BEFORE THE PUBLIC SERVICE COMMISSION OF WYOMING

IN THE MATTER OF CHEYENNE LIGHT, FUEL )

AND POWER d/b/a BLACK HILLS ENERGY FOR ) DOCKET No. 20003-173-ET-18
AUTHORITY TO IMPLEMENT A BLOCKCHAIN ) (RECORD No. 15104)
INTERRUPTIBLE SERVICE TARIFF )

APPEARANCES

For the Applicant, Cheyenne Light Fuel and Power d/b/a Black Hills Energy
(CLFP or the Company):
JANA SMOOT WHITE, Associate General Counsel, Rapid City, South Dakota.

For the Intervenor, Office of Consumer Advocate (OCA):

CHRISTOPHER LEGER, Counsel, Cheyenne, Wyoming

HEARD BEFORE

Chairman KARA B. FORNSTROM

Deputy Chairman MARY A. THRONE
Commissioner MICHAEL M. ROBINSON

STEVE MINK, Assistant Secretary,

Presiding pursuant to a Special Order of the Commission.

MEMORANDUM OPINION, FINDINGS, AND

ORDER APPROVING STIPULATION
(Issued July 22, 2019)

This matter is before the Wyoming Public Service Commission (Commission) upon the
Application of CLFP requesting approval of its proposed Blockchain Interruptible Service (BCIS)
Tariff, and on the intervention of the OCA. Also before the Commission for consideration is a
Stipulation and Agreement (Stipulation)' entered into by CLFP and the OCA (collectively the
Parties).

The Commission, having reviewed the Application and attached exhibits, the Parties'
prehearing filings, the evidence introduced at the public hearing held on April 30, 2019, its files
regarding CLFP, applicable Wyoming utility law, having heard the arguments of the Parties, and
otherwise being fully advised in the premises, FINDS and CONCLUDES:

Introduction and Course of Proceedings

1. CLFPisawhollyownedsubsidiaryofBlackHillsCorporation.(Ex.l,p.8).CLFP
engages in the generation, transmission and distribution of electricity. CLFP is a public utility as

' The Stipulation is attached hereto and incorporated herein as Appendix A.

-1- Docket No. 20003-173-ET-18
defined in Wyo. Stat. § 37-1-101(a)(vi)(C), subject to the Commission's jurisdiction pursuant to
Wyo. Stat. § 37-2-112.

2. OnSeptember28,2018,theCompanysubmittedanApplicationseekingauthority
to implement a BCIS Tariff. The Company also submitted supporting testimony (Exs. 4, 6, 7, 11
and 12) and proposed tariff sheets (Exs. 2 and 3). CLFP explained the BCIS Tariff is necessary
because its existing tariffs are insufficient to attract blockchain business while continuing to
provide safe, reliable and affordable service to existing retail customers. Blockchain customers,
according to the Company, are unique because they are large consumers of electricity and may
represent loads of a limited duration. (Ex. 1, p. l).

3. OnOctober3,2018,theOCA,aseparate,independentdivisionoftheCommission
charged with representing the interests of Wyoming citizens and all classes of utility customers,
filed its Notice of Intervention pursuant to Wyo. Stat. § 37-2-402. (Ex. 103).

4. On October 4, 2018, the Commission issued a Notice of Application, which

generally described the Application and provided a deadline of November s, 2018, for interested
persons to file a statement, intervention petition, protest, or request for a public hearing. A public
notice was published in the newspaper located in CLFP's service territory. (Ex. 102).

s. On January 3, 2019, the Commission issued a Notice Setting Scheduling

Conference. (Ex. 105). On January 10, 2019, the Commission issued a Scheduling Order
establishing the procedural schedule and setting a public hearing to commence on April 30, 2019.
(Ex. 106).

6. On March 15, 2019, CLFP filed the Stipulation on behalf of the parties, together
with supporting exhibits. (Exs. A-E). The OCA filed testimony supporting the Stipulation. (Ex.
G).

7. On April s, 2019, the Commission issued a Notice and Order Setting Public
Hearing for April 30, 2019. A public notice was published in the newspaper located in CLFP's
serviceterritory. (Ex. 108).

8. On April 30, 2019, the Commission held an exhibit conference and received the
following exhibits into evidence:

CLFP's Exhibit Nos. 1 through 13. (Tr., p. 5);

Commission Exhibit Nos. 101 through 108. (Tr., p. 6);
OCA Exhibit Nos. 201 through 201.4. (Tr., p. 6); and
Joint Exhibit Nos. A through G. (Tr., p. 6).

9. The public hearing was held April 30, 2019, pursuant to the Wyoming
Administrative Procedure Act (WAPA), Wyo. Stat. § 16-3-101 et seq., in the Commission's
hearing room in Cheyenne. CLFP and the OCA appeared and participated in the hearing in support
of the Stipulation. At the conclusion of the public hearing, the Commission closed the record and
held public deliberations pursuant to Wyo. Stat. § 16-4-403. The Commission unanimously
approved the Application, as modified by the Stipulation and this Order, and directed the
preparation of an order consistent with its decision.

