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of meeting load growth to its customers by melding the cost of new conservation 

 programs and generation resources with the cost of the existing system. In addition, 

 BPA can limit transmission access and resource shaping services making it very difficult 

 for a customer to acquire its own resources to meet load growth. Both of these practices 

 significantly hinder the functioning of a competitive market for load growth services. 



Let me briefly describe my vision for a new, competitive BPA with four broad 

 areas of change: 1) tiered rates; 2) product unbundling; 3) transmission poUcy; and 4) 

 corporation status. I will then turn to the future role of the Regional Power Planning 

 Council. Finally, I will discuss the Variable Rate paid by the DSIs. 



BPA will move to a tiered rate pricing structiu"e forming a wall between the costs 

 associated with existing generation and conservation resources and the costs of meeting 

 load growth. Utilities and industries facing load growth will have the options of: 1) 

 purchasing directiy from BPA at the actual, nominal cost associated with a new resource 

 or conservation program; 2) entering a consortium and building a new resource; 3) 

 running their own conservation programs with funding primarily from consimiers directiy 

 benefitting from the program; or 4) purchasing power directiy from another utility or 

 independent p>ower producer. The customer would only purchase from BPA if the 

 agency was offering the most cost-effective, reliable product to meet their load growth 

 needs. Other BPA ratepayers would not be off-setting a portion of the cost of meeting 

 that customer's load growtit 



BPA will unbundle its product and service lines. Replacing its plain vanilla service 

 will be a wide array of services for BPA customers. BPA's core business Une will 

 continue to be providing power from the existing federal system at the lowest possible 

 cost to its existing customers. Other services will include system flexibility, reserves, load 

 shaping, and integrating new resources into utiUty systems. Each product will be priced 

 at the cost of providing the service. Each customer will choose equally from the menu of 

 unbundled products, and by their own selection, find an efficient allocation of resource 

 cost Unbundling is critically important as a means for ahgning the costs of service with 

 benefits and needs of each customer. 



In addition, by unbundling the new resource integration services, customers will 

 have access to these products at the same price for bringing their own new resources into 

 the system, as BPA will face when attempting to market new, BPA financed generation 

 resources. This vnU help provide a level playing field ensuring that customers are not 

 compelled to accept a ttigher priced BPA resource than a utility could acquire on its 

 own. 



The Federal transmission system operated by BPA provides about 80 percent of 

 the main-grid transmission within the Pacific Northwest It would be wasteful to 

 dupUcate this system to encourage competition in generation. In order to allow 

 competitive forces to keep down the cost of generation, BPA will have to change its 



