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Mr. Chairman and Members of the BPA Task Force: 



My name is Kermit Scarborough, and I am chairman of the Canby 

 Utility Board. 



Our utility serves the City of Canby, Oregon, population 10,000. 

 We are entirely dependent on the Bonneville Power Administration 

 for electricity. 



Much has been written -- and said today -- about Bonneville's 

 efforts to become more competitive and businesslike. Those are 

 laudable goals. 



But we also need Bonneville to become more accountable, and I 

 would like to spend my time today addressing a major area of 

 concern, one that impacts the rates and power supply of every 

 utility in the Northwest. 



I am talking about Bonneville's long-standing relationship with 

 the Direct Service Industries (DSIs) . 



The DSIs are sixteen companies that purchase power directly from 

 Bonneville. Most of them are aluminum smelters, and they account 

 for about one-fourth of all Bonneville's revenues. The smelters 

 produce an important product, and they provide valuable 

 employment to thousands of people in our region. 



But the industries are subsidized by Bonneville and receive 

 special treatment in the amount and price they pay for power. 

 The more that subsidies go to the smelters, the more other 

 customers around the region pay for electricity. There is no 

 free lunch: someone will pay for the costs of operating the 

 system of dams and power plants in our region. 