-2- Docket No. 20003-173-ET-18

 Summary of Decision

10. TheCommissionapprovesCLFP'sApplication,asamendedbytheStipu/ationand
this Order, to implement the BCIS Tariff. The Commission concludes that the terms of the
Stipulation are consistent with the public interest.

Issue

11. The Commission must determine whether the Stipulation serves the public interest
as an appropriate means to resolve this matter pursuant to Wyo. Stat. § 16-3-107(n) and
Commission Rule Chapter 2, Section 25.

Findings of Fact

12. Blockchain is a technology that permits digital information to be distributed, but

not copied, such that each piece of data can have only one owner. This technology supports digital
currency (cryptocurrency) and enables many uses such as shipping and supply chain tracking. As
the data is exchanged each transaction becomes a block in the chain. Blockchain technology is
used to support unique transactions and is commonly used for mining cryptocurrency by validating
transactions for a reward. (Ex. 1, pp. 2-3).

13. Wyoming, as a State, has made significant efforts, both through legislation and
economic development, to attract the blockchain industry. (Ex. 4, pp. s-6). Concerns have arisen,
largely based on experience in other jurisdictions, related to the questionable permanence and
intense electric demand of such loads. The most significant concern is how to protect existing
customers from the strain potential BCIS customers bring to the system. (Ex. 201, p. 7; Ex. 4, P.
7).

14. With this in mind, CLFP has endeavored to implement a proactive approach to
balance the opportunity the State of Wyoming is presenting to attract new industries with the risk
posed to existing customers. CLFP's proposal, as modified by the Stipulation, accomplishes that
goal by formulating a tariff that isolates existing customers from any increased capital costs or
operating expenses, and the inherent business risks associated with blockchain customers. The
tariff requires CLFP to separately identify and account for all the revenues and expenses from
serving BCIS customers and to remove those costs and expenses from any future class cost of
service studies, general rate cases and normalized earnings reports. (Ex. G, p. 3).

15. CLFP filed its Application on September 28, 2018. The OCA intervened on
October 3, 2018. On February 26, 2019, the OCA and CLFP participated in a Settlement
Conference, which resulted in an agreement in principle. Accordingly, the parties filed the
Stipulation along with supporting testimony of Kyle White on behalf of CLFP and Anthony
Ornelas on behalf of the OCA on March 15 and 22, 2019, respectively. (Exs. A, F and G.)

16. The Stipulation modifies the proposed BCIS Tariff, while creating the BCIS
Customer Credit Adjustment (BCCA) Tariff to implement the customer benefits outlined in the
agreement. (Ex. A., p. 7).

17. CLFP recognized a new contract would be necessary to incentivize the blockchain
industry to locate in its service territory because its current rates would render cryptocurrency
-3- Docket No. 20003-1 73-ET-18
mining unprofitable. The BCIS Tariff provides an alternative that allows the Company and new
industry to negotiate terms and rates of service outside of rates set by the Commission. The key to
the BCIS Tariff is its interruptible nature - for economic and reliability concerns, and for relieving
transmission constraints.

18. hireturn,CLFPhasidentifiedthreeprotectionsforexistingcustomers:

1. BCIS Transmission Credit: This credit has two components: [1] $1.00
per MW; plus [2] weighted average of ancillary charges related to the Federal Energy Regulatory
Commission approved Open Access Transmission Tariff (OATT) - currently resulting in a rate of
$1.25. The second component is dynamic and may change as the OATT changes. (Ex. A, pp. 3-
4).

11. BCIS Customer Benefit: This credit is $1.00 per MW (Ex. A, pg. 4)).

111. Corporate Overhead Expenses: Set at 10% until next rate case when this
category of benefits will cease to exist. (Ex. A, pp. 4-5).

19. All of the credits will flow to customers through an annual filing as described in
the BCCA Tariff. (Tr., p. 51 ; Ex. A, pp. 7-8).

20. Other benefits addressed in the Stipulation include Ring Fencing Provisions, Line
Extensions and Systems Upgrades, and Reservation of Distribution capacity for non-BCIS
customer load growth. (Ex. A, pp. s-7).

a. The Ring Fencing provisions prohibit the Company from seeking recovery
of any interest expense or other debt related expense that is greater than the Company would have
incurred had the debt been issued by a Black Hills entity that held a BBB- equivalent investment
grade credit rating. The Ring Fencing provisions trigger if the Company's credit rating is
downgraded below a BBB- rating, and is attributable to the provision of service under the BCIS
Tariff. (Ex. A., pp. s-6).

b. The Line Extension and System Upgrades provisions protect customers

by assigning any costs of line extensions or system upgrades needed to provide service to BCIS
customers only to those customers. (Ex. A., p. 6)

c. The Stipulation further protects customers by reserving capacity at

CLFP's substations for non-BCIS customer growth. (Ex. A., pp. 6-7).

