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clearly defined. 



9. Allocations of power must be stable and predictable. 



10. SUB asserts that the size of the Tier 1 allocation should be 

 based on 3 year average, weather adjusted loads placed on 

 BPA. Employing historic test years are better than future 

 test years because they represent actual load, not estimated. 



Exceptions should be made for contingency contracts. 



11. Prices for each tier must be based upon the costs of the 

 resources in each tier (only actual, not theoretical, costs) . 

 Opportunity costs in regions outside the Pacific Northwest 

 should not be used to determine marginal costs in the 

 Northwest. Prices for power and all services to deliver that 

 power should not be inflated by the foregone revenue from 

 potential sales outside of the region. 



Specific time periods should be defined when determining 

 prices for each tier and the resources in the respective 

 pools should be defined in purchase contracts for each block 

 of power. It is envisioned that Tiers would be time 

 differentiated. For example, all resources purchased after 

 the initial allocation of Tier 1 that occur in a 5 or 10 year 

 period would comprise Tier 2. The next 5-10 year period 

 acquisitions would comprise Tier 3, and so on. 



Stability of the first tier price is crucial. BPA must be 

 accountable for costs - customers must have the right to 

 audit cost accounting. 



12. BPA rate design shall depend on the resource and load 

 characteristics in each tier. 



13. BPA's resource acquisitions shall be based solely upon 

 reasonable notice from the customers . 



14. BPA's net revenue volatility shall be minimized. 



15. Unbundled services must be available at cost, concurrent with 

 the implementation of tiered rates, subject to public 

 preference. BPA should provide unbundled services of load 

 shaping, dispatch, marketing, reserves, capacity, 

 conservation, etc. on a cost basis. Preference customers 

 will have contractual rights to these services upon 

 reasonable notice to BPA (to initiate or terminate) . These 

 unbundled services are in addition to any Tier 1 allocation. 



It is envisioned that the Tier 1 allocation will consist of 

 capacity and energy and will be priced to include the cost of 

 all services required to deliver the Tier 1 product. In this 



SPRINGFIELD UTILITY BOARD PAGE 4 SEPT. 25, 1993 



