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Market forces can and should be used to help BPA and its customers come to grips with the 

 reality that our inexpensive hydropower resources are finite and the necessity to move 

 swiftly from least-cost planning to least-cost action. We support the introduction of 

 tiered rates; elimination of subsides for uneconomic use; and contractual commitments to 

 hold customers accountable for the costs and benefits they bring to the system. 



Market mechanisms can be of enormous service in helping BPA reach its goals more 

 efficiently and effectively; the market cannot, however, tell BPA what its goals 

 are. Embracing market forces does not mean sweeping aside all policy objectives in 

 favor of minimizing short-term rates, as some customers have implied. Many customers 

 contend that BPA's competitiveness can only be assured if it focuses myopically on 

 marketing power and considers all other objectives - including the achievement of the Act's 

 purposes - as costs of business to be minimized, rather than goals to be achieved. We 

 should hardly be surprised that customers define competitiveness this way, but we must 

 not allow BPA to do so. 



The people of the Northwest will be well-served by a vigorous competition in which the 

 winners deliver energy services at the lowest total cost However, we will not accept a 

 destructive competition to see who can most artfully circumvent the goals of the Act to hold 

 down shon term prices. Nor can we accept competition that pits the ability of a few 

 energy-intensive industries to minimize rates against the ability of the region to thrive and 

 prosper. That kind of competition m^y enrich a few, but it impoverishes the region by 

 eroding our capacity to build the efficient, affordable, environmentally sound, equitable 

 energy system envisioned in the Regional Act 



We clearly detect in BPA's "competitiveness" initiative an effort to undermine the 

 provisions of the Act that make BPA accountable to the public, to Congress, to the Power 

 Planning Council, and indeed, to anyone but its wholesale customers. Three years ago, 

 BPA adopted a mission statement in which it aspired to be "the most competitive and 

 socially responsible" power system in the nation. We do not believe that those two goals 

 are in conflict. Still, we find it conspicuous that the second half of that mandate seems to 

 have vanished without a trace from BPA's rhetoric. 



Although the competitiveness initiative is proceeding largely behind closed doors, we have 

 seen enough to understand where it's heading. Perhaps the most telling sign is the 

 persistent focus on emphasizing "business relationships" (i.e., relationships with utilities 

 and the Direct Service Industries) and de-emphasizing "political" relationships (i.e., 

 relationships with the public. Congress, state and local governments, tribes, agencies, 

 pubhc interest organizations, and the Council). BPA management proclaims that its goal is 

 to run the agency "like a business." Bonneville is, of course, not a business but a public 

 agency with a mandate to serve the pubhc interest. Still, we accept the proposition that 

 BPA could learn a great deal from private entities about how to run a leaner, more efficient 

 organization. 



Many customers seem to believe that running it like a business means catering exclusively 

 to the desires of its wholesale customers, primarily by minimizing wholesale prices. But 

 successful businesses cater to their customers only insofar as doing so serves the interests 

 of their shareholders. If we pursue the business analogy to its extreme, we inevitably 

 conclude that businesses are not created for the primary purpose of satisfying their 

 customers; they are created to add value for their owners. These purposes are generally 

 compatible and often inseparable, but when they conflict, no business will pursue its 

 customers' goals at the expense of its shareholders. Because BPA is a public entity, its 

 shareholders are its customers' customers, the retail consimiers, the citizens of the Pacific 



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