21. Importantly, the Commission will remain apprised of the implementation of the
BCIS Tariff through informational filing of contracts and the periodic reporting requirements. (Ex.
A, p. 8; Tr., pp. 49 and 54). The Commission requires that annual reports made under this provision
of the Stipulation contain the information required by Wyo. Stat. § 3 7-3-11 6(c).

22. We find the Stipulation achieves the balance both parties seek and is in the public
interest. Therefore, we approve the Stipulation without modification. Further, the BCIS and
BCCA tariffs are approved, effective June 1, 2019. Finally, the amendments to the Power Cost
Adjustment (PCA) tariff are approved.

-4- Docket No. 20003-173-ET-18

 23. Any paragraph set forth in the Principles of Law or Conclusions of Law, which
include a Finding of Fact may also be considered a Finding of Fact, and is therefore incorporated
herein by this reference.

Principles of Law

24. Wyo.Stat.§37-3-116,specifiestheconditionsunderwhichautilitymayenterinto
certain service agreements with customers with a projected usage greater than five MW for a utility
service provided under a Commission approved tariff and, reads as follows:

Electric utility service agreements.

(a) An electric utility may enter into a service agreement as specified in

subsection (d) of this section, provided that the terms and conditions of the
agreement:

(i) Are expected to result in revenue to the utility in an amount that

exceeds the expected cost to serve the customer's projected electric usage;

(ii) Shall not result in obligating other customers for any utility
investments or any direct, indirect or reasonably assigned costs related to the utility's
service to the customer under the agreement. For purposes of this paragraph,
investments and costs include known or reasonably ascertainable expenses for
power supply, electric transmission and distribution and administrative, general,
financial and other costs related to the agreement;

(iii) Provide benefits to other customers without imposing additional

current or future costs.

(b) An electric utility shall retain for its owners any profits or losses that result
from entering into an agreement with a customer pursuant to this section.

(c) Regulated utilities entering into agreements under this section shall report
to the commission at least once every three (3) years as to the impacts on other rate
payers.

(d) This section shall only apply to service agreements:

(i) Between an electric utility and a customer with projected electric

usage greater than five (5) megawatts;

(ii) For services provided under a tariff approved by the commission

consistent with its authority under Wyo. Stat. 3 7-2-121.

25. Wyo.Stat.§37-3-106(b)and(c)allowtheCommissiontosuspendratesforatotal
of ten months:

(b) Unless the commission otherwise orders, no public utility shall make any
change in any rate which has been duly established except after thirty (30) days
-5- Docket No. 20003-173-ET-18
 notice to the commission, which notice shall plainly state the changes proposed to
be made in the rates then in force, and the time when the changed rates will go into
effect. . . .

(c) Whenever there is filed with the commission by any public utility any
application or tariff proposing a new rate or rates, the commission may, either upon
complaint or upon its own initiative, initiate an investigation, hearing, or both,
concerning the lawfulness of such rate or rates. Pending its decision thereon, the
commission may suspend such rate or rates, before they become effective but not
for a longer initial period than six (6) months beyond the time when such rate or
rates would otherwise go into effect. If the commission shall thereafter find that a
longer time will be required, the commission may extend the period of suspension
for an additional period or periods not exceeding in the aggregate, three (3) months.

26. Wyo. Stat. e) 37-2-122(b) gives necessary latitude to the Commission regarding
utility services, stating:

If, upon hearing and investigation, any service or service regulation of any public
utility shall be found by the commission to be unjustly discriminatory or unduly
preferential, or any service or facility shall be found to be inadequate or unsafe, or
any service regulation shall be found to be unjust or unreasonable, or any service,
facility or service regulation shall be found otherwise in any respect to be in
violation of any provisions of this act, the commission may prescribe and order
substituted therefor such service, facility or service regulation, as it shall determine
to be adequate and safe, or just and reasonable, as the case may be and otherwise
in compliance with the provisions of this act, including any provisions concerning
the availability or reliability of service. It shall be the duty of the public utility to
comply with and conform to such determination and order of the commission.

27. Wyo. Stat. e) 37-2-120 prohibits the Commission from making any order "which
requires the change of any rate or service. . . unless or until all parties are afforded an opportunity
for a hearing in accordance with the Wyoming Administrative Procedure Act." The Act establishes
general procedures for Commission cases, including the giving of reasonable notice. Wyo. Stat.
§ 16-3-107; in accord are Wyo. Stat. e)53 37-2-201, 37-2-202, and 37-3-106. See also, Commission
Rule Chapter 2, Sections s and 11.

28. The public interest must come first in Commission decisions; the desires of the
utility are secondary. Mountain Fuel Supply Co. v. Pub. Serv. Comm'n, 662 P.2d 878, 883 (Wyo.
1983). Construing Wyo. Stat. § 37-3-101, which requires rates to be reasonable, the Court further
stated:

This court cannot usurp the legislative functions delegated to the PSC in setting
appropriate rates, but will defer to the agency discretion so long as the results are
fair, reasonable, uniform and not unduly discriminatory.

