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serves. Recall that about 60 percent of Bonneville's sales ultimately 

 go to basic industry, us and folks that Ken represents and some 

 basic agriculture. 



We compete in markets on the basis of price and most of the 

 markets we compete in are internationally almost perfectly com- 

 petitive commodity markets. Prices go up here, we eat it. There is 

 no other alternative. So that's the first test. 



The question of how competitive we or other industries are, I 

 think it is a fundamental question we will have to wrestle with as 

 we go out over time. But it's certainly a question and an issue. 



T^e question of whether Bonneville is competitive or not is really 

 a question of what's the alternative cost of providing the same 

 products, and combustion turbines may be a good choice. All I can 

 say there is that I have several members that are actively involved 

 in getting combustion turbine output. 



My own sense is that the crossover point between BonneviUe's 

 rates and the cost of new combustion turbines is quite a bit closer 

 and I think that it will get closer as the market gets more competi- 

 tive. How close? It's always going to be a debate, but there's no 

 doubt that it's adding additional competitive pressure. 



I guess the last thing I'd say is I'll agree with some comments 

 that were made earher. The question of whether Bonneville is com- 

 petitive or not has to be a long-term question. We're not interested 

 in solutions that just push off some of these problems into the fu- 

 ture. 



We think there's going to have to be significant changes to the 

 agency. Randy Hardy is taking the lead in doing those. We're work- 

 ing with him. If he's success^, I think we'll set the stage for the 

 agency being competitive in the fiiture. But that's the goal, the 

 long-term future. 



Mr. DeFazio. Okay. Ken. 



Mr. Canon. We've spent a lot of time trying to wrestle with this 

 question as far as Bonneville versus the utihty. Obviously, buying 

 from utilities, the question is, well, do you want Bonneville to be 

 the resource provider for the region or do you want the utilities to 

 be so. 



Again, going back to John's point, which makes us most competi- 

 tive? It seems to us that the utOities that we see out there are look- 

 ing at risk. We've heard a lot about Tenaska's risk as far as gas. 

 That's something we're very, very accustomed to dealing with. We 

 have now dealt with it for 4 or 5 years as our plants buy gas on 

 a daily basis in a very deregulated market. 



I guess we've internalized that to some extent. At the same time, 

 we know that the utilities are looking at what has happened and 

 is happening with the NIPS recovery team and the hydro capabil- 

 ity. That's another risk that they're dealing with. 



I don't think well really know for a couple years. I think that 

 as some of these things sort out, I think as we see the utihties 

 going out with requests for resources and actually moving ahead, 

 we wiU know for certain. 



Right now I think a lot of people are acting on perception. The 

 perception, perhaps unfairly given, is that Bonneville cannot be 

 competitive. We're not bujdng into that. We're hopeful that the 



