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Question 9: Should the provisions in the power sales contract which allow some 

 utilities to be reimbursed by BPA for lost revenue when a voluntary 

 curtailment is implemented be eliminated? If so, why? If not, why not? 



Answer: As background, in 1981, Section 1 1(b) of the power sales contract was 



negotiated by BPA and its customers on the premise that a utility which 

 voluntarily took actions to reduce its load in times of a power shortage 

 would suffer a reduction in its revenues, and it was equitable to regionalize 

 some of these costs. Section 1 1(b) provides for lost revenue payments to 

 metered requirements and actual computed requirements customers for 

 voluntary curtailment that is initiated by the states and BPA. There are at 

 least four arguments why removal of these provisions might be appropriate: 

 (1) The methodology in the current contracts is very complicated. It would 

 be difBcult to determine the amount of load reduction (to what projected 

 load is actual load compared) and the contribution of various factors (i.e., 

 any reduction will be the combined result of weather, economic aaivity 

 fluctuations, alternate fuel av^lability, normal usage changes by consumers, 

 as well as responses to the request for curtailment), to the level of precision 

 necessary for payment purposes. (2) There is a significant workload to 

 BPA and its customers associated with implementing these contract 

 provisions. (3) The cost reallocation is, to some extent, circular, with the 

 very customers to whom BPA makes the payments the same customers 

 who, in the end, wiU see such payments reflected in a higher BPA revenue 

 requirements. (4) Given the unplanned workload and the contentiousness 

 that would be associated with these provisions, there is a reluctance to call 

 for volimtaiy curtailment. 



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