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     **[ERRATA                                                                                                              
     SHEET]{.underline}**                                                                                                   

     Regarding changes to the                                                                                               
     transcript for the                                                                                                     
     October 9, 2002, Public                                                                                                
     Comment Forum, Phoenix                                                                                                 

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     1                        8                        PUBLIC COMMENT FORUM                    PUBLIC INFORMATION FORUM     

     9                        13                       15 megawatts was to                     50 megawatts was to          

     9                        14                       Now, Western.                           Now, Bureau Western          

     10                       4                        Parker-Davis as a scarce resource       Parker-Davis has a scarce    
                                                                                               resource                     

     10                       25                       Disastrous effects on their economies   Disasterous effects on their 
                                                                                               economics                    

     13                       16                       people can least afford                 people can lose the fort     

     17                       11                       We applied for the CRSP power           We applied for the CRITS     
                                                                                               power                        

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                                                                                                                            

                              BRUSH & TERRELL COURT                                                                         
                              REPORTERS                                                                                     

                              23331 North 90th Drive                                                                        DEPONENT

                              Peoria, Arizona 85383                                                                         

                              PHONE: 623-561-8046                                                                           

                              FAX: 623-561-8056                                                                             DATE

                                                                                                                            
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1

1 THE UNITED STATES DEPARTMENT OF ENERGY

2 WESTERN AREA POWER ADMINISTRATION

3 PHOENIX AREA OFFICE

4

5

6 PARKER-DAVIS PROJECT

7 APPLICATION OF POWER MARKETING INITIATIVE

8 PUBLIC INFORMATION FORUM

9 (To Post - 2008 Remarketing Effort)

10

11

12

13 REPORTER\'S TRANSCRIPT OF PROCEEDINGS

14

15

16 Phoenix, Arizona

October 9th, 2002

17 1:00 o\'clock p.m.

18

19

20 PREPARED BY: CHRISTINE JOHNSON, RPR

CERTIFIED COURT REPORTER #50383

21

22

23 PREPARED FOR: BRUSH & TERRELL

Court Reporters

24 WESTERN AREA POWER ADMINISTRATION 23331 N. 90th Drive

Peoria, Arizona 85323

25 (623) 561-8046

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

2

1 Be it remembered that heretofore on October 9,

2 2002, commencing at 1:00 p.m., at the Western Area Power

3 Administration, 615 South 43rd Avenue, Phoenix, Arizona, the

4 following proceedings were had, to wit:

5

6

7 WESTERN AREA POWER ADMINISTRATION

8 APPEARANCES:

9 MR. DOUGLAS N. HARNESS

Office of General Counsel

10

MR. ROY TINSLEY

11 Project Manager, Western Area Power

Administration

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CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

3

1 I N D E X

2

3 OPENING REMARKS Page

4 BY MR. DOUGLAS HARNESS 4

5

6

7

8 COMMENTS

9 BY MR. MICHAEL CURTIS 7, 16

10 BY MR. ROBERT LYNCH 12

11 BY MR. JIM TRANGSRUD 16

12 BY MR. LELAND GARDNER 17

13 BY MR. GERALD LOPEZ 18

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CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

4

1 MR. HARNESS: All right. Well, let\'s get started.

2 Can everybody hear me okay? We do have a microphone, but

3 I\'m going to try not to use it \'cause I don\'t know that we

4 need it, but certainly anybody that has problems hearing me,

5 let me know and I\'ll either speak up or go to the mike.

6 Anyway, good afternoon, everyone. Welcome to

7 today\'s Public Comment Forum. I\'m Doug Harness. I\'m an

8 attorney with Western Area Power Administration from our

9 office in Lakewood, Colorado.

10 The purpose of this Public Comment Forum is to

11 give interested parties the opportunity to make oral

12 presentations or submit written comments for the record on

13 Western\'s proposal to apply the Power Marketing Initiative

14 of Western\'s Energy Planning and Management Program to

15 Parker-Davis firm electric service commitments beyond

16 September 30th, 2008.

17 Western\'s proposal would create a resource pool of

18 six percent of available Parker-Davis resources for

19 allocation to new customers and would extend 94 percent of

20 the current Parker-Davis customers contractual entitlements

21 to firm Parker-Davis resources for 20 years beyond September

22 30th, 2008.

