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Senator Hatfield. Senator Gorton. 



Senator GORTON. Mr. Hardy, one of the ways in which the BPA 

 and the administration propose to pay for the biological opinion 

 costs is, and I quote, "To reform its financial practices." 



What does this mean? Is it likely to entail missing the annual 

 Treasury payment at some time in the future? 



Mr. Hardy. Possibly. Reform the financial practices is a generic 

 statement that, in essence, refers to building up our cash reserves 

 more slowly than we otherwise would, which translates into lower- 

 ing the probability of making our planned Treasury payment. 



Typically, we maintain a very high probability, 85 to 95 percent, 

 of making our planned Treasury payment each year. Clearly, that 

 percentage will go down significantly as a result both of the com- 

 petitive pressures and the cost pressures associated with salmon 

 and other items. 



Senator GORTON. I want to compliment you on your manage- 

 ment, and your predecessors on their management over the last 10 

 years or so, where we have met those payment schedules. 



Nothing, in my view, or little, in my view, can be more dangerous 

 with respect to acceptance here in the Congress as a whole of BPA 

 and its place in the United States than the thought of beginning 

 to miss those payments again, as has happened in the past. 



This particular phrase worries me for exactly that reason. I do 

 not regard it as acceptable that we should put ourselves at risk in 

 the way that missing a payment will put us at risk, and I know 

 you will do everything possible to avoid it, but the reason for this 

 hearing, at least in part, is to try to see to it that you have a great- 

 er guarantee of not missing that debt payment than you can pos- 

 sibly have under the present regime. 



One of the charts at the back of your testimony here includes a 

 lot of assumptions and estimates. How comfortable are you with 

 the cost to BPA of the biological opinion on your chart? 



I know it goes way up. I suppose that is a midline. It could be 

 lower, but it could be considerably higher, is that not the case? 



Mr. Hardy. That is true. This cost of the 1995 biological opinion 

 is a midpoint estimate, and probably the most single significant 

 variable, at least in the near term is water conditions. The chart 

 estimates are midpoint, assuming average water years. 



If there is a drought year, the costs would be much higher. If we 

 have an excellent water year, the costs would be substantially 

 lower. 



Senator GORTON. So far this looks like a good water year, does 

 it not? 



Mr. Hardy. The current water year is a little below average, but 

 compared to the last 4 years, it is a very good water year. 



Senator Gorton. Mr. Chairman, I have another engagement. I 

 will try to be back. 



Senator Hatfield. Thank you. We hope you can come back. 



Senator Murray. 



Senator Murray. Thank you, Mr. Chairman. 



And welcome, Mr. Hardy. You said yesterday that the full appli- 

 cation of 4(h)(10Xc), combined with other financial measures, gives 

 Bonneville some breathing room in the short term, is that correct? 



Mr. Hardy. That is correct. 



