20090520AVU to IFG 002S.pdf

Avista Corp.
1411 East Mission P.O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
Toll Free 800-727-9170
J:JVISTA.
Corp.
r. ¡= (" r.:.. '~.... ",,,Æ' ~';"'''
2009 MAY 20 M1 8: 06
May 18, 2009
Dean J. Miler
McDevitt & Miler LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, ID 83702
Re: Production Requests ofIdaho Forest Group in Case Nos. A VU-E-09-01 and A VU-G-09-01
Dear Mr. Miler,
Enclosed are an original and one copy of Avista's supplemental response to Idaho Forest
Group's production request in the above referenced docket. Included in this mailng is Avista's
supplementa response to production requests 002S. The electronic version of the response was
emailed on 05/15/09 and is also being provided in electronic format on the CDs included in this
mailing.
Also included is Avista's CONFIDENTIA response to PR 002SC. This response contains
TRAE SECRET, PROPRIETARY or CONFIDENTIA information and is separately filed
under IDAP A 31.01.01, Rule 067 and 233, and Section 9-340D,Idaho Code, and pursuant to the
Protective Agreement between Avista and Idaho Forest Group dated Februar 2,2009. They are
being provided under a sealed separate envelop, marked CONFIDENTIA.
If there are any questions regarding the enclosed information, please contact me at (509) 495-
4546 or via e-mail atjoe.miler~avistacorp.com
ttS. in"'I~'..7r::.: .............. ......
!VVJ~d' L
Joe Miller
Regulatory Analyst
State & Federal Regulation
Enclosures
.
.
.
JUSDICTION:
CASE NO:
REQUESTER:
TYE:
REQUEST NO.:
REQUEST:
AVISTACORPORATION
RESPONSE TO REQUEST FOR INFORMTION
IDAHO
A VU-E-09-01 / A VU-G-09-01
Idaho Forest Group
Production Request
IFG-002S
DATE PREPARD:
WITSS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
05/14/2009
Scott MorrslRchard Storro
Joe Miler
State & Federal Regulation
[phone]
Please provide a copy of the Settlement Agreement between the CDA Tribe, the United States
Deparent of the Interior and Avista Corporation. (Direct Testimony of Scott Morrs, Pg. 5).
RESPONSE:
Please see Avista's response 002SC, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information exempt from public view and is separately filed under IDAP A
31.01.01, Rule 067 and 233, and Section 9-340D, Idaho Code, and pursuant to the Protective
Agreement between Avista and IPUC Staff dated January 8, 2009.
.DAVID J. MEYER
VICE PRESIDENT i GENERAL COUNSEL i REGULATORY &
GOVERNENTAL AFFAIRS
AVISTA CORPORATION
P.O. BOX 3727
1411 EAST MISSION AVENUE
SPOKAE i WASHINGTON 99220 - 3 7 2 7TELEPHONE: [phone]FACSIMILE: [phone]
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
.IN THE MATTER OF THE APPLICATION
OF AVISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AN CHAGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO ELECTRIC
AN NATUR GAS CUSTOMERS IN THE
STATE OF IDAHO
CASE NO. AVU-E-08-01
DIRECT TESTIMONY
OF
TONI E. PESSEMIER
FOR AVISTA CORPORATION
(ELECTRIC ONLY)
.
IFG PR 002S Attachment F
.1
2
I. INTRODUCTION
Q.Please state your name, employer and business
3 address.
4 A.My name is Toni E. Pessemier.I am employed as
5 the American Indian Relations Advisor by Avista Corporation
6 located at 1411 East Mission Avenue, Spokane, Washington.
7 Q.Would you briefly describe your educational and
8 professional background?
