351 



IBM, and our own regional success story, Nike. In fact, this morn- 

 ing's Register Guard talks about a 400 FTE reduction at the United 

 States Forest Service, so I am somewhat mystified by the Adminis- 

 trator's apparent inability to lay people off from the federal system. 



If its customers are to be competitive in the world marketplace 

 of today, the same type of actions must take place at BPA. If BPA 

 is to remain a competitive service provider, it must act quickly to 

 reduce its cost of doing business. 



Should BPA fail to become truly competitive, it will over time be- 

 come increasingly irrelevant. Depending upon the energy choices of 

 the Northwest and world economic conditions, BPA could easily 

 enter a downward spiral from which it would not recover without 

 a massive federal bailout. 



My second topic is accountability. All of us in the region, SUB 

 included, engage in a collective fantasy. We pretend that by dilut- 

 ing — regionalizing — our mistakes in the vast FBS resource makes 

 everjrthing okay. 



As a result, our region has a complex system of special deals and 

 fiascos. They go by various names — low density discount, irrigation 

 discount, variable rate, Trojan, WPPSS — but they all share a com- 

 mon reality: the people and organizations responsible escape the 

 consequences of their decisions by melding the costs into the re- 

 gional rate pool. Many of these same players are now at the fore- 

 front expressing serious concerns about the relatively minor ex- 

 penditures being made for fish and wildlife mitigation, $300 million 

 for fish versus an estimated minimum half billion dollars to decom- 

 mission WNP-2. 



I would echo my peer Mr. Scarborough's testimony on the DSIs, 

 including the need for an audit. 



To increase accountability of both BPA and at the utility level, 

 SUB supports the concept of tiered rates. Our implementation plan 

 is contained in my written testimony, but the principle is simple: 

 create accountability for the region's utilities. Under tiered rates, 

 the responsibility, accountability and risk for developing resources 

 (including conservation), belongs to the utilities and its customers. 

 BPA will only require resources for tier 2 or subsequent tiers upon 

 receiving definitive notice from its customers that they wish to 

 place load on BPA. 



Tiered wholesale rates, as outlined in our written testimony, pro- 

 vide the utility with tools and clear price signals. Under tiered 

 wholesale rates, the retail rates paid by industrial customers of 

 those utilities reflect that utilitys decisions, not BPA mandates. 



As BPA implements tiered rates, it becomes possible to unbundle 

 products and services as independent and discrete marketable com- 

 modities, not associated with any particular tier. Unbundled serv- 

 ices should be priced, as should all BPA services, at cost. 



Unfortunately, BPA does not have a cost accounting of a market- 

 driven organization and lacks concrete information concerning the 

 costs of its services. Revision of that system must proceed the 

 unbundling of services. BPA cannot very well sell something it does 

 not know the price of. 



The decentralization envisioned by Springfield in an unbundled, 

 tiered-rate BPA is not the equivalent of chaos. Regional coordina- 

 tion of existing resources and planning for new resources will still 



