20180924Howard Exhibit 14.pdf

o
o
ON BETIAI.F OE AVISTA CORPORATION
DAVID J. MEYER
VICE PRES]DENT AND CH]EF COUNSEL EOR
REGULATORY & GOVERNMENTAL AEFAIRS
P.O. BOX 3721
741\ EAST MISSION AVENUE
SPOKANE, V{ASHTNGTON 99220-3121
TELEPHoNE: [phone]\6
FACSIMILE: [phone]
DAVI D. MEYERGAV]STACORP . COM
ON BETIAI,F OF HYDRO ONE I,IMITED
ELIZABETH THOMAS, PARTNER
KARI VANDER STOEP, PARTNER
K&L GATES LLP
925 FOURTH AVENUE, SUrTE 2900
SEATTLE, WA 981014-1158
TELEPHONE: [phone]
FACSIMILE: [phone]
LIZ . THOMASGKLGATES. COM
KARI . VANDERSTOEPGKLGATES . COM
BEEORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OE THE JOINT
APPLICAT]ON OF HYDRO ONE LIMITED
(ACT]NG THROUGH ITS INDIRECT
SUBSIDIARY, OLYMPUS EQUITY LLC)
AND
AVISTA CORPORATION
EOR AN ORDER AUTHORIZING PROPOSED
TRANSACTION
CASE NO
CASE NO
AVU-E-17-05
AVU-G-71 -09
EXHIB]T NO. I4
BRUCE F. HOWARD
EOR AVISTA CORPORATION
(ELECTRIC AND NATURAL GAS)
o
)
o
State of ldaho
DEPARTMENT OF WATER RESOURCES
321 f,ast lrront Strect . P,O. Box 83?2(l . Boise, Idaho E3'20-009E
Phone: (208) 28"-48tiO r lex: t208) 28?-6?(tfl , Wrbslte: nnw.ldwr.ldaho.got'
C.L *BUTCIIi OTTER
Gortltrr
GAIIY SPACI(MAN
Ilrt(tr
Exhibit No. 14
Case Nos. AVU-E-1 7-09IAVU-G- 1 7-05
B. Howard, Avista
Schedule 1, Page 1 of '11
August 10, 20lE
Transmitted Yia Hand Delivery od by E-moil
Paul K.jellander, President
Kristine Raper, Commissioner
Eric Anderson, Commissioner
C/O Diane Hanian, Commission Secretary
Idaho Public Utilities Commission
472W. Washington St.
Boise, Idaho t3702
Re: Case Nos. AVU-E-17-09 and AVU-G-17-05
Dear Commissioners,
I am writing to update you regnrding discussions between the Idaho Department of Water
Resources ('IDWR') and Avista Corporation ( Avista ). Since early 201t, IDWR and Avista have bcen
discussing Avista's water right claims in the Coeurd'Alene-Spokane River Basin Adjudication
("CSRBA"). The main focus of our discussions has been Avista's hydropower water rights at the three
dams and power plant at Post Falls ('Post Falls dam"). The State of Idaho has a history of disputes over
hydropower water rights. The Swan Falls contoversy of the early l9t0s involving ldaho Power's
hydropower waterrights at Swan Falls dam led to the comm€ncement ofthe Snake River Basin
Adjudication ('SRBA') in I9t7. Litigation in the SRBA related to Idaho Power's Swan Falls water
rights did not conclude until 2012. A main reason for encaging with Avista early in the CSRBA was to
avoid extended litigation over Avista's hydropower water rights, especially over the issue of
subordination to existing and funnc watcr rights.
In July of 201 E, IDWR was notified af the Joint Application for an Order Auilprizing Proposed
Trotsrction ('Joint Application") filed with the Idaho Public Utilitics Commission ("PUC) by Avista
and Hydro One Limited ("Hydro One"). The Joint Application sought the PUC's approval of a planned
merger between Avista and Hydro One purcuant to Idaho Code $ 6l-32t. Immedialely, IDWR was
concerned the merger would disrupr the adjudication claim discussions ard might impede or prevent
resolution of the issues. Furthermore, IDWR was concemed the merger could result in a change in the
use of water authorized by Avista's hydropower water rights. To ensure that the public interest as it
pertains to Avista's uss of water under its hydropower water rights, would not be adversely affected,
IDWR moved to intervene in the PUC proceeding. The PUC subsequcntly granted IDWR's petition to
intervenc.
