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Question 7: Should the low-density discount be eliminated or modified? Please provide 

 an estimate of the cost and/or benefit to regional ratepayers of continuing 

 to provide these discounts. 



Answer: The low density discount is mandated by Sertion 7(d)(1) of the Pacific 



Northwest Electric Power Planning and Conservation Act which states: 



"In order to avoid adverse impacts on retail rates of the Administrator's 

 customers with low system densities, the Administrator shall, to the extent 

 appropriate, apply discounts to the rate or rates for such customers." 



BPA has reviewed the low density discount every five years since it 

 was mandated by the Pacific Northwest Electric Power Planning 

 and Conservation Act. The last review occured in 1991 and 

 recommeded that no modifications to the low density discount was 

 necessary. That recommendation was incorporated into BPA's 

 1993 initial rates proposal. 



The cost and/or benefits associated with the low density discount are 

 included in the Priority Firm Power rate because the low density discount is 

 merely a reallocation among the Priority Firm customers. The effect of 

 eliminating the low density discount would be that the customers receiving 

 the low density discount would be charged more and the customers not 

 receiving the discount would be charged less. Excluding the residential 

 exchange, the estimated total redistribution for FY 1994 is $22 million and 

 for FY 1995 the estimated total redistribution is $22.3 million. 



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