20110425_3327.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KJELLANDER
COMMISSIONER REDFORD
COMMISSIONER SMITH
COMMISSION SECRETARY
COMMISSION STAFF

FROM: DON HOWELL
DEPUTY ATTORNEY GENERAL

DATE: APRIL 21, 2011

SUBJECT: REVISION OF THE BPA SETTLEMENT AGREEMENT, BPA DOCKET
NO. REP-12

On March 28, 2011, the Commission formally adopted a 97-page Settlement
Agreement in the BPA REP-12 case. The Settlement Agreement is intended to resolve long-
standing dispute among the settling parties. The Settlement Agreement was the product of a 12-
month formal mediation process involving the 6 regional utilities; the State Commissions of
Idaho, Oregon and Washington; the Citizens Utility Board (CUB) of Oregon;1 and many but not
all of the more than 120 consumer-owned utilities (the COUs).
The settling parties recognized that not all parties to the five Ninth Circuit appeals
may settle. In particular, the Industrial Customer Group (APAC) and some COUs will not
support the settlement. However, the parties that do settle have agreed to waive their claims
against other settling parties, thereby minimizing the overall liability exposure of the settling
parties. BPA will use the REP-12 case as the formal proceeding to determine whether it should
adopt the settlement.
REVISION TO THE AGREEMENT
The Settlement Agreement called for parties intending to join the settlement do so no
later than April 15, 2011. Besides each member of the IOU Group, the Settlement Agreement
required that COUs representing 91% of BPA’s load sign onto the Agreement. If this 91%
condition was not satisfied, then the Settlement Agreement “will be void ab initio.” Section

1 These first 10 parties are commonly referred to as the IOU Group.
DECISION MEMORANDUM 2
1.2.2. According to BPA’s calculation, 81.5% of the COU load signed the Settlement
Agreement. Consequently, by the terms of the Settlement Agreement, it became void.
During the week of April 20, the IOU Group met again with the COU Group in an
effort to salvage the Settlement Agreement. Following discussions among the group members
and between the IOU and COU Groups, the parties agreed to reduce the 91% threshold. On
April 22, 2011, the parties generally agreed to amend that provision of the Settlement Agreement
and set the signature condition at 75%. Combining this threshold with the regional IOU load
would mean that more than 90% of the region’s electrical load would agree to the settlement.
The signing parties agreed that they have come too far to abandon the settlement now.
It is my opinion that the revised settlement represents a fair, just and reasonable
approach to this extensive litigation. Although the settlement will not completely resolve all
legal disputes, it will significantly limit litigation exposure and potential liabilities for the settling
parties, particularly the three utilities we regulate. In particular, the settlement would end the
retroactive lookback payments and the deemer mechanism unless the revised settlement is
overturned by the Ninth Circuit.
COMMISSION DECISION
In summary, I recommend that the Commission adopt the revised Settlement
Agreement and authorize me to transmit a signature page to BPA. Does the Commission
concur?

bls/M:BPA Settlement Agreement_REP-12_dh3