51 



tracts. That is not easy, but the advantage it has for our customers 

 is that it gives them multi-year commitments. 



If they sign such a contract with us, they have got basically a 

 guarantee for 5-7 years that they have got stable program levels 

 and conservation funding rather than being subject to our financial 

 circumstances each year when we allocate our budgets. I am hope- 

 ful that we will be able to gradually shift some of that financing 

 burden to our customers in exchange for giving them multi-year 

 contracts, given that program stability. 



Tacoma and Seattle, in particular, are two of the customers that 

 we are attempting to negotiate such arrangements with. Eugene 

 Water and Electric Board is another. We have a whole group of 

 Washington utilities called the CARES group, which are some of 

 the smaller PUDs, mid-sized PUDs, in Washington State, and the 

 same thing with some of the Oregon munis. So we have quite a 

 number of customers or groups of customers that we are attempt- 

 ing to negotiate such arrangements with. 



Mr. Kreidler. Do you have any estimate of what proportion of 

 your discretionary spending on conservation, which I understand to 

 be about 11 percent, could potentially be turned over to the cus- 

 tomers? 



Mr. Hardy. I don't have a precise estimate, and I will have to 

 get that for your for the record. My guess would be that it is some- 

 where in the 10-20 percent range, maybe higher. 



[The information follows:] 



Current negotiations with utilities on third-party financing arrangements for FY 

 1994 and FY 1995 would turn over about 30 percent to customers. 



Mr. Kreidler. Another option would be to perhaps cut back on 

 acquisition and development programs in favor of conservation, 

 particularly over the next few years. Is that a viable? 



Mr. Hardy. That is one of the issues we are actively pursuing 

 in the current budget reduction exercise. I meaii we are not just 

 looking at our conservation budget, we are looking at our genera- 

 tion budget as well and seeking to bring both of those down. We 

 are actuSly seeking to keep our conservation acquisition targets at 

 the same level while making ourselves more efficient. 



Our generation targets we are probably going to decrease by 

 some amount, slip on-line dates and possibly even cancel some 

 projects. So we are looking at delaying those acquisitions. The 

 trade-ofi" there tends to be how much can you do and what kind of 

 additional short-term power purchase obligations would you incur, 

 on average, over the number of water years. 



I think it is fair to say we are trying to take some additional risk 

 in that area, hoping we are going to have average water and there- 

 by decrease the size of the rate increase. So you will see cuts in 

 both those budgets, not just the conservation budget but the gen- 

 eration budget as well. 



Mr. Kreidler. Lastly, what are your thoughts on using the lump 

 payments that are going to come to Bonneville in connection with 

 the transmission lines to California for rate increase reduction pur- 

 poses. I am asking about the potential of essentially postponing 

 those lump payments to the Federal Government as a means of 

 moderating the immediate impact in the short term. 



