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STATEMENT OF K.C. GOLDEN 



Mr. Golden. Let me pull off my coat so I can distinguish myself 

 from the men in blue a little bit. I do not want you to get the 

 wrong impression. [Laughter.] 



Thank you, Mr. Chairman and Congressman LaRocco. My name 

 is K.C. Golden and I am the director of the 



Mr. DeFazio. Now they are taking off their coats at the other 

 end here. [Laughter.] 



We may get into some more interesting rebuttal here. 



Mr. Golden. I am the director of the Northwest Conservation 

 Act Coalition. We are a region-wide alliance of public interest orga- 

 nizations and we have appeared before you before and appreciate 

 the opportunity to do so again. 



We fervently support the effort to make Bonneville a more effi- 

 cient agency and more effective at reaching its goals. But frankly, 

 we have to question the sudden frenzy over the proposition that 

 Bonneville is in imminent danger of losing its competitiveness and 

 turning into the mere carcass that Mr. Drummond described. BPA 

 is still by a wide margin the lowest cost wholesale power supplier 

 in the region and in the West for that matter. I think that Mr. 

 Drummond's own testimony supported that inadvertently by his in- 

 sistence, and other panelist insistence, that BPA stay with cost- 

 based rates rather than value-based rates. That is an indication 

 that the value of BPA's power is significantly higher than its cost. 

 Market-clearing prices for BPA power are significantly higher than 

 what BPA customers now pay, and I think we all know that. 



It is ironic in fact, I think, that some of the customers who are 

 beating their chest the loudest about the new robust competitive 

 market forces out there are those who would be the first to fall off 

 in a truly free market competitive environment. In a truly free 

 market competitive environment, there would be no regional pref- 

 erence; there would be no public preference; there would be no irri- 

 gation discount. And we certainly would not be selling power to di- 

 rect service industries at half of its market-clearing price. 



Having said all of that, we frankly welcome a good dose of mar- 

 ket pressure on the BPA System. I think the BPA system has be- 

 come lazy and complacent. When I say the BPA system, I include 

 the agency and its customers. I think market pressures will help 

 awaken us to the fact that we cannot keep diluting our inexpensive 

 hydropower resources forever with expensive mistakes and expect 

 not to have to pay for it. We cannot continue to subsidize uneco- 

 nomic use. And we have to awaken to the necessity to move from 

 least-cost planning relative swiftly to least-cost action. I think the 

 market will help us do all those things if intelligently applied. 



But the marliet is not an end in itself; the market is a mecha- 

 nism. The market cannot tell us what our goals are; it can only 

 help us achieve them more efficiently. The comparison that comes 

 to mind is the Clean Air Act. Market forces have been unleashed 

 under the Clean Air Act to achieve pollution reduction goals as effi- 

 ciently as possible. I think it is working quite well. But we did not 

 ask the market to tell us what is the appropriate amount of sulfur 

 dioxide — that was a policy goal. Having set that policy goal, we did 

 unleash the invisible hand to get us there as efficiently as possible, 

 and I think that analogy applies here as well. 