23 In addition to today\'s Forum and the forum that

24 will be held tomorrow in Ontario, written comments may be

25 submitted at anytime during the comment period that ends

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

5

1 November the 6th, 2002.

2 These comments should be sent to Mr. J. Tyler

3 Carlson, Regional Manager of Western\'s Desert Southwest

4 regional office at post office box 6457, Phoenix, Arizona,

5 85005-6457.

6 Comments may also be submitted by fax to the

7 following phone number, area code 602(352-2490) or by e-mail

8 to the e-mail address of \"post2008PDP@WAPA.gov.\" All

9 comments must be received by 5:00 p.m. local Phoenix time on

10 November 6th to be considered.

11 All written comments received by Western will be

12 posted on Western\'s website at the end of the comment

13 period.

14 A verbatim transcript of today\'s Forum is being

15 prepared by our court reporter. Everything said while we

16 are in session today, together will all exhibits, will be

17 part of the official record.

18 Copies of today\'s transcript and, for that matter,

19 all of the comment forum transcripts, will be available to

20 anyone who would like a copy upon payment of the required

21 fee to the court reporter.

22 The court reporter\'s name and address, telephone

23 number are available upon request. Copies of the transcript

24 and the exhibits will be available for review here at the

25 Desert Southwest office in Phoenix.

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

6

1 All comments made to today should be relevant to

2 the proposed action, which is: One, the application of the

3 Power Marketing Initiative to the Parker-Davis Project; two,

4 the size of the resource pool to be available to new

5 customers; and, three, the percentage of resources to be

6 extended to existing customers.

7 As a moderator, I reserve the right to disallow

8 any comments that are not \-- that are not relevant to these

9 subjects.

10 We would ask that if you have any relevant

11 materials to be introduced in the record, that you provide

12 them to the court reporter and she\'ll assign a Exhibit

13 Number.

14 After the close of the public comment period,

15 Western will review all of the information, comments and

16 exhibits that have been received with regard to the

17 proposal. Western will then announce a decision in the

18 \"Federal Register.\"

19 Comments made during this public process will be

20 discussed in this announcement.

21 I will proceed today \-- we did have a speaker list

22 at the outside of the room where the attendance roster was,

23 and we\'ll proceed down that list, which won\'t be a long

24 procession since we only have one name. And then we\'ll \-- I

25 guess we\'ll open the floor to anybody else who would like to

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

7

1 make comments.

2 MR. CURTIS: Not if they didn\'t sign in.

3 MR. HARNESS: So also please keep in mind that

4 Western has no presentation today and will not be answering

5 any questions. We\'re simply here to listen to your

6 comments.

7 So with that, unless anyone has any procedural

8 questions, we will start with our speaker who signed up.

9 That\'s Mr. Curtis. And you can either come up, if you\'d

10 like to use the microphone, or stay where you are.

11 MR. CURTIS: I\'d like to choose the appropriate

12 distance from the appropriate people before I make my

13 remarks.

14 My name is Michael Curtis and I will \-- I\'m

15 Executive Secretary of the Arizona Municipal Power Users

16 Association. I\'m here particularly on behalf of certain

17 dispossessed people who are preference customers without any

18 preference power and those who have insufficient allocation

19 of preference power, such as the Avra Valley Irrigation and

20 Drainage District, the Cotaro-Marana Irrigation District,

21 the Hohokam Irrigation District, the Page Electric Utility

22 Authority.

23 Other members of our association have no

24 Parker-Davis such as the City of Williams, Arizona, City of

25 Safford, also members of \-- members of ours, such as the

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

8

1 White Mountain Apache Tribe and Navapache Electric don\'t

2 have any Parker-Davis.

3 You have asked that there be three particular

4 comments made concerning the Power Marketing Initiative, the

5 size of the pool and percentage of existing contracts to be

6 renewed. And you\'ve said you have no precommitments and,

7 therefore, at the outset, I\'d like to say that it is the

8 position of the people whom I indicated I was speaking for

9 today that your available resource, under the concept of

10 marketing surplus Parker-Davis is too small to do justice to

11 a sufficient number of people, and that there may be an

12 alternative that would result in there not be a necessity of

13 even having a resource pool might be able to even extend

14 contracts while still increasing the number of participants.

15 The problem with Parker-Davis, as much as it is

16 very unique, because under the Gila Project Act and the Yuma

17 Project Act and the Parker and Davis Acts, the generation is

18 dedicated to the needs of reclamation to fulfill certain

19 functions and, therefore, it\'s only the surplus that is

20 marketed.

