Federal Electric Power: Operating and Financial Status of DOE's Power
Marketing Administrations (Fact Sheet, 10/13/95, GAO/RCED/AIMD-96-9FS).

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  RCED/AIMD-96-9FS
     TITLE:  Federal Electric Power: Operating and Financial Status of 
             DOE's Power Marketing Administrations
      DATE:  10/13/95
   SUBJECT:  Electric utilities
             Competition
             Utility rates
             Government sponsored enterprises
             Appropriated funds
             Electric power transmission
             Electric power generation
             Hydroelectric powerplants
             Agency debt
             Offsetting collections

             
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Cover
================================================================ COVER


Fact Sheet for the Honorable
Richard M.  Burr, House of Representatives

October 1995

FEDERAL ELECTRIC POWER - OPERATING
AND FINANCIAL STATUS OF DOE'S
POWER MARKETING ADMINISTRATIONS

GAO/RCED/AIMD-96-9FS

Status of DOE's PMAs

(307335)


Abbreviations
=============================================================== ABBREV

  APA - Alaska Power Administration
  BPA - Bonneville Power Administration
  DOE - Department of Energy
  EIA - Energy Information Administration
  GAO - General Accounting Office
  IBWC - International Boundary and Water Commission
  kWh - kilowatt hour
  MW - megawatt
  MWh - megawatt hour
  PMA - power marketing administration
  PP&E - property, plant, and equipment
  PWUA - Provo River Water Users' Association
  SEPA - Southeastern Power Administration
  SRP - Salt River Project
  SWPA - Southwestern Power Administration
  WAPA - Western Area Power Administration
  WPPSS - Washington Public Power Supply System

Letter
=============================================================== LETTER


B-265626

October 13, 1995

The Honorable Richard M.  Burr
House of Representatives

Dear Mr.  Burr: 

This report responds to your request for information on the
Department of Energy's (DOE) five power marketing administrations
(PMAs).  Specifically, we are providing you with operating and
financial information that covers fiscal years 1985 through 1994.  We
are also providing information on competitive issues facing the PMAs. 

The first section of this letter--operating information--includes a
description of facilities used by the PMAs to sell power and the
customers served by the PMAs.  With some exceptions, the PMAs sell
and transmit electricity from multipurpose federal hydropower
facilities that are owned and operated by other federal agencies. 
The PMAs give preference in the sale of power to publicly owned power
systems; such sales accounted for about 63 percent of the PMAs' power
sales in 1993. 

The second section--financial information--discusses the manner in
which the PMAs finance their operations, the revenues and expenses
associated with their operations, and the manner in which they repay
their debts.  The PMAs have financed all capital investments through
appropriations, other indebtedness to the U.S.  Treasury, and
financial obligations to nonfederal power projects--all of which
comprise the PMAs' debt.  About two-thirds of the PMAs' cumulative
debt (approximately $23 billion) was outstanding, as of September 30,
1994.  The PMAs are required to repay their debt, with interest,
using revenues generated from power sales.  The weighted average
interest rates on the portion of the PMAs' outstanding debt owed to
the Treasury (approximately $15 billion) are below the average rate
on the outstanding long-term debt paid by the nation's largest
investor-owned utilities. 

The final section--competitive issues--describes the increasingly
competitive markets in which the PMAs operate and the potential
effect of these markets on the PMAs.  In general, the PMAs remain
among the sellers of electricity at the lowest cost.  Their ability
to operate as low-cost sellers stems from several factors, including
the inherent low cost of hydropower relative to other generating
sources, federal financing at relatively low interest rates,
flexibility in the repayment of principal on the Treasury portion of
the PMAs' debt, the PMAs' tax exempt status, and operating budgets
that seek to break even rather than earn a profit or a return on
investment.  Because the PMAs' debt is at low interest rates, four of
the five PMAs have been able to carry high levels of debt without a
corresponding increase in financial risk.  However, high levels of
debt currently pose problems for one PMA and could pose problems for
other PMAs in a more competitive environment. 


   OPERATING INFORMATION
------------------------------------------------------------ Letter :1

The PMAs--Alaska Power Administration (Alaska), Bonneville Power
Administration (Bonneville), Southeastern Power Administration
(Southeastern), Southwestern Power Administration (Southwestern), and
Western Area Power Administration (Western)--were established from
1937 through 1977 to sell and transmit electricity generated mainly
from federal hydropower facilities.\1 With the exception of Alaska,
the PMAs do not own or operate any of the power generation
facilities.\2 Most of these facilities were constructed and continue
to be owned and operated by the Department of the Interior's Bureau
of Reclamation (Bureau) or the U.S.  Army Corps of Engineers
(Corps).\3 The Bureau and the Corps constructed these facilities as
part of a larger effort in developing multipurpose water projects
that have other functions in addition to power generation, including
flood control, irrigation, navigation, and recreation.\4

The PMAs, with the exception of Southeastern, have constructed and
continue to own and operate a combined total of nearly 33,000 miles
of transmission lines to carry out the PMAs' role in selling and
transmitting electric power.  Power sold by the five PMAs accounted
for about 3 percent of all power generated in the United States in
1993. 

The PMAs vary widely in their operating characteristics and scope of
activities.  Alaska has 88 miles of transmission lines, and sales are
limited to two areas in the State of Alaska.  Southeastern owns no
transmission facilities and relies on the transmission services of
other utilities to transmit the power that it sells to customers in
all or parts of 11 states.  Southwestern is comparable to
Southeastern in terms of sales volume but owns and operates about
1,400 miles of transmission lines in all or parts of six states. 
Western owns and operates over 16,000 miles of transmission lines
serving customers in all or parts of 15 states.  Bonneville owns and
operates over 14,000 miles of transmission lines and sells to
customers in all or parts of eight states.  In 1994, Bonneville
accounted for about 69 percent of total PMA revenues. 

Figure 1 presents the service area and fiscal year 1994 operating
revenue for each PMA.  In addition, table I.2 in appendix I shows
some operating statistics including the amount of generating capacity
used to generate the power sold by the PMAs, and the number of power
plants, miles of transmission lines, and employees for each PMA, as
of September 30, 1994. 

   Figure 1:  PMAs' Service Areas

   (See figure in printed
   edition.)

Source:  Developed by GAO from data provided by DOE and the PMAs'
1994 annual reports. 

Each PMA has an administrator who is appointed by the Secretary of
Energy.  Each administrator is authorized to make decisions regarding
the operation of the PMA, although the authority and duties of the
administrator are subject to the supervision and direction of the
Secretary.  The administrators testify before the Congress on the
PMAs' budgets, which are submitted as part of DOE's annual federal
budget.  DOE establishes each PMA's personnel limits as part of DOE's
total personnel ceiling.  The administrator also has authority to
propose rate adjustments to meet projected revenue needs.  Except for
Bonneville, the Deputy Secretary of Energy is responsible for
approving rate adjustments for the PMAs on an interim basis.  The
Federal Energy Regulatory Commission has authority over final
approval for all of the PMAs' rates.  In addition, the administrators
work with numerous federal, state, and local agencies on issues such
as flood control, fish and wildlife protection, and irrigation.  For
example, Bonneville is required to work with the Pacific Northwest
Electric Power and Conservation Planning Council, which the Congress
created in 1980 to coordinate power planning and fish and wildlife
protection in the Pacific Northwest, among other things.\5

As required by law, all PMAs give preference in the sale of power to
public power customers--customer-owned cooperatives, public utility
and irrigation districts, and municipally owned utilities.\6 Public
power customers purchased about 63 percent of the power sold by the
PMAs in fiscal year 1993.\7 The remainder of the power is purchased
by state and federal agencies and nonpreference customers, such as
investor-owned utilities and industrial companies.  Figure 2 shows
the percentage of power sold by all the PMAs to each type of PMA
customer during fiscal year 1993 in megawatt (MW) hours (MWh).\8
(Table I.3 of app.  I shows the quantity of power sold and associated
revenues for all PMAs for each type of customer during fiscal year
1993.)

   Figure 2:  Percentage of Total
   Power Sold by PMAs to Each Type
   of Customer During Fiscal Year
   1993

   (See figure in printed
   edition.)

   Source:  GAO's analysis of data
   provided by DOE's Energy
   Information Administration.

   (See figure in printed
   edition.)

As shown in figure 3, as a whole, public power customers are not
dependent on the PMAs as their sole source of power.  For example, as
shown in figure 3, in fiscal year 1993, Bonneville's public power
customers obtained about 46 percent of their overall power needs from
sources other than Bonneville, while Southeastern's public power
customers obtained about 95 percent of their total power needs from
sources other than Southeastern.\9 At the same time, however, some of
the PMAs' public power customers purchase a large percentage of their
power from PMAs.  For example, during fiscal year 1993, more than 80
percent of Bonneville's public power customers obtained more than 75
percent of their total power needs from Bonneville.  Table I.4 of
appendix I shows the quantity of power purchased by public power
customers from PMAs and the total quantity of power obtained by the
same customers from all sources during fiscal year 1993.  Table I.5
of appendix I shows the number of public power customers for each PMA
and the percentage of the customers' overall power needs that were
purchased from the PMA. 

   Figure 3:  PMAs' Public Power
   Customers' Purchases of PMA
   Power Versus Total Power
   Obtained From All Sources for
   Fiscal Year 1993

   (See figure in printed
   edition.)

Note:  Non-PMA sources include customers' self-generation and power
purchases from other sources. 

Source:  GAO's analysis of the PMAs' and the Energy Information
Administration's data. 


--------------------
\1 Nuclear-fired and coal-fired power plants account for less than 5
percent of the generating capacity used to generate the power sold by
the PMAs.  Table I.1 of app.  I includes the generating capacity for
all PMA-related facilities. 

\2 For financial reporting purposes, all power-related capital
expenditures made by the PMAs or the operating agencies are shown as
assets on the consolidated financial statements of the PMAs and the
operating agencies. 

\3 In addition to the Bureau and the Corps, four other agencies are
responsible for the day-to-day operations of 5 of the 135 facilities
used for generating power that the PMAs market.  These other agencies
are shown in table I.1 of app.I.  We refer to these six agencies as
the operating agencies. 

\4 Responsibility for all functions of the facilities resides with
the operating agencies of the hydropower facilities. 

\5 All of Bonneville's proposals involving major resource decisions
must be consistent with the Council's plan--those plans that are
inconsistent must receive specific congressional authorization. 

\6 The PMAs may also give preference to units of state governments
and the federal government. 

