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Questions for the Bonneville Power Administration Task Force Hearing 

 October 28, 1993 



QUESTIONS FROM CONGRESSMAN DEFAZIO 



Question 1 : What alternatives can you suggest to Bonneville's current repayment formula for 

 its appropriated Treasury debt that would provide a long-term solution to the 

 perennial attempts to accelerate BPA's debt repayment schedule, have a neutral or 

 beneficial effect on Bonneville's rates, and provide the maximum deficit reduction? 

 Please discuss the principles that should govern any restructuring of Bonneville's 

 debt. 



Answer 1 : Consistent with the Report of the National Performance Review recommendation 

 on an alternative repayment structure for the agency's low interest debt, Bonneville 

 suggests a buy-out of the outstanding appropriated debt on Bonneville, U.S. Anny 

 Corps of Engineers, and Bureau of Reclamation projects. The buy-out amount of 

 about $4 billion would be based on today's value of the stream of fiiture payments 

 associated with outstanding appropriations. The buy-out would be financed 

 through the issuance of new debt through public bond markets. The funds 

 received fi-om the new debt would then be returned to the U.S. Treasury to satisfy 

 the repayment obligation on the appropriated debt. This would forever remove the 

 low interest appropriations from Bonneville's and Treasury's books and end the 

 uncertainty over the terms and conditions of repayment. 



Bonneville's governing principles in any buy-out are to arrive at a solution that provides a fair 

 recovery of the U.S. taxpayer's investment in the Northwest hydrosystem and to avoid adverse 

 impact on the region's ratepayers. In order to make a buy-out beneficial to the region, it would 

 have to be structured to minimize the impacts on ratepayers. Bonneville recently raised rates 15.7 

 percent following its 1993 Rate Case. Any additional rate increase would adversely affect the 

 Northwest economy and Bonneville's competitiveness, and would be resisted fiercely by 