9 A.I received a Bachelor of Arts in Business
10 Administration from Pacific University in 1986, and a
11 Master of Business Administration degree from Eastern
12 Washington University in 1995.I started working for
13 Avista in 1988 as a Customer Service Representative. Since.14
15
that time I have worked in various positions including
Internal Auditor and Power Resource Engineer/Analyst.In
16 1993, I began my current position as Advisor to the Office
17 of the President, American Indian Relations.My primary
18 responsibilities involve the management and support of
19 projects related to business operations or legal issues
20 involving Tribes, maintaining corporate compliance with
21 tribal-related regulations and settlements, and sustaining
22 working relationships with regional American Indian Tribes.
.
Pessemier, Di 1
Avista Corporation
IFG PR 002S Attachment F
.1 Q. What is the scope of your testimony in this
2 proceeding?
3 A.My testimony will provide an overview of the
4 Coeur d' Alene Tribe's claims concerning compensation for
5 storage of water on Coeur d' Alene Lake and subsequent
6 settlement of these . 1issues.The testimony provides
7 background data concerning the claims for past storage,
8 compensation for future storage associated with the Spokane
9 River Proj ect FERC relicensing, settlement of these issues,
10 and transmission rights of way on tribal lands.
11 Q.Are you sponsoring any exhibits?
12 A.Yes.I am sponsoring Exhibit 8, Schedule 1 (Map
13 of Lake Coeur d' Alene and Post Falls Hydroelectric Project).14 and Schedule 2 (Memorandum Concerning Settlement of Claims
15 with the Coeur d' Alene Tribe) .
16 Q.What are the main issues concerning the Coeur
17 d'Alene Tribe?
18 A.There are several legal issues concerning
19 trespass and compensation for water storage for the Coeur
20 d' Alene Tribe (CDA Tribe).The past trespass covers the
21 period from 1907 through 1981, during which the tribal
22 ownership of the lower third of the lake was not known to
23 the Company or any of its regulatory agencies.The second
i Final execution of the settled documents and public disclosure of the terms will await final review of the settlement
by the Deparent oflnterior (DOl), which Avista currently believes will occur in April of2008. Thereafter,
unreacted versions of the testimony and exhibits peraining to this issue wil be filed with the Commission..
Pessemier, Di 2
Avista Corporation
Attachment F
.
.
.
1
2
period covers 1981 through 2007, where compensation for
storage is governed under the Federal Power Act, because
3 the Post Falls Hydroelectric Development was added to the
4 FERC Spokane River Proj ect license in 1981.The third
5 issue covers all aspects of the Spokane River Relicensing
6 process, which includes future compensation for storage for
7 the new license period.Finally,another key issue
8 concerned Avista' s transmission rights-of-way across tribal
9 trus t and fee lands.
10
11
Would you please provide a brief overview of LakeQ.
relation to the Spokane RiverinCoeurd'Alene
12 Hydroelectric Project?
13
14
15
16
Yes. Lake Coeur d' Alene has a minimum elevationA.
of approximately 2,120.5 feet and normal sumer elevation
of 2,128.0 feet.Prior to 1941, the sumer elevation was
2,126.5 feet.The Post Falls Dam has controlled Coeur
17 d' Alene Lake levels for five to seven months of the year
18 since the project began operation in 1906. The lake is on
19 free-flow conditions for the remaining months of the year.
20 See Exhibit 8, Schedule 1, consisting of a map of the CDA
21 Lake and the location of Post Falls Dam in relation
22 thereto.
23 Please sumrize the history of the dispute withQ.
24 the Coeur d' Alene Tribe.
Pessemier, Di 3
Avista Corporation
IFG PR 002S Attachment F
.1
2
A.Exhibit 8,Schedule 2 provides an in-depth
history of the litigation and basis for settlement. As
3 explained in this exhibit, Avista believed that it had all
4 necessary permits to store water on the lake for the Post
5 Falls Project between 1907 and 1972.During this period,
6 the State of Idaho exercised exclusive ownership of the
7 lake and the use of the lake for storage by Avista was not
8 challenged by any parties during this time.