21 And in the marketing of that surplus, there are

22 many who have needs, but the manner in which you have

23 proposed to address those needs is, in the opinion of the

24 people that I indicated, insufficient.

25 What you should consider is not doing the PMI, not

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

9

1 doing the Power Marketing Initiative and do a reallocation.

2 The reallocation should be a fresh look, and there are some

3 fresh looks that should be closely examined.

4 Your resource pool is some ten or 15 megawatts.

5 But before you ever got to the resource pool, if you were to

6 look at the history, for instance, of our friends from the

7 Imperial Irrigation District that have a 30-megawatt

8 allocation from years ago, but that\'s because no one ever

9 closely examined the language of the allocation, which

10 indicated that their 30 megawatts was only for so long as

11 Pilot Knob had not been built and was not operational, not

12 whether it was in operation, but operational. At which

13 time, 50 megawatts was to come back to the then Bureau.

14 Now, Bureau Western.

15 So depending on how you look at it, you now have a

16 resource availability of perhaps 30 megawatts.

17 Now, that\'s 30 new customers, one megawatt a

18 piece, but, unfortunately, you\'re talking now about a

19 resource pool that may cause other customers to lose some.

20 But then again, if you look at the concept of

21 those who are entitled to Hoover, certainly in Nevada,

22 Arizona, they\'re entitled to Hoover as agencies of the

23 state, and there is no restriction on resale.

24 But if you look at our friends \-- my dear friend,

25 Jerry Lopez, whom I\'ve enjoyed company with for many years,

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

10

1 and I do not mean this in a \-- anything other than a

2 professional sense now \-- I think two of his seven customers

3 aren\'t preference, and I think that remarketing of

4 Parker-Davis has a scarce resource that should go to the

5 preference customers that you might find that now you have a

6 pool of 40 to 45 megawatts, but you still have to take

7 something away from somebody, a bunch of other small

8 entities that perhaps can illafford to have any reductions.

9 So if you just forgot the six percent pool and

10 just accumulated some 30 megawatts, Western could do the

11 greatest good for the greatest number. You could have

12 potentially 30 new entities, each one of which could have a

13 megawatt or some semblance thereof.

14 The existing customers, with two exceptions, which

15 historically I think are \-- their allocations are not

16 validly based on premise \-- but with those two exceptions,

17 you would have done the equivalent of a Lord feeding the

18 multitude with the seven loaves and seven fishes, and I

19 think that that is truly the task of Western is to figure

20 out how to remarket the Parker-Davis looking at a way in

21 which they could do the greatest good with the least injury

22 under the circumstances.

23 The bigger resource base, no harm to others.

24 There are some entities that only have a megawatt. How

25 would you take the six percent away from them? Disasterous

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

11

1 effects on their economics.

2 Take Wickenburg. The loss of anything \-- or

3 perhaps Fredonia. The loss of anything would be terribly

4 hurtful and damaging.

5 And yet if you were able to create using your

6 powers of historical research analysis and the discretion of

7 the administrator and looking out for the broadest interests

8 of the people\'s of the United States, including the Indians

9 and non-Indians, you could bring as many as 20 or 30 new

10 entities under the umbrella of the federal bounty, and we

11 think that you should seriously consider doing that, rather

12 than simply reshuffling a stale deck and automatically

13 renewing the deck less than six percent because the six

14 percent is rather meaningless, given the need out there.

15 We think that the comments we\'ve made indicate

16 that there needs to be no harm and no loss to 98 percent of

17 the Parker-Davis customers, and we think that the source to

18 which we have directed your attention, the sources, too, are

19 such that they historically have not a strong claim.

20 I\'m sorry I\'m not available for questions, and I

21 would probably like to move now to the back of the room

22 closest to the door. Thank you.

23 MR. HARNESS: All right. Thank you. Like I said,

24 nobody else signed up on the speaker list, but obviously I

25 don\'t want to bar anybody for that reason. So the floor is

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

12

1 now open.

2 Would anybody like to make any comments?

3 Mr. Lynch?

4 MR. LYNCH: I\'m Bob Lynch. I\'m an attorney here

5 in Phoenix and I\'m here on behalf of Electrical District

6 Number Three and the City of Needles, both contractors for

7 Parker-Davis cob.

8 We support this process. We believe it should go

9 forward. You\'re talking about 243 megawatts as the \"Federal

10 Register\" notice acknowledges. It\'s a very small resource.

11 It\'s already spread very thin. And the concept of

12 remarketing it, which I will get to a little later, we do

13 not believe makes any sense.

