Ill 



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? 



No electric utility is an island. Throughout the nation, all utilities are interconnected 

 by a network of transmission circuits which makes them veiy dependent upon each other. 

 Tliis is particularly true in the Pacific Northwest, where we have an extensive federal 

 transmission grid. Therefore, if one utility, for whatever reason, does not have adequate 

 resources to meet its load, neighboring utilities must support the deficient utility to prevent 

 serious problems on their own systems. If this support must come from curtaihnent of loads, 

 then equity demands that the supporting utility receive extra compensation for the adverse 

 effects of curtailment of planed revenues. If the supporting utility is BPA, then the 

 curtailment must come from BPA's utility customers and the extra compensation must flow 

 through to those curtailing utilities who suffered the loss in planned revenues. The provision 

 in the existing contract allowing this to happen must remain. 



10. How should the long-term power contracts that BPA is currently negotiating 

 differ from the current contracts? What, if any, environmental issues should be 

 addressed in these contracts? 



PPC and the other BPA customer groups are working on principles for new power 

 sales contracts. It is too early to say what our preferred set of principles will be. 



11. It has l>een suggested that the Residential Exchange Program rewards less 

 efficient utilities. Are revisions to the exchange agreements necessary? If so, 

 what changes would you suggest? 



The Residential Exchange Program may reward inefficient utilities since the benefit to 

 utilities exchanging with BPA is based upon the difference between the BPA PF rate and the 

 average system cost of the utility - thus the higher the utility's cost the bigger the exchange 

 benefit. However, we must assume that the state regulatory commissions or the boards of 

 direaors of the participating utilities are doing their jobs and keeping the utilities' costs as 

 low as possible. 



It may be argued that the Residential Exchange Program provides benefiu for utilities 

 that develop generation facilities while it does not provide benefiU for all types of 

 conservation programs. There is good reason for this differential treatment of conservation 

 and generation. Certain conservation costs are related to consumer behavior (promotion and 

 advertising) and are not actual hardware costs. These should not be allowed in the 

 calculation of exchangeable costs. 



The exchange should be revised to keep track of changes in the utility regulatory 

 arena. Issues include decoupling and the reduction in data availability that results. In 

 addition, utilities should provide Average System Cost (ASC) dau to BPA on a timely and 



PUBLIC POWEP COUNCIL 

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