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Question 4: How should the costs of environmental externalities, including the costs of 

 restoring endangered fish and other species, be distributed in tiered rates 

 and/or unbundled services? What must BPA do to ensure that 

 competitiveness efforts such as tiered rates and unbundling do not diminish 

 its commitment to statutory requirements such as the protection of fish and 

 wildlife? 



How can the region maintain the benefits of regional coordination and 

 planning if resource acquisition and transmission become more 

 decentralized as a result of tiered rates and unbundling? 



Answer: At this time, BPA has not made any conclusions regarding how 



environmental costs will be redistributed or changed from current rate- 

 making practices in its rate structures. In our current rate design the 

 environmental costs associated with restoring endangered fish and other 

 species are allocated as hydro system costs to all firm power uses. How 

 BPA allocates costs among its customers is an issue which has been 

 historically determined in BPA rate cases. 



This issue is being discussed in the Tiered Rate Work Group which 

 includes BPA's customers and other interested parties. One proposal has 

 been to put all of these costs in the first tier. Another proposal has been to 

 not provide customers with a first tier allocation unless they meet certain 

 environmental criteria. 



BPA's competitive efforts will not diminish its commitments to meeting its 

 statutory obligation to protea fish and wildlife. In fact, BPA's ability to 

 meet these obligations hinge on its ability to remain competitive in a utility 

 environment that is undergoing rapid change. Only if BPA is successful in 

 becoming more competitive, which includes taking a more results-oriented 

 approach in meeting our fish and wildlife responsibilities, will we maintain 

 our revenue base and our ability to fund effective fish and wildlife efforts. 



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