# [SN-03 SA Data Response]{.underline}

## Request No.: BPA-SA-001

Exhibit: SN-03-E-SA-01, Testimony of Weiss, page 11, lines 16-21.

Please provide the data and analysis (i.e., probabilities of various
nuclear plant outage durations and premature decommissions) for nuclear
plants of the type and age of the Columbia Generation Station (CGS) that
supports SA's claim that BPA should incorporate such risks in the Risk
Analysis.

**Response**:

SA objects to this request because it requires us to perform analysis.
It also mischaracterizes our testimony, which reads as follows:

*Q. How should BPA have estimated the risk of expensive repairs or
premature decommissioning?*

A. BPA should consult the readily available Nuclear Regulatory
Commission statistics on the likelihood of this sort of event for plants
of this type and age. These probabilities could then be weighted by an
estimate of costs and included in the risk model. This is easily done
and should be incorporated into the rates.

Our testimony clearly proposes that BPA should do the analysis that
Bonneville now asks SA to do in this data request.

Notwithstanding this objection, SA refers Bonneville to the NRC.gov
website to obtain the \"Information Digest 2002 Edition \" (NUREG 1350,
Vol. 14). For example, we looked at Appendices A and B to obtain
1998-2001 statistics on the nine Boiling-water reactors, type Mark 2,
including CGS, which have been constructed and operated in the U.S. They
include CGS, LaSalle 1&2, Limerick 1&2, 9 Mile Point, Susquehanna 1&2
and Millstone 1 (now shut down).

For those most recent four years, there are therefore 4\*9 = 36 yearly
capacity factors. It is important to note that one must include
Millstone 1, shut in mid-1998, because premature shutdown is the type of
risk shared by these reactors (we assigned a capacity factor of 50% for
that year). Of the 36 operating years, one can make the following table:

[Capacity factor Years]{.underline}

0 4

\>0-50% 2

\>50-70% 3 (two of these were CGS before it changed fueling cycles)

\>70-80% 3

\>80-90% 10

\>90% 14

Even this extremely limited research shows that these types of plants
have a distribution of good and bad years which could be incorporated
into BPA\'s risk analysis.

# [SN-03 SA Data Response]{.underline}

## Request No.: BPA-SA-002

Exhibit: SN-03-E-SA-01, Testimony of Weiss, page 11, line 22 to page 12,
line 2.

Please provide the data and analysis supporting SA's claim that BPA's
annual nuclear decommissioning fund contribution may be inadequate.

**Response**

This statement referred to my belief that a 6.3% real rate of return is
optimistic. (See response to BPA-SA-004). If that is true, then the fund
contribution should be increased to correspond to a lower rate of gain
in order to provide the required decommissioning fund when it is needed.

# [SN-03 SA Data Responses]{.underline}

**Response to Data Request -- BPA-SA-003**

Exhibit: SN-03-E-SA-01, Testimony of Weiss, page 12, lines 3-19.

SA objects to this request in that it combines two questions that we
have labeled (a) and (b) that should have been submitted separately. In
addition, we object that the second question requires SA to provide
studies and analysis. Notwithstanding these objections, we will attempt
to answer the questions.

**BPA\'s Request (a)**

Please provide all analysis that supports SA's claim that BPA has not
adequately budgeted for implementation of the Biological Opinions and
the Fish and Wildlife Program.

**Response**

SOS/NWEC submit, as Attachment SA-BPA-003A, an analysis by the Columbia
Basin Fish and Wildlife Authority (CBFWA) that demonstrates the need for
a minimum of \$247 million annually to implement BPA's Endangered
Species Act offsite mitigation requirements, as well as the Northwest
Power Planning Council's (Council) Fish and Wildlife Program. The CBFWA
analysis consists of a summary of nearly 700 proposals solicited and
ultimately approved through the Council's Provincial Review. All
proposals included 3-year budgets, and were subject to a detailed review
by the Independent Scientific Review Board (ISRP) and federal, state and
tribal fish and wildlife managers. SOS/NWEC view this as an overly
conservative estimate, based on significant future cost uncertainties
referenced below.

