modproc.com.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE APPLICATION OF PACIFICORP FOR AN ORDER APPROVING THE SALE OF ITS INTEREST IN (1) THE CENTRALIA STEAM ELECTRIC GENERATING PLANT, (2) THE RATE BASED PORTION OF ITS CENTRALIA COAL MINE, AND (3) RELATED FACILITIES; FOR A DETERMINATION OF THE AMOUNT OF AND THE PROPER RATEMAKING TREATMENT OF THE GAIN ASSOCIATED WITH THE SALE; AND (4) AN EWG DETERMINATION. )
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CASE NO. PAC-E-99-2

NOTICE OF MODIFIED PROCEDURE

NOTICE OF COMMENT/ UTILITY REPLY DEADLINES

On August 12, 1999, PacifiCorp (Company) filed an Application with the Idaho Public Utilities Commission (Commission) regarding the proposed sale by the Company of its 47.5% ownership interest in the Centralia steam generating plant (and related facilities) and the 47.5% rate based portion of its ownership interest in the Centralia Coal Mine. The purchaser of the Centralia generating unit is TECWA Power, Inc. (TECWA Power) and the purchaser of the Centralia Coal Mine is TECWA Fuel, Inc. (TECWA Fuel), both Washington corporations and both wholly-owned subsidiaries of TransAlta Corp., a Canadian energy corporation with $5 billion (Canadian) in assets and guarantor of certain obligations and duties undertaken by TECWA Power and TECWA Fuel.
PacifiCorp seeks a Commission Order approving the sale of the Company’s interest in the Centralia steam generating plant and the rate based portion of the Centralia Coal Mine. Citing Idaho Code § 61-523--Valuation. PacifiCorp also seeks a Commission Order adopting the Company’s methodology to calculate the gain associated with the sale and the proposed ratemaking treatment of the gain.
As represented in the Application, the owners of the Centralia facilities decided to sell the assets due principally to the possible need for additional capital expenditures to meet new air emission requirements and the potential impact of U.S. electric utility industry deregulation trends on the prospect for recovery of utility plant-in-service investment. The gross proceeds from the sale of the generating facility and the mine were allocated between the generating plant price of $452,598,000 and coal mine price of $101,400,000. The gross purchase prices are subject to certain adjustments which must be incorporated in any calculation of net gain. PacifiCorp’s share of the gain associated with the sale is estimated to be approximately $83 million on a system wide basis. The actual dollar value of the net gain on the sale will not be finalized until the close of the transaction.
The Company requests that its Application be processed pursuant to Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
The Company’s Application includes copies of the Centralia Power Plant Purchase and Sale Agreement and Centralia Coal Mine Purchase and Sale Agreement, other transactional documents and the prefiled testimonies of Company witnesses C. Alex Miller, Managing Director of Planning; Dr. Roger Weaver, Director, Regulatory and Strategy Support; and Anne E. Eakin, Vice President Regulation.
On September 7, 1999, the Commission in Case No. PAC-E-99-2 issued a Notice of Application and established a September 17 Deadline for Intervention. No Petitions for Intervention were filed. The Commission in its Notice also solicited comment on the Company proposal to process its Application pursuant to Modified Procedure. The deadline for filing written comments regarding the Company’s proposed use of Modified Procedure was September 30, 1999. Commission Staff was the only party to file written comments.
Based on its preliminary review Staff supported the Company’s request to process its Application pursuant to Modified Procedure. Staff identified the following issues that it intends to address: (a) prudence of sale—reclamation risk, multiple owner risk, economics (cost of replacement power, etc.); (b) gain—dollar calculation and regulatory treatment. Staff proposed the following Modified Procedure scheduling:
Comment deadline
Utility reply December 3, 1999
December 30, 1999
COMMISSION FINDINGS
The Commission has reviewed and considered the filings of record in Case No. PACE-99-2 including the comments of Commission Staff. The Commission notes that the Company in this case has also requested a Commission determination regarding classification of its Centralia generation facility upon sale as an “eligible facility” for purpose of subsequent operation by an exempt wholesale generator (EWG). This matter has been handled by separate Notice issued August 31, 1999, and is not the subject of further comment.
YOU ARE HEREBY NOTIFIED that the Commission after reviewing the comments filed in this case regarding the appropriateness of Modified Procedure in processing the Company’s Application regarding issues presented in its filing pertaining to the sale of its Centralia facilities, calculation of the associated gain, and related ratemaking treatment, has determined that the public interest does not require a hearing to consider the issues presented and that the issues raised by the Application may be processed under Modified Procedure, i.e., by written submission rather than by hearing. Reference Commission Rules of Procedure, IDAPA 31.01.01.201-204.
YOU ARE FURTHER NOTIFIED that the Commission solicits public comment regarding the Company’s Application and adopts the following scheduling for Modified Procedure:
Comment deadline
Utility reply December 3, 1999
December 30, 1999
YOU ARE FURTHER NOTIFIED that written comments concerning Case No. PACE99-2 should be mailed to the Commission and the Company at the addresses reflected below:
COMMISSION SECRETARY
IDAHO PUBLIC UTILITIES COMMISSION
PO BOX 83720
BOISE, IDAHO 83720-0074

Street Address for Express Mail:

472 W WASHINGTON ST
BOISE, ID 83702-5983 ANNE E. EAKIN
VICE PRESIDENT, REGULATION
PACIFICORP
825 NE MULTNOMAH, STE 800
PORTLAND, OR 97232

GEORGE M. GALLOWAY
STOHL RIVES, LLP
900 SW 5th AVENUE, STE 2600
PORTLAND, OR 9204
All comments should contain the case caption and case number shown on the first page of this document.
YOU ARE FURTHER NOTIFIED that the Application in Case No. PAC-E-99-2 can be reviewed at the Commission office and at the Idaho offices of PacifiCorp dba Utah Power & Light Company during regular business hours.
DATED at Boise, Idaho this day of October 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

vld/N:PAC-E-99-2_sw2

NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT/ UTILITY
REPLY DEADLINES 1

Office of the Secretary
Service Date
October 26, 1999