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WESTERN AREA POWER ADMINISTRATION STATEMENT OF WILLIAM H. CLAGETT, ADMINISTRATOR

Chairman HATFIELD. I would now like to ask the Administrator of the Western Region, Mr. Clagett, who also came from Bonneville Power Administration to his current post in Denver, to make his statement at this time.

Mr. CLAGETT. Thank you, Mr. Chairman.

I appreciate this opportunity to appear before the committee and represent the Western Area Power Administration.

Chairman HATFIELD. It is always good to see you.
Mr. CLAGETT. It is good to see you, sir.

THIRD AC TRANSMISSION LINE I would like to summarize my prepared statement. The first item which I think is of interest to several people in this room is the socalled third ac transmission line. The project development agreement has now been signed by all participants for the development of the California portion of that intertie. That is a $27 million effort to do engineering and environmental work, and it is expected to take 242 years to complete. This agreement provides for a future decision by these participants for the construction of the line.

PURCHASE POWER AND WHEELING Next, I would like to mention purchase power and wheeling, which is a major part of our program. Of the $205 million of our fiscal year 1987 purchase power and wheeling budget, funded outside our revolving funds, $181 million of that is for the Central Valley project in California. We have had some difficulty in the past predicting water conditions; we have had, therefore, difficulty predicting what kind of appropriations we are going to need. That was a concern that you expressed last year.

Therefore, we have initiated something called bill crediting, which is a three-party agreement where some of our customers pay directly to some of our suppliers on those purchases. We expect this year to spend about $50 million through that mechanism. We have already completed some $16 million in bill credits.

WESTERN COLORADO TRANSMISSION FACILITIES Another item in our construction budget is a transmission line in western Colorado, which involves three parties in the construction and operation of that line. It was broken down into five segments. Two of those segments have

awarded for the thin the next zersized. A third ,

now been completed and are energized. A third segment is under construction, and within the next 2 or 3 months, we expect contracts to be awarded for the last two sections. The project costs are essentially the same as originally envisioned. The only modification is the addition of a couple of phase-shifting transformers to assure full utilization of that facility.

CONSTRUCTION AND O&M PROGRAMS Otherwise, the construction program and the O&M program for Western Area Power Administration is a stable program that represents the kind of program that I think most people expect of a system that consists of 16,000 miles of line, of which 8,000 miles are wood pole lines. Of those 8,000 miles of wood pole lines, about two-thirds are over 30 years old. So we have a constant program of replacing or upgrading these old lines in concert with the needs of other utilities in the area.

RATES AND REPAYMENT The last item I would like to mention are rates and repayment. Last year, we had fantastic water; lots of water, and that means lots of generation. Consequently, we repaid Treasury $258 million on the outstanding debt for our system. That represented about 10 percent of the outstanding debt at the time.

We have no substantial rate increases anticipated in the near future, although we do have a couple of minor rate increases that we expect to start soon. We now have no rate actions before FERC.

Mr. Chairman, that summarizes my statement. I would be pleased to answer any questions.

The statement follows:)

STATEMENT OF WILLIAM H. CLAGETT, ADMINISTRATOR, WESTERN AREA

POWER ADMINISTRATION

Mr. Chairman and Members of the Subcommittee:

I am privileged to have the opportunity to discuss with you today the fiscal year (FY) 1987 budget proposal for the Western Area Power Administration (Western).

This past year has been extremely successful for Western, a situation which would not be possible without the support of this Subcommittee. As Western's Administrator, I look forward with enthusiasm to the challenges ahead. I believe the fy 1987 budget request will allow Western to meet those challenges, and help further the National Energy Policy Plan objectives of fostering an adequate supply of energy at reasonable costs consistent with sound business principles.

Mission, Organization, and Staffing

Western is a federally operated electric power marketing administration responsible for the delivery and sale of power to over 550 wholesale customers consisting of cooperatives, municipalities, public utility districts, irrigation districts, Federal and State agencies, private utilities, and reclamation project customers. The wholesale power customers, in turn, provide service to millions of retail power consumers in the States of Arizona, California, Colorado, Iowa, Kansas, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, South Dakota, Texas, Utah, and Wyoming.

During FY 1987, Western will continue to be responsible for the operation and maintenance of over 16,490 circuit miles of transmission line, an estimated 242 substations, and various appurtenant power facilities in a 1.3-million-square-mile geographic area. Electric power marketed by Western will be generated at 51 hydropower plants operated by the Bureau of

Reclamation (BuRec), the u.s. Army Corps of Engineers (Corps), and the International Boundary and Water Commission (u.s. Section). Additionally, Western will market the United States 24.3-percent entitlement (547 megawatts) from the coal-fired Navajo Generating Station near Page, Arizona. The United States share of the installed generating capacity of all these powerplants will be 9,105 megawatts (MW).

The FY 1987 budget request for Western provides for a personnel staffing level of 1,379 full-time equivalents (FTE) to

accomplish Western's objectives, the same as FY 1986.

I am pleased to report to the subcommittee that during the past several months we have, with the assistance of the General Services Administration (GSA), obtained permanent office and service center space for our Sacramento Area office, Bismarck District Office, and the Electric Power Training Center. This essentially completes present space acquisition needs for our organization.

BUDGET HIGHLIGHTS

For FY 1987, Western is requesting $240.3 million in new budget authority, an increase of $44.5 million above the FY 1986 appropriation level. The funds are for construction and rehabilitation of transmission lines and associated facilities; system operation and maintenance expenses; and for purchase power and wheeling expenses. This .increase is attributable to increased purchase power and wheeling costs for the Central Valley Project (CVP) in California, for power system facility replacements and additions, including consolidation of transmission facilities at the Hoover Powerplant in southern

Nevada, and for adjustments in the allocation of Western's

administrative and general expenses.

In addition to our request for new budget authority, we are

requesting FY 1987 obligational authority of $82.0 million for

the Colorado River Basins Power Marketing Fund (CRB Fund), established pursuant to Public Laws 75-529, 84-485, 92-370, and 90-537, a decrease of $4.6 million from FY 1986. This decrease reflects completion of construction work in FY 1986 for the

Fort Peck-Havre 230-kV Transmission Line in Montana, as well as

lower estimates for purchase power costs for fuel replacement

energy. Under the CRB Fund, encompassing the Colorado River Storage Project (CRSP), the Fort Peck Project, and the Central Arizona Project (CAP), all operation and maintenance and power marketing expenses (including a portion of similar expenses incurred by the Burec and the Corps) are financed from project power receipts collected by Western. Receipts above actual project operating expenses are returned to the U.S. Treasury to repay Federal investments.

Specific appropriation or fund amounts requested in FY 1987. compared to funds appropriated in FY 1986 are as follows:

BUDGET REQUEST SUMMARY
(Dollars in Thousands)

FY 1986

Adjusted Appropriation or Fund/Activity Appropriation

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