NOVEMBER 14, 1956.

Mr. H. R. MOORE,

Idaho Power Co., Boise, Idaho.

DEAR MR. MOORE: Attached are the derivations of streamflows requested by Mr. Glenn Hall when I was in Boise several weeks ago. They are the net power flows for Brownlee, Hells Canyon, and Oxbow projects used in our power operation studies to determine benefits from coordination of the Brownlee, Oxbow, and Hells Canyon projects with the Federal system.

Subsequent to the time these studies were made new estimates of Snake River irrigation depletions have been made by the Water Management Subcommittee of the Columbia Basin Inter-Agency Committee. These revised depletion adjustments are incorporated in streamflow derivations for the Northwest Utilities Conference Committee report currently being prepared. We feel that use of the new depletion data would not materially change the results of the studies previously submitted to you since the principal benefits from integration of Brownlee project with the Federal system are due to the added storage.

We regret having delayed sending you these streamflow data and will be glad to supply any additional information we have which you feel will be useful in your studies.

Very truly yours,

H. M. MCINTYRE, Hydraulic Operations Officer.

Net power flows for Brownlee, Hells Canyon, and Oxbow projects-1960-61 through 1964-65 levels of development-Average monthly discharge in second-feet

See explanations of columns (1), (2), (3), (4) of table on following page.

EXPLANATION OF COLUMNS

(1) From Geological Survey discharge records. Median-month year flows are selected from the 25-year period, July 1925 through June 1950.

(2) Reservoir evaporation losses are based on normal pool reservoir area and estimated average monthly net evaporation rates.

(3) Snake River irrigation depletion adjustments are the sum of adjustments for present development (1948) as shown in Report on Snake River Streamflow Depletion prepared by the Columbia Basin Interagency Committee, Technical Subcommittee for Operating Plan, May 1951, and additional adjustments to 1962-63 level based on USBR tabulation, "Estimated flow, Snake River at Oxbow, Oreg., with 367,000 acres of new land development, primarily ground water," dated May 20, 1952. (4) The algebraic sum of columns (1), (2), and (3).

DRAFT PROPOSAL

Prepared by Bonneville Power Administration, April 1957

IDAHO

1. Term of Agreement. Subject to the other provisions contained herein, each of the provisions of this agreement shall be effective for the term of twenty (20) years commencing at the time Brownlee dam is completed and ready for regular operation.

2. Definitions.

(a) The term "storage drawdown period" for the purpose of this agreement means the period commencing September 16 in each year, in the term hereof, through April 15 in the immediately succeeding year.

(b) The term "storage refill period" for the purpose of this agreement means the period April 16 through September 15 in each year, in the term hereof.

(c) The term "system load requirements" means the system load requirements of the Company, excluding therefrom the sales of nonfirm hydroelectric energy by the Company to other utilities.

(d) The term "maximum hourly capability" of the Company's plants shall be deemed to be kilowatts until changed as provided in section ____ and thereafter shall be deemed to be the capability as so determined.

3. Exchange of Supplementary Excess Energy.

(a) The Government shall make available to the Company at the point or points of delivery specified in and subject to the applicable terms of said exchange agreement (Contract No. 14-03-001-11493), during each day in each storage refill period during the term hereof and the Company shall accept from the Government, electric energy in the amount of the excess of the Company's system load requirements for such day over the actual output of the Company's generators for such day and such generators are to be operated in a manner that will assure that Brownlee reservoir will be full by September 15 of each year in the term hereof: Provided, however, That the Administrator may, but shall not be obligated to make available to the Company during any refill period electric energy in excess of 432,000,000 kilowatt-hours.

(b) The Government shall not be obligated to make electric energy available to the Company as provided in subsection (a) of this section during any hour at an integrated demand for such hour in excess of the smaller of:

(1) the number of kilowatts obtained by subtracting the actual output, in kilowatts of the Company's plants during such hour, from the maximum hourly capability of such plants (as defined in section 2 hereof), or

(2) the number of kilowatts specified by the Administrator if he determines that the capacity of the transmission and/or transformation facilities used by the Government in making deliveries hereunder is insufficient to enable the Government to deliver, during such hour, the amount of electric energy requested by the Company, together with the firm requirements of all other customers of the Government which are served by using a part or all of such facilities.

