54 



we are planning, based on average water assumptions, to purchase 

 an amount of water to make sure that under average water condi- 

 tions we will refill on July 31 of 1994. 



Mr. DeFazio. Okay. If you could provide that figure, I would ap- 

 preciate it. 



[The information follows:] 



Power Purchases for FY 1994 are estimated at $126 million. 



Mr, DeFazio. Is the budget predicated upon continued curtail- 

 ment of the first quartile for the aluminum companies for next 

 year, given the fact that you are anticipating additional 



Mr. Hardy. I don't believe so, but I need to check that, Mr. 

 Chairman. I don't know right now what the answer to that ques- 

 tion is. I think we have assumed that we would have a return to 

 average water conditions and we would be able to serve that low. 

 I need to check that; I am not certain. 



Mr. DeFazio. Well, if on the one hand we are assuming that we 

 need to have an additional budget allocation for power purchases 

 to refill the reservoirs, and on the other hand, we are over here as- 

 suming that we can reinstate that quartile, it seems that that is 

 not entirely contradictory. I understand there is a difference be- 

 tween storage and flow, but it still seems there is some overlap of 

 concern with those two issues. 



Mr. Hardy. I am not sure what assumption we are now using 

 in the 1994 budget on that question. I need to get back to you on 

 that. 



Mr. DeFazio. Could you? 



[The information follows:] 



The FY 1994 estimate of $126 million assumes that the first quartile for the Di- 

 rect Service Industries is restricted from October through December. 



Mr. Hardy. I can tell you relative to what we are doing with the 

 DSIs that this is a day-to-day kind of thing. We have recently made 

 them an offer for the duration of 1993 that is a fixed price offer 

 to try to give us some additional stability. Basically, they would 

 pay for the first several months, fi*om May 1 forward, a much high- 

 er price for energy than they otherwise would if they got it from 

 surplus sales in exchange for a guarantee of replacement energy for 

 the duration of the year. However, I don't know what specific plan- 

 ning assumption we have used for the 1994 budget, Mr. Chairman. 



Mr. DeFazio. Is that a subject of the rate case? 



Mr. Hardy. That is outside the rate case. 



Mr. DeFazio. I would like to have some details on that, if I 

 could. 



Mr. Hardy. Certainly. I would be happy to provide you that. 



[The information follows:] 



The 1994 budget assumes service to the first quartile of the aluminum companies 

 for 1994 when energy is available. The forecasts used in preparing the budget were 

 the same as those used in BPA's Initial Proposal to the 1993 Rate Case. BPA uses 

 a historical water period of 50 years in the forecast process. Whenever there is 

 nonfirm energy available, the aluminum companies are given first priority to pur- 

 chase it at the forecasted Variable Industrial rate. The expected value of the 50 

 water conditions is used in forecasting the service to the first quartile and becomes 

 the basis for the budget. 



In BPA's supplemental proposal, BPA had new information on streamflows for the 

 spring and summer of 1993. With this new information, BPA adjusted its forecast 

 of service to the aluminum companies' first quartile by projecting restriction through 



