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121900 1 (1983-07-11)

handle is hein.gao/gaobactch0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUN1±P& unit WASHINGTON, QI.C. 20548 FOR RELEASE ON DELIVERY EXPECTED AT 9:30 A.M. JULY 11, 1983 121900 STATEMENT OF JOHN W. SPRAGUE, ASSOCIATE DIRECTOR RESOURCES, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION BEFORE THE SUBCOMITTEE ON MINING, FOREST MANAGEMENT AND BONNEVILLE POWER ADMINISTRATION 00MMITTEE ON INTERIOR AND INSULAR AFFAIRS U.S. HOUSE OF REPRESENTATIVES We appreciate this opportunity to discuss with you the potential for expanding electric power transmission between the Pacific Northwest and California. We con- cluded in 1980 that intertie expansion would be beneficial to the Northwest, Cali- fornia, and the Nation as a whole even though the Northwest was projecting power deficits. Recent Northwest forecasts now project power surpluses ranging from 4 to 18 years, therefore, the benefits envisioned in 1980 are even greater today. Because of the surplus power situation, Bonneville has initiated negotiations with California utilities for short-term (3- to 7-year) contracts for firm surplus energy over the existing lines. Bonneville has also initiated discussions with other Northwest utilities and California utilities for long-term contracts up to 1,500 MW. In addition, Bonneville is studying various intertie expansion alternatives and has initially concluded that all are economically feasible. Although the options appear economically feasible, the financial risks involved have hampered intertie expan- sion. Before utilities are willing to invest hundreds of millions of dollars on an additional intertie, they want to be assured that risks are at a minimum. Regarding intertie expansion, investors are concerned about (1) not knowing how much surplus power will be available from the Northwest on a long-term basis (beyond 1990) and uncertainty as to its price, (2) not having secure power deliveries because of Federal legislation that provides for a call-back provision on all Bonneville sales of power for use outside the region, (3) private utilities not having assurance on power allocations because of Federal legislation that provides preference in the allocation of Federal power to public bodies and cooperatives, and (4) public utili- ties not having access to intertie capacity. The Federal Government has a strong presence in the Northwest (Bonneville) which could aid in addressing the impediments to intertie expansion. Clearly, Bonneville, has been and should continue to be a facilitator in the intertie negotiations and needs to play a key role in addressing the impediments. Bonneville should work with the Northwest utilities to determine how much Northwest surplus energy is available for marketing to California, how long the surplus will be available, and how the energy will be priced. Bonneville needs to continue to consult with the Canadian provincial Governments to determine how much Canadian energy might be available for export through the Northwest to California and at what price. Bonneville needs to determine whether the legislative restrictions can be addressed in the negotiation process. If not, the Administrator of Bonneville should initiate any legislative changes that would be appropriate to facilitate successful conclusion of the negotiations. If no agreements on intertie expansion have been reached after 1-year, the Sec- retary of Energy, based on cost-benefit or other appropriate analyses, may want to seek congressional approval for the two Federal power marketing agencies in these regions, Bonneville in the Northwest and the Western Area Power Administration in California, to develop the most cost effective intertie solutions. N, to I(D q

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