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4. Tiered Rates Cannot Completely Replace Coordinated Programs 



Finally, while there is value in sending marginal wholesale price signals, these signals do 

 not substitute for the need to run regional and utility-specific conservation programs. 

 Some programs — for example, codes or market-making efforts ~ are only workable and 

 cost-effective at the regional level. In fact, conservation programs become more 

 important at higher prices, because they are designed not only to substitute for market 

 signals but to correct fundamental market imperfections - such as access to reliable 

 information, access to capital, split incentives (such as between builders and buyers, 

 architects and builders, or landlords and tenants), and differences in risk and discount 

 rates. Well-designed programs are specifically tailored to address these issues and work 

 with market signals. One need not look beyond the cities of New York, San Diego, and 

 Honolulu to see that high energy prices do not resolve market failures or stimulate ~ on 

 their own - comprehensive investments in energy efficiency. We must work carefully to 

 ensure that price signals are supported by carefully chosen and efficientiy run 

 conservation programs. 



3. BPA is considering unbundling the services it provides such as transmission, storage, load 

 shaping, and integration services. What are the potential benefits and drawbacks of 

 unbundling? If BPA pursues unbundling, what services should be unbundled and how 

 should the price for these services be calculated? Are there some BPA services that cannot 

 be unbundled? 



BPA provides many melded services. Put most simply, BPA's most tangible products include 

 firm and non-firm energy, capacity, instantaneous and planning reserves, interconnection 

 charges, shaping, and transmission or wheeling services. Currentiy, BPA melds all of its 

 preference customer services into essentially one priority firm (PF) rate. Unbundled rates would 

 distinguish between raw kilowatt-hours and the other power services necessary to transform 



0-R24)2W ' 8 