(c) If the Administrator, at any time or times after July 1, 1959, determines from schedules prepared by him that the total amount of power available for his disposition during any period beginning after July 1, 1965, will not be sufficient to supply the Government's other commitments he shall give written notice to the Company specifying the amount of the proposed reduction in the amount of kilowatt-hours specified in subsection (a) of this section, and the period during which such reduction is to be effective, but such period shall not begin before the later of: (i) July 1, 1965, or (ii) five (5) years from the time such notice is given: Provided, however, That such reduction shall not reduce the amount specified in subsection (a) of this section below 313,000,000 kilowatt-hours.

(d) The Company shall, at the request of the Government, make available to the Government, during each day in each storage release period in the term hereof when the balance in the supplementary exchange account (hereinafter defined) is in favor of the Government, at the point of delivery specified in and subject to the applicable terms and conditions of, said exchange agreement (Contract No. 14-03-001-11493), electric energy at a rate up to the Company's total system generation in excess of its system load requirements: Provided, however, That the Company shall not be obligated to make available such electric energy in amounts in excess of the capacity of the interconnecting transmission facilities of the parties hereto, or to generate electric energy at Brownlee plant in such amounts that discharge of water from storage in Brownlee reservoir exceeds the amounts usable to generate electric energy at the Company's Oxbow plant (when constructed and ready for regular operation).

4. Supplementary Exchange Account and Settlement.

(a) A supplementary exchange account will be established and maintained by the Administrator and he shall record therein the credits and debits to be made to the Government under this agreement. No credits or debits will be made in such account unless the deliveries made hereunder are made in accordance with a prior agreement of the dispatchers of the parties hereto and logged and recorded as such by the proper operator of such parties.

(b) The amount of electric energy delivered by the Government to the Company in accordance with subsection 3 (a) hereof, will be credited to the Government in the supplementary exchange account; provided, however, that is the balance due the Government is such account exceeds 313,000,000 kilowatt-hours at the end of the storage refill period, the excess of such balance over 313,000,000 kilowatt-hours shall be credited to the Government in the exchange account established by said Contract No. 14-03-001-11493, and the Government shall be debited in the supplementary exchange account with the amount of such excess.

(c) Subject to the provisions of subsection (g) of this section, on September 16 of each year during the term hereof, there shall be debited against the Government in the supplementary exchange account an amount determined by subtracting from credits entered in said account up to 313,000,000 kilowatt-hours, for the deliveries made by the Government to the Company for such year in accordance with subsection 3 (a) hereof, an amount obtained by dividing the above-mentioned credits by one and four-tenths (1.4).

(d) The amount of electric energy delivered to the Government by the Company in accordance with subsection (d) of section 3 hereof, will be debited against Government in the supplementary exchange account.

(e) During any month in each storage release period when the balance in the storage energy account is in favor of the Government and the Company desires to purchase a portion of such electric energy to serve its load requirements for such month, the Company will notify the Administrator in writing at least five (5) days prior to the beginning of such month specifying the amount of electric energy it wishes to purchase during such month from said supplementary exchange account. Upon receipt of such notice from the Company, the Administrator's dispatchers shall notify the Company's dispatchers of the amount of such electric energy in said supplementary exchange account, if any, the Government is willing to sell to the Company. The electric energy purchased by the Company in accordance with this subsection shall be credited to the Government in the exchange energy account established by said Contract No. 14-03-001-11493 and debited against the Government in said supplementary exchange account.

(f) If the balance in the supplementary exchange account is in favor of the Government when water is spilled from Brownlee reservoir or if water is released from Brownlee at the request of the Corps of Engineers, for the purpose of providing space for flood control, the Administrator will debit the Government in the supplementary exchange account with the number of kilowatt-hours, as determined by the Administrator, which is the lesser of: (1) the number of kilowatt-hours which could otherwise have been generated from the water so spilled or released, or (2) such balance then remaining in the supplementary exchange

account.

