TreasuryBPA Conference Call

1
Treasury/BPA Conference Call

• November 6, 2002

2
Objective

• We agree BPA has the authority to miss and
  re-schedule annual Treasury payments on non-due
  obligations.
• We want to explore consequences of missing such a
  payment.
• Financial implications Understand what
  circumstances would cause the 1 interest penalty
  to be assessed (see pg.4 and graph on last page)
• Relationship with Treasury and the Administration
  We dont want to damage the current good
  relationship and trust we have with Treasury.
  Would like some reassurance that this
  relationship would not be negatively impacted by
  a missed Treasury payment

3
Levels of Annual Repayment Requirements

•  Obligations that are due in the current year
  (term schedule - the minimum legal
  requirement).
• Amortization schedule for the year as filed with
  FERC in a rate proposal, which includes all due
  obligations, and in most years, some
  discretionary amortization (administrative
  requirement).
•  Actual payments, which include all due payments
  and discretionary amortization as scheduled in a
  FERC filing, and additionally may include
  additional payments (protocol).

4
What Criterion Is Appropriate In Applying 1
Interest Penalty?

• Based on legislative history, we believe the
  repayment criteria of the Secretary of Energy
  to be used in applying the interest penalty
  refers to the term schedule criteria. This
  would mean that in determining whether BPA has
  failed to repay, and whether the interest
  penalty should be applied, all payments to date
  in excess of the term schedule should be
  considered.
•  What we are asking, however, is whether Treasury
  would consider the excess above our scheduled
  payment in determining whether BPA has failed to
  repay, and whether the interest penalty should
  be applied.
• Wed like to explore the possibility of getting
  some written clarification of Treasurys view of
  application of the 1 interest penalty
•  

5
Current Amortization Payments in Excess of Rate
Case Schedule

•  

 
6
Comparison of Amortization Schedules Term
Schedule, Rate Case Schedule, and Actual Payments
( in thousands)
Protocol (Actual Amounts Paid)
Administrative requirement (filed with FERC in
a rate proposal)
Minimum legal requirement (Term Schedule-
obligations due)
Term schedule doesnt account for forecasted
borrowing beyond 1996