PORT OF SEATTLE 
MEMORANDUM 

COMMISSION AGENDA             Item No.      5i 
ACTION ITEM             Date of Meeting Date of Meeting  September 11, 2012 
DATE:    September 4, 2012 
TO:      Tay Yoshitani, Chief Executive Officer 
FROM:    David Soike, Director, Aviation Facilities and Capital Program 
Trevor Emtman, Senior Systems Engineer/Utility Business Manager 
Traci Goodwin, Senior Port Counsel 
SUBJECT: Proposed Settlement of Pacific Northwest Refund Action 
Net proceeds to the Port:  In-kind infrastructure construction valued at $1 million to $2 million. 
ACTION REQUESTED:
Request Commission acceptance of the settlement offer from Puget Sound Energy (PSE) dated August
22, 2012, and authorization for the Chief Executive Officer to execute a settlement agreement with PSE
resolving all claims in litigation related to the Port's claims as an interested party against PSE in the
Pacific Northwest Refund action. The settlement agreement will be negotiated with PSE pursuant to the
terms of the settlement offer and may include additional matters involving mutual cooperation between
the Port and PSE. In exchange for agreeing to settle the litigation, the Port would be required to dismiss
all actions against PSE currently pending before FERC. 
SYNOPSIS:
The Pacific Northwest Refund action is a refund claim filed by the Port before the Federal Energy
Regulatory Commission (FERC) in 2001 that seeks to recover excess charges that were imposed on the
Port during the 2001 California Energy crises. Puget Sound Energy, Inc. v. All Jurisdictional Sellers of
Energy, et al., Federal Energy Regulatory Commission Docket No. EL01-10-085. After lengthy
proceedings, defendant PSE has offered to resolve the Port's claim against it by funding and
constructing a new electrical service feeder at the Airport, the construction cost of which is estimated to
be approximately $1 million to $2 million. 
Accepting PSE's settlement offer and executing a settlement agreement will directly benefit the Port by
providing an in-kind payment to resolve this long-running litigation and assures the Port of receiving a
dedicated underground electrical feeder valued at $1 million to $2 million. The new feeder improves the
reliability of the Port's electrical service, increases capacity and backup generation preparedness,
anticipates future growth along International Boulevard and improves fault coordination on the Port's
property. By accepting the settlement, the Port would be required to dismiss all actions against PSE
currently pending before FERC.

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 6, 2012 
Page 2 of 4 
BACKGROUND: 
In 2001, the Port of Seattle intervened in an action before the FERC seeking refunds from for "unjust
and unreasonable" energy prices charged by PSE between December 25, 2000, and June 20, 2001. The
Port estimates that it paid approximately $18 million in excess energy charges during this time period
because of manipulation of the energy markets in California and the Pacific Northwest by PSE, Enron, 
and other parties. The Port and other plaintiffs from the Pacific Northwest, including the cities of
Tacoma and Seattle, asserted that these unjust and unreasonable prices came about as a result of PSE's
role during the California energy crisis. 
The refund claims of the Pacific Northwest plaintiffs, including the Port's claims, were originally heard
by a FERC Hearing Judge in September 2001 who concluded that the price increases in the Pacific
Northwest were an expected and predictable response to a confluence of unusual market factors. She
also concluded that the market was a functional competitive market, that the prices were not
"unreasonable or unjust," and denied the refund claims of the Pacific Northwest plaintiffs. After
seeking and being denied relief from the full FERC Commission, the Port and other Pacific Northwest
parties filed requests for rehearing before the Ninth Circuit Court of Appeals. On August 24, 2007, the
court granted the request for rehearing and remanded the matter back to FERC with instructions to
consider the market manipulation evidence of the plaintiffs in light of related decisions of the court
concerning the energy crisis. 
On October 23, 2007, the Port Commission authorized the Chief Executive Officer to execute a
settlement agreement resolving all claims in litigation related to the Port's claims as an interested party
against Enron for $150,000. 
FERC issued an order on May 24, 2011, establishing the scope of the evidentiary hearing on the Ninth
Circuit's remand order. The Pacific Northwest parties disagreed that the scope of the evidentiary
hearing was consistent with the Ninth Circuit's remand order and filed a motion with FERC for
reconsideration of the order in November 2011. A decision on the motion for reconsideration is still
pending. On July 16, 2012, FERC issued an order that established the procedural schedule for a hearing
on the merits and scheduled a prehearing conference for the hearing on the merits.
On August 22, 2012, PSE proposed a settlement of this litigation to the Port in which PSE would pay for
and construct an additional electrical service feeder from its Bow Lake substation to the Port's point of
delivery at South 160th Street. The settlement offer will remain effective for 30 days (until September
21, 2012).
The benefits of the new dedicated underground feeder to the Port would include the following: 
1) Reliability - Underground feeders are inherently more reliable because they are not subject to
vehicle accidents or severe weather events such as windstorms and lightning; 
2) Fault coordination - The system protection is not currently coordinated between the two
agencies at this point of delivery. A system fault on the Port system may cause interruption of
service to the entire PSE feeder. PSE will correct this system protection issue at their expense;

