75 



In addition, back in November, we bid on a solicitation from Pub- 

 lic Resource Managers, who is putting together a portfolio of re- 

 sources for a number of our customers. 



We offered a price that started at 29 mills, just 2 mills above our 

 existing rate, and we did not even make the short list of selectees, 

 that PRM published that it was going to negotiate with last week. 



There is a general pattern in all of these offers. Competitors, 

 whether they are PacifiCorp, or Washington Water Power, or 

 ENRON, or other marketer-brokers, are offering our customers 5- 

 year, and in some cases 10-year contracts, that start below our cur- 

 rent rate, and escalate just slightly above our rate at the end of the 

 period. 



Now, these are just the offers we know about. I suspect, and we 

 have received some information to this effect, that, in fact, there 

 are a number of offers out there that start and end below our cur- 

 rent rate in the 5-year marketplace. That is the pattern and that 

 is what we are trying to deal with. 



We have tried to respond to that challenge in four or five dif- 

 ferent ways. I have mentioned the cost cuts and how we are pro- 

 ceeding with them. We intend to keep the 2-year rate proposal as 

 low as possible. We announced a 5-percent rate increase as a pre- 

 liminary proposal 3 weeks ago. That number is going to go down. 

 It has to go down if Bonneville is going to stay competitive, and we 

 are working to make that happen. 



We have indicated an intention to offer a 5-year rate proposal in 

 the next 45 to 60 days. I will be frank and tell you I am not quite 

 sure how I am going to get to a 5-year rate proposal, but I know 

 I have to get there if we are to be competitive and if we are going 

 to compete with the kinds of offers that I have just described. 



We will jise cost cutting, 4(h)(10)(c), credits, and the debt re- 

 scheduling tools that Dr. Rivlin talked about in an effort not just 

 to pay for the additional salmon cost increment, but also to keep 

 Bonneville competitive more generally. 



We will move to simplify our existing contracts. That is why we 

 announced, along with the budget cuts 2 weeks ago, the decision 

 to shelve our tiered rates proposal. This decision was made pri- 

 marily because the tiers had collapsed and there was no longer a 

 market-based tier two, but also because the decision greatly sim- 

 plified our ability to offer new power sales contracts. We will move 

 to more tailored power sales contracts for individual customers 

 rather than the omnibus negotiation that we have engaged in so 

 far. 



Let me turn a little bit to fish. Bonneville is dedicated to restor- 

 ing the salmon runs. We are currently spending at a clip of roughly 

 $300 million to $350 million a year, and as many of you have ob- 

 served, that is going to go to roughly $500 million a year over the 

 next 3 to 4 years. 



I should emphasize, however, that fish is not the biggest section 

 of our budget. It is about 10 percent now, and with the inclusion 

 of the 1995 biological opinion costs, it will grow to 13 or 14 percent. 

 There are other sections, for example, the WPPSS debt service, and 

 operations and maintenance of transmission systems, that are larg- 

 er. 



