280 



But there is another aspect of Bonneville's competitiveness 

 initiative that troubles us: the unwillingness to date of 

 Bonneville to examine critically its relationship with the DSIs. 



The DSIs currently receive two types of subsidies or special 

 treatment from Bonneville: 1) the variable industrial (VI) rate, 

 which fluctuates with the price of alvuninum; and 2) credits 

 (discounts) on their power bills for providing forced outage and 

 other reserves. 



Those subsidies are discussed in more detail below. 



QUESTION 5 (First Part): The Variable Industrial Rate 



Should the variable industrial rate for the DSIs be eliminated or 

 modified? 



We believe Bonneville should never have implemented the rate in 

 the first place or extended it to 1996. Furthermore, we believe 

 Bonneville should be precluded from implementing similar, 

 speculative rates in the future. 



The variable industrial rate is available only for aluminum 

 smelters (90 percent of the total DSI load). The higher the 

 price of aluminum, the more the DSIs pay. 



The reverse is also true. When the price of aluminum is low, the 

 rate for the smelters drops. And that, as you know, is what has 

 happened for the last two years. 



The VI rate is currently 17.9 mills. But that includes a 7.30 

 mill demand charge (which does not fluctuate). The energy 

 component is the portion that moves up or down with aluminum 

 prices, and it is only 10.6 mills. 



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