\7 We focused on public power customers because (1) public power
customers generally purchase the majority of PMA-provided power, (2)
investor-owned utilities generally only supplement their power needs
with purchases from the PMAs, and (3) end users (generally state and
federal agencies and industrial customers) do not report information
to DOE on energy usage and thus data are not available to determine
whether these customers purchase power from sources other than the
PMAs. 

\8 A megawatt is 1 million watts; a watt is the basic unit used to
measure electrical power.  A megawatt hour is equal to 1 megawatt of
power applied for 1 hour. 

\9 The amount of power purchased from the PMAs by the PMAs' customers
varies from year to year depending on conditions such as water flow
that may affect the amount of power that a PMA can sell. 


   FINANCIAL INFORMATION
------------------------------------------------------------ Letter :2

The Congress appropriates money each year to the PMAs for
power-related purposes and to the federal operating agencies for both
power and nonpower purposes.  The PMAs, other than Bonneville,
generally receive appropriations annually to cover operations and
maintenance expenses and capital investments in their transmission
assets.\10 \11 \12 In fiscal year 1994, the PMAs received about $328
million in appropriations.  The operating agencies receive
appropriations for all aspects of the multipurpose hydro projects,
including operations, maintenance, and capital expenses related to
power and also to other functions, such as irrigation and navigation. 
The operating agencies expended about $409 million on power-related
operating and capital expenses and allocated these expenses to the
PMAs for repayment during fiscal year 1994.  The PMAs have no control
over the amount of generation investment incurred by the operating
agencies, which, by law, becomes repayable through rates charged by
the PMAs. 

PMAs, unlike most other federal agencies, are required by law to
repay their appropriations as well as appropriations expended by the
operating agencies for power-related purposes.\13 The PMAs repay
appropriations expended for operations and maintenance expenses in
the same year that the expenses are incurred.  In contrast, the PMAs
repay appropriations expended for capital investments and other debt,
with interest, over the repayment period as prescribed by law and/or
DOE order.\14 Figure 4 shows the appropriations received by each PMA
for operations and maintenance expenses and for capital investments
in transmission facilities in fiscal year 1994.  Figure 4 also shows
the appropriations that were expended by the operating agencies for
operations and maintenance expenses and for capital investments in
generation facilities during the same fiscal year.\15 Table II.1 of
appendix II shows this same information for fiscal years 1985-94. 

   Figure 4:  Appropriations
   Received by PMAs and
   Appropriations Expended by the
   Operating Agencies on
   Power-Related Costs During
   Fiscal Year 1994

   (See figure in printed
   edition.)

Source:  Developed by GAO from the PMAs' data. 

Legislation requires the PMAs to set their power rates at the lowest
possible level consistent with sound business principles.  The PMAs
do not set their rates to earn a profit.  Instead, they attempt to
generate revenues sufficient to recover all costs incurred as a
result of producing, marketing, and transmitting electric power,
including repayment of the federal investment and other debt with
interest.  DOE requires each PMA to annually prepare a repayment
study to test the adequacy of their rates and to show, among other
things, estimated revenues and expenses, estimated payments on the
federal investment, and the total amount of federal investment to be
repaid. 

The gross repayable investment assigned to be repaid by power
revenues totaled nearly $34 billion, as of September 30, 1994.\16
This amount includes $2.4 billion stemming from costs related to
irrigation that Bonneville and Western must repay.\17 PMAs had repaid
about $11 billion (32 percent) of the gross repayable amount leaving
more than $23 billion of outstanding debt, as of September 30, 1994. 
Figure 5 shows the gross repayable investment, the amount repaid, and
the outstanding repayable investment (debt) for each PMA, as of
September 30, 1994.  Table II.2 in appendix II shows this information
for fiscal years 1985-94. 

   Figure 5:  Gross Repayable
   Investment, Amount Repaid, and
   Outstanding Repayable
   Investment, as of September 30,
   1994

   (See figure in printed
   edition.)

\a This debt comprises appropriated debt only. 

\b Bonneville's outstanding debt comprises (1) appropriated debt
($6.8 billion), (2) Treasury bonds ($2.6 billion), (3) nonfederal
projects ($7.4 billion), and (4) irrigation expenses ($832 million). 

\c Western's outstanding debt comprises (1) appropriated debt ($2.1
billion) and (2) irrigation expenses ($1.6 billion). 

Source:  The PMAs' data. 

The federal dams from which the PMAs sell electricity also serve a
variety of nonpower purposes including flood control, irrigation,
navigation, and recreation.  The PMAs seek to balance the concerns of
the authorized competing uses of the projects in scheduling and
delivering power to their customers.  In addition to the $34 billion
invested in generation and transmission facilities, another $9.5
billion in appropriations has been expended to date by the operating
agencies for these nonpower purposes.  Unlike the appropriations used
for power generation and transmission, appropriations expended for
nonpower purposes are not repaid through power-related revenues. 
Figure 6 shows the percentage of appropriations expended by the PMAs
and the operating agencies for both power and nonpower purposes, as
of September 30, 1994.  Figure II.1 and table II.6 of appendix II
show appropriations expended by the PMAs and the operating agencies. 

   Figure 6:  Gross Appropriations
   Expended for Power and Nonpower
   Purposes for All PMAs, as of
   September 30, 1994

   (See figure in printed
   edition.)

Source:  The PMAs' annual reports for fiscal year 1994 and other PMA
data. 

The PMAs generated about $3.2 billion in power-related revenues in
fiscal year 1994.\18 In accordance with legislation, the PMAs deposit
their annual revenues in the Treasury.  These receipts are generally
applied to expenses in the following order:  (1) operations and
maintenance expenses, (2) purchased and exchanged power costs, (3)
transmission service fees, (4) interest expense, and (5) any debt
service on Treasury bonds (Bonneville only).  Any remaining revenues
are applied to any remaining balance due on unpaid or deferred annual
expenses, if any, and then toward the repayment on the federal
investment.\19 DOE requires the PMAs to pay their highest
interest-bearing debt first whenever possible, consistent with
applicable law.\20

The financial characteristics of the PMAs, in many respects, are a
reflection of the various statutes and DOE policies and procedures
that govern their operations.  For example, except for Bonneville,
the PMAs, as described earlier, receive appropriations annually to
cover their operating and maintenance expenses and to finance capital
investments.\21

These financing methods differ from those used by investor- owned
utilities.  Such utilities generally pay for their operating expenses
from operating revenue and finance capital investments by (1) issuing
debt, (2) selling common or preferred stock, or (3) using cash
generated from operations. 

In addition, the PMAs' weighted average interest rates on their
outstanding debt to the Treasury ranged from 2.7 to 4.6 percent in
fiscal year 1994.\22 This compares with an average interest rate of
8.1 percent on outstanding long-term debt for the nation's 179
largest investor-owned utilities in 1993, according to a DOE
report.\23 These utilities accounted for more than 97 percent of all
revenues earned by investor-owned utilities in 1993.  As a comparison
to the average cost of the PMAs' debt in relation to the average cost
of the Treasury's debt, the Treasury's weighted average interest rate
on the outstanding marketable interest-bearing public debt was 6.9
percent as of July 31, 1995. 

As shown in figures 7 and 8, the PMAs' financing methods and terms of
repayment have led to a high amount of outstanding debt in comparison
to total investment.  These figures present two financial ratios that
highlight the amount of debt that the PMAs have outstanding.  The
first ratio--debt to gross property, plant, and equipment--shows the
outstanding portion of the PMAs' debt, as a percentage of the total
amount invested in these facilities.\24 The second ratio--debt
service to revenue--shows the amount of annual revenues used to pay
principal and interest on outstanding debt (debt service) as a
percentage of total revenues.  Table II.5 of appendix II shows this
information for each PMA during the period 1985-94. 

   Figure 7:  Debt as a Percentage
   of Gross Property, Plant, and
   Equipment for All PMAs, as of
   September 30, 1994

   (See figure in printed
   edition.)

Source:  The PMAs' data. 

   Figure 8:  Debt Service as a
   Percentage of Revenue for All
   PMAs, as of September 30, 1994

   (See figure in printed
   edition.)

Source:  The PMAs' data. 

Because the PMAs' debt is at low interest rates, four of the five
PMAs have been able to carry high levels of debt without a
corresponding increase in financial risk.  However, as explained in
the following discussion on competitive issues, high levels of debt
currently pose problems for Bonneville and could pose problems for
other PMAs in a more competitive environment. 


--------------------
\10 In 1974, the Congress stopped providing Bonneville with annual
appropriations and instead provided it with a revolving fund
maintained by the Treasury and permanent Treasury borrowing
authority, now limited to $3.75 billion.  However, Bonneville remains
responsible for repaying its debt stemming from appropriations
expended by Bonneville prior to 1974 and debt stemming from
appropriations expended by the operating agencies on power-related
expenses. 

\11 Although most of Western's projects are funded by appropriations,
three projects--the Fort Peck Project, which is included in the
Pick-Sloan Missouri Basin Program; the Colorado River Storage
Project; and the Central Arizona Project--have revolving funds for
operational, maintenance, and replacement costs.  Western's Boulder
Canyon Project has permanent authority for the same types of costs as
well as emergency expenditures.  Nonfederal financing has been
obtained for the Parker Dam, the Hoover Power Plant upratings, and
the Buffalo Bill Power Plant.  Nonfederal financing has been obtained
for transmission construction through participation agreements with
regional utilities. 

\12 Because Alaska owns and operates its facilities, it directly
receives appropriations for capital investments in generation
facilities. 

\13 In addition to appropriated debt, Bonneville's debt includes
Treasury bonds and obligations in nonfederal power projects. 
Bonneville is to repay all these debts with interest. 

\14 The PMAs are generally required to repay the investments in (1)
transmission assets within 35 to 45 years of initial operation, (2)
generation assets generally within 50 years of initial operation, and
(3) replacements within their estimated useful service life, but not
exceeding 50 years. 

\15 Because the operating agencies generally receive appropriations
annually to cover the costs associated with all functions of the
multipurpose projects that they operate and maintain, we were not
able to present the amount of appropriations received at the
beginning of the fiscal year for power-related purposes.  Instead, in
fig.  4 we present the appropriations that were expended by the
operating agencies during the year on power-related activities. 
These are the costs that are allocated by the operating agencies to
the PMA for repayment. 

\16 Gross repayable investment includes (1) cumulative appropriations
expended to construct and upgrade generation and transmission
facilities, (2) certain costs related to irrigation (Bonneville and
Western only), (3) cumulative borrowings from the Treasury (Treasury
bonds)(Bonneville only), and (4) cumulative obligations in nonfederal
power projects (Bonneville only). 

