contract mr johnson will follow discussing the priority for a rate in the treatment of the interest either one would have the priority for rate and the treatment of the direct service industrial customers and i believe mr program i will be able to keep up if they do so i'm here to tell you that there are certain with regard to those contracts is simply not true bonneville did not accommodate the section seven b to are are established by settlement as opposed to doing it via the statutory scheme that there are seven b two rate ceiling simply does not apply and the preference customers are not  entitled to any protection whatsoever under that statutory provision that is the position they took in the proceeding below and that has been phylicia of statute that we come here to get rectified we believe that monofilm made this requirements of probably body customers may not exceed the amount charged may not exceed that's what congress said when they said we are a limited for the preferences customer rate i believe this language is mandatory in that language congress set an absolute limit on the amount that bonneville could charge public agency customers for rep cost the express congressional intention for quoting this provision in this vast area was to limit the amount of cost bonneville could legally charge public agency customers and there is no question none whatsoever that in this case bonneville failed to abide by that loop i would like to if i could briefly read to you a quote from one of those pre formed page one zero nine because i think b p a made two adjustments to the post seventy two twenty point seven nine per kilowatt hour preference rate a needle on available bonneville allocated allocated to the and the punchline is to less than just the result was an after settlement p f preference rate of twenty two point three three mills per kilowatt hour a lot of words what bonneville saying in this paragraph is when they did the section seven b to reach ceiling comparison the result of the limit the maximum amount they could charge of public utility customers that bonneville calculate and by their own words that caused the rate that they charged the preference customers to reach to twenty two point three three mills per kilowatt hour or it could in plain english if that's possible in this s what they did is they added two hundred ninety two million dollars to that preference customer rate above the limit that they himself so calculated pursuant to section seventy two the difference between twenty point seven mil per kilowatt hour and twenty two point three three mil going about this is the rate period for that we're currently in your own started in two thousand one goes two thousand and six can you help me interpretation the congressionally mandated cost protection provided to public agencies under section seventy two is a racist by the mere expediency of a settlement agreement between bonneville and some other third party the twenty two point three three mils the kilowatt hour the grief says that number one was not surprisingly in the case of the settlement was higher than produced by application of b p s contested calculation of rep benefits which would be the twenty eight point seven number it was the litigation over that that litigation heard on monday or was that some other litigation that was so we have to set the context a little bit more dance here question adequately the contest over those numbers was conducted in a formal on the record consideration the arguments made by the investor and utilities and found as a matter of law on each and every one of them in their final record a decision that they lacked merit and so the quotation to the contested matters at the end of the great proceeding bonneville made a decision made it on the record mean it was a matter of law and so those matters were decided and the way volatile decided those was to sustain the twenty point seventy nine that's almost ninety percent correct your honor if you were told all of that up to the point where a decision had been rendered what happened last week is the i'll use that might if my understanding is correct and they can correct me if i'm wrong voluntarily just missed their challenge just refer to position your position is that bonneville arrive at a rate of twenty point seven mills per kilowatt hour the reps asked for something higher than twenty two from thing in excess of twenty two mills per kilowatt hour  that is not correct i believe what happened is in the same proceeding although they reject and the arguments of the ious with regard to the appropriate level limits that should be calculated under section seven b two and those arguments were rejected by bonneville one of those in the sensually in the same proceeding turned the page and said even though we have calculated a rate correctly limited as to seventy two which would be the twenty point seven mills we are going to nonetheless add another two hundred ninety two million dollars to that rate to take it up to the twenty two point three three level because it is our position bills position that when the it's payment obligation under the rep is settled that the limitations that that flow from sections seventy two rate ceiling simply appreciate that what you heard on monday was the case about vonage girl striking an arrangement with the investor owned utilities to determine how much money they would be paid under the rep that was the settlement that was the part where one of the on the air used to determine how much money would change hands as to how part of it but that was only half the story or that the case today is the other half of the story because bonneville once having undertaken that obligation had to come through the rate case to find somebody to pay the bill because bonneville can't pay itself and when they brought that hundred forty million dollar obligation that they had undertaken to the rate case they looked around pay under seventy two by law was limited to twenty point three hundred twenty point seven mills for kilowatt hour that they did but that only generated forty eight million dollars to pay the  pay them money which exceeded monocles ability to collect lawfully from us and that is the whole picture of what's happened in the school the last thought i would like to leave you with before i come back and give you the information that you asked for three reasons first because it founded bondal acted contrary to the clear and expressed directions of