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provide the resources that are necessary to meet their load growth 

 beyond the tier 1 allocation. 



So what we are looking at today are conservation — ^but I have got 

 to tell you under the present pricing structure at Bonneville con- 

 servation for our members is not a very do-able resource — meth- 

 ane-derived generation from landfill projects, and combustion tur- 

 bines. Those are the three cost-effective resources that make sense 

 in today's economic picture. 



Today's average pricing provides the wrong decisions, the wrong 

 basis for our decision-making for the future. We truly believe that 

 we can make better resource decisions. We have unique needs, the 

 rural areas have unique needs, and we believe that we have a lot 

 lower costs in developing. And I do not believe that this com- 

 promises the central planning concept. In a sense, PNGrC is a 

 central planner. It may not be a public body in the true sense of 

 the word public, but it is directed by elected officials. And we are 

 representing 27 systems, so that is a group for which we can do 

 central planning. We would be the pool. And the market will really 

 dictate the economic good for that pool. 



There are a number of acquisition possibilities and there is diver- 

 sity in those possibilities. I think having diversity in planning can 

 lead a group to make the right decisions by picking and choosing 

 and basing your decisions on experience of other people as well. 



Central planning, in and of itself, is not necessarily a panacea — 

 it is a good process, and I do not deny that. But it has resulted in 

 some bad decisions in the past. 



Tiered rates are complex to implement, but they are pretty sim- 

 ple in philosophy, at least in my philosophy of what tiered rates 

 should be. And that is, that we have to protect the federal base sys- 

 tem in order that we can get the benefits of that tremendous re- 

 source and to be assured of repa3dng Treasury. And each tier has 

 to be based on the cost of the resources in the tier. 



If we have the ability to choose for our tier 2 resources or our 

 resource beyond the tier 1 allocation, based on the incremental cost 

 from tier 2, we are going to choose conservation, we are going to 

 choose to develop our own resources, we are going to choose to go 

 with Bonneville, or buy from others. Those are all the options that 

 are available to us. 



Unbundling goes right along with tiered rates. It is not possible 

 for an entity such as ourselves to provide power on any basis to our 

 members without those services. We would have to buy them from 

 some source. Bonneville is a very good provider of those services, 

 but not necessarily the only provider, except in the case of trans- 

 mission. 



This is a scary process for us because in the rural areas we have 

 a fear that as these things become unbundled we may be forgotten 

 in the process, with more emphasis on urban areas. 



Turning now to the low-density discount, the origin is the Re- 

 gional Power Act. Congress recognized when it was passed the 

 need to mitigate the problems of the rural areas and the disadvan- 

 tages in order to keep these rural Eireas competitive and economi- 

 cally viable. They realized that there were already problems with 

 transportation and water and sewerage and medical facilities, and 

 they did not want to compound that with causing higher rates for 