\17 As directed by law, in addition to the costs of the power portion
of the hydropower projects from which they sell and transmit power,
Bonneville and Western are responsible for repaying, through power
revenues, a portion of the irrigation costs associated with the
hydropower projects.  Irrigation costs are to be repaid without an
interest charge. 

\18 Table II.3 of app.  II shows revenues, expenses, and other
financial information for each PMA for fiscal years 1985-94. 

\19 Bonneville and Alaska have exceptions to this priority of revenue
application.  Bonneville first makes payments on debts associated
with obligations related to its nonfederal power projects.  Revenues
from Alaska's Snettisham project are first applied to the required
principal payment for the Long Lake portion of the project. 

\20 As we noted in a 1983 report, the practice of paying the highest
interest-bearing debt first (rather than first paying the oldest
outstanding debt) results in a savings for the PMA but imposes an
additional cost to the Treasury.  See Policies Governing Bonneville
Power Administrations' Repayment of Federal Investment Still Need
Revision (GAO/RCED-84-25, Oct.  26, 1983). 

\21 Legislation directs Bonneville to deposit its revenues into a
revolving fund maintained by the Treasury and authorizes Bonneville
to use this fund to finance its operations and capital investments. 

\22 Table II.4 in app.  II shows interest rates on appropriated debt
for each PMA. 

\23 See Financial Statistics of Major U.S.  Investor-Owned Electric
Utilities, 1993 by DOE's Energy Information Administration. 

\24 Gross property, plant, and equipment includes the original cost
of generation and transmission facilities and the cost of
construction work in progress.  For Bonneville, we also included its
other capital investments and obligations in nonfederal projects,
such as energy conservation measures and costs associated with
operating and terminated nuclear plants. 


   COMPETITIVE ISSUES
------------------------------------------------------------ Letter :3

PMAs have been and generally remain among the sellers of wholesale
electric power at the lowest cost.\25 Their ability to operate as
low-cost sellers stems from several factors, including the inherent
low cost of hydropower relative to other generating sources, federal
financing at relatively low interest rates, flexibility in the
repayment of principal on the Treasury portion of the PMAs' debt, the
PMAs' tax exempt status, and operating budgets that seek to break
even rather than earn a profit or a return on investment.  Partly
because of these factors, the average revenue earned per unit of
wholesale power sold by the PMAs is low in comparison to the national
average for wholesale power sold by all utilities.  The average
revenue per kilowatt hour (kWh)\26 sold by each PMA ranged from 1.2
to 2.5 cents in 1993.  This was less than the national average for
wholesale power in 1993 which, according to DOE's Energy Information
Administration, ranged from 3.3 to 4.1 cents, depending on the type
of electric utility.  The overall average was 3.6 cents.\27 Figure 9
shows the average revenue earned per kilowatt hour of wholesale power
sold for each PMA compared with the national average for wholesale
power during fiscal year 1993.  Table III.1 of appendix III shows (1)
the total kilowatt hours of wholesale power sold and the associated
power revenues by each PMA and (2) the nationwide total of kilowatt
hours of wholesale power sold and associated revenues earned during
fiscal year 1993. 

   Figure 9:  Average Revenue
   Earned per Kilowatt Hour of
   Wholesale Power Sold for Each
   PMA During Fiscal Year 1993

   (See figure in printed
   edition.)

Source:  Developed by GAO from the Energy Information
Administration's and the PMAs' data. 

According to PMA officials, as of June 1995, with the exception of
Bonneville, each PMA had rates that remain the lowest in its service
area.  These PMAs have experienced no major problems in terms of
customers' switching to other suppliers or having to negotiate new
rates because of competition from other suppliers.  On the other
hand, Bonneville has experienced financial difficulty attributable to
many factors including investments in nuclear plants.\28

These difficulties coincide with other suppliers in Bonneville's
service area offering electric power service at rates at or below the
rate at which Bonneville sells much of its power.  Several of
Bonneville's customers have recently signed contracts with other
suppliers, and other customers have indicated their willingness to
negotiate with other suppliers.  As noted in our 1994 report,
Bonneville's high debt and associated fixed costs and low financial
reserves provide it with little flexibility to respond to any further
operating losses, increasing the possibility that Bonneville would be
unable to make its annual Treasury payment.\29

The circumstances in which Bonneville finds itself are part of a
larger trend in the wholesale segment of the electric power industry. 
This segment of the market has grown increasingly competitive in
recent years, in part, because of industry changes stemming from the
Energy Policy Act of 1992, which allows easier access to power
generation markets and promotes greater use of electric transmission
lines.  As part of the trend toward competition, the Federal Energy
Regulatory Commission expects nationwide wholesale rates to decline. 
Because the PMAs sell most of their power at wholesale, they could be
directly affected by this trend. 

A PMA's financial condition will play a role in determining whether
it can compete with other suppliers.  As mentioned earlier, a high
debt-to-gross property, plant, and equipment ratio and a high debt
service-to-revenue ratio could limit the flexibility of a PMA to
match the rates of a competitor while still meeting financial
obligations, including repayment of the federal investment.  A PMA
with rates below other suppliers' rates in its service area has some
flexibility to increase rates if necessary to meet its financial
obligations.  Conversely, a PMA with rates at or above the level
offered by other suppliers in its service area, combined with a high
level of debt, would have limited flexibility in reducing rates. 


--------------------
\25 The wholesale segment of the electric power industry comprises
utilities and other suppliers that sell power to other utilities for
resale to the consumer.  In contrast, the retail segment comprises
utilities that sell power directly to the end users including
industrial, commercial, and residential consumers.  During 1993,
about 80 percent of the combined PMA sales were to wholesale
customers.  The remainder of these sales was to end users, such as
federal military installations, aluminum smelters, and other
industrial customers. 

\26 A kilowatt hour is 1,000 watt hours.  A watt hour is equal to 1
watt of power applied for 1 hour. 

\27 The Energy Information Administration cautions that average
revenue per unit of energy sold should not be used as a substitute
for the price of power.  The price that any one utility charges
another for wholesale energy comprises numerous transaction-specific
factors including the fee charged for reserving a portion of
capacity, the fee for the energy actually delivered, and the fee for
the use of the facilities.  These fees are influenced by factors such
as time of delivery, quantity of energy, and reliability of supply. 

\28 Because, unlike the other PMAs, Bonneville is responsible for
meeting the future demands of its customers, it assumed partial
financial responsibility for investments in nuclear plants in the
early 1970s.  Of Bonneville's approximately $17.6 billion in
outstanding debt, about $7.4 billion is attributable to obligations
to repay the costs of these plants.  Bonneville is obligated to repay
more than $4 billion for plants that have been terminated and thus
produce no electricity. 

\29 Bonneville Power Administration:  Borrowing Practices and
Financial Condition (GAO/AIMD-94-67BR, Apr.  19, 1994). 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :4

We provided copies of a draft of this report to DOE for its review
and comment.  We received comments from DOE's Bonneville Power
Administration and DOE's Power Marketing Liaison Office, which is
responsible for the other four PMAs, and have included their comments
and our response in this report as appendixes IV and V, respectively. 

Bonneville stated that our report was factually correct and fairly
reflected its competitive situation.  For the other four PMAs, DOE
commented that our report implied that the PMAs were inefficient and
used inappropriate operating techniques that could leave the PMAs in
a precarious position in the future.  We did not evaluate the
efficiency of the PMAs' operations and have drawn no such conclusion. 
DOE also commented that it is inappopriate to compare investor-owned
utilities' method of operating at a profit with that of the PMAs. 
Our report does not make this comparision.  Rather, it compares the
PMAs' average interest rates and the PMAs' method of financing
capital investments with those of investor-owned utilities.  DOE
suggested that we include several additional facts in our report that
it believed should help explain more fully how the PMAs operate.  We
have expanded certain descriptive data to include facts suggested by
DOE.  DOE also provided technical corrections and clarifications that
we incorporated where appropriate. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :5

To develop the financial information presented in this report, we
interviewed officials of each PMA and reviewed data from the five
PMAs' annual reports and financial statements for fiscal years 1985
through 1994.\30 To develop certain financial indicators, we used
applicable repayment studies and financial statements.  As
appropriate, we interviewed officials of each PMA and used the PMAs'
data to develop operating information on the PMAs and to discuss
competitive issues.  We did not independently verify the accuracy of
the PMAs' data.  In developing operating information, we also used
available data from sources, such as the Congressional Research
Service, DOE, the Federal Energy Regulatory Commission, and the
National Academy of Public Administration.  We used data from the
Energy Information Administration to develop information on the
extent to which the PMA's public power customers purchase
PMA-provided power. 

We performed our review from April through September 1995, in
accordance with generally accepted government auditing standards. 


--------------------
\30 Most of the financial statements were independently audited by
certified public accounting firms or, in the case of Alaska, DOE's
Office of Inspector General.  Western's financial statements were not
audited for fiscal years 1985 through 1990.  Southwestern's financial
statements were not audited for fiscal years 1988 and 1989. 


---------------------------------------------------------- Letter :5.1

As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 7 days after the date of this letter.  At that time, we will
send copies to appropriate congressional committees, federal
agencies, and other interested parties.  We will also make copies
available to others on request. 

This report was prepared under the direction of Victor S.  Rezendes,
Director of Energy and Science Issues in the Resources, Community,
and Economic Development Division, who may be reached at (202)
512-3841 and Lisa Jacobson, Director of Civil Audits in the
Accounting and Information Management Division, who may be reached at
(202) 512-9508, if you have any questions.  Major contributors to
this report are listed in appendix VI. 