While IDWR's pctition to intervene was pending before the PUC, IDWR and Avista continued
discussing Avista's hydropower water rights at Post Falls dam. We arp pleased to inform you that IDWR
and Avista reachcd an agreement that addresses IDWR's conccms. Spccifically, IDWR and Avista have
o
o
o
o
August 10, 2018
Letter to Commissioners
Page2
reached an agreement regarding subordination of Avisa's water rights consistent with the historical
operations at Post Falls dam. IDWR and Avista have agreed that Avista's waler right claim nos. 95-451E,
95-91 15, and 95-91 l9 shall be recommended in the CSRBA with the following subordination language:
The use of water confirmed in this right shall be junior and subordinate to permits, licenses, or
decrees for all uses, except for permits, licenses, or decrees for inigation storage or power
purposes, within the State of Idaho with a priority date later than July 25,201E, diverted upstr€am
from all three points ofdiversion for this right.
The use of water confirmed in this right shali not be subordinate to permits, license, or decrees
within the State of Idaho diverted downstrram from all three points of diversion for this right.
The egreemert ensures that the public interest, es it relates to Ayista's water usc pursuant
to its water rights, will oot be adversely effected by the proposed transrction between Aviste and
Hydro One. The agreement safeguards existing and future water usens from changes in historical
operations, helps protect the sumrner lake level of Coeur d'Alene Lake, and supports the ongoing
operations of Post Falls dam in a manner consistent with prior agreements and the Idaho Departnent of
Environmental Qualiry 40 I Certificarion.
A copy of the agreement between IDWR and Avista is attached to this letter. To ensure
documentation of the agreement before the PUC, IDWR requests that if the PUC approves the pending
transaction berween Avista and Hydro One, the PUC include the agreement as an attachment or exhibit to
any such order so that the resolution ofthis issue is documented in the order.
Sincerely,
Director
Attachment: Agreement Regarding Subordination of Avista's Post Falls Hydroelectric Facility Water
Rights
Cc; Allparties
Exhibit No. 14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 2 ol 1'l
o
The use of water confirmed in this right shall be junior and subordinate to permits, licenses, or
decrees for all uses within the State of ldaho with a priority date of, or earlier than, July 25,2018,
diverted upstream from all three points ofdiversion forthis right.
o
o
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this l0s day of August 2018, I served a true and corrcct
copy of the foregoing document on the following by the method(s) indicated.
Idaho Public Utilities Commissioners
C/O Diane Hanian
Commission Secrctary
Idatro Public Utilities Commission
472W.I/ashington St.
Boise, Idaho 83702
d i ane. holt/0puc. idaho. gov
David Meyer
Vice Prcsident and Chief Counsel of
Regulatory & Governmental Affairs
Avista Corporation
P.O. Box 3727
Spokane, WA99220-3727
Dav i d. me.ver@av i stacorp.conr
Patrick Ehrbar
Director of Rates
State & Federal Regulation
Avists Corporation
patrick. [e-mail]
Elisabeth Thomas
Kari Vander Stoep
Dirk Middents
K&L Gates LLP
925 Fourth Avenue, Suite 2900
Seattle, WA 98104-1158
I iz. thomas.6k I eates.conr
kari.vanderstoeo@kl eates.com
d i rk. m iddenbfa.k I sates.com
Janes Scarlett
Executive Vice Presidemt & Chief
Legal Officer
Hydro One Limited
j [e-mail]
IDAHO PUCD U.S. Mail, poshge prepaid
[l xana Delivery
tr
Ovemight Mail
Facsimilc
Email
AVISTA CORPORATION
U-S. Mail, postagc prepaid
Hand Delivery
Ovcrnight Msil
Facsimile
Email
f] u.s. Mail, posqge prcpaid
Hand Delivcry
OvemightMail
Facsimile
Email
HYDRO ONE LIMITED
U.S. Mail, postqge prepaid
Hand Delivery
Ovcrnight Mail
Facsimile
Email
Etrtrntr
tra
trtrtrtra
Exhibit No. 14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 3 of l'1
o
U.S. Mail, postage prepaid
Hand Dclivcry
Ovemight Mail
Facsimilc
Email
trtrnuB
o
o
Brandon Karpen
Deputy Attomey General
Idaho Public Utilities Commission
472W, Washington
P.O. Box 83720
Boise, ID E3720-0074
brandon. karpen@puc. idaho. gov
Ronald Williams
Williams Bradbury, PC
P.O. Box 388
Boise,ID 83701
ron@u'i I I iamsbradbun'.com
Larry A. Crowley, Director
The Enerry Srategies Institute, Inc.
