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average of a more typical uifoan utility. Congress decided that the region as a whole could 

 bear some of those increased costs experienced by very rural utilities. The magnitude of the 

 discount is small, amounting to only $22 million per year. 



The Residential Exchange 



The residential exchange was part of the "deal" of the Power Act by wliich the 

 residential and small farm customers of the region's investor-owned utilities were ensured a 

 share of the benefits of the federal system. The investor-owned utilities and some public 

 utilities exchange power for their residential and small farm customers at their average 

 system cost and receive the same amount of power at Bonneville's average system cost. 



Some parties have raised the possibility of abuse of this system by an exchanging 

 utility overstating its average system cost. However, the costs of the investor-owned utilities 

 are overseen by state regulators who have a clear responsibility to see that a utility is not 

 overstating its costs. Bonneville itself closely examines those costs. The Council has seen 

 no evidence that there has been abuse of that system. 



Mr. Chairman, that concludes my testimony today. On behalf of the Northwest Power 

 Planning Council, I want to thank you again for the opportunity to present the Council's 

 views. The Council looks forward to continuing to work with your committee in the months 

 aliead. 



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