20160407Notice of Affiliate Transaction.pdf

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April7,2016
Idaho Public Utilities Commission
472West Washington
Boise,ID 83702-5983
Jean D. Jewell
Commission Secretary
PacifiCorp Notice of Affiliate Transaction
Case No. PAC-E-05-8
Dear Ms. Jewell:
This letter will serve as notice pursuant to Commitmentl 17(2), incorporated in the
Idalro Public Utilities Commission Order No. 29973 issued February 13,2006, as supplemented
by Order No. 29998 March 14,2006, in the above-referenced proceeding, approving the
acquisition of PacifiCorp by MidAmerican Energy Holdings Company (now "Berkshire
Hathaway Energy Company" or "BHE"), of an affiliated interest transaction with Cottonwood
Creek Consolidated Inigation Company ("CCCIC") for a Letter Agreement allowing CCCIC to
utilize some or all of PacifiCorp's CCCIC primary water allotment during the2016 inigation
season in exchange for CCCIC's agreement to begin its irrigation season on April 10, 2016. A
verified copy of the Letter Agreement ("Agreement") is included with this Notice as Attachment
A.
CCCIC is a non-profit mutual irrigation company, which is a privately owned water stock
company. PacifiCorp holds approximately 26% of the outstanding water stock in CCCIC.
PacifiCorp pays annual assessment fees to CCCIC to help cover its operating and maintenance
costs, as well as other costs pertinent to conducting its business, in exchange for receiving access
to water used by PacifiCorp's Hunter generating facility. PacifiCorp also previously made
capital investments in CCCIC to ensure a long-term, frrm water supply for its Hunter generating
facility. PacifiCorp also appoints one member to CCCIC's board of directors.
While irrigation companies typically use "ownership by shares" exclusively to allocate and grant
water rights (and as such, they are not typical equity interests in the entity), this ownership
interest and appointment authority could be deemed to create an affiliate interest in some
PacifiCorp jurisdictions. PacifiCorp thereby submits this filing out of an abundance of caution.
R Jelf Richards
Vice President and General Counsel
1407 W. North Temple, Suite 320
Salt Lake CiA, UT 81116
801-22047i1 Ollice
j eff , r ic h ar ds@1t ac ifi c o rp. c o m
Attention:
Re:
Jean D. Jewell
Notice of Affiliate Transaction
April7,2016
PacifiCorp has determined that it does not need its 2016 CCCIC share water allocation.
PacifiCorp wishes to lease its water share allocation back to CCCIC for the 2016 irrigation
season, and CCCIC will, in tum, start its irrigation season on April 10,2016, approximately two
weeks earlier than usual. CCCIC will also pay PacifiCorp $0.50 per acre-foot of water it
receives under the Agreement. The term of the Agreement is from April 10, 2016, through
October 31,2016, with no option for renewal.
The water received through PacifiCorp's CCCIC water shares is used at PacifiCorp's Hunter
generation facility. Entering into this Agreement will reduce the risk of PacifiCorp losing
approximately 16,000 acre-feet of water that has been carried over in Joes Valley Reservoir. If
the reservoir spills, PacifiCorp will lose its carry-over water. CCCIC's use of the water shares
under the Agreement will decrease the risk of the reservoir spilling, thereby increasing the
chance of PacifiCorp maintaining its 16,000 acre-foot of carry-over water required for the Hunter
generation facility. Additionally, it is estimated that PacifiCorp will receive an aggregate
amount of $4,000 in exchange for the water CCCIC receives under the Agreement. Entering into
the Agreement is in the public interest because PacifiCorp's effective utilization of water
resources will maximize water availability at its Hunter generating facility, ensuring a long-term
firm water supply that is necessary to meet its obligation to provide safe and reliable electric
service.
Please do not hesitate to contact me if you have any questions.
R. Jeff Richards
Vice President and General Counsel
PacifiCorp
Enclosures
Best Regards,
YPecIHEoRP
March 28,2016
Cottonwood Creek Consolidated Irrigation Company
Attn: Clyde Magnuson - President
P.O. Box 678
Orangeville, Utah 84537
Subject: 2016 Water Use Letter Agreement
Dear Mr. Magnuson,
Subject to the terms and conditions specified in this Letter Agreement, PacifiCorp hereby agrees to make
available to Cottonwood Creek Consolidated Irrigation Company (CCCIC) up to all of its 2016 CCCIC
Primary water allotment in exchange for CCCIC's agreement to begin its irrigation season on April 10,
2016.
