Power Marketing Administration

Highlights of Program Changes ($ in millions)

Page 98

deregulation stems largely from the 1992 Energy Policy Act and ensuing Federal Energy Regulatory Commission (FERC) orders, (FERC orders 888 and 889) requiring separation of utilities' power and transmission functions. As a Federal agency, Bonneville is not bound by law to comply with the orders, but chose to comply with the FERC orders because it views compliance as essential to successfully compete in the electric power market of the future. Further, Bonneville supports DOE's October 1995 "Power Marketing Administration Open Access Policy".

Bonneville's budget also reflects the utility business and public benefits forecast in Bonneville's 1996 rate case filed with FERC which became effective October 1, 1996. Bonneville's budget estimate will have to change to enable Bonneville to meet its statutory responsibilities and fulfill its legislative and executive obligations as the electric utility industry evolves. This changing environment includes the final recommendations of the Comprehensive Review of the Northwest Energy System (the Regional Review) which was convened on January 4, 1996, by the governors of Idaho, Montana, Oregon, and Washington. The Regional Review was conducted by a special independent steering committee. It served as a forum for discussion about the restructuring of the electric utility industry and what it will mean to the Pacific Northwest. The governors received the Regional Review proposal on December 12, 1996. The proposal recommends legislatively splitting Bonneville into two agencies. The report recognizes Bonneville's need to recover costs, but no process is outlined. The review does not address fish and wildlife funding after 2001 or river governance. The governors appointed a transition board to prepare a strategic plan on implementing the regional review's report. The Northwest Congressional delegation asked the Transition Board in June, 1997 to initiate a review of Bonneville's cost management issues. A report on these activities will be submitted to Congress by March, 1998.

Alaska Power Administration

No funds requested due to the termination of the agency.
Southeastern Power Administration

Program direction increases $0.1 million from $4.3 million to $4.4 million due to
the cost of living raise and the purchase of ADP equipment/software, and
inflation increases. This increase is offset by a $5.8 million decrease in purchase
power and wheeling which is comprised of an increase of $2.2 million in the total
program ($43.7 million in FY 1998 to $45.9 million in FY 1999), due to
purchase power requirements for a full year's operation of the Russell project
offset by an $8.0 million increase in the use of reimbursements in FY 1999
necessary to cover the entire purchase power requirement of the Russell project.
Southwestern Power Administration

Operations and maintenance increases by $0.3 million, from $2.4 million to $2.7
million, due to efforts to maintain the transmission system right-of-ways, the
replacement of deteriorated poles and related hardware, and vehicle and
equipment maintenance. Construction overall has no significant change at $0.1
million increase from $6.7 million to $6.8 million. However, while vehicle
replacements decrease by 44 percent, transmission system replacements increase
by 7 percent. Program Direction decreases by $0.9 million, from $17.3 million to
$16.4 million, due to Southwestern's efforts to streamline the organization by
reducing salary, benefits, travel and relocation expenses due to FTE reductions
and by negotiating a new building lease. This streamlining effort is designed to
shift funding from program direction to direct program support of transmission

-$13.5

-$5.7

-$0.5

system replacements in the Operations and Maintenance and Construction
budgets.

Western Area Power Administration

Construction, Rehabilitation, Operation and Maintenance Program: Program
Direction decreases $2.5 million from $109.8 million to $107.4 million due to
decreases of $3.7 million permanent authority authorized for the Boulder Canyon
Project and $0.9 million in support services offset by an increase of $2.1 million
in salaries, benefits, and travel due primarily to government-wide pay raises.
Operation and Maintenance decreases $4.7 million from $41.2 million to $36.5
million due to a decrease of $1.9 million in permanent authority for the Boulder
Canyon Project and a decrease of $2.8 million in supplies, materials, and
equipment. Purchase Power and Wheeling decreases $1.0 million from $54.9
million to $53.9 million due to expansion of non-appropriated financing of $2.0
million in the Pick-Sloan Missouri River Basin offset by an increase of $1.0
million in the Central Valley Project due to constraints on their alternative
financing programs. Construction and Rehabilitation decreases $3.4 million from
$24.2 million to $20.8 million due to continuation of aggressive reduction in
these capital investments in order for Western and its customers to remain as
competitive as possible in the rapidly changing electric utility industry. The Utah
Mitigation and Conservation account decreases $0.6 million from $5.6 million to
$5.0 million as necessary to support the Administration's balanced budget goals.
Colorado River Basins Power Marketing Fund

The net budget authority of -$16.1 million in FY 1998 remains the same in
FY 1999 as the operating expenses and offsetting collections are both decreasing
by $24.1 million. The operating expenses are decreasing from $124.8 million to
$100.7 million due primarily to a decrease of $25.8 million for purchase power
and $2.2 million in interest payments to the Treasury offset by an increase of $1.0
million in program direction and $2.9 million for system replacements, supplies
and materials.

Bonneville Power Administration

Power Business Line program activity increases $24.0 million from $50.0 million
to $74.0 million due to additional improvements and replacements of existing
U.S. Bureau of Reclamation and Corps of Engineers hydroelectric projects.
Transmission Services decreases $10.9 million from $146.7 million to $135.8
million due to the implementation of reliability centered maintenance and
replacement practices which dictate that non critical transmission equipment will
only be replaced at failure. Conservation and Energy Efficiency activities
decrease $17.3 million from $26.2 million to $8.9 million due to the closeout of
conservation acquisition programs consistent with BPA's new approach to
developing conservation resources though the use of non-government funds.

