28355_hearing.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF APPLICATION OF AVISTA CORPORATION FOR AUTHORITY TO SELL ITS INTEREST IN THE COAL-FIRED CENTRALIA POWER PLANT. )
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) CASE NO. AVU-E-99-6

NOTICE OF PETITION FOR RECONSIDERATION

NOTICE OF SCHEDULING

NOTICE OF HEARING

ORDER NO.  28355

On March 7, 2000, the Idaho Public Utilities Commission (Commission) issued final Order No. 28297 in Case No. AVUE-00-06, approving the proposed sale by Avista Corporation dba Avista Utilities—Washington Water Power Division (Avista; Company) of its 15% ownership interest in the coal-fired Centralia Plant. In its Order the Commission found the depreciation reserve methodology to be a reasonable method for distribution of gain associated with the sale. The customer portion of the regulatory gain for Idaho, pending final sale and adjustment, is $6,811,625. Under the accounting approved by the Commission, current rates for Idaho tariff customers of Avista are to be reduced by a uniform 1.318%. Pursuant to the Commission’s Order, the Potlatch-Lewiston facility, a special contract customer of Avista, was denied any share of the sale gain. The Commission in its Order stated:
The Potlatch-Lewiston facility is a special contract customer and its rates are determined within the four corners of its service contract. We find that the Company in this case presents a persuasive argument for denying Potlatch any share of the customer portion of the Centralia gain.

As reflected earlier in its Order,
Potlatch is excluded from the sharing of any gains because, the Company contends, it is a special contract customer. The rates for Potlatch are not entirely based on cost of service ratemaking principles. Tr. pp. 177, 178, 191, 192. Potlatch is not subject to price adjustments (either increases or decreases), is exempted from PCA rebates and surcharges, is exempted from the DSM tariff rider, and was exempted from the WWP-E-98-11 general rate case. Tr. p. 158. Price adjustments for Potlatch are identified in its contract. Tr. p. 180.

YOU ARE HEREBY NOTIFIED that on March 28, 2000, Potlatch Corporation, a party to the underlying case, filed a timely Petition for Reconsideration of the Commission’s Order No. 28297, specifically that portion of the Commission’s Order “denying Potlatch any share of the customer portion of the Centralia gain.” Reference Idaho Code 61-626. Potlatch contends that the Commission’s Order is “contrary to the evidence, unreasonable, discriminatory and unlawful.” Potlatch contends that “regardless of the form of the contract, all contract rates, including the Potlatch rates at issue in this case, have been required to cover the cost of service and be ‘just, reasonable, and non-discriminatory’ vis-à-vis other ratepayers.” Avista and the Commission, Potlatch contends, are arguably estopped to take a position to the contrary. Potlatch contends that it has both a legal and equitable right to participate in the gains from the Centralia sale by virtue of the fact that it contributed to the plant’s depreciation reserve both as a special contract customer and for the period prior to 1991 when Potlatch contends that its rates were subject to rate adjustments in the same manner as tariff rates. Nothing in the agreement, Potlatch argues, can be construed as a waiver of Potlatch’s legal rights in this regard. To exclude Potlatch from the gain of the Centralia sale, Potlatch contends, unjustly enriches other Idaho ratepayers at Potlatch’s expense. If rehearing is granted, Potlatch states that it intends to produce additional evidence in the form of Washington Water Power pleadings, relevant prior Commission Orders, and brief testimony calculating the amount due Potlatch.
YOU ARE FURTHER NOTIFIED that the Commission after reviewing and considering the Petition of Potlatch, the transcript record and its Order No. 28297 in this case finds it reasonable on grounds of equity and fairness to provide Potlatch with additional opportunity to present its claim of entitlement to a share of the customer portion of the Centralia gain. The Commission finds it reasonable to grant reconsideration by evidentiary hearing. Reference IDAPA 31.01.01.332. The Commission notes that the entitlement of Potlatch may be a mixed question of law and fact. We note that the parties to the Potlatch “Electric Service and Purchase Agreement” are both parties to this case. Avista contends that Potlatch should not share in the Centralia gain—Potlatch contends that it should. Arguably, the contract should define rights and obligations. If the matter cannot be resolved outside the contract or if the intent of the parties is not readily apparent or obvious from the contract language, the appropriate forum for resolving the dispute may be the courts and not the Commission. The Commission reminds the parties of its limited jurisdiction regarding contract interpretation. Reference Idaho Code 61-501; Afton Energy Inc. v. Idaho Power Company, 111 Idaho 925, 729 P.2d 400 (1986); and Lemhi Telco v. Mountain States Tel & Tel, 98 Idaho 692, 571 P.2d 753 (1977).
YOU ARE FURTHER NOTIFIED that pursuant to agreement of the parties and the Commission, the following scheduling for proceedings on reconsideration has been adopted:
Friday, May 12, 2000

Thursday, June 15, 2000 Prefile deadline—direct testimony
Potlatch Corporation

Prefile deadline—direct testimony
Avista and Commission Staff
Pursuant to agreement, all prefile dates are “in-hand” dates. The prepared testimony and exhibits must conform to the requirements of Rules 266 and 267 of the Commission’s Rules of Procedure . Reference IDAPA 31.01.01.266-267.
The parties are apprised that discovery is available pursuant to Commission Rules of Procedure , IDAPA 31.01.01.221-234. The parties should coordinate discovery requests and responses so that they are able to comply with the established prefile deadlines.
YOU ARE FURTHER NOTIFIED that the Commission will conduct a Hearing on Reconsideration in this matter commencing at 9:30 A.M., WEDNESDAY, JUNE 21, 2000, AT THE COMMISSION HEARING ROOM, 472 WEST WASHINGTON STREET, BOISE, IDAHO.
YOU ARE FURTHER NOTIFIED that all hearings and prehearing conferences in this matter will be held in facilities meeting the accessibility requirements of the Americans with Disabilities Act. In order to participate, understand testimony and argument at a public hearing, persons needing the help of a sign language interpreter or other assistance may ask the Commission to provide a sign language interpreter or other assistance as required under the Americans with Disabilities Act. The request for assistance must be received at least five (5) working days before the hearing by contacting the Commission Secretary at:
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, ID 83720-0074
[phone] (TELEPHONE)
[phone] (TEXT TELEPHONE)
[phone] (FAX)

YOU ARE FURTHER NOTIFIED that all proceedings in this case will be held pursuant to the Commission’s jurisdiction under Title 61 of the Idaho Code and that the Commission may enter any final Order consistent with its authority under Title 61.
YOU ARE FURTHER NOTIFIED that all proceedings in this matter will be conducted pursuant to the Commission’s Rules of Procedure, IDAPA 31.01.01.000 et seq.

O R D E R
In consideration of the foregoing and as more particularly described above, IT IS HEREBY ORDERED and the Commission in Case No. AVU-E-99-06 does hereby grant reconsideration of its Order No. 28297 in the manner indicated and pursuant to the foregoing scheduling.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of April 2000.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/O:AVU-E-99-06_sw2

NOTICE OF PETITION FOR RECONSIDERATION
NOTICE OF SCHEDULING
NOTICE OF HEARING
ORDER NO. 28355 1

Office of the Secretary
Service Date
April 27, 2000