provide us with most of the runoff that fiiels the river. We have 

 a situation in which Bonneville has to increase its revenues and I 

 know it has been struggling with that question. Of course, as we 

 increase the rates, it is passed on to producers in the Bonneville 

 Power canopy. 



Beyond that, we are grappling with a Btu energy tax proposed 

 by the Clinton Administration which will have an additional im- 

 pact upon those users of energy in the Northwest, and many of us, 

 I think, in our region question the reasonableness of taxing a clean, 

 renewable energy source like hydropower at the same level that 

 you tax fossil fuel plant energy development. 



In fact, last month I had a representative from Northwest Alu- 

 minum in my office who testified before the Ways and Means Com- 

 mittee on the President's proposed tax package on hydropower. He 

 said that if the proposed rate increase goes through, that they are 

 out of business, and that means 489 people in The Dalles, Oregon, 

 are out of work. 



So with the energy tax and the inland waterway fee which will 

 be passed on, I don t envy Mr. Hardj^s position and job in juggling 

 these numbers. But the rate increase which may be double-digit 

 that Bonneville is discussing plus these additional taxes to be 

 passed on seem to me to be an invasion of private interest and cer- 

 tainly of the people who convert energy to productive means in the 

 Pacific Northwest. 



So thank you, Mr. Chairman. I am looking forward to the testi- 

 mony of Mr. Hardy. 



[Prepared statement of Mr. Smith follows:] 



Statement of Congressman Robert F. (Bob) Smith 



Mr. Chairman, I want to thank you for holding this hearing. I am hopeful that 

 in the next six months we can address some key issues about how we csm make 

 the Bonneville Power Administration more competitive and how they can continue 

 to play a role in economic development in the Pacific Northwest. 



In addition, I want to commend Mr. Hardy for the excellent job he has done dur- 

 ing his relatively short tenure at BPA. He has a big challenge ahead of him and 

 in many respects, he has joined the battle at perhaps the worst possible time. 



Unfortunately, he's not getting a whole lot of help from the current Administra- 

 tion. To use a boxing analogy, BPA ratepayers have already been rocked by a left 

 hook from extreme drought, low aluminum prices and the Endangered Species Act. 

 Now President Clinton is poised to deliver tne knockout blowout with his excessive 

 and unjustifiable Btu tax. 



Like many of my colleagues from the Northwest, I am not clear about the wisdom 

 of taxing a clean, renewable energy source like hydropower on the same level as an 

 average fossil fuel plant. It just doesn't make sense. 



Last month, a representative of Northwest Aluminum in The Dalles testified be- 

 fore the Ways and Meeuis Committee about the President's tax on hydropower. The 

 message he gave to the Committee was simple: If you add an unfair Btu tax on to 

 BPA's proposed rate increase, they are out oi business and 489 people in The Dalles 

 are out of work. 



In my district, it doesn't end there. Like the mighty Columbia River, the taxes 

 iust keep rolling along. If you add the Btu tax to other Administration proposals 

 like the 500% increase in the Inland Waterway User Fee, a typical Oregon wheat 

 farm is going to pay over $12,000 in additional costs. 



In my mind, a double-digit rate increase from Bonneville is serious enough. But 

 if the Northwest keeps getting hit by the Administration's taxes, it goes beyond a 

 knockout blow. It's kicking us when we're on the ground. 



Mr. Chairman, I look forward to the testimony we will hear today from Mr. 

 Hardy. 



Thank you. 



Mr. DeFazio. Thank you. 



