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Mr. Chairman, thank you again for the opportunity to testify before the BPA Task Force. 

 My name is K.C. Golden. I am the Executive Director of the Northwest Conservation Act 

 Coalition, a regional alliance of public interest organizations and utilities that is dedicated to 

 the successful implementation of the Northwest Conservation and Power Planning Act of 

 1980. Our goals are laid out clearly and compellingly in the Act's purposes (and I 

 paraphrase here): 



( 1 )(A) To encourage conservation and efficiency in the use of electric power, 



(1)(B) To encourage the development of renewable resources within the Pacific 

 Northwest; 



(2) To assure adequate, efficient, economical, and reliable energy services; 



(3) To make the public and its state and local and tribal governments full partners in 

 bitilding a regional energy future that emphasizes conservation, renewable 

 resources, and environmental protection; 



(4) To distribute the costs and benefits of the regional power system fairly; and 



(6) To protect, mitigate, and enhance the fish and wildlife resources of the 

 Columbia River Basin. 



Although NCAC ferventiy supports the effort to make BPA a more efficient agency, we 

 must begin by questioning the basic premise of the competitiveness initiative. Many of 

 BPA's customers contend that BPA is in imminent danger of suffering a massive loss of 

 load to lower cost competitors. These competitors, the thinking goes, can supply energy 

 more cheaply because they are not saddled with BPA's environmental and conservation 

 responsibilities and because they do not have the looming threat of repayment reform. As 

 customers flee the system, rates will rise even more dramatically, causing the infamous 

 "death spiral." 



We submit that this scenario is entirely implausible. BPA is, by a very wide margin, the 

 lowest cost wholesale power supplier in the West. Those who have preferential access to 

 BPA power are well aware that *hc market will bear substantially hi^er prices, and that a 

 formidable array of utilities outside of the Northwest would gladly trade places in the 

 queue. At a recent meeting of the Northwest Power Planning Council, University of 

 Kansas Professor Doug Houston, an outspoken opponent of utility-sponsored 

 conservation and environmental initiatives, confirmed the magnitude of BPA's competitive 

 advantage. Professor Houston estimated that BPA rates would double if left unregulated. 

 In other words, the market clearing price for BPA power is much higher than current 

 levels, and those who claim easy access to cheaper alternatives are simply posturing for 

 negotiating leverage. 



Having said that, NCAC very strongly supports the notion that BPA can and must 

 accomplish its objectives much more efficiendy than it currendy does. We welcome the 

 advent of market pressures that will awaken the Northwest utility industry to the reality of 

 rising marginal costs and the urgent need to develop least-cost energy resources. BPA and 

 its customers have been lulled into complacency by the luxury of a pool of inexpensive 

 hydropower so vast that it was able to absorb enormous financial mistakes and still yield 

 the lowest rates in the nation. We strongly encourage the introduction of market signals 

 that reinforce a message that BPA and its customers desperately need to hear We simply 

 can't afford to postpone least-cost resource development and subsidize uneconomic use any 

 longer. 



NCAC page 1 



