continued revenue level necessary for the operation and repayment of the Boulder Canyon Project. Specifically, Western prepared and published in the Federal Register on May 17, 1985, proposed General Regulations for the Charges for the Sale of Power from the Boulder Canyon Project.

Western then held a public information forum on June 4, 1985, to explain the proposed regulations. This forum was followed by a public comment forum on July 1, 1985. At the public comment forum Western granted a 90-day delay in the proceedings in response to a request from the customers. The delay was to provide the customers an opportunity to resolve differences among themselves. During the 90-day delay, Western's staff met as requested, singularly and collectively, with the customers to answer their questions and provide data.

Subsequent to the delay, Western received customer's comments through October 1, 1985. After review of the comments, Western published revised proposed General Regulations in the Federal Register on November 29, 1985.

Western conducted another public comment forum on the revised proposed General Regulations on December 19, 1985, and received customer's comments through January 6, 1986.

In response to requests by the customers, Western held an additional public comment forum on February 12, 1986, to receive additional comments and identify specific items of data, information, or analysis that the customers required of Western in order to comment on the revised proposed General Regulations.

Western has prepared responses to these comments and has sent them to the Federal Register for publication. This current Notice will request additional comments on the revised proposed General Regulations within 30 days of publication. Western will review all comments received and then publish final General Regulations for the Charges for the Sale of Power from the Boulder Canyon Project as soon as possible after the comment period closes. To assist customers in this process Western is providing, by separate mailing, to those interested parties, copies of all the data and documents referenced in the Federal Register Notice.

Question: What effect, if any, will the new rate schedule for Hoover power have on the FY 87 budget for WAPA?

Answer: In FY 1985, pursuant to the Hoover Power Plant Act of 1984, a revolving fund was established to provide for the operation, maintenance, and replacement costs of the Boulder Canyon Project. These costs are to be offset by revenues. Therefore, the new rate schedule will have no impact on Western's FY 1987 budget. However, it is anticipated that the present rate level for Hoover power will increase with the implementation of the new rate schedule on June 1, 1987, due to

the additional costs authorized by the Hoover Power Plant Act of 1984; specifically, the construction of additional visitor facilities, the uprating of the Hoover powerplant generator capacity, and the addition of the contribution to the Lower Colorado River Basin Development Fund.

Question: Several of the Hoover customers in Arizona, Nevada and California have raised concerns about how the rates are being set and the criteria that is being used in making the determination. What action have you taken to deal with the concerns that have been raised?

Answer: Throughout the rulemaking process Western has indicated that as long as the collection of adequate revenues was assured, Western would seriously consider any rate design which the allottees could agree upon and which did not violate the law. In order to reconcile their differences, the customers requested a 90-day delay in the proceedings, which Western granted on July 1, 1985.

During the ensuing period, Western met, and continues to meet, with interested parties in order to more clearly understand their positions, answer their questions, and provide additional information and data to help resolve any differences relative to the proposed General Regulations.

One of the major differences identified was the rate design of the Base Charge and the Lower Basin Development Fund Contribution Charge. The customers were unable to come to a consensus on the design of the capacity and energy components of the charges for power from the Boulder Canyon Project and submitted, to Western, three separate and differing proposals for these charges. Western then proposed a new rate design in the revised proposed General Regulations. In developing the new rate design, Western considered all comments received and has attempted to minimize the disparity of the economic impacts of the individual customers.

Western has met with, and will continue to meet with, the interested parties to achieve a consensus while maintaining the financial integrity of the Boulder Canyon Project. Western will continue an open and public process in order to satisfactorily resolve the expressed concerns and prevent any delays in the completion of the rulemaking and contracting process.

Question: It is my belief that there exists a special role for Western Area Power Administration to set the Hoover rates in such a way as to try to avoid legal entanglements that would endanger progress on the uprating process which in turn could affect the CAP repayment schedule. Could you detail the actions that you have taken to assure that all possible views and avenues have been explored in setting these rates so that legal entanglements can be avoided?

Answer: Western recognizes its role in providing for the required contribution to the Lower Colorado River Basin Development Fund to accomplish the timely Central Arizona Project repayment.

Throughout the rulemaking process, Western has and will continue to subject its actions, information and responses to thorough legal review to ensure that they are within the authority granted by the various laws, directives, orders, and regulations which govern Western.

The numerous meetings, comment forums and Federal Register Notices attest to our deliberate and cautious approach to setting the new Hoover rates to ensure the timely progress of the Uprating Program. In any event, the CAP repayment will not be affected as the four and one half mill per kilowatt hour contribution charge will be assessed on each kilowatt hour of energy sold in the State of Arizona whether the Uprating Program is delayed or not. The energy associated with the Uprating Program will be available on June 1, 1987, thereby, assuring the CAP of the revenues anticipated by the passage of the Hoover Power Plant Act of 1984.

Question: It is my understanding that the goal is to have the regulations issued in a manner that allows the contracting process with the utilities to begin this June. Are you going to be able to meet that timeframe? If not, why not?

Answer: Western hopes to complete negotiations and have contracts ready for execution by June 1, 1986. Although the schedule is ambitious, Western is undertaking several concurrent actions, such as proceeding with contract negotiations in parallel with the development of the General Regulations in order to ensure meeting the June 1, 1986, date. This is necessary to assure continued Uprating Program progress. Western and the future customers have agreed that contract negotiations can proceed on those topics which are not specifically addressed in the proposed General Regulations. Western will commence contract negotiations beginning the week of March 24, 1988.

After the proposed General Regulations are finalized, those specific contract topics addressed in the regulations will be incorporated into the power contracts. Western believes that the June deadline can be met with the above understanding and the continued cooperative efforts of the Hoover customers.

SUBCOMMITTEE RECESS

Chairman HATFIELD. The subcommittee will recess until the call of the Chair. I want to thank Miss Fitzpatrick, Mr. Johnson, Mr. Cross, Mr. Geisinger, Mr. Wilkerson, and Mr. Clagett for your very excellent testimony and your assistance to this committee and its deliberations.

[Whereupon, at 3:13 p.m. Thursday, March 20, the subcommittee was recessed to reconvene at 10 a.m. Monday, April 14.]