Sincerely yours,

Victor S.  Rezendes
Director, Energy and
 Science Issues

Lisa G.  Jacobson
Director, Civil Audits
Accounting and Information
 Management Division


OPERATING INFORMATION
=========================================================== Appendix I



                                    Table I.1
                     
                      Plant-Operating Characteristics, as of
                                September 30, 1994

                              Existing                   Generator
Operati                      number of  Primary          nameplate   Fiscal year
ng                          generating  energy            capacity    of initial
agency   Plant's name            units  source              (MW)\a     operation
-------  --------------  -------------  ------------  ------------  ------------
Alaska
--------------------------------------------------------------------------------
APA      Eklutna                     2  Hydro                   30          1955

APA      Snettisham                  3  Hydro                   78        1975 &
                                                                          1991\b

Subtota                              5                         108
l


Bonneville
--------------------------------------------------------------------------------
Bureau   Grand Coulee               27  Hydro                6,188          1941

Bureau   Grand Coulee                6  Hydro                  314          1973
         #2\c

Bureau   Hungry Horse                4  Hydro                  392          1952

Bureau   Palisades                   4  Hydro                  142          1957

Bureau   Anderson Ranch              2  Hydro                   27          1950

Bureau   Minidoka                    7  Hydro                   13          1909

Bureau   Roza                        1  Hydro                   11          1958

Bureau   Black Canyon                2  Hydro                    8          1925

Bureau   Chandler                    2  Hydro                   12          1956

Corps    Chief Joseph               27  Hydro                2,069          1955

Corps    John Day                   16  Hydro                2,160          1968

Corps    The Dalles                 22  Hydro                1,780          1957

Corps    Bonneville                 18  Hydro                1,050          1938

Corps    McNary                     14  Hydro                  980          1953

Corps    Lower Granite               6  Hydro                  810          1975

Corps    Lower                       6  Hydro                  810          1969
         Monumental

Corps    Little Goose                6  Hydro                  810          1970

Corps    Ice Harbor                  6  Hydro                  603          1961

Corps    Libby                       5  Hydro                  525          1975

Corps    Dworshak                    3  Hydro                  400          1974

Corps    Lookout Point               3  Hydro                  120          1954

Corps    Detroit                     2  Hydro                  100          1953

Corps    Green Peter                 2  Hydro                   80          1967

Corps    Lost Creek                  2  Hydro                   49          1975

Corps    Albeni Falls                3  Hydro                   43          1955

Corps    Hills Creek                 2  Hydro                   30          1962

Corps    Cougar                      2  Hydro                   25          1964

Corps    Foster                      2  Hydro                   20          1968

Corps    Big Cliff                   1  Hydro                   18          1954

Corps    Dexter                      1  Hydro                   15          1955

WPPSS\d  Project 2                   1  Nuclear              1,100          1984

Subtota                            205                      20,704
l


Southeastern
--------------------------------------------------------------------------------
Corps    Allatoona                   3  Hydro                   74          1950

Corps    Buford                      3  Hydro                   86          1957

Corps    Carters                     4  Hydro                  500          1975

Corps    J. Strom                    7  Hydro                  280          1953
         Thurmond

Corps    Walter F.                   4  Hydro                  130          1963
         George

Corps    Hartwell                    5  Hydro                  344          1962

Corps    Robert F.                   4  Hydro                   68          1975
         Henry

Corps    Millers Ferry               3  Hydro                   75          1970

Corps    West Point                  3  Hydro                   73          1975

Corps    Richard B.                  4  Hydro                  300          1984
         Russell\e

Corps    John H. Kerr                7  Hydro                  204          1953

Corps    Philpott                    3  Hydro                   14          1952

Corps    Barkley                     4  Hydro                  130          1966

Corps    J. Percy                    1  Hydro                   28          1970
         Priest

Corps    Cheatham                    3  Hydro                   36          1959

Corps    Cordell Hull                3  Hydro                  100          1973

Corps    Old Hickory                 4  Hydro                  100          1957

Corps    Center Hill                 3  Hydro                  135          1950

Corps    Dale Hollow                 3  Hydro                   54          1948

Corps    Wolf Creek                  6  Hydro                  270          1951

Corps    Laurel                      1  Hydro                   61          1976

Corps    Jim Woodruff                3  Hydro                   30          1957

Subtota                             81                       3,092
l\f


Southwestern
--------------------------------------------------------------------------------
Corps    Beaver                      2  Hydro                  112          1965

Corps    Blakely                     2  Hydro                   75          1956
         Mountain

Corps    Broken Bow                  2  Hydro                  100          1970

Corps    Bull Shoals                 8  Hydro                  340          1953

Corps    Clarence                    2  Hydro                   58          1985
         Cannon

Corps    Dardanelle                  4  Hydro                  124          1965

Corps    DeGray                      2  Hydro                   68          1972

Corps    Denison                     2  Hydro                   70          1945

Corps    Eufaula                     3  Hydro                   90          1965

Corps    Ft. Gibson                  4  Hydro                   45          1953

Corps    Greers Ferry                2  Hydro                   96          1964

Corps    Harry S.                    2  Hydro                   53          1982
         Truman\g

Corps    Keystone                    2  Hydro                   70          1968

Corps    Narrows                     3  Hydro                   26          1950

Corps    Norfork                     2  Hydro                   81          1944

Corps    Ozark                       5  Hydro                  100          1973

Corps    Robert D.                   2  Hydro                    7          1989
         Willis

Corps    Robert S. Kerr              4  Hydro                  110          1971

Corps    Sam Rayburn                 2  Hydro                   52          1966

Corps    Stockton                    1  Hydro                   45          1973

Corps    Table Rock                  4  Hydro                  200          1959

Corps    Tenkiller                   2  Hydro                   39          1954
         Ferry

Corps    Webbers Falls               3  Hydro                   60          1974

Corps    Whitney                     2  Hydro                   30          1955

Subtota                             67                       2,051
l


Western
--------------------------------------------------------------------------------
Bureau   Hoover                     19  Hydro                2,074          1936

Bureau   J. F. Carr                  2  Hydro                  154          1963

Bureau   Folsom                      3  Hydro                  215          1955

Bureau   Keswick                     3  Hydro                  105          1950

Bureau   New Melones                 2  Hydro                  383          1979

Bureau   Nimbus                      2  Hydro                   14          1955

Bureau   O'Neill                     6  Hydro                   29          1968

Bureau   W. R. Gianelli              8  Hydro                  202          1968

Bureau   Shasta                      7  Hydro                  578          1944

Bureau   Spring Creek                2  Hydro                  200          1964

Bureau   Trinity                     3  Hydro                  140          1964

Bureau   Mount Elbert                2  Hydro                  206          1982

Bureau   Big Thompson                1  Hydro                    5          1969

Bureau   Estes                       3  Hydro                   50          1950

Bureau   Flatiron                    3  Hydro                   95          1954

Bureau   Green Mountain              2  Hydro                   26          1943

Bureau   Mary's Lake                 1  Hydro                    8          1951

Bureau   Pole Hill                   1  Hydro                   33          1954

Bureau   Yellowtail                  4  Hydro                  288          1966

Bureau   Alcova                      2  Hydro                   36          1955

Bureau   Boysen                      2  Hydro                   15          1952

Bureau   Buffalo Bill                3  Hydro                   18            \h

Bureau   Fremont Canyon              2  Hydro                   66          1961

Bureau   Glendo                      2  Hydro                   38          1959

Bureau   Guernsey                    2  Hydro                    5          1927

Bureau   Heart Mountain              1  Hydro                    5          1949

Bureau   Kortes                      3  Hydro                   36          1950

Bureau   Pilot Butte                 2  Hydro                    2          1925

Bureau   Seminoe                     3  Hydro                   45          1939

Bureau   Shoshone                    1  Hydro                    3        1922\i

Bureau   Canyon Ferry                3  Hydro                   60          1954

Bureau   Davis                       5  Hydro                  269          1951

Bureau   Parker                      4  Hydro                   69          1943

Bureau   Glen Canyon                 8  Hydro                1,356          1964

Bureau   Blue Mesa                   2  Hydro                   96          1967

Bureau   Crystal                     1  Hydro                   28          1978

Bureau   Flaming Gorge               3  Hydro                  152          1964

Bureau   McPhee                      1  Hydro                    1          1993

Bureau   Morrow Point                2  Hydro                  156          1971

Bureau   Towaoc                      1  Hydro                   11          1993

Bureau   Upper Molina                1  Hydro                    9          1963

Bureau   Lower Molina                1  Hydro                    5          1963

Bureau   Elephant Butte              3  Hydro                   28          1941

Bureau   Fontenelle                  1  Hydro                   13          1968

Bureau   Stampede                    1  Hydro                    3          1987

Corps    Fort Peck                   5  Hydro                  218          1943

Corps    Garrison                    5  Hydro                  546          1956

Corps    Big Bend                    8  Hydro                  538          1965

Corps    Fort Randall                8  Hydro                  387          1954

Corps    Gavins Point                3  Hydro                  122          1956

Corps    Oahe                        7  Hydro                  786          1962

IBWC     Amistad                     2  Hydro                   66          1983

IBWC     Falcon                      3  Hydro                   32          1955

PWUA     Deer Creek                  2  Hydro                    5          1958

SRP      Navajo                      3  Coal                 547\j          1974

Subtota                            180                      10,577
l

================================================================================
Total\f                            538                      36,532
--------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration
IBWC = International Boundary and Water Commission
MW = megawatt
PMA = power maketing administration
PWUA = Provo River Water Users' Association
SRP = Salt River Project
WPPSS = Washington Public Power Supply System

\a The generator nameplate capacity refers to the full-load
continuous rating under specified conditions, usually indicated on a
plate attached physically to the equipment.  Because water flow
largely dictates the amount of water available for generation, the
average megawatts available for power generation from a hydro
facility may differ from the nameplate capacity.  These numbers are
rounded to the nearest megawatt. 

\b For the Snettisham project, the Long Lake portion was placed in
service in 1975, and the Crater Lake portion was placed in service in
1991. 

\c The units at Grand Coulee #2 are pump generators. 

\d Bonneville acquired all or part of the generating capability of
three nuclear power plants owned by WPPSS.  One plant is in
commercial operation, and two have been terminated. 

\e Four additional units at the Richard B.  Russell project are being
tested. 

\f We do not include Southeastern's 300-kilowatt Stonewall Jackson
Project, which was energized in 1994.  No power bills were issued for
this project in fiscal year 1994. 

\g The Harry S.  Truman project has six units installed, but only two
were commercially operable. 

\h Power plant was not yet in commercial operation. 

\i Power plant is being modified and tested prior to resuming
commercial operation. 

\j Federal government's share (24.3 percent) of 2,250-MW plant
capability. 

Source:  The PMAs' annual reports and other data provided by the
PMAs. 



                               Table I.2
                
                  Operating Statistics of PMAs, as of
                           September 30, 1994

                                   APA   BPA  SEPA  SWPA  WAPA  Totals
--------------------------------  ----  ----  ----  ----  ----  ------
Generator nameplate capacity       108  20,7  3,09  2,05  10,5  36,532
 (MW)                                     04     2     1    77
Number of power plants\a             2    31    22    24    55     134
Transmission lines (miles)          88  14,8     0  1,38  16,7  32,992
                                          00           0    27
Annual federal employment (full     35  3,32    41   189  1,46   5,054
 time equivalent)\b                      2\c                 7
----------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
MW = megawatt
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

\a Power plants can include more than one generation unit. 

\b Employment numbers do not include contractors. 

\c As of April 27, 1995. 