CBFWA's analysis is roughly equivalent to BPA's "direct program"
responsibilities, which includes a significant portion of the agency's
responsibilities under the National Marine Fisheries Service (NMFS)
Federal Columbia River Power System (FCRPS) Biological Opinion (BiOp),
and the Council's Fish and Wildlife Program. However, there are
additional costs associated with BPA's FCRPS BiOp responsibilites, such
as reimbursable operations and maintenance (O&M) costs, capital
expenses, bond repayment, and transmission. It is difficult to determine
from BPA's Power Business Line Summary of Net Revenues to what extent
those additional costs are adequately accounted for. SOS/NWEC submit as
Attachment SA-BPA-003B an analysis by NMFS staff that estimates
agency-by-agency funding needs in order to implement the NMFS BiOp. \[We
are faxing this attachment to the requestor. We only have a hard copy.
If any other party would like a copy, we can fax it if provided a fax
number.\] BPA's annual subtotal is in the range of \$500 million per
year from fiscal years 2003-2006.

**BPA\'s Request (b)**

*Please provide, for the uncertainties SA identified, the operating
(hydro generation) impacts and non-operating expense impacts, timing of
implementation, and probability of adoption during FY 2003-FY 2006.*

**Response**

It is difficult to determine with any specificity the operating and
non-operating expenses that may result from the uncertainties described
in the SOS/NWEC testimony. The purpose of submitting those uncertainties
was to prove that point: BPA cannot assume that its fish and wildlife
funding costs through FY2006 will be fixed. To do so would be a blatant
violation of Fish and Wildlife Funding Principles 2 and 7 which state
that: "Bonneville will take into account the *full range of potential*
fish and wildlife costs," and that "Bonneville will adopt an approach
that is *flexible in order to respond to a variety of different fish and
wildlife cost scenarios*," respectively (emphasis added). BPA can be no
more certain of its potential fish and wildlife costs now that it was in
2000 when the Fish and Wildlife Funding Principles were adopted.

To illustrate these *potential* fish and wildlife costs, the following
presents an expanded discussion of some, but not all, future
uncertainties:

1)  **NMFS BiOp**: The current FCRPS BiOp includes a series of check-ins
    to determine if the BiOp is receiving the proper attention from a
    funding and implementation standpoint, as well as to determine
    whether the Reasonable and Prudent Action it puts forth is indeed
    meeting biological objectives. Two of the check-ins will occur (in
    2003 and 2005) before the end of the current rate period. According
    to NMFS, if these evaluation points show that implementation is
    neither timely nor sufficient, "then NMFS will indicate how the
    Action Agencies can revise the RPA implementation through new 1- and
    5- year plans to meet the hydro and off-site performance standards.
    For example, the plans could call for further efforts to reduce
    hydro system mortality" by increasing flow augmentation and spill.
    *See* FCRPS BiOp at 9-43. Moreover, "failure to implement enough
    estuary or tributary habitat improvements for Snake River ESUs could
    necessitate that the Action Agencies seek authorization to breach
    Snake River dams (while continuing efforts to restore estuary and
    tributary habitat)..." *See* NMFS BiOp at 9-44. In each case, BPA's
    fish and wildlife costs would be likely to increase. In addition,
    the adequacy of the BiOp itself is the subject of a lawsuit that
    should be resolved shortly and could result in the need for major
    revisions.

2)  **Subbasin Planning:** The Council is developing more detailed
    Subbasin Plans that will replace current summaries from the
    Provincial Review. These plans will identify additional work needed
    to adequately mitigate the impact the FCRPS, and are currently
    expected for completion in FY2004. These plans will likely increase
    BPA's fish and wildlife budget needs in the latter part of the
    current rate period.

3)  **Recovery Planning**: Recovery Planning is currently underway for
    the Willamette and lower Columbia River basins and the interior
    Columbia Basin to attempt to halt the decline of threatened and
    endangered salmon and steelhead ESUs. Thought the course of recovery
    planning, it is likely that additional or alternative measures
    necessary for achieving the identified recovery goals will result.

4)  **Clean Water Act Compliance**: The U.S. Environmental Protection
    Agency (EPA) is currently working with the states of Idaho, Oregon
    and Washington, and in coordination with Columbia Basin Tribes to
    develop Total Maximum Daily Loads (TMDL) for Temperature and Total
    Dissolved Gas (TDG) on the Columbia and Snake Rivers. BPA will
    likely be responsible for a major portion of the Clean Water Act
    costs associated with the FCRPS dams. This process could be
    completed before the end of this rate period.