congress second because what bonneville did flew in the face of overwhelming legislative history and third the attention on at this time says that the salaries for the generation of power are subject to preference and priority section four  are entitled to be served first from those resources investor owned utilities and the direct service industrial customers that the u s ties are a historical group of companies mostly aluminum producers that purchased very large quantities of electricity from more power and blend the cost of that power now into the rates that were paid by the customers that were given an allocation by congress that statutory no right of access to the federal base system under the preference and priority statutes that i've tried to draw your attention to bonneville had enough power to serve preference better deal for this rate case and they pushed very hard to get it with respect to the direct service industries the largest remaining among them is alcoa the largest aluminum producer in the world these were the rumors we tried to do a little bit of discovery by a request for data in the rate case but there wasn't enough grist so what i'm telling you in answer to your question is really  but i believe those decisions are fixed in the agency will not matter changing argument in the rate case i filed a petition for review at the end of september in hopes of preserving the rights a little gate the repetition  second the second issue for raises is that is that my clients didn't raise secretly raised the issue of multiple misses of bonneville on their treasury payment on our motion for reconsideration and i just want to call the court's attention to pages of eleven and twelve of our reply brief where we raised all sorts of issues in that regard and also in our opening briefs we reserved that that issue and we filed our our petition for reconsideration and also the initial petition kirk i don't think those i don't think those issues are are before you or at least i think we prevail i think we prevail on those on those issues our our major our meter concern with both for first decision and and with b p s decision is that they relied only on the good i didn't look at the bad and certainly never talk about the ugly we challenge first we challenge first decision as being as being are a train creatures a violation of law because congress made it very clear that they had to make a finding under seven eight to a and to be not not discussed not think about not mention but make a specific finding that b p s rates are sufficient to assure repayment of the federal investment in the federal crime europe our system and to make certain that those are based on the administrators total proposed rates were intended to recover the any revenue requirements for the generation function including the federal investment in the head with generation and fish and wildlife recovery so say they're going to get there they don't say we've looked at the record they don't say that we've considered anything other than bonneville statements that they say they say these rates are good enough we don't think that raises raises to the level of what congress intended for to do which was  the legislative history is very clear very clear in the act that e p a was not to receive subsidies in the situation they were to pay their debt and they were paid their debt based on their current cost and their rate schedules our position that d p a did the same thing that i want to talk about what it what i think at least from my client's standpoint it's probably the single most important issue here as to this rate case section seven our major concern our major concern and i think it's clear to you from our griefs this is what did what did b p a determine was going to be its fish and wildlife costs and was it going to be able to meet those meet those costs good rather than making that determination in the rate case they adopted what the what they claim is an independent outside discussion of what these what these costs were going to be in the had thirteen fish wildlife principles now in fairness my clients participated in that process and we had a we did have a spirited debate and we did have a lot of the discussion as to as to what those fish and wildlife c principles adopted them or said they would adopt them the ultimately the record is clear that ultimately changed them in the rape kits and then and then told my clients and everyone else and instructed the the  examiner in that case can i consider any evidence to the contrary we presented the loneliness evidence that the piece was going to missed the treasury payment if they didn't set their rates high enough to cover the fish and wildlife costs in this situation the extraordinary excluded the evidence refused to give us our opportunity to be heard and have a discussion is required under seven i the act and as a result we've ended up with a situation where no one has his adequately considered either b p or for whether or not on as a matter of fact excluded consideration of of not only my clients concerns about their ability to meet their cost but also the ark or even public utilities commission who says there's a very good chance even though and also that we back went through all the different criteria five seated when we came up with the consideration of whether then we understand here's what i understood you to have said on monday and if i'm misunderstanding and now's your chance to tell me  us over three hundred million dollars and so we were able to reach settlement at one hundred forty million dollars so in the rate case what happened was really seventy two there was a trigger we reallocated we credited practice customers lowered their rate by six hundred forty seven million dollars they want to stop there you can't stop there we have to settle the costs one hundred forty million dollars a year we have to recover section seventy of the northwest everything else and so when you have a situation in which can arise where you're in a situation where you're not going to be able to recover those costs you have to use the seventy allocation let me read seven g to make sure i understand  within the the rate period itself which means they don't carry over past a rate period previous governments were generally lunchtimes of monthly payments that occurred within a rate period so they're when they're mean within that rate period they don't judgment so when we came in we knew there was the the residential