By Brice Wallace
Deseret Morning News

      PacifiCorp, catching heat for picking itself from among dozens of bidders to build a proposed power generation plant, contended Wednesday that it did not have a conflict of interest in being both a bidder and bid selector.
      At issue is whether PacifiCorp, which operates as Utah Power in Utah and Idaho, acted properly when it selected itself to construct a gas-fired plant in Mona, Juab County. The utility contends it was the best choice from a group of 79 bidders. That contention was backed up by its hired consulting company, Navigant Consulting Inc., although other bidders say that choice ultimately could be more costly to customers than other options.
      PacifiCorp says the plant will cost $350 million, which it believes is $320 million less expensive, over the life of the plant, than the next-best bid.
      Several bidders have claimed that PacifiCorp's bid process was too confusing and that its "self-build" choice is suspect. But during a Wednesday Utah Public Service Commission hearing on the Currant Creek project, Mark Tallman, PacifiCorp's managing director for trading and origination, testified that he sees no conflict, adding, "I think the commission is the ultimate judge.
      "I don't believe that PacifiCorp has a conflict. Our perspective is to bring the best resource to customers. I am aware that others believe we have a conflict," he said Wednesday.
      "Our proposal wasn't a competitor. Our proposal was a benchmark. It was there to serve as a benchmark and a cost-based alternative for comparison purposes and to be implemented if necessary."
      "It wasn't a competitor, but it won. Is that your testimony?" asked Gary Dodge, an attorney for the Utah Association of Energy Users, a group of industrial companies.
      "It didn't 'win.' It was the best choice, the best course of action. It wasn't a case of winning and losing," Tallman replied.
      "There were no preconceived notions about 'build' vs. 'buy,' " he said later. "There was no underlying tone that came down from on high to make sure the process gets the right answer. The right answer in the process was the least-cost alternative, regardless of build vs. buy."
      Navigant, he said, "looked over our shoulder" to ensure PacifiCorp was "evaluating things in a fair and balanced fashion."
      Tallman said the utility is restricted, unlike the other bidders, from recovering the construction costs over a 20-year period. Instead, it must recover them over the expected 35-year life of the plant.
      "My testimony shows that the Currant Creek project is still the most economic choice for customers, even if all costs are accounted for over a 20-year term, which of course we would not be allowed to do, instead of a 35-year term. And even on that basis, Currant Creek enjoys a 14 percent advantage over any of the other offers that were received."
      Tallman also said the utility chose to not publicize its own proposal during the bidding process because it would have made bidders less aggressive and less creative.
      The utility is expecting to be about 1,049 megawatts short of meeting demand during summer 2005. A megawatt is enough electricity to power about 500 homes. Currant Creek would put 280 megawatts toward meeting that amount by then, on the way to being a 525-megawatt plant, and the company has found other supplies to add to that for the 2005 summer season.
      Without Currant Creek, the company has a "daunting task" to secure enough resources for that summer, Tallman said.
      Critics also have said the bid comparison was skewed because PacifiCorp solicited bids for "peaking" electricity — used during high-demand periods — but its own option included peaking and baseload components.
      Some bidders also have chastised the utility for trying to cram the regulatory process into a short period of time, leaving inadequate time to prepare. Tallman said the company decided to move forward with the Currant Creek project in late September.
      His testimony indicated the company made the decision when the bidding process would begin. But, he said, "to infer that we maliciously delayed the process is just wrong."
      Dodge has called PacifiCorp's actions "blackout blackmail," contending that the commission is faced with approving the project on PacifiCorp's terms and timetable or dealing with rolling blackouts in summer 2005.
      "Without Currant Creek, the chances of any of those events occurring and resulting in an outcome that is undesirable is higher," Tallman said. He said it would be unwise "to sit and sit and wait and hope that a resource will show up."
      Under questioning from Dodge, Tallman said the company has done no analysis on any savings to ratepayers if the Currant Creek project were delayed one year and the summer 2005 demand were met by buying power elsewhere. "Our premise has been that Currant Creek is needed, and that's how we've moved forward," he said.
      Tallman was the only witness Wednesday, and the hearing is expected to continue into next week. The commission has decided to not have oral public comment but instead welcomed the public to provide written comment until Feb. 27. It is encouraging the public to work with the state Committee of Consumer Services, which represents individuals, small businesses and farmers on utility matters.