14 The \"Federal Register\" notice talked about the

15 applicability of this process under your regulations. It\'s

16 our position that the concept of applicability, under the

17 PMI regulations, means how, not whether.

18 There is no rational basis for a class that would

19 exclude Parker-Davis Project customers from treatment under

20 these regulations and no criteria for classification, other

21 than compliance with IRP rules and not to treat Parker-Davis

22 under these rules would be arbitrary and capricious and

23 abusive discretion.

24 We believe the 20-year term is not a matter for

25 debate; that the rules applied to the 20-year term is

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

13

1 automatic under those rules as written. Given this small

2 resource, we think Western should consider reducing the

3 reserve pool to five percent from six percent. We\'re

4 talking about 14 and a half megawatts. You\'re talking about

5 possibly reducing that to 12 or ten.

6 Mr. Curtis made the point that there are some

7 contractors who can\'t afford to lose any right now and yet

8 they will under this process.

9 The City of Needles is in the same boat as

10 Wickenburg or other small contractors for whom this is the

11 primary resource or very significant part of their existing

12 resource base.

13 However this happens, whether it is four or five

14 or six percent, it\'s going to hurt, and it\'s going to hurt

15 in small communities and in rural areas the most where

16 people can lose the fort.

17 So we think that modeling this pool more or less

18 after Pick-Sloan in terms of the six percent figure is \-- is

19 too high.

20 Also, we think that the reserve pool should come

21 from the withdrawable portion of any contractor\'s allocation

22 that has withdrawable power.

23 If memory serves me, the last withdrawal was done

24 in \-- at the time of the 1984 marketing criteria. It\'s been

25 at least 15 years since there\'s been a withdrawal for the

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

14

1 priority uses articulated in the marketing criteria.

2 In short, those priority uses have been satisfied

3 by the power pool of 40 and a half megawatts that is

4 dedicated currently to priority use.

5 And in the future, there will be less water

6 drainage pumping necessary in the Yuma Valley because water

7 that is currently going to the All-American Canal and is

8 released from Parker Dam will be taken out by \-- met under

9 the California four-four plan.

10 There doesn\'t seem to be any particular basis in

11 that the future for increased power need before those

12 priority uses in the last 15 years, at least, have

13 demonstrated that these loads are covered.

14 So at the very least, it would hurt \-- it would

15 not hurt Western\'s flexibility or the Bureau\'s to take the

16 percentage share, whatever it is, four, five or six out of

17 the withdrawable portion and then redesignate it as

18 nonwithdrawable. So that the people getting this new

19 resource, you\'re getting nonwithdrawable power.

20 I don\'t want to suggest that they should get

21 withdrawable power. That bag is \-- that\'s a mixed bag in

22 the current allocation as it is.

23 But I think that Western would be fully justified

24 in working with the Bureau to have that portion of the

25 reserve pool reclassified as nonwithdrawable without

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

15

1 damaging any \-- any future flexibility or operational

2 considerations.

3 As I say, the 15-year history of \-- in the last 15

4 years of power loads show that this large withdrawable

5 designation is really unnecessary. This is \-- just a small

6 piece of that could be taken care of in any event.

7 Concerning remarketing, I want to remind you that

8 the marketing area is the same as for Hoover, Southern

9 Nevada, Arizona, all of Southern California. It\'s noted

10 people in the room who will be competing for that resource.

11 And as small as it is, people will come out of the

12 woodwork if they believe that the entire resource is up for

13 grabs.

14 And the kind of damage that that will do to the

15 peoples\' whose economy have come to depend on this resource

16 is just obvious.

17 The \-- there\'s not enough power to go around

18 admittedly and there isn\'t sufficient of this resource to go

19 around.

20 And what Western is doing is the appropriate

21 thing, under the circumstances, in extending these contracts

22 and with the reserve pool.

23 Remarketing will turn into a feeding frenzy, and

24 that\'s not in the public interest.

25 Thank you for the opportunity to comment, and I

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

16

1 will be submitting written comments prior to the close of

2 the record.