(Id.). The Court further observed:

-6- Docket No. 20003-173-ET-18

 We agree that if the end result complies with the 'just and reasonable' standard
amiounced in the statute, the methodology used by the PSC is not a concern of this
court, but is a matter encompassed within the prerogatives of the PSC.

(Id. at 885).; see also, Union Tel. Co., Inc. v. Wyo. Pub. Serv. Comm'n & AT&T Commc'ns of the
Mountain States, Inc., 821 P.2d 550, 563 (Wyo. 1991) and Great W Sugar Co. v. Johnson et al.,
624 P.2d 1184, 1186-88 (Wyo. 1981).

29. In defining the standard of proof in adjudicatory hearings, the Wyoming Supreme
Court has stated:

The language of the WAPA does not expressly provide a standard of proof in
contested case hearings. See Wyo. Stat. Ann. Eg 16-3-114(c). We have previously
recognized that the standard applicable to an adjudicatory hearing before an agency,
unless otherwise stated, is the "preponderance of the evidence" standard
customarily used in civil cases. Willadsen v. Christopulos, 731 P.2d 1181, 1184
(Wyo. 1987). A ?preponderance of the evidence" is defined as ?proof which leads
the trier of fact to find that the existence of the contested fact is more probable than
its non-existence." Judd v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2010
WY 85, ? 31, 233 P.3d 956, 968 (Wyo. 2010).

Accordingly, where, as in Wyo. Stat. § 3 7-3-116, the evidentiary standard is not specifically stated,
the public utility's burden of proof must be met by the preponderance of the evidence standard.

30. The Commission may approve a stipulation or agreed upon settlement as a means
of disposing of any matter coming before it at hearing pursuant to Chapter 2, Section 25 of the
Commission Rules and Wyo. Stat. § 16-3-107(n).

31. Section 107 of WAPA, Wyo. Stat. Fg 16-3-107 sets parameters for due process in
Commission cases, including the giving of reasonable notice. In accord are Wyo. Stat. F3§ 37-2-
201, 37-2-202, and 37-3-106. See also, Chapter 2 Section s of the Commission's Rules.

Conclusions of Law

32. CLFP is a public utility, as defined in Wyo. Stat. § 37-1-101(a)(vi)(C), providing

retail electric public utility service under certificates of public convenience and necessity issued
by the Commission. CLFP is subject to the Commission's jurisdiction pursuant to Wyo. Stat. e) 3 7-
2-112.

33. ProperpublicnoticeoftheseproceedingswasprovidedinaccordancewithWAPA,
Wyo. Stat. e) 37-2-203, and Commission Rule Chapter 2, Section s. The public hearing was held
and conducted pursuant to Wyo. Stat. §§ 16-3-107, 16-3-108, 37-2-203, and applicable sections of
the Commission's Rules. The Commission properly granted the OCA's intervention, making it a
party for all purposes.

34. When the parties to a contested case proceeding reach a settlement, the Commission
holds a public hearing to determine whether the settlement is in the public interest. In such
proceedings, we seek to understand the terms of the settlement, and assure that it completely
addresses the requirements of the underlying application, thereby ensuring that the settlement
-7- Docket No. 20003-173-ET-18
includes all the necessary determinations of fact that may be required for subsequent proceedings.
We inquire into the motivations of the parties to confirm that no aspect of the settlement is, by
inattention or design, contrary to the interests of all or a subset of the utility's ratepayers. We
conduct such other examination as the public interest may require.

35. The Commission strongly disfavors ?black box" settlements, which because of
their opacity prevent the Commission from determining how the parties reached an agreement. In
such situations, the settlement does not document the results in a way that establishes a useable
context within which to view subsequent applications. This makes it difficult for the Commission
to fulfill its responsibility to determine that the settlement is in the public interest. At the same
time, transparency alone does not satisfy the public interest. The Commission can and does reject
proposed settlements when it concludes they do not serve the public interest." In the instant case,
however, the Parties discussed in detail how the Stipulation resolves the issues presented.

36. Full pre-hearing disclosure by the parties materially aids us in gathering the
requisite evidence and reaching a decision in the public interest. Here, the Parties reasonably
documented the details of their settlement and explained the process by which they reached a
settlement. We find the Stipulation testimony credible and persuasive.

37. TheSfjp;u7ationisareasonableresolutionofthiscaseasitservesthepublicinterest
and should be approved. However, nothing in the Stipulation constitutes a limitation on the
jurisdiction of the Commission in this or any other case.

38. The Commission finds that the evidence in the record supports the Stipulation and
CLFP's request to implement the BCIS and BCCA Tariffs. The Commission further finds that the
Application, as modified by the Stipulation, is in the public interest and is approved.

39. The Commission finds it is in the public interest for CLFP to amend its PCA tariff
as proposed.

40. Because the Order incorporates the Stipulation, the Commission has not repeated
all of the provisions contained therein. However, the Commission reviewed those provisions, heard
the discussion of the Parties, and fully considered them in approving the Stipulation.

