78 



It is important to note that the overall goal of Bonneville's Competitiveness Project is to allow 

 Bonneville to more efficiently and effectively accomplish its mission as outlined in organic statute, 

 not to change the mission itself Bonneville remains committed to the integrity of the region's 

 environment and natural resources, to conservation as the energy resource of first choice, and to 

 providing high quality transmission and other services. Our cojnpetitiveness has a direct 

 relationship to our ability to fulfill our mission, including regional utility, social and environmental 

 responsibilities. 



There has been a perception by some that Bonneville's focus on customers is an abrogation of our 

 fish and wildlife and other environmental responsibilities. If anyone has a stake in Bonneville's 

 continued success, it is those who are dedicated to preserving the region's fish, wildlife, 

 conservation and renewable resource programs Bonneville's customers have alternatives to 

 Bonneville power. Without revenues from the power side, it will be difficult, if not impossible, to 

 continue to fund the region's fish, wildlife, conservation and renewables programs A healthy 

 economy and a healthy environment go hand in hand One supports the other. A viable 

 Bonneville is critical to the entire region ~ environmental concerns as well as business and 

 industry. 



SUSTAINING REVENUES 



To ensure that we can meet all our regional responsibilities, we believe we must move to stabilize 

 rates to keep our existing customers and attract new revenues as well. Bonneville is looking at 

 how different price increases affect Bonneville's ability to keep customers and thus sustain 

 revenues. We believe this sustainable revenues analysis, based on actual offers being made to our 

 customers, shows that because our customers can choose alternative power suppliers at 

 competitive prices, even small rate increases can lead to a loss of existing customers sales Total 

 revenues may increase somewhat, especially in the short run with small rate increases less than 5 

 percent However, Bonneville believes that as rate increases move much above 5 percent, this 

 changes. Larger rate increases could modify Bonneville's revenue base by driving existing 

 customers away Our customers have many alternatives to turn to for their power needs Some, 

 like Clark Public Utilities, Grays Harbor Public Utility District, and Snohomish Public Utility 

 District, have already decided to diversify their power purchases from sources other than 

 Bonneville. Many other customers are being pursued by investor-owned or public utilities, 

 independent power producers, power brokers, and marketers As of March 1, 1995 Bonneville 

 has received formal requests fi'om six utilities to decrease their current purchases from Bonneville 

 by 472 megawatts. This reduction may result in lower power purchases and lower valued product 

 sales, but final decisions are yet to be made 



An irony of the marketplace is that some of our competitors are also our customers and 

 exchanging utilities under the Residential Exchange Program Virtually all of our customers, both 

 utilities and industries, are being approached by our competitors. For example 



Washington Water Power is proposing a 10-year arrangement to serve about half of the 

 load of Inland Power and Light about 27 average megawatts, Bonneville's second-largest 

 co-op customer. The price is potentially competitive with Bonneville's current priority 

 firm rate and escalates at 3 percent a year. 



The City of Canby has signed a similar contract for service to most of its 13 average 

 megawatt load with Portland General Electric. 



Idaho's Kootenai Electric Co-op has been offered by ENRON a contract to serve all of 

 Kootenai's 27 average megawatt load at prices which start near Bonneville's current 

 priority rate. 



In addition, a number of Northwest generating utilities and other West Coast suppliers, 

 including PacifiCorp, BC Hydro, PGE, San Diego Gas and Electric (through its Enova 

 subsidiary), and the Eugene Water and Electric Board, in addition to independent power 

 producers, are offering to serve current Bonneville customers 



