EXHIBIT 10A
AGREEMENT AND STIPULATION
This Stipulation And Agreement To Compromise and Settle
("Stipulation") is intended as a formal settlement and compromise among the
Parties as to various matters set forth herein.
For valuable consideration, the receipt of which is hereby
acknowledged by the Parties, the Parties agree as follows:
1. The Stipulation and Agreement to Compromise and Settle pertaining
to Case Nos. 97-00742A, 99-00470A, 99-00754A, and 00-00416A, attached hereto as
Exhibit A, are incorporated herein by reference and made a part of this
Stipulation as though fully set forth in this paragraph.
2. Immediately upon entry by the Public Utilities Commission of
Nevada ("PUCN") of final, unappealed and unappealable orders approving the first
filed monthly applications pursuant to Paragraph 6 of Exhibit A and Paragraph 3
below, Nevada Power Company ("NPC"), Sierra Pacific Resources ("SPR"), and
Sierra Pacific Power Company ("SPPC") will dismiss with prejudice Case No. CV-N-
157 DWH VPC filed in the United States District Court for the District of
Nevada. In the event that this Stipulation, including any stipulation and/or
agreements incorporated by reference herein, or any terms or conditions set
forth herein, are not approved, or adopted and/or implemented in full and strict
accordance with the terms specified herein, or if any Court precludes the
enforcement of any of the rights and remedies set forth in said agreements for
any reasons, the parties hereto specifically agree that said dismissal with
prejudice shall not preclude SPPC, SPR or NPC from asserting any claims which
accrue
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subsequent to such dismissal, or that dismissal with prejudice cannot be raised
as a bar to any claims, of whatsoever kind or nature based on unconstitutional
takings or deprivations of any property rights under the Federal and/or State
Constitutions..
3. SPPC will implement a monthly fuel and purchased power ("F&PP")
rider with rate schedules to be effective forty-five (45) days after the date of
each filing. SPPC's first F&PP rider filing will be made no earlier than August
15, 2000, and no later than November 1, 2000. SPPC's initial F&PP rider will not
exceed 4.5 mils per kWh from its current BTER. SPPC shall file monthly
applications thereafter to adjust the F&PP rider.
3.1 The monthly change in the F&PP rider will be determined as the
difference between the Nevada jurisdictional total fuel and purchased power
costs for the twelve month period beginning fourteen months prior to the
adjustment month divided by the Nevada jurisdictional kWh sales for the same
period, and the Nevada jurisdictional total fuel and purchased power costs for
the twelve month period beginning fifteen months prior to the adjustment month
divided by the Nevada jurisdictional kWh sales for the same period. The
methodology for calculation of the F&PP rider is attached as Exhibit B.
4. After the initial F&PP filing, monthly adjustments to the F&PP
rider shall not result in changes, upward or downward, that exceed those in the
following schedule:
(a) 0.95 mils per kWh for each of the first six monthly filings.
(b) 1.15 mils per kWh for each of the second six monthly filings.
(c) 1.35 mils per kWh for each of the next six monthly filings.
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(d) 1.55 mils per kWh for each of the next six monthly filings.
(e) 1.75 mils per kWh on a monthly basis for filings through December
15, 2002 for rates effective February 1, 2003 to February 28,
2003
4.1 These adjustments are calculated exclusive of any Purchased Power
Agreement Adjustment Mechanism ("PPAAM") incorporated into this F&PP rider. It
is also recognized that with the implementation of any PPAAM that the F&PP rider
calculation will be adjusted to recognize the impact of the PPAAM.
4.2 No later than October 1, 2002, SPPC will make a filing in the
form of a general rate case to reset all components of rates, such rates to be
effective March 1, 2003.
5. The Parties to this Stipulation are of the opinion that such
monthly F&PP filings to be made by SPPC are lawful under NRS Chapter 704, and
that such filings should be accepted by the Public Utilities Commission of
Nevada ("Commission") for review, and warrant that they will not oppose such
filings for review nor challenge the legality of such filings in any
administrative or court proceeding. The Parties, other than the Commission, will
not seek to suspend the schedules implementing the rate changes set forth in the
monthly F&PP filings, and will support SPPC's request not to suspend such
schedules. The Parties agree to support expedited treatment of such filings.
6. SPPC will include with each F&PP monthly filing a statement of
its separate fixed charge coverage ratio calculations for the 12-month period
covered by the F&PP rider filing. If the acquisition of Portland General
Electric is consummated, any goodwill amortization expense associated with the
transaction shall not be included
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in the calculation of the fixed charge coverage ratio. The form of the
calculation is attached hereto as Exhibit C. SPPC will not implement an increase
in the F&PP rider when its respective fixed charge ratio is at or exceeds 2.5
times. Nothing in this paragraph 6 will be deemed to permit adjustments to the
F&PP rider that would exceed the limitations to the F&PP rider outlined in
Paragraph 4 above.