41. TheCommissionapprovestheStipu/afionasattachedtothis0rder,effectiveon
and after June 1, 2019. The Stipulation serves the public interest and is an appropriate means of
disposing of this matter pursuant to Commission Rule Chapter 2, Section 25 and Wyo. Stat. § 16-
3-107(n).

42. The Commission's conclusions set forth hereinabove are supported by a

preponderance of the evidence.

NOW THEREFORE, IT IS ORDERED:

1. Pursuant to the Commission's deliberations held on April 30, 2019, Cheyenne

Light, Fuel and Power d/b/a Black Hills Energy for authority to implement a Blockchain

2 See, e. g., Montana Dakota Utilities Co., Docket No. 20004-81 -ER-09, Order of May 26, 2010.
-8- Docket No. 20003-173-ET-18
 Interruptible Service tariff, is approved, consistent with the terms of this Order and the Stipulation,
appended hereto as Appendix A, effective June 1, 2019.

2. This Order is effective immediately.

MADE and ENTERED at Cheyenne, Wyoming, on July 22, 2019.

PUBLIC SERVICE COMMISSION OF WYOMING

l? g. ?
KARA B. FORNSTRO'M, Chairman

r"i-C?
?,,.%! ilC.E.?(,,'
0 .? 'o"Th MARY * HRONE, Deputy Chairman
a'p' OFFICIAL S,%
SEAL ..:a 4z? a-?-,-
MICHAEL M. ROBINSON, Commissioner
?5?

STEVE MINK, Assistant Secretary

-9- DocketNo. 20003-173-ET-18

 APPEffl.TT")TX A

BEFORE THE PUBLIC SERVICE COMMISSION

OF THE STATE OF WYOMING

IN THE MATTER OF THE APPLICATION OF

CHEYENNE LIGHT, FUEL AND POWER COMPANY D/B/A BLACK HILLS TO
IMPLEMENT A BLOCKCHAIN INTERRUPTIBLE SERVICE
TARIFF EFFECTIVE DECEMBER 1, 2018

STIPULATION AND AGREEMENT

DocketNo. 20003-173-ET-18

(Record No. 15104)

March 15, 2019

 TABLE OF CONTENTS

I. PROCEDURAL HISTORY. 2

II. THE STIPULATION 3

III. PROCEDURAL MATTERS 4

IV. GENERAL TERMS AND CONDITIONS 4

ATTACHMENTS

Stipulation Attachment A - BCIS Tariff Legislative and Clean Version

Stipulation Attachment B - Substation Reservation

Stipulation Attachment C - Proposed BCIS Customer Crcdit Adjustment Tariff

Language

Stipulation Attachment D - Illustrative BCIS Customer Crcdit Adjustment

Calculation
 BEFORE THE PUBLIC SERVICE COMMISSION
OF THE STATE OF WYOMING

IN THE MATTER OF THE APPLICATION OF )

CHEYENNE LIGHT, FUEL AND POWER )
COMPANY d/b/a BLACK HILLS ENERGY TO ) DocketNo. 20003-173-ET-18
IMPLEMENT A BLOCKCHAIN ) (RecordNo. 15104)
INTERRUPTIBLE SERVICE TARIFF )
EFFECTIVE DECEMBER 1, 2018 )

STIPULATION AND AGREEMENT

The parties to this Stipulation and Agreement ("Stipulation") are Cheyenne Light, Fuel and

Power Company d/b/a Black Hills Energy ("Cheyenne Light") and the Wyoming Office of

Consumer Advocate ("OCA") (collectively referred to as the "Stipulating Parties").

The Stipulating Parties, by and through their respective undersigned representatives,

agree to resolve Cheyenne Light's Application to implemcnt a Blockchain Interruptible Service

Tariff (?BCIS Tariff') that was proposed to be effective December 1, 2018 ("BCIS Docket").

Resolution of the BCIS Docket is a compromise of the positions of the Stipulating Parties, and

is based on the record in this case in its entirety, including the Pre-Filed Direct Testimony and

Exhibits filed by Cheyenne Light and the Pre-Filed Testimony of the OCA. The Stipulating

Parties believe the resolution presented in this Stipulation is in the public interest, and the parties

agree to support and defend the terms and principles.

NOW THEREFORE, the Stipulating Parties stipulate and agree to the following, and

respectfully request that the Wyoming Public Service Commission ("Commission") approve the

Stipulation, Tariff sheets and Blockchain Customer Credit Adjustment Tariff Language contained

in Stipulation Attachment A and C, without material change, with an effective date of June 1, 2019

or as directed by the Commission.

1
 I. PROCEDURAL HISTORY

1. Cheyenne Light submitted its Application in the BCIS Docket on September 28, 2018.

The Application requested the implementation of a BCIS Tariff effective December 1, 2018.

