modproc.doc

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION

IN THE MATTER OF THE 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
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 THE 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 FOR AN EWG DETERMINATION
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CASE NO. PAC-E-99-2

NOTICE OF REQUEST FOR DETERMINATION OF
EWG “eligible facility” STATUS

NOTICE OF MODIFIED
PROCEDURE

NOTICE OF COMMENT
DEADLINE

On August 10, 1999, Avista Corporation dba Avista Utilities —Washington Water Power Division (Avista) filed an Application with the Idaho Public Utilities Commission regarding the proposed sale by Avista of its 15% ownership interest in the coal-fired Centralia Power Plant, a 1340 megawatt generation facility located in the state of Washington. The facility is co-owned by Avista (15%), PacifiCorp (47.5%), City of Seattle (8%), City of Tacoma (8%), Snohomish PUD (8%), Puget Sound Energy (7%), Grays Harbor County PUD (4%) and Portland General Electric (2.5%).
On August 12, 1999, PacifiCorp dba Utah Power & Light Company (PacifiCorp) filed an Application with the Commission regarding the proposed sale by PacifiCorp of its 47.5% ownership interest in the Centralia Power Plant (and related facilities) and the rate based portion of its ownership interest in the adjacent Centralia Coal Mine. PacifiCorp is the sole owner of the Centralia 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. Upon sale it is represented that the generation facilities will become wholesale generation.
As represented in their respective Applications, the owners of the Centralia facilities decided to sell the assets due principally to the possible need for additional capital expenditures (sulfur dioxide scrubbers and low nitrogen burners) to meet 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 purchase price of the generating facility as reflected in the Centralia Plant Purchase and Sale Agreement is $452,598,000. The purchase price of the coal mine as reflected in the Centralia Coal Mine Purchase and Sale Agreement is $101,400,000. The gross purchase prices are subject to certain adjustments which must be incorporated in any calculation of net gain.
The Commission has jurisdiction over the Idaho rates and charges of Avista and PacifiCorp. The Commission notes that a portion of the respective rates and charges for each utility represents recovery of rate based investment in Centralia generation and/or mine facilities.
PacifiCorp and Avista seek a Commission ruling pursuant to Section 32(c) of the Public Utility Holding Company Act of 1935 (PUCHA) (codified at 15 U.S.C. § 79z(5a)(c)) classifying the Centralia Power Plant as an “eligible facility,” thus allowing the purchaser to operate the plant as an Exempt Wholesale Generator (EWG) under federal law. Specifically, the utilities seek a Commission determination that operation of Centralia as an “eligible facility” upon sale (1) will benefit consumers, (2) is in the public interest, and (3) does not violate state law. The utilities request expedited processing of the EWG determination. Expedited processing, they state, is important from a timing standpoint. TransAlta, it is explained, cannot commence processing its application with the Federal Energy Regulatory Commission (FERC) in order to obtain FERC’s qualification of these generation assets as “eligible facilities” and TECWA Power as an “Exempt Wholesale Generator” until the Commission has made the three determinations required by federal statute. The utilities ask that their requested determination be made prior to and contingent upon the required regulatory approvals of the sale. As completion of sale cannot take place without the relevant state regulatory approvals, it is represented that this assures making these determinations will not prejudge the merits of the proposed sale under Idaho statutory standards.
The Applications filed by PacifiCorp and Avista include copies of the Centralia Power Plant Purchase and Sale Agreement, Centralia Coal Mine Purchase and Sale Agreement, other transactional documents and prefiled testimonies of company witnesses.
Commission Findings
The Commission has reviewed and considered the filings of record in Case Nos. PAC-E-99-2 and AVU-E-99-6. The Commission finds that the issue presented regarding the classification of Centralia generation facility as an “eligible facility” for purpose of subsequent operation by an exempt wholesale generator (EWG) under federal law is an issue that may not require a hearing and is appropriate to process 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 may not hold a hearing in this proceeding on the issue of EWG “eligible facility” status unless it receives written protests or comments opposing the use of Modified Procedure and stating why Modified Procedure should not be used. Reference IDAPA 31.01.01.203.
YOU ARE FURTHER NOTIFIED that the deadline for filing written comments or protests with the respect to the determination of “eligible facility” status and the Commission’s use of Modified Procedure in Case Nos. AVU-E-99-6 and PAC-E-99-2 is Friday, September 24, 1999. Persons desiring a hearing must specifically request a hearing in their written protests or comments.
YOU ARE FURTHER NOTIFIED that if no written comments or protests are received within the deadline, the Commission will consider the matter on its merits and enter its Order without a formal hearing. If comments or protests are filed within the deadline, the Commission will consider them and in its discretion may set the matter for hearing or may decide the matter and issue its Order on the basis of the written positions before it. Reference IDAPA 31.01.01.204.
YOU ARE FURTHER NOTIFIED that written comments concerning Case Nos. AVU-E-99-6 and PAC-E-99-2 should mailed to the Commission and the Companies 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 Street
Boise, ID 83702-5983 Avista Corporation

THOMAS D. DUKICH
MANAGER RATES & TARIFF ADMINISTRATION
AVISTA CORPORATION
PO BOX 3727
SPOKANE, WA 99220

DAVID J. MEYER
SR VICE PRESIDENT & GENERAL COUNSEL
AVISTA CORPORATION
PO BOX 3727
SPOKANE, WA 99220

PacifiCorp

C. ALEX MILLER
MANAGING DIRECTOR OF PLANNING
PACIFICORP
SUITE 600
825 NE MULTNOMAH
PORTLAND, OR 97232

GEORGE M. GALLOWAY
STOEL RIVES LLP
SUITE 2600
900 SW FIFTH AVENUE
PORTLAND, OR 97204
YOU ARE FURTHER NOTIFIED that the Applications in Case Nos. AVU-E-99-6 and PAC-E-99-1 can be reviewed at the Commission’s office and at the Idaho offices of Avista Corporation dba Avista Utilities — Washington Water Power Division and PacifiCorp dba Utah Power & Light Company during regular business hours.

DATED at Boise, Idaho, this day of August 1999.

DENNIS S. HANSEN, PRESIDENT

MARSHA H. SMITH, COMMISSIONER

PAUL KJELLANDER, COMMISSIONER

ATTEST:

Myrna J. Walters
Commission Secretary

bls/N:avue996_pace992_sw

NOTICE OF REQUEST FOR
DETERMINATION OF EWG “eligible facility” STATUS
NOTICE OF MODIFIED PROCEDURE
NOTICE OF COMMENT DEADLINE 1

Office of the Secretary
Service Date
August 31, 1999