29025_ahrg.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AN ACCOUNTING ORDER AUTHORIZING THE INCLUSION OF POWER SUPPLY EXPENSES ASSOCIATED WITH THE PURCHASE OF CAPACITY AND ENERGY FROM GARNET ENERGY, LLC IN THE COMPANY’S POWER COST ADJUSTMENT (PCA). )
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CASE NO. IPC-E-01-42

AMENDED NOTICE OF
HEARINGS AND SCHEDULING

ORDER NO.  29025

On April 23, 2002, the Idaho Rural Council and Citizens for Responsible Land Use (hereinafter referred to as “Rural Council”) filed a Motion requesting that the scheduled prefile dates and technical hearing in this matter be vacated and rescheduled. The intervenor Rural Council initially requested that the schedule in this case be postponed for at least 90 days. On May 8, 2002, the Commission issued Order No. 29023 setting oral argument regarding Rural Council’s Motion to Vacate/Reschedule on May 10, 2002. At the oral argument, all the parties to this case entered appearances and participated in the oral argument.
BACKGROUND
This case concerns Idaho Power Company’s request that the Commission approve a Power Purchase Agreement (PPA) with Garnet Energy LLC, an unregulated affiliate of Idaho Power. Idaho Power also sought an accounting order authorizing it to include the prudently incurred expenses associated with the purchase of capacity and energy from Garnet Energy in the Company’s Power Cost Adjustment (PCA) mechanism. In a Notice issued March 8, 2002, the Commission established a discovery and hearing schedule. The Parties were directed to comply with a prefiling schedule with Staff and Intervenor’s direct testimony to be filed May 24, 2002. The technical hearing was scheduled for June 26-28, 2002. Order No. 29023 at 1.
THE MOTION TO POSTPONE
At the oral argument Rural Council argued that there were several reasons to postpone the hearing schedule. Briefly, Rural Council observed that Idaho Power had “officially” postponed the date to begin commercial operation of the Garnet plant for one year, or until June 1, 2005. Thus, counsel inferred that there was not a compelling need to maintain the existing schedule. He also requested a delay because Idaho Power had been recalcitrant in providing necessary information and materials to the Parties in this case. More specifically, instead of issuing Idaho Power’s 2002 Integrated Resource Plan (IRP) in early April, the 2002 IRP was just released last week. He insisted that the IRP contains critical information relevant to this case and its delayed release hindered the Parties’ efforts to prepare their testimony. Moreover, timely discovery responses from Idaho Power were delayed until the Parties had completed a Protective Agreement regarding the handling of alleged trade secret information.
The Rural Council also insisted that the Company has not supplied many documents and other requested information which is material to this case, including Demand Side Management (DSM) information, fuel contracts, interconnection agreements, etc. Rural Council further claimed that Idaho Power’s sole direct witness may not be qualified to present DSM testimony, thereby necessitating the need to conduct time-consuming depositions. Finally, at the oral argument, the Rural Council moved to amend its Motion and requested the Commission to defer this case indefinitely.
The Commission Staff, Ada Downwind, the Industrial Customers of Idaho Power, and the Building & Trades Council supported the amended Motion to stay this proceeding.
Idaho Power and Garnet Energy both opposed the Motion and urged the Commission to adhere to its existing schedule. Counsel for Idaho Power insisted that the Company has been diligent in answering discovery and that it was appropriate for Protective Agreements to be executed before disclosing alleged trade secret information. He next explained that the employees responsible for drafting the 2002 IRP were the very same employees answering the discovery requests. Consequently, the IRP was issued later than expected. Finally, as to other information such as DSM and the anticipated amendment of the PPA, Idaho Power’s counsel maintained that the Company believes those issues are generally not material to this case.
Idaho Power and Garnet both argued that delaying the schedule in this matter would be detrimental. If Idaho Power cancels the Power Purchase Agreement after August 23, 2002, Idaho Power on behalf of Garnet is obligated to pay a progress payment of $8.4 million to the manufacturer of the gas fired turbine. This payment is in addition to an initial down payment of $7.62 million already paid to the manufacturer by Garnet, and for which Idaho Power by exercising its option to delay is now obligated to reimburse should the Power Purchase Agreement be cancelled.