2. OnOctober3,2018,theCommissionissuedaSusperision0rder.PursuanttoWyo.Stat.

§ 37-3-106, Cheyenne Light's BCIS Tariff Application was suspended for the six-month term

prescribed by subsection (c) commcncing after 30-days' notice term provided by subsection (b).

3. OnOctober4,2018,theCommissionissuedits#oticeo7,4pp'ication,whichsetadeadline

for interventions of November s, 2018.

4. On October 3, 2018, the OCA filed its Notice of Intervention, Objection to Requested

Effective Date, and Motion for Shortened Discovery. This filing was the exercise of the OCA's

authority to participate pursuant to the provisions of Wyo. Stat. § 37-2-402(a), requesting any

implementation of the tariff to be withheld during the duration of the docket, and moving for a 10

calendar day deadline for all discovery.

s. On October 8, 2018, the OCA filed its Withdrawal of Motion for Shortened Discovery

Turnaround following the agreement of Cheyenne Light to an alternate shortened discovery

deadline.

6. On January 3, 2019, the Commission issued a Notice Setting Scheduling Corzference

wherein a scheduling conference was set for January 10, 2019.

7. On January 10, 2019, the Commission issued a Scheduling Order setting the following

deadlines:

January 25, 2019

Deadline for Intervenors to issue discovery on
Applicant testimony
l
l
l

i Febmary 15, 2019 Deadline for Intervenors to file direct testimo-ny i

March 11, 2019 r Deadline for all parties to file rebuttal testimony
and for Intervcnors to file cross-answer testimony
l
l

l March 29, 2019 {Deadline to issue all discovery

l

l April 10, 2019 Deadline for all parties to exchange exhibits

2

April 12, 2019
l April 18, 2019
l April 30, 2019
'5April 30 - May 2, 2019
Deadline for parties to file any pre-hearing reports,
pre-hearing motions, any objections to pre-filed
testimony and exhibits. Deadline to file exhibits
and exhibit index
lPreJhearing Conference 1
lExhibit Conference 1
{Public Hearing l

8. OnFebruaryl5,2019,theOCAfiledtheDirectPre-FiledTestimonyofAnthonyOmelas,
9. On February 26, 2019, the OCA and Cheyenne Light participated in a Settlement
Conference. An agreement was reached in principle to resolve the BCIS Docket. The agreed-
upon resolutions are described in Section III of the Stipulation and shown on Stipulation
Attachments A through C which are more fully described below.
II. THE STIPULATION

The Stipulating Parties agree to settle and resolve the BCIS Docket on the following terms
and conditions:

10. Amendments to the proposed BCIS Tariff. The Stipulating Parties agree to the form
and content of the proposed BCIS Tariff (Exhibit l to the Application) with the following edits
and clarifications which are attached hereto as Stipulation Attachment A:
a. BCIS Transmission Credit: The Stipulating Parties agree the amount of
the BCIS Transmission Credit per megawatt hour served under the BCIS
Tariff shall be: 1) $1 .00; and 2) a blend of the ancillary service charge rate
under the Open Access Transmission Tariff ("OATT") for non-firm use of
the Cheyenne Light system in effect on the date of execution of each BCIS
customer agreement. The $1.00 represents the Cheyeru'ie Light's currently
approved OATT discounted non-firm transmission service rate and is a
transmission cost assignment to the BCIS customers. This $1.00 per
3
 megawatt hour transmission cost assigmnent portion of the BCIS
Transmission Credit will remain fixed unless changed by the Commission as
the result of a general rate case. The OCA specifically reserves its right to
challenge the amount of the BCIS Transmission Credit in any Cheyenne
Light general rate case. The ancillary service charge rate will be calculated
as the weighted average of on and off peak charges for the varied usage of
the transmission system based on the OATT that is in effect on the date of
execution of each BCIS agreement. At thc time of the execution of this
Stipulation, the OATT posted ancillary service on peak rate is $0.31 and off
peak rate is $0.18 which results in a BCIS Transmission Credit of $1 .25 per
megawatt hour of energy served under the BCIS Tariff:
[$1.00 + ($0.31 x 57% + $0.18 x 43 %)] = $1.25

The BCIS Transmission Credit will be credited to customers through a BCIS

Customer Credit Adjustment, which is discussed in detail in Paragraph 14 of this
Stipulation.

b. BCIS Customer Benefit: The Stipulating Parties agree the BCIS Customer Benefit
of $1 .00 per megawatt hour of energy served under the BCIS Tariff will be credited to
customers through a BCIS Customer Credit Adjustment, which is discussed in detail
in Paragraph 14 of this Stipulation.

c. Corporate Overhead Expenses: The Stipulating Parties agree to the proposed

accounting treatment of the corporate overhead costs related to BCIS customers.
However, until new base rates become effective due to a general rate case, the
Stipulating Parties agree Cheyenne Light will provide a corporate overhead credit to
its non-BCIS customers as an immediate benefit for a portion of overhead costs
4
 assigned to the BCIS customer segment, but not reflected in Cheyenne Light's current
non-BCIS base rates. This BCIS Corporate Overhead Credit will be 1 0% of the annual
amount of corporate overhead costs allocated to the BCIS customer segment recorded to
the BCIS income statement under FERC accounts 920 and 921. This percentage is
representative of the forecasted 2019 Cheyenne Light annual corporate overhead cost
allocation of 9.51 % pursuant to BHC's Corporate Allocation Manual. Once Cheycnne
Light establishes new base rates due to a general rate case, the BCIS Corporate
Overhead Credit will no longer be provided through the BCIS Customer Credit
Adjustment and the BCIS corporate overhead charges allocated to the BCIS customer
segment will be removed from any future cost of service study for non-BCIS customer
classes.