Source:  The PMAs' annual reports for fiscal year 1994 and other data
provided by DOE. 



                                     Table I.3
                      
                       PMA Sales by Customer Type for Fiscal
                                     Year 1993

                               (Dollars in thousands)



    Customer                            Revenu            Revenu            Revenu
    type         MWh  Revenues     MWh      es       MWh      es       MWh      es
--  --------  ------  --------  ------  ------  --------  ------  --------  ------
AP  Municipa  92,197    $1,500      \a      \a        \a      \a        \a      \a
 A   lities
    Public        \a        \a      \a      \a        \a      \a        \a      \a
     utility
     distric
     ts
    Cooperat  80,746     1,314      \a      \a        \a      \a        \a      \a
     ives
    Irrigati      \a        \a      \a      \a        \a      \a        \a      \a
     on
     distric
     ts
    State         \a        \a   1,170     $38        \a      \a        \a      \a
     agencies
    Federal       \a        \a      \a      \a        \a      \a        \a      \a
     agencies
    Investor      \a        \a      \a      \a   232,888  $7,265        \a      \a
     -owned
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a        \a      \a
     compani
     es
    Other         \a        \a      \a      \a        \a      \a        \a      \a
     industry
    Counties      \a        \a      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a        \a      \a        \a      \a
     region
    Interdep      \a        \a      \a      \a        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a      \a      \a        \a      \a        \a      \a
     use\c
==================================================================================
    Totals    172,94    $2,814   1,170     $38   232,888  $7,265        \a      \a
                   3

Total sales
for resale
(MWh)
405,831
----------------------------------------------------------------------------------

Total resale
revenues
$10,079
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.025 \
\ \
----------------------------------------------------------------------------------
BP  Municipa  11,747   268,058      \a      \a        \a      \a        \a      \a
 A   lities     ,223
    Public    22,821   536,253      \a      \a        \a      \a        \a      \a
     utility    ,312
     distric
     ts
    Cooperat  9,960,   226,875      \a      \a        \a      \a        \a      \a
     ives        407
    Irrigati      \a        \a      \a      \a        \a      \a        \a      \a
     on
     distric
     ts
    State         \a        \a      \a      \a        \a      \a        \a      \a
     agencies
    Federal       \a        \a  1,165,  25,103        \a      \a        \a      \a
     agencies                      482
    Investor      \a        \a      \a      \a  7,821,53  299,95        \a      \a
     -owned                                            1       2
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a  19,465,0  351,17
     compani                                                            57       8
     es
    Other         \a        \a      \a      \a        \a      \a  1,358,18  31,348
     industry                                                            8
    Counties      \a        \a      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a  4,894,64  75,262        \a      \a
     region\d                                          3
    Interdep      \a        \a      \a      \a        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a      \a      \a        \a      \a        \a      \a
     use\c
==================================================================================
    Totals    44,528  $1,031,1  1,165,  $25,10  12,716,1  $375,2  20,823,2  $382,5
                ,942        86     482       3        74      14        45      26

Total sales
for resale
(MWh)
57,245,116
----------------------------------------------------------------------------------

Total resale
revenues
$1,406,400
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.025 \
\
----------------------------------------------------------------------------------
SE  Municipa  1,815,    46,453      \a      \a        \a      \a        \a      \a
 PA  lities      260
    Public        \a        \a      \a      \a        \a      \a        \a      \a
     utility
     distric
     ts
    Cooperat  4,093,    90,418      \a      \a        \a      \a        \a      \a
     ives        934
    Irrigati      \a        \a      \a      \a        \a      \a        \a      \a
     on
     distric
     ts
    State     328,53     5,856      \a      \a        \a      \a        \a      \a
     agencies      0
    Federal   2,451,    21,080      \a      \a        \a      \a        \a      \a
     agencie     401
     s\e
    Investor      \a        \a      \a      \a    17,588     214        \a      \a
     -owned
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a        \a      \a
     compani
     es
    Other         \a        \a      \a      \a        \a      \a        \a      \a
     industry
    Counties  38,104       836      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a        \a      \a        \a      \a
     region
    Interdep      \a        \a      \a      \a        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a      \a      \a        \a      \a        \a      \a
     use\c
==================================================================================
    Totals    8,727,  $164,653      \a      \a    17,588    $214        \a      \a
                 229
==================================================================================
    Total             8,744,81
     sales                   7
     for
     resale
     (MWh)

Total resale
revenues
$164,867
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.019 \
\ \
----------------------------------------------------------------------------------
SW  Municipa  2,227,    19,840      \a      \a    \1,134  \5,897        \a      \a
 PA  lities      454
    Public        \a        \a      \a      \a        \a      \a        \a      \a
     utility
     distric
     ts
    Cooperat  5,701,    70,873      \a      \a        \a      \a        \a      \a
     ives        043
    Irrigati      \a        \a      \a      \a        \a      \a        \a      \a
     on
     distric
     ts
    State         \a        \a      \a      \a        \a      \a        \a      \a
     agencies
    Federal       \a        \a  189,11   3,722     7,030      37        \a      \a
     agencies                        7
    Investor      \a        \a      \a      \a     9,455      49        \a      \a
     -owned
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a        \a      \a
     compani
     es
    Other         \a        \a      \a      \a        \a      \a        \a      \a
     Industry
    Counties      \a        \a      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a        \a      \a        \a      \a
     region
    Interdep      \a        \a      \a      \a        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a      \a      \a        \a      \a        \a      \a
     use\c
==================================================================================
    Totals    7,928,   $90,713  189,11  $3,722    17,619  $5,983        \a      \a
                 497                 7

Total sales
for resale
(MWh)
7,946,116
----------------------------------------------------------------------------------

Total resale
revenues
$96,696
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.012 \
\ \
----------------------------------------------------------------------------------
WA  Municipa  9,871,   187,912      \a      \a        \a      \a        \a      \a
 PA  lities      704
    Public    4,252,   101,605      \a      \a        \a      \a        \a      \a
     utility     111
     distric
     ts
    Cooperat  7,745,   123,805      \a      \a        \a      \a        \a      \a
     ives        483
    Irrigati  1,709,    24,116      \a      \a        \a      \a        \a      \a
     on          781
     distric
     ts
    State     3,624,   \55,811  566,89   9,408        \a      \a        \a      \a
     agencies    445                 2
    Federal   \156,1    \2,270  2,116,  53,267        \a      \a        \a      \a
     agencies     31               764
    Investor      \a        \a      \a      \a  1,998,71  40,040        \a      \a
     -owned                                            5
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a        \a      \a
     compani
     es
    Other         \a        \a      \a      \a        \a      \a        \a      \a
     industry
    Counties      \a        \a      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a        \a      \a        \a      \a
     region
    Interdep      \a        \a  14,185       0        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a  1,383,   8,085        \a      \a        \a      \a
     use\c                         235
==================================================================================
    Totals    27,359  $495,519  4,081,  $70,76  1,998,71  $40,04        \a      \a
                ,655               076       0         5       0

Total sales
for resale
(MWh)
29,358,370
----------------------------------------------------------------------------------

Total resale
revenues
$535,559
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.019 \
\ \
----------------------------------------------------------------------------------
Al            25,753   523,773      \a      \a    \1,134  \5,897        \a      \a
 l   Municip    ,838
 P   alities
 M
 A
 s
    Public    27,073   637,858      \a      \a        \a      \a        \a      \a
     utility    ,423
     distric
     ts
    Cooperat  27,581   513,285      \a      \a        \a      \a        \a      \a
     ives       ,613
    Irrigati  1,709,    24,116      \a      \a        \a      \a        \a      \a
     on          781
     distric
     ts
    State     3,952,    61,667  568,06   9,446        \a      \a        \a      \a
     agencies    975                 2
    Federal   2,607,    23,350  3,471,  82,092     7,030      37        \a      \a
     agencie     532               363
     s\e
    Investor      \a        \a      \a      \a  10,080,1  347,52        \a      \a
     -owned                                           77       0
     utiliti
     es
    Aluminum      \a        \a      \a      \a        \a      \a  19,465,0  351,17
     compani                                                            57       8
     es
    Other         \a        \a      \a      \a        \a      \a  1,358,18  31,348
     industry                                                            8
    Counties  38,104       836      \a      \a        \a      \a        \a      \a
    Outside       \a        \a      \a      \a  4,894,64  75,262        \a      \a
     region\d                                          3
    Interdep      \a        \a  14,185       0        \a      \a        \a      \a
     artment
     al\b
    Project       \a        \a  1,383,   8,085        \a      \a        \a      \a
     use\c                         235
==================================================================================
    Totals    88,717  $1,784,8  5,436,  $99,62  14,981,8  $422,8  20,823,2  $382,5
                ,266        85     845       3        50      19        45      26

Total sales
for resale
(MWh)
103,699,116
----------------------------------------------------------------------------------

Total resale
revenues
$2,207,704
----------------------------------------------------------------------------------

Average
revenue per
kWh $0.021 \
\
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
kWh = kilowatt hour
MWh = megawatt hour
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

\a Not applicable. 

\b lnterdepartmental sales are sales to the facilities that play an
integral role in the operation of WAPA's projects. 

\c Project use is mainly sales of electricity necessary to pump water
at federal irrigation projects. 

\d By law, BPA first serves customers located in the Pacific
Northwest (legislatively defined as Oregon, Washington, and portions
of Montana, Nevada, Utah, and Wyoming).  BPA sells electricity that
is surplus to the needs of the Pacific Northwest to customers outside
the region, mainly those located in California.  In 1993, these
customers included public- and investor-owned utilities and one
federal agency. 

\e All of SEPA's sales to federal agencies in 1993 were to the
Tennessee Valley Authority. 

Source:  Derived by GAO from data provided by the PMAs. 



                               Table I.4
                
                PMA Public Power Customers' Purchases of
                 PMA Power Versus Total Power Obtained
                 From All Sources for Fiscal Year 1993

                                                           Total power
                                      Public power       obtained from
                                customer purchases       all sources\a
PMA                                 from PMA (MWh)               (MWh)
------------------------------  ------------------  ------------------
Alaska                                     172,943           3,416,744
Bonneville\b                            43,671,980          80,902,370
Southeastern\c                           5,944,700         120,457,936
Southwestern                             7,662,077          59,011,084
Western                                 17,613,180         148,512,732
Total                                   75,064,880         412,300,866
----------------------------------------------------------------------
Legend

EIA = Energy Information Administration
MWh = megawatt hour
PMA = power marketing administration

\a Includes customer generated power and purchases from sources other
than the PMAs. 

