BPA and REA Actions and Activities Affecting Utility Participation in Washington Public Power Supply System Plants 4 and 5

GAO was asked to determine how the activities of the Bonneville Power Administration (BPA) and the Rural Electrification Administration (REA) affected two incomplete nuclear powerplants recently terminated by the Washington Public Power Supply System. Specifically, GAO reviewed: (1) BPA involvement in regional demand forecasting; (2) BPA representation to its customers of the region's need for additional generating capacity; (3) BPA involvement, if any, in its customers' decisions to participate in plants 4 and 5 and the respective levels of their participation; (4) recent BPA actions which relate to termination of plants 4 and 5; and (5) recent REA actions directed toward BPA customers which could affect the customers' approach to terminating the two plants.

GAO found that BPA: (1) played a role in providing electric demand forecast assistance to small customers and provided input to the region's forecast; (2) endorsed the need for additional generating units to meet regional power needs by defending the validity of the regional forecast; (3) supported the participation of its preference customers in plants 4 and 5; and (5) took several actions indirectly facilitating attempts to mothball and then terminate these plants. REA directed its borrowers to meet their Supply System obligations and implied that their present and future financial standing with REA could be affected if they do not honor their obligations on plants 4 and 5.