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We think that many of these problems could be overcome if the region and BPA moved 

 toward a more decentralized acquisition approach that relies on tiered wholesale rates 

 and greater competition in wholesale markets. A properly implemented tiered rate 

 structure would provide the necessary incentive for BPA's customers to pursue conser- 

 vation on their own. It would also link decision-making authority and responsibility 

 which is lacking in the current regional structure. Utilities that make cost-effective deci- 

 sions will produce benefits for their customers. Those that do not will reap the cost 

 and rate consequences. This is as it should be BPA should not be a social engineer! 

 Successful efforts will be emulated by others. In our view such a system will yield 

 more innovative and efficient programs that will be supported locally. 



The above comments can be generally applied to BPA's generation acquisition 

 programs as well. Raft River has a particular concern relating to PNGC's share of the 

 Boardman Project which was offered to BPA several times. That resource clearly 

 would have cost BPA less than some resources BPA is acquiring. Yet the output of an 

 existing resource whose costs are basically known and whose environmental impacts 

 are sunk , has been sold out of the region for the long term. I do not want to get into 

 the specifics of this decision. The sale to California will substantially benefit PNGC's 

 co-op members. However, it would have been more beneficial for all concerned to 

 find a way to keep the power here. However, the bottom line is that BPA's process 

 was simply too inflexible to accomplish the result that was in the best interest of the 

 region including BPA's customers. Had a system of tiered rates been in place, 

 PNGC's share of Boardman would almost certainly have remained a regional resource. 



Very frankly, BPA has not provided and nor do I have enough information to speak to 

 the proposed contract between BPA and the Tenaska Combustion Turbine project with 

 any specific knowledge. However, I would be concerned to the extent that BPA ties its 

 entire gas supply, to fixed gas price escalation terms. Over the long-run gas should 

 remain very competitive although there will be periods of price volatility. In general, 

 you can expect to pay a very healthy price premium to obtain long-term price certainty. 

 As a BPA firm power customer this is a real concern. 



