243 



DeFazio Hearing 

 Emerald PUD, page 16 

 September 25, 1993 



While we support the concept of transforming Bonneville from an agency to a 

 Government Corporation, we caution against allowing this new status to be used eis 

 an additional mechanism to distance Bonneville from public scrutiny of all of its 

 actions. There were five attempts between 1937 and 1958 to convert Bonneville 

 Power Administration (BPA) into a Columbia Valley Authority (CVA). Most were driven 

 by frustrations over the difficulties of securing appropriations from congress for capital 

 projects. The new initiative to turn BPA into a government corporation has the 

 appearance of a sixth attempt at forming the long sought CVA. This new effort is 

 being brought forward without draft legislative language which would clarify the intent 

 of the effort and give purpose to the outcome. Is the intent to establish the goals of 

 the 1935 CVA bill proposed by U.S. Senator James Pope? This bill provided broad 

 non-power planning authority similar to that vested in the TVA. Or, is the intent to 

 devise a TVA-like regional control, removing the regional system from national debate. 

 We understand this new initiative is to give flexibility to the agency and reduce 

 reporting requirements to other federal agencies -- benefits enjoyed by TVA. 

 However, TVA is subject to a governing body which is not proposed for the new BPA 

 Corporation. 



Repayment Reform and Debt Buv-down 



We support the recent proposal for Bonneville to "buy-down" the existing payment 

 stream on rts $6.9 billion debt, providing a buy-down actually produces a benefit to the 

 federal government in the form of a reduction to the national debt. However, the 

 proposal must be "rate neutral" to Bonneville's consumers. In order to accomplish this, 

 it will be necessary to provide flexibility in determining the discount rate. The "scoring" 

 of this repayment must reflect the true value of buying out the debt. Bonneville needs 

 to make clear to the region's billpayers how the relationship to the financial life of 

 existing transmission and generation assets will change. We understand the existing 

 transmission and generation assets have 1 5 and 25 year financing lives remaining. 

 Under the new bonds these may be extended to 40 years. 



We make the assumption that Bonneville will be allowed to secure private capital by 

 issuing paper "implicitly backed by the U.S. Government." Recognizing the enormous 

 liabilities Bonneville has assumed in its nuclear obligations, the secrecy of the terms of 

 the Tenaska contract and the WPPSS/GE settlement, and the uncertainty of the 

 Endangered Species Act impacts on the hydro system, it is not likely that Bonneville 

 could issue bonds without the backing of the federal government. 



