205 



capture those full benefits for our customers, and the same would 

 be true for BPA. 



Mr. DeFazio. Mr. Myers, could you comment on that and then 

 I will ask Mr. Reiten also afterwards. 



Mr. Myers. I will be quite brief. I believe that, as has been ex- 

 pressed by a number of the panelists this morning, we are not deal- 

 ing with a bunch of independent actions here. We are dealing with 

 really an aggregate number of actions that involve things like 

 tiered rates, and you know, everything is inter-related. And I 

 think, as Mr. Drummond expressed earlier today, the question of 

 how you handle the residential exchange with a tiered-rate struc- 

 ture is one that has yet to be examined. Yet it is certainly conceiv- 

 able that within that context a solution to part of the problem that 

 Mr. Lorenzini describes could exist. I mean, it may well be that 

 tiered rates enter into that discussion as well. 



Mr. DeFazio. Are you familiar with their proposal or just 



Mr. Myers. Well I £im not familiar with their specific proposal. 

 We have other utilities in the region who have bought themselves 

 out of the residential exchange and gotten some kind of agreement. 

 It is not clear that that is really the best action for anyone. It al- 

 ways involves some sort of forecast of what the future holds. 



Mr. DeFazio. Looking around the round world down the road. 



Mr. Myers. And as an older fellow in this business, the only 

 thing I really know for sure about forecasting the future is I think 

 I am going to be wrong. 



Mr. DeFazio. Okay. Mr. Reiten. 



Mr. Reiten. Well I would agree with the sort of fundamental 

 structural view of the exchange that Mr. Lorenzini described. I 

 think I also agree, which was alluded to both by Mr. Myers and 

 Mr. Lorenzini, that in practice we do not consider addressing our 

 costs in any way to gain us an advantage as a result of that ex- 

 change being there. We have much greater forces on us to keep our 

 costs down. And if that is a negative in the calculation of the ex- 

 change, so be it. We think in practice it is not expressing behav- 

 ioral changes in us in any way as a result of the way it is designed. 

 But fundamentally it does, if you think about it, set up a disadvan- 

 tage for both Bonneville and for the people who are using the ex- 

 change, such as investor-owned utilities, if they move their costs 

 one way or the other. And we really probably ought to address 

 something that is structurally not right that is not being used in 

 practice. 



Mr. DeFazio. Okay. 



Mr. PiLON. Mr. DeFazio, could I make a comment? 



Mr. DeFazio. Sure. 



Mr. PiLON. The residential exchange may have been very appro- 

 priate at the time the Act was passed, the rate differential between 

 private utilities and public utilities in the early 1980s was different 

 than it is now. 



I am not sure the residential exchange at all is appropriate any 

 more. Now I realize it is in the Act and all that sort of thing, but 

 there are about $200 million a year that my customers are paying 

 to the investor-owned utilities in the region to buy down their rate. 

 Our recent rate increase puts our residential rate very nearly equal 

 to the residential customers of Mr. Reiten's company. Their an- 



