53 



make the decision within that envelope. I'm optimistic that that 

 will lead to a less bureaucratic, more responsive kind of approach. 



The second thing I would say is, part of the budget cutting that 

 we are now doing is looking at further efficiencies in that operation 

 and, in particular, our own administrative overhead costs which I 

 thir^ are excessive in those areas. I am convinced that we can sig- 

 nificantly reduce those costs and probably make ourselves more re- 

 sponsive in the bargain. 



All that being said, I think we need to distinguish between what 

 we need to acquire the 660 megawatts in a more efficient fashion 

 with probably lower program incentives but with a tiered rate or 

 some other kind of price signal, and what a customer may want. 

 I can't satisfy all the wants. The more you satisfy all the wants, 

 the more this becomes an entitlement program, and we simply can- 

 not succeed if that is the way it is viewed by ourselves and our cus- 

 tomers. Our customers, I think, are aware of that and are actively 

 working with us to try to change that. 



I must say, however, that I often run into a world of difference 

 between the theme that I hear from a utility general manager and 

 that that I hear from the same utility's conservation manager 

 about what we are doing and not doing. Some of our own utilities 

 have a rather fundamental management inconsistency that they 

 need to wrestle with before we are going to be successful in solving 

 this problem. 



Mr. DeFazio. Since you mentioned entitlements, I thought I 

 would bring up Super Good Cents, which I think some look at as 

 an entitlement. 



Now that both Washington State and Oregon have adopted the 

 model conservation standards and revised upward dramatically 

 their residential building codes, do you believe it is time to revisit 

 the amount of subsidy that is provided in the single family residen- 

 tial, and are you going to look at that? 



Mr. Hardy. Yes. 



Mr. DeFazio. Okay. 



The power purchases, if we could just dwell on that for a mo- 

 ment. You talked about purchases, $170 million unscheduled in 

 January, February, or early March. What are you projecting for fis- 

 c£d year 1994 for power purchases? In looking at next year's budg- 

 et, is one of the underlying factors driving the total cost of this 

 budget an assumption that you will require similar purchases in 

 the next winter that were unanticipated this year and came out of 

 reserves, but are you now building those into your base budget? 



Mr. Hardy. Not to that level, but let me describe to you the plan- 

 ning horizon we are using. I will answer for the record the precise 

 number because I don't have it in front of me. 



As a result of the fact that, given water conditions in this year, 

 reservoirs will not refill this year, we will have to plan to purchase 

 an amount of power based on average water assumptions for 1994 

 that will enable us to assure or give us a reasonable probability of 

 reservoir refill in 1994. So we would be making purchases above 

 what we would normally make if our reservoirs were full on July 

 31 of this year, but I am not going to budget $170 million of addi- 

 tional purchases because what we had this year was a l-in-50-year 

 event. It would not be prudent to collect that amount of money, but 



