86 



Bonneville has included in this budget provisions in our appropriations language markup 

 approving access to our authority to issue direct loans This authority was granted in the Pacific 

 Northwest Power Planning Act, which gave Bonneville $1.25 billion for conservation and 

 renewable resource loans and grants. Bonneville has issued direct loans in the past and, since this 

 is a pre-existing authority, Bonneville believes, based on preliminary contacts with the 0MB and 

 CBO, that issuing loans once more will not pose budget deficit scorekeeping problems for the 

 Congressional committees. To assure planning certainty for conducting the Conservation 

 program, Bonneville has included appropriations language in the budget to allow $29 million in 

 conservation loans during FY 1996. 



PERFORMANCE MEASURES 



Included in the FY 1996 Congressional Budget Submission are seven performance measures 

 based on those measures included in the agency's FY 1994 Annual Management Report They 

 address the key areas of Bonneville's business, including 1) fulfillment offish and wildlife 

 responsibilities, 2) status of Treasury repayment, 3) meeting customer load, 4) transmission 

 system performance, 5) system safety, 6) Bonneville conservation resource costs and 7) rate 

 competitiveness Bonneville is continuing to evaluate and refine its business strategies, objectives 

 and success indicators as a fundamental part of its Competitiveness Project 



OTHER SIGNIFICANT EVENTS 



POWER SALES CONTRACTS 



Bonneville's customers want more tailored contracts and they want simplicity in both rates and 

 contracts. We are committed to provide this. We are moving away from the complicated 

 "omnibus" power sales contracts of the past. 



Negotiations with customers on long-term power sales contracts began in September, with 

 customers and interest groups participating in the discussions Although tiered rates have 

 temporarily been put on hold, unbundled products are being introduced and customer needs are 

 being addressed in the light of the new business environment Proposed agreements in principle 

 have been developed for most major issues, and a drafl summary of the proposed contract 

 principles and key issues should be ready for comment soon. Bonneville intends to offer new 

 contracts by early fall, to be effective in October 1996 Customers who prefer to continue to 

 purchase power under their existing contracts may do so until those contracts expire in 2001. 



1995 RATE CASE 



Bonneville is on a course to stabilize its rates through the end of the decade. It is increasingly 

 apparent that customers value stability as well as competitive price. Bonneville will make a major 

 commitment to five-year rate stability at price levels consistent with our preliminary rate proposal 

 However, due to poor water conditions, added generation expenses and increased salmon 

 recovery costs, we have announced a 5 percent proposed rate increase for 1996-97 This increase 

 is needed to give us a reasonable probability of making our Treasury payment and building 

 financial reserves. Key factors affecting our rates include the protracted drought, increased fish 

 costs, generation debt service and additional generation costs 



Bonneville is offering customers what we believe to be an innovative expanded approach in its 

 new rate case Recognizing that many customers put a premium on price stability, Bonneville is 

 offering customers a choice of a two-year rate schedule or a five-year rate schedule While prices 

 may be different, both will be competitive with the market. Bonneville has reviewed the proposals 

 competitors have put before customers and is prepared to offer products and services that are not 

 only price competitive, but also more reliable and more stable. 



Bonneville is well aware that in the new marketplace, the highest rates do not necessarily generate 

 the most revenue. Now that our customers have alternatives, it is clear that as our prices go up, 

 Bonneville customers have the option to move to other suppliers It would make little sense to 

 set rates so high that customers are driven away. That would impair our ability to meet our costs, 

 including those related to our fish and wildlife and conservation obligations. 



