81 



Mr. DeFazio. Thank you and thank everybody for their succinct 

 and thoughtful testimony. 



We will now begin a couple of rounds of questions. I am sure I 

 will not finish my first round. I think I will start with some of the 

 points Ms. Merchant was raising right at the very end there. I 

 have a question about unbundling that I would like each of the 

 groups or everyone, if they so wish, to address. It goes to the 

 unbundling issue. My concern is that when you begin to unbundle 

 services, particularly when you talk about unbundling fish and 

 wildlife — I do not know how we unbundle an obligation exactly. But 

 in any case, when you begin to unbundle these services, various 

 customers or players in the region are going to have different capa- 

 bilities, and I am worried that we will find that some major players 

 may want to come in and cherry pick certain services from BPA 

 while they have the economies of scale to fill in those other gaps 

 and other utilities would remain captive. Then the question is, 

 what does happen to those obligations, the underlying debt, the 

 fish and wildlife obligations and the other things that BPA has to 

 continue to handle. How do we get those utilities over here, you 

 know, who have cherry picked, so to speak, in the unbundling of 

 services to carry their fair share of the total obligation in the re- 

 gion which makes those other services available to them. The pric- 

 ing mechanism, it seems to me, is going to be very problematic, and 

 I question how far you can take unbundling and what things are 

 appropriately unbundled and what are not. This also will obviously 

 go back to tiered rates and what is in the base and what is not in 

 the base. If you could just perhaps allay some of my concerns about 

 unbundling, it would be helpful. 



Mr. Hardy. Well, first of all, we are not going to unbundle fish 

 and wildlife. I agree with you, that is not one of the things I am 

 contemplating. We are going to try to unbundle our basic power 

 products in much the way that you have described, Mr. Chairman, 

 with different combinations of capacity and energy and different 

 combinations of storage, load shaping, load factoring combined in 

 different ways. Precisely what you have described can occur. Dif- 

 ferent people can participate in different ways that are most appro- 

 priate to their circumstances. That is all part of the marketing plan 

 currently under development. We will have that in shape to start 

 discussing publicly probably about the first of December, although 

 we have already started some discussions that are preliminary in 

 nature. And once we have that in that form, after the first of De- 

 cember, we will actually start testing products or bringing out dif- 

 ferent products for review within the region to see what some of 

 the consequences of providing those products are as well as who 

 the takers might be. 



I contemplate that what we are going to see is that those who 

 have the capability to take advantage of different tjrpes of products 

 will probably pay more for those kinds of products than perhaps 

 they are paying now, but overall they will get a higher value for 

 that product. 



Mr. DeFazio. Okay, if someone, say a small utility, were bu3dng 

 a more melded rate, if we continued to provide that, or vanilla rate 

 or whatever we want to call it, that the actual value of, say, one 

 of the major unbundled services — ^whether it was load shaping or 



