United States.

THE BONNEVILLE POWER ADMINISTRATION [BPA] AND

WASHINGTON PUBLIC POWER SUPPLY SYSTEM [WPPSS]

OVERSIGHT HEARING

BEFORE THE

SUBCOMMITTEE ON MINING, FOREST MANAGEMENT,

AND BONNEVILLE POWER ADMINISTRATION

OF THE

COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

HOUSE OF REPRESENTATIVES

NINETY-EIGHTH CONGRESS

SECOND SESSION

ON

WASHINGTON PUBLIC POWER SUPPLY SYSTEM BOND DEFAULT: WHO

PAYS?

HEARING HELD IN WASHINGTON, DC

JANUARY 26, 1984

Serial No. 98-48

PART I

Printed for the use of the Committee on Interior and Insular Affairs

42-276 O

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1985

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

HOUSE OF REPRESENTATIVES

MORRIS K. UDALL, Arizona, Chairman

STANLEY SCOVILLE, Staff Director and Counsel

ROY JONES, Associate Staff Director and Counsel

LEE MCELVAIN, General Counsel

TIMOTHY W. GLIDDEN, Republican Counsel

SUBCOMMITTEE ON MINING, FOREST MANAGEMENT, AND BONNEVILLE POWER

ADMINISTRATION

JAMES WEAVER, Oregon, Chairman

DANIEL MEEK, BPA and Energy Consultant

MARGARET CHAPIN, Clerk

NOTE.-The first listed minority member is counterpart to the subcommittee chairman.

Lazar, Jim, research director, Northwest Conservation Act Coalition...

Panel from the National WPPSS 4 and 5 Bondholders Committee consist-

ing of:

17

Jonathan Krasney, chairman..

Arthur Hoffer, vice chairman

Richard Lehmann, treasurer..

Panel consisting of:

Mark Binstein, investigator for WPPSS Bondholders Association, Inc.

V. Lee Ringler, plaintiff in Ringler v. Merrill Lynch lawsuit.....

Panel consisting of:

Eliot Greenbaum, director of research, Sills, Zoppa & Associates.

Jeff Alexopulos, vice president, T. Rowe Price Associates

Shad, Hon. John S.R., Chairman, U.S. Securities and Exchange Commis-

sion

Udall, Hon. Morris K., chairman, Committee on Interior and Insular

Affairs....

APPENDIX

THURSDAY, JANUARY 26, 1984

Additional material submitted for the hearing record from:

Jeff Alexopulos, vice president, T. Rowe Price Associates, Inc.:

1. Responses to subcommittee questions, January 1984...

2. Proposal for resolving WPPSS debt, March 1983....

77

81

3. Letter from Thomas D. Friery (WPPSS), to Peter J.D. Gordon (T. Rowe

Price Associates, Inc.), July 10, 1978..

84

4. Paper entitled "Pacific Northwest Resource and Load Forecast," Robert

B. Gallup, chief consulting engineer, R.W. Beck & Associates, October

31, 1979

89

Mark Binstein, investigator for WPPSS Bondholders Association, Inc.:

1. Responses to subcommittee questions......

97

2. Association letter to WPPSS 4 and 5 bondholders, January 1984.

Clearing Up News Service: Paper entitled "Summary of WPPSS Litigation,'

November 11, 1983..

100

106

CBS News: Excerpt from a segment entitled "Whoops," from 60 Minutes,

November 6, 1983.

116

Dr. Thomas J. DiLorenzo, Department of Economics, George Mason Universi-

ty, Fairfax, VA:

1. Prepared statement...

125

2. Paper entitled "The WPPSS Default: Not the Only Off-Budget Boon-

Doggle," published by the CATO Institute, Washington, DC

134

Howard Gleckman, staff reporter for The Bond Buyer: "WPPSS: From Dream

To Default," reprint of a four-part series appearing in the publication

Credit Markets, January 1984..

149

Eliot Greenbaum, director of research, Sills, Zoppa & Associates:

1. Washington Public Power Supply System, February 15, 1979 (for Mi-

chael A. Weisser, Inc.)

187

2. Municipal Credit Report, April 18, 1980 (for Michael A. Weisser, Inc.)....

189