UNITED STATES OF AMERICA

U.S. DEPARTMENT OF ENERGY

BEFORE THE

BONNEVILLE POWER ADMINISTRATION

IN THE MATTER OF THE PROPOSED ) BPA DOCKET NO. SN-03

SAFETY-NET COST RECOVERY )

ADJUSTMENT PROCEEDING OF THE )

BONNEVILLE POWER )

ADMINISTRATION )

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

ANSWER TO MOTIONS TO STRIKE REBUTTAL TESTIMONY

OF THE COLUMBIA RIVER INTER-TRIBAL FISH COMMISSION

AND THE YAKAMA NATION

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Tim Weaver

Law Office of Tim Weaver

402 E. Yakima Ave.

Yakima, WA 98901

\(509\) 575-1500

Fax: (509) 575-1227

Robert Lothrop

Columbia River Inter-Tribal Fish Commission

729 N.E. Oregon Street, suite 200

Portland, Oregon 97232

\(503\) 238-0667

Fax: (503) 235-4228

May 13, 2003 SN-03-M-23

UNITED STATES OF AMERICA

U.S. DEPARTMENT OF ENERGY

BEFORE THE

BONNEVILLE POWER ADMINISTRATION

IN THE MATTER OF THE PROPOSED ) BPA DOCKET NO. SN-03

SAFETY-NET COST RECOVERY )

ADJUSTMENT PROCEEDING OF THE )

BONNEVILLE POWER )

ADMINISTRATION )

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

ANSWER TO MOTIONS TO STRIKE REBUTTAL TESTIMONY

OF THE COLUMBIA RIVER INTER-TRIBAL FISH COMMISSION

AND THE YAKAMA NATION
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This Answer addresses the motions by the Bonneville Power Administration
(SN-03-M-21) and Public Power Council (SN-02-M-20) to strike certain
portions of Exhibit SN-03-E-CR/YA-02 and attachments thereto, Rebuttal
Testimony of the Columbia River Inter-Tribal Fish Commission
(\"CRITFC\") and the Yakama Nation (\"YN\"), hereinafter collectively
referred to as "Tribes." The disputed testimony and attachments are
offered to clarify and refute Bonneville\'s assertions regarding its
system costs and obligation to repay Treasury. The Tribes offer their
rebuttal testimony so that Bonneville may adequately mitigate cost
risks, recover its total system costs in accordance with its statutory
mandates, and repay Treasury.

# The Columbia River Inter-Tribal Fish Commission and the Yakama Nation Should Be Allowed to File Rebuttal Their Testimony. 

The Motions to Strike conflict with Bonneville\'s rules for these
proceedings. Under Bonneville\'s Rules of Procedure Governing Rate
Hearings (\"Rules\"), \"parties shall be provided an adequate
opportunity to offer refutation or rebuttal on **[any]{.underline}**
material submitted by BPA.\" Rules §1010.11(a)(1) (emphasis added). It
is the clear policy of the Rules to allow the tribes rebuttal testimony.

Bonneville is required by statute to set rates that are based upon the
Administrator\'s total system costs. 16 USC § 839e(a)(2)(B). Bonneville
must also protect the public interest "by ensuring that federal
hydroelectric programs recover their own costs and do not require
subsidies from the federal treasury.\" [Aluminum Company of America v.
Bonneville Power Administration]{.underline}, 891 F.2d 748, at 760
(1989) (citing the legislative history of the Bonneville Project Act, 16
USC § 832 et. seq.). Bonneville has a duty to \"...protect, mitigate and
enhance fish and wildlife...\" 16 USC § 839(6). As part of the total
system costs, Bonneville collects rates sufficient to fund various fish
and wildlife programs. Administrative agencies must not construe their
statutory duty so as to be \"inconsistent with the statutory mandate or
that frustrate\[s\] the policy that Congress sought to implement.\"
[Markair, Inc. v. Civil Aeronautics Board]{.underline}, 744 f.2d 1383,
at 1385 (9^th^ Cir.1984). In order to comply with its statutory mandates
and Congressional policy, Bonneville may not ignore testimony that is
reasonably related to developing a full understanding of issues that may
affect Bonneville\'s ability to cover its total system costs, to repay
the Treasury, or its ability to pay for fish and wildlife measures.

# Section by Section Answer to Bonneville\'s \'s Motion to Strike

-   Page 3, line 18 through line 22:

PPC moves to strike the aforementioned material, but not Bonneville.
According to PPC, this testimony is precluded "because it challenges
BPA's prior decisions in the WP-02 case." The text of the Tribes'
rebuttal is directly at odds with PPC's rationale. The Tribes' rebuttal
testimony clearly addresses the customers' "\[f\]ailure to independently
evaluate **the current proposal....**" SN-03-E-CR/YA )-02 at page 3,
line 20 (emphasis added). PPC's motion to strike this testimony should
be denied.

-   Page 5, line 12 through Page 6, line 8, ending with "...attachment
    SN-03-E-CR/YA-02E".

PPC proposes striking this portion of the Tribes' testimony because it
challenges fish and wildlife program/funding levels. According to
Bonneville, this testimony is precluded because it challenges fish and
wildlife program/funding levels and is rebutting BPA's direct case.

