207 



us with a cash payment when their rates get above Bonneville's, 

 we are willing to cash the check. 



Mr. DeFazio. I am sure. 



Mr. Drummond, you talked about someone going out and looking 

 at a 30 mill project. One of the problems I have with all this is, 

 sure the future of BPA is fraught with uncertainties; on the other 

 hand, they have some pretty substantial stuff underlying the rea- 

 sonableness of their rates. You are talking about gas-fired genera- 

 tion. This 30 mill project, does this bring a long-term contract for 

 provision of gas at some fixed or predicable escalated price, or is 

 it subject to future market variations? 



Mr. Drummond. I cannot tell you the specifics of the contract, 

 but what I can tell you is that I can go to Morgan Stanley today 

 and buy a long-term hedge in natural gas. I can buy hedges from 

 any number of sources, large New York houses that will give me 

 protection against the increase in the price of natural gas. I can 

 buy natural gas in the ground and protect myself against increases. 



Mr. DeFazio. Right, but you also have the Clean Air Act and the 

 potential for CO2 regulation or taxation. 



Mr. Drummond. Oh, sure, I remember well the Fuel Use Act 

 that prohibited exactly the sort of development that we are talking 

 about now. So certainly it can turn around. I think the point is that 

 remaining a Bonneville full-requirements customer is not a risk- 

 free strategy. It carries with it significant risks. And what people 

 are doing is trying to balance the risks that they see in remaining 

 a full-requirements customer or even a partial-requirements cus- 

 tomer, versus the risk of new resource development. 



Mr. DeFazio. Okay. Mr. LaRocco, my time has expired. 



Mr. LaRocco. Thank you, Mr. Chairman, you asked the question 

 I wanted to on that 30 mills thing. It caught my attention as soon 

 as you mentioned it. What kind of energy — ^that was gas? 



Mr. Drummond. Yes, sir. 



Mr. LaRocco. Mr. Lorenzini, you had mentioned in point seven 

 of your testimony that, "We believe the investments Bonneville is 

 m^ddng in fish and wildlife programs could be targeted more effec- 

 tively to meet statutory requirements." Could you give me some 

 ideas on how that might work? This goes to yesterday's hearing, 

 but we did not have your involvement yesterday. 



Mr. Lorenzini. Well, our view consistently has been that in es- 

 tablishing the fish and wildlife requirements, there is a need to 

 begin by establishing and setting the overall objectives and the 

 goals for fishery escapement that we are trying to achieve, and 

 then measuring the programs against those goals. And that process 

 has not been followed. And so our concern is that if it were fol- 

 lowed, we believe the priorities would be different, said we believe 

 that many of the programs that are being currently funded may 

 not make the priority list. And I would be happy to supplement 

 that if you would like and submit some additional comments. 



[Editor's note. — ^This information may be found in the Appen- 

 dix.] 



Mr. LaRocco. Are you talking about like poaching and the 

 squawfish — ^those tjrpes of programs that they are involved in — ^be- 

 cause it is pretty widespread, or the spill program? 