# [SN-03 SA Data Response]{.underline}

## Request No.: BPA-SA-004

Exhibit: SN-03-E-SA-01, Testimony of Steven Weiss, page 12, lines 1 -- 2
(BPA Pagination).

Please provide any data and analysis showing that "A 6.3 percent
[real]{.underline} return is overly optimistic."

**Response**:

The Power Planning Council will be using a real discount rate of 4.75%
in their upcoming power plan and used that number in their last one, as
well (confirmed via e-mail exchange with NWPPC staffer Charlie Grist).
The Council\'s discount rate represents the time value of money invested
in risk-free securities such as Treasury bills. I would be surprised
(and upset) if ENW invested in much riskier instruments than that\--and
if it does, who is supposed to absorb the risk?

Another source is the US government\'s pension guaranty program. See:
<http://www.pbgc.gov/services/interest/LUMP_SUM.HTM>. This program
assumes returns in the 4-5.5% range [nominal.]{.underline} Another
source is the Canadian government\'s pension program which estimates
long-term yields at between 4.5-5% real return, a bit better, but still
well short of BPA\'s 6.3% estimate. This can be viewed at:
<http://www.cppib.ca/how/measuring/index.html>

When I posed the question to Kevin Bell, an economist who works for us
occasionally, he replied:

> In general, I can\'t think of anything besides tech stocks in the late
>
> \'90\'s that claimed low risk, long term returns in the range of 6%
> real.
>
> As with so many of BPA\'s screwups, even if they could claim that a
> 6.3%
>
> real return passes the laugh test as an \*expected\* return, available
>
> when the money is needed, the real question is what the probability
>
> distribution looks like. This investment portfolio should look like a
>
> pension fund. Pension funds that plan on 6.5% real returns, on a fixed
>
> payout schedule, tend to fail.

Despite Mr. Bell\'s colorful language, his points make sense: (1) BPA
should look at the actual investments and make sure they are
conservative enough so as not to transfer risk back to Bonneville; and,
if BPA does take on that risk, (2) BPA should model a probability
distribution that the investment will give various returns in
calculating its TPP. Those are the points I tried to make in my
testimony.

# [SN-03 SA Data Response]{.underline}

## Request No.: BPA-SA-005

Exhibit: SN-03-E-SA-01, Testimony of Steven Weiss, page 24, lines 7 - 8
(BPA Pagination).

Please provide data describing the statutory basis for any BPA
obligation "to provide meaningful help to low-income consumers."

**Response:**

SA objects to this request because it is a question that should be
argued in Briefing as it asks for a legal conclusion. There are no
\"data\" that are needed to justify the existence of a statute or are
the \"basis\" for a statute of which I am aware.

Notwithstanding this objection, we will attempt to answer the question.
We assume the question asks for the statutory basis SA would cite in a
Brief describing BPA\'s obligation to provide meaningful help to
low-income consumers. The NW Power Planning and Conservation Act
requires in its first section that one of BPA\'s core purposes is \"to
assure the Pacific Northwest of an adequate, efficient,
[economical]{.underline} and reliable power supply.\" (emphasis added)
BPA is evidently taking this purpose very seriously in its attempts to
keep any SN CRAC increase at a minimum. For low-income consumers living
in sub-standard or under-weatherized housing, this means, we believe,
that BPA has an [obligation]{.underline} to provide help in weatherizing
their homes and installing efficient appliances as part of its
conservation programs.

In addition the Act states that, Bonneville also has as its purpose
\"\...to encourage\...conservation and efficiency in the use of electric
power,\...and \"\...to provide for\...the development of regional plans
and programs related to energy conservation\...and providing
environmental quality.\" Thus BPA has a mandated obligation to support
energy conservation and environmental quality (and living in a cold,
drafty home is not living in a quality environment.)

It is our opinion that BPA must [balance]{.underline} its goals. Low
rates are only one of its mandated purposes. Helping low-income
consumers has long been one of BPA\'s goals and a key ingredient in its
conservation programs. NWEC wonders how BPA could support these programs
in the past if it weren\'t one of its statutory purposes. Thus the
argument is simply about what level of support these programs should
receive.

(BPA has moved to strike this portion of our testimony, so this issue
may become moot. Frankly, however, we are astonished that BPA would even
have to ask the question that is the subject of this data request. In
these tough times, BPA should realize that under-funding of critical
programs to poor people must not be traded for lower rates for the rest
of us.)