-$12.1

$0.0

-$6.0

Mission

Federal Energy Regulatory Commission

The Commission regulates essential interstate aspects of four of the nation's critical energy industries: electric power transmission and sales for resale, natural gas transportation and sales for resale, oil pipeline transportation, and nonfederal hydroelectric power. The Commission ensures that the rates, terms and conditions of service for the electric power, natural gas, and oil industries are just and reasonable and not unduly discriminatory or preferential, and that licensing, administration, and safety actions for the hydropower industry and other approvals for all four industries are consistent with the public interest.

Program Overview In FY 1999, the Commission will maintain its focus on environmental issues and compliance in all program areas. In addition, the Commission will continue to encourage competitive markets where appropriate, while maintaining more traditional forms of regulation where competitive markets do not exist or market forces do not work to protect the public interest. This will be accomplished through on-going implementation of the Energy Policy Act of 1992 and other authority under the Federal Power Act, including reducing barriers to competition and generation in the electric power industry. Since passage of the Act, the Commission has aggressively pursued policies designed to foster competition in wholesale electric power markets. In April, 1996, the Commission issued Order No. 888, which requires all public utilities that own, control, or operate electric transmission facilities to provide nondiscriminatory open access transmission services and allows utilities to seek full recovery of stranded costs. A companion order, Order No. 889, requires nondiscriminatory access to information about electric transmission facilities. With implementation of these initiatives, the Nation will see the most sweeping transformation in the electric power industry since the passage of the Federal Power Act in 1935.

Budget Overview

This expanded competition also is changing the economics and conditions under which
hydroelectric projects are developed and operated. Passage of Order No. 596 in October,
1997 gives the hydroelectric power industry additional alternatives for preparing project
proposals. These alternatives are designed to help resolve issues, achieve settlements, and
complete environmental documents before applications are filed, to speed Commission
decisions after filing.

The Commission's budget request for FY 1999 is $168.9 million, about a 4 percent increase
over total FY 1998 funding, which included the use of prior years' unobligated balances. This
request funds 1,377 FTEs, the same number as in FY 1998. The Commission will recover the
full cost of its operations through a system of annual charges and fees, to be retained and
made available until expended without further appropriation in FY 2000.

Highlights of Program Changes ($ in millions)

The FY 1999 budget request reflects the Commission's changing regulatory priorities, resulting from three factors: 1) the need to process the huge surge in workload and respond to the changing needs of the electric power industry as the Commission continues to implement the restructuring of the industry and addresses major issues such as open-access and stranded costs; 2) the pursuit of new strategic and structural arrangements to further the competitive initiatives of Order Nos. 436, 500, and 636 for the natural gas pipeline industry; and 3) the filing of the first group of relicense applications for projects with licenses that expire between 2000 and 2010, many of which are large capacity projects composed of several developments.

Mission

Nuclear Waste Disposal Fund

The mission of the Office of Civilian Radioactive Waste Management is to manage and dispose of the Nation's spent nuclear fuel and high-level radioactive waste. The Office Civilian Radioactive Waste Management (OCRWM) provides leadership in developing and implementing strategies to accomplish this mission to assure public and worker health and safety, protect the environment, merit public confidence, and are economically viable. Program Overview The office was established by the Nuclear Waste Policy Act of 1982. The Act established responsibility and a framework to provide for the permanent disposal of spent nuclear fuel from commercial utilities and high-level radioactive waste generated from atomic energy defense activities. The Nuclear Waste Policy Amendments Act of 1987 designated the Yucca Mountain, Nevada, site for detailed scientific investigation to evaluate the site's suitability for a geologic repository. Activities performed by the program include core scientific work and additional excavation of the Exploratory Studies Facility at Yucca Mountain, waste package and repository design, and planning for the transfer and transportation of waste to the Federal Government from the owners and generators of spent fuel and high-level radioactive waste. OCRWM continues to focus on the schedule and milestones described in the draft revised Program Plan. The draft revised Program Plan refocused the program activities to emphasize core scientific activities at Yucca Mountain. The draft revised Program Plan defines four near-term objectives that will maintain the momentum toward a National decision on the geologic disposal option: complete the updating of the regulatory framework for the Yucca Mountain site; completion of the viability assessment for Yucca Mountain in 1998; recommendation of the repository site to the President in 2001 if the site is suitable; and submission of a License Application for constructing a repository to the Nuclear Regulatory Commission in 2002.

Budget Overview

The Civilian Radioactive Waste Management Program has been funded through two appropriations: the Nuclear Waste Fund, and the Defense Nuclear Waste Disposal appropriation. The Nuclear Waste Disposal Fund is financed by fees from the ratepayers of nuclear utilities. The Defense contribution is a general fund appropriation to offset the costs of disposing of the Department's high-level waste generated from atomic energy defense activities. The FY 1998 appropriations provide a total funding level of $346.0 million. Of the $346.0 million appropriated, $267.7 million is allocated to Yucca Mountain Site Characterization efforts which will support the completion of the Viability Assessment in 1998. $5.9 million will be allocated to the continuation of waste acceptance, storage and transportation activities. The remaining funding of $72.4 million will directly support Site Characterization and WAST activities; and fund federal salaries and other program direction activities. The program is continuing prelicensing activities with the Nuclear Regulatory Commission and regulatory interaction with the Environmental Protection Agency. Upon the completion of its evaluation of the viability assessment, the program will prepare the additional information required for a suitability determination by the Secretary of Energy and

49-799 98-12