20040831Decision Memo.pdf

DECISION MEMORANDUM
TO:COMMISSIONER KJELLANDER
COMMISSIONER SMITH
CO MMISSI 0 NER HANSEN
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL STAFF
FROM:SCOTT WOODBURY
DATE:AUGUST 25, 2004
RE:CASE NOS. AVU-04-1/AVU-04-1 (A vista)
POTLATCH DISCOVERY REQUEST-MOTION TO COMPEL
On August 4, 2004, Potlatch requested the following infonnation from A vista:
Request No. 86:
In A vista s latest quarterly earnings report, Gary Ely states that A vista has
entered into a non-binding letter of intent to purchase Mirant's half-interest in
Coyote Springs II.
(a) Please provide a copy of the letter of intent.
(b) Please provide a statement of the purchase price and any terms and
conditions agreed to by A vista and Mirant that are not included in the letter
of intent.
( c ) Please provide copies of all studies comparing the cost and benefits of
Coyote Springs II to existing or potential alternative resources.
IDAPA 31.01.01.225
Avista objected to Potlatch's request for infonnation in the following manner:
Response No. 86
Avista respectfully objects to this request for infonnation. The possible purchase
of Mirant's interest in Coyote Springs II is not at issue in these proceedings;
A vista has asked for no rate relief or other regulatory treatment with respect to
this potential transaction in this docket. Should A vista consummate this
purchase, any request for associated rate relief will be the subject of future
proceedings, which will afford all parties the opportunity for discovery.
Moreover, it should be recognized that only a confidential non-binding letter of
intent has been executed. A definitive Purchase and Sale Agreement has yet to
DECISION MEMORANDUM
be negotiated and executed. Unless and until such an agreement is reached, any
such purchase remains indefinite.
IDAP A 31.01.01.225.03.
On August 24, 2004, Potlatch filed a Motion to Compel Discovery Responses together with
an accompanying Affidavit. As reflected in the Affidavit, Potlatch states and contends as follows:
A vista Corporation has failed to produce discoverable records concerning its
intent to purchase Mirant's half-interest in Coyote Springs II on the grounds that
the possible purchase of Mirant' s interest in Coyote Springs II is not at issue in
these proceedings.Avista Corporation s objection is inconsistent ,with the
rules of discovery and law. Rule 26(b)(1) of the Idaho Civil Rules provides that
parties may obtain discovery regarding any matter, not privileged, which is
relevant to the subject matter involved in the pending action...." One of the
primary issues in this case is whether A vista should be allowed to ratebase
construction costs in excess of Coyote Springs II's fair market value. The price
and terms of the potential purchase of Mirant's half of Coyote Springs II are
obviously relevant to the detennination of the plant's fair market value. More
generally, this case calls into question the prudence of Avista s resource
acquisition strategies in its dealings with Mirant in the natural gas transaction
identified as "Deal A " and all of the discovery requests are designed to produce
information relevant to these issues.
Potlatch requests an immediate Order compelling the production of Potlatch Corporation s six set of
discovery requests to Avista Corporation by August 30, 2004, in order that Potlatch Corporation and
the Commission may be fully advised concerning Avista Corporation s intent to purchase Mirant's
half-interest in Coyote Springs II. Potlatch does not request oral argument on this motion, but stands
ready to appear in any further proceedings the Commission may deem necessary or advisable.
COMMISSION DECISION
Potlatch has requested infonnation regarding the possible purchase by Avista of Mirant'
half-interest in Coyote Springs II. Avista has objected to Potlatch's request for information. Potlatch
has filed a Motion to Compel. How does the Commission wish to handle Potlatch's Motion?
Scott Woodbury
VldlM:A VUEO41 A VUGO41 swdmemo
DECISION MEMORANDUM