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ALASKA POWER ADMINISTRATION STATEMENT OF ROBERT J. CROSS, ADMINISTRATOR

Chairman HATFIELD. Mr. Robert Cross, Administrator of the Alaska Power Administration, I believe, has a statement that we will put in the record. If you would highlight it, we would appreciate it.

Mr. Cross. Thank you, Mr. Chairman, and I will be very brief, except for one point Did I understand you to say that you were planning on relinquishing the Chair of this committee after this year?

Chairman HATFIELD. Oh, I am not prepared to finalize that decision. It depends on a lot of other things that happen, that may happen in November. (Laughter.]

Mr. Cross. I hope very much that it is not the last time that we will have a chance to get your guidance on things you have helped us with so much. It was shocking to me when I heard it, and I hope I heard it wrong.

Chairman HATFIELD. Mr. Cross, you have been a very great counselor of this committee and all you other gentlemen. I think you probably have the seniority on all of your colleagues in terms of the number of times you have appeared before this committee. You have always been very helpful, and we are very grateful.

BUDGET PROPOSAL Mr. Cross. Mr. Chairman, our 1987 request will continue the operation and maintenance program of the Alaska Power Administration at the current level, financed partly from a deferral from the 1985 balances. The deferral does reflect some favorable cost experiences in the last couple of years. It is not a curtailment of programs in any way, shape, or form.

We also have available to us the full amount of the emergency fund that was established in 1984. I believe the programs are progressing in a satisfactory fashion as measured by sales and revenues. Progress on the operation and maintenance objectives, perhaps, is the most complex. The major piece of work right now is completion of our automation project, the Eklutna powerplant, which, when completed, will produce rather significant manpower savings before the end of 1987.

NET BILLING PROCESS There are two items which I would like to mention. We have utilized for the last several years a process of net billing the cost of non-Federal personnel to handle operation and maintenance of the Snettisham project. When we complete the Eklutna automation, we expect to make similar arrangements with one of our customers in the Anchorage area.

We are estimating total net billing amounts in 1987 of 3.8 percent of revenues. If we did not net bill, we, of course, would have to ask for appropriations to cover those costs.

My last point is, we have completed a joint study with the State of Alaska on issues involved with the proposed sale of the Alaska Power Administration project. As was mentioned early on in this hearing, we expect that report to be available next month and plan on furnishing it to your committee. After working quite some time on that issue, I still think that sale of the Alaska Power Administration makes a great deal of sense and that we should pursue it and get that job done.

I would be happy to answer questions, sir. [The statement follows:)

STATEMENT OF ROBERT J. Cross, ADMINISTRATOR, ALASKA POWER ADMINISTRATION

Mr. Chairman and Members of the Committee:

I would like to give your committee a brief progress report on the Alaska Power Administration (APA) and a summary of our budget request for FY 1987.

PROGRAM OVERVIEW

APA is responsible for operation, maintenance, transmission and power marketing for the two Federal hydroelectric projects in Alaska. These are the 30 MW Eklutna Project serving Anchorage and surrounding areas, and the 47.6 MW Snettisham Project, which is the main power source for Juneau, Alaska's Capitol city. The two projects now provide roughly 8% of the energy requirements for Alaska's electric power utilities, with the balance coming from utility-/and State-owned plants.

In earlier years, APA carried out planning work on future power supply and transmission programs. The planning work has been phased out because the State and local utilities now have sufficient resources to do the necessary studies without further Pederal involvement.

We maintain our headquarters office in Juneau with field offices at each project for the operation and maintenance work. Our staffing request is 38 PTE's, the same as for FY 1986.

An expansion of the Snettisham Project is now underway by the. Corps of Engineers which has design and construction responsibility for that project. The new construction is the Cater Lake Onit which will add 34,5 at a cost of about $58 million. Pover on line is estimated in late 1988.

CURRENT ACTIVITIES

I am pleased to report that both projects are in good condition. I believe our current maintenance levels are adequate to assure good protection of the investment and continuity of service.

We have unde

to modernize and automate the 3) -year

We have underway a project to modernize and automate the 31-year old Eklutna powerplant. This will allow us to shift from a fully-attended plant to remote operation by supervisory control. We have estimated that the manpower savings will pay for the new equipment within about 3 years. The new system is scheduled for completion in 1986, and we expect to complete the shift to remote operation in PY 1987.

Other current activities include a program to replace PCB transformers, replacement of one of the turbine runners at Eklutna, and continuation of a fairly intensive transmission line maintenance program started three years ago for Snettishan Project.

Por 1985, ve marketed 309 million kilowatt hours with gross revenues of $6,866,000. We are estimating sales of 336 million kilowatt hours with revenues of $7,732,000 for FY 1986.

Our appropriation level has been fairly steady in recent years .-$3,233,000 in 1985 and $3,245,000 in 1986. The latter number reflects the adjustment under Gramm-Rudman-Hollings.

NET BILLING

We have used net-billing arrangements for wheeling of Snettishan power over non-Federal transmission lines and for an operations contract which provides utility operators for Snettishan. The

actual amount net-billed in PY 1985 was $205,000, or 38 of revenues:

We plan to develop a similar operations contract for Eklutna after the automation project is complete. Operations would be handled remotely by one of our utility customers. We also

propose to use net-billing for our costs under the contract. We

are estimating net-billing amounts of $350,000 in 1987 (total of both projects), or 3.8% of projected 1987 revenues.

The President's PY 1986 Budget included a proposal that the
Alaska Power Administration projects be sold to the State of
Alaska or other non-Pederal ownership.

This idea makes sense for many reasons. The two APA projects constitute a fairly small part of the power supply and transmission facilities in Alaska. Both are essentially singlepurpose power developments with all costs allocated to power. The State bas its own Alaska Pover Authority with capability to plan, design, finance, and construct hydroelectric and other power facilities. The APA customers operate both generation and transmission facilities. APA serves in only one state. There is just no longer a need for a separate Federal power program in Alaska.

For the last several months we have been working with the Alaska Office of Management and Budget and other interested parties on a joint study of the issues surrounding the proposed sale. We . expect to finalize a study report in March and hope that report can provide much of the information needed to develop specific decisions and legislative recommendations on the proposed sale.

The study has not turned up anything which looks like an insurmountable obstacle. There is a lot of concern about

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