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policies and make trammission available within the region to all of its customers on a 

 common carrier, non-discriminatory basis. The philosophy behind the National Energy 

 Policy Act of 1992 is a step in this direction, but open access also must be extended to 

 the DSIs. 



BPA will become a federal corporation. To become business-hke, BPA must be 

 unfettered from unnecessary federal rules. A one time change in BPA's existing debt 

 relationship with the U.S. Treasury may also be necessary. This should be accomplished 

 on a rate-neutral basis and provide significant long term stabihty in BPA's repayment 

 practices. We will need your help, Mr. Chairman, to manage any required legislation to 

 accomplish these objectives without revisiting the broader institutional issues that have 

 been settled by the Regional Power Act 



As provided by the Regional Power Act, a reformed, revitalized BPA will 

 continue to provide valuable services in the areas where it is most qualified. Those 

 areas are also defined in the Bonneville Project Act Foremost among them is the 

 marketing and transmission of power from the Federal Columbia River Power System. 



Congressman, some may say that by facilitating a more open and competitive 

 power market, BPA Umits its abihty to acquire resources for the region as a whole - a 

 provision of the 1980 Act that was not contained in the 1937 law. This is false. The 

 Regional Power Act clearly gives utilities the option of relying on BPA to meet load 

 growth, or of acquiring their own resources. Under current market conditions, many 

 utilities can more efficiently acquire and pay for resources directly, without BPA acting 

 as their agent Other utilities may wish to continue to rely on BPA, and that is their 

 prerogative. 



The Power Council, meanwhile, will continue to provide the moral and political 

 persuasion to put conservation first It will guide BPA in its efforts' on behalf of those 

 utilities that continue to rely on the agency to meet load growth. Most importantly, the 

 Power Council can perform a vital leadership role in guiding the region through the 

 transition to a decentralized, market oriented energy future. The state public utility 

 commissions will continue to oversee the acquisitions of investor-owned utilities through 

 integrated resource planning. 



Let me close by addressing your questions about the Variable Rate. BPA 

 adopted the Variable Rate in 1986 for the mutual benefit of its aluminum smelter 

 customers and its utility customers. A cycUcal downturn in aluminum prices had caused 

 several Northwest aluminum plants to close. BPA, which had a 2,000 megawatt energy 

 surplus even when the plants were operating, was required to sell this surplus power on 

 the open market, far below BPA's costs. 



BPA, the smelters and other customers designed the Variable Rate to maintain a 

 higher level of smelter operations and recover BPA's costs on average from the smelters 



