238 



ENCLOSURE VI.I ENCLOSURE VII 



need for additional generating units, (3) supported utilities' 

 participation in the financing of the plants, and (4) acted to 

 indirectly facilitate the termination of the plants. 



In testimony before the Congress in March 1984, we assessed 

 both the impact of the costs of nuclear plants 1, 2, and 3 on BPA's 

 rates and on BPA's responsibilities for project oversight. We 

 found that BPA's ratepayers were responsible for almost $1 billion 

 annually in costs related to plants 1, 2, and 3 and that costs from 

 the projects represented about 30 percent of BPA's total projected 

 revenue requirements for 1985. We also found that BPA's oversight 

 staff and management staff were uncertain of BPA's oversight 

 objectives and staff responsibilities. We identified means by 

 which BPA could better exercise its existing contractual 

 authorities for oversight, including conducting more comprehensive 

 audits and budget reviews and participating in project-related 

 meetings . 



In our August 1984 report, we recommended to the Secretary of 

 Energy that BPA take several steps to strengthen its oversight 

 program, including defining its organizational roles and policies, 

 adopting procedures for implementing its oversight objectives, 

 outlining its intent to implement its contractual oversight 

 authorities, and reviewing its oversight staffing and 

 organizational format to ensure their adequacy and appropriateness 

 to support a comprehensive oversight program. The Department of 

 Energy (DOE), in commenting on a draft of our report, agreed with 

 the general thrust of our recommendation that BPA improve the 

 effectiveness of its oversight. However, DOE believed that recent 

 changes in BPA's oversight structure had overcome many of the 

 problems and therefore believed that no further action was needed 

 to address the specific problems identified in our report. 



Our 1989 report reviewed several issues involving DOE's 

 possible acquisition and conversion of a partially completed 

 commercial nuclear power plant (plant 1) to a nuclear materials 

 production facility. We found that if DOE acquired the plant, it 

 would probably complete the power-generating capability of the 

 plant, thus making it a dual-purpose — production and power — 

 reactor. We reviewed, eunong other things, whether a DOE 

 acquisition and conversion of plant 1 through condemnation could 

 lead to a default on bonds for the plant, and what effect such an 

 acquisition would have on BPA's liability for BPA's share of debt 

 in the plant. We also examined the rate that DOE would charge for 

 electricity generated by the converted reactor. 



We found that DOE could acquire the plant either through 

 voluntary sale or condemnation. We determined that selling the 

 plant for less than the amount of the outstanding bonds (roughly 

 $2.1 billion) could cause a default. Condemnation, however, would 



22 GA0/RCED-93-133R, GAO Products oo Bonneville Power Adainlstratiaa 



