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should continue to market FBS power at cost in a way that would 

 maximize the benefits and to set the rates at the actual cost of 

 those services. And to address a comment or question that was 

 raised earlier by the Chairman. We see the FBS cost as including 

 necessary cost for fish and wildlife mitigation. 



The second service the region clearly needs Bonneville to provide 

 is transmission of both FBS and non-federal power. Again, we sup- 

 port setting Bonneville's transmission rates at the actual cost of 

 owning and operating the facilities, and we support further oppor- 

 tunities for Bonneville customers to participate in regionally need- 

 ed investments and new transmission facilities such as the Third 

 AC project. 



The third primary service is a little bit different, but it is no less 

 important. That has to do with the issue of Bonneville working 

 with its customers to acquire regionally needed new resources. It 

 is important to recognize that this category of service involves re- 

 sponsibilities that Bonneville actually shares with its customers. 

 Specifically, under the Regional Act, Bonneville is encouraged to 

 work with its customers to develop new resources either on their 

 own or with assistance from Bonneville. Accordingly, we believe 

 that Bonneville should continue to support its customers in acquir- 

 ing new resources. 



Under the partnership approach, we envision Bonneville would 

 participate in acquiring the new resources but only to the extent 

 that customers formally request service from Bonneville. Further, 

 as a general rule, when Bonneville provides new resource services, 

 customers who buy those services should reimburse Bonneville for 

 the actual cost of those new resources. 



That last item raises a concern that I would like to address 

 under the heading of transition to a new Bonneville. We support 

 taking steps toward a new Bonneville organized around these three 

 basic types of service with the rates set at the actual cost of provid- 

 ing each service. However, we are also interested in ensuring that, 

 if significant changes are made, there be as smooth a transition as 

 possible to the new BPA. One particular concern that we have is 

 that during the transition Bonneville customers continue to have 

 the ability to acquire regionally cost-effective conservation and re- 

 newable resources. 



PGP utilities along with other Bonneville customers have made 

 significant commitments to acquiring these resources — staff com- 

 mitments, financial commitments, contractual commitments — with 

 the assurance that regionalized funding would be available to sup- 

 port those efforts. For example, my utility is currently involved in 

 a very large conservation project — I think it is the largest single 

 one in the region — to develop 5 average megawatts of conservation 

 from our Ft. Lewis facility. Our ability to maintain that effort and 

 to do this and other projects during the transition to a restructured 

 Bonneville so that opportunities are not lost and so that regional 

 conservation targets are met should be a priority of this effort. 



Now one of the problems here potentially with this objective is 

 that, to the extent some continued regional funding of conservation 

 and renewable resources is needed during the transition to a new 

 Bonneville, it may be necessary to support the use of revenues from 

 the sale of the FBS power or the first tier if a tiered rate is estab- 



