174 



9. Should the provisions in the power sales contract which allow some 

 utilities to be reimbursed by Bonneville for lost revenue when a 

 voluntary curtailment is implemented be retained? 



Yes. Under the regional "Share the Shortage" Agreement, Bonneville's 

 customers will be asked to curtail their sales so that other higher priority 

 loads can be served. Because some of these customers are requirements 

 customers, any saved power ends up on BPA's system to be sold at marginal 

 rates. The curtailment of these loads reduces the net operating revenue of 

 these utilities and they should be reimbursed for that net revenue loss. 



10. How should the long-term power contracts that Bonneville is currently 

 negotiating differ from the current contracts? What, if any, 

 environmental issues should be addressed in these contracts? 



The negotiations regarding new power sales contracts is ongoing. The 

 agreements represent the business relationship between Bonneville and its 

 power customers. In the end, the terms and conditions of the agreements 

 have to be satisfactory to two parties, BPA and the customer. We are 

 working with the PPC to develop consistent provisions that will define the 

 business relationship. But to speculate on what should be included or not 

 included at this time is premature. 



We recognize the interest of non-customers in the negotiations 

 between BPA and its customers. However, their stake in the negotiations is 

 much different than the customers. We are sure that Bonneville, in its 

 development of the contracts, will take into account the environmental 

 issues raised in the process. But, in the end, both Bonneville and the 

 customers are entering into a mutually agreed business arrangement that 

 must be acceptable to both parties. 



11. It has been suggested that the residential exchange program rewards 

 less efficient utilities. Are revisions to the exchange agreements 

 necessary? If so, what changes would you suggest? 



The residential exchange represents an income transfer of $200 million 

 to the customers of investor owned utilities in the region. In a time when 

 BPA's wholesale costs are becoming non-competitive, this transfer has 

 become a burden to BPA's preference customers that needs to be reduced or 

 eliminated. One alternative available to BPA under the Regional Act is to 

 substitute lower cost BPA acquisitions for the average cost of lOU resources 



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