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load growth, new utilities entering the exchange, and the level of BPA's own

rates.

CONSERVATION

Punding of $117.5 million is projected for Bonneville's conservation program

in FY 1987. In formulating the FY 1987 program, BPA took into account its

revised load forecast and the North west Power Planning Council's 1986 Power

Plan. Emphasis continues to shift toward development of the capability to acquire savings in the non-residential sectors of electricity use.

BPA's funding requirement for residential conservation programs will be

reduced to an estimated $56.2 million in PY 1987, while funding for commercial

and industrial programs will increase to $47.3 million in areas believed to

have high savings potential in the Pacific Northwest. A $10.9 million

increase over FY 1986 in programs for public agencies and other customers is

almost entirely devoted to initial implementation of Model Conservation

Standards (MCS) in new residential and commercial structures. MCS

efficiencies, if not captured in initial design and construction, are lost to

the region as opportunities for cost-effective savings.

As BPA has gained experience in the accomplishment of conservation, its

performance against budget targets has become more predictable. During FY 1985 BPA completed 95 percent of the planned program we described to you a

year ago.

SYSTEM PLANNING AND CONSTRUCTION

BPA's system planning and construction program funding is projected at $187.1 million. This amount includes $57.0 million for continued construction of facilities initiated in prior years, $120.9 million for "new start" additions to the power system and the replacement of aging and obsolete power system equipment, and $16.3 million for research and development in electric power transmission and BPA's EPRI contribution.

A najor PY 1987 new start is the addition of reinforcements to BPA's system to

support construction of a Third AC Intertie between the Pacific North west and

the Pacific South west. These reinforcements will increase interregional

AC capacity by 1600 megawatts.

Progress has been made, but much vork remains

to be done. Neverthe less, unless utilities in the Northwest and South west,

including BPA, determine that this project is economically feasible, construction will not begin. Long term oil and gas prices will certainly figure in this evaluation.

PISH AND WILDLIFE

BPA', PY 1987 fish and wild ute program will be funded at $44.2 million,
$10 ai llion more than in FY 1986. This program level reflects the naturity of
BPA's role in achieving the fish and wild life objectives of the Pacific
Northwest Power Act and our commitment to supporting the Planning Council's
Fish and Wildlife Program.

OTHER PROGRAMS

BPA's other program . areas show Uttle change, with minor increases mainly due

to inflation and increased interest costs. Despite constrained funding and manpower levels in recent years, BPA is internationally respected in the

utility industry for the officient and reliable operation, maintenance, and

scheduling of its extensive power grid.

CONCLUSION

BPA has come through a period of great turmoil. We have resolved many

difficult issues and are entering a period of hard-earned stability. Because BPA plays a critical role in the revitalization of the North west economy, we must proceed agressively to meet the challenges ahead.

Our po vor resources appear to be more than adequate to meet regional needs for

the decade, but we are now faced with effectively marketing the surplus in a time of dropping oil and gas prices. This is a challenge in which BPA has a

great financial stake.

Recognizing a common energy destiny, we have developed strong worlding

relations with utilities outside our region. In the future we will continue

to plan cooperatively for an efficient use of Canadian and Pacific Northwest

resources that will benefit the North west, Canada, and California.

Most importantly, we have achieved stable rates and become a lean, efficient

organization.

In the year ahead we will continue to work to stabilize our

revenues, so that BPA can meet its repayment obligations to the Treasury.

• This concludes my prepared statement.

I will be glad to answer any questions

you might have.

BIOGRAPHICAL SKETCH

PETER T. JOHNSON
Bonneville Power Administrator

PETER T. JOHNSON was born in Boise, Idaho in 1932. He received a Bachelor's Degree from Dartmouth College in 1954. The following year he was awarded a Master's Degree in Business Administration from Amos Tuck School of Busines8 in Dartmouth. He completed his military service as a contracting Officer in the U.S. Air Force and served in the Idaho Air National Guard.

