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STATEMENT OF JUDITH MERCHANT 



Ms. Merchant. Good morning, my ngime is Judith Merchant, 

 and I am the Director of the Washington State Energy Office. I am 

 very pleased to be here this morning to present the views of the 

 executive agencies of the State of Washington on the issues of your 

 hearing. We are very grateful to you, Mr. Chairman, and you too 

 Representative LaRocco, for conducting these hearings because we 

 think that the questions you have raised foreshadow the broad is- 

 sues of the future of the Bonneville Power Administration and the 

 fate of the Power Act. We share your concerns and commitment to 

 it, and the economic, social and environmental values that are em- 

 bodied in that legislation. 



We very much value Bonneville as a partner in creating an envi- 

 ronmentally and economically sound energy future for the State 

 and the region. We are very supportive of Administrator Randy 

 Hardy in his efforts to streamline Bonneville's services and reduce 

 cost. We have an enormous stake in the future of Bonneville. We 

 are very sensitive to the future because our State represents 65 

 percent of Bonneville's sales and many of our utilities, industries 

 and consumers rely on Bonneville for affordable power. 



We have detailed our views in our written testimony, and I 

 would like to focus on three basic policy issues. First and foremost 

 is that we support the Pacific Northwest Power Act which sets out 

 an ambitious agenda of cost-effective conservation and renewable 

 resource development, power planning, fish and wildlife, goals 

 which have been discussed. Bonneville plays an essential role in 

 carrying out the provisions of the Act. It brings a scale and a reach 

 that is needed to ensure that the Act provisions can be carried out. 

 Let me give you an intangible example. The Washington State 

 Building Code Council has just passed commercial energy codes. 

 This would not have been possible if Bonneville and other utilities 

 had not been there to say, yes, we will support the implementation 

 and enforcement codes. It played even a stronger role in the pas- 

 sage of the residential energy codes. This commercial code, for ex- 

 ample, will save 200 average megawatts of energy. That is a con- 

 sideraJble resource to this region. 



Bonneville is very important to us as a resource in assisting in 

 procedures for siting new energy resources. Whatever changes 

 occur in the market, Bonneville's ability and commitment to par- 

 ticipate in regional conservation and resource development activi- 

 ties is essential. 



Second, we do believe that Bonneville is and will remain a very 

 competitive provider of electricity and power services. We also be- 

 lieve that enhancing competitive forces can help us achieve our pol- 

 icy goals, but only if they are used very carefully and very appro- 

 priately. Market forces such as tiered rates and unbundling can 

 help Bonneville convey the higher long-term cost of new power re- 

 source and the value of efficiency improvements. It is important to 

 ensure that these market forces are not used to frustrate the goals 

 of the Power Act by allowing low-cost providers to circumvent 

 them. Therefore, we would encourage Bonneville to consider the 

 following principles in establishing tiered rates. 



First, regional obligations should be paid for by all of us. No cus- 

 tomer should be allowed to avoid the fish and wildlife obligations 



