18 



So, you have about 60 percent of our current operations budget 

 that is the truly discretionary portion of our budget. That means 

 we have about $340 miUion, give or take, to work with in terms 

 of abihty to cut our budget and have a meaningful impact on the 

 rate increase. 



Basically, on the expense side, $25 million equates to one per- 

 centage point on the rate increase. So the total budget is roughly 

 equivalent 13 or 14 percentage points. A 50 percent cut in the cur- 

 rent options budget would give you $170 million, or roughly 6 to 

 7 percentage points off the rate increase. 



Next slide, please. 



Mr. Chairman, this graphic shows permanent Bonneville Federal 

 employment. There were a number of committee questions, about 

 what our staffing levels have been. The point of this graph is that 

 our overall employment has been roughly steady for the last 20 

 years. It has varied plus or minus 5 percent, around a median of 

 about 3,500 employees, for the last 20 years. The low has been a 

 little below 3,300; the high has been almost 3,700. Last year, in fis- 

 cal year 1992, we were at 3,667, and that is about the level that 

 we expect to come in at this year. So, we have some fluctuations 

 up and down, but basically we have stable staffing. That does not 

 include contractor staffing or other kinds of staffing, and I suspect 

 we will get into that in the questions. 



Next slide, please. 



The other principal tool, other than budget reductions, that we 

 have to control the size of the rate increase is taking a somewhat 

 greater risk on making our annual payment to the U.S. Treasury. 

 Our long-term goal is to have a 95 percent confidence level of re- 

 paying Treasury. In the initial rate case proposal, we concluded it 

 was too expensive to get there all in one rate case, so we lowered 

 that to a 90 percent probability of repa3dng Treasury. 



To decrease the size of the current rate increase, we could fur- 

 ther lower that probability to 85 or 80 percent, and that gives you 

 1.7 and 3 percentage points worth of rate benefit, respectively. 

 That is the other principal tool that we have. There are some oth- 

 ers, like the level of working capital, but that pretty much runs out 

 the tool kit of measures that we have to take this 24-25 percent 

 rate increase and get it down into the range that is more accept- 

 able. My goal is to definitely get it below 20 percent. The customers 

 in the settlement discussions that you alluded to coalesced around 

 a goal of 14 to 15 percent. We are working jointly to try to get to 

 that goal. I am not sure whether we can make that much of a 

 change, but we are clearly dedicated to getting as close to that goal 

 as we can. 



I might say one other thing, Mr. Chairman, anticipating a ques- 

 tion, but drawing from your original opening statement. It is true, 

 we did have settlement discussions with a number of the rate case 

 parties two weeks ago. By the nature of the rate case process, only 

 the parties to the rate case were allowed to be participants in those 

 settlement discussions. 



However, I would observe that those discussions included not 

 just customers of Bonneville, but also included the Northwest Con- 

 servation Act Coalition, Northwest Environmental Defense Council, 

 and other environmental groups. As a matter of fact, NCAC and 