7. Six months following the implementation of the F&PP rider
mechanism, and every six months thereafter (unless changed by the Commission)
SPPC will file with the Commission an independent audit of fuel and purchased
power purchasing practices. Any findings of imprudence by the Commission will be
reflected in future F&PP adjustment filings, and all parties retain any and all
rights with respect to said F&PP filings except those specifically involved
herein. Such fixed charge covenants shall be calculated before giving effect to
extraordinary gains or losses. The Company will not object to such audit results
being made available by the Commission to any party to this Stipulation or as
required under any applicable law.
8. General rates (non-fuel and non-purchased power) for SPPC will
remain capped until March 1, 2003 as required by NRS (S) 704.982 and NRS
(S)704.9823.
8.1 NPC and SPPC hereby agree to retain and support the pricing
structure of the TPPCs filed in FERC Dockets ER00-2015 and ER00-2018 on June 29,
2000. The parties are free to pursue remedies associated with all other issues
related to these dockets.
9. SPPC's obligations to make monthly F&PP filings, all limitations
on F&PP adjustments, and the requirement to perform and to file independent
audits of the F&PP shall cease December 15, 2002, with an audit covering
purchases up to
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October 31, 2002. Notwithstanding the provisions of Paragraph 4, if SPPC's
obligation to provide provider of last resort ("PLR") service ends prior to
March 1, 2003, the F&PP adjustment mechanism will terminate at that time and
SPPC will file a final audit covering the period ending on the date of
termination. Disposition of amounts identified by the final audit will be
determined by the Commission. If SPPC remains obligated to provide PLR service
through an affiliate, such affiliate will also be permitted the use of the F&PP
rider pursuant to the terms of this Stipulation.
Retail Open Access
10. NPC agrees to have in place, and Parties agree to support,
procedures including but not limited to accurate and timely billing procedures,
that will accommodate and result in the opening of the retail market in
potentially competitive services pursuant to NRS (S)704.976 for customers of NPC
according to the following schedule:
November 1, 2000: Distribution rate classes C-4, C-5, and all C-3
accounts which are also C-4 and/or C-5
customers.
April 1, 2001: Distribution rate classes C-3, except those
provided for above.
June 1, 2001: Distribution rate classes C-1 and C-2
September 1, 2001 to All remaining customers will be eligible on a
December 31, 2001: phased- in basis.
11. Subject to existing contractual obligations and tariffs filed by
SPPC and approved by the Commission, customers eligible for service distribution
rate
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classes SG and LIG may acquire generation, aggregation, metering and billing
services from an alternative seller beginning November 1, 2000.
12. The Parties agree to jointly seek an amendment to SB 438 that
permits the distribution utility ("EDU") acting as the provider of last resort
("PLR") serving customers in NPC's or SPPC's service territories to implement
the F&PP rider.
13. Upon the effective date of legislation described in paragraph 12
above, SPPC agrees to have in place, and Parties agree to support, procedures
including but not limited to accurate and timely billing procedures, that will
accommodate and result in, the opening of the retail market in potentially
competitive services pursuant to NRS (S)704.976 for customers of SPPC according
to the following schedule:
April 1, 2001 Distribution rate class SG, LIG, and LPG
June 1, 2001 Distribution rate classes LSG, XXXX,
IMPG, IMSG, MIG, MPG, and MSG
September 1, 2001 All remaining customers will be eligible on
to December 31, 2001 a phased-in basis.
14. NPC and SPPC will file tariffs necessary for prudent supply
management for the PLR including: notice appropriate for each class of customers
electing open access, notice appropriate for each class of customers electing to
return to the PLR, and such pricing and other terms and conditions as are
necessary and appropriate to accommodate customers' return to PLR service, and
so as to not frustrate the recovery of costs to be collected in the F&PP rider.
15. The Parties agree to support legislation eliminating the
requirements of NRS (S) 704.982(5) and NRS (S) 704.9829 to promote the efficient
transfer of PLR functions to other qualified suppliers.
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Generation Proceeds and PPA Mitigation
16. Gain on the sale of the generation will be determined based on
the net proceeds of each bundle after tax less cost of the sale and the sum of
recorded book value on the closing date, with the accuracy of such recorded book
values verified by the Companies' independent auditors. Book values for each of
the bundles will be adjusted only for normal additions, retirements and
scheduled depreciation. For illustrative purposes only, unaudited book values as
of March 31, 2000, are attached as Exhibit D.
