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II. Bonneville must adapt to the Increasingly con*>petltlve energy 

 market. 



BPA faces the same competitive issues we face. We encourage them 

 to respond to these competitive pressures. I do want to commend 

 Bonneville for its recent efforts to respond to customer concems about 

 competition. BPA took seriously questions about a potential price 

 increase in excess of 20 percent and reduced the increase to a more 

 reasonable level without gutting key activities. Bonneville officials are 

 also thinking about how the agency is organized and staffed, and they are 

 looking for other ways to reduce costs and increase efficiency. An 

 example is Bonneville's internal Function-by-Function Review which is 

 intended to streamline the agency's existing processes and work products. 

 Bonneville invited PacifiCorp, along with other customers and interest 

 groups, to participate in the process. We believe it will lead to changes 

 that will make the agency more efficient and urge BPA to continue with 

 similar initiatives in the future. In addition, the recent announcement 

 that 800 positions are to be eliminr.ted at BPA is further evidence that 

 Bonneville's management is facing the challenges head-on. 



Reducing costs and controlling prices are cleariy first steps toward 

 remaining competitive. But they are not enough. Looking ahead, Bonneville 

 should capitalize on the unique opportunity it has in the regional energy 

 marketplace to provide some of the services it is in the best position to 

 offer, while perhaps letting go of some roles that others may be better 

 positioned to fill. 



III. Bonneville should be able to maricet certain services more 

 aggressively. 



We commend BPA for steps they have taken to consider offering 

 selected products to customers. We encourage them to move more 

 aggressively to "unbundle" a wider range of products and services. An 

 "unbundling" of services, such as transmission, storage, load shaping, and 

 others, would add to Bonneville's revenues, enhance efficiencies of 

 resources owned by other power providers, and provide important value to 

 customers. 



