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unlike this initial contract, such future contracts do not have the benefit of 

 the statutorily deemed sufficiency of power available to the Administrator 

 under section 5(g)(7). Bonneville's ability to offer any future contracts to 

 its nonpreference customers, including the Industrial Purchasers, is therefore 

 largely dependent upon Bonneville achieving firm load/resource balance while 

 these intial contracts are in effect. Bonneville is aware that most, if not 

 all, of the Industrial Purchasers are necessarily considering substantial new 

 capital investment at their existing facilities during the period of the 

 initial contracts, and that as a result the useful life of these facilities 

 may be extended well beyond the 20-year term of the initial contracts. We 

 hope you will find section' 12 of the attached contract responsive to some of 

 the concerns that have been expressed as to Bonnevilles' recognition of your 

 need for future, as well as immediate, power planning certainty. We would 

 certainly expect future Bonneville officials to recognize this need as well. 

 At the same time, Bonneville's obligation to maintain load/resource balance 

 through the efforts of its Customers and other non-Federal entities, and the 

 goal of achieving load/resource balance in making possible future contracts 

 and a continuing program under the Regional Act, needs to be borne in mind by 

 the Customers as well as by Bonneville. 



Bonneville has recently conducted cash flow analyses that indicate that should 

 there be substantial Industrial Purchaser curtailment below sales projected in 

 designing Bonneville's 1981 wholesale power rates, Bonneville would experience 

 severe cash flow difficulties, potentially of such a magnitude as to endanger 

 Bonneville's ability to purchase necessary power. In the contract 

 negotiations all parties recognized that Bonneville needs to minimize ccsh 

 flow problems, and that consequently a method should be agreed upon for 

 dealing with underrecoveries of costs incurred pursuant to section 5 (c) of 

 the Regional Act at intervals prior to July 1, 1985. Bonneville recognizes 

 that this was not solved during the negotiation of the contract, however, our 

 recent review of potential cash flow problems convinces us that it is 

 imperative to resolve this issue now. 



Bonneville intends to resolve this problem in future years through policies of 

 general applicability in its aimual rate proceeding. One possible way to deal 

 with the particular cash flow problem resulting from DSI curtailments would 

 be, if a DSI reduced its Operating Demand upon notice prior to the beginning 

 of the Contract Year pursuant to section 5(b)(4) of the new contract, 

 Bonneville could reallocate the cost of exchange resources or reduce the 

 amount of purchases it otherwise might have to make. 



We believe that this resolution is consistent with the legal obligations 

 imposed by section 7(b)(3) and section 7(c)(1)(A) of the Regional Act, and 

 does not prejudice the right of any person or entity to present and to have 

 considered any arguments or evidence it may wish to present in Bonneville s 

 rate proceedings conducted pursuant to section 7 of the Regional Act. The 

 following conditions will aid Bonneville's cash flow needs, and do not 



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