159 



But our companies are facing tremendous competitive challenges 

 from regulation and rising power costs which jeopardize the viabil- 

 ity of the Northwest aluminum industry. 



We provide about 30 percent or $560 million of BPA's power rev- 

 enues. Our plants are the only customers who buy continuous 

 blocks of power, both day and night, 365 days per year. 



This unique characteristic of our power load avoids the need for 

 shaping or other expensive aspects of tracking the ups and downs 

 of a more typical customer group. 



In addition, a quarter of our load may be dropped when EPA 

 lacks sufficient power to serve everyone, allowing BPA to avoid 

 building costly backup generation. Power costs are a significant fac- 

 tor in our total cost of producing aluminum. 



Our continued economic contribution to the region depends on 

 maintaining affordable, reasonably stable, and predictable power 

 rates for our industry, since our survival is ultimately determined 

 by the worldwide price for aluminum. And it is, indeed, a global 

 business today, with one price for aluminum worldwide. 



From the early 1940's to the early 1980's, BPA was an economic 

 supplier of power to the aluminum industry. But today, BPA's 

 rates are already one-third higher than the global average for our 

 industry. Let me put that into perspective. 



We are paying, on average, 18 mills worldwide in power costs, as 

 supplied to the aluminum industry. So at 27 mills, the current rate 

 today, it is already considerably above the world average, as far as 

 our costs are concerned, and puts BPA in the upper quartile on a 

 cost basis. So there is already pressure today on us from a cost 

 standpoint. 



The series of rate increases that began in the eighties have seri- 

 ously eroded, as a result of the numbers I just quoted, BPA's com- 

 petitive edge. 



BPA has, indeed, been working hard to contain costs, but that 

 constructive effort has more lately been imperiled by major cost 

 burdens. BPA is being required, under the ESA, to provide fish pro- 

 tection measures that, if not in some way controlled, will end BPA's 

 historically competitive position. 



The aluminum industry recognizes BPA's duty to be environ- 

 mentally responsible, and likewise, recognizes that this duty cre- 

 ates legitimate ratepayer burdens. But our fundamental concern is 

 that these cos^"« are now being incurred with little regard for eco- 

 nomics or science. 



We are deeply disappointed that the recommendations of the 2- 

 year study by the highly respected scientists, commissioned by 

 NMFS, and led by Professor Donald Bevan, have been set aside. 



This recovery team study was released last year, and was the 

 basis for the agency's formal recovery plan for salmon. But instead, 

 far more drastic and costly measures that were rejected by the re- 

 covery team are largely being adopted by NMFS. 



If the Federal agencies mandating fish recovery follows a more 

 scientifically based salmon management plan, we could achieve the 

 Northwest Power Act's vision of recovering salmon runs while re- 

 taining the advantage of the region's great hydropower resource. 



We believe the plan developed by the recovery team is both bal- 

 anced and effective. We urge you to support this plan as the plat- 