# SN-03 SA DATA RESPONSE

**BPA\'s Request BPA-SA-006**

Exhibit:: SN-03-E-SA-01, Testimony of Weiss, Page 12, lines 13-19.

In this section, Save our Wild Salmon Coalition states that if BPA's
fish and wildlife obligations are not fully funded, then greater risks
arise, including: "the financial penalties for breaching tribal and
international treaties; the economic harm to fishing and tourism
businesses and the communities which depend on them; and the irreparable
cultural loss to native tribes." Please identify the treaties you
reference and provide documentation for the potential cost exposure that
would arise. Please also identify and document the economic harm to
fishing and tourism and explain how this harm, if any, creates a
financial risk to BPA.

**Response**

SOS/NWEC objects to this request. If appropriate documentation for
potential cost exposure due to breaching tribal treaties and trust
responsibilites, or economic harm to fishing and tourism businesses,
does not presently exist, it is because BPA has not performed the
necessary risk analyses to calculate such costs.

The purpose of SOS/NWEC testimony referred to in this data request was
simply to identify "non-operating risks" or uncertainties that BPA has
not accounted for in the rate case. We assume that BPA has the
appropriate technical expertise to quantify those risks.

# SN-03 SA DATA RESPONSE

**BPA\'s Request BPA-SA-007**

Exhibit: SN-03-E-SA-01, testimony of Weiss, Page 6, lines 17-24, to page
7 lines 1-3.

In this section, Save our Wild Salmon Coalition states that in BPA's
definition of its "obligations" BPA has included only "contracted
payments for fish and wildlife expenses" and excluded two of its "most
important fish-related responsibilities: hydro operations . . . and
commitments made to the tribes, fishery managers and the public. . . ."
Please identify each of the commitments referenced and any documentation
showing the anticipated cost of each (if any), the time at which any
actions to fulfill the commitment were to be done, and the means of
assessing BPA's fulfillment of the commitment.

**SA Response**

The timing and nature of salmon-related hydro obligations to which BPA
must abide are described in the 2000 National Marine Fisheries Service
Biological Opinion for the Federal Columbia River Power System. They
include, but are not limited, specific levels of spill at federal dams,
reservoir releases to augment downstream flows, minimum operating pool
reservoir levels, etc. BPA has often referred to the "cost" of such
operations as "foregone revenue." (SOS/NWEC object to the concept that
such operations "cost" the agency revenue it could otherwise expect
because the Columbia and Snake rivers do not belong to BPA, nor does BPA
own the water used to satisfy legally required salmon recovery
operations.)

Nevertheless, SOS/NWEC view salmon-related hydro actions as
*obligations* to which BPA and the federal family as a whole must abide
in order to satisfy requirements under the Endangered Species Act, the
Northwest Power Act, and tribal trust and treaty responsibilities.

Furthermore, in the 2000 Rate Case, BPA "committed itself clearly and
publicly, with the express endorsement of the Administration, to meeting
its fish and wildlife obligations...without qualifications as to the
magnitude of the obligations." (*See* WP-02-A-02, Page 5-37). This was
the basis for the \"Keep the Options Open\" strategy endorsed by BPA.
This express commitment, as well as BPA\'s legal obligations under the
BiOp and the NW Power Planning Act to fund measures beneficial to fish
and wildlife, were what we meant in our testimony as obligations that
BPA must meet despite the fact that many of them are not the subject of
contracts. The point of our testimony is that the funding of these
non-contracted obligations is not protected by BPA\'s Treasury payment
priorities policy. That is, only contracted obligations are insured by
the fact that Bonneville must pay its contracts *before* it can pay the
Treasury. BPA\'s non-contracted obligations do not receive this
assurance, and thus BPA\'s TPP is their only protection.

For example, if BPA has contracted with an entity to run a hatchery but
subsequently BPA suffers financial difficulties, the holders of that
contract have the certainty that they will get paid even if Bonneville
must stiff the Treasury. On the other hand, if BPA does not yet have a
contract for that same hatchery, even if the hatchery operation is an
RPA required by the BiOp, BPA can very well make its Treasury payment
without any pressure on it to sign the hatchery contract. BPA can delay
or not sign the contract at all. Only through lengthy and expensive
legal challenge can BPA be forced to honor that commitment. Thus it is
of critical interest for those interested in seeing that BPA does meet
its non-contracted obligations that BPA stays out of financial
difficulties.