no 



4. How should the costs of environmental externalities, including the costs of 

 restoring endangered fish and other species, be distributed in tiered rates and/or 

 unbundled services? What must BPA do to ensure that competitiveness efforts 

 such as tiered rates and unbundling do not diminish its commitment to statutory 

 requirements such as the protection for Hsh and wildlife? How can the region 

 maintain the beneflts of regional coordination and planning if resource 

 acquisition and transmission become more decentralized as a result of tiered rates 

 and unbundling? 



The costs of the fish and wildlife program should be assigned to the first tier, which 

 should include the federal hydro system. These are "externalities" associated with specific 

 resources, and the costs of these programs should be paid for by those using the resources. 

 BPA's statutory requirements to protect fish and wildlife are not defined in terms of 

 imlimited funding, and are not defined specifically in any event, thus there should be no 

 conflict between BPA becoming more competitive and meeting iu environmental 

 responsibilities. In fact, if BPA does Doi become more competitive, its ability to fund inji 

 fish and wildlife programs will diminish. The question of how tiered rates relates to the 

 unbimdling of products and services has not yet been addressed. 



The benefits of regional coordination and planning need not be diminished under a 

 system of tiered rates and unbundled products and services. Regional coordination will 

 probably continue with the Coordination Agreement or some successor arrangement. 

 Coordination will happen in any event through the interconnected nature of the region's 

 electricity system. Decentralized decision-making will not interfere with coordination, 

 because there are economic benefits in coordination that will cause individual decision- 

 making entities to work together. Centralization is not necessary for coordination. Utilities 

 are developing resources now and yet there is no allegation of failure to coordinate. 

 Additionally, resources that are cost-effective under coordinated regional planning will likely 

 remain so with tiered rates and imbundling, as long as open transmission access allows the 

 supply to reach the demand. 



5. Should the variable rate for the DSIs be eliminated or modified? Please provide 

 an estimate of the cost and/or benefit to regional ratepayers of continuing to 

 provide this variable rate. What is the current value of reserves of the first 

 quartile of the DSI allocation? What is the current VOR of the second quartile? 



The current VI rate and contract are scheduled to expire in mid-1996. At this point, 

 we have not addressed the possibility of continuing this arrangement. We are woricing on the 

 question of how tiered rates will apply to the DSIs. 



PUBLIC POWER COUNCIL 



600 N E Murtnomari. Sun 739 Ponuntf. OM fia 



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