9 The CDA Tribe first made a claim to partial ownership
10 of the lake in 1973 when they sought to intervene in FERC
11 proceedings concerning the license of the Spokane River
12 Project.In 1979, Avista stipulated to allow FERC to
13 decide the issue, which resulted in a 1980 FERC decision.14 that the State of Idaho owned the lake. This decision was
15 reversed in 1983 which resulted in further appeals until
16 1988, when FERC ultimately determined that it did not have
17 jurisdiction to resolve the lake ownership issue.No
18 further action was taken on the matter until 1992, when the
19 CDA Tribe filed suit in federal court for ownership of the
20 lake.The State of Idaho claimed immunity from suit and
21 the case was ultimately dismissed.
22 In 1994, the ownership issue was taken up by the U. S.
23 as Trustee for the Tribe.In 1998, the United States
24 District Court for the District of Idaho determined that
25 the CDA Tribe owns portions of the bed and banks of Lake
.
Pessemier, Di 4
Avista Corporation
IFG PR 002S Attachment F
.
.
.
1
2
Coeur d' Alene that are within the current boundaries of the
Coeur d' Alene Reservation. The case eventually reached the
3 u.s. Supreme Court, where a narrow 5-to-4 decision in 2001
4 established that the United States holds, in trust for the
5 CDA Tribe, the portion of the lake that is located within
6
7
the Reservation boundaries.This amounts to approximately
the lower one-third of the lake.This ruling directly
8 impacts the Company because Avista owns and operates the
9 Post Falls Hydroelectric Generating Station (Post Falls),
10 which controls the lake water level during portions of the
11 year. The ruling resulted in the Company being liable for
12 compensation to the CDA Tribe for water storage on
13 reservation lands under §10 (e) of the Federal Power Act.
14 The Company and the CDA Tribe subsequently engaged in
15 ongoing discussions with respect to past and future
16 compensation.
17 Please describe the process that ultimately ledQ.
18 to a settlement of this matter.
19
20
Avista and the Tribe agreed to a mediationA.
process before commencing with litigation.A unique
21 process was used that involved a blending of traditional
22
23
litigation along with mediated settlementelements
negotiations.The services of John Bickerman, a mediator
24 from Washington, D. C ., were retained by the parties to
25 oversee and facilitate settlement discussions.The
Pessemier, Di 5
~ Avista Corporation
IFG PR 002S Attachment F
.1
2
Honorable Judge William Canby of the U. S. Ninth Circuit
Court of Appeals for the Ninth Circuit was retained to
3 provide the parties with non-binding advisory opinions
4 regarding liability and damages.The mediation process
5 took several years and resulted in a large volume of data
6 collection and analysis.The negotiated settlement
7 comprehensively addressed and resolved the Tribe's claims
8 of trespass, §10 (e) charges, transmission line rights of
9 way, and many of the Tribe's issues also associated with
10 the Spokane River Relicensing process.
11
12
Q.What was determined during the settlement?
A.Judge Canby, in his advisory opinions, determined
13 that FERC or a federal court would find in favor of the.14 Tribe that Avista was liable for trespass on Tribal lands
15 by virtue of the use of the lake as a reservoir during part
16 of the year.Judge Canby sumarized the position by
17 stating that "the Coeur d' Alene Tribe has established its
18 right to damages for trespass by Avista for the period 1907
19 to 1981, and to reasonable charges under §10 (e) from 1981
20 through the term of any license granted by FERC to Avista
21 in pending proceedings."The methodology for determining
22 damages owed to the Tribe was also reviewed through Judge
23 Canby and the amounts of those damages were then determined
24 through additional mediation and negotiations.The
25 financial components of the settlement covered compensation
.
Pessemier, Di 6
Avista Corporation
IFG PR 002S Attachment F
.1
2
for trespass, §10 (e) charges, transmission rights of way,
water rights permit, and satisfaction of §4 (e) conditions
3 with a new FERC license for the Spokane River Project.
4
5
Q.What are the ter.s of the settlement agreement?
