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Question 2; Should BPA adopt tiered rates? If not, why not? If so, how should these 

 rates be structured? If there is a specific model or framework for BPA 

 tiered rates that you support, please describe it in detail. What principles 

 should be used in the development of these rates? 



Can tiered rates be designed so that they do not discourage development of 

 new industry in areas served by customers of BPA? Should federal base 

 system resources be allocated through a tiered rate system? 



Answer: BPA and many of its customers have become more interested in tiered 



rates as a means of promoting more efiBcient resource acquisitions by both 

 BPA and its customers, and as a means of reducing upward pressure on 

 BPA rates. BPA supports the concept of tiered rates, but a thorough 

 examination of alternative tiered rate designs is needed before a final 

 decision can be made. As part of BPA's 1993 Rate Case, BPA and the rate 

 case parties signed a settlement on tiered rates in which we agreed to 

 thoroughly investigate tiered rates with our customers and interested 

 parties in an open process to be completed prior to the 1995 rate case. A 

 tiered rate work group began this investigation in July of this year. By 

 about July of next year, a BPA determination, based on recommendations 

 from the work group will be made (1) for a preferred methodology or 

 methodologies, or (2) not to proceed with tiered rates. Given the strong 

 interest already demonstrated in tiered rates, we believe the major focus of 

 the woiic group will be to determine how to design tiered rates. 



At this point, BPA does not have a specific model or framework for 

 structuring tiered rates. The Competitiveness Project is an initiative to 

 reinvent BPA in order that the agency can move from a more traditional 