Prom 1957 to 1968, Mr. Johnson worked for the MacGregor Triang le Company of Boise, a firm specializing in heavy high way and utility construction. He was elected a Director and Executive Vice President of the company in 1964.

In 1968, he joined Trus-Joist Corp., an international firm manufacturing roof and floor structural systems. He rose to President of the firm in 1971 and Chief Executive Officer in 1975, overseeing the operations of the company during a period of dynamic growth.

Mr. Johnson became a private business Consultant in 1979. He co-chaired a Governor's Management Task Force in Idaho during 1980, seeking ways to improve the efficiency and productivity of state government. He also was a member of President Reagan's Transition Team in 1980-81.

In May 1981, Mr. Johnson was appointed Bonneville Power Administrator by the Secretary' of Energy. Bonneville Power Administration is an arm of the U.S. Department of Energy.

As Adminstrator, Mr. Johnson is responsible for overseeing all activities of the Federal power marketing agency, including operation of one of the world's largest high-voltage transmision systems. He directs the making of policy for BPA and guides Bonneville's efforts to implement the Pacific Northwest Electric Power Planning and Conservation Act.

The Administrator in ultimately responsible for decisions on acquisition of cost-effective power resources by BPA to serve the needs of the region. The Act gave BPA the mandate to acquire electric resources, giving conservation and renewable resources priority over conventional generating resources.

He serves on the 0.3. Committee of the World Energy Conference, the Board of Directors of the Electric Power Research Institute, and 18 Chairman of the United States Entity under the Columbia River Treaty with Canada.

Chairman HATFIELD. I thank you, Mr. Johnson.
Does the Senator from South Dakota have any questions?
Senator Abdnor. No.

Chairman HATFIELD. Does the Senator from North Dakota have any questions? Senator BURDICK. No.

BRITISH COLUMBIA HYDROPOWER SALES Chairman HATFIELD. Mr. Johnson, I have here an article written by Mr. James. Flannagan of the Oregonian in which the headline reads, “BPA Bar To BC Power Sale.” That is British Columbia, as you know. In that, I note that the Canadian Ambassador of the United States, a friend of mine, Mr. Alan Gotleib, was quoted in this article as stating that the BPA was “A bar to the sale of power between Canada and California."

Would you please comment on that quote attributed to the Canadian Ambassador?

Mr. JOHNSON. Thank you, Mr. Chairman.

And with all due respect to the Ambassador, I have to disagree. I don't think that Bonneville in any sense has been a bar to the success of the program of British Columbia Hydro, to market its surplus power into the Pacific Northwest or California. In fact, rather than a bar, I think Bonneville serves as the grease on the wheel. In 1984, we adopted an access policy which gave first priority to surplus utilities in the Pa. cific Northwest on a pro rata basis, but this has not adversely affected British Columbia Hydro.

Let me explain. In looking at 1984 and 1985, British Columbia Hydro export revenue records, we find that they have sold all of the surplus they have generated in their system in the 9 months ending on December 1, 1985. They sold $218 million, up from $69 million just 3 years before, a threefold increase in revenues from export energy, surplus energy. This represents some 18 percent of the total generation utility revenues of British Columbia Hydro.

In 1985—I think this is very significant-we hear about the success of exports from Canada and imports into the Northeast or Northeastern United States. In 1985, British Columbia Hydro exported 10,300 gigawatt-hours. That was the largest amount exported by any Canadian utility in the calendar year ended December 31, 1985. They were the largest exporter of Canadian power.

This success can be laid, in part, to a good water year this last year, and that was important to both of our systems. However, equally important, and this is what I think we have to point out, in keeping with a long-standing relationship of cooperation between the Pacific Northwest and Canada, Bonneville Power Administration, with the schedulers of British Columbia Hydro, encouraged the shaping of this surplus power into windows, those times when capability was available on Bonneville's intertie in order that they could, then, access those opportunities and market power into the Northwest and into California.

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