86 



to support BPA's economic well being, so you can, just as you say, 

 continue to fund its fish and wildlife conservation responsibilities. 

 Could you expand on what those incentives are that you might see? 



Mr. Hardy. As we saw the competitive environment unfolding 

 before us, we asked ourselves the very questions that Angus sur- 

 faced about our regional responsibilities. How do we ensure that 

 those continue to be maintained — specifically our fish and wildlife 

 responsibilities? One of the frustrations that we have is that right 

 now my perception is the fishery agencies and the tribes are not 

 invested in our financial success. Frankly, we are running these 

 programs more like entitlement programs than as results oriented 

 fish programs. That is frustrating to the agencies and the tribes, 

 and believe me, it is extremely frustrating to me to be spending 

 $300 million a year and not know whether I am getting any results 

 for it. The suggestion of turning the lump sum of money over to 

 the Fish and Wildlife Service or something else has an appeal, if 

 you can take that and combine it with a trust-tj^je concept such as 

 we have done in the wildlife area in your State and in Montana, 

 where that actually relieves Bonneville of some of the ultimate 

 mitigation obligations. I mean, you provide a lump sum of money 

 with no strings attached in exchange for getting some certainty as 

 to what your ultimate obligation is. That is the kind of concept we 

 were talking about. There are other variants on that like a base 

 level of funding for fish and wildlife that can go up in good water 

 years. You build your overall financial reserve above a certain 

 level. Right now, the target in our rate case is roughly $400 million 

 by the end of fiscal year 1995. If you had a couple of good water 

 years, you had good aluminum prices with the variable rate like we 

 had back in the late 1980s and you build that reserve, say over 

 $700 or $800 million — ^you probably do not want to build it any- 

 more than that — some portion of that might go to additional fish 

 funds. Some portion of it might also go to rate relief. Those kinds 

 of things. So those are two or three different conceptual ways to get 

 at having the fisheries community more invested for financial suc- 

 cess rather than viewing us as a deep pocket where the answer is 

 always. Just spend more. My ability to do that is getting stretched 

 to its limits right now, not to mention what it may be 2 or 3 years 

 from now. 



Mr. LaRocco. Well yesterday, it was even suggested that some- 

 body is continually tr3dng to encourage the tribes to file lawsuits. 

 That is not exactly an incentive. That is just the opposite. I mean, 

 that is not a user-friendly relationship. It is a confrontational rela- 

 tionship that I hope we can avoid in a lot of ways with BPA. Are 

 you afraid that maybe in the customer base at some point, every- 

 body may fear being the last customer of BPA? In other words, 

 there a major push towards IPPs, you know, or is this a smaller 

 phenomenon? 



Mr. Hardy. Right now, I would say there is cause for concern, 

 but not alarm. The priority firm rate right now is 27 mills. The cost 

 of acquiring a new combustion turbine is more like probably 35 

 mills. Maybe there are a couple out there that are closer to 30 

 mills. So we have not reached the crossover point of our priority 

 firm rate with the cost of the resource acquisitions yet. I think it 

 will be some time before that actually occurs. But even with that. 



