180 



TESTIMONY BEFORE THE U.S. HOUSE OF REPRESENTATIVES 



COMMITTEE ON NATURAL RESOURCES 



by Columbia River People's Utility District 



September 25, 1993 



Eugene , Oregon 



Page 4 of 7 



5. Should the variable rate for the Direct Service Industries 

 (DSI) be eliminated or modified? Please provide an estimate of 

 the cost and/or benefit to regional rate payers of continuing to 

 provide this variable rate. 



What is the current value of reserve (VOR) of the first quartile 

 of the DSI allocation? What is the current VOR of the second 

 quartile? 



The variable rate should definitely be eliminated. The 

 circumstemces today are different than when the variable rate was 

 started. We are no longer in resource surplus and subsidizing 

 the aluminum companies is costing us all dearly. While the 

 variable rate has been a net benefit to Bonneville's non-aluminum 

 smelter customers (an additional $23.5 million from 1986 through 

 1st quarter of FY 1993) this trend has been greatly reversed 

 since FY 1992. With the world price of aluminum expected to 

 remain at low levels and the power deficit continuing, the 

 variable rate will soon become a net loser, if it is not already. 



The current value of reserves is about $60 million per year. Of 

 this, $30 million is for the second quartile, which should be 

 eliminated. An additional $10 million could be removed by 

 updating the calculation used for the top quartile reserve. The 

 resulting value for reserves that more accurately reflects what 

 we are actually getting is about $20 million per year. 



6. Should the irrigation discount be eliminated or modified? 

 Please provide an estimate of the cost and/or benefit to regional 

 rate payers of continuing to provide this discount. 



7. Should the low-density discount be eliminated or modified? 

 Please provide an estimate of the cost and/or benefit to regional 

 rate payers of continuing to provide these discounts. 



8. Are there any other subsidies or discounts that Bonneville 

 provides to certain customers that should be eliminated? 



Bonneville's discounts are an attempt to equally position the 

 customers of the various preference utilities that are otherwise 

 disadvantaged because of circumstances in their service 

 territories. For example, through the irrigation discount, 

 Bonneville recognizes that there are utilities who have a large 

 proportion of irrigation load and that their well being is 

 closely tied to the well being of their irrigating customers. 

 Similarity, for the Low Density Discount, utilities who are 

 disadvantaged by having sparse populations and/or high debt in 

 relation to sales volume receive a discount to more equally 

 position their customers with others in the region. These 

 discounts are a matter of equity and should remain. 



NAT_HVSE/GEN.MGR 



