebud must pay"; so it does

13 refer to interconnection.

14 Q But what you quoted us is integration; is

15 that correct?

16 A MR. DUVALL: Yes, what you said you would

17 not pay for is stated as integration. We never asked you

18 to pay for integration studies, whatever those are.

19 Q And it says in there we will pay for

20 interconnection?

21 A MR. DUVALL: It does say in here that you

22 will pay for interconnection. That's what we asked you to

23 pay for. That's what we negotiated the $4,000 cap on.

24 MR. ORNDORFF: Mr. Chairman, I think I'd

25 like to put Mr. Blendu on and try to get him done before

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1 lunch.

2 COMMISSIONER MILLER: You're through with

3 these witnesses or no?

4 MR. ORNDORFF: I think I will pass on them.

5 I agree with you, we're beating a dead horse. The issue

6 is pretty clear and the Commission will make, is getting

7 the gist of what happened; so I think it would be helpful

8 to put Mr. Blendu on, let these two witnesses go. We have

9 two more witnesses yet to do this afternoon.

10 COMMISSIONER MILLER: Let's go off the

11 record and discuss the scheduling question.

12 (Off the record discussion.)

13 COMMISSIONER MILLER: Questions from the

14 Commission.

15 Commissioner Nelson.

16 COMMISSIONER NELSON: I think this area has

17 been pretty well covered. Thank you.

18 COMMISSIONER MILLER: Commissioner Smith.

19 COMMISSIONER SMITH: I just have one.

20

21 EXAMINATION

22

23 BY COMMISSIONER SMITH:

24 Q Mr. Ramisch, you talked about Exhibit 127

25 which is a sketch or a diagram earlier today.

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1 A MR. RAMISCH: Yes.

2 Q Okay, and do you also have available

3 Exhibit 124?

4 A MR. RAMISCH: Yes, go ahead.

5 Q So does the sketch that you discussed

6 earlier relate in any way to the letter that's

7 Exhibit 124? I mean, is this the Arco site which it

8 states in Mr. Orndorff's letter, Exhibit 124, that it's

9 not suitable to interconnect with PacifiCorp's system, so

10 they went somewhere else?

11 A MR. RAMISCH: Yes. Yes, the Arco site in

12 his letter, March 10th, is the little box in the middle of

13 this diagram.

14 Q So this is something that came and went and

15 has no relevance to the Montpelier site?

16 A MR. RAMISCH: That is correct.

17 COMMISSIONER SMITH: Thank you.

18 COMMISSIONER MILLER: Redirect.

19

20 REDIRECT EXAMINATION

21

22 BY MR. FELL:

23 Q Mr. Duvall, the last set of questions you

24 had from Mr. Orndorff related to Exhibit 69. I'd like to

25 clarify something on this. Do you have it in front of

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1 you?

2 A MR. DUVALL: Yes.

3 Q In the second paragraph, as I recall, you

4 read the second sentence. Would you read that again,

5 please?

6 A MR. DUVALL: "The ability of engineers to

7 physically interconnect the Rosebud plant to PacifiCorp's

8 transmission is a routine engineering task for which

9 Rosebud must pay."

10 Q Now, was that a statement that Rosebud has

11 to pay for the interconnection costs or that Rosebud would

12 be paying for the interconnection study that had been

13 discussed in Exhibits 68 and 69?

14 A MR. DUVALL: I guess I'm not real sure. The

15 ability of engineers to physically interconnect the

16 Rosebud plant to PacifiCorp's transmission is a routine

17 engineering task, if it's an engineering task, I would

18 presume it's a design task, which would be the

19 interconnection study.

20 Q Was it your understanding when you got this

21 letter that Rosebud was refusing to pay for the

22 interconnection cost -- for the interconnection study that

23 was described as the agreement in Exhibit 68?

24 A MR. DUVALL: That was my interpretation of

25 this letter.

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1 Q To the best of your knowledge, did Rosebud

2 ever follow up and request to renew the integration study

3 letter and go about -- I'm sorry, the interconnection

4 study letter and conduct the interconnection study?

5 A MR. DUVALL: No.

6 Q Mr. Ramisch, on Exhibit 108, which is the

7 September 16, 1993, letter with the information requests,

8 in connection with the development of your July 11, 1994,

9 proposal, did you receive the substantial bulk of the

10 information requested in that letter?

11 A MR. RAMISCH: Yes, we did.

12 Q Did Rosebud ever provide specific objections

13 to particular information requested in here that would

14 allow us to evaluate compromises or adjustments to our

15 requests? Did they provide specific objections to what

16 was requested and agreements to provide other

17 information?

18 A MR. RAMISCH: Not specific. They objected

19 to the letter and the information request and I quoted

20 from the letters where we said please answer those

21 questions you can and we'll discuss the rest, but there

22 were never specific objections to pieces they didn't like.

23 MR. FELL: I'll be able to rely on the

24 record that we have so far. That's all the questions I

25 have.