16.1 The Parties agree that, taken as a whole for the Xxxxx bundle,
any gains on the sale of the bundle shall be treated the same as other gains on
other bundles. If, however, taken as a whole, the Xxxxx bundle sells for below
book value, such proceeds received by the Company shall not entitle the Company
to claim additional amounts up to book value.
17. NPC and SPPC will recover from the gain (as defined in paragraph
16 above), the value of common and general plant determined by the Commission
and allocated to the generation function. NPC and SPPC will make a corresponding
reduction to common and general plant rate base reflecting the amount of
recovery described herein.
18. Except as provided in paragraphs 18.1 and 18.2, all remaining
gain after distribution of proceeds as set forth in paragraph 5 of Exhibit A and
paragraph 17 above will be placed into separate escrow accounts by NPC and SPPC
("Generation Proceeds Escrow Accounts") promptly upon final receipt of the
proceeds from each sale and invested by a third party professional manager,
approved by the Commission for the
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purposes of disbursements in accordance with Paragraphs19(A)and 19(B) below, and
recovery of any out-of-market costs associated with those purchased power
agreements ("PPAs") listed on Exhibit E. Any surplus remaining after satisfying
all over-market costs associated with PPAs will be refunded to customers.
18.1 SPPC will receive from next available proceeds up to the amount
of $9,000,000 so long as it meets the deadlines set forth in Paragraph 13 above.
Such proceeds shall be disbursed as follows:
(a) 20% ($1,800,000) Opening of retail energy market to rate
classes SG, LIG, and LPG
(b) 40% ($3,600,000) Opening of retail energy market to rate
classes LSG, XXXX, IMPG, IMSG, MIG,
MPG, and MSG
(c) 40% ($3,600,000) Opening of energy market to all remaining
rate classes.
Deviations from the above schedule pursuant to, necessitated or caused
by regulatory or legislative act or acts do not constitute a waiver or
forfeiture of the timing or amounts set forth above.
18.2 Nevada Power will receive from next available proceeds up to the
amount of $16,000,000 so long as it meets the deadlines set forth in Paragraph
10 above. Such proceeds shall be disbursed as follows:
(a) 25% ($4,000,000) Opening of retail energy market to rate
classes C-4, C-5 and all C-3 accounts
which are also C-4 and/or C-5 customers.
(b) 25% ($4,000,000) Opening of retail energy market to
remaining C-3 rate classes.
(c) 25% ($4,000,000) Opening of retail energy market to rate
classes C-1 and C-2.
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(d) 25% ($4,000,000) Opening of retail energy market to
remaining rate classes.
Deviations from the above schedule pursuant to, necessitated or caused
by regulatory or legislative act or acts do not constitute a waiver or
forfeiture of the timing or amounts set forth above.
18.3 Any revenue Nevada Power receives from the sale of S02
allowances shall be treated consistent with prior Commission orders.
19. The parties shall exercise good faith to mitigate costs
associated with PPAs, pursuant to the following methods.
(A) Permanent Auction: to the extent there are tax or market advantages,
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and if approved by the Commission, NPC and SPPC will execute a
competitive, permanent auction of PPAs within two months of the
completion of the divestiture of 50 percent or more of the respective
Company's generation capacity, funded with an amount up to, but not
exceeding the balance remaining on escrowed gains from the sale of
generation. Any PPAs not divested in the permanent auction shall have
their energy and capacity auctioned in the Annual Auction described
below. NPC and SPPC shall hold a permanent auction for all remaining
PPAs at least every two years following the initial permanent auction.
In no event shall the Companies be required to fund any such auction
or buyout with other than funds escrowed pursuant to Paragraph 19
above.
(B) Annual Auction: The Companies, in collaboration with the Staff and
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the BCP, will secure the services of an independent agent. The
function of
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the independent agent is to determine market price for and to market
PPA energy and capacity annually on the wholesale markets. Amounts
received from the annual wholesale auction shall be an additional
source of funds to meet the obligations under the PPAs.
(C) The Parties agree that (A) and (B) above constitute adequate
mitigation pursuant to NRS (S) 704.983 and (S) 704.9865.
20. The Parties agree that the following PPAAM will be implemented.
PPA costs not collected through paragraph 19 (A) and (B) will be collected
concurrently through a non-bypassable wires charge calculated and collected in a
competitively neutral manner as provided herein. Such wires charge, which will
be collected from all customers, will be effective with retail open access on
November 1, 2000, determined pursuant to (B) above. Such wires charge will be
credited with an annuity calculated based on the value of the principal and
interest from the invested net proceeds described in paragraph 19 and the
remaining life of the PPA obligations. An illustration of this mechanism is
attached hereto as Exhibit F.
