92 ! 



I 



Senator Murray. I believe you also said that BPA will lose cus- j 

 tomers regardless of the fish issue, because of current market con- i 

 ditions, is that correct? ; 



Mr. Hardy. In my estimation, yes, that is correct. , 



Senator Murray. So assuming that the cost deal described yes- I 

 terday, can BPA now implement the biological opinion in 1995 and I 

 1996 without exacerbating competitiveness problems over the next 1 

 few years? 



Mr. Hardy. We can implement the 1995 biological opinion in a 

 way that certainly will allow us not to have to raise rates by the 

 5 percent that we put in the initial proposal, and hopefully we can 

 lower this rate increase. 



In terms of how that affects our overall competitiveness posture, 

 we are significantly better off than if we did not have the assist- 

 ance. However, any upward price pressure, in the view of a declin- 

 ing market, gives us significant problems. 



The 4(h)(10)(c) credit is very helpful in dealing with the next 2 

 years, and the kind of initial cost increase that comes with paying 

 for the 1995 biological opinion. 



An equally pressing problem that we have, in terms of the cus- 

 tomer perceptions, and I am assuming you will hear this from your 

 next panel, is long-term price certainty, and lack of predictability. 



What will Judge Marsh do? What will happen to market condi- 

 tions, and a variety of other things? That is what the 5-year rate 

 is designed to address, but ultimately, to sustain this kind of a 

 multiyear rate proposal, we need something beyond what we have 

 now. 



Senator Murray. But for the next several years that chart that 

 you showed us at the beginning should level off, we should be OK 

 there. 



Mr. Hardy. Bonneville's rates will level off The real question is: 

 Where does the top line on the first chart go? Where is the market 

 going to go? If the market prices level off and do not get any lower, 

 we will probably have a decent chance, but if the market prices 

 continue to go down, regardless of fish costs or not, we will be faced 

 with a significantly greater probability of losing load. I cannot tell 

 you where the market is going to head today, except it has gone 

 down dramatically, even in the last 3 months. 



Senator Murray. And that is regardless of fish. 



Mr. Hardy. Market changes are irrespective of fish, but the fact 

 that Bonneville has another fish cost increment exacerbates that 

 problem. But I should emphasize that first and foremost we have 

 a market problem. 



We happen to have a fish problem and a particular fish timing 

 problem but the basic problem here is more the market, more than 

 anything else. We are dealing with other costs, of which fish has 

 received the most attention, but it is also far from being the only 

 cost. 



Senator Murray. On this chart you said 10 percent goes to fish 

 and part of this goes to WPPSS. Where is WPPSS in this chart? 



Mr. Hardy. The non-Federal debt service, the dark blue category 

 on attachment 3, is basically almost all WPPSS debt. 



Senator Murray. This whole thing is WPPSS debt? 



