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shaping and so on -- that make greater autonomy in new resource development possible. 

 Obtaining those services implies a responsibility for supporting a regional system that is 

 consistent with the goals of the Power Act. In light of the changes that are under way in the 

 region, the issue with which the Council is wrestling is this: for those utilities that will be 

 exercising greater autonomy in the development of new resources, is there a need to 

 reinforce their responsibility to help achieve regional goals that are affected by that 

 development, and are the jKJwer sales contracts the appropriate mechanism for accomplishing 

 that reinforcement? If so, how would it be accomplished? If not, how can the region be 

 assured that its goals will be pursued in the evolving, restructured, more competitive utility 

 system? 



Some parties to the power sales contracts have argued that the contracts should be 

 restricted to only those terms and conditions directly related to the power sale transaction. 

 The existence of the Council's plan as a benchmark against which the resource acquisition 

 plans of individual utilities could be judged might be sufficient guidance. Other parties have 

 argued that the power sales contracts should include the responsibility to participate in the 

 implementation of the goals of the Power Act as reflected in the Council's plan. The Council 

 has not yet reached a decision on this issue. 



Other Issues 



Your letter raised several other issues on which the Council has not taken positions. 

 We do. however, offer the following observations: 



Direct Service Industry Variable Rate and the Iirigation Discount 



Both the direct service industry variable rate and the irrigation discount were 

 instituted at a time when they were likely to be a "win-win" for the region. The utility 

 system had a large surplus. The aluminum industry and agriculture were both depressed, 

 with low prices on world markets. These rate mechanisms were a means by which the utility 

 could make a sale it might not otherwise make, and the industries could afford to operate and 

 be competitive. To the extent these arrangements still constitute a win-win for the region, 

 they should be retained. However, circumstances in the utility system and international 

 markets have changed since the inception of these rates. They should, therefore, be re- 

 examined in light of the changed circumstances. 



Low-Density Discount 



The low-density discount was specifically authorized in the Power Act in recognition 

 of the significantly higher distribution costs experienced by some of the rural utilities in the 

 region. The Council recently met in rural western Montana. The utility serving that region 

 serves an average of two and one-half meters per mile of distribution system, far less than the 



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