92 



Mr. DeFazio. Yes, but I do not think we can question the re- 

 gional coordination and the reciprocal obligation. I mean I have 

 seen some phenomenal numbers which start high and go really 

 high in terms of the value of the coordinated system. And all we 

 have to do is go back and look at WPPSS and understand what 

 happens when we start going off on tangents. Of course, unfortu- 

 nately BPA itself was 



Mr. Duncan. That was a regional tangent. 



Mr. DeFazio. Yes, it was regional tangent. [Laughter.] 



Not a good example of exactly what I am talking about here, but 

 you know, it was started by an individual group of utilities. 



Ms. Merchant, did you have any comment on this? 



Ms. Merchant. No. 



Mr. DeFazio. Okay. 



Mr. LaRocco, do you have further questions? Let me just sort of 

 review — I will have more opportunities, but let me see. To the Ad- 

 ministrator it has been some time since our Portland hearing and 

 you have had several meetings of the group that is working on 

 tiered rates, and as I read your testimony, your testimony says 

 that we are going to move forward. The question is. What are the 

 options with tiered rates? Are we still in that place? 



Mr. Hardy. That is correct. We have a work group comprised of 

 both customer and public interest groups, as well as the Council 

 and other representatives that have looked at the tiered rates ques- 

 tion two or three times. There are three basic options with an infi- 

 nite number of variants they are looking at. What we do not have 

 yet is the marketing plan. You know, that tiered rates discussion 

 needs to be informed of what the unbundled services are. My guess 

 is that this discussion probably occurs in December. 



Mr. DeFazio. We are still headed toward tier rates in your opin- 

 ion? 



Mr. Hardy. As I testified at Congressman Wyden's hearing about 

 two months ago, the question is not whether we do this, the ques- 

 tion is just how, and from my perspective, how it meshes with the 

 unbundled products and services. So I have crossed that threshold. 

 For the very reason that I think you alluded to earlier, for the last 

 13 years, we have been achieving conservation almost entirely 

 through offering very generous program incentives. And if we con- 

 tinue in that mode for the next 10 years, we are going to spend $3 

 billion on conservation. I just concluded that the delivery costs 

 were going to kill us and that we had to lower the incentive levels 

 on one hand but put in some form of tiered rates on the other 

 hand. So you had a mixture of program incentives and price signals 

 that got you to the same aggregate amount which is, the Council's 

 1,500 megawatt goal regionally, or our portion of that which is 

 about 650 to 700 megawatts. You got to the same aggregate 

 amount of conservation acquisition but with much less pressure on 

 the priority firm rate. 



Mr. DeFazio. In your review of the development of tiered rates, 

 are we bringing in everything, including the DSIs, into the tiered 

 rate discussion? 



Mr. Hardy. We have not ruled anything out in terms of how it 

 would apply. We really have not gotten to the question of deciding 

 just how it applies to different customer groups. 



