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will work with its customers and other interested groups to 



help ensure that these issues are fully explored. 



E. BPA's Services Should Be Made Available on an 

 Unbundled Basis at Cost-Based Rates 



BPA has appropriately recognized that its historic 

 approach of bundling many of its services together into one 

 should be replaced by a fundamentally different approach — 

 providing unbundled services tailored to meet its customers' 

 needs . 



Unbundled BPA services should promote efficient BPA 

 operations and help ensure that BPA's customers pay for only 

 those BPA services that they need and use. Unbundling of 

 BPA's services should emphasize separately pricing those 

 services for which BPA has incurred or incurs material and 

 direct operating or capital costs to provide such services. ^ 

 This does not require subdividing BPA's services into every 

 identifiable element, which would be difficult and costly to 

 administer and unnecessarily complex. 



It is of fundamental importance that the rates for BPA's 

 firm power and other services be cost-based to avoid cross- 

 subsidization of one customer class by another. Such cross- 

 subsidies are unfair. They also send erroneous price signals 

 that promote inefficient outcomes. Unbundling should not be 



^For example, BPA's transforming power (whether Federal power sold by 

 Bonneville or non-Federal power transmitted by Bonneville) for delivery at 

 low voltages imposes material costs on BPA that should be reflected in the 

 rate BPA charges for such service. 



•10- 