5549 S. Cliffsedge Ave.
Boise, tD E3716
[e-mail]
Dean J. Miller
dean i m i I I err,rilcableo ne. net
Peter J. Richardson
Richardson Adams, PLLC
515 N. 276 St.
Boise,ID 83702
oeter@richardsonadams. com
Dr. Don Reading
6070 Hill Road
Boise,ID 83703
dreading@mi ndsprine.com
caro l. hauen@c I eanratemaper.com
[e-mail]
i ohn. i acobs@clearwaterpaper. com
[e-mail]
nathan. sm ilh@cl earwaterpaper.com
IDAHO FOREST GROUP, LLC
COMMISSION STAFF
aDtrtra
U.S. Mail, postage prepaid
Hand Delivery
Overnight Mril
Facsimile
Email
U.S. Mail, postEge prcpatd
Hand Delivery
Ovemight Mail
Facsimile
Email
U.S. Mail, postage prcpaid
Hand Delivery
Overnight Mail
Facsimile
Email
U.S. Mail, posagc prepaid
Hand Dclivery
Overnight Mail
Facsimile
Email
U.S. M8il, pootsge prepEid
Hand Delivcry
Ovemight Mail
Facsimile
Email
U.S. Mail, postrge prepaid
Hand Delivery
OvemightMail
Facsimile
Email
El nr"it
fi rmait
EI emait
E emal
Entrtra
atrtrtrE
trntrtra
trCLEARWATER PAPER. COR.PORATION
Exhibit No. 't4
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 4 of 11
o EI rrnait
trtrtrDa
o
Brady M. Prudy
Atlorney at Law
2019N. rP sr
Boise,ID 83702
bmourdv(Ehotmail.com
Benjamin J. Otto
Idaho Conservation League
710 N. 66 St.
Boise,ID 83702
bottofd i dahoconservat io n. orB
Daniel le Franco-Malone
Schwerin Campbell Barnard
Iglitzin & Lavitt LLP
l8 West Meroer Street, Suite 400
Seattle, WA 98119-3971
[e-mail]
Norman M. Semanko
Parsons Behle & Latimer
800 West Main Street, Ste. 1300
Boisc,Idaho 83702
nsemanko@ oarsonsbeh I e.com
CO}iMUNITY ACTION PARTNERSHIP ASSOCIATION OF IDAHOatrU.S. Mail, postagc prcpaid
Hud Delivery
Ovcrnight Mail
Facsimile
Email
IDAIIO CONSERVATION LEAGUE
U.S. Mail, postage prepaid
Hand Delivery
Ovcrnight Mail
Facsimile
Email
U.S. Mail, postage prepaid
Hand Dclivery
Ovcrnight Mail
Facsimile
Email
AVISTA CUSTo}IERGROT'P
[t u.s. Mail, postagc prrcpeid
WASHINGTON AND NORTHERN IDAHO DISTRICT COUNCIL OF LABORERS
tru
trtrtrtra
atrtrtra
o trtrtrE
Hud Delivery
Ovcrnight Mail
Facsimilc
Email
L. Baxter
Exhibit No. 14
Case Nos. AVU-E- 1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 5 of 11
o
o
o
Agreement Regarding Subordination of Avista's Post Falls Hydroelectric Facility Water Rights
Purpose
This Agreement, reached between Avista Corporation, a Washington corporation ("Avista") and the
ldaho Department of Water Resources ("lDWR") (collectively the "Parties), is intended to capture the
mutual understanding of the Parties regarding subordination of Avista's Post Falls water rights, of record
with ]DWR as Avista's claim nos. 95"4518, 95-9115, and 95-9119 (hereafter "Avista's water rights"). This
Agreement guides the Parties' actions in settings including, but not limited to, the Coeur d'Alene-
Spokane River Basin Adjudication ("CSRBA") and the currently pending proceeding before the ldaho
Public Utilities Commission ("PUC") related to the proposed merger of Avista and Hydro One Limited
(acting through its indirect subsidiary Olympus Equity ttC)("Hydro One").
