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irrigation, and recreational benefits. BPA was originally created to market power from these 

 federal resources and it clearly continues to have an obligation to manage and preserve them so 

 that their long-term value to the Region can be maximized. 



The PGP believes that treating BPA's FBS power marketing function as a distinct service will 

 allow it to be run more efficiently and with greater accountability. For example, BPA funding 

 of fish and wildlife restoration activities associated with the FBS resources should be treated as 

 an essential activity within the FBS power marketing function. Costs for these and other FBS- 

 related activities should be recovered through the rates that BPA charges for FBS power. 

 Further, rates for FBS power should be set at BPA's actual cost of service, not at some 

 hypothetical marginal cost. We suggest that FBS power rates should eventually be used to fund 

 only those programs and activities directiy associated with the production of FBS power, rather 

 than to subsidize other types of services or unrelated programs. 



In other words, the PGP would support the unbtmdling of BPA's FBS power marketing service 

 from its other services, including new resource acquisition. We would also support some limited 

 unbundling within the FBS services, but only to die extent that BPA's customers ask to buy them 

 separately, and only if the imbundled services can be sold at a verifiable cost of service. PGP 

 members would take vigorous exception to unbundling of essential FBS services if they were to 

 be priced a^ve actual cost of service. We would be particularly opposed to BPA moving toward 

 what it has recently termed 'value-based' pricing, where rates would be based on customer ability 

 to pay, rather than cost. 



The PGP also supports BPA's use of seasonal power exchanges and other techniques to reshape 

 FBS generation. However, these transactions should be used only for fish restoration and to 

 configure output from the FBS to the match the needs of BPA's preference customers. Any 

 excess oi nonfirm FBS power should be made available to BPA's Northwest customers, for 

 example to regional utilities who wish to use new resources to firm up nonfirm FBS hydroelectric 

 power. And BPA should not use sales or exchanges of FBS power outside the Pacific Northwest 

 as a way to justify or subsidize BPA acquisition of new resources. 



Two; Transmission of Federal and Nonfederal Power 



BPA's second primary area of responsibility is to provide bulk transmission service for both 

 federal and nonfederal power. Here too, the PGP recommends that BPA focus on transmission 

 as a primary service, with its overall goal being the satisfaction of all customer requests for 

 service, subject to existing federal statutory and regulatory limitations specific to the Pacific 

 Northwest. 



Of course, BPA must maintain the ability to use its transmission system to deliver power from 



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