Answer: In October 1983, on the basis of its speed, efficiency, and short takeoff and landing capability at high altitudes typical of those in Western's service area, Western purchased and placed into operation a used 1981 Cessna Citation 550. Although Western has logged over 57,000 nautical miles during the first five months of operation, it is difficult to extrapolate annual cost savings since this operation occurred during the winter when construction, operation, and maintenance activities are at a low level of activity.

This aircraft has enabled Western to manage its program more efficiently and maintain more effective customer relations by enabling key personnel to travel throughout Western ́s service area more quickly than is possible using commercial transportation connecting to remote areas. For example, commercial travel to our Watertown Operations Office, South Dakota, from Golden, Colorado takes about 10 hours compared to about two hours with Western's aircraft.

Reception and Representation Fund

Question: The budget proposed new appropriations language authorizing WAPA to use $1,500 for official reception and representation expenses. Has this reception and representation fund been authorized by the appropriate legislative committee?

Answer: Western has not previously requested funds to cover official reception and representation expenses. Specific statutory authority for this type of fund is typically obtained through appropriation language.

Question: Why do you find it necessary to have such authority?

Answer: Western frequently interacts with customer groups and foreign officials involved in the electric power marketing and transmission business. As a result of this interaction, Western should reciprocate in occasionally hosting official functions which require expenses that should not be borne as out-of-pocket expenses by Federal employees. This fund will permit Western to maintain relationships of value with its customers and others in the electric utility industry.

Helicopter Acquisition

Question: Explain the need for an additional new helicopter which is being requested in the 1985 budget.

Answer: This new helicopter is needed to meet Western's power marketing and transmission requirements in the eastern two-thirds of North Dakota and parts of Minnesota. It will be used primarily for patrol of transmission lines and to support construction activities patrolled by chartered, fixed-wing aircraft. This helicopter will also enable Western's engineers to make more frequent inspections of contractor activities, construction inspections, and safety reviews at remote work sites.

Question: How much will this helicopter cost?

Answer: Our estimated acquisition cost of the helicopter is $432,000.

Question: Did you analyze the option of contracting for the use and/or the operation and maintenance?

Answer: Yes. An informal analysis using OMB Circular A-76 cost comparison techniques was performed to assure ourselves that in-house ownership and operation costs are comparable to commercial operations. This analysis indicated it is less costly for Western to own and operate the helicopter than to lease. We expect to accomplish maintenance by contract.

Question: What would be the impact if an additional helicopter is not provided?

Answer: Western would continue to use fixed-wing aircraft for line patrol in parts of North Dakota and Minnesota. The use of fixed-wing aircraft is not as effective and efficient as helicopters for patrol and emergencies because of poorer visibility, higher flying speed, and inability to land fixed-wing aircraft for closer inspection or repair of facilities. As a result, trouble spots on transmission lines can be missed or crews must be transported to work sites via vehicles, which can increase costs through lost time and delay restoration of service to customers.

Purchase Power and Wheeling Increase

Question: Explain why your appropriations request for purchase power and wheeling is increasing from $43 million to $90 million.

Answer: Although Western's purchase power and wheeling request for FY 1985 is an increase, for comparison purposes, a more accurate base is $68 million, which includes carryover from FY 1983 and is the amount available to Western for expenditure in FY 1984. The $22 million increase, from $68 million to $90 million, is mostly attributed to increased costs to the Central Valley Project for energy imports from the Pacific Northwest and increased charges for capacity purchases; an additional $2.1 million for increased costs of energy purchases on the Pick-Sloan Missouri Basin Program because of higher rates; and an additional $1.6 million for energy purchases for the Parker-Davis Project. The increased Central Valley Project costs will be offset by increased revenues, resulting from power rate adjustments recently approved by the Federal Energy Regulatory Commission on a final basis.

Question: What is the impact on your program if the $36 million of credit billing is not obtained?

Answer: Western would not be able to satisfy all contractual commitments for the delivery of firm power to Central Valley Project power customers within the funds requested. However, if favorable water conditions continue in California and the Northwest area, the need for credit billing will decrease.

STATEMENT OF WILLIAM H. CLAGETT, ACTING ADMINISTRATOR, SOUTHWESTERN POWER ADMINISTRATION

It is a pleasure to appear before you today to present the FY 1985 budget request for the Southwestern Power Administration (Southwestern). I will summarize the major program areas of this request, and discuss some of our accomplishments. A summary of the request follows:

Southwestern's budget level represents an increase of $39,000 or one tenth of a percent.

60,000

$29,208,000

OPERATION AND MAINTENANCE SUMMARY

The FY 1985 budget request of $10,168,000 for Operation and Maintenance represents an increase of $368,000 or 3.8% from the current year level. This activity provides for the marketing and administration of the power program, operation of the transmission system, maintenance of all physical facilities and general program management.

This change reflects an increase in our labor costs for our wage hour employees and other minor increases in costs for communications, and supplies.

PURCHASE POWER AND WHEELING

The request of $22,400,000 for Purchase Power and Wheeling is less than the current year but covers four months of critical year conditions, an improvement over the 3-1/2 month coverage provided by FY 1984 funding. This improvement comes as a result of the expiration of the Reynolds Metals Contract and the resale of that power under new contracts which reduce SWPA energy sales commitments from 2400 hours per year for each kilowatt of capacity, to 1200 hours per year. The conversion of this contract reduces the energy Southwestern is obligated to deliver in any one year by 180 million kilowatt hours or a savings of $4 million in power purchases in a critical year. Thus, we are able to lower our funding request and still cover our needs for a greater period of time.

CONSTRUCTION

Trans

The funding request of $3,700,000 for construction represents the same level of effort as the current year. This activity provides funding for capital equipment and inventory, and minor modifications to the transmission and communication systems necessary to maintain the reliability and the adequacy of the Government's portion of the area electric utility grid. mission planning studies have begun in order to identify alternatives to a transmission loading and low voltage condition on our system in the Northeastern Arkansas and Southeastern Missouri area. These studies are being conducted in cooperation with the utility systems connected to or serving the area.

FUNDING OF FY 1985 REQUEST

Southwestern's request consists of $29,208,000 in new appropriations with the remainder being funded by $7,000,000 in 1983 carryover deferred until 1985 and $60,000 from management savings.

The 1983 carryover is derived from savings available by holding negotiated wage increases for our hourly employees to the Presidential pay cap applicable to all Federal employees, the ceiling placed on GSA rates for office space rental, reduced Purchase Power and Wheeling expenses resulting from good water inflow conditions, and minor construction project savings.

reduction.

STAFFING

Southwestern's request for staffing reflects a reduction of 3 FTE's in 1984 and an additional 9 FTE's in 1985 for a total 6% These savings will be accomplished by converting work previously done by Federal employees to accomplishment by the private sector through contracts.

RATES

Timely adjustments in rates to recover costs impacted by inflation have been the key to keeping Southwestern's repayment status current. In addition to other rate increases implemented in FY 1979 system rates were increased 38% or $25 million annually, and special rates for the Sam Rayburn project were raised 23% during FY 1983. A transmission wheeling rate increase of 22% was filed with the FERC to be effective April 1, 1984. Collectively these rate adjustments have substantially improved Southwestern's financial condition. These rate increases were necessary to comply with the mandáte of Section 5 of the Flood Control Act of 1944 to recover the costs of producing and transmitting power.

We are currently preparing new rate studies to submit to the Federal Energy Regulatory Commission this spring. It appears

no rate adjustments will be necessary for both the system and

the Sam Rayburn project for the immediate future.