242 



DeFazio Hearing 

 Emerald PUD, page 15 

 September 25, 1993 



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

 BPA's competitiveness initiative, both during a transition period and after 

 BPA has adopted some of the changes it is considering? 



Bonneville needs to be an advocate not an adversary of utility participation in resource 

 acquisitions. Bonneville will fail in its effort to be competitive if it cannot set the needs 

 of its customers above its need for control and agency dominance. Emerald signed 

 the first billing credits contract in the region. The decisions we made through the 

 course of negotiating this agreemertt relied heavily on information provided by 

 Bonneville. One year after we entered this agreement we were advised that 

 Bonneville had significantly lowered their alternative cost. This was the result of a 

 mistake Bonneville made in their original projections. The end result was a substantial 

 reduction in the value of the project for Emerald. In trying to understand how this 

 happened we were told that the error was a result of the final agreement reached on 

 the Tenaska contract which was a key element in calculating the new benchmark for 

 valuation of our billing credit contract. Bonneville went on to say they could not tell us 

 how this valuation for Tenaska was arrived at because those numbers are viteil to 

 preserving the confidentiality of the Tenaska Agreement. 



Under tiered rates and unbundling, Bonneville should still offer to provide load growth 

 services for utilities. In order to effectively accomplish this service Bonneville must at 

 least maintain existing conservation programs. The new idea that Bonneville would 

 acquire all regional conservation, as described in question 2 about tiered rates, is quite 

 intriguing. 



Billing credits would likely have no meaning and should probably be eliminated. 



13. Please provide any other suggestions regarding actions that would malce 

 BPA more competitive or cost-effective? 



Government Corporation 



Bonneville is actively pursuing "Government Corporation" status. This may provide the 

 Administrator the ability to manage the entity more in line with conventional business 

 practices as opposed to traditional bureaucratic processes. Personnel management 

 practices need to be more responsive to rewarding and promoting deserving 

 employees, and termination where services are no longer necessary or performance is 

 substandard. Authority to make decision must be delegated to the regional offices, or 

 the regional offices should be closed and all decision making come out of 

 headquarters. 



