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Bonneville's customers. We estimate that a buy-out of the outstanding appropriated debt with 

 debt issued on the open market would provide the U.S. Treasury with a one-time inflow of 

 approximately $4 billion, and therefore would contribute to a reduction in borrowing by the U.S. 

 Treasury. 



Question 2: If Bonneville 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 fi-om the Treasury or the private financial 

 markets? 



Answer 2: Bonneville believes the direct buyout authority should be directed to the agency's 

 "old" debt, since how "new" debt should be financed in the fiiture is a very difficult 

 issue. Right now, capital investments in the Federal Columbia River Power 

 System are financed through a combination of annual appropriations to the Corps 

 of Engineers and Bureau of Reclamation, Bonneville revenue bonds sold to the 

 U.S. Treasury ("Treasury borrowing"), and third-party financing backed in some 

 fashion by Bonneville. 



Bonneville's ability to finance directly its own capital program activities— in 

 conservation, fish and wildlife, transmission system additions and replacements-is 

 currently capped at $3.75 billion. As of 9/30/93, we have used $2.6 billion of that 

 authority, and at current projected expenditure rates, we would expect to reach the 

 cap in FY 1997. Congress will need to decide prior to that point how best to 

 enable Bonneville to finance in the fiiture. The options range fi-om total reliance 

 on the other two capital sources (appropriations and third parties), to a simple 

 raising of the $3.75 billion ceiling, to direct Bonneville access to the capital 

 markets. We expect a fiiture discussion in the Congress on what combination with 