exchange possibility where they could get up to over three hundred million dollars a year and we knew the litigation issues were tough because we've seen some of them before we also knew they could take the settlement route settlement route then we have to have rates for that too so what what how do we deal with these two possible worlds it's something we've never had to deal with before in seventy two so what we did this because  corporation exchange we ran the seventy two really tests assuming an exchange because that could occur and we created a six hundred forty seven million dollars back to the preference customers lowering their r there their petition has no bearing on where we were when we had to decide this issue we had to decide that when we had the settlements in exchange program so we had the lowest point let's talk about the high end point i'll use prevail on their positions which we know are strong with the scor end and it was not the high end it was a reasonable rate that accommodated the settlement and they benefit from a lack of litigation exposure on the exchange it's not that they don't get any benefit from this they do your honor the benefit to the we can have a settlement of the residential exchange program and we'll have to litigate every seventy two the exchange exchange issue rather that never changes you to the death it was the fact that you have preference customers obligate  we love the court to get into the law here in the statutes if you go through our brief this i believe that it's really set out very clearly about the statutes first of all what petitioners are doing in this case is a kind of combines two different things trying to use preference and bring it over into rate making where it doesn't fit and that's the problem that's the fundamental flaw member of the suspect rates not not in the to say that there's no preference with respect rates not entirely true  because of the r e q program and we have no problems stemmed the two sometimes it helps the public sometimes it hurts that we have no problem seventy two that is what it is but power sales that preference principles apply is given a number of applications power they have preference over other parts preference customers come first before you sell the other that's not the way rates work it doesn't apply to rates this course tells them three times that those kids getting a brief that brief this thi that the benefit from that is well i think please get together and tell us what our fish funding alternative should be so we know what you include in that weight case so this was where the fish funding was going to be established that we could take it and go into the rate case with it so the group met for nine months hammered things that came up with thirteen fish finding alternatives these alternatives ranged from that four hundred thirty seven million dollars a year to seven hundred twenty four million dollars a year for fish now b p relates to recover its total system costs and here's why they do start the great period with four hundred twenty my nine million dollars in reserves it's rates including the automatic load based in financial based cra are illegal contracts those are important general case so if we couldn't have the settlement agreements well then we'd have to go back and determine what the l small farm customers entitle to we are talking about a range of potential benefits are in the fact that there is a range and a contingency that is exactly what makes this calculation fact addressed in quantified and discussed in the sections of the record of decision in the money case that that i provided to you at the end of the day beginning i believe in a page eight of three where where the nature of each of those disputes and the a quantified i want to make a contrast here the publics have claimed that by settling these clients and are recovering the cost that they pay over a five year period and additional of two hundred  forty i think two hundred ninety two million dollars and someone costs less what was saved by viable not having the change we don't know that number by contrast the amount of the claims exceeded one point five billion over that same period and bondable settle these claims whether us for less than fifty cents on the dollar are we another question was asked what it would have happened had there not been a settlement offer how would we have brought the claims i actually do not believe the result would have been that we entered the residential exchanges brought the plans i believe we would have brought in appeal to what vulnerable offered us claiming that it was not what the seventy two test i don't think you should be terribly surprising the party that wants to settle for less than fifty cents on the dollar would take a tough position in this record of decision it's not likely to offer a settlement and so if you don't take the salad i agree with you on a lot of your issues would have the rate been the them by rating that was poorly phrased what would have been the rate that was produced by application of the section seventy two rates ceiling had the investor in utilities positions prevailed or bonneville produced twenty two point three miles per kilowatt hour which is the rate they actually charged as in the i o u s had they prevailed with their issues in the rate ceiling calculation factually incorrect the the rate case that we're talking about concluded in may of two thousand the rep settlement contracts were not signed into law kolber in two thousand so clearly that was a desire to pay money rather than an obligation liquidate it so that would be factually wrong the second point is response to a question that you asked a judge lecture about whether bonneville has why seven g in the manner that they're proposing that they have done in this case and i think the answer that you got was well we've never particularly section seventy two or three and i apologize for taking the time but i appreciate your question the issued by the national the fisheries service on on what was needed to be done in the circumstances would change substantially we came in and said the circumstances have changed substantially you need to do something different bonneville said although we excluded ran all the fish to the turbans and never provided any money following that for any of these things that the cases they did that's how they treated the way that they met their treasury cost was they deprived fish and wildlife of any spill and