236 



DeFazio Hearing 

 Emerald PUD, page 9 

 September 25, 1993 



compatible to tiered rates. However, if done in a straightforward and simple way, 

 unbundled services is not inconsistent with tiered rates. Emerald is concerned that 

 Bonneville is considering unbundling services without tiered rates. In our opinion, 

 unbundled services without tiered rates is a step backwards. 



Bonneville is currently developing its "marketing plan," without the input of its 

 customers, and is contemplating 68 unbundled products and services. Beside being 

 extremely difficult, if not impossible, to determine the true cost of most of these 

 products and services, it will be a nightmare for most utilities to deal with such a long 

 laundry list. Emerald believes that Bonneville needs to keep the list as simple as 

 possible. A list of 68 products and services is not simple. 



The benefits of unbundling products and services is that many of the utilities seeking 

 to develop their own resources will likely be able to become more independent. 

 Having access to these services will create flexibility and opportunity that would 

 othenwise be impossible to achieve. This is the purpose of unbundling. 



A drawback to unbundling is that private providers can in the short-run subsidize 

 select products and services in order to capture market share and to compete with 

 Bonneville, and in order for Bonneville to fc>e competitive in that market segment rt will 

 have to shift costs to some other product or service. This cross-subsidization could 

 severely distort the market. As well, once products and services are unbundled, even 

 if it is kept simple it will still be quite complex. This will create a distinct advantage for 

 those larger and more sophisticated utilities accustomed to dealing in similar products 

 and services. In addition, the provision and price of these products and services will 

 be susceptible to undue influence from these large sophisticated utilities, probably to 

 the detriment to smaller utilities. Finally, it is our fear that valuable public products 

 and services will be acquired to a much larger degree than today to increase profits 

 for lOUs. This is not an appropriate result of unbundling. Smaller utilities just entering 

 the resource development arena will be severely disadvantaged without adequate 

 protection such as the application of preference and recall rights for services sold to 

 lOUs or out of the region. 



Several services should be included at a minimum to provide for continuity and a 

 smooth transition. Unbundling should create the ability of utilities to rely on Bonneville 

 for load growth services. A rebundled package of products and services that looks, 

 smells, and feels like priority firm power today should be a service offered by 

 Bonneville. 



The provision of unbundled products and services is not unusual. There are 

 numerous examples of both public and private as well as non-utility marketing 

 activities for products such as scheduling, dispatching, firming, wheeling, billing. 



