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in terms of cost, some of our customers are already pursuing alternative 

 suppliers. The perceived uncertainty of BPA's future rates, driven by 

 escalating and unpredictable costs, and the erosion of the value from our 

 products and services as the utility industry changes, have encouraged 

 some customers to reduce their dependence on BPA. 



BPA is uniquely positioned with a majority of the Northwest's transmission 

 and power to continue to bring significant benefit to the region and to our 

 customers. Our ability to remain competitive will ensure that the region's 

 premier economic asset, the federal hydro power system, is managed-with a 

 melding of business-like, open, and environmentally responsible principles— 

 in a way that brings maximum benefit to the Pacific Northwest. It will 

 enable the continued vitality of the agency in resource development, 

 environmental issues, and achievement of planning and operational 

 efiBciencies. 



BPA is currently positioned as the low cost provider to the region as a 

 whole, although some have lower costs. With the industry changes 

 confronting the region our advantage is narrowing, particularly for some 

 segments of our market. Further complicating the issue is the uncertainty 

 of our fiiture costs, particularly in program areas such as Fish and Wildlife. 

 Repayment reform initiatives may also result in greater costs through 

 revised repayment schedules or higher interest rates on existing debt. Even 

 - with these uncertainties, we are committed to preserve our position as low 

 cost provider to the markets we serve through this project. BPA must be 

 successfiil with its Competitiveness Project to ensure a continued low cost 

 power supply. Then and only then, will our customers choose to rely on 



