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This dramatic decline has been driven by factors generally outside our control. 

 Continued drought conditions, low aluminum prices, and Endangered Species 

 Act costs have significantly reduced our net revenues compared to expectations 

 when the rates were put in place in October, 1991. 



The Northwest hydropower system is under its greatest stress ever. 

 Streamflows between August and Febmary were the lowest since 1926. ' 

 The last two years have been the second worst consecutive water years in 

 Bonneville's 55-year history. Only the years 1944-1945 were worse. Continuing 

 drought conditions are causing severe reductions in the operating levels of 

 Federal reservoirs. And, it is becoming increasingly expensive to store water to 

 aid the spring juvenile migration of threatened and endangered salmon. 



Drought conditions impact Bonneville in two key areas-reduced revenues from 

 sale of nonfirm energy and surplus revenues and increased purchase power 

 costs to cover our fimn load and fish flow obligations. Both have contributed 

 significantly to the decline of our forecasted net revenues. 



Drought conditions are not the sole cause of our financial difficulties. The 

 region's aluminum industry, which provides about one-fourth of Bonneville's 

 revenues, is suffering from continued low aluminum prices. Because 

 Bonneville's revenues from the smelters are tied to worldwide aluminum prices, 

 we have been impacted as well. 



