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problems noted above for the residential markets, although the consequences of 

 any^uch problems will be smaller. 



There are two broad approaches to promoting additional cost-effective fuel 

 switching; improving the fiinctioning of markets and directly intervening in 

 markets by mandating or paying money to influence fuel decisions. Bonneville 

 strongly believes that the first approach is where we should focus our efforts. 

 Markets are working, but maybe not as well as they could. We can most 

 efficiently promote cost-effective fuel switching by improving the functioning of 

 markets. Specifically we need to send appropriate price signals and improve the 

 information available to consumers, builders and other decision makers. 

 Appropriate price signals include not only the price of energy, but also might 

 include hookup fees or other charges that reflect the longer-term costs of new 

 construction fuel choice decisions made by builders, developers, or building 

 owners who do not pay the ongoing energy costs. 



Parties besides electric utilities also have key roles in contributing to good market 

 outcomes. Natural gas utilities and their regulators in particular may need to 

 reassess and possibly revise their policies and approaches to making natural gas 

 available to consumers so consumers have more fuel choice options. 



Specifically, Bonneville is considering adoption of tiered wholesale rates that 

 would better reflect the true costs of developing new electricity resources. This 

 would help our utility customers make good resource decisions and encourage 

 them in turn to provide better price signals to their end use consumers We are 

 also reviewing our own electricity conservation programs to make sure we are not 

 sending mixed signals or otherwise providing incentives that are counter to good 



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