\b For the purpose of our analysis, we excluded 10 public power
customers located outside the Pacific Northwest.  These customers
accounted for less than 1 percent of Bonneville's revenues in fiscal
year 1993. 

\c For the purpose of our analysis, we excluded the Tennessee Valley
Authority from Southeastern's sales to public power customers.  The
Tennessee Valley Authority accounted for about 13 percent of
Southeastern's revenues in fiscal year 1993. 

Source:  Developed by GAO from the PMAs' fiscal year 1993 annual
reports and EIA's data. 



                               Table I.5
                
                  Power Purchases From PMAs by Public
                Power Customers as a Percentage of Their
                Total Power Obtained From All Sources in
                            Fiscal Year 1993

                                           Percent   Percent   Percent
                         Total   Percent        of        of        of
                        number        of  customer  customer  customer
                            of  customer         s         s         s
                        public         s  purchasi  purchasi  purchasi
                         power  purchasi    ng 26-    ng 51-    ng 76-
                      customer   ng 0-25        50        75       100
                           s\a   percent   percent   percent   percent
--------------------  --------  --------  --------  --------  --------
APA                          3       100         0         0         0
BPA                        119         7         1         5        87
SEPA                       263        98         1         0         0
SWPA                        53        36        19        13        32
WAPA                       315        30        23        25        22
----------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
EIA = Energy Information Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Washington Public Power Supply System

Note:  Percentages may not total 100 because of rounding. 

Eleven public power customers received power from two PMAs; these
customers are included in the total number of customers for each PMA
from which they purchased power. 

\a This information excludes 46 irrigation districts that purchased
power from WAPA and 1 irrigation district that purchased power from
BPA.  These customers were not listed in EIA's database used to
construct this information. 

Source:  Derived by GAO from data provided by EIA and the PMAs. 


FINANCIAL INFORMATION
========================================================== Appendix II

   Figure II.1:  Appropriations
   Expended for Power and Nonpower
   Purposes, as of September 30,
   1994



   (See figure in printed
   edition.)

Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

Note:  Although we categorize appropriations expended for both power
and nonpower purposes, as appropriate, under the heading of each PMA,
the PMAs, with the exception of some costs related to irrigation, are
responsible for repaying only those costs related to power.  The
operating agencies are responsible for the appropriations expended
for nonpower purposes, and these expended funds are not reimbursable
through power revenues.  The accounts of BPA, SEPA, and SWPA and
their respective operating agencies are collectively referred to as
power systems or programs.  BPA is part of the Federal Columbia River
Power System.  SEPA is part of the Southeastern Federal Power
Program.  SWPA is part of the Southwestern Federal Power System. 

Percentages may not total 100 because of rounding. 

Source:  The PMAs' annual reports for fiscal year 1994 and other data
provided by the PMAs. 



                                                                                     Table II.1
                                                                      
                                                                      Appropriations Received by the PMAs and
                                                                      Appropriations Expended by the Operating
                                                                        Agencies on Power-Related Costs for
                                                                           Fiscal Years 1985 Through 1994

                                                                               (Dollars in millions)


                                                                  Operat          Operat
            Operatin          Operatin          Operatin             ing             ing          Operating          Operatin          Operatin          Operatin          Operatin
PMA    PMA  g agency     PMA  g agency     PMA  g agency     PMA  agency     PMA  agency     PMA     agency     PMA  g agency     PMA  g agency     PMA  g agency     PMA  g agency
----  ----  --------  ------  --------  ------  --------  ------  ------  ------  ------  ------  ---------  ------  --------  ------  --------  ------  --------  ------  --------
APA     $2      $0.6      $2      $0.7      $2      $0.7      $3    $0.7      $3    $0.0      $3       $0.0      $3     $65.3      $3  $(0.1)\c      $4      $5.8      $4      $0.5
BPA      0     185.8       0     127.0       0     161.9       0   139.4       0   149.4       0      168.4       0     185.6       0     198.0       0     219.3       0     158.5
SEPA    36      97.6  (19)\a      50.6      16      61.0      24    71.3      39    57.1      18       68.5       8      57.6      24      81.8      32      79.2      30      70.5
SWPA    31      25.8      30      34.1      25      33.4      17    39.3      15    34.3      25       35.6      20      37.3      28      38.3      22      31.8      34      46.2
WAPA   218      60.6     188     121.6     215      60.0     235   163.2     250   131.1     264      239.0     266     182.8     278     143.0     312     116.0     260     133.0
 \b
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
DOE = Department of Energy
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

\a In 1986 DOE transferred about $19 million of carried over
appropriations from SEPA to another DOE agency.  SEPA used remaining
carried over appropriations to fund operations. 

\b Operating agency appropriation amounts are estimates provided by
WAPA. 

\c APA did not have documentation needed to explain the negative
balance. 

Source:  Developed by GAO from PMA-provided data. 



                                    Table II.2
                     
                        Gross Repayable Investment, Amount
                     Repaid, and Total Outstanding Repayable
                     Investment for Fiscal Years 1985 Through
                                       1994

                              (Dollars in millions)

PMA                 1985    1986  1987  1988  1989  1990  1991  1992  1993  1994
----------------  ------  ------  ----  ----  ----  ----  ----  ----  ----  ----
APA
Gross repayable     $131    $131  $132  $133  $133  $134  $198  $200  $205  $206
 investment
Amount repaid         21      22    24    27    31    34    37    38    40    42
Total                110     109   108   106   102   100   161   162   165   164
 outstanding
 repayable
 investment
Percent repaid       16%     17%   18%   20%   23%   25%   19%   19%   20%   20%

BPA
--------------------------------------------------------------------------------
Gross repayable   $19,05  $19,76  $20,  $20,  $21,  $21,  $22,  $23,  $24,  $25,
 investment            9       4   337   088   141   456   376   648   343   331
Amount repaid      4,291   4,860  5,10  5,64  5,73  5,54  6,26  7,23  7,06  7,69
                                     0     5     3     5     3     8     4     1
Total             14,769  14,904  15,2  15,2  15,4  15,9  16,1  16,4  17,2  17,6
 outstanding                        37    43    09    11    13    10    79    40
 repayable
 investment
Percent repaid       23%     25%   25%   27%   27%   26%   28%   31%   29%   30%

SEPA
--------------------------------------------------------------------------------
Gross repayable   $1,303  $1,398  $1,4  $1,4  $1,4  $1,4  $1,4  $1,4  $1,4  $1,4
 investment                         06    10    19    22    28    34    42    76
Amount repaid        310     306   311   289   293   316   352   387   435   468
Total                993   1,092  1,09  1,12  1,12  1,10  1,07  1,04  1,00  1,00
 outstanding                         5     1     6     6     6     7     7     8
 repayable
 investment
Percent repaid       24%     22%   22%   20%   21%   22%   25%   27%   30%   32%

SWPA
--------------------------------------------------------------------------------
Gross repayable     $903    $921  $931  $941  $951  $961  $979  $993  $997  $1,0
 investment                                                                   08
Amount repaid         84     114   135   155   179   203   224   252   298   330
Total                819     807   796   786   772   758   755   741   699   678
 outstanding
 repayable
 investment
Percent repaid        9%     12%   15%   16%   19%   21%   23%   25%   30%   33%

WAPA
--------------------------------------------------------------------------------
Gross repayable   $4,014  $4,032  $4,9  $4,7  $4,9  $5,0  $5,1  $5,3  $5,6  $5,8
 investment                         78    14    74    21    56    35    31    91
Amount repaid      1,760   1,876  2,08  2,09  2,12  2,07  2,14  2,11  2,19  2,22
                                     0     7     0     7     3     4     8     1
Total              2,254   2,156  2,89  2,61  2,85  2,94  3,01  3,22  3,43  3,67
 outstanding                         8     7     4     4     3     1     3     0
 repayable
 investment\a
Percent repaid       44%     47%   42%   44%   43%   41%   42%   40%   39%   38%
--------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration BPA = Bonneville Power
Administration PMA = power marketing administration SEPA =
Southeastern Power Administration SWPA = Southwestern Power
Administration WAPA = Western Area Power Administration

\a The total outstanding repayable investment amounts for WAPA do not
include deferred expenses.  Deferred expenses totaled $238 million,
as of September 30, 1994. 

Source:  Derived by GAO from data provided by the PMAs. 



                                    Table II.3
                     
                          PMAs' Revenues, Expenses, and
                      Accumulated Net Revenue (Deficit) for
                          Fiscal Years 1985 Through 1994

                              (Dollars in millions)

PMA                   1985  1986  1987  1988  1989  1990  1991  1992  1993  1994
--------------------  ----  ----  ----  ----  ----  ----  ----  ----  ----  ----
APA\a
Revenues              $7.0  $7.4  $8.3  $9.1  $9.0  $9.6  $9.4  $9.4  $10.  $10.
                                                                         2     2
Operating expenses     3.2   3.5   3.7   3.5   3.6   3.9   5.9   6.5   6.5   6.5
Net interest expense   2.5   3.2   3.2   3.1   3.1   3.0   2.9   4.8   4.8   4.9
Adjustments              0     0     0     0     0     0  (16.     0  (0.3     0
                                                            0)           )
Net revenue            1.3   0.7   1.4   2.4   2.3   2.8  (15.  (1.9  (1.4  (1.2
 (deficit)                                                  4)     )     )     )
Accumulated net       13.6  14.2  15.6  18.1  20.4  23.2   7.7   5.8   4.4   3.2
 revenue (deficit)
BPA
Revenues              2,88  2,62  1,67  1,94  2,06  2,08  2,22  1,92  1,94  2,19
                       1.9   5.8   4.0   6.9   3.9   0.8   0.2   8.8   2.5   5.9
Operating expenses    1,76  1,84  965.  1,00  1,13  1,13  1,25  1,51  1,51  1,50
                       0.5   1.3     3   8.0   1.5   3.6   6.4   6.8   4.6   0.0
Net interest expense  897.  849.  921.  913.  892.  670.  538.  685.  724.  756.
                         9     4     0     6     5     5     7     6     8     7
Adjustments              0     0     0  20.0     0     0     0     0     0     0
Net revenue           223.  (64.  (212   5.3  39.9  276.  425.  (273  (296  (60.
 (deficit)               4    9)   .6)                 7     1   .6)   .9)    7)
Accumulated net       (308  (373  (586  (580  (540  (264  160.  (112  (409  (470
 revenue (deficit)     .6)   .5)   .0)   .8)   .9)   .2)     9   .7)   .6)   .3)

