247 



basic services such as electricity. A real indication of that economic 

 hardship I think is the fact that none of these systems that have 

 low-density discount benefits have been taken over by the sur- 

 rounding systems, even though the rates of most of the surround- 

 ing systems are much lower. The high-density systems originally 

 did not want the co-ops and the rural areas and that was the rea- 

 son the co-ops formed, and they still do not. 



However, one of the concerns that we have is, especially with the 

 possibility of retail wheeling, is the potential for cream skimming. 

 Take these good loads, the few that do exist, the dense loads of the 

 rural systems, without the low-density discount, and those rates 

 are going to become higher for all of the customers in rural areas 

 and certainly the good loads will see higher rates and will have po- 

 litical motivation to try to find alternative suppliers, thus exacer- 

 bating the problem of the customers who do not have a choice in 

 rural areas. 



The cost of the low-density discount is relatively small, it is $24 

 million average per year in the 1994-1995 rate period. That benefit 

 is very significant because it is spread over relatively few cus- 

 tomers, but in the overall Bonneville budget, it is relatively insig- 

 nificant. 



There have been a couple of major reviews of the low-density dis- 

 count. There have been safeguards added to it over time; the dis- 

 count declines as the density increases, so it is not just one num- 

 ber. And it is even more important today, frankly, than when it 

 was originally created by Congress. 



In conclusion, the regional energy in the Northwest is going to 

 be market-based, it is inexorable, and it is important for Bonneville 

 and the rest of us to get ready for that situation. The unbundled 

 services and tiered rate concepts, if correctly implemented and ap- 

 plied, are necessary tools for becoming competitive. Finally, I ap- 

 peal to you and to everyone not to forget the importance of the 

 rural economy as these changes take place. 



Thank you for your time. 



Mr. DeFazio. Thank you. Mr. Scarborough. 



[Prepared statement of Mr. Piper follows:] 



