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If we can make it work, we will spend $700,000 to $1 million over the next four to six years to keep from spending $20 million on system improvements. The lion's share of the investment deferral ($15 million) goes to BPA as well as the lion's share of the cost (70%). Under this program, OPALCO will spend $200,000 to $300,000 to keep from making $5 million in system upgrades. We should be able to save the entire cost of the program every year that we can defer these projects. This is exciting and worth our effort to make sure it works. Another issue that will be very high on our priority list over the next several years is the evolving deregulation of the electric industry. Today, the vast majority of the power sold in the United States comes from large, privately owned, vertically integrated electric utilities (like Puget Power and PacifiCorp). These utilities do everything from generating the power to selling it to the end user. By comparison, OPALCO buys our power from another company (BPA) and sells it to you. I have just polished my crystal ball, and it tells me that within five years, all electric companies will be split into five functional areas. I don't know whether this split will be functional (different departments of the same company) or legal (different companies). Here are the five areas I think we will see and what they mean to you: (1) Generation of Power. Anyone can generate power and sell it to whoever they want. This will be totally unregulated as to price, quality or reliability. (2) Bulk Transmission of Power. This will be a heavily regulated business, moving large amounts of power between specific points. Prices for transmission of power will be regulated, and anyone willing to pay the posted price will be able to get access. (3) Distribution of Power. This is a major part of what OPALCO does today. It will be a regulated business that moves power from the transmission system to the end user. Companies (like OPALCO) who own distribution lines will be required to move power for others at the same rate they charge themselves. (4) The Sale of Electric Energy. Another part of what OPALCO does. Like the telephone long distance service, anyone who wants will be able to get into the sale of electric energy business. This will be totally unregulated. In the future, you may buy your power from the XYZ Power Company, who will buy the power and sell it to you. You may never deal directly with OPALCO. We don't want to lose your business, and we are going to work hard to insure our products are competitively priced and of high quality. (5) Energy Services. This covers many of the things OPALCO does that are not covered above. This category includes conservation, power quality, and our Load Management Program. The future will be far different than the past. We are not going to have too many years to get ready for the competitive future, so it is very high on my list of things to worry about.
Doug Bechtel
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