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fixed operating costs. This is the situation faced by the majority of the small, rural 

 utilities in economically distressed areas of the state. The impact of lost margin is 

 proportionately greater for a small system with limited ability to expand the 

 revenue base. 



5. Relative Advantages of Large Public/Private Utilities 



Large utilities are easier for Bonneville to work with because they have large 

 specialized staffs, and are more attractive because they may have very significant 

 conservation potential. Neglect of the smaller utilities, however, wdll lead to loss of 

 significant resource opportunities. Rural areas, which have timber-related and other 

 econonnic problems, also find themselves paying for resource acquisition efforts 

 elsewhere where local economics are relatively well off. 



6. Limited Infrastructure 



Small PUDs may not have skilled contractors available locally, and may be located 

 far from equipment suppliers. 



Consequences of Non-Participation in Rescxirce Acquisition by Small and Medium 

 Size Utilities 



If BPA utility-focused resource programs do not promote participation by small and 

 medium size utilities and/or provide mechanisms for their participation, there will 

 be negative impacts on Bonneville's long range resource acquisition goals. These 

 impacts include: 



1. Fewer low-cost conservation and generation resources will be captured. 



Small and medium size utilities' service areas contain significant potential 

 resources — renewable generating resources in particular. Often it is easier to site and 

 develop projects in a rural, rather than an urban setting. 



2. Energy resource development programs will neglect areas of the state that 

 especially need economic development. 



