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capacity, transmission services, load shaping, reserves and so on. These products are 

 delivered at a single, so-called "postage stamp rate' — the same price regardless of the actual 

 cost to deliver the service to different locations under different conditions. This pricing 

 structure was one of the cornerstones on which Bonneville was founded. 



Many Bonneville customers are going to want and need to continue to receive that 

 bundled service. Other customers may find that to respond to their own competitive 

 challenges they want to develop some of their own resources. To do so, they will need some 

 of Bonneville's services but not others. They may want to purchase storage or transmission 

 or reserves, or some combination of products. If utilities can develop resources that are 

 consistent with the Act and the Council's plan and do so more cost-effectively than 

 Bonneville, then Bonneville should be able to provide the services necessary to facilitate that 

 development. The challenge to Bonneville will be to market those services, whether bundled 

 or unbundled, at fair prices that reflect true costs, don't give advantages to one group of 

 customers at the cost of another, and do not impede Bonneville's and the region's abilities to 

 fulfill the broader responsibihties found in the Act. The Coimcil sup|x>rts Bonneville's 

 providing unbundled products and services if it can be done in ways that satisfy those 

 criteria. 



Marketing unbundled services in such a way that these criteria are satisfied will, 

 however, be an extremely difficult and potentially contentious task. For example, which and 

 how much of these services are subject to public agency preference? Unbundling also 

 interacts with and complicates other initiatives such as tiered rates. Nevertheless, unbundling 

 can be done. Bonneville currently offers some discrete services like transmission and 

 capacity. Other utilities routinely offer unbundled products. Woridng these issues out will 

 be a major focus of the renegotiation of Bonneville's long-term power sales contracts. 



Tiered Rates 



Tiered wholesale rates provide a base amount of power at one price and charge a 

 higher price for power above that base amount. There are many ways in which a tiered rate 

 structure could be designed. In general, the first tier would reflect the amount and cost of 

 power from the federal base system while the second tier rate would reflect the cost of power 

 from new resources. This does not, however, necessarily imply strictly linking the tiers to 

 specific resource pools. 



In general, environmental costs attributable to specific resources should be allocated 

 to the tier to which those resources are allocated. Fish and wildlife costs attributable to the 

 federal base system should be allocated to the first tier. Environmental costs associated with 

 new resources should be allocated to the tier or tiers to which the resources are allocated. 

 However, as noted earlier, if only Bonneville must take environmental costs into account, the 



