112 



comprehensive basis. The In Lieu provisions of the contract should be shortened 

 considerably (from 7 years to 1 year) and the deemer provisions should be revised to provide 

 for payments from the utility to BPA when the utility's costs is less than BPA's. Finally, the 

 question of how tiered rates will apply to the residential exchange must be addressed. 



12. What part should BPA's existing resource acquisition programs play in BPA's 

 competitiveness initiative, both during a tran^on period and after BPA has 

 adopted some of the dianges it is considering? 



PPC believes that BPA's resource acquisition activities will play an important part in 

 the success of its competitiveness initiative. There are many opportunities to streamline the 

 agency's approach to resource acquisition. There are currently 338 Bonneville employees 

 and 117 contractor employees working on various aspects of BPA's resource acquisition 

 activities. In conservation, for example, approximately 40 cents of every dollar spent to 

 acquire the resource is spent on some form of overhead. This is unacceptable! We believe 

 that an approach to conservation that relies upon utility initiative and innovation rather than 

 central planning of conservation programs can significantly reduce the overheads. 



During the transition period from current resource acquisition programs to some other 

 approach, PPC believes that we could significantly reduce the amount of program evaluation 

 work that is undertaken. While PPC continues to support "proving" the performance of 

 conservation resources, we believe that the current approach to program evaluation is more 

 directed toward scientific precision than effective implementation. We believe that BPA 

 should no longer determine technical specifications for conservation programs, establish 

 incentive payments and administrative reimbursements, determine reporting requirements, 

 and all other rules for program implementation, then conduct an evaluation and tell its 

 customers that BPA will no longer suppon their conservation programs because they are not 

 cost-effective. PPC believes that conservation is a viable resource that can be developed 

 very cost-effectively. Our members would like the opportunity to prove that they can 

 accomplish this task. 



On the generating resource side, we see several developments that are encouraging. 

 Bonneville recently revised its billing credit policy with an eye toward reducing the 

 administrative burden imposed by a policy that was written wlten the region had an energy 

 surplus and resource acquisition was the last thing that Bonneville wanted to encourage. 

 Because the policy revisions were undertaken in consultation with customers and the BPA 

 team had a clear message to solve tlie difficulties of woilcing with the existing policy, the 

 revision effort was largely successful. A new solicitation for 200 aMW was met with 

 interest and negotiations are slated to begin after Bonneville releases its mailceting plan in 

 November. 



Bonneville must decide what its future role in resource acquisition efforts will be and 

 then consistently develop policies that allow regional utilities to assume a complementary 

 role. If Bonneville chooses in its marketing plan to take a more passive stance in resource 



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PUBLIC POWER COUNCIL 



BOO N E Munnom•^. Sum 739 Ponttno. OA fS 

 (U3J 23:-24Z7 