A.There are several areas covered under the terms
6 of the settlement agreement:
7 . Regarding compensation for trespass, the settlement
8
9
10
includes the payment of $25 million in 2008, $10
million in 2009 and $4 million in 2010 for resolution
of the past trespass and §10 (e) charges.The future
.
11
12
13
14
§10 (e) payments are $400,000 flat annual payments for
the first 20 years of the license and $700,000 flat
annual payments for the remaining 30 years of the
license.
15 . There was an agreement by the Tribe to indemnify,
16
17
18
19
20
21
22
defend and hold Avista harmless from any and all
liability, judgment, loss, cost, and expense resulting
from any and all claims of any kind or nature that may
be asserted by the United States, or any governmental
department, agency or officer thereof, arising out of
or related to or in any way connected with the use or
occupancy by Avista of the bed and banks of the Lake
23
24
and the St. Joe River lying wi thin the boundaries of
the reservation.
.
Pessemier, Di 7
Avista Corporation
F
.. The Tribe granted Avista transmission line rights of1
2
3
4
way across tribal trust and fee land for a time period
correlated with the term of a new Spokane River
Project FERC license for a single payment of $32,000.
5 . The Tribe issued a water permit and agreed that the
6
7
settlement payments will satisfy any future tax claims
for water storage.
8 . §4 (e) conditions for relicensing the Spokane River
9 Project would be satisfied through payments of $10
.
10
11
12
13
14
million in the first year, $2 million per year for the
next eight years, $1.5 million for the next 16 years
and $2 million per year for the remainder of the 50-
year FERC license into a resources restoration fund to
implement provisions of the §4 (e) conditions.
15 . A master agreement would be filed under a joint
16
17
18
19
peti tion in Federal District Court seeking a consent
judgment to maintain the continuing jurisdiction of
the Federal District Court to enforce the terms of the
settlement.
20 . Finally, there is a reservation of claims and defenses
21
22
23
24
in the event the Tribe makes a claim to ownership of
the northern two-thirds of the Lake and Heyburn State
Park.
Q.Why did the Company choose to settle the case at
25 this time rather than proceed with litigation?.
Pessemier, Di 8
Avista Corporation
IFG PR 002S Attachment F
.1
2
A. As explained in the Memorandum attached to my
testimony as Exhibit 8, Schedule 2:
3 . The settlement presents a full and final resolution of
4
5
6
7
8
9
the Tribe's claim to trespass and §10 (e) annual
charges regarding Avista i s use of the lake as a
reservoir from 1907 to the present and through the
term of a new FERC license for the Post Falls
hydroelectric development (HED) .As such,the
settlement presents a full and final resolution of
10
11
12
disputed issues regarding more than 100 years of
hydroelectric generation by Avista utilizing Tribal
lands, as well as up to 50 years in the future;
13 . The settlement eliminates Avista' s potential exposure.14 to a significant verdict for its historical use of
15
16
that portion of the lake located within the
Reservation;
17 . The settlement also resolves a numer of critical
18
19
20
21
22
issues pertaining to Avista' s application with FERC to
relicense the Post Falls HED, including the imposition
of conditions under §4 (e). The dispute between Avista
and the Tribe over §4 (e) conditions has been lengthy,
involved, and contentious, resulting in protracted and
23 expens i ve regula tory and legal proceedings;
24 . Finally, the settlement provides for water rights,
25 rights of way and other authorizations necessary from.
Pessemier, Di 9
Avista Corporation
IFG PR 002S Attachment F
.1
2
the Tribe.In this respect,the settlement provides
certainty to Avista.
