III. E.

DIRECT SERVICE INDUSTRIES (DSI)

Generic Statement

The specific role, responsibility and the influence of the
DSI is unknown to the Cities. The DSI's, however, have been
represented by Mr. Larry Hittle in the negotiations conducted
to date regarding long-term Northwest purchases. The primary
group with which the California utilities have met and
negotiated with regarding Northwest purchases consists of
representatives as follows:

Ed Sienkiewicz
Jerry Garman

Larry Hittle

Merrill Schultz

Bonneville Power Administration
Seattle City Light

Direct Service Industries

Intercompany Pool

While not knowing the specifics of the DSI's position, one of the positions held by Mr. Hittle in the negotiations to date has been that, as a group, the contract term offered by the Northwest for any negotiated contracts could only be for rolling five-year firm periods; these five-year rolling firm contracts could be within the framework of a 15-year or evergreen contract arrangement. The firmness of any of these power transactions would be only for a rolling five-year period.

Thank you for the presentation on February 9, 1983, regarding long-term power purchase arrangements from the Pacific Northwest (PNW). The proposal appears attractive where displacement of oil or natural gas fuels occurs. However, the proposed price, the relatively short term (five-year maximum contract), and the recall provisions combine to make the proposal unattractive as a substitute for long-term resources.

As indicated by questions raised during your presentation, significant concern exists regarding establishment of the appropriate marketing agency to accomplish your proposal. The Bonneville Power Administration (BPA) appears to us to be in a position to serve as the marketing agency, but if it is decided to create some other entity instead of utilizing the BPA's proven capabilities, we suggest definitive steps be taken in the near future.

During your presentation, it was suggested that capacity would be virtually 100-percent firm and would be backed by PNW hydro resources. Use of the low-cost Federal hydro system as backup to guarantee firm deliveries could preclude access to those low-cost resources by entities which have a legal priority to them but who might not be interested in participating in your proposed "firm" power sales arrangements.

111 North Hope Street, Los Angeles, California Mailing address Box 111 Los Angeles 90051
Telephone (213) 481-4211 Cuble address. DEWAPOLA

25-181 0-83-29

Mr. Edward W. Sienkiewicz

-2

March 30, 1983

We suggest consideration be given to the following points in the further development of this marketing proposal to make it attractive to the Cities of Burbank, Glendale, Pasadena and Los Angeles:

Contract period should be approximately 15 years.

O Sale should not be related to a specific resource.

Sale price can be escalated with time and should
reflect melding of all PNW resources and not a
marginal cost.

Marketing agency could be the BPA, another agency
with proven capabilities, or another agency
authorized by Congress.

Pricing for the firm energy sale should provide
equity between the PNW and the Pacific Southwest.

Federal Energy Regulatory Commission review should
be provided to assure that transactions are
consistent with existing laws and service costs
are fair.

I hope these comments are helpful in the further development of your proposal. Please keep us informed of progress in this matter, and if additional information is needed, please telephone Mr. Bernard V. Palk at (213) 481-3393.

TESTIMONY OF

GLENN J. BJORKLUND

VICE PRESIDENT

SOUTHERN CALIFORNIA EDISON COMPANY

BEFORE THE

SUBCOMMITTEE ON MINING, FOREST MANAGEMENT,

AND THE BONNEVILLE POWER ADMINISTRATION

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

OF THE

UNITED STATES HOUSE OF REPRESENTATIVES

EUGENE, OREGON

JULY 11, 1983