This Agreement is built upon several interests of the Parties:
o To protect the summer lake level of Coeur d'Alene Lake;
o To ensure the public interest, as it relates to the use of water by Avista, will not be adversely
affected by the proposed transaction between Avista and Hydro One; and
r To support the ongoing operations of the three dams and power plant at Post Falls ("Post Falls
dam") in a manner consistent with prior agreements and as referenced by the ldaho
Department of Environmental Quality 401 Ceftification ("401 Certification") for Post Falls dam
and the Federal Energy Regulatory Commission's License for the Spokane River Project #2545
("FERC license").
Subordination of Avista's water rights
The Parties agree that Avista's water rights are subordinated consistent with the following language, and
the following language will be included in the CSRBA claims for Avista's water rights and will be
incorporated in IDWR's recommendations of Avista's water rights in the CSRBA Director's Report for
Basin 95 ("Directo/s Report"):
The use of water confirmed in this right shall be junior and subordinate to permits,
licenses, or decrees for all uses within the State of ldaho with a priority date of, or
earlierthan, July 25, 2018, daverted upstream from all three points of diversion for this
right.
The use of water confirmed in this right shall be junior and subordinate to permits,
licenses, or decrees for all uses, except for permits, licenses, or decrees for irrigalion
storage or power purposes, within the State of ldaho with a priority date later than July
25,2Ot8, diverted upstream from all three points of diversion for this right.
The use of water confirmed in this right shall not be subordinate to permits, license, or
decrees within the State of ldaho diverted downstream from all three points of
diversion for this right.
Agreed Actions bythe Parties
1. Upon both Parties' signature to this Agreement, IDWR will convey to the PUC a copy of this
Agreement along with a letter stating that if the PUC approves the pending transaction between
Avista and Hydro One, the PUC shall reference this Agreement in any such order. The letter will
1
Exhibit No. 14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 6 of 11
o
o
o
also explain that with this Agreement, IDWR is satisfied that the proposed merger, with respecl
to Avista's water rights, will not be adverse to the public interesti
2. Avista will not object to the terms of subordination described above which will be included in
the Directorrs Report for Avista's water rights, and will support those terms in the CSRBA;
3. The Parties agree on dismissal or withdrawal, as appropriate, of Avista's federal water right
claims in the CSRBA, numbered 95-16663 and 95-16654; and
4. Avista also owns certain water rights for power purposes at Cabinet Gorge dam, of record with
IDWR as water right nos. 95-4555, 96-2179,96-2180, and 96-2269. IDWR and Avista aBree to
work, in good faith, toward reaching an agreement regarding subordination of Avista's water
rights at Cabinet Gorge dam.
General Terms
1. Consideration. The Parties acknowledge receiving sufficient consideration for the commitments
contained in this Agreement and waive any argument that they might have in any judicial
proceeding that no consideration exists to support this Agreement or that the consideration
received is not sufficient.
2. Bindins Effect of Agreement. This Agreement is intended to be a final and binding aBreement
between IDWR and Avista, jointly and severally, and inures to the benefit of, and is binding
upon, the successors in interest and assigns of each entity. The Parties further agree that this
Agreement is not contingent upon approval of the pending PUC merger case between Avista
and Hydro One.
3. Caoaciw to Execute Agreement. The Parties warrant and represent that the person executing
this Agreement on its behalf is empowered to do so and thereby binds it by signing this
Agreement.
4. Waivers. The failure to object to any breach of any term or condition in this Agreernent shall
not constitute a waiver, and no failure to object shall be deemed a waiver of any prior or
subsequent breach.
5. Entiretv of Aereement. This Agreement represents the entire and integrated agreement
between the Parties with respect to the subject matter hereof. No promise or inducement has
been offered or made except as herein set forth, and this Agreement is executed by each party
without reliance upon any statement or representation by any other party or its agent.