3 Accordingly, the settlement does not give either party all
4 of the outcomes that might be obtained or desired under
5 various scenarios, including the possibility of successful
6 litigation in federal court. However, this must be weighed
7 against the likelihood that formal litigation could last
8 decades, could potentially subj ect Avista to significant
9 past damages; and could render operation of the Post Falls
10 HED impracticable.Therefore, considering the risks of
11 li tigation, together with the potential exposure and other
12 considerations involved,the settlement reflects a
13 reasonable compromise, and a fair accommodation, to the.14 interests of Avista and its customers.Upon execution of
15 the final agreement by the parties, a copy of the
16 settlement will be submitted to the Commission.Company
17 witness Ms. Andrews discusses the impact of the settlement
18 in the Company's request in this case.
19 Q.Does this conclude your pre-filed direct
20 testimony?
21 A.Yes it does.
.
Pessemier, Di 10
Avista Corporation
IFG PR 002S Attachment F
.(Service Date December 29, 20081
BEFORE THE WASHINGTON STATE
UTILITIES AN TRSPORTATION COMMISSION
WASHIGTON UTILITIES AND
TRANSPORTATION
COMMSSION,
Complainant,
v.
A VISTA CORPORATION, d//a
A VISTA UTILITIES,
Respondent.
.
) DOCKETS UE-080416
) and UG-080417
) (consolidated)
)
)
)
)
)
)
)
)
)
)
)
ORDER 08
FIAL ORDER APPROVING
AND ADOPTING MUTI-PARTY
SETTLEMENT STIULATION Al-TD
REQUIRIG COMPLIANCE FILING
Synopsis: The Commission approves and adopts the Multi-party Settlement
Stipulation entered into amongAvista, the Commission's Stafj Northwest Indutrial
Gas Users, and The Energy Project, and- Ù1 part, the Industrial Customers of
Northwest Utilities it a reâtmable resolution of Avista 's requestfor increases in
electric and natural gas rates.
The Settlement resolves the issue of what rates consumers wil pay commencing
January 1, 2009, for electric and natural gas service provided by Avista. The
Commissionfinds reasonable the parties' agreed $32.5 milion, or 9.1 percent rate
increase, in annual electric revenues, and a $4.8 milion, or 2.4 percent, rate increase
in annual natural gas revenues. The Commission requires Avista to file electric
service and natural gas service tarif sheets in compliance with the terms and
conditions of the Settlement.
.
IFG_PR_002S Attachment G - WA Orders Page 1 of7
.
.
.
DOCKET UE-080416IUG-080417 (Consolidated)
ORDER 08
PAGE 28
costs are retued under curent methods and customers would "receive no greatr
safeguard" with the proposed reclassificaton.79
Commission Decision.
66 We conclude that the joint pares have failed to demonstrate the need for
reclassifying AROs as .regulatory liabilties and accordigly deny their request. There
is no evidence that A vista ha failed to properly use these fuds for their intended
purose. Moreover, the joint paries failed to demonstrte that reclassification of
these fuds would afford ratepayers any greater protection should that contingency
anse. .
6. Settlement with the Coeur d'Alene Tribe.8o
67 A vista requests recovery of costs associated with the settement of the Coeur d Alene
Tribe's (Tribe) claim for damages related to the operation of Avista's Spokane River
Hydroelectric Project (project), including its Post Falls hydroelectric facilty located
on the Spokane River downstream of Lake Coeur d'Alene.S) As designed, the
Project uses Lake Coeur d Alene as a water storage facility - manpulating water
levels as necessar to optim system efficiency.
68 From i 907 to 1972, A vista operated the Project under authority granted by the State
ofIdaho.82 In 1972, Avista filed a petition with the FERC seeking a federal license to
operate the Projëct. In 1973, the Tribe intervened in the proceeding, claiming a
porton of Lake Coeurd'Alene was on itsreserv.ation and under itsexc1usive use and
control. 83 In response, A vista argued that ownership of the lake was held by the State
ofIdao, which had issued an relevant permits necessar for the Project's operation.
After years of litigation in a number of forums, the United States Supreme Cour
ultimately determined in 2001 that the United States holds, in trst for the Coeur
79 ¡d. at 3-4.