The BCIS Corporate Overhead Credit will be credited to customers through a

BCIS Customer Credit Adjustment, which is discussed in detail in Paragraph 14 of this
Stipulation.

d. Marginal Costs. The Stipulating Parties agree to the removal of the term "marginal"
from Paragraph 9 under the Contract section in the BCIS Tariff as follows:
Revenue expected to be received under the Agreement during its term
must exceed the anticipated 4 costs to the Company of its
performance under the Agreement

11. Ring Fencing: The Stipulating Parties agree Cheyenne Light will apply the following
ring fencing protections regarding service under the BCIS Tariff':
RING FENCING

a. So long as Cheyenne Light is providing services under the BCIS Tariff,

Cheyenne Light shall not seek and is precluded from recovering from
its Wyoming customers any interest expense or other debt related
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 expense that is greater than it would have incurred had the debt been
issued by a Black Hills Corporation entity that held a BBB- equivalent
?investment grade? credit rating at the time of issuance. The investment
grade status shall be a minimum presumption relative to the interest
rate or debt cost, but if a higher rating than the minimum to obtain
"investment grade" status is in place at the time of issuance, the actual
rating grade shall be utilized.

b. For the proposed computing of the cost of equity for Cheyenne Light,
a rating of not less than the minimum rating to be considered
investment grade (BBB- equivalent) shall be presumed for the purpose
of determining comparable companies and for other cost of equity
analyses reliant on corporate risk.

c. The above provisions shall be in place so Iong as Cheyenne Light is

providing service under the BCIS Tariff and shall apply only when a
credit rating downgrade below BBB- equivalent occurs that is
materially attributable to Cheyenne Light providing service under the
BCIS Tariff.

12. Line Extensions and System Upgrades. The Stipulating Parties agree Cheyenne Light
will identify and specifically account for all line extensions and system upgrades attributable to
service under the BCIS Tariff. These investments will be direct assigned to the BCIS Customer
under the terms of their contracts. Cheyenne Light may, at its discretion request to include these
investments in rate base in future rate cases. Any future request to include these extensions or other
system upgrades will be accompanied by specific testimony and data as to why these investments
are used and useful to the general body of Cheyenne Light customers. Any party may challenge
Cheyenne Light's request for the inclusion of the cost of these investments in its base rates
applicable to non-BCIS customers.

13. Distribution Assets. The Stipulating Parties agree Cheyenne Light will initially reserve
capacity at its existing substations for native non-BCIS customer growth as follows:

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 Current
Utilized Available
Reserved
Substation Capacity BCIS
Capacity
(2018 Capacity
Peak)
Happy Jack OMW 4.7 MW 15 MW

Hilltop 62 MW 4MW 30MW

Skyline 46 MW OMW 40 MW

Crow Creek 46.5 MW 9.5 MW 40 MW

East Business
8.9 MW 3.8MW 35MW
Park

Stipulation Attachment B provides additional information regarding the all load-serving

substations and reserved capacity including forecasted load growth at each substation for 2018 -

2022. Cheyenne Light will notify the Commission of any changes to its capacity reservations

annually during its business update with the Commission.

14. BCIS Customer Credit Adiustment. The Stipulating Parties agree Cheyenne Light will

provide non-BCIS customers with the BCIS Transmission Credit, BCIS Customer Benefit, and

BCIS Corporate Overhead Credit annually through the BCIS Customer Credit Adjustment

("BCCA"). Cheyenne Light will make a filing with the Commission providing detailed

calculations of the BCCA annually on May 1 . The BCIS Customer Credit Adjustment proposed

tariff provisions are attached as Stipulation Attachment C.

The Stipulating Parties agree Cheyenne Light will utilize the methodology as set forth in

Stipulation Attachment D for its annual calculation of the BCIS Customer Credit Adjustment.'

The Stipulating Parties further agree the OCA is not waiving and is specifically reserving its

right to challenge the annual BCIS Customer Credit Adjustment filing and the burden of proof

remains with Cheyenne Light.

' Attachment D is for illustrative purposes only.

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 The Stipulating Parties further agree Cheyenne Light will work with the OCA and the

Commission staff to revise its Wyo. p.s.c. Tariff No. 13 to include the BCCA Tariff provisions

(included in Stipulation Attachment C) and all required cross references to this new cost

adjustment mechanism in its Tariff within thirty days of Commission approval of the BCIS

Tariff.