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1 COMMISSIONER MILLER: Gentlemen, thank you

2 for your help.

3 (The witnesses left the stand.)

4 COMMISSIONER MILLER: All right, where does

5 that leave us?

6 MR. FELL: We have two witnesses remaining,

7 Roger Weaver and Ken Morris.

8 MR. ORNDORFF: Mr. Chairman, I believe we

9 agreed that we might put Mr. Blendu on to respond to the

10 testimony of Mr. Ramisch.

11 COMMISSIONER MILLER: I know that you've

12 requested that. I don't know if there is an agreement to

13 that effect yet. Mr. Orndorff would like to call, I guess

14 in the nature of rebuttal, Mr. Blendu now. Would that be

15 agreeable to you?

16 MR. FELL: I'm uncomfortable with it because

17 he may be calling him back again later to respond to one

18 of our other witnesses' testimony; for example,

19 Mr. Morris' testimony dealing with transmission

20 constraints.

21 MR. ORNDORFF: Mr. Chairman, I've tried to

22 accommodate Mr. Fell on a fairly massive amount of

23 supplemental direct without raising too many objections.

24 Mr. Blendu is a witness only as to technical matters and

25 interconnection and engineering. He's not a transmission

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1 witness and he certainly is not a rate witness; so I think

2 Mr. Fell's concerns are a bit stretched.

3 COMMISSIONER MILLER: Can you represent that

4 you won't recall him for any other purpose?

5 MR. ORNDORFF: Unless there's technical

6 engineering testimony that Mr. Fell introduces, I won't

7 call him.

8 COMMISSIONER MILLER: Well, assuming that

9 there's no information or no testimony brought up that's

10 not already in the prefiled testimony, can you represent

11 that you won't recall him for any other purpose?

12 MR. ORNDORFF: I think I understand the

13 stipulation. I'm not sure, but let's try it.

14 COMMISSIONER MILLER: Well, Mr. Fell, would

15 you acquiesce in calling Mr. Blendu now for this one point

16 so we can get him out of here on the basis of the

17 representation that he won't be recalled for any other

18 purpose?

19 MR. FELL: Yes.

20 COMMISSIONER MILLER: Thank you very much.

21 Let's recall Mr. Blendu.

22 MR. ORNDORFF: Mr. Ronald Blendu.

23 COMMISSIONER MILLER: It might be helpful,

24 Mr. Orndorff, if you could make for the record a statement

25 of in your view the relevance of testimony with respect to

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1 interconnection matters for a project that is not the

2 project being proposed now in this case.

3 MR. ORNDORFF: This is aside from

4 Mr. Blendu's testimony; right?

5 COMMISSIONER MILLER: My understanding is

6 he's going to testify with respect to the Arco

7 transmission interconnection issues.

8 MR. ORNDORFF: I was going to preface his

9 testimony with some questions and answers that might get

10 to that. If it doesn't at the end, then maybe we should

11 reexamine that.

12 COMMISSIONER MILLER: Let's see where we go.

13 MR. ORNDORFF: Okay.

14

15 RONALD D. BLENDU,

16 recalled as a rebuttal witness at the instance of Rosebud

17 Enterprises, Inc., having been previously duly sworn,

18 resumed the stand and was further examined and testified

19 as follows:

20

21 DIRECT EXAMINATION

22

23 BY MR. ORNDORFF:

24 Q Mr. Blendu, did you have an opportunity to

25 listen to Mr. Ramisch explain the interconnection

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1 facilities available at Rosebud's original Arco site?

2 A I believe I listened to at least some of it.

3 Q Now, just for purposes of the record, after

4 visiting the Arco site, was it your recommendation to

5 Rosebud that Rosebud move its site?

6 A Yes.

7 Q And perhaps you could briefly tell us why

8 you decided that the site from Arco had to be moved.

9 A I believe I can explain that. I don't know

10 how briefly I can do it. In the May 15th letter from

11 PacifiCorp, in reading the Paragraph 2 and 3, they

12 indicated they had terminations of both 230 kV and 69 kV

13 transmission in the Arco area and this was confirmed by

14 drawings and other discussions. As the engineer comparing

15 to Darlington, I looked at the option of having to build

16 some new 69 kV transmission costs in the lesser cost of a

17 69 kV interconnection as compared to a 230 interconnection

18 at Arco; so based on that letter and the drawings we had,

19 I recommended that we move our project to Arco.

20 When we set up the meeting for the

21 interconnection study at Arco, I arrived on site thinking

22 it would be a relatively straightforward discussion on how

23 we would proceed to a 2-$3,000 interconnection study. At

24 the time we had the technology, we had the site, we had

25 transportation, we had limestone supply, ash disposal and

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1 water.

