260 



with regards to the value of reserves, I must tell you that I 

 believe Bonneville's method for paying the DSIs for reserves is 

 also fundamentally flawed. 



This arrangement allows the DSIs to provide forced outage 

 reserves to Bonneville. 



The DSIs receive a discount on their power bill for providing 

 "reserves" to Bonneville. Instead of building standby generating 

 resources that can operate in case of a plant malfunction, 

 Bonneville can shed load and restrict DSI operations under 

 certain circumstances. 



In theory, the arrangement makes enormous sense to both 

 Bonneville and the DSIs. The problem comes is in the way that 

 Bonneville pays for the reserves. 



In 1987, Bonneville adopted what is known as the "IP-PF Rate 

 Link," which freezes the value of DSI reserves. The Link was 

 extended in 1991 and now expires in 1996, the same time as the 

 variable industrial rate. 



Several components of the Link are now out of date, yet 

 Bonneville has shown no interest in revising them to reflect 

 current market conditions. 



In other words, Bonneville, which has such outspoken pretensions 

 to become more competitive and businesslike, has locked into 

 place a lucrative set of discounts for the DSIs. The more 

 discounts the DSIs receive, the more the rate burden shifts to 

 other customers, particularly the public utilities. 