(g) If a change in the rate specified in Bonneville Wholesale Energy Rate Schedule H-3 (attached hereto as Exhibit A) is effected by an amendment of such schedule or the adoption of a new rate schedule superseding said rate schedule, and if such amended or new rate schedule is substituted, as provided in said Contract No. 14-03-001-11493, for the rate schedule attached thereto as Exhibit A, the debit to be made against the Government in the supplementary exchange account as provided in subsection (c) of this section, after such change was effected, shall be computed as provided in said subsection (c) after substituting,

for the figure "one and four-tenths (1.4)" therein mentioned, the sum of one (1) plus the quotient obtained by dividing one (1) mill by the number of mills and fraction thereof to which such rate was changed.

APRIL 18, 1957.

Mr. A. C. INMAN,

Idaho Power Co., Boise, Idaho.

DEAR MR. INMAN: Attached are copies of the charts we discussed in Dr. Wm. A. Pearl's office in connection with the BPA-Idaho Power Co. storage contract. The charts show the deficit of the Idaho Power Co. in red and the surplus in blue. Also plotted on the charts are the Oxbow and Brownlee monthly generation in the critical year 1936-37 and the annual average.

The data for these charts were taken from the load resource studies submitted to you and discussed in previous meetings.

No attempt has been made to reregulate Brownlee storage to provide a more uniform surplus on the Idaho Power Co.'s system.

Very truly yours,

Dr. WILLIAM A. PEARL,

Administrator, Department of the Interior,

H. M. MCINTYRE, Hydraulic Operations Officer.

IDAHO POWER Co.,

Boise, Idaho, May 21, 1957.

Bonneville Power Administration, Portland, Oreg.

DEAR DR. PEARL: For the purpose of recording the progress of our conferences in regard to an integration agreement, we have prepared the attached memorandum, which indicates our impression of the conclusions reached during the course of the meeting. If the contents of the memorandum are not in accord with your impressions of the meeting, I would appreciate hearing from you.

We are not able to supply you with any new information which has had enough consideration by our engineers to be in suitable form to present at this time. However, we will have some additional ideas to present to you at our meetings on May 28.

Yours very truly,

R. E. GALE, Vice President. MEMORANDUM ON BONNEVILLE POWER ADMINISTRATION-IDAHO POWER CO. MEETING ON INTEGRATION AGREEMENT, MAY 14, 1957

The following men met in Portland on May 14, 1957:

Bonneville Power Administration:

Dr. Wm. A. Pearl

Miller Evans

Lane Morthland
Jack Joliffe

H. M. McIntyre

Idaho Power Co.:

R. E. Gale
H. R. Moore
F. C. Harvey
R. A. Hogg

This meeting was for the purpose of establishing the principal benefits which might accrue to the Bonneville Power Administration and Idaho Power Co. systems in the event that integration was accomplished under a suitable contract. The construction of an integration contract was outlined to consist of three steps: (1) agreement on operating and engineering procedure to obtain integration benefits, (2) agreement on equitable division of benefits, and (3) stating the agreements of points (1) and (2) in a legal document in a manner consistent with the laws governing the contracting parties.

Prior to this meeting, studies had been made and presented to groups consisting of representatives from the Bonneville Power Administration, Army Engineers, Bureau of Reclamation, Federal Power Commission, Pacific Northwest Power Co. and Idaho Power Co. Studies prepared by Mr. McIntyre were used for comparison purposes and determination of integration benefits. The studies consisted of calculations as to the possible firm power capability of the two systems operated independently under water conditions which would represent the most adverse period for the northwest power pool (1936–37), the BPA system (1936–37), and the Idaho Power Co. (1934-35), and under median month water conditions. Similar studies were also made of the two systems operating in coordination under the same water conditions as above. The objective of the study in every