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There is a competitiveness project under way at Bonneville. We 

 support that and we have people involved in it and will continue 

 to have people involved in it. But, basicgdly, all elements of Bonne- 

 ville's business are going to have to be reexamined and I suspect 

 there's going to be massive changes in a lot of things before thej^re 

 going to become competitive. We'll talk about that more, I suspect, 

 at the next hearing, but let me give a preview just for today. 



The three major problems I beheve facing the agency are: One, 

 it melds its rates for its products and, basically, masks the cost of 

 new generation, masks the cost of conservation, and masks the cost 

 of transmission development. 



A related thing it does is it keeps the products and services it 

 offers pretty much bundled and it's kind of a consequence of the 

 melded rate and doesn't allow each of its goods and services to com- 

 pete on the margin- and see if the prices that it costs to provide 

 those services are actually ones that can be marketed. 



The other thing I'd point out that's a problem is the large con- 

 servation incentives. These are significant and, in fact, are some of 

 the reason, obviously not all the reason, but some of the reason 

 rates are experiencing pressure. 



What are the solutions? Again, this is just a preview, but, one, 

 I'm going to agree with some of the other panel members and say 

 we need to set very ambitious efficiency improvement programs 

 here in the region. I think the 660 megawatts ought to be a floor. 



We need to use our products here, our scarce resources, as effi- 

 ciently as possible. I beheve that the Council and Bonneville ought 

 to take the lead on planning to ensure that happens. I think we're 

 going to have to test and challenge. What's happening is that Bon- 

 neville doesn't have to pay to ensure we get a good regional result. 



I think one of the primary assumptions here is that Bonneville 

 has to pay before we can get a good regional result, and that's just 

 not the case. I think as we move into a more competitive environ- 

 ment, you're going to see things like tiered rates and other things 

 that have been offered as ways to take the pajnnent for meiny of 

 these programs and push it down much, much closer to the people 

 it benefits. And that's the way it should be. 



We have pushed conservation very hard in the early 1980s. My 

 own sense is we've got it kick-started, but we don't have a problem 

 with information. It's a problem of getting the program delivered. 

 We'll need to continue to work on that. 



But, again, my goal would be to use electricity as efficiently as 

 possible. But I think we'll have to take a hard look as we move to- 

 ward this competitive situation ensuring that consumers and utili- 

 ties that benefit fi*om the programs probably shoulder most of the 

 cost. 



Let me make a couple of comments about the future. First, I 

 think in any meirket where it becomes deregulated or much more 

 competitive you will find the dominant firms shrinking, and I think 

 you'll find the real price of the product going down. Now, the con- 

 clusion I draw fi-om that is that Bonneville will be much smaller 

 in the future if it's going to survive. 



It's going to be more agile, be much more business-like, but that's 

 what a competitive market is. Again, I would draw you back to the 