SEPA \b
--------------------------------------------------------------------------------
Revenues              94.4  106.  121.  113.  131.  140.  152.  155.  169.  158.
                               7     1     4     4     8     4     3     3     1
Operating expenses    61.5  80.8  82.3  100.  97.8  88.6  88.8  93.0  99.3  102.
                                           5                                   6
Net interest expense  27.7  37.4  42.1  42.4  45.2  45.6  44.2  42.7  40.5  38.9
Adjustments              0     0     0     0     0     0     0     0     0     0
Net revenue            5.2  (11.  (3.3  (29.  (11.   6.6  19.4  19.6  29.5  16.6
 (deficit)                    5)     )    5)    6)
Accumulated net       214.  202.  199.  170.  20.3  26.9  46.3  65.9  95.4  112.
 revenue (deficit)       3     8     5     0                                   0

SWPA\ c,d
--------------------------------------------------------------------------------
Revenues              110.  102.  90.8  91.2  91.0  95.5  94.9  103.  115.  109.
                         8     8                                   1     7     4
Operating expenses    54.9  54.4  51.8  57.2  52.9  60.8  66.0  66.7  63.3  70.7
Net interest expense  20.3  20.6  21.8  20.3  19.8  19.7  19.5  19.4  17.3  18.1
Adjustments              0     0     0     0     0  114.     0     0     0     0
                                                       4
Net revenue           35.6  27.8  17.2  13.7  18.3  (99.   9.4  17.0  35.1  20.6
 (deficit)                                            4)
Accumulated net       23.0  43.8  61.1  75.6  93.8  (14.  (4.9  12.0  47.1  67.8
 revenue (deficit)\e                                  2)     )

WAPA \f,g
--------------------------------------------------------------------------------
Revenues              583.  609.  627.  500.  532.  547.  586.  707.  673.  713.
                         4     8     4     0     9     7     0     2     9     8
Operating expenses    287.  346.  390.  395.  484.  515.  519.  555.  674.  579.
                         7     4     7     8     6     0     0     7     1     4
Net interest expense  56.7  52.7  49.6  47.6  60.0  74.1  89.0  131.  148.  184.
                                                                   5     4     6
Adjustments              0     0     0     0     0     0     0     0  130.     0
                                                                         5
Net revenue           239.  210.  187.  56.6  (11.  (41.  (22.  20.0  (18.  (50.
 (deficit)               0     7     1          7)    3)    0)          1)    2)
Accumulated net       1,29  1,45  1,68  1,77  1,76  1,71  1,56  1,45  317.  267.
 revenue (deficit)\e   1.0   6.2   9.9   4.6   0.0   5.3   4.1   1.9     2     1
--------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

Notes:  Financial data are rounded to the nearest hundred thousand. 

Accumulated net revenue (deficit) is as of September 30, 1994. 

Differences may occur in amounts as stated in the financial
statements because of rounding. 

\a In fiscal year 1991, APA changed its method of computing
depreciation on utility plants from the compound-interest to the
straight-line method.  The change was applied retroactively to
utility plant additions of prior years.  The cumulative effect of
this change for years prior to 1991 was a decrease in the accumulated
net revenue (deficit) of about $16.0 million. 

\b In fiscal year 1990, SEPA changed its method of computing
depreciation on utility plants from compound-interest to the
straight-line method.  The change was applied retroactively to
utility plant additions of prior years.  The cumulative effect of
this change for years prior to 1990 was a decrease in accumulated net
revenues (deficit) by $138.2 million.  The 1989 financial data for
SEPA is as reflected in the 1989 financial statements.  The 1989
financial data for SEPA were extracted from the 1989 financial
statements in SEPA's 1990 annual report.  The financial statements
were restated to reflect the change in the method of computing
depreciation. 

\c SWPA's financial data for fiscal years 1985, 1986, 1988, 1989, and
1990 were extracted from the restated financial statements in SWPA's
annual reports. 

\d In fiscal year 1990, SWPA changed its method for calculating
depreciation on utility plants from the compound-interest to the
straight-line method.  The change was applied retroactively to
utility plant additions of prior years.  The cumulative effect of
this change for years prior to 1990 was a decrease in accumulated net
revenue (deficit) of about $114.4 million. 

\e Because of prior year adjustments or revenue transfers, the
accumulated net revenues (deficit) for certain years may not equal
the prior year's balance in this account plus current year net
revenue (deficit). 

\f WAPA's financial data for fiscal year 1993 were extracted from the
restated financial statements in WAPA's 1994 annual report. 

\g In fiscal year 1993, WAPA changed its method of accounting for
depreciation of utility plant assets from the compound-interest
method to the straight-line method.  The cumulative effect of this
change for years prior to 1993 was a decrease in accumulated net
revenues (deficit) by $1.054 billion. 

Source:  The PMAs' annual reports. 



                               Table II.4
                
                Interest Rates on Appropriated Debt for
                      Each PMA in Fiscal Year 1994

                           (Rates in percent)

                           APA   BPA\a,b    SEPA\a    SWPA\c      WAPA
--------------------  --------  --------  --------  --------  --------
Range of rates         2.5-8.5   2.5-8.5   2.5-9.5      2.5-        0-
                                                       7.875    12.375
Nominal weighted        2.98\d       3.5       4.6       2.7    4.45\d
 average rate
----------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonnevillle Power Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

\a Obtained from BPA's 1994 annual report. 

\b Does not include interest rates on Treasury bonds or nonfederal
projects. 

\c Provided by the PMA, as of September 30, 1994. 

\d Calculated by GAO for fiscal year 1994. 

Source:  The PMAs' annual reports for fiscal year 1994 or material
developed by GAO from other data provided by the PMAs. 



                                                                                     Table II.5
                                                                      
                                                                          Financial Ratios for PMAs, as of
                                                                                 September 30, 1994

                                                                                (Figures in percent)


                                Debt            Debt
                              servic          servic                                                                                                                          Debt
      Debt      Debt    Debt       e    Debt       e    Debt      Debt    Debt      Debt    Debt       Debt    Debt      Debt    Debt      Debt    Debt      Debt    Debt
        to   service      to      to      to      to      to   service      to   service      to    service      to   service      to   service      to   service      to  service
PM   gross        to   gross  revenu   gross  revenu   gross        to   gross        to   gross         to   gross        to   gross        to   gross        to   gross       to
A     PP&E   revenue    PP&E       e    PP&E       e    PP&E   revenue    PP&E   revenue    PP&E    revenue    PP&E   revenue    PP&E   revenue    PP&E   revenue    PP&E  revenue
--  ------  --------  ------  ------  ------  ------  ------  --------  ------  --------  ------  ---------  ------  --------  ------  --------  ------  --------  ------  -------
AP      96        67      95      62      92      63      90        68      88        69      86         67      87        57      89        64      89        68      88       70
 A
BP      98        58      98      73      99      66      98        61      97        54      96         44      95        34      94        55      95        55      95       48
 A
SE      65        42      71      39      70      38      70        39      68        37      64         49      61        52      57        50      54        52      52       46
 PA
SW      87        51      84      49      83      47      80        44      78        42      75         46      74        42      72        46      67        55      63       46
 PA
WA      64        48      58      24      75      34      66        10      67        14      66          5      63        24      67        15      70        32      72       26
 PA
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration BPA = Bonneville Power
Administration PMA = power marketing administration PP&E = property,
plant, and equipment SEPA = Southeastern Power Administration SWPA =
Southwestern Power Administration WAPA = Western Area Power
Administration

Note:  Gross property, plant, and equipment includes the original
cost of generation and transmission facilities and the cost of
construction work in progress.  For BPA, we also included other
investments and obligations such as energy conservation measures and
costs associated with operating and terminated nuclear plants. 

The ratio of debt to gross property, plant, and equipment was
calculated by dividing outstanding repayable investment (debt) by
gross property, plant, and equipment. 

The ratio of debt service to revenue was calculated by dividing
principal debt repayments plus net interest expense by operating
revenues. 

Source:  Derived by GAO from the PMAs' annual reports and other data
provided by the PMAs. 



                                                                       Table II.6
                                                        
                                                        Gross Appropriations Expended for Power
                                                         and Nonpower Purposes, as of September
                                                                        30, 1994

                                                                 (Dollars in millions)

                                                              Percent                                               Percent
                     Percent             Percent                   of                  Percent of                        of                  Percent of
Purpose        APA  of total       BPA  of total      SEPA      total          SWPA         total          WAPA       total        Totals         total
--------  --------  --------  --------  --------  --------  ---------  ------------  ------------  ------------  ----------  ------------  ------------
Power\a     $206.1     100.0  $25,331.      91.9  $1,476.0       62.4      $1,007.6          37.4      $5,891.0        55.7     $33,911.7          78.1
                                     0
Flood           \b        \b     559.3       2.0     244.3       10.3         910.0          33.7           0.3         0.0       1,713.9           3.9
 control
Irrigati        \b        \b     409.2       1.5        \b         \b            \b            \b       1,558.4        14.7       1,967.6           4.5
 on
Navigati        \b        \b     815.8       3.0     320.9       13.6         231.7           8.6            \b          \b       1,368.4           3.2
 on
Recreati        \b        \b     113.8       0.4     291.3       12.3         402.3          14.9          28.6         0.3         836.0           1.9
 on
Fish and        \b        \b      80.0       0.3      16.7        0.7          24.6           0.9          97.4         0.9         218.7           0.5
 wildlife
Multipur        \b        \b        \b        \b        \b         \b            \b            \b       2,801.6        26.5       2,801.6           6.5
 pose\c
Municipa        \b        \b        \b        \b        \b         \b            \b            \b         197.6         1.9         197.6           0.5
 l and
 industr
 ial\d
Other           \b        \b     244.2       0.9      14.3        0.6         121.1           4.5           6.1         0.1         385.7           0.9
=======================================================================================================================================================
Total       $206.1     100.0  $27,553.     100.0  $2,363.5      100.0      $2,697.3         100.0     $10,581.0       100.0     $43,401.2         100.0
                                     3
-------------------------------------------------------------------------------------------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

Note:  Percentages may not total 100 because of rounding. 

\a Power-related costs includes all power-related and all
irrigation-related costs incurred by the PMA and the operating agency
that must be repaid to the federal government through power revenues. 

\b Not applicable. 

\c Multipurpose costs refer to costs incurred by the operating agency
that can be allocated to any purpose of the project.  Different
multipurpose costs are allocated to each project, and the operating
agency at each project then determines how to allocate these costs to
the appropriate purposes at the project. 

\d Municipal and industrial costs refer to costs associated with
providing water to cities for their use, such as for drinking
purposes. 

