[Congressional Record Volume 141, Number 112 (Wednesday, July 12, 1995)]
[House]
[Pages H6899-H6900]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                BONNEVILLE POWER CONTRACTUAL OBLIGATIONS

  The SPEAKER pro tempore (Mr. Longley). Under a previous order of the 
House, the gentleman from Nebraska [Mr. Christensen] is recognized for 
5 minutes.
  Mr. CHRISTENSEN. Mr. Speaker, I rise today to denounce one of the 
most outrageous and arrogant abuses of government power that I have 
witnessed since coming to Washington. Sadly, it involves a U.S. 
Government agency, the Bonneville Power Administration, or better known 
as BPA, which unilaterally has refused to honor an electric power 
contract with a Nebraska company, Tenaska Washington Partners II. This 
decision, if not reversed immediately, could wind up costing the 
American taxpayer over $1 billion.
  To give you a little background on this situation, back in 1991, 
Bonneville Power issued a request for proposals. They were needing to 
build some more power into their unit and so they were looking to 
expand and they sent out a request for proposals. Over 102 bidders 
responded. Of those 102 bidders, Tenaska won the bid. Well, they went 
ahead and constructed the facility and are almost 70 percent complete 
by now. Just last month they went over the 70 percent completion.
  In April 1995, Bonneville Power informed Tenaska that the power 
administration no longer intended to honor the power contract, claiming 
recent dramatic reductions in projected demand for Bonneville Power. In 
subsequent correspondence and meetings, Bonneville Power repeatedly has 
stated that it will not perform its obligations under the power 
purchase agreement.
  Bonneville's action here constitutes a willful repudiation of a 
valid, binding contract. Bonneville Power has never alleged, nor can 
they allege, that there has been any fault on the part of Tenaska. In 
so doing, Bonneville Power violates the principle of the sanctity of 
contract, a principle that is so fundamental under U.S. law that it 
underlies every business transaction.
  Indeed, the U.S. Secretary of Energy, the head of the very agency 
which supervises Bonneville Power, recently has explained that breaking 
a contract in the power industry could substantially inhibit the 
development of more competitive wholesale power markets, concluding 
that a competitive market simply will not flourish if the integrity of 
contractual agreements is subject to question.
  Well, that is exactly what has happened here, Mr. Speaker. If 
Bonneville Power fails to correct what has gone on in the past few 
months, Tenaska will have no other recourse than to resort to 
litigation. With the law clearly on Tenaska's side, Bonneville Power 
should expect that any forum which hears this dispute will likely hold 
Bonneville Power liable to and for damages, perhaps in excess of $1 
billion.
  Why $1 billion? Well, this represents the amount of money already 
expended by Tenaska in construction of its power facility, plus the net 
present value of what it could expect to receive under the contract. 
The ability of an aggrieved contracting party to obtain such damages is 
a fundamental principle of American contract law.
  Bonneville Power officials have claimed that there is not enough 
money in the power administration's trust fund to pay for such damages. 
Accordingly, American taxpayers would be forced to bail out Bonneville 
Power to the tune of over $1 billion. The money likely would come from 
either the Federal
 Judgment Fund supported by general tax dollars, or from a significant 
rate hike on Bonneville Power customers.

  By taking this action, Bonneville perhaps believes that it is wiser 
to incur a greater expense later via litigation when a far lesser 
expense can be incurred today through honoring the contract. What I 
think is probably more likely the situation that Bonneville Power has 
chosen here is they would prefer that the money come from another part 
of the government instead of their own budget.
  Such reasoning I believe would be an extraordinary abuse of power. I 
know that the people of Nebraska, the people that I represent, do not 
want to be stuck paying the tab for Bonneville Power's unwillingness to 
live up to its contractual agreement, a signed document. I doubt that 
any other taxpayer in this country would be pleased that Bonneville 
Power is spending our money in such an unwise fashion.
  I believe the only logical solution is for Bonneville Power to honor 
its written contract with Tenaska. In order to 

[[Page H 6900]]
abide by the law, retain its political viability, and provide for 
fundamental fairness to its contractors, Bonneville Power must honor 
its contractual obligations by enabling the Tenaska plant to produce 
power and to serve Bonneville Power and its customers just like they 
agreed to and just like they have and will perform.
  You know, Mr. Speaker, in a day and a time when the American people 
are wondering about the efficiency of the Department of Energy, I 
believe that them stepping forward and telling one of their agencies to 
honor the contract like they agreed to would be a good step in the 
right direction.

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