57 



Mr. Hardy. I would have to refer back to the agreement. I don't 

 beheve we reimbursed our total amount, but we reimbursed some 

 amount. But the nature of this agreement is that the power system 

 is all interconnected, and if we can't get unanimous consent to go 

 forward, one utility can lean on the system at the expense of an- 

 other utility. Absent trying to exercise the police powers of the 

 State to compel them to do certain things, and audit that and en- 

 force that, the best way to try to do this is to reach some collective 

 voluntary agreement where you share the costs that you incur 

 when you have to do a power supply sort of voluntary curtailment. 

 That is what the attempt has been with the Share the Shortage 

 agreement. 



Mr. DeFazio. Right, but they aren't voluntarily making up the 

 difference in your wholesale costs at this point in time; I mean your 

 purchase costs. They aren't helping you pay that 4 mill difference. 

 That is coming out of your reserves, which of course they contrib- 

 uted to because they are customers, but then that drives the rate 

 case. 



I would just say, this seems to me something that warrants a lot 

 of scrutiny in looking at the two-tiered or multi-tiered rates. We 

 shouldn't be driven by the lowest common denominator. If we have 

 got a bad utility out there that is not going to ask its people to con- 

 serve in these periods of common concern, then rather than them 

 driving everybody else in the wrong direction, maybe they need to 

 pay a little extra if they want to stay at that high rate of consump- 

 tion. I just urge you to look carefully at that. 



I am not sure this meets the overarching mandate of the North- 

 west Power Act of driving us toward conservation and renewables. 

 It doesn't send a conservation signal to me and apparently didn't 

 send one to the utilities. Anyway, I think that is something that 

 warrants some more scrutiny. 



I have gone on for quite some time. Let's see if Mr. LaRocco has 

 some questions. I don't have too many more. I told you it would 

 take about two hours. Randy, and probably we will get you out of 

 here in another 15 minutes. 



Mr. LaRocco. 



Mr. LaRocco. Thank you, Mr. Chairman. 



I just have one question for you. The Northwest Power Planning 

 Council has produced a graph showing a drop in BPA preference 

 rates in real dollars from 1983 to 1992. If BPA had adjusted rates 

 since 1983 to keep pace with inflation, what would your current 

 cash reserve situation be? Do you have any estimates on that, 

 Randy? 



Mr. Hardy. Basically, our rates have declined by about 23 per- 

 cent in real terms. We would have needed a rate increase of about 

 that amount over that 10-year period, 23-25 percent probably, to 

 keep our cash reserves level at the $400-$500-million level that 

 would have been our planning criterion. 



So if we would have done that, I think our cash reserves would 

 have come in, rather than at the $90 million that I showed you in 

 the chart, would probably be in the $500 million, give or take, 

 range, which is about what our planning estimate is for what we 

 thiiS: an appropriate level of reserves is. 



