206 



nounced rate increase will put our rates about 5.8 percent below 

 their residential rates, at a time when my customers are pajdng 

 money — that is what it is, it is not an exchange of power, we are 

 paying money — ^to allow them a 30 percent discount in the residen- 

 tial rate. I think the time of equity is gone. 



Mr. DeFazio. Okay, thank you. 



Mr. Reiten. I cannot help but respond to that 



Mr. DeFazio. Go right ahead, I like that. 



Mr. Reiten [continuing]. By saying the time of equity was here 

 in 1980 when they considered all the ratepayers in the region bene- 

 ficiaries of a regional hydroelectric system, both public and private 

 alike, that was the equity that should have been made and was, 

 and it still holds true today. And that equity should still be there 

 for the members of the region. They are federally funded projects 

 and should not be used exclusively for the rights of one group of 

 customers versus other groups of customers in a region that re- 

 ceived that overall attention on a federal basis. So we have a 

 friendly disagreement with that. 



Mr. DeFazio. Well let me draw one other twist to this, since the 

 major concern that is being addressed by a lot of the customers 

 here is the future — ^whether or not BPA's rates are going to remain 

 competitive, particularly because of some of the extraordinary bur- 

 dens which are placed on them that are not placed on lOUs or 

 other generators or utilities. Look at reconstructing this so that, 

 you know, you can share in the upside and the downside? Is that 

 a possibility? 



Mr. LORENZINI. Well Congressman, it seems to me that that is 

 basically the idea that we have proposed. To the extent that we 

 would lock in the current value of the residential exchange in some 

 kind of contractual relationship, we would share in the upside or 

 the downside. If we are not as effective in achieving efficiencies as 

 BPA is, we would lose value that we would not lose if we did not 

 make that change. And so it seems to me that that is the whole 

 purpose of what we are proposing. And I would also add my sup- 

 port to the comments that Mr. Reiten made concerning the 



Mr. DeFazio. Mr. Myers cannot resist another 



Mr. Myers. I just want to be sure we understand the way the 

 residential exchange works. It does involve both an upside and a 

 downside risk because there is an accounting that goes on. Should 

 the inverse occur, should our rates get lower than Bonneville's in 

 this residential exchange, an account makes it go the other way. 

 So there is a sharing. I think you need to perhaps talk to the Bon- 

 neville people who administer this, but it would work both ways. 



Mr. Drummond. I cannot resist. Mr. Myers is right, there is a 

 sharing. The difference is that an account accrues and there is not 

 an actual pa5anent that goes from the investor-owned utility back 

 to Bonneville. It is just an account that is maintained that is extin- 

 guished if the 



Mr. DeFazio. If it reverses again. 



Mr. Drummond. That is right. 



Mr. DeFazio. This is good. I learn something at all these hear- 

 ings. I was not familiar with that. 



Mr. Drummond. And frankly, you know, that is something that 

 we would certainly support being changed. If they want to provide 