2 That morning, I met Mr. Lowe and Mr. Vance

3 Witbeck at the Utah Power & Light building in Arco. What

4 I was first presented with is, lo and behold, contrary to

5 our drawings, we've just found out we don't interconnect

6 into the Arco substation with our 230 kV; so we

7 subsequently discussed that revelation. We went out and

8 looked at the Arco substation. There was one Arco

9 substation and what I'd ask is people to get Mr. Vance

10 Witbeck's sketch which is Exhibit B, Page 1 of 1, I

11 believe, to some of my testimony, I'll presume this is

12 Mr. Ramisch's sketch and my sketch and lay those out,

13 because I agree with Mr. Ramisch that the presentation of

14 their sketch is confusing and misleading when you look at

15 things out of perspective; so to help people understand

16 the difficulty that was created with Arco, I'd like to

17 have people focus on what Mr. Witbeck who is the regional

18 engineer for Utah Power & Light sketched for me and took

19 and showed me and how that compares to what Mr. Ramisch

20 has presented versus what I presented in my sketch.

21 COMMISSIONER NELSON: Where is your sketch,

22 sir?

23 COMMISSIONER MILLER: If we're going to do

24 this, Mr. Orndorff, we're going to have to have exhibit

25 numbers to tie this to the proper document.

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1 THE WITNESS: This would be Exhibit C,

2 Page 1 of 1.

3 COMMISSIONER MILLER: Where are we going to

4 find that, sir?

5 THE WITNESS: That's in my --

6 MR. ORNDORFF: Can I approach the witness

7 and see what he has?

8 COMMISSIONER MILLER: Sure.

9 (Mr. Orndorff approached the witness.)

10 MR. ORNDORFF: This is a response to

11 Interrogatory 56 that Mr. Blendu has grabbed.

12 COMMISSIONER MILLER: Pardon?

13 MR. ORNDORFF: A response to an

14 interrogatory from PacifiCorp.

15 COMMISSIONER MILLER: So it's not marked as

16 an exhibit for our hearing right now?

17 MR. ORNDORFF: It is not in as an exhibit.

18 Let's see, it's Supplemental Response No. 56 and Exhibit C

19 to that supplement, and I suspect the Commissioners do not

20 have copies.

21 COMMISSIONER MILLER: I wonder, once again,

22 we understand that for a variety of reasons, regardless of

23 whose fault it was, if it was anybody's fault, that based

24 on the facts learned here, Rosebud concluded that the site

25 would have to be moved and that subsequently it was. Why

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1 is it important for us to spend a great deal of time on

2 the question of what the true status of interconnection

3 facilities at Arco were if we all understand that because

4 of whatever they were the project had to be moved?

5 MR. ORNDORFF: Well, I think the only issue

6 here and the reason I continue to paw the ground is that I

7 believe that Rosebud was misled as to the status of the

8 interconnect. I would hesitate and I do not represent and

9 I'm not trying to establish it was deliberate, but the

10 fact is we were misled into believing that the site was

11 viable at Arco for transmission and it was only through

12 our investigation in going to the site that the people

13 from PacifiCorp were able to verify their system was not

14 as represented to us.

15 Now, I believe that that has some bearing in

16 this case as far as why Rosebud moved from Arco to

17 Montpelier. It is not indicative of an immature project

18 that we moved. In fact, it was a very substantially

19 mature project that it was capable of moving and very

20 quickly reorganizing after the unfortunate set of facts

21 from PacifiCorp. I don't think it's particularly unusual

22 that there are always problems in project development, but

23 this particular site move was a result of PacifiCorp's

24 lack of information, not Rosebud's, and we can continue to

25 explore that or we can all agree that PacifiCorp probably

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1 didn't know exactly what the status of their line was, in

2 which case we'll be satisfied.

3 COMMISSIONER MILLER: Mr. Fell.

4 MR. FELL: The apparent source of what

5 Mr. Orndorff refers to as misinformation was the 1990, the

6 May 15, 1990, letter and the 1990 project which

7 Mr. Orndorff has stipulated has no nexus to this project

8 and is not related to this project or this hearing any

9 longer. That was located in Darlington north of Arco

10 which clearly is a different situation and he is trying to

11 claim misrepresentation on the basis of a project that's

12 unrelated. Integration studies are clearly part of the

13 responsibilities in investigating a project and that is

14 what occurred.

15 MR. ORNDORFF: Well, we can argue this all

16 day. Maybe I should just go ahead with Mr. Blendu.

17 COMMISSIONER MILLER: Well, now we've

18 reached 12:15, we're going to take our break now; so I

19 guess you're entitled to try and establish -- I think you

20 are entitled to try and establish what you have set

21 forth. That, of course, is not a finding of the

22 Commission that that's the fact at this point, but we'll

23 come back after lunch. This will give you an opportunity

24 to try and organize that testimony in a way that it will

25 be precise.

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1 MR. ORNDORFF: Thank you, Mr. Chairman. I

2 need all the time I can get.

3 COMMISSIONER MILLER: We'll shoot for

4 reconvening at 2:00 o'clock.

5 (Noon recess.)

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