Whereas, PacifiCorp owns shares in CCCIC which provides PacifiCorp with a proportionate
amount of CCCIC's annual water rights, herein referred to as o'Primary Water Allotment";
Whereas, PacifiCorp holds rights to water in Joes Valley Reservoir (JVR) through certain water
supply contracts with Emery Water Conservancy District, herein referred to as "Project Water";
Whereas, PacifiCorp's unused Project Water in JVR is allowed to be carried over from one year to
the next as long as JVR does not fill and spill (as more fully outlined in the 1982 Cottonwood Creek
Operating Criteria). PacifiCorp's unused Project Water that is allowed to be carried over for future
use when the reservoir does not spill is herein referred to as "Project Water Carry-Over";
Whereas, PacifiCorp's Project Water Carry-Over account balance in JRV as of March 1,2016 was
approximately 16,600 acre-feet, which does not include PacifiCorp's 2016 Project Water allotment.
Whereas, PacifiCorp desires to manage its water supplies in such a manner to reduce the risk of
JVR filling and spilling this run-off season, which would in turn result in PacifiCorp's loss of its
current Project Water Carry-Over balance.
Whereas, PacifiCorp can reduce the risk of JVR spilling by allowing CCCIC to use PacifiCorp's
Primary Water Allotment and thereby protect and maintain PacifiCorp's Project Water Carry-Over
balance.
As such, effective April 10, 2016 through October 31,2016, the following provisions will be used in the
management, delivery, use and recordkeeping of water resources between PacifiCorp and CCCIC.
1. PacihCorp will allow the use of up to all of its 2016 CCCIC Primary Water Allotment by
CCCIC shareholders for irrigation purposes. CCCIC will pay PacifiCorp $0.50 for each acre-
foot of PacifiCorp's Primary Water Allotment it uses under this letter agreement, as determined
by PacifiCorp's Primary Water Allotment, as allocated by CCCIC.
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CCCIC will begin its irrigation season on April 10,2016 and at such time CCCIC will call for
deliveries of its Primary Water, including PacifiCorp's Primary Water Allotment from JVR.
CCCIC shall be solely responsible for all Primary Water CCCIC divens and uses from JVR.
Any water PacifiCorp diverts from Adobe Wash Reservoir from April I up through the time
JVR either spills or reaches maximum pool elevation (in the event it does not spill) will be
deducted from PacifiCorp's current Project Water Carry-Over account.
a. CCCIC's agrees and understands that its use of PacifiCorp's Primary Water Allofnent
under this Letter Agreement is subject to the condition that JVR does not fill and spill, and
PacifiCorp shall not be liable in any manner to CCCIC in the event JVR does fill and spill
b. If JVR spills, then from July 1,2016 to the end of the 2016 irrigation season, PacifiCorp
will resume access to and use of all of its remaining 2016 Primary Water Allotment and
CCCIC will no longer have the use of PacifiCorp's Primary Water.
c. If JVR does not spill and PacifiCorp maintains access to its block of Project Water Carry-
Over, then CCCIC will continue to be allowed to use PacifiCorp's Primary Water
Allotment for the remainder of the 2016 inigation season - and any water PacifiCorp
diverts from Adobe Wash Reservoir for the remainder of the 2016 season will be deducted
from its Project Water Carry-Over account.
Paragraph 7 of the Cottonwood Creek Operating Criteria states ["...and project power water
utilizing space in the irrigation pools will be the first water spilled when spills occur or
releases are made in anticipation of spills."l Nothing in this 2016 Water Use Letter
Agreement will be construed as "releasing water in anticipation of a spill" which would
otherwise qualiff for the zeroing out of PacifiCorp's Project Water Carry-Over account
pursuant to the Operating Criteria.
The provisions outlined in this Letter Agreement will apply only during the 2016 irrigation
season and in no way will establish a precedent for future anangements/practices between
PacifiCorp and CCCIC.
Please indicate your agreement with the above provisions by your signature and date below.
Sincerely,Agreed:
Cottonwood Creek Consolidated Inigation Company
Laren Huntsman
Managing Director,
Hunter Plant
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