Purchase Power and Wheeling Question: By far the largest single increase in funding is in the request for Purchase Power and Wheeling. The appropriations request is increasing from $46.7 million in 1986 to $76.7 million in 1987. What accounts for this large increase? Answer: The increase in the FY 1987 purchase power and wheeling program is primarily due to Western's purchase of power from Basin Electric Power Cooperative to help meet Central Valley Project power delivery obligations. This will be the first full year of implementing the contract between Western and Basin for delivery of 185 MW of power. Western will reduce purchases from the Bonneville Power Administration in FY 1987 due to the commitment to purchase Basin Electric Power. This will decrease nonappropriation transfers with BPA, which have offset appropriations in the past. We have also experienced significant increases in capacity charges from Pacific Gas and Electric Company. Question: Is there any way to limit these large changes from year to year? Answer: Western's purchase power and wheeling activity is constantly changing which makes it difficult to project with a high degree of accuracy what funding requirements will be from one year to the next. Some of the factors that make it difficult to project the PP&W budget are: variations in the prices and amounts of surplus available from the Pacific Northwest; variations in the California thermal power sources Western uses to support the CVP; and the amount of net billing, bill crediting and nonappropriated transfers available to support the PP&W program. Western is continually looking for methods to increase the degree of certainty in its appropriations requirements. Western considers the implementation of a revolving fund where revenue would be available without further appropriation to pay for the purchase and wheeling of power to be the best method of eliminating the impact of the PP&W activity on the appropriations process. Question: The budget justification indicates that WAPA will be reducing power purchases from BPA in 1987. Can you explain the reasons for this action? Answer: WAPA and BPA had a surplus firm power sales agreement that terminated in February 1986 after the Basin Electric purchases commenced. This reduction in firm surplus purchases from BPA is reflected in WAPA's budget projections. In lieu of firm power purchases from BPA, Western expects to purchase surplus, nonfirm energy from both BPA and other Northwest entities. Question: What is the value of the power WAPA will no longer purchase from BPA? Answer: The cost of firm surplus power that had been purchased from BPA was approximately $2 million per month delivered in California. Buy America Question: Section 506 of P.L. 99-141 provides that agencies shall determine the incremental costs associated with implementing the "Buy American" requirement and defer or offset such incremental costs against otherwise existing repayment obligations. Does the Western Area Power Administration anticipate purchasing the type of high power EHV equipment defined by committee report #99-195? If so, what is the total cost of the equipment purchase? Answer: Yes, Western anticipates purchasing various types of EHV equipment. A tabulation showing planned EHV equipment by type of equipment for fiscal years 1986 and 1987 is provided for the record. consumer or the taxpayer? Have you estimated the average additional cost to the ratepayer and/or the revenue impact? Answer: Western has not purchased any extra high voltage equipment thus far in FY 1986; however, for evaluation of bids, a 25 percent differential will be added to bids received from foreign manufacturers. Western's customers will not bear the incremental costs as they will be deferred or offset against existing repayment obligations. Estimates of additional costs and revenue impacts are not available since we have not yet gone through the procurement process for these equipment purchases. Question: Do you think that this type of "Buy American" provision could have a harmful impact on our relations with those trading partners with whom we enjoy a very favorable balance of trade? Do you believe that an appropriations measure is the appropriate vehicle to deal with a complex trade issue that could have significant trade policy consequences? Answer: Western is sympathetic to the pressures faced by domestic EHV vendors when they are confronted by competition from foreign vendors whose prices may have been made especially attractive by the relative strength of the dollar against other currencies in the last several years. The Administration objected to this statutory approach because history has shown that the passage of such legislation would do more harm than good to the American economy. This is still the Administration's position. Procurement Restrictions Question: As you know, the fiscal 1986 appropriations act contains a 25 percent price preference on procurement of EHV equipment which is manufactured in the U.S. Assuming these restrictions apply, please list each fiscal 1986 procurement for your agency that has been, or will be, affected by the restriction, and the amount of each procurement. Explain the impact of the restriction on the procurement using both the definition of EHV equipment contained in the Statement of Managers accompanying the Conference Report on H.R. 2959 and the definition contained in the statement on the floor of the Senate during consideration of the Conference Report on H.R. 2959. Answer: To date, Western has not procured any extra high voltage equipment in FY 1986. Impacts of the EHV provision can only be determined after the future procurements have been completed. A list will be provided showing our planned procurements using both definitions of EHV equipment. (The information follows:) PROJECTED EHV EQUIPMENT PURCHASES FOLLOWING STATEMENT PROJECTED EQUIPMENT PURCHASES FOLLOWING MANAGERS Question: If the same restriction were continued in fiscal 1987, please list each anticipated procurement by your agency that would be affected, estimate the amount of each procurement, and explain the impact of the restriction on the procurement. Provide the same type of information for the period 1988-1992, assuming the restriction were continued for your agency. Again, answer the questions separately for each definition of EHV equipment. Answer: Tables showing Western's projected EHV procurements for FY 1987 and the period 1988-1992 will be provided for the record. Since Western has not yet procured any equipment which falls under the EHV provision, the impacts cannot yet be evaluated. * ** Planning projections are not available for these out years Most of these amounts are associated with planned purchases |