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STATEMENT OF FERGUS A. PILON 



Mr. PiLON. Good morning, Chairman DeFazio, Congressman 

 LaRocco. I am happy to be here today and appreciate this oppor- 

 tunity to make some comments. Congressman LaRocco, I am par- 

 ticularly pleased to see you because I grew up in Pocatello. I spent 

 15 years of my life there and many of my friends who I still com- 

 municate with there speak highly of you. So I am very pleased to 

 meet you today. 



Mr. LaRocco. It is always nice to hear that people outside my 

 district are speaking highly of me. [Laughter.] 



Mr. PiLON. My name is Fergus Pilon, and I am the general man- 

 ager at Columbia River PUD in St. Helens, Oregon. I am here 

 today speaking on behalf of the Non-Generating Public Utility 

 Group. Non-generators are Bonneville's special customers. We are 

 the full-requirements customers. We depend solely on Bonneville 

 for our power. The non-generators, while our organization consists 

 of 25 utilities, there is many more of us in the region. It is a special 

 relationship that has existed between Bonneville and its full-re- 

 quirements customers for the past 50 years. That has to be main- 

 tained through any changes that we are envisioning for Bonneville 

 for the next 50 years. We are here because of Bonneville, and Bon- 

 neville is here because of us if you will look back in history. 



My comments today will be highlights from my written testi- 

 mony. Why is it important for Bonneville to become more competi- 

 tive? As we speak today, Bonneville is perceived as not being the 

 least-cost, stable energy provider in the region. I recently met with 

 some folks seeking to site an industrial facility in our service area 

 and I offered them our retail rate and they were fully aware that 

 I was a full-requirements customer of Bonneville. They were not in- 

 terested in my retail rate. They were not interested in the discount 

 on my retail rate. They were interested in generating their own 

 electricity with natural gas because they think that will provide 

 them a more competitive power in the long run. Now, in this par- 

 ticular case, gas happens to be a feedstock for their process, so they 

 need to get gas there anyway. So it is a true cogeneration facility. 

 It is not an IPP facility. They were interested in talking to me be- 

 cause they wanted me to buy power from them. So there is a seri- 

 ous issue of competitiveness in Bonneville's present rates. 



Should Bonneville adopt tiered rates? I have been v/orking at 

 Public Power Council for the last two years in what we call the 

 tiered-rate policy subgroup. It is a group of PPC Executive Commit- 

 tee members and we have come together and butted heads at times 

 and laid our views out on the table, and the non-generating facili- 

 ties are in support of Public Power Council's principles for tiered 

 rates. Bill Drummond earlier referred to some of those principles 

 and I will not get into them. I would like to point out that they 

 are a dynamic set of principles. They are a little bit longer than 

 the Director of the Washington Department of Energy spoke to this 

 morning, but they are principles that we feel are very important 

 for the implementation of tiered rates. 



Bonneville is considering unbundling its services. This is a big 

 concern for full-requirements customers of Bonneville. We buy a 

 bundle of services right now — I suppose you could say from Bonne- 

 ville — ^when we buy our power, and the cost for those services are 



