DEPARTMENT OF ENERGY 

 Bonneville Power Administration 

 statement of randall hardy, administrator 



opening remarks 



Senator Hatfield. As we turn now to Mr. Hardy, the Adminis- 

 trator of the Bonneville Power Administration, let me just add one 

 further fact. 



In setting up this meeting today, I invited each of the colleagues 

 from the States of Washington, Idaho, Montana, and Alaska to sub- 

 mit suggested names of witnesses, and I believe that we have been 

 able to accommodate not only specific requests, but have many im- 

 portant categories of parties represented in this hearing. 



We regret, the timeframe being what it is, that we could not 

 have more. 



Tremendous interest in the outcome of this hearing today has 

 been expressed by our House colleagues from all of our States, and 

 there may be a similar hearing organized by some of the House col- 

 leagues at a later time. 



But we would have loved to have been able to accommodate all 

 of our colleagues: House colleagues, as well as our Senate col- 

 leagues, but we were not able to do so. 



Mr. Hardy, you may proceed to either make a summary state- 

 ment, and if you want, to answer questions. 



Mr. Hardy. Yes, sir; Mr. Chairman, I would like to ask that my 

 full statement be entered in the record. 



Senator Hatfield. It will be. 



Mr. Hardy. And I will summarize it. I will speak briefly from a 

 handout that I think each of you have. 



Mr. Chairman, as you observed in your opening statement, Bon- 

 neville today faces the greatest challenge in its entire 58-year his- 

 tory, and I include in that period the WPPSS period and other peri- 

 ods which, at the time, seemed awfully formidable. 



That challenge is summarized in this graph, with our competi- 

 tiveness picture and how our competitiveness has changed over the 

 last 15 years. The bottom line is, essentially, the cost of Bonne- 

 ville's power. You will notice that line is pretty stable. It has not 

 gone up all that much over the last 15 years. 



What has changed is the top line, which is the cost of alternative 

 generation. Fifteen years ago, when the Power Act passed, Bonne- 

 ville's wholesale rate was about 10 mills, and the cost of a new nu- 

 clear or a coal plant was 70 mills or 80 mills. We had plenty of 

 room to raise rates, and customers simply did not have other 

 choices. 



Today our wholesale rate is 27 mills, and the avoided cost of new 

 generation is somewhere between 25 mills and 30 mills. In fact, 



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