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 6, 2012 
Page 3 of 4 
3) Backup generation preparedness - A PSE dedicated feeder serving only the Port will allow
operational flexibility by enabling the Port and PSE to quickly and efficiently segregate Port
distribution systems from PSE distribution. This segregation or "islanding" will allow the Port
to provide backup generation services in the future to our systems and customers without
adversely effecting PSE customers, systems, and services; and 
4) Increased capacity - PSE will install a new larger conductor and increase the third service
capacity to 6.5 Mega Volt Amperes (MVA). 
5) Predictable maintenance costs  PSE will only charge the Port per established Washington
Utilities and Transportation Commission tariff rates. 
6) Technical cooperation  PSE will provide technical staff cooperation to the Port to facilitate
smooth operation should the airport move forward to build and operate it's own back-up power
generation facility in the future.
The new feeder should also accommodate anticipated future growth along International Boulevard,
improve certain reliability issues that may arise when the Port operates in parallel with other customers, 
and improve fault coordination on the Port's property. The construction cost of this new feeder line is
estimated to be approximately $1 million to $2 million. In exchange for agreeing to have PSE construct
the new feeder line, the Port would dismiss all actions against PSE currently pending before FERC. In
recent months, the Cities of Tacoma and Seattle, which also have claims pending against PSE in the
Pacific Northwest Refund action, have entered into a series of settlements of many claims. These
settlements have been for significantly less than the cities' original claims for relief. 
FINANCIAL IMPLICATIONS: 
None. By accepting the settlement, the Port will realize a fair settlement and avoid incurring additional
legal costs. 
ALTERNATIVES CONSIDERED AND THEIR IMPLICATIONS: 
1. Port staff has reviewed the proposed settlement offer and believes it would be beneficial for the Port.
As noted above, this litigation has been underway since 2001, and has involved multiple complex
proceedings and appeals. Settlement of the litigation would terminate the expenditure of funds for
outside counsel resources and would result in PSE funding and constructing a valuable infrastructure
improvement at the Airport. As noted above, the other Pacific Northwest parties are evaluating their
options and attempting to settle claims whenever possible. 
It is recommended that the Commission approve the acceptance of the settlement offer and authorize the
Chief Executive Officer to execute the settlement agreement with PSE as described in the settlement
offer of August 22, 2012, and further authorize the Chief Executive Officer to execute the settlement
agreement to include any additional matters involving mutual cooperation between the Port and PSE that
the parties would find beneficial. Finally, the value of the new feeder line is a reasonable amount to
accept in settlement given the progress of the litigation, the settlements that the Cities of Tacoma and

COMMISSION AGENDA 
Tay Yoshitani, Chief Executive Officer 
September 6, 2012 
Page 4 of 4 
Seattle have recently accepted and the likelihood of prevailing at the hearing before FERC. This is the
recommended alternative. 
2. The alternative to accepting this settlement is preparation for hearing in the Pacific Northwest refund
proceeding, which would be costly. In addition, the expenditure of the resources to prepare for the
hearing would not necessarily mean that the Port would achieve a successful outcome at the hearing.
Accepting the settlement means that the Port will not expend resources preparing for the hearing and
will receive a valuable infrastructure improvement funded and constructed by PSE.
OTHER DOCUMENTS ASSOCIATED WITH THIS REQUEST: 
None. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS: 
On October 23, 2007, the Port Commission authorized the Chief Executive Officer to execute a
settlement agreement resolving all claims in litigation related to the Port's claims against Enron arising
from the 2001 California energy crisis for $150,000.