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generating resources and to construct additional transmission 

 facilities. These investments are projected to drive BPA's 

 resource costs. BPA's irrigation load provides a market for EPA 

 power precisely when BPA's year-around loads are at their lowest. 

 This improves BPA's load factor during the summer period and makes 

 the BPA system more efficient. 



B. Irrigation Load is Non-Growina; New Resource Costs Not 

 Caused bv Irrigation Load. Another reason the irrigation load 

 costs less to serve is that it has been a non-growing load for the 

 past 15 years ' and it is projected to be a non-growing load for 

 the foreseeable future. Because irrigation load has not grown, BPA 

 has not and will not been required to acquire new resources to 

 serve irrigation power users. 



If the region's load growth were like irrigation's load 

 growth, there would have been no need for the costly investments in 

 new thermal resources and transmission facilities which occurred in 

 the late 1970s and the 1980s and BPA rates would still reflect 

 purely hydroelectric costs. 



IV. The "Competitiveness Project". "Unbundling" BPA Services. 

 "Tiered Rates". "PMDAM". and Other BPA Initiatives. BPA is 

 currently involved in several major review processes through which 

 BPA will not only completely review and possibly revise its method 

 of designing rates, but its whole relationship with its customers 

 and its method of conducting business. The initiative to 

 "unbundle" the delivery and pricing of BPA's services, BPA's review 

 of "tiered rates", BPA's comprehensive review of rate design, 

 including the PMDAM methodology, the effort to reduce BPA costs and 

 to operate more efficiently, and other important BPA initiatives 

 are all part of an effort which has come to be known as the 

 "Competitiveness Project". 



BPA's efforts are, in part, a product of the Clinton 

 Administration's initiative to "reinvent government". More 

 importantly, however, they are the result of BPA and it's customers 

 coming to a mutual understanding that BPA simply must become more 

 efficient in order to continue to deliver cost-effective products 

 to its customers. The need is clear. BPA must succeed in this 

 effort if it is to remain the region's primary provider of bulk 

 power and transmission services. 



The irrigation load of the 15 largest irrigation utilities in the Northwest actually declined by 

 about 8X frcn 1981 to 1987. Since 1980 irrigated acreage in the Northwest has increased by 1.3X (0.1X increase 

 per year). In that sane period, sprinitler irrigated acreage increased by 16X due primarily to conversion of 

 flood irrigated land to sprinklers. Flood irrigation uses little or no electricity but is a relatively less 

 efficient method of applyincc water. Absent any inprovenent in efficiency, a 16X increase in sprinicler irrigated 

 acreage implies that electric usage should also increase by about 16X. However, irrigation load has averaged 

 only a 0.6X annual increase since 1979, or about 7.5X total from 1979 to 1991. Energy conservation efforts by 

 irrigators and irrigation utilities are primarily responsible for the difference. 



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