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BPA Power Function Review Date Issued: January 17, 2006PFR II Kick Off Meeting

January 23, 2006 Workshop

PFR II Scenarios

What would it take to get a 10% reduction in the Initial Proposal Average Rate?

Scenario 1:

• $175 M/year reduction in costs results in approximately a $3/MWh reduction in the Initial Proposal Average Rate

Scenario 2:

• Liquidity Tools and $50 M/year reduction in costs result in approximately a $3/MWh reduction in the Initial Proposal Average Rate ($2/MWh from liquidity tools and $1/MWh from cost reductions)

Scenario 3:

• Liquidity Tools and $125 M improvement in FY06 Expected Value Net Trading Floor revenues result in approximately a $3/MWh reduction in the Initial Proposal Average Rate ($2/MWh for liquidity tools and $1/MWh improved net trading floor sales)

Note: Liquidity tool impacts assume a fully flexible financial tool in these scenarios.