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| Northwest power planners will convene management experts to seek further budget cuts for Bonneville Power Administration. The review's concern is the For more information: Northwest Power Planning Bonneville Power Administration |
If the Bonneville Power
Administration is going to fulfill its set of recommendations from
last year's Comprehensive Review of the Northwest Energy System,
it needs a leaner budget. These recommendations include:
successfully carrying out the federal power marketing subscription
process and resolving future fish and wildlife recovery issues. To
make new budget cuts, the governors of Idaho, Montana, Oregon and
Washington have asked the Northwest Power Planning Council to work
with Bonneville to establish a cost-control forum. Subsequently,
Oregon Representatives Peter DeFazio and Bob Smith called upon
Bonneville and the Council to convene a group to develop
recommendations regarding areas where Bonneville's costs could be
reduced.
In response, representatives of the Council and Bonneville met to discuss a cost review mechanism for Bonneville. The purpose would be to provide a baseline of future cost trends and recommendations on cost control objectives. This baseline will serve as a fundamental input to the subscription process, through which Bonneville's federal power is sold, as well as discussions of Bonneville transition cost recovery and future fish costs. The budget review would be a collaborative activity of the Council and Bonneville, with the involvement of customers, tribal representatives and key interest groups. The recommendations developed by the review will be given to Bonneville's administrator. The review's concern is the effective management of Bonneville's costs. The focus of the review would be Bonneville's management of its controllable operating and capital costs. These include Bonneville's internal costs, as well as the capital and operating costs of the U.S. Army Corps of Engineers, the Bureau of Reclamation, the Washington Public Power Supply System and other suppliers. The review will be concerned with the efficiency of business operations, not Bonneville's business strategy or opportunities for increasing revenues. Nor would the review be concerned with changes in Bonneville's statutory mission and responsibilities, such as irrigation repayment or the determination of fish and wildlife recovery measures. While there may be opportunities for reducing Bonneville's costs in these areas, these are questions of policy as opposed to management. The initial focus of the budget review would be on the Fiscal Year 1998 to Fiscal Year 2003 time period to complement Bonneville's ongoing internal budget planning process. This work will need to be accomplished by early fall of this year. To support a successful subscription process, however, the review must focus on the fundamental drivers of Bonneville's costs and its cost structure during the initial subscription period of Fiscal Year 2002 to Fiscal Year 2006. Work on this phase of the review is expected to extend to the end of 1997. Consultations To define and refine the review, the Council and Bonneville will consult regularly with Bonneville customers, tribal representatives and interest groups. The purpose of the consultations will be: first, to help scope the review and focus its attention on those areas most fruitful for review; second, to provide ongoing feedback on the progress and interim findings of the review; and third, to provide feedback on the review's recommendations. To the greatest extent possible, consultations will be integrated with regular meetings of the consulting organizations. Management of the Review The review will be overseen by a ?management committee,? including a senior Bonneville manager, the Council's Power Committee and four to five outside members. The outside members will be chosen on the basis of their management or financial experience. The intent is to tap the expertise of individuals who have managed cost reductions in large competitive industries and can bring that experience to bear on Bonneville's situation. At least one of the members will be chosen for utility experience. The outside members will not be affiliated with Bonneville customers or other regional interest groups. This is intended to keep the management committee small and ensure its objectivity. The functions of the management committee will be: first, to establish the scope of the review and the means of carrying it out, taking into account information received through consultations with the customers, tribal representatives and other interests; second, to monitor the progress of the review and provide interim direction; and, third, to make recommendations to the Bonneville administrator based on the findings of the review, taking into account viewpoints expressed by customers, tribal representatives and other interests during consultations. The review will be staffed primarily by Bonneville and Council employees. The review will, at the discretion of the management committee, be able to call on outside, independent consultants to provide analysis of issues as required. |
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