SOUTHWESTERN POWER ADMINISTRATION QUESTIONS SUBMITTED BY SENATOR HATFIELD Management Savings Question: The budget justification shows a program reduction of $60,000 in management savings for 1984 and $232,000 in prospective management savings in 1985. How do you plan to realize the $60,000 in savings for 1984 and the $232,000 proposed for 1985? Answer: Southwestern is now evaluating actions which can be taken to reduce staffing needs through management initiatives. These initiatives are designed to improve efficiency and effectiveness of Southwestern's management systems, improve current operations, and improve planning and control of its organization structure. Question: What will be the impact on the marketing effort if these management savings cannot be found? Answer: Although Southwestern anticipates that the savings will be achieved, they are unable to predict the impact on any specific program area at this time. However, they would not take any action that would adversely affect their marketing effort. Additional FTES Question: How will the 2 additional FTE positions be used? Answer: The 2 additional positions will be needed for the increased workload of the Branch of Substations related to the increased maintenance responsibility resulting from the acquisition of 4 switchyards from the Corps of Engineers. Question: Why is an electrician leader needed at this time and how has this work been handled in the past? Answer: In order to perform the additional maintenance of the four extra switchyards, and only add a minimum number of members to the crew size, the crew will occasionally be split into smaller crews for short periods of 2 or 3 days. During these times, an experienced crew member will assume the leadership responsibility, without becoming a formal supervisor, for the technical work that must be accomplished. Electrical operation and maintenance work has been performed using 7-man crews, including journeymen electricians, under direct supervision. Depending on the work requirements, these crews may be split up into 3-4 member groups under the supervision of "electrician leaders." No change in this method of operation is planned. Reallocation of Funds Question: Do you foresee any major program changes that could require the reallocation of the funds requested in the 1985 budget? Answer: At this time, the only program change that could require the reallocation of the funds requested in the 1985 budget is the possible cancellation of the sale of 277 miles of transmission facilities in Oklahoma. Western Farmers Electric Cooperative, with whom GSA has been negotiating the sale, is having second thoughts on this purchase. If Western Farmers decides not to purchase, Southwestern will need anywhere from $2 to $3 million in funds to upgrade and put the facilities back into use. This work is not a part of the FY 1985 budget request. These facilities have been given only critical maintenance during the 4 years the disposal has been in progress; consequently, they are in poor condition. There is at least half a million dollars worth of work that should be done immediately. Current Water Conditions Question: What is the current water condition in the Southwestern Power service area? Answer: Water inflow conditions for the first half of FY 1984 are excellent and have been above (150%) median since September 1983. Presently reservoirs are completely full and flood operations are in effect at many of the power projects. Purchased Power Question: The budget justification shows purchased power requirements of $22.4 million based on a 4-month critical water condition and $32.3 million for a 6-month condition. If you assume critical water conditions will last longer than 4 months, would the additional funds be requested by the Administration in a supplemental? Answer: Yes Sir. Assuming that banking arrangements have been exhausted, and that the funds for power have been used up, Southwestern's likely alternative would be to request the needed funds through a supplemental appropriation because of the large amounts of money required. Usually the need for these additional funds is not known until late in the fiscal year. It is unlikely, therefore, that Southwestern would still have sufficient unobligated funds remaining in other program areas to cover such an expense. Power Sales Contracts Question: Update the Committee on SWPA's efforts and activities to renegotiate power sales contracts? Answer: All available power, including that which will become available from the two new projects, Harry S. Truman and Clarence Cannon, is now under contract. The allocation to Texas was accomplished under interim arrangements pending completion of contract negotiations. The firm power contractual arrangements that expire between 1985 and 1987 are now in the negotiation process and new contracts will be signed prior to FY 1988. The new contracts will provide for sales of energy at 1200 kilowatt hours per year per kilowatt of capacity as compared with some 4300 kilowatt hours per year per kilowatt of capacity under the old contracts, thus reducing the Government's need to purchase thermal energy and allowing the customers to use the Government's power to meet their peak demand requirements. Question: What level of funding is requested for 1985, how does this compare with the 1984 level, and is it your professional opinion that the 1985 request is adequate to carry out this work in an efficient manner? Answer: The 1985 funding level for Southwestern Power Marketing Division, which among other things is responsible for negotiation and administration of power sales contracts, is $1.7 million, which is slightly higher than that in the 1984 budget. The requested funding level will be adequate to accomplish the effort planned for FY 1985. Critical Maintenance Work Question: Is there any critical maintenance work that should be accomplished in FY 1985 that will be backlogged because of inadequate funding? Answer: No Sir. The funding level requested for maintenance is adequate to keep the system at a reliable operating level, unless the Western Farmers Electric Cooperative decides not to acquire the 277 miles of transmission lines in Oklahoma. STATEMENT OF HARRY C. GEISINGER, ADMINISTRATOR, SOUTHEASTERN POWER ADMINISTRATION It is a pleasure to appear before you today to discuss Southeastern Power Administration's (SEPA) proposed budget request for fiscal year 1985. FY 1985 BUDGET An appropriation of $35,744,000 is requested in the President's 1985 Budget to effectively carry out Southeastern's mission in a 10-state area of the Southeast. The requested FY 1985 appropriation represents an increase of $15,150,000 over the amount appropriated for FY 1984. A comparison by activities of the FY 1985 Operations and Maintenance budget request with the amounts appropriated in FY 1984 is as follows: The request of $1,904,000 for the System Operation and Maintenance activity will provide funds for the negotiation and administration of wheeling and power sales contracts; development and review of rates to assure repayment of power costs; scheduling the generation of power and supervision of power deliveries; and direction and support of Southeastern's power marketing program. This amount represents a $153,000 increase over the amount available in the current year. Of this increase, $111,000 is required for pay adjustments, statutory withingrade increases, and additional personnel benefit costs. The remainder is required to provide for nominal increases resulting from higher administrative costs for support functions (travel, transportation of materials, GSA rental, communications, printing and reproduction, and supplies and materials). The request provides funding for the purchase of additional ADP equipment, software, and associated costs to enhance existing computer support and to improve billing operations, provide more reliable and timely financial data, and to perform complex hydrological and project operations studies. The funding is also required to replace office equipment which has been in service for long periods of time. Accomplishment of the program objectives for FY 1985 anticipates continuation of the current employment level of 41 fulltime equivalents, although the projects in operation, the amount of power sold, and the number of customers served will increase. PURCHASE POWER AND WHEELING The major portion of the budget request, $33,840,000, is required for the Purchase Power and Wheeling activity and represents a $14,997,000 increase over the amount available in the current year. Funds provided for the purchase of power and wheeling are used only to pay amounts charged the Government under contractual arrangements for (1) delivery of power over non-Federal systems to load centers of preferred agencies for the account of the Government; and (2) purchase by the Government of energy to firm up Federally-generated power to the load factor required by preferred agencies, to provide support capacity required to meet commitments from the Jim Woodruff Project under adverse water conditions, and to defray other costs under drought conditions. In the absence of ownership or operation of transmission facilities, Southeastern carries out its marketing program by utilizing the existing transmission systems of the power utilities in the area. This is accomplished through "wheeling" arrangements between Southeastern and each of the area utilities who have transmission lines connected to the projects under which the |