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concern. Bonneville's focus on its competitiveness is a direct result of its customers' 

 concern about their own ability to remain competitive. 



Competitiveness is an issue now because the utility industry appean to be undergoing 

 a major shift in relationships among the key functions of power generation, transmission, 

 distribution and consumption. The roles of power sellers and power buyers seem less clear 

 than they once were. How far these changes can and should go and their implications for a 

 long-term, least-cost energy fiiture should be the focus of major public policy debate both 

 here in the region and nationally. 



The restructuring that appears to be under way b the product of a number of forces: 



Changing Tecfancrfogies. New generating technologies — moderate-scale, 

 efficient, short lead time, combined-cycle combustion turbines and cogeneration units — are 

 available now. Small-scale fuel ceUs and cost-competitive renewable resource technologies 

 are not far behind. Some of these technologies are utility scale. Some, however, are small 

 enough to be appropriate for large industrial or commercial consumers. These technologies 

 and. as importantly, low-cost natural gas, are rapidly changing our expectations about liow 

 we will generate electricity, wfio will generate it, Iww it is marketed and delivered, &ndfrom 

 whom consumers will purchase it. 



In addition, new technology in transmission and distribution can improve efficiency, 

 ease access to transmission and potentially increase the competitive advantage of those who 

 control transmission services. 



Technology is also creating dramatic changes on the consumers' side of the meter. 

 One of the fundamental concepts of the Power Act was to view more efficient structures and 

 equipment as electricity resources. In the future, new communication and control 

 technologies could provide consumers with instantaneous information on their electricity 

 rales and the ability to adjust their electricity use accordingly. Such technologies could also 

 enable utilities to control the operation of appliances or equipment in homes and businesses 

 to reduce demands on generation and distribution. These technologies could fundamentally 

 alter the relationship between the utility and its customers. 



We should neither be stampeded by the technological changes taking place nor ignore 

 them. It is clear, however, that if technologies emerge that confer a competitive advantage in 

 the marketplace, maikets and regulations will tend to evolve to accommodate them. 



Regulation or, more accurately, deregulation. Beginning with the Public 

 Utilities Regulatory Policy Act (PURPA), there has been a trend toward easing entry into the 

 business of generating electricity. PURPA was intended to encourage cogeneration and 

 small renewable generation by requiring utilities to purchase power from qualifying 



