Exhibit 10(t)
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF SOUTH DAKOTA
IN THE MATTER OF THE FILING OF THE ) EL99-005
ELECTRIC POWER SERVICE AGREEMENT )
BETWEEN BLACK HILLS POWER AND )
LIGHT COMPANY AND THE SOUTH )
DAKOTA STATE CEMENT PLANT )
COMMISSION )
SETTLEMENT STIPULATION
On April 26, 1999, Black Hills Power and Light Company ("BHPL") filed
with the South Dakota Public Utilities Commission ("Commission") a confidential
electric power service contract with deviation between itself and the South
Dakota State Cement Plant Commission ("Dacotah Cement"). That contract with
deviation was intended to replace and supersede the Electric Power Service
Agreement between the parties dated May 1, 1987, as amended by Amendment No. 1
to the Industrial Contract Service Agreement dated June 23, 1995.
The Staff of the Commission ("Staff") and BHPL, collectively referred
to as "Parties," upon the execution of this Stipulation, agree that this
Stipulation resolves all issues in this docket and otherwise as addressed
herein. The Parties stipulate and agree that the Commission may enter an Order
consistent with the terms and conditions of this Stipulation, as set forth
below:
1. Confidentiality. The terms and conditions of the contract with
deviation between BHPL and Dacotah Cement shall receive "confidential
treatment," consistent with the provisions of ARSD 20:10:13:09, et seq., and
consistent with the terms and conditions of the filing made by BHPL on April 26,
1999, except that as it concerns the Stipulation relative to the extension of
the rate freeze identified herein, which may be made public by BHPL, the Staff,
or the Commission, as any of them deem it appropriate.
2. Safety Net. In Docket EL99-001, BHPL sought the approval of a new
general service large optional combined account billing rate schedule. In that
docket, the Staff made significant inquiry relative to BHPL's plan to offer
benefits to some of its general service large account customers and the
potential impact that these reductions to its general service large customers
may potentially have on BHPL's "captive customers" and the resulting need for a
safety net for such captive customers; namely BHPL's residential and small
business customers. As a part of Docket No. EL99-001, the Order entered by the
Commission specifically acknowledged the recommended "cautioned approval" of the
Commission Staff relative to providing benefits to large customers and the
potential impact on captive customers. In this docket, BHPL has proposed rate
changes, this time for a large industrial customer, and the Staff has raised
additional questions relative to the potential impact on BHPL's captive
customers and the concern that cost shifting could occur as a result of the
changes in rates for industrial customers.
3. Request for Waiver of Class Cost of Service Study Requirement. The
Parties acknowledge that the Order approved in EL99-001 provided that BHPL
shall, in its next general rate proceeding, provide comparison class cost of
service studies for general service large customers, reflecting revenues before
and after the implementation of the tariff changes under EL99-001, which study
was intended to assure that BHPL was not shifting costs between its respective
classes of service for the benefit of general service large class customers. The
Parties agree that this may be construed as a general rate proceeding and,
therefore, request that the Commission waive the requirement for a comparison
class cost of service study.
4. Extension of Rate Freeze and Abeyance of Fuel and Purchased Power
Adjustment Tariff. The rate freeze entered by an Order of the Commission in
EL95-003 on July 19, 1995, shall be extended from December 31, 1999, subject to
the terms and conditions set forth below.
(a) BHPL shall not file any additional applications with the
Commission if this Stipulation is approved, which, if
granted, would result in an increase in revenues for the
period between January 1, 2000 through December 31, 2004
("Rate Freeze Period"); provided, however, that this Rate
Freeze Period does not prevent BHPL from filing for a rate
increase to take effect subsequent to January 1, 2005, or
from filing for a rate increase if BHPL's cost of service is
expected to increase as a result of an "Extraordinary Event"
as defined in paragraph 4(f) below; nor is this Rate Freeze
Period intended to prohibit BHPL from filing rate
applications that request changes in rates for reasons other
than to obtain a general rate increase.
(b) Staff enters into this Stipulation in the public interest
and in the interest of BHPL's South Dakota electric
customers in order to provide for the continued protection
of rate stability during the Rate Freeze Period, and Staff
agrees that BHPL should continue to pursue and realize the
benefits of those opportunities available to BHPL and its
unregulated affiliates and subsidiaries, to make BHPL more
efficient and competitive over the long term, to the benefit
of BHPL's South Dakota customers.
(c) BHPL shall not include a fuel and purchased power adjustment
tariff, nor shall BHPL make any application to reinstate a
fuel and purchased power adjustment tariff to take effect
prior to January 1, 2005; however, in the event an
Extraordinary Event arises, this restriction shall not
apply, subject to the terms and conditions of the
Extraordinary Event.
(d) In consideration for the commitment to forgo the fuel and
purchased power adjustment tariff, except as otherwise
provided herein, and consistent with the Order Approving
Settlement Agreement and that certain Settlement Stipulation
in EL95-003, BHPL shall continue to retain without
adjustment to rates charged to its South Dakota customers
all revenues and benefits realized by it from the sale of
wholesale capacity and energy, including, without
limitation, sales to MDU for its Sheridan, Wyoming load and
any and all other sales of wholesale capacity or energy by
BHPL. BHPL may effect a transfer and/or assignment of any
right which BHPL has in any sale of wholesale capacity and
energy, including, without limitation, sales to MDU for its
Sheridan, Wyoming load, sales to the City of Gillette,
Wyoming, or any other sale of wholesale capacity or energy
without a review of the consideration, if any, between BHPL
and any affiliate or subsidiary of Black Hills Corporation,
subject to the Staff and Commission reviewing the
reasonableness and prudency of such actions in any
subsequent general rate proceeding which is initiated with
the intent to raise or reduce rates when compared to those
in effect as a result of this Stipulation. This provision
shall continue to apply to BHPL's tariffs until modified by
a lawful Order of the Commission.