3 MR. HARNESS: Yes, Mr. Curtis?

4 MR. CURTIS: On behalf of Wickenburg, my name is

5 Michael Curtis. We have a megawatt of withdrawable power.

6 We would prefer \-- Wickenburg would prefer not to ever

7 experience that withdrawal and believes that if there were a

8 larger resource base of some 30 megawatts from which to

9 satisfy in the discretion and reasonable exercise of the

10 learned discretion of Western and its administrator, that if

11 they could figure out how to divide that up, it would

12 hopefully then be unnecessary for Wickenburg to have to

13 either contribute to a percentage pool or suffer the

14 withdrawal, keeping in mind mind that all of the

15 Parker-Davis generation is subject to withdrawal.

16 And there is no such thing, to our understanding,

17 with the exception of half of Parker that goes to MWD, our

18 research indicates there is no such thing of a resource

19 called nonwithdrawable Parker-Davis. Thank you.

20 MR. HARNESS: Okay. Thank you.

21 Anyone else?

22 MR. TRANGSRUD: Jim Trangsrud with Salt River

23 Project. We do support the application of the PMI and

24 applicability of the PMI to the Parker-Davis process.

25 We support the 20-year contract extension to

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

17

1 existing customers and the 94 percent of the resource to the

2 existing customers and the creation of the six-percent pool

3 as outlined for new customers.

4 MR. HARNESS: Thank you.

5 Next? Anyone else wanting to make \-- to make any

6 comments today?

7 Oh, yes.

8 MR. GARDNER: My name Leland Gardner on behalf of

9 the Colorado River Indian Tribes. We are here to just bring

10 a special situation to the attention of Western.

11 We applied for the CRITS power and received an

12 allocation to the \-- to be effective in 2004.

13 We applied by citing our total load on the

14 reservation, but Western denied to recognize the load

15 located in the California part of the reservation and so the

16 allocation that we received was based only on Arizona loads.

17 This cut off about half of the residential

18 customers on the reservation.

19 In its final allocation, Western \-- and I assume

20 this was the Salt Lake City division of Western \-- said that

21 we could look to Parker-Davis for the load that was not

22 covered.

23 So we are here to remind this office of Western

24 that we would like that \-- that little promise to be

25 recognized when Parker-Davis is allocated.

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

18

1 Thank you very much.

2 MR. HARNESS: Before we proceed, can you folks

3 over here on this side hear well? Okay. It may be too late

4 for that, but \--

5 Okay. Anyone else like to make any comments?

6 Okay. Seeing as \-- I guess, Mr. Lopez would. Please.

7 MR. LOPEZ: Thank you very much. I just have two

8 comments, please. We believe the State of Nevada is in

9 crowded company among preference customers who resell

10 federal power to end users might not themselves be

11 considered a preference entity under the federal reclamation

12 law.

13 That does not violate the preference clause and

14 that opinion is expressed in the decision of the Comptroller

15 General of the United States dated May 1 of 1980.

16 I would also like to suggest to Western, in fact,

17 ask Western to allow interested parties a short but

18 reasonable time to respond to any written comments that are

19 submitted on or before November 6th.

20 I understand that the procedure that you plan to

21 follow, at this point, is to publish all written comments

22 together with Western\'s responses.

23 We believe Western\'s responses could be helped if

24 interested parties were allowed to reply to any written

25 comments that might require such a response. We would ask

CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

19

1 for a short but reasonable time to respond to any written

2 comments.

3 Thank you.

4 MR. HARNESS: Thank you.

5 Anyone else like to make any comments?

6 MR. CURTIS: Aren\'t you glad I was here? No one

7 would have said anything.

8 MR. HARNESS: To those who attend, speak what

9 they\'d like to say. So all right. Last chance. Okay.

10 I don\'t see anyone else indicating that they would

11 like to make any comments. So we\'ll wrap things up.

12 Certainly would like to thank you all for coming

13 today. We appreciate your attendance and participation. We

14 would ask that if you haven\'t already done so, that you\'d

15 sign the attendance roster that was just outside the door in

16 the hallway so we have an accurate record of who was here

17 today and would remind you that the comment period does

18 close again on November the 6th.

19 So, again, thank you so much for all the comments

20 and your attendance and we\'re done.

21 (Whereupon, the proceedings terminated at 1:45

22 p.m.)

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CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046

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8 I, CHRISTINE JOHNSON, having been first duly sworn

9 and appointed as Official Court Reporter herein, do hereby

10 certify that the foregoing pages numbered from 2 to 19,

11 inclusive, constitute a full, true and accurate transcript

12 of all the proceedings had in the above matter, all done to

13 the best of my skill and ability.

14 DATED this 15th day of October, 2002.

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19 CERTIFIED COURT REPORTER \# 50383

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CHRISTINE JOHNSON, RPR

Brush & Terrell Court Reporters

\(623\) 561-8046