The Tribes' testimony is not directed at Bonneville's fish and wildlife
funding levels. It is directed at the likelihood of a Bonneville
Treasury deferral and associated policy concerns. In this proceeding,
Bonneville is proposing to set rates based on a 50% probability of
deferring a payment to Treasury in the next three fiscal years. The
Tribes' rebuttal testimony, which PPC and Bonneville have not moved to
strike, points out that the customers have not evaluated the policy
risks associated with a Treasury deferral. SN-03-E-CR/YA-02, page 5
lines 5 to 11. The Tribes' subsequent testimony, which Bonneville and
PPC have moved to strike, highlights the fact that Bonneville
Administrator has spoken in opposition to deferring Treasury payment due
to political risk: "If Congress thinks there's a subsidy the region
could lose control of the federal system, Wright indicated."
SN-03-E-CR/YA-02, page 5, line 22 to page 6 line 1 (attachment DD). The
Tribes' concern is that "\[n\]ow, BPA is facing a financial crisis and
the proposal of both Bonneville and the utilities is to increase the
risk of Treasury deferral to minimize the rate increase."
[Id]{.underline}. Page 6, lines 1 to 3. The policy risks and likelihood
of Treasury deferral are fundamental considerations in determining with
Bonneville's rates recover total system costs. The Tribes' rebuttal
testimony which addresses these matters should not be struck..

-   Page 7, line 22 through page 8, line 6.

PPC moves to strike this testimony, but not Bonneville. According to
PPC, this testimony challenges fish and wildlife program/funding levels.
It does not. This testimony addresses cost risks and Treasury repayment
obligations. The testimony presents analysis of the rate impact of
addressing fish and wildlife cost risks and increasing Treasury payment
probability through increasing rates. The Tribes' analyses demonstrate
that Bonneville can address cost risks and increase its TPP, "while
keeping its rates between six and fourteen percent below the long-term
market rate for electricity."

-   Page 8, lines 23, beginning with "For example, in 2001, Bonneville
    eliminated river ..." through Page 10, line 9:

According to PPC, this testimony challenges Fish and Wildlife program
levels and funding, as well as issues related to BPA's implementation of
the Biological Opinion, and is excluded by the FRN. Bonneville moves to
strike some, but not all of the material set forth in this portion of
the PPC motion. Bonneville does not move to strike the following
statements[^1]:

> In 2003, Bonneville has cut fish and wildlife funding to deal with its
> financial crisis. *(see* attachment SN-03-E-CR/YA-02LL) These actions
> took place after Bonneville commitments in writing to the Columbia
> Basin Tribes. If Bonneville has not honored its commitments in the
> past, it is difficult to support a strategy that relies on some future
> commitments that are combined with such a low probability of fully
> repaying the Treasury *(see* attachment SN-03-E-CR/YA-02JJa).

\*\*\*

> Fourth, the Save Our Wild Salmon proposal does not address the need to
> position Bonneville to remain competitive and meet higher fish and
> wildlife costs after 2006 *(see* PP/CR:001, incorporated as attachment
> SN-03-E-CR/YA-01MM).

These two statements reflect separate tribal concerns. The first
pertains to the Tribes' policy concerns associated with a strategy that
has a low probability of Treasury repayment. The tribes do not support
such a strategy because of its impact on Bonneville policy making. The
second deals with Bonneville's ending reserves and the fact that the low
ending reserves projected for 2006 are of concern to the Tribes.
Treasury payment probability and ending reserves are appropriate issues
for this proceeding and the Tribes' rebuttal in this regard should not
be stricken.

Bonneville and PPC join in seeking to strike page 9 line 9 through page
10 line 6 of the Tribes' rebuttal. This testimony highlights the
uncertainties Bonneville faces with regard to its fish and wildlife
costs. Ultimately, Congress is the arbiter of Bonneville's costs,
including its fish and wildlife costs. While Bonneville asserts that it
sets its level of fish and wildlife spending, that decision is subject
to congressional oversight and modification pursuant to the Transmission
Act. Bonneville is subject to cost uncertainty with regard to fish and
wildlife and its other costs. It is appropriate that Bonneville
recognize these uncertainties and account for them in this proceeding.
For example, the Federal District Court of Oregon recently ruled that
NMFS Biological Opinion on the operation of the FCRPS was unlawful,
because the government had relied on offsite mitigation actions that
were not reasonably certain to occur [NWF v. NMFS]{.underline}, Civ. No.
01-640-RE (Opinion and Order, D. Ore, May 7, 2003) . These included
measures for which there were no funding commitments by Bonneville or
others. [See]{.underline} SlipOp at 22. How the government will remedy
these deficiencies is unknown. Bonneville should account for such
uncertainties in this proceeding. The foregoing matter should not be
struck from the Tribes' rebuttal testimony.

# CONCLUSION

#  {#section .unnumbered}

Bonneville must comply with the relevant statutes and Congressional
policy. To comply, Bonneville may not ignore testimony that is
reasonably related and necessary to developing a full understanding of
the issues that may affect Bonneville\'s ability to cover its total
system costs, to repay the Treasury, or its ability to pay for fish and
wildlife measures. For the reasons previously stated, the Columbia River
Inter-Tribal Fish Commission and the Yakama Nation respectfully request
the Hearing Officer deny Bonneville\'s Motion to Strike portions of the
Direct Testimony of the Columbia River Inter-Tribal Fish Commission and
the Yakama Nation

DATED this 13^th^ day of May, 2003.

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Tim Weaver

Attorney for the

The Yakama Nation

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Robert Lothrop

Attorney for the

Columbia River Inter-Tribal Fish Commission

[^1]: Bonneville does move to strike attachment LL.