20040903Order No 29583.pdf

Office of the Secretary
Service Date
September 3, 2004
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
VISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES AND )
CHARGES FOR ELECTRIC AND NATURAL
GAS SERVICE TO ELECTRIC AND NATURAL
GAS CUSTOMERS IN THE STATE OF IDAHO.
CASE NO. AVU-O4-
VU -O4-
ORDER NO. 29583
On August 4, 2004, Potlatch requested the following information from A vista:
Request No. 86:
In A vista s latest quarterly earnings report, Gary Ely states that A vista has
entered into a non-binding letter of intent to purchase Mirant's half-interest
in Coyote Springs II.
(a) Please provide a copy of the letter of intent.
(b) Please provide a statement of the purchase price and any terms and
conditions agreed to by A vista and Mirant that are not included in the
letter of intent.
(c) Please provide copies of all studies comparing the cost and benefits of
Coyote Springs II to existing or potential alternative resources.
IDAPA 31.01.01.225
A vista objected to Potlatch's request for information in the following manner:
Response No. 86
A vista respectfully objects to this request for information. The possible
purchase of Mirant's interest in Coyote Springs II is not at issue in these
proceedings; A vista has asked for no rate relief or other regulatory
treatment with respect to this potential transaction in this docket. Should
A vista consummate this purchase, any request for associated rate relief
will be the subj ect of future proceedings, which will afford all parties the
opportunity for discovery.
Moreover, it should be recognized that only a confidential non-binding
letter of intent has been executed. A definitive Purchase and Sale
Agreement has yet to be negotiated and executed. Unless and until such an
agreement is reached, any such purchase remains indefinite.
ORDER NO. 29583
IDAPA 31.01.01.225.03.
On August 24, 2004, Potlatch filed a Motion to Compel Discovery Responses
together with an accompanying Affidavit. As reflected in the Affidavit, Potlatch states and
contends as follows:
A vista Corporation has failed to produce discoverable records concerning
its intent to purchase Mirant's half-interest in Coyote Springs II on the
grounds that "the possible purchase of Mirant's interest in Coyote Springs
II is not at issue in these proceedings." Avista Corporation s objection is
inconsistent with the rules of discovery and law. Rule 26(b)(1) of the
Idaho Civil Rules provides that "parties may obtain discovery regarding
any matter, not privileged, which is relevant to the subject matter involved
in the pending action....One of the primary issues in this case is
whether A vista should be allowed to ratebase construction costs in excess
of Coyote Springs II'fair market value. The price and terms of the
potential purchase of Mirant's half of Coyote Springs II are obviously
relevant to the detennination of the plant's fair market value. More
generally, this case calls into question the prudence of Avista s resource
acquisition strategies in its dealings with Mirant in the natural gas
transaction identified as "Deal A " and all of the discovery requests are
designed to produce information relevant to these issues.
Potlatch requests an immediate Order compelling the production of Potlatch Corporation s six
set of discovery requests to Avista Corporation by August 30, 2004, in order that Potlatch
Corporation and the Commission may be fully advised concerning Avista Corporation s intent to
purchase Mirant's half-interest in Coyote Springs II. Potlatch does not request oral argument on
this motion, but stands ready to appear in any further proceedings the Commission may deem
necessary or advisable.
On August 30, 2004, Avista filed an Answer to Potlatch's Motion to Compel. Avista
objects to Potlatch's request on the following grounds:
The possible purchase of Mirant's interest in Coyote Springs II is not at
issue in these proceedings; A vista has asked for no rate relief or other
regulatory treatment with respect to this potential transaction in this
docket. Should A vista consummate this purchase, any request for
associated rate relief will be the subject of future proceedings, which will
afford all parties the opportunity for discovery.
ORDER NO. 29583
Moreover, A vista notes, it should be recognized that only a confidential
non-binding letter of intent has been executed. A definitive Purchase and
Sale Agreement has yet to be executed. Unless and until such an
agreement is reached, any such purchase remains indefinite. At issue
this rate case, the Company contends, are the facts and circumstances
known to A vista at the time it decided to initially acquire Coyote Springs
II-not the terms of a potential purchase several years later of Mirant's
share.
Avista recommends that Potlatch's Motion to Compel be denied.
COMMISSION FINDINGS
The Commission has reviewed Potlatch's Production Request No. 86 , Avista
Answer and Potlatch'related Motion to Compel and the Company response.The
Commission finds that the parties have complied with the Commission s rules of discovery, i.
IDAPA 31.01.01.221-234 and the Idaho Civil Rules of Procedure (ICRP) Rules 26 and 37. The
general rules governing the scope of discovery are found in ICRP Rule 26(b)(1). It states that
parties may obtain discovery regarding any matter that is not privileged and which is relevant to
the subject matter involved in the pending action. The discovery must reasonably be calculated
to lead to discovery of admissible evidence at hearing. The Commission notes that the record in
Case No. A VU-04-1 has already closed.We further find that the information sought
regarding what is only a "non-binding letter of intent" would not be relevant in informing our
decision in this case. The Commission is persuaded by Avista s argument regarding Potlatch'
Production Request No. 86 and finds it reasonable to deny Potlatch's related Motion to Compel.
ORDER
In consideration of the foregoing and as more particularly described above, IT
HEREBY ORDERED and the Commission does hereby deny Potlatch's Motion to Compel.
ORDER NO. 29583
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this 3 M
day of September 2004.
PAUL KJ L
MARSHA H. SMITH, COMMISSIONER
ENNIS S. RAN EN, COMMISSIONER
ATTEST:
~D
D. Jewell
mmission Secretary
Vld/O:A VUEO41- A VUGO41 sw2 - MtntoCompel
ORDER NO. 29583