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dressed towards trying to improve salmon mortality and improve 

 the number of returning adults. 



I think the biggest difficulty we currently have is that we do not 

 know what results, if any, are being produced. We also have a need 

 for better prioritization on the money we are spending. Three hun- 

 dred million dollars a year is a substantial expenditure and it, is 

 spread over a nxmiber of activities. The focus on results and the 

 ability to produce results is the biggest theme that I would try to 

 strike with you today. 



Finally, we have the competitive pressures that Bonneville is 

 under. You will be holding an all-day hearing tomorrow on just 

 that topic. We face a dramatically changing utility marketplace 

 that is being deregulated and is going to go through a degree of 

 structural change in the next 10 years, not unlike the changes the 

 airlines and the phone companies and the gas companies have been 

 through in the last 10 years. Prices are coming down dramatically, 

 and it is not clear to us just how we are going to maneuver through 

 that changing environment with the kind of pressure that it cre- 

 ates on our rates and our costs. 



On Monday of this week, I announced that we were going to lay 

 off 15 percent of the Bonneville work force. We are going through 

 a fair amount of pain associated with trying to get ourselves more 

 competitive. 



The consequence for fisheries expenditures is this — ^we can prob- 

 ably sustain the $300 million expenditure level that we have now, 

 if we can set some priorities and get some results. If we get 

 ratcheted to $400 miUion or $500 million over the next 2-3 years, 

 I do not think we can financially sustain that level, regardless of 

 what the biologic justification may be. We simply will have cus- 

 tomers that will leave our system and buy their power elsewhere, 

 or fold up altogether. This is different ft-om just keeping rates low. 

 This is a matter of fundamental competitiveness and where you are 

 able to collect money. And when customers can go out and build 

 a combustion turbine for close to the price they project your rates 

 are going to be in 5-8 years, that puts you at a fundamental com- 

 petitive disadvantage. 



The challenge that we have, besides trying to set some priorities 

 in the amount of money we are currently spending, is how to get 

 the ^sheries community, the resource agencies, the tribes, and oth- 

 ers invested — ^not just in biological success, but in our own financial 

 success, so we can assure continued stable funding for salmon re- 

 covery. 



We need to explore some methods for "incentivizing" fisheries 

 agencies to do that. Bonneville is examining these now. They might 

 involve such things as providing a base level of funding with addi- 

 tional funding available in good water years, or programs savings, 

 or monetary savings, from other programs being redirected towards 

 additional fishery funding. Or, if we built our financial reserves 

 past a certain level, some portion of that money could be used, not 

 just for rate relief, but also for additional fish funding. 



Those are some of the concepts that could enable us to get to the 

 biologic results we need, but also take account of the fiinancial cir- 

 cumstances that we have, so we do not go through this ratcheting 



