191 



The two reasons for choosing purchases over curtailment are price and 



flexibility. 



Price: The Power Sales Contract requires that, if BPA requests curtailment, 

 then BPA shall pay the curtailing party for lost revenues. Customers to whom 

 Section 1 1 applies, for the most part, are totally dependent upon BPA for 

 power resources. Their expenses may be fixed within the short-term horizon 

 of weeks or months between notice of the need for curtailment and the time 

 when it would have to commence If BPA and a State Governor call for 

 curtailment, voluntary or otherwise, those utilities would be unable to adapt 

 total revenues to cover expenses in a timely fashion to meet the income lost by 

 reduced electricity sales This would place them, because of a request for 

 curtailment, in a position of reduced ability to meet their revenue requirements 

 When the Power Sales Contracts were negotiated in 1981 to 1982, this 

 situation was recognized, resulting in Section 1 1 Section 1 1 requires BPA to 

 reimburse utilities for costs incurred during a voluntary curtailment In effect, 

 this regionalizes the localized, negative impact of a curtailment on utility 

 systems Costs are defined in the contract as the difference between utility 

 retail prices and BPAs energy portion of the priority firm rate 



In early 1993, additional energy was needed on certain dates, for fixed periods 

 of time, of^en only on certain hours of the day, and at the lowest possible price 

 The projected cost of the curtailment "resource" was approximately 4 cents per 

 kilowatthour (kwh). This figure is derived by taking the average utility retail 

 rate of 5.5 cents per kwh, minus the average of the energy charge of BPA's 

 1991 priority firm energy charge of 1.7 cents per kwh Purchased energy was 

 available for purchase at a price of about 2 7 cents per kilowatthour 