80 This issue addresses informtion that was protected from public disclosure by the terms and
conditions of Order 03, Protective Order, entered April 3, 2008, until A vista relinquished its
clai of confdentiality to most information on December 19, 2008.
&¡ Pessemier, Exh. No. TEP-IT at 1.
&2 ¡d. at 3.
83Id
IFG_PR_002S Attachment G - WA Orders Page 2 of7
.
.
.
DOCKET UE-080416/UG-080417 (Consolidated)
ORDER 08
PAGE 29
d' Alene Tribe, those portons of the lake within the boundares of the Coeur d'Alene
Reservation.84 The Cour's ruling did not, however, settle the Tnbe's dispute with
A vista related to the histonc and future use ofthe lake to benefit Project operations,
including compensatory claims founded in § 1 OC e) of the Federal Power Act for
inundatig reservation lands.85
69 In 2008, A vista and the Tribe reached a comprehensive settlement whereby A vista
agrees to compensate the Tribe for past damages and future use of the lake to serve
the Project. Additional settlement terms include the issuance of a tribal water nghts
permt for the Project's benefit, and new or renewed rights-of-way to maintain
"existing trsmission lines across Tribal Trust Lands.',86 As compensation for past
trespass and §1 O( e) water storage claims, A vista wil pay the Tribe $25 milion in
2008, $10 millon in 2009, and $4inillon in 2010.87 Futue §lO(e) compensation
consists of flat anual payments of $400,000 for the first 20 years of the license and
$700,.000 flat anual payments for the remaing 30 years of the license.88 The
settling paries would allow recovery of A vista's immediate settlement payments and
offer a ratemaking treatment set fort below.
70 The Settlement would defer Washington's share of Avista's 2008 and 2009 payments
to the Tribe, totalig $35.4 milion, as a regulatory asset.89 The deferral would
include depreciation/amortization associated with said payments together with a
caring charge of five percent. 90 In addition, A vista would be allowed to defer a
carring charge on the costs not yet included in rate base for subsequent recovery in
rates.91 Finally,. the deferral's recovery in rates would be spread over the remaining
life of the Project.
114 ¡d.
liS ¡d. at 4-5.
86 Pessemer, Exh. No. TEP~lT at 5-6, and Exh. No. TEP-4TC at 19.
87 Andrews, Exh. No. EMA-1T at 24.
&I ¡d.
89 The deferrl would commence when A vista maes its first payment to the Tribe. A vista Brief at
10.90 Andrews, Exh. No. EMA-l Tat 24.
91 ¡d.
IFG_PR_002S Attachment G - WA Orders Page 3 of7
.DOCKET UE-0804161UG-080417 (Consolidated)
ORDER 08
PAGE 30
71 The proposed raemakng treatient would result in a pro forma adjustient that
decreases . Washigtn net operatig income by $499,000 and increases rate base by
$15,084,000.92 The setting pares agree that the pro forma costs associated with the
settlement with the Tribe are prudenë3 and that any costs that exceed the pro formed
costs in this case would be addressed in a separate proceeding.94
72 The joint pares argue that Avista's payments to the Tribe should be disallowed as
imprudent because A vista "admitted to past trespass. ,,95 They assert that the
settlement with the Tribe would require curent customers to pay for past misconduct
and usage charges resulting in retroactive ratemaking in violation ofRCW 80.28.020,
which requires the Commssion to set rates prospectively.96 The joint paries argue
that the past § 1 O( e) usage costs and past trespass damages are costs that should have
been included in ratemaing for previous periods.97 If the Commission approves
these expenses, the joint paries propose that these fuds be offset by monies collected
under non-legal assèt removal obligations (ARDs).98.73 In rebutt, Avista denies that its settement expenses were imprudently incurd and
assert that it has not admitted to trespass.99 Avista contends that ownership of Lake
Coeur d'Alene was not conclusively detered until the Supreme Court ruling and
that, even theIl, it reasonably believed that its rights were protected by an .earlier
assignent of rights to operate the Post Falls dam site and the issuace of a permt in
1909 to use the lake to store water.lOO Avist fuer contends that the settlement does
not constitute retroactive ratemakng because there were no "past management
mistaes."ioi It argues that settlement payments to the Tribe could not have been
anticipated or previously recovered though rates; there was no obligation until an
.
