207 



(l:ONSERVATION 



(p.4,Ql) 



In a letter to Chairman Miller dated March 24, 1993, the Northwest Power 

 Planning Council stated that BPA "has not been aggressive in reducing 

 program administrative costs" for conservation programs. Please identify 

 potential savings, if any, per fiscal year from FY 1994 to FY 1998 from 

 reducing administrative costs of conservation programs. 



• Reducing the administrative costs of delivering conservation 

 resources is a high priority with PPC . It is important, however, to 

 differentiate between program administrative costs and corporate 

 administrative costs because the corporate costs are beyond the control 

 of BPA's conservation staff. The preliminary numbers indicate that 

 program overheads average approximately 14% of program costs and 

 corporate overheads average approximately 26%. 



• PPC believes that significant savings are possible by employing 

 innovative strategies for delivering conservation resources . Third 

 party financing of conservation and placing greater control of 

 conservation expenditures at the local utility level are examples of 

 these innovations. For example, an organization of Washington 

 Public Utility Districts has been formed to develop conservation and 

 renewable resources. These approaches rely more on local than 

 centralized decision-making. 



• Given the state of knowledge about conservation performance in 

 the Northwest, a more reasonable approach to program evaluation 

 would also help to lower BPA conservation program 

 administrative costs . The issues are how much certainty we need 

 and how much can we afford. 



• BPA*s corporate overheads are somewhat more difficult to analyze 

 and understand . We understand that BPA is reviewing the impacts 

 of corporate overheads on conservation programs. We will be 

 examining the components of these overheads as soon as the 

 assessment is complete and we expect to be working with BPA to 

 address the issues of corporate overheads as they contribute to BPA's 

 conservation program costs. 



