338 



power, they would receive no offsetting benefit through lower 

 winter rates because they place no demand on BPA in the winter. 



We recognize that the PHDAM model is being revised and 

 our concerns may be partially addressed by BPA. Nevertheless, we 

 are presently very concerned about BPA's future course on the issue 

 of rate seasonality. 



G. Irrigation Discount Reinstated in 1985; Irrigation Load 

 Benefits BPA. After being phased out in 1979, the irrigation 

 discount was reinstated in 1985. BPA gave economic uncertainty in 

 the farm sector as its primary reason for doing so. However, the 

 discount also reflects the fact that a summer only load imposes 

 less cost on BPA than a year-around winter peaking load, a fact 

 which was not adequately reflected in BPA rates. Moreover, as 

 further explained below, such a load provides system benefits to 

 BPA. 



H. Ratio o f Rinnm er Irrigation Rate to Year Around BPA Rate 

 Has Remained Relativelv Constant. Exhibit 2 illustrates the 

 historic relationship between the average BPA rate to preference 

 customers and irrigation rates since 1955. As previously noted, 

 the ratio between the average irrigation rate for summer only usage 

 and the average rate to preference customers for year around usage 

 has remained relatively constant. Irrigation rates until the mid 

 1960 's were about 65 percent of the average rate for year around 

 use by all preference customers. Since the early 1970s they have 

 averaged between 70 and 80 percent of the average annual rate for 

 all preference customers. 



In 1979 when the irrigation discount was phased out and 

 seasonality reached its maximum, irrigation rates were 72% of the 

 average annual Priority Firm rate. Since 1985, when BPA readopted 

 the irrigation discount, the methodology used calculate the 

 irrigation discount has been designed to cause irrigation rates to 

 increase by the same percentage as the average annual increase in 

 the Priority Firm rate for all BPA customers. 



III. Irrigation Load is Unigue. Costs BPA Less to Serve, and it is 

 Beneficial to the BPA System. Irrigation sales represents 4 to 5 

 percent of BPA's direct power sales and revenues. Irrigation load 

 occurs exclusively "off-peak". Irrigation sales plus induced power 

 sales to agriculture related industries, represent 9.5% of BPA's 

 revenues . 



Continuation of the irrigation discount, or an equivalent 

 rate, is justified because BPA's irrigation load costs BPA less to 

 serve than its year-around winter peaking loads. It complements 

 the operation of the federal hydro system and provides needed loads 

 and revenues at a time of year when other BPA loads and revenues 

 are at a low point. This is increasingly important to BPA as the 

 operation of the federal system is modified to meet fish flow 



