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To unilaterally alter the rates associated with these projects would represent a 

 gigantic act of bad faith and would be analogous to a bank unilaterally raising a 

 homeowner's fixed mortgage rate. Unfortunately, persistent officials at the 

 Office of Management and Budget continue to pound away at what they perceive 

 as a subsidy. I believe, on the merits, that those officials are wrong. However, 

 having to fight the fight every year has been taxing on the customers of the 

 PMAs and has diverted attention from other pressing matters that should dominate 

 policy discussions in the future. 



If refinancing BPA's appropriated debt is what it takes to get out of this policy 

 maze and on to more constructive debates, then PNGC supports the concept. 

 However, there are some caveats. Our chief concern is that a debt buyout be 

 structured so that it is truly rate neutral — both in the short term and in the 

 long term. EPA just recently concluded a rate case covering the FY94-FY95 

 period. That rate case resulted in a 15 percent increase in wholesale power costs 

 and is reverberating around the region in the form of individual utility rate 

 increases in the 5 to 10 percent range. The utility that I manage, Blachly-Lane, 

 is currently proposing a 10 percent rate increase to cover the additional price of 

 Bonneville power. 



The consequent higher electric bills will have very real impacts on the customers 

 that I have the privilege of serving. Around the region, farms, aluminum 

 smelters , timber mills , and other business ventures that are operating close to 

 the margin during these uncertain economic times will lay off employees or close 

 up shop altogether. "It is paramount that we do not multiply that effect by 

 increasing pressure for additional rate increases by adding to the current cost of 

 satisfying BPA's debt burden. 



Interest rate surcharges, excessive refinancing costs, or premiums to the 

 government for the use of assets paid for by customer revenues should not be 

 added into the repayment mix to boost the cost of the proposal to the ratepayers. 

 The definition of rate neutral has to be the same for all of us ~ no increased 

 repayment obligations above the net present value of the current income stream 

 due to the government under current obligations . While I know that this would 

 not result in any additional "scoreable" revenue for 0MB analysts living with 

 arcane scoring rules , it should represent a tangible benefit to the taxpayer 

 consisting of an immediate multibillion dollar reduction in Treasury debt . 



Bonneville's customers are looking for a truly rate neutral proposal because it 

 allows them both stability and predictability. Anything less would fan the flames 

 of an already uncertain economic future in the West . Whether you support them 

 or not, there is no question that the policies of this Administration which have a 

 disproportionate impact on the West -- grazing fee increases, public timber 

 harvest reductions, mining law revisions — will have an economic impact on 

 struggling rursd areas . Those policy decisions seek to identify economic 

 activities that the Administration apparently believes are destructive to the 

 environment. Increased electric bills are not nearly so discriminatory — they 

 affect every industry throughout the Northwest. 



Our communities do not need an additional electric rate increase piled on top of an 

 already staggering list of threats to their economic viability. BPA and the 

 Federal Base System constitute the economic engine that drives the Northwest 

 economy. They support critical national industries -- aluminum, pulp and paper, 



