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undertake its competitiveness initiative? What principles should guide 

 BPA in this effort? 



As we speak today, Bonneville is no longer perceived as the lowest 

 cost provider of electric energy in the Northwest. For example, one industry 

 planning to locate in the service area of one of our members has elected to 

 develop its own generation to serve their new load rather than face the 

 uncertainty surrounding BPA's future rates. The industry believes that it can 

 produce electricity for its own needs at a lower cost than buying power at 

 retail from the local utility. Even worse, potential commercial and industrial 

 customers that lack the economic ability to provide their own generation may 

 avoid requirements customer's service areas and thereby stifle economic 

 growth that should occur in those areas. 



BPA's wholesale rates already exceed the generation and transmission 

 costs of at least one investor owned utility in the region and are roughly 

 equivalent to several others. If the trend continues of loading an unfair share 

 of non-power costs on BPA customers, and Bonneville cannot achieve the 

 efficiency improvements hoped for in their current efforts, it is almost certain 

 that BPA will not be a competitive power supplier in the future. Bonneville 

 cannot continue to be the "deep pocket" for every interest group that 

 believes it deserves to be funded by BPA revenues paid by BPA customers. 

 There must be accountability for the dollars spent. We strongly support 

 BPA's current efforts to become more competitive. 



Another reason for Bonneville to become and remain competitive 

 relates to fish and wildlife costs. The Regional Act clearly mandates that 

 BPA and the Power Planning Council "protect, mitigate, and enhance fish 

 and wildlife affected by the development, operation, and management of 

 such facilities . . . while assuring the Pacific Northwest an adequate, 

 efficient, economical and reliable power sudpIv ". (emphasis added) In 

 today's competitive environment, these provisions are even more relevant. 

 Bonneville is reaching the point that it will be unable to fund fish and wildlife 

 activities and remain competitive. Currently, revenues from Bonneville 

 customers are funding about $300,000,000 of the region's fish and wildlife 

 activities and these costs have a direct effect on Bonneville's 

 competitiveness. 



2. Should Bonneville adopt tiered rates? If not, why not? If so, how 

 should there rates be structured? If there is a specific model or 

 framework for Bonneville tiered rates that you support, please describe 



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