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Let me summarize very briefly what the Bonneville problem is. 

 Administrator Hardy has laid out for you scenarios under which 

 customers leave the system and abandon some part of the power 

 that they have been purchasing from Bonneville. 



The normal response in a competitive market is to try to find 

 other customers, and as the marketplace opens up, Bonneville has 

 more potential customers available to it. But Bonneville, because of 

 that 30-year-old statute can only make short-term sales when it is 

 finding a customer out of the region. 



If it is selling in the region, anytime you buy from Bonneville, 

 you become a kind of Typhoid Mary that is automatically subject 

 to Federal statutory restrictions on your own resale out of the re- 

 gion. 



This is if you are a Bonneville customer in the Northwest. And 

 no matter who you are, Bonneville has to go through extraordinary 

 paperwork requirements documenting the sale, and none of these 

 restrictions are applicable to any of Bonneville's competitors. 



Now, in an era generally hospitable to free trade it seems like 

 somebody forgot about Bonneville, and we think it is time to do 

 something about that. 



We also acknowledge that that solution has to be respectful of 

 the regional tradition of public preference, it has to be respectful 

 of Bonneville's obligations to its existing customers, and, in gen- 

 eral, the solution has to be one that works essentially for all of the 

 major interests in this room. 



What we put on the table, and I will just close on the proposal, 

 and I want to emphasize it is only that, and we look forward to fur- 

 ther discussion, is that in situations where a Bonneville customer 

 abandons the system and signs a long-term contract with someone 

 else, that Bonneville ought to be able to resell that power in the 

 marketplace after giving all the public preference customers a 

 chance to go ahead and step in and replace that departing buyer, 

 if they want to. 



Senator Hatfield. Other than a spot market. 



Mr. Cavanagh. Absolutely, Senator. In other words, the problem 

 we are dealing with is that when Bonneville has to go to the spot 

 market, it loses a penny a kilowatt hour pretty much automati- 

 cally, compared to what it could make in an open market. 



And the difference that makes, just to summarize for Adminis- 

 trator Hardy, some of Bonneville's internal resource projections are 

 looking at a possibility of 1,000 average megawatts of load leaving. 



The difference between the spot market and the free market, in 

 terms of those resales, is easily on the order of $100 million a year. 



It seems to me, again, that if we can find a way to let Bonneville 

 resell abandoned power in the free market, as opposed to this arti- 

 ficially constrained market, all Bonneville customers stand to bene- 

 fit. 



So that is what we would like to urge this committee and our col- 

 leagues at this hearing to work on as part, not all of, heaven 

 knows, but part of the solution to making Bonneville more competi- 

 tive and letting it find solutions to the fish problem comparable to 

 those we found on the efficiency side. 



