April 11, 1997

A copy of this letter was sent to each member of the Northwest’s House delegation

Thank you for joining the other members of the Northwest House delegation in apprising us of your principles, priorities and anticipated schedule for developing legislation to restructure the region’s energy system and the Bonneville Power Administration. It is reassuring to us that the delegation is unified in recognizing the advantages that will accrue by retaining the benefits of the federal hydroelectric system for the Pacific Northwest, even in a competitive electricity marketplace. We agree with this objective, as well as with the necessity of ensuring that the region’s obligations to the Federal Treasury continue to be repaid in full and on time.

We have charged our representatives on the Northwest Energy Review Transition Board with the tasks of implementing the recommendations made by the Comprehensive Review steering committee, overseeing the development of the federal power marketing subscription process, and devising legislative recommendations for you and your colleagues. The Transition Board has held three public meetings already and has endorsed work plans for developing the federal power marketing subscription process and for defining the issues associated with the legal separation of Bonneville’s transmission and power marketing functions. Both processes will have regularly scheduled public meetings over the next several months.

Although we understand the pressures you face with the House’s anticipated legislative schedule, and will do everything we can to provide you with legislative recommendations by June 1, 1997, it will be a difficult task. There are many reasons for this, not the least of which is the wide range of opinions within Bonneville’s customer groups and other interested parties about the need for and scope of federal legislation.

We know that the House likely will take up national electricity restructuring legislation later this year and that provisions dealing with the Bonneville Power Administration and the Northwest’s energy system will be considered at that time. Although the region has not reached consensus on a package of legislative recommendations yet, the Transition Board is working with Bonneville, the various customer groups, and other interested parties to develop such a package. It is clear to us that the region cannot afford to be unprepared for the House debate when it occurs, and we will endeavor to assist you in every possible way to represent the Northwest’s interests. We look forward to working with you to ensure that regional interests understand the need for prompt action.

Your letter also mentions that you are seeking recommendations on issues that the Comprehensive Review either failed to reach consensus on or did not address. The two major issues in these categories are river governance and stranded costs of existing assets. With regard to river governance, the Transition Board recently heard a proposal from its staff to convene a meeting to discuss fish and wildlife issues in the context of river governance. Indian tribes, federal and state representatives, and conservation, utility and industrial interests would be invited to attend. The Board will take up the matter again at its April meeting.

We also realize that the tribes, as sovereign nations, must play a major role in any river governance process. Accordingly, we have invited tribal leaders to meet with us on June 3, 1997, to discuss these important issues. This meeting was scheduled before we received your letter, so any recommendations we are able to forward to you on or before your June 1 deadline likely will not fully address river governance. We will, however, apprise you of any progress made in our June 3rd meeting with the tribal leaders as soon thereafter as possible.

With regard to stranded costs, the final report from the steering committee noted that if its recommendations are prudently implemented, the risk that Bonneville would need to seek stranded cost recovery would be reduced dramatically. While the Transition Board is working to ensure that the subscription process will be successful, it understands that there likely will be a national debate in Congress over the issue of stranded costs, and that you and your colleagues will be involved in that debate. We recognize that the region may have to investigate more fully options associated with stranded costs.

Thank you again for your interest in this critical Northwest issue. We will make every effort to provide recommendations to you in a timely manner. Please continue to view us as a resource on which you can rely for information on any Columbia River Basin issue.

Sincerely,

Philip E. Batt Governor of Idaho	Marc Racicot Governor of Montana
John A. Kitzhaber Governor of Oregon	Gary Locke Governor of Washington