THE MOTION TO COMPEL
On May 7, 2002, the Building & Trades Council filed a Motion requesting that the Commission compel Garnet Energy to answer several discovery requests. At the time of the oral argument, Garnet had not filed an answer to the Motion to Compel but indicated at the oral argument it would do so no later than May 15, 2002. The Commission directed Garnet and the Building Council to discuss a date for scheduling oral argument on the Motion to Compel.
FINDINGS AND DISCUSSION
Based upon our review of the motions and the argument of the Parties, we conclude that Rural Council’s initial Motion to Postpone the Schedule should be granted in part. The Commission finds it reasonable to amend the schedule in this matter so that the Parties may be better prepared for the technical hearing. Delaying the remaining schedule will allow the Parties to conduct the necessary discovery and prepare for the technical hearing.
We also find merit in the Rural Council’s argument regarding DSM and related issues. As the Commission stated in our Notice of Scheduling issued March 8, 2002, one of the issues to be decided in this matter was whether the Garnet power contract was prudent and cost effective when compared to other viable alternatives including DSM, conservation projects, and renewables. It was our intent that this issue and the other issues contained in our Notice be addressed in the technical hearing. It is neither sufficient nor reasonable for Idaho Power’s sole direct witness to be unprepared to address DSM and the other identified issues. Consequently, we direct that Idaho Power shall file supplemental direct testimony by a qualified witness addressing DSM, renewables and other conservation alternatives. This supplemental prefile testimony shall be filed no later than May 24, 2002.
Turning next to the Motion to Compel, we find it appropriate to set oral argument for May 21, 2002. This date will allow Garnet to file an answer and for the Commission to timely hear this discovery dispute.
We further find it appropriate to amend our initial schedule set out in the Notice of Scheduling/Notice of Hearing issued March 8, 2002. Set out below is the new discovery and hearings schedule in this case.
DATE ACTION May 21, 2002 Oral Argument in the Commission Hearing Room at 10:00 a.m. to consider the Building & Trades Council’s Motion to Compel.
May 24, 2002 Prefile deadline of Idaho Power Company supplemental, direct testimony on DSM, conservation and other renewable alternatives
June 21, 2002 Prefile deadline of Staff/Intervenor direct testimony
July 15, 2002 Prefile deadline for Idaho Power rebuttal
July 23-24 and 26
(if necessary), 2002 Technical Hearing in Boise
July 23, 2002 Evening hearing at 7:00 p.m. to receive testimony from members of the public
The Commission understands that the Parties are already using an expedited discovery process for propounding and answering discovery. We encourage the Parties to continue to expedite the discovery process. In addition, the Commission cautions the Parties that discovery disputes which cannot be resolved should be immediately brought to the Commission’s attention. It is the Commission’s intent to avoid any further delay and to adhere to the schedule set out in this Order.
O R D E R
IT IS HEREBY ORDERED that the Motion filed by the Idaho Rural Council and Citizens for Responsible Land Use seeking a deferral in the schedule is granted in part and denied in part. The Rural Council’s request to amend its Motion for an indefinite stay of the proceeding is denied.
IT IS FURTHER ORDERED that the hearing schedule set out in the Commission’s Notice of Scheduling dated March 8, 2002 is vacated.
IT IS FURTHER ORDERED that Idaho Power submit supplemental direct prefiled testimony addressing DSM, renewables and other conservation alternatives to the Garnet power contract no later than May 24, 2002.
IT IS FURTHER ORDERED that the Parties comply with the schedule set out in this Order.
IT IS FURTHER ORDERED that the Building & Trades Council’s Motion to Compel shall be set for oral argument on May 21, 2002.
IT IS FURTHER ORDERED that to expedite service of this Order, the Commission Secretary transmit this Order via facsimile to the Parties.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of May 2002.

PAUL KJELLANDER, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

DENNIS S. HANSEN, COMMISSIONER

ATTEST:

Jean D. Jewell
Commission Secretary

bls/O:IPCE0142_dh

AMENDED NOTICE OF
HEARING AND SCHEDULING
ORDER NO. 29025 1

Office of the Secretary
Service Date
May 13, 2002