Source:  The PMAs' fiscal year 1994 annual reports and data provided
by the PMAs. 


COMPETITIVE ISSUES
========================================================= Appendix III



                              Table III.1
                
                  Average Revenue per Kilowatt Hour of
                Wholesale Power Sold for Each PMA During
                            Fiscal Year 1993

                                      Energy                   Average
                                   delivered               revenue (in
                                          in     Revenue     cents per
                                    kilowatt  from sales      kilowatt
PMA                                    hours  in dollars    hour sold)
--------------------------------  ----------  ----------  ------------
APA                               405,831,00  $10,079,00           2.5
                                           0           0
BPA                               57,245,116  1,406,400,           2.5
                                        ,000         000
SEPA                              8,744,817,  164,867,00           1.9
                                         000           0
SWPA                              7,946,116,  96,696,000           1.2
                                         000
WAPA                              29,358,370  535,559,00           1.8
                                        ,000           0
Nationwide-wholesale              1,202,901,  $43,383,57           3.6
                                     697,000       2,000
----------------------------------------------------------------------
Legend

APA = Alaska Power Administration
BPA = Bonneville Power Administration
EIA = Energy Information Administration
PMA = power marketing administration
SEPA = Southeastern Power Administration
SWPA = Southwestern Power Administration
WAPA = Western Area Power Administration

Source:  Developed by GAO from the PMAs' fiscal year 1993 annual
reports and EIA's data. 




(See figure in printed edition.)Appendix IV
COMMENTS FROM THE DEPARTMENT OF
ENERGY'S BONNEVILLE POWER
ADMINISTRATION
========================================================= Appendix III




(See figure in printed edition.)Appendix V
COMMENTS FROM THE DEPARTMENT OF
ENERGY'S POWER MARKETING LIAISON
OFFICE
========================================================= Appendix III



(See figure in printed edition.)



(See figure in printed edition.)


The following are GAO's comments on the Power Marketing Liaison
Office's letter dated September 15, 1995. 


   GAO'S COMMENTS
------------------------------------------------------- Appendix III:1

1.  The Power Marketing Liaison Office stated that our report implies
that the PMAs generally use inefficient and inappropriate operating
techniques that could leave them in a precarious position in the
future.  We disagree.  Our report notes that the PMAs embody the
various statutes and DOE policies that govern their procedures.  Our
report also points out that with the exception of Alaska, the PMAs do
not own or operate the hydropower facilities from which they sell
power nor do they have control over the amount of investment incurred
by the agencies that operate and maintain the facilities.  We did not
attempt to assess the efficiency or appropriateness of the current
operating techniques used by the PMAs or the operating agencies. 

2.  The Liaison Office stated that it is inappropriate to use
investor-owned utilities' methodology of operating for a profit as
the only standard by which to judge the PMAs' operations.  Our report
did not compare the fact that investor-owned utilities use a
profit-based methodology with the fact that the PMAs' are not allowed
to earn a profit.  We compared investor-owned utilities with the PMAs
in two cases, both of which we believe are appropriate.  First,
concerning the manner in which the hydropower facilities and
transmission assets were financed, we compared the PMAs' cost of
borrowing from the Treasury with investor-owned utilities' cost of
borrowing from private markets.  We believe that this comparison
allows the reader to independently assess the relative borrowing
costs and potential financial advantages of PMAs versus private
sector operations.  Second, we explain that most capital investments
in federal hydropower and transmission facilities are made through
appropriations, which are essentially debt because they must be
repaid through power revenues.  We compare the PMAs' method of
financing with that of investor-owned utilities that can issue common
or preferred stock in addition to debt.  Because the PMAs cannot
issue stock, it is reasonable to expect that they would have higher
levels of debt than investor-owned utilities.  We do not assess the
levels of the PMAs' debt in comparison to investor-owned utilities
but rather in terms of competitive pressures and how the PMAs' debt
may affect their competitive situation. 

3.  The Liaison Office suggested several items that should be
recognized in the report in order to avoid incorrect conclusions
stemming from our comparison of PMAs with investor-owned utilities. 
The Liaison Office suggested that (1) the Congress never intended the
PMAs to make a profit, (2) PMAs have a lower operating cost because
their facilities were constructed at a time when construction costs
were lower and the facilities have no fuel costs, (3) the PMAs' high
debt ratio results from the capital- intensive start-up costs
associated with hydropower facilities and the longer service lives of
these facilities and resultant longer repayment periods, and (4) the
PMAs' revenues can vary from year to year depending on water flow,
and thus comparisons to nonhydro- based systems, such as those of
investor-owned utilities, are misleading.  First, our report
acknowledges that the PMAs do not set their rates to earn a profit. 
Rather, they attempt to generate power revenues sufficient to cover
all capital and operating costs.  Second, although our report lists
several reasons why the PMAs remain among the sellers of power at the
lowest cost, our list was not intended to be exhaustive.  Our intent
was to inform the reader that, for many reasons the PMAs have been
and generally remain among the sellers of power at the lowest cost. 
In addition, our report notes the inherent low cost of hydropower
relative to other generating sources.  Third, we do not compare the
PMAs' high levels of debt with the debt of investor-owned utilities. 
Instead, we explain how the PMAs' debt, which is a fixed cost, may
constrain the PMAs from adjusting to the increasingly competitive
wholesale power markets in which they operate.  Fourth, we do not
compare any particular year's revenues or generation of any of the
PMAs with a nonhydro-based system of an investor-owned utility. 
Instead, our report notes that the PMAs' revenues can vary depending
on conditions, such as water flow, which may affect the amount of
power that a PMA can sell. 

4.  The Liaison Office commented that the PMAs operate efficiently
within congressional guidelines.  The Liaison Office supported this
comment by suggesting that the PMAs (1) normally return more funds to
the Treasury than the annual congressional appropriations provided
for the operating costs of the PMAs and the power-related costs of
the operating agencies and (2) seek to balance the concerns of
authorized competing uses of the projects and scheduling and
delivering power to their customers.  While PMAs may normally return
more funds to the Treasury than they receive each year in annual
appropriations, the repayment does not cover the Treasury's interest
expense associated with the PMAs' debt.  Second, our report notes
that in addition to the $34 billion invested in power-related capital
investments, more than $9.5 billion has been expended by the
operating agencies for nonpower-related purposes, such as flood
control, irrigation, and navigation.  We revised our report to note
that the PMAs must recognize and balance the concerns of these
competing uses against the needs of their power customers. 

5.  We agree with DOE that because Bonneville accounts for the
majority of the PMAs' sales and revenues, its data tend to overshadow
the other PMAs' and may lead to inappropriate conclusions about all
of the PMAs when the conclusions only apply to Bonneville.  We have
limited our presentation to factual material only.  Our discussion of
Bonneville's competitive situation was not meant as a reflection on
the other PMAs but instead was intended to show what can happen when
a PMA with high fixed costs faces a competitive environment.  Our
report explains that as of the date of our report, the other PMAs
were the low-cost sellers of power in their areas. 

6.  The Liaison Office commented that our report should reinforce the
fact that the PMAs have no control over the amount of appropriations
expended by the operating agencies for power generation equipment. 
We agree and have revised our report accordingly. 

7.  We agree with the Liaison Office that the two financial ratios we
cite in our report (debt to gross property, plant, and equipment and
debt service to revenue) should not be used alone to accurately
assess the PMAs' financial condition.  We use these ratios only as
indicators of the PMAs' financial condition.  However, for
Bonneville, which now faces significant competition, the high debt
service ratio is a critical indicator of its financial condition. 
Bonneville's high debt and resultant fixed costs leave it with little
flexibility to respond to competitive challenges.  The substantial
debt of the other PMAs is not currently a problem because they remain
the sellers of power at the lowest cost in their service areas. 
However, competition is expected to result in a general decline in
wholesale rates and, if they do not remain low-cost sellers, other
PMAs could face a situation similar to Bonneville's.  We agree with
the Liaison Office that the PMAs' debt is at lower interest rates
than those available today and that this has allowed PMAs to carry
higher debt ratios without a corresponding increase in financial
risk.  However, as stated above, increased competition in wholesale
power markets is a relatively new development and could pose serious
challenges for each of the PMAs. 

8.  The scope of our review did not include an assessment of the
quality of the power equipment employed by the PMAs. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix VI

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION

Bernice Steinhardt, Associate Director
Peg Reese, Project Manager
Daniel Feehan, Deputy Project Manager
Charles Hessler, Deputy Project Manager
Philip Amon
Nancy Bowser
Ken Davis
Stacey Keisling
James Kennedy
Martha Vawter

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION

Gregory Kutz, Assistant Director
Patricia Cheeseboro
Michelle Dimodica
Lori Hendrickson
Donald Neff

OFFICE OF THE GENERAL COUNSEL

Jackie Goff, Senior Attorney


BIBLIOGRAPHY
============================================================ Chapter 0

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Audit of Bonneville Power Administration's Management of Its Fish
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Bonneville Power Administration Business Plan 1995.  U.S.  Department
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The Bonneville Power Administration:  To Sell or Not to Sell.  U.S. 
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BPA at a Crossroads.  U.S.  House of Representatives, BPA Task Force,
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Federal Energy Subsidies:  Direct and Indirect Interventions in
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Financial Statistics of Major U.S.  Publicly Owned Electric
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Administration.  DOE/EIA-0437(93)/2.  Washington, D.C.:  Feb.  1995. 

Fitch Research.  "Fitch Competitive Indicator." New York:  Fitch
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Garrison, K.  and D.  Marcus.  "Changing the Current:  Affordable
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York:  Natural Resources Defense Council.  Dec.  1994. 

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Oversight Hearing:  BPA Electric Power Resources Acquisition (July
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Oversight Hearing:  BPA Columbia River Salmon Restoration (held in
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RELATED GAO PRODUCTS
============================================================ Chapter 1

Bonneville Power Administration's Power Sales and Exchanges
(GAO/RCED-95-257R, Sept.  19, 1995). 

Bonneville Power Administration:  Borrowing Practices and Financial
Condition (GAO/AIMD-94-67BR, Apr.  19, 1994). 

Bonneville Power Administration:  GAO Products Issued Since the
Enactment of the 1980 Pacific Northwest Power Act (GAO/RCED-93-133R,
Mar.  31, 1993). 

Federal Electric Power:  Views on the Sale of the Alaska Power
Administration Hydropower Assets (GAO/RCED-90-93, Feb.  22, 1990). 

Policies Governing Bonneville Power Administration's Repayment of
Federal Investment Still Need Revision (GAO/RCED-84-25, Oct.  26,
1983).