15. Annual Reporting. The Stipulating Parties agree Cheyenne Light will provide an update

on the BCIS Tariff annually as part of its business update to the Commission. This report shall

include, but is not limited to, the number of customers served, the nature of service provided, the

status of distribution assets and the reservation of load for native load growth, and customer

benefits provided through the BCCA associated with service under the BCIS Tariff.

III. PROCEDURAL MATTERS

16. The Stipulating Parties agree to request a bench decision and to waive their right to file

post-hearing briefs.

17. Cheyenne Light will file supportive Stipulation Testimony providing additional detail and

support for the Stipulation and its terms by March 15, 2019. The OCA may also file Stipulation

Testimony by March 15, 2019, however, any party may rely on the Stipulation Testimony of

Cheyenne Light to support the temis of the Stipulation.

IV. GENERAL TERMS AND CONDITIONS

18. Public Interest. The Stipulating Parties stipulate and agree this Stipulation, in its entirety,

is in the public interest and in its entirety it is just and reasonable. The Stipulating Parties

acknowledge this Stipulation represents a compromise of all positions of the Stipulating Parties in

this Docket and has been negotiated in good faith. The Stipulating Parties agree to support all

elements of this Stipulation as being in the public interest in proceedings before the Commission,

and to advocate in good faith that the Commission approve this Stipulation in its entirety.
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 19. Settlement Negotiations. The Stipulating Parties stipulate and agree that all negotiations
related to this Stipulation are privileged and confidential, and no Party shall be bound by any
position asserted in the negotiations, except to the extent expressly stated in this Stipulation.
In addition, evidence of conduct or statements made in the negotiation and discussion
phases of this Stipulation shall not be admissible as evidence in any proceeding before the
Commission or any court.

20. Settlement Effectiveness. The Stipulating Parties stipulate and agree that, except as
expressly noted herein, the execution of this Stipulation shall not be deemed to constitute an
acknowledgement of any party hereto of the validity or invalidity of any particular method, theory
or principle of regulation, and no party shall be deemed to have agreed that any principle, method
or theory of regulation employed in arriving at this Stipulation is appropriate for resolving any
issue in any other proceeding. Except as noted, the execution of this Stipulation shall not
constitute the basis of estoppel or waiver in future proceedings by any party, except to the extent
dictated by this Stipulation. Furthernnore, no party hereafter shall be deemed to be bound by any
position asserted by any party, and no finding of fact or conclusion of law other than those
expressly stated herein shall be deemed to be implicit in this Stipulation.

If the Commission chooses to adopt and approve the Stipulation without material
alterations, this docket and the issues addressed in this Stipulation are resolved in their entirety.
21. Hearing Witnesses and Exhibits. The Stipulating Parties agree to the admission of all
pre-filed testimony and exhibits filed in Docket No. 20003-1 73-ET-18 (Record No. 15104). The
Stipulating Parties waive cross examination of witnesses or representatives of any party who is a
signatory to the Stipulation provided the witnesses' or representatives' testimony or
representations before the Commission are consistent with this Stipulation.

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22. Support for Settlement. At the scheduled hearing in this matter, the Stipulating Parties

shall each provide at least one witness or representative who will be available to answer questions

related to the Stipulation. Representatives of any Stipulating Party may request to appear in person

or by phone. Those witnesses who pre-filed testimony in this matter will be made available to

respond to questions of the Commission and/or its Staff upon request.

The Stipulating Parties acknowledge their support and advocacy of the Stipulation may

be compromised by alterations to the Stipulation. In the event the Commission rejects or

materially alters the Stipulation, the Stipulating Parties agree they are no longer bound by its

terms and are not deemed to have waived any of their respective proccdural or due process rights

under Wyoming law.

23. Settlement Execution. This Stipulation may be executed by electronic mail or facsimile

in one or more counterparts and each counterpart shall have the same force and effect as an

original document and as if all the Stipulating Parties had signed the same document. Any

signature page of this Stipulation may be detached from any counterpart of this Stipulation

without impairing the legal effect of any signatures thereon, and may be attached to another

counterpart of the Stipulation identical in form hereto but having attached to it one or more

signature page(s).

[SIGNATURES ON FOLLOWING TWO PAGES]

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Cheyenne Light, Fuel and Power Company

By:
'b. 0?
Kyle"D.a )?te
Vice Ppffiidlnt - Regulatory Strategy
7001 'loui'd Rushmore Road
Rapid ?, SD 57702
Kyle. White@blackhillscorp.com
Date:

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Wyoming Office of Consumer Advocate

i :i (1 ? .'l?i2r, aa
BY::A lr Xy? a (.-
Christophermger ?:'-,
Counsel /

2515 Warren Ave, Si?iite 304

Cheyenne, WY 82003
Christopher.Leger@wyo.gov

i
j

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