Date: 1982-12-21
Speaker: PETER T. JOHNSON (republican)
Chamber: H

Administrator. Bonneville Power Administration. Portland. Oreg. DEAR PETER: Recognizing your concern for the ultimate wellbeing of public power in the Northwest. I am writing to review with you recent developments in the WPPSS controversy and. as a result of that review. to propose some modest steps which should contribute to a solution of the situation with as little damage as possible to the involved entities. That the best hope for resolution must start with limiting the damage to the smaller preferred customers of your Agency is a sad commentary on the entire misadventure. These smaller users (the socalled 88) have already suffered substantial damage since they were induced to lend themselves to the WPPSS 4 and 5 projects. When I first took an interest in the WPPSS scandal. I warned the Idaho cooperatives and municipalities that I would not and could not support a federal "bailout" of these groups merely because they had made a bad deal. The focus of my endeavors has been to determine whether the Federal Government. directly or through one or more of its agencies. had acted improperly to induce or coerce the 88 into the WPPSS project in a way to create a moral and/or legal duty on the part of the government to make restitution to the damaged parties. Based on GAO reports. publications by the BPA and the REA. statements and pleadings in cases arising out of the WPPSS matter like the I 394 litigation. and the very terms of the participants contracts. there is no longer any serious question about the intimate involvement of the federal government in every phase of the entire project from inducing participation to coercing pay. ment. Even more disturbing is the clear indication that BPA was involved in decisions made by or on behalf of WPPSS on issuing securities against the project. Whatever the motivation of any of the parties in so complex a project as the failed WNP plants 1 through 5. it. becomes increas. ingly clear that no participant is without some responsibility for the outcome. In the case of WNP.4 and 5. it is now beyond dispute that the federal government bears a major share of the responsibility for the eventual outcome. In addition. It is now apparent that the bond underwriters also have a substantial liability for both the provisions of the participants contracts and for representations made to purchasers of the securities issued on the WPPSS project. Now that the facts are beginning to demonstrate that responsibility is distributed among a large number of entities. the original position of the 88 becomes more important. Despite serious question as to the validity of some. if not all of the 88 contracts. these distributors have consistently taken the reasonable position that they were not opposed to accepting a fair share of the actual cost of construction and termination of the WNP 4 and 5 plants. Litigation now seems to be the least satisfactory device for resolution of the differences among the parties and . claimed beneficiaries of 4 and 5. Leaving aside the questions of commingling of WPPSS assets and the questionable enforceability of the bonds against the 88 or perhaps even WPPSS. . the other complexities would appear to be better handled by a negotiated agreement among the groups involved on sharing the loss on 4 and 5. While I do not speak for any of the participants. I am convinced that an initiative by the Administrator of BPA seeking a conference toward negotiated settlement would be well received. BPA. as the prime mover of WPPSS. should probably chair such a meeting and the 88. the bond underwriters. bond trustees. involved federal agencies. and perhaps even official representatives of the states of the Northwest should be particiPants. I fear that without such a conciliation. the holders of many of the bonds will be left without recourse. except possibly against the underwriters. I urge you to give such a conference serious consideration and I pledge my cooperation in any way possible to assist in the fair resolution of the matter. The opportunity to preserve public and nuclear power in the Northwest and perhaps in a much wider area should be. from your own standpoint. worth the effort in itself. Any early conference could save enormous litigation expense. materially shorten the time necessary to resolve the matter. and provide a balanced solution to all parties concerned. I shall be contacting you further regarding this proposal and look forward to your response. Sincerely.