270 



The thrust of my testimony is that we need your assistance in 

 ending some of the lucrative DSI subsidies and in ensuring that 

 any contractual arrangement that Bonneville strikes with the DSIs 

 is fair to the public utilities, like Canby, which by statute are 

 Bonneville's preferred customers. 



In the time allotted to me, I wish to make three basic points 

 regarding: 1) competitiveness; 2) the new power sales contract 

 renegotiation process; and 3) the need for a thorough GAO review 

 of the Bonneville-DSI relationship. 



We have focused on DSI issues because we believe they are 

 traditionally underplayed by other public power organizations, 

 and we wish to emphasize and call the Task Force's attention to 

 them. 



1 . COMPETITIVENESS 



Bonneville's competitiveness initiative cannot eind will not 

 succeed unless Bonneville reevaluates its relationship with the 

 DSIs. Bonneville, in our opinion, nust end the two, significant 

 subsidies it now bestows on the DSIs: the variable industrial 

 rate for aluminum smelters and the out-of-date methodology for 

 calculating the value of DSI reserves. 



The variable rate applies only to aluminum smelters. It 

 increases when the price of aluminum goes up, and decreases when 

 the price drops. 