Transition and Past Costs
21. All parties reserve all claims with respect to recovery of
transition costs, and except as provided in paragraphs 16 through 20 and 21.1
herein, NPC and SPPC remit, release, and waive whatever rights and claims they
may have to collect past costs as set forth and described at NRS (S) 704.983.
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21.1 The Parties to the Stipulation, except the Commission, agree to
seek to close the past cost portion of Docket No. 97-8001, as that proposed
regulation is no longer necessary.
21.2 The parties agree that to the extent that any Commission order
results in the stranding of NPC and/or SPPC's metering assets, NPC and/or SPPC
will either continue to recover the book value of such stranded metering assets
as plant in service, or recover the book value of such stranded metering assets
through a charge established for this purpose. SPPC and NPC agree to offer to
transfer ownership of any meter previously used to serve a customer to that
customer or to an alternative seller chosen by the customer at net book value.
SPPC and NPC shall file with the Commission, a proposed tariff for the transfer
of ownership of meters at net book value within sixty (60) days of the effective
date of this Stipulation.
Transmission
22. The Companies will promptly, but in no event later than July 19 ,
2000, file with the FERC modifications to their open access transmission tariffs
("OATT") to facilitate retail open access.
23. The Companies will diligently pursue compliance with FERC Order
2000 and the formation of a regional transmission organization ("RTO"). The
Companies will not form a separate affiliate to provide generation and/or
aggregation services in Nevada prior to the transfer of transmission facilities
to an RTO established pursuant to FERC Order 2000 and approved by the FERC.
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24. Until such time as an RTO is implemented, the Companies agrees to
"Glass House" procedures as set forth below to assure the effectiveness of open
access.
(a) Companies will fund up to $250,000 annually for professional and
technical salaries and benefits.
(b) Companies will provide reasonable in-kind office accommodations,
access, equipment and supplies.
(c) Consistent with FERC rules, the Companies will provide real-time
audit access to systems and records related to transmission
scheduling.
Other Provisions
25. Except as necessitated or caused by legislative or regulatory
act, NPC assumes any and all risks of losing the two-county exemption for reason
of merger.
26. SPR will hold Nevada customers harmless for any increase in costs
associated with SPR's acquisition of Portland General Electric ("PGE"). The
Company will only recover costs associated with the PGE acquisition, including
goodwill, to the extent that it demonstrates in a proceeding before the
Commission net savings sufficient to offset costs attributable to the
transaction. The Company agrees that net savings (i.e. savings net of
transaction costs) associated with the acquisition, including economies of
scale, shall be used to reduce cost of service.
27. The provisions of this Stipulation are not severable and, in the
event any aspect or provision of this Stipulation is not fulfilled, adopted, and
fully enforced in accordance with its terms by the PUCN, it shall be deemed
withdrawn, null
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and void, and of no further effect, and without prejudice to any claims or
contentions which may have been made in any proceeding by any party, and shall
not be admissible as evidence, or described or discussed in any legal
proceeding.
28. This Stipulation is subject to the Commission's approval and is
made upon the express understanding that it constitutes a negotiated settlement
of all issues set forth herein, and is contingent upon Commission approval of
the stipulations concurrently submitted in Commission Docket Nos. 00-5003, 00-
5005, 99-4001, 99-4002, 99-4005, 99-4006, Case No. CV-99-01743 in the Second
Judicial District Court in the State of Nevada in and for Washoe County, and
Case No. 00-00416A in the First Judicial District Court in the State of Nevada
in and for Xxxxxx City.
29. Except for those rights, claims and/or defenses as are expressly
waived herein, all Parties reserve any and all rights, claims and defenses of
whatsoever kind or nature with respect to any proceeding contemplated herein.
The Parties agree to take all possible action to support this Stipulation, and
to take no action, direct or indirect, in opposition to the request for approval
of this Stipulation.
PUBLIC UTILITIES COMMISSION BUREAU OF CONSUMER PROTECTION
OF NEVADA
By______________________________ By______________________________
Xxxx Xxxxxx, General Counsel Xxxxxxx Xxx, Consumer Advocate
REGULATORY OPERATIONS STAFF, PUCN
By_________________________________
Xxxxxx Xxxxxxxx, Staff Counsel
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NEVADA POWER COMPANY MANDALAY BAY PARK PLACE
SIERRA PACIFIC POWER COMPANY ENTERTAINMENT, MIRAGE
SIERRA PACIFIC RESOURCES (MPPM) GROUP
By_______________________________ By_________________________________
Xxxxxxx X. Xxxxxxxx, General Counsel Xxxxxx Xxxxxxxx, Esquire
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