92 ¡d.
9; Settement, Exh. NO.5 at 4 and I i; Joint Testimony in Support of Settlement, Exh. Nos. 4TC at
27; Pessemier, Exh. No. TEP-ITC at 1-7, TEP-3C at 1-12, and TEP4TC at 4-21.
94 Settlement, Exh NO.5 at4 and 11, Joint Testimony in Support of Settlement, Exh. No. 4TC at
27.
95 Majoros, Exh. No. MJ4TCat 16.
96 ¡d.
91 Public Coùnel's Briefat 24.
98Majoros, Exh. No.MJ-4TC at 18-
99 Pessemier, Exh. No. TEP4TC at 4-6 and Exh. No. TEP-5.
100 Pessiter, Exh.No. JEP-4TG at 2-3.
WI ¡d. at 6; Avista's Brief at 54.
IFG_PR_002S Attachment G - WA Orders Page 4 of7
.
.
.
DOCKET UE-0804161UG-080417 (Consolidated)
ORDER 08
PAGE 31
agreement was reached with the Tribe in 2008.102 A vista argues fuer that the
settlement resolves all disputed issues, settes historic claims over use of the lake for
hydroelectrc generation and, for the next 50 years, preseres a valuable, low cost
energy resource for the benefit of its customers.103 Staf joins in its arguents.
74 Finally, A vita and Staff oppose the use of ARO fuds to offset any settlement
expenses arguing to do so would be inappropriate.1M In cross-answering testimony,
Staff contends that itísinappropriate to us theuon-legal ARO's for any purose
other than the cost of asset removal.105 Staff contends that the joint paries ignore the
fact that these funds were collected specifically for futue removal costs.106
Commission Decision.
75 The evidence demonstrates that A vista began operating the Project under authority
grted by the State of Idao to control the level of Lake Coeur d' Alene. The joint
pares do not explain why Avista knew or should have known that the Tribe shared
jursdiction over Lake Coeur d Alene with the State ofIdaho prior to the Supreme
Cour's 2001 ruling. Indeed, the long, complex legal history ofthis issue belies the
joint pares' assêrton.
76 The controversy over the lake's ownership arose approximately 35. years ago when
the Tribe fist asserted its claim of ownership of those portons of the lake within its
reservation. Litigation ensued before the FERC, which ruled initially that the lake
was owned by Idaho~107 FERC's decision was appealed and eventully remanded for
review, where it ~ecided that itlacked jursdiction to resolve this issue in 1988.108
Finally, the United States, actig in its capacity as trtee for the Trìbe, brought suit
againstTdaho to.settle the question. In 2001, the Cour ruled 5-4 in favor of the
ioi Avista'sBriefat54.
103 Pessemier, Exh. No. TEP-4TC at 3.
104 Felsenthal, Exh. No. ADF-lT atl6.
ios Parinen, Exh. No. MPP-IT at 5.
106 ¡d. at 6.
107 Pessemier, Exh. No. TEP-4TC at 15.
108 ¡d. at 7.
IFG_PR_002S Attachment G - WA Orders Page 5 of7
.DOCKET UE-080416IUG-080417 (Consolidated)
ORDER 08
PAGE 32
United States, fmally resolving the Tribe's ownership claim.109 Throughout this
dispute's long legal history, A vista either pursued all legal remedies at its disposal or
had no choice but to await the litigation's outcome. The matter now decided, Avista
pursued an opportity to sette all claims raised by the Tribe, including those
afecting the relicensing of the Project. We believe Avista's actions were both
reasonable and prudent.
