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utilities (and all of their ratepayers) , whether publicly or 

 privately ovmed, and whether or not they rely exclusively on BPA 

 for their power supply, have long enjoyed the cost benefits of the 

 federal Columbia River Power System. The region's economy is 

 largely built on the foundation of the Federal System. 



For example, in irrigated agriculture, relatively low cost BPA 

 power for irrigation pumping has been a cost "equalizer" for 

 Northwest irrigators who compete with irrigated farmers from other 

 less arid regions and/or regions which are located closer to 

 markets. If BPA becomes uncompetitive, irrigators will pay higher 

 rates to their retail utility and, ultimately, lose their cost 

 "equalizer. " 



Having said that the Competitiveness Project is necessary; it 

 must be recognized that at this stage, the Competitiveness Project 

 is not a well defined proposal or set of proposals to reform BPA or 

 to revise its operations. Rather it is a process; it is a 

 commitment by BPA to thoroughly review BPA operations and to 

 develop specific proposals to reform BPA. 



NIU supports the Competitiveness Project. We believe it is an 

 important BPA initiative. This is not to say, however, that NIU or 

 any NIU member endorses "unbundling" or "tiered rates" or any other 

 specific proposal or program as it may ultimately be defined and 

 put forward by BPA. The distinction is this, we support BPA's 

 commitment for a top to bottom review of BPA operations, but we do 

 not endorse in advance every action or proposal which may 

 ultimately emerge in the name of the Competitiveness Project. We 

 simply need to understand the details of any specific proposal or 

 program before we agree to support it. 



V. The Irrigation Discount and the Competitiveness Project. In 

 the short run, the Competitiveness Project means uncertainty for 

 all BPA customers and their consumers, including irrigators. We 

 accept that uncertainty. We believe that in the long run, the 

 importance of improving the efficiency of BPA outweighs the 

 problems created by uncertainty. If BPA succeeds, it will find 

 ways to keep its costs and rates down for all BPA utility customers 

 and their retail consumers, including irrigators. 



The Competitiveness Project will involve a broad ranging 

 review of BPA rates, rate design and programs. We understand that 

 the irrigation discount will come under scrutiny by BPA, as will 

 all other matters involving rates and programs. We believe, that 

 keeping BPA competitive is not incompatible with retention of the 

 irrigation discount or an equivalent rate. This is true because 

 the irrigation discount or an equivalent summer period rate is 

 soundly based on cost of service, cost causation and cost benefits 

 to BPA. The following are some of the reasons why the irrigation 

 discount and the Competitiveness Project are not incompatible. 



