20180718Decision Memo.pdf

DECISION MEMORANDUM
TO COMMISSIONER KJELLANDER
COMMISSIONER RAPER
COMMISSIONER ANDERSON
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL
FROM:BRANDON KARPEN
DEPUTY ATTORNEY GENERAL
DATE: JULY 17,2018
SUBJECT:JOINT APPLICATION OF HYDRO ONE LIMITED AND AVISTA
CORPORATION FOR APPROVAL OF MERGER AGREEMENT;
CASE NOS. AVU.E.17.O9 AND AVU.G-17-05
On July 3,2018, the Commission ordered the scheduling of technical hearing related
to various issues raised by the public through written public comments, and at the public
hearings convened by the Commission. Order 34101. The Commission set the technical hearing
for July 23, 2018. After the Commission scheduled the technical hearing, the Commission
granted intervention to the Avista Customer Group, which is opposed to the proposed merger.
Two additional developments have now occurred: (l) the Idaho Department of Water
Resources (IDWR) has petitioned to intervene and has notified the Commission that IDWR plans
to impose merger-related conditions on Avista's hydropower rights in the merger; and (2) Hydro
One's CEO and board of directors have resigned. These matters are further described below.
A. Petition to Intervene and Notice of Intent to Consider Conditions
On July 9,2018, the IDWR petitioned to intervene "as a matter of right due to the
mandatory duty of the Commission [related to Idaho Code $ 6l-328(4) (to consider and include
any conditions required by the IDWR Director)1." IDWR Petition at3-4. IDWR also claimed a
substantial interest in the case. Further, IDWR argued its petition was timely (for the same
reasons the Avista Customer Group cited when it successfully petitioned to intervene).
Alternatively, IDWR argued that good cause exists to grant late intervention. Id. at 4-5. In
conjunction with the petition, IDWR notified the Commission that IDWR is considering
appropriate conditions pursuant to Idaho Code $ 42-1701(6Xa). Id. at3.
IDECISION MEMORANDUM
Applicants Avista Corporation and Hydro One Limited oppose the IDWR's petition
to intervene. In summary, Applicants argue that the Commission should deny intervention for
several reasons. Primarily, the Applicant's contend IDWR lacks any authority to impose
conditions related to the proposed merger because no water rights are being sold, assigned or
transferred-Avista is keeping its hydropower water rights after the merger, and there will be no
change in Avista's water use. Applicants also submit that the ongoing Coeur d'Alene-Spokane
River Basin General Adjudication, in Idaho's Fifth Judicial District, is the correct proceeding in
which to address Avista's water rights. Id. at 2. To that end, Applicants state it "will agree to
incorporate whatever condition on water rights that are subsequently imposed in the Coeur
d'Alene-Spokane River Basin Adjudication, and will amend and supplement their merger
conditionsaccordingly...." Id.at2-3. Applicants claim IDWR's intervention is untimely,
without a good cause explanation, and that IDWR seeks to broaden the issues at the eleventh
hour of this proceeding. 1d.
Applicants also express concern that the IDWR has notified the Commission of its
intent to consider conditions without describing how IDWR proposes to arrive at such
conditions. Id. at 7. Applicants express further concern that allowing intervention would put the
Commission in a position of making a determination on a water dispute outside its statutory
change, and unduly prolong the case, or jeopardize the merger. Id. at 8.
B. Hydro One Monagement Changes
On July 11,2018, Staff learned from media reports that the Hydro One CEO and the
board had resigned. The Applicants have not filed anything related to this development, and Staff
is unclear on what affect, if any, it might have on the proposed merger and the Commission's
conduct of this proceeding.
COMMISSION DECISION
Does the Commission wish to grant or deny IDWR intervention?
Does the Commission wish to do anything else in light of the developments described
above?
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DECISION MEMORANDUM 2
General