230 



DeFazio Hearing 

 Emerald PUD, page 3 

 September 25, 1993 



As well, Bonneviile is exposing itself to what could be an enormous gas price risk in 

 the mid-to-long-term, and a potential carbon dioxide penalty by purchasing significant 

 amounts of gas-fired resources wrthout proper financial protection. While many 

 utilities and state utility commissions have established an explicit value for CO2 

 emissions, Bonneville has explicitly excluded any recognition of this cost in its pricing 

 of the Tenaska project, or any fossil fuel-fired resource for that matter. We believe 

 this artificially lowers the cost of this project, and overstates its competitiveness. 



Changes In The Electric Utility Industry 



Bonneville, and the Northwest Power Pleinning Council (the Council), have not come to 

 grips with the reality of decentrsilized resource acquisition. They have not adequately 

 accounted for utilities' efforts to become more independent and provide for their own 

 load growth. Recently, the Council had an opportunity to assess Bonneville's resource 

 acquisition projections against the reality of what is going on in the region. The 

 Council held its first "Section 6(0)" hearing regarding the acquisition of the output from 

 a 240 MW gas-fired combustion turbine facility - Tenaska. In the Council's "needs 

 analysis'" there was little if einy recognrtion of the efforts of several of Bonneville's 

 customers to acquire their own resources. Rather than confront this reality, the 

 Council elected to warn Bonneville that the next time they proposed a generation 

 resource they could expect to undergo rigorous scrutiny. 



Technology is working to the benefit of decentralized, smaller scale "dispatched 

 generation" and "off-grid" resources. These technologies are more suited to local utility 

 implementafion and independent power producers than centralized providers like 

 Bonneville. Advances in these technologies could leave Bonneville in the future with 

 stranded investments. 



Public Trust and Accountability 



Bonneville has entered into a series of agreements in recent years which they have 

 shielded from public scrutiny. These agreements include settlements with General 

 Electric over issues involving the WPPSS nuclear facilities, Trojan nuclear facility 

 obligations, and most recently a secret agreement to acquire the output of a 240 MW 

 gas-fired facility (Tenaska). Without knowing what responsibilities Bonneville has 

 assumed in these agreements there is no way of knowing how competitive these 

 resources are. More important is the fact that Bonneville has seriously damaged the 

 public's perception of its ability to keep the "public trust." Without this trust Bonneville 

 will be seriously hampered in its ability to deal with the tough problems of today and 

 tomorrow. 