(e) BHPL has indicated that during the Rate Freeze Period, it
may enter into power purchase transactions or power resource
transfers with its affiliated exempt wholesale generator
("EWG"), as defined and regulated in Section 32(k) of the
Public Utility Holding Company Act ("Act"), and for the
purposes of the Act, Staff and BHPL agree that the
Commission has sufficient regulatory authority, resources,
and access to the books and records of BHPL and its
associates, affiliates, and subsidiaries to exercise its
duties under the referenced provisions of the Act. Staff and
BHPL agree that Staff and Commission may review the
reasonableness and prudency of such purchases between BHPL
and its affiliated EWG in any general rate proceeding which
is initiated with the intent to raise or reduce rates when
compared to those in effect as a result of this Stipulation.
(f) An Extraordinary Event is the occurrence of one of those
items enumerated below:
(1) New federal, state or local governmental
requirements or governmental charges,
including, but not limited to, income taxes,
taxes or charges imposed on energy,
emissions, environmental extranalities or
reclamation obligations, imposed after
January 1, 2000, upon BHPL or Wyodak
Resources Development Corp. that project to
cause BHPL's cost of service to its South
Dakota customers to increase in a material
amount. Increases in the cost of service of
less than $2,000,000 will be presumed not to
be material for the purposes of this
paragraph.
(2) Forced outages, caused by an act of nature
or criminal activity or resulting from fire
or explosion from any cause, occurring to
both the Wyodak Plant and Neil Simpson Unit
#2 which are projected to continue
simultaneously over a period exceeding 60
days.
(3) Forced outage occurring to either the Wyodak
Plant or NS #2 which has continued for a
period of three months and is projected to
be nine months or more.
(4) The Consumers Price Index, All Urban, as
compiled by the United States Department of
Labor increases to a monthly rate for six
consecutive months which if continuing for
the following six months would result in a
10 percent or more annual inflation rate.
(5) The loss of a South Dakota customer or
revenue from an existing South Dakota
customer that, if projected, would result in
a loss of revenue to BHPL of $2,000,000 or
more during any 12-month period.
(6) If BHPL's cost of coal to its South Dakota
customers increases and is projected to
increase by more than $2,000,000 over the
cost for the most recent calendar year.
(7) Electric deregulation as a result of either
federal or state mandate which allows any
customer of BHPL to choose its provider of
electricity at any time during the Rate
Freeze Period.
(g) BHPL represents that during the Rate Freeze Period it will
not purchase fuel and electric power which will be
intentionally priced artificially low during the Rate Freeze
Period and artificially high following the Rate Freeze
Period, with the result that customers following the Rate
Freeze Period would be subsidizing power costs of customers
during the Rate Freeze Period.
5. Reduction in Taxes During Rate Freeze Period.
If any material reduction in federal, state, or local taxes occurs
which is projected to materially reduce BHPL's cost of service for its South
Dakota customers, the Commission shall have the right in its discretion to
modify the stipulation to adjust the rates to reflect the tax changes. Decreases
in the cost of service of less than $1,000,000 would be presumed not to be
material for purposes of this paragraph.
6. General Conditions.
(a) Except for ratemaking principles set forth herein,
this Stipulation shall not be deemed to constitute
any precedential value after the Rate Freeze Period,
including, but not limited to, treatment of
off-system energy and capacity sales revenues and
transactions.
(b) The approval of this Stipulation by the Commission
shall not in any respect constitute a determination
by the Commission as to the merits of any allegations
or contentions made in this proceeding.
(c) The Stipulation is expressly conditioned upon the
Commission's acceptance of all the provisions hereof,
without change or a condition which is unacceptable
to any Party.
(d) Discussions among BHPL and Staff which produced this
Stipulation have been conducted with the customary
understanding that all offers of settlement and
discussions relating thereto are privileged and shall
not be used in any manner in connection with this
proceeding or otherwise, except as required by law.
(e) This Stipulation includes all terms of Settlement and
is submitted on the condition that in the event the
Commission imposes any change in or condition to this
Stipulation which is unacceptable to any Party, this
Stipulation shall be deemed withdrawn and shall not
constitute any part of the record in this proceeding
or any other proceeding nor be used for any other
purpose.
(f) This Stipulation shall be binding upon the parties
hereto and upon their respective successors, assigns,
agents and representatives.
(g) It is understood that Staff enters into this
Stipulation for the benefit of BHPL's South Dakota
customers affected hereby and in the public interest.
7. Statement R. For informational purposes, BHPL shall continue to make
annual filings with the Commission of the Statement R computation as presented
in Docket EL95-003 to monitor earnings derived from affiliated coal sales to
BHPL.
8. Commission Approval. Each of the Parties request the Commission to
enter its order approving this Stipulation and grant the waiver requested in
paragraph 3. Failure of the Commission to enter such order shall cause this
Stipulation to become null and void.
Dated June _____, 1999.
BLACK HILLS POWER AND STAFF OF THE PUBLIC UTILITIES
LIGHT COMPANY COMMISSION
By ________________________ By ____________________________
John K. Nooney, Attorney Camron Hoseck, Attorney