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G. The Purpose of the BPA Residential Exchange Was to 

 Extend the Benefits of the Federal System to All 

 Residential Customers in the Region 



When the Northwest Power Act was enacted, it provided for 

 Residential Purchase and Sale Agreements ("RPSAs") to address 

 a very real and valid concern. During the power shortages of 

 the inid-1970s, investor-owned public utilities lost their 

 direct access to federal power and were faced with 

 construction of their own resources. This threatened 

 increasing disparities between the rates paid by residential 

 customers of investor-owned public utilities and the rates 

 paid by residential customers of publicly owned utilities who 

 continued to have access to the Federal system with its low 

 cost hydropower. The purpose of the RPSAs was to extend to 

 the residential customers of all utilities in the region the 

 opportunity to share in the benefits of the Federal system, 

 and to prevent the residential customers of utilities from 

 being penalized financially as a result of their development 

 of resources. Thus, RPSAs are intended to provide benefits to 

 publicly owned and investor-owned utilities alike. 



The RPSAs do not provide an incentive for investor-owned 

 utilities to operate less efficiently. The benefits of the 

 exchange are available to the residential and small farm loads 

 of any utility in the region, and each utility has a strong 

 incentive to keep its cost down because none of its commercial 

 or industrial loads receive any benefits from the residential 

 exchange. Any suggestion that the RPSA's provide an incentive 



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