PR 07 04 BONNEVILLE POWER ADMINISTRATION FOR IMMEDIATE RELEASE: THURSDAY, Jan. 22, 2004 Contact: Mike Hansen | , BPA (503)-230-5131     Settlement fails to earn regional approval PORTLAND, Ore. - A deadline passed on a proposed settlement that could have brought wholesale power rates down several percentage points. The Bonneville Power Administration announced today that the region’s utilities did not settle lawsuits over the level of BPA benefits going to the residential and small-farm consumers of the region’s investor-owned utilities. Midnight Jan. 21 was the deadline for signing on to the settlement, which was crafted over several months by representatives of public and private power, state utility commissions and BPA. Eighty-six public utilities (which included some non-litigants) expressed formal support for the proposal, and six expressed opposition. Since unanimous support from the litigants was required, the settlement did not succeed. “I am disappointed that the settlement proposal was not adopted,” said BPA Administrator Steve Wright. “We believe the proposal offered the best opportunity for near-term rate relief for the region’s public power customers. Still, I want to thank those who took the time to negotiate the settlement and those who carefully considered it.” In the absence of a settlement, BPA will continue to implement its existing power contracts and to pursue stringent cost management measures, including those that were part of the settlement proposal. Had the proposal succeeded, BPA’s wholesale power rates would have dropped by nearly 7 percent, retroactive to Oct. 1, 2003. When the settlement proposal was first released for review last fall, rates were projected to go down approximately 10 percent with approval of the settlement. Since then, fiscal year 2004 rates have gone down approximately 3 percent due to various adjustments. The proposed rate decrease would have been possible largely due to the elimination of $200 million in payments to the investor-owned utilities and the deferral of another $270 million of their benefits into the five-year rate period beginning in 2007. With the demise of the settlement proposal, no more adjustments will be made for fiscal year 2004 rates. BPA will examine any new settlement proposal that surfaces if it has broad public power support as well as the support of the region’s investor-owned utilities and state utility commissions, Wright said. He cautioned that any new proposal would have to meet several tests. It would have to provide near-term rate relief, and it could not rely on abrogating existing contracts. It could not ignore environmental commitments, jeopardize reliability or increase the risk of BPA failing to pay the U.S. Treasury on time and in full. But BPA will not have as much time to spend on settlement issues according to Wright. “Our attention to the future needs to increase,” he said. “There are major issues on the horizon, including power rates after 2006, post-2005 transmission rates, implementation of a cost-effective fish and wildlife program that meets performance objectives and assurance that cost-effective electricity infrastructure investments are implemented. “While we will not close the door on discussion of any reasonable proposal, it will no longer be our primary focus,” said Wright. “We must now increase our focus on 2006 and beyond because there are many issues that significantly affect the region.” While issues determining future rates will get increasing attention, he said BPA will continue to pursue actions that could provide near-term rate relief and will continue to work with its customers and other regional stakeholders to find additional cost savings and revenue enhancements. “We made a commitment to stringently manage our costs, and that commitment does not depend on the success or failure of the proposed settlement,” Wright said. Submitted for distribution on 01-22-2004 at 10:03 AM

Bonneville Power Administration, 905 N.E. 11th Avenue, Portland, Oregon 97232 Mailing Address: Media Relations - DM7, P.O. Box 3621, Portland, OR 97208-3621 Phone: (503)230-5131 FAX: (503) 230-5884 Web Site: http://www.bpa.gov