This delegation has expedited our processes, but the next Administration could withdraw that delegation, and others as well.

The Department of Justice represents Bonneville in all litigation, although Bonneville attorneys have actually handled most of its highly specialized litigation in the Ninth Circuit Court of Appeals. Many of these cases have involved claims for millions of dollars. Nevertheless, small claims consume significant amounts of time due to external review requirements. Personal injury claims of over $10,000 must go through Department of Energy review before they can be paid. As required by the Federal Tort Claims Act, personal injury claims of over $25,000 also must go through Department of Justice review before they can be paid. Under these two sets of rules, Bonneville must aggregate small claims related to the same incident to see if they may exceed the dollar limits and then seek the appropriate Departmental approvals. A corporation, in contrast, could be provided more authority.

Today, Bonneville is "self-financed" under the Federal Columbia River Transmission System Act. This Act provides for the direct use by Bonneville of operating revenues, not taxpayer revenues, and the ability to sell revenue bonds to the Treasury to finance its capital investments. Nevertheless, Bonneville is currently subject to General Accounting Office (GAO) rules, including settlement of its accounts, applicable to federal agencies that receive annual appropriations. As a result of the application of non-business oriented rules, for example, overtime pay that any private company could pay is prohibited.

Bonneville is also subject to the reporting requirements designed for federal agencies receiving annual appropriations while simultaneously maintaining its records in a conventional utility fashion using generally accepted accounting principles. As a corporation, these GAO requirements would no longer apply, although GAO could still audit and report on the agency's activities. In addition, the duality-literally the keeping of two sets of books-would be eliminated.

Another significant obstacle to competing effectively in a market environment is the civil service system designed for traditional federal programs. Under that system, it is difficult to manage its human resources efficiently. Bonneville cannot manage its organization to an efficient mix of federal and contractor staffing needed to get the job done in the most cost-effective and expedited manner. For example, Bonneville does not have the flexibility to hire temporary employees to cut brush when needed. Bonneville must wait 90 days or pay much more to have a contractor supply brush cutters.

Although Bonneville does maintain a significant contractor presence, the agency does not have the flexibility to hire maintenance and construction craftsmen directly out of union halls, to pay competitive salaries in many job categories, to fire nonproductive employees in less than two to five years, or to establish incentives specifically designed to support Bonneville's mission. For example, Bonneville invests much training in, but finds it difficult to keep power schedulers because other utilities lure them away with higher salaries.

Bonneville currently lacks the tools to downsize quickly through separation incentives, early retirement or cost effective redeployment. It takes a minimum of 18 months to reduce the workforce under current law and such reductions must be based on seniority rather than business needs. Other personnel flexibility, including improved incentives, would likely improve productivity.

Procurement and the management of property, including real property, is another critical area. A corporate structure could aid in disposing of unneeded facilities and property, thereby increasing net revenues, and allow more efficient facilities management relationships with other business partners. Buying and managing computers and communications equipment would also be made easier and more efficient. In the past, the imposition of a government-wide telecommunication policy resulted in the duplication of computing and telephone equipment. Use of Bonneville's own single microwave communication system could be more efficient, reduce redundancies, and provide a more reliable power control and communication system.

CONCLUSION

In conclusion, government corporation status:

• Can provide a structure that would allow business type agencies to remove unnecessary layers of time-consuming approval mechanisms;

• Eliminate or revise regulatory, budget or accounting directives that add costs that are not commensurate with the value provided to customers;

Better target incentives for its work force to accomplish strategic business objectives;

Manage staff in the most cost-effective manner;

• Procure and dispose of resources in a manner that produces optimal results for customers; and

• Assume legal responsibility commensurate with a utility operation. This concludes my testimony, I would be pleased to respond to your questions.

Mr. HORN. We thank you very much.

I now yield to the gentleman from Washington, Mr. Tate.

Mr. TATE. Thank you, Mr. Chairman. And thank you for your testimony, Mr. Robertson.

A couple of questions that I have, and just start right off the bat because I think it is important that we get this on the record. Several, and many, actually, have suggested privatization of all four of the PMA's. What makes Bonneville different, and what would be the benefits and/or drawbacks of proposals such as that in trying to be more competitive and so forth?

Mr. ROBERTSON. Well, the fundamental issue I think with respect to Bonneville-the difference between Bonneville and the other PMA's is size. Bonneville is, in terms of budget, larger I think than all the other PMA's put together, and our role in the region in terms of serving 40 percent of the power supply and 75 percent of the high voltage transmission is a dominant role not comparable to any of the roles of the other PMA's in other regions of the country.

The other issue for the taxpayers that have been raised is our value in this Federal Treasury payment obligation that we have is, we calculate, worth about $7 billion to the taxpayers right now. That is a net present value number. Given our obligations, given the fact that we have a debt ratio of 8:1, given the fact that we have this large scale fish and wildlife obligation that is growing every year, there is some serious question whether or not the taxpayers would benefit from a sale of Bonneville. That is to say, would someone purchase Bonneville with these kinds of obligations to a benefit that would exceed the $7 billion net present value that we are now paying back to Treasury?

We also have major Endangered Species Act implications, as I indicated. We have responsibilities for fish and wildlife mitigation that other PMA's do not have. We have nuclear plant investments. We have a thing called the residential exchange. We are the entity that is designated for treaty obligations with Canada on the Columbia River. There are a number of complexities that are related to Bonneville that are not related to the other PMA's.

Mr. TATE. A followup question on that. I was looking at a few of the statistics. You know, just a few years ago we were spending $150 million a year for fish and wildlife. Now the estimate is we would get up to $500 million, if not $600 million, somewhere about a 25 percent increase. Will this undermine in any way the stability of a public corporation having those sorts of uncertainties out there that-without a cap on fish? And the other part of the question is, how much of that money is directly because of the Endangered Species Act?

Mr. ROBERTSON. Of the $550 million-well, let me start. This year we expect to spend about $405 million on fish and wildlife, and of that amount I believe about $260 million would be related directly to the Endangered Species Act mitigation.

In 1998, we would plan to spend, based on the requirements of fish and wildlife in the ESA, $550 million approximately for fish and wildlife, and of that amount $370 would be related to the Endangered Species Act.