6. Modification. To the extent this Agreement may be amended or modlfied, it shall be only by a
written agreement signed by each of the parties to this Agreement.
7. Dispute Resolution. The Parties agree to meet and discuss informally, in good faith, before filing
an action arising from the Agreement.
8. Execution of Axreement in Parts. Due to time constraints, the parti€s acknowledge that it is not
possible to have all Parties sign the same copy of this Agreement. fherefore, the parties agree
that this Agreement may be executed in any number of counterparts, each of which shall be
deemed an oriBinal, but allof which together shall constitute one and the same instrument.
2
Exhibit No. '14
Case Nos. AVU-E- I 7-09/AVU-G- 1 7-05
B. Howard, Avista
Schedule 1, Page 7 of 1'l
O
o
o
9. Siordures. In witness wher€of, the partles to this Agreement through thelr duly authorizcd
representatlrrcs have execrlted thls Agreement and certlfy that they have read, understood, and
agreed to the terms and condltions of thls Agreement as set forth herein.
Agreed to, the 256 ofJulY,2018.
Avista Corp
Bruce Howard, Sr. Dlrrtor
Real Estate and Environmental Affairc
For IDWR
6ary Spackrnan, Dlrector
ldaho Department of Water Resources
3
Exhibit No. '14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 8 of 11
o
ACKNOWtrIIGEMENTS
STATE OF TA)o*h,r*r{o*
?c(a-wL ss.
COUNTY OF
me to
be the person who executed the foretoing lnstrument on behalf of Avista Corporation, and he/she
acknowledged to me that he/she executed the same.
NOTARY
Residing r t^lA
STATE OF
COUNTY OF
On this
-
day of luly,2O18, before il€,
A notary public of the State of ldaho, personally appeared GARY SPACKMAN, the Director of the ldaho
D€partment of Water Resources, known or ldentlfied to me to be the penon who executed the
foregoing lnstrument on behalf of the ldaho Department of Water Resources, and he acknowledged to
me that he executed the same.
NOTARY PUBLIC
Residing at:
My commission expires:
5S,
4
Exhibit No. 14
Case Nos. AVU-E- 1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 9 of 1'l
On thir?S dryof 2018,before me,
A notary publk ofthe State of pcrsonally appeared
.a
)
)
)
)
)
)
o
9. SEnlturGs. ln wltness wtnrcof, thc pertles to thls Agresnent throqh thelrduly authorlzed
rcprrsentatlws have executed thls Ajreemrnt ard certfi that they harrc tE.d, understood, and
agr:cd to the tarm! end condltlons of thls ASrecmcnt er s€t forth hcr:ln.
Agrecd to, thc 25s ofJuly, 2018.
For Avlsta Corp
Bruce Howald, Sr. Ditrctor
Real Estrtc and Envlronmcntal Afreirs
o
3o
For
Grry Dlructor
ldaho Departmrnt of Water Resources
Exhibit No. 14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 10 of11
o
ACKNOWLEDGEMENTS
STATE OF
COUNTY OF
On this
-
day of JulY, 2018, before ffi€, .
A notary public of the State of
-
personally appeared
a _ of Avista Corporation, known or identified to me to
be the person who executed the fore8oing anstrument on behalf of Avista Corporation, and he/she
acknowledged to me that hc/she executed the same.
NOTARY PUBLIC
Residing at:
My commission explrcs:
Hno'
s5.
o STATE OF
On tnis.Say of July, 2018, before me,{.*., A u:t.,ta-
A notary public of the State of ldaho, personally appeared GARY SPACKMAN, the Director of the ldaho
Departrnent of Water Resources, known or identified to me to be the person who executed the
foregoing instrument on behalf of the ldaho Department of water Resources, and he acknowledged to
me that he executed the same.
tl la,
-llt A
6 NOTARY PUBTIC
+Reslding at: ?)c,s.z- i{<t^rxo-
My commission f^.1\ilFo..)-
+a
ID
ss.
4
Exhibit No. 14
Case Nos. AVU-E-1 7-09/AVU-G-1 7-05
B. Howard, Avista
Schedule 1, Page 'l'1 of 11
L
l{oI,{?
t.-n(t'uc
o
COUNTY OF $vt^-
I