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throughout the 1980s. This was done despite the fact that the cost 

 of facilities to serve growing winter loads was then and is now the 

 primary long range cause for BPA's growing resource expenditures. 



The ratio of winter to sununer energy charges declined 

 from 2 to 1 in 1979 to about 9 to 7 by 1991. In addition, BPA's 

 demand charge was made uniform throughout the year; in other words, 

 the seasonality of demand charges was eliminated altogether. BPA's 

 proposed 1993 rate adjustment reflects a modest reversal of the 

 decade long trend to reduce or eliminate seasonal rates. Energy 

 rates are slightly more seasonalized under the proposed PF-93 rate 

 than under PF-91, however, BPA's demand charge would remain uniform 

 year around. 



F. Future of "Rate Design" and Seasonality is Uncertain. It 

 is impossible to know what BPA will do concerning rate design and 

 seasonality in the 1995 BPA rate case. BPA is in the midst of a 

 major overhaul of the methodology by which it determines rate 

 design. In fact, some of BPA's initial proposals suggest that it 

 may utilize the results of a model known as the Power Marketing 

 Decision Analysis Model ("PMDAM") to determine seasonality of BPA 

 rates. 



As we understand it, the basic purpose of the PMDAM model 

 is to calculate the seasonal, daily and hourly cost of operating 

 resources and the value of power based on a West Coast utility 

 system model, including resources and usage in California and the 

 Pacific Southwest. The PMDAM model is now being revised by BPA; 

 however, earlier versions of the model base calculations of the 

 cost and value of power on interregional "opportunity cost" of 

 power, i.e. on the cost of operating resources and the value of BPA 

 power in California and the Pacific Southwest. Because California 

 and the Southwest are summer peaking systems, use of these results 

 could completely reverse BPA's existing seasonality and make summer 

 rates in the Northwest closer to or even higher than winter rates. 



Such a result makes no sense to NIU. It continues to be 

 true that BPA's primary responsibility and mission is as the 

 regional bulk power and transmission supplier for the Northwest. 

 This requires that BPA plan and acquire resources, including 

 transmission, and therefor incur costs, primarily to serve growing 

 winter loads in the Northwest. BPA rates should be based on BPA's 

 cost incurrence for serving its native load, not the cost of 

 producing power in California or the "opportunity cost" of not 

 selling BPA power to California. 



It would be inconsistent with BPA's statutory regional 

 power supply mission and highly inequitable to summer only power 

 users in the Northwest if BPA adopted a methodology which tied BPA 

 rates to interregional "opportunity cost" rather than BPA's 

 regional cost incurrence. Not only would summer only users pay 

 higher rates than they should based on cost incurrence for summer 



