36 



Having stated our willingness to support this refinancing to achieve a long term 

 resolution of this issue, we are also willing to continue to fight repayment acceleration, or 

 any repayment initiative that would increase our rates, in concert with the American Public 

 Power Association and National Rural Electric Cooperative Association and publicly and co- 

 operatively owned utilities throughout the nation if we are unable to achieve a debt 

 refinancing that is consistent with the principles that we have described. 



2. If BonneTille is given legislative authority to refinance its Treasury' debt, should 

 that authority be limited to Bonneville's appropriated debt? Should Bonneville 

 be given new borrowing authority, either from the Treasury or the private 

 finandal markets? 



The repayment acceleration proposals referred to in our response to Question 1 have 

 always focussed on BPA's existing appropriated debt since the appropriated debt represents 

 that debt which BPA has held the longest and has the lowest interest rates. BPA's bonded 

 debt from the U.S. Treasury bears interest rates that are consistent with market interest rates 

 that prevailed at the time of issuance of the bonds, and therefore have not been a focus of 

 repayment acceleration initiatives. As a result, we believe that BPA should only be given 

 the authority to refinance its existing appropriated debt. 



BPA is facing the possibility of running out of Treasury borrowing authority for new 

 transmission and fish and wildlife projects by 1997. PPC has considered the question of 

 whether BPA should be given private capital market access in order to meet its capital needs. 

 At this point we believe that BPA should rely on its current borrowing authority and U.S. 

 Army Corps of Engineers and Bureau of Reclamation appropriations. Financing from its 

 customers or third parties is another important source of capital. This type of financing 

 reduces BPA reliance on Treasury debt. BPA's Treasury debt cap should be increased only 

 if these sources of capital are insufficient. We do not believe that BPA should be given 

 private capital market access at this time, but we are willing to re-examine this position for 

 discrete projects. We are concerned that if BPA is given private capital market access the 

 level of customer involvement in BPA decision-making would decrease and BPA would face 

 new rate increase pressures from issuance costs, coverage ratios and debt growth. 



3. In general, please discuss your views on the possibility of changing Bonneville's 

 status from that of a federal agency within the Department of Energy to a 

 govemment corporation. 



PPC supports govemment corporation status for BPA, provided that our principles are 

 met. These are very similar to those that we stated in response to Question 1 . They include: 

 no rate increase as a result of a move to govemment corporation status, no decrease in the 

 level of customer influence at BPA, long term efficiency gains must come as a result of this 

 move, and there should be no decrease in access to capital for BPA. Also govemment 

 corporation stams, if it is to be attained legislatively, must be achieved with legislation 

 focused on this single issue. 



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PUBUC POWER COUNCIL 

 50C N E Multnomah, Suite 729 Portland. OR 9TZ 

 (S03i 23J-2<27 



