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a whole wrath of environmental reasons why one would choose not 

 to do that, and I think they are well known to everyone and I will 

 leave them behind for the moment. 



Just on economic grounds, gas price risk, you may be able to buy 

 a hedge against it. The hedge presumably costs something. And I 

 think the experience so far is that no one can hold somebody to a 

 low gas price contract, no matter how long it is for, if there is a 

 huge price run up, and there is still enormous risk there. 



CO2 risk, Bonneville tried to ensure itself against CO2 risk in 

 purchasing Tenaska, and was unable to do so. Where did that risk 

 go? It did not go away because Bonneville could not acquire insur- 

 ance. The insurance companies did not want it. Consumers do not 

 want it, but consumers end up with it. We are ensuring a fossil 

 fiiel industry against that risk now, if Tenaska goes forward. 



And finally, I am not sure exactly how this works, but in an 

 unbundled world, it seems to me that a lot of the costs that now 

 get loaded into Bonneville's PF rate are now off in their own bun- 

 dle somewhere, and the costs that you are avoiding as a Bonneville 

 customer by developing your own resource, the energy cost, is going 

 to be lower. So in other words, I think it is quite possible that a 

 utility could go out there and maybe find an engine a mill or two 

 cheaper than Bonneville can build an engine, but then it is going 

 to have to go out and buy wheels and a transmission and a wind- 

 shield and a steering wheel and maybe a radio. And by the time 

 it gets through assembling this car by itself, I really question 

 whether it is going to look a lot cheaper than if they had just 

 bought the car from Bonneville in the first place. 



I think those who think there is a vast 30 mill resource out there 

 are kidding themselves and are going to find out. 



Mr. DeFazio. But I think you did not really address Mr. Reiten's 

 point. For that individual utility, they £ire in part, as much as they 

 acquire another resource, avoiding the public social costs, which we 

 have decided upon in terms of Columbia River Basin salmon, fish 

 and wildlife, and others. And that is something that I really think 

 we have got to wrestle with there. 



Mr. GrOLDEN. But they are not avoiding the social cost of carbon 

 risk; they are passing it on to their customers. 



Mr. DeFazio. That may be, but that is not apparent in making 

 the decision at the outset, or even in the short-term, until some- 

 thing happens under the Clean Air Act or in Congress. You know, 

 they may skate for quite a while. There was other testimony on 

 this whole idea of serving a narrowing base — ^particularly Mr. 

 Pilon's people, who are full-requirements customers and want to 

 stay full requirements customers — picking up even more and more 

 and more proportionately of the social burden, while other people 

 go another route. Do you have any thoughts on that, Mr. Pilon? I 

 mean I think that is a particular problem for your organization. 



Mr. PiLON. Well I think your perspective, Mr. Chairman, is right 

 on. There will be utilities in our group that will be ill-positioned 

 and unable to take advantage of unbundled services or developing 

 their own resources and we will be left on Bonneville to pick up 

 those costs — ^you are absolutely correct. 



Mr. DeFazio. Okay, unless anybody else has something they 

 really want to say — ^Mr. Drummond. 