77 In sum, we reject the joint pares' argument that Avista's operation of the Project or
its actions in response to the Tribe's claim were imprudent. Avista operated the
Project with authority from the entity it reasonably believed was the lawful owner, the
State ofIdao, and, when challenged, it defended its right to operate it pursuant to the
authority granted. Without fuer legal recourse, A vista acted prudently to settle its
dispute with the Tlibeand wrp the Project's relicensing issues into a comprehensive
agreementensurng long-term avalabilty of valuable hydroelectrc resources for the
benefit ofAvistå's curent and futue ratepayers.iio.78 Finally, we find that the settling pares' treatment of the costs related to the
settlement with the Tribe is reasonable and well supported by the evidence in the
record.
1 i i The costs associated with the settlement wil be recouped over time and
with reasonable carg charges. Contrar to the joint paries' asserton, the
settlement does not constitute retroactive ratemaking. Retroactive ratemaking
involves the current collection, though rates, of past obligations.
1 12 Until A vista
reached a settlement earlier this yea, it had no obligation to the Tribe. This case
presents Avista' s frrst opportity to recover the charges associated with that
obligation. 1I3We also reject the joint partes' alternative proposal to use ARG's to
.
109 Idaho v. United States, 533 U.S. 262 (2001). In that case, the Court held that thepost~Idao
statehood ratification of traties with the Tribe demonstrated Congressional intent to reserve
certin submerged lands of the lake for the benefit of the Tribe.
lid The Tribe's original claim potentially exposed Avista to much higQer daages. (pessemier,
Exh. No. TEP-4TC at 17). If sucessfu, thes clai could theaten the Project's fuhie
economic viabilty.
ll See n. 93.
112 In the Matter of the Application ofPugetSound Energy For Authorization Regarding the
Deferral of the Net Impact of the Conservation Incentive Credit Program, Schedule 125, and
Subsequent Recovery Thereof Through Schedule 120. Conservation Rider, Docket UE-OI0410,
Order Denying Petition to Amend Accounting Order (November 9,2001).
113 Pessemier, Exh. No. TEP-4TC at 6.
IFG_PR_002S Attachment G - WA Orders Page 6 of?
.DOCKET UE-080416IUG-080417 (Consolidted)
ORDER 08
PAGE 33
offset any settlement expenses; it is inappropriate to use ARO's for any purose other
than the cost of asset removaL. We conclude that the Settlement's terms dealing with
payments made to the Tribe are reasonable and supported by the record.
v. Conclusion.
79 We favor the resolution of contested issues though settlement when a settlement's
terms and conditions comply with the law and are consistent with the public interest.
After thorough consideration, we find the Settlement to be lawful and in the public
interest and that the resultig rates are fair, just, reasonable, and suffcient We adopt
the Settlement as the Commission's resolution of all mattrs in this proceeding.
FINDINGS OF FACT
80 Having discused above in detail the evidence received in this proceeding concerning
all material mattrs, and having stated above our fidings and conclusions upon issues
in dispute among the pares and the reasons supportng the fidings and conclusions,
the Commssion now makes and enters the following summar fidings of fact,
incorporatig by reference pertinent portons of the preceding detailed findings:
.
81 (1) The Washington Utilities and Trasporttion Commission is an agency of the
State of Wasgton, vested by statute with authority to regulate rates, rules,
regulations, practices, and accounts of public service companies, including
electrc and gas companies.
82 (2) Avista Utilities is a "public service company," an "electrical company," and a
"gas company," as those terms are defined in RCW 80.04.010, and as those
term are used in RCW Title 80. Avista is engaged in Washington State in the
business of supplying utility services and natual gas to the public for
compensation.
83 (3)The existing rates for electrc and natul gas service provided by A vista in
Washington are insufficient to yield reasonable compensation for the services
rendered. A vista requies prospective rate relief for its electrc and natual gas
servces iii Washington..
IFG_PR_002S Attchment G - WA Orders Page? of?