8 



So, there may well be good reason for a utility to engage in its 

 own resource development activity as a hedge against those uncer- 

 tainties. We will actively work with our customers who wsint to try 

 to facilitate resource acquisitions. We just want them to do it for 

 the right reasons and not do it out of some panic that Bonneville 

 rates or costs are out of control, and that 2 or 3 years down the 

 line, there's going to be a crossover between the cost of a resource 

 that we may acquire and the PF rate. Not so. 



Our resource plan essentially sketches the need for some 1,500 

 megawatts in resource acquisitions over the next 10 years. It 

 breaks down roughly this way, and Sue Hickey will get into more 

 detail about the breakdown. Roughly, 660 megawatts of that is con- 

 servation. From 100-200 megawatts are seasonal energy ex- 

 changes. The balance or some 400-500 megawatts are a mixture of 

 resources including the Tenaska turbine, our wind and geothermal 

 demonstration projects, and a variety of billing credit resources, 

 principally small hydro from our customers. In all, it is a pretty 

 balanced resource portfolio. 



You will hear a lot today about the Council's conservation goal 

 and our fulfillment of that goal or lack of fulfillment of that goal. 

 The Council set a goal of 1,500 megawatts of region-wide conserva- 

 tion acquisition over the next 10 years. 



We determined and the Council concurred that our share of that 

 goal for the Bonneville service territory was roughly 660 

 megawatts. That is the target we are using for resource acquisi- 

 tions for conservation. It is not a cap. It is not a floor. It is a target. 

 If it goes up and we can acquire more cost-effective conservation, 

 that is what we will do. 



There's been an awful lot of reading of the tea leaves of how Bon- 

 neville is viewing that 660 megawatt number. It is a good mid- 

 range planning estimate and that's all it is. It's good guidance for 

 now. It's what we're making decisions on. As we acquire the con- 

 servation resource, we will undoubtedly adjust it. If we can acquire 

 more conservation cost effectively, we will do that. 



Also, there has been a lot of concern about the recent budget cuts 

 that Congressman Smith alluded to to get the size of tiie rate in- 

 crease down. Part of those budget cuts were conservation cuts. I 

 think those are probably the most sensitive. I would only observe 

 that our conservation budget cuts were roughly 12 percent of those 

 previously budgeted expenditures for Fiscal Years 1994 and 1995. 



Our generation program was cut by 30 percent. The transmission 

 program was cut by 28 percent. So I don't think conservation w£is 

 cut out of proportion to anything else. In addition, we cut roughly 

 $65 million out of the 1993 to 1995 rate period. We did that be- 

 cause we needed to be competitive. 



But I would observe that our conservation budget still nearly 

 doubles between Fiscal Years 1992 and 1995. We go from a level 

 of $120 milUon last year to a level of about $226 million in Fiscal 

 Year 1995. So even with the budget cuts, you're almost doubling 

 that expenditure. And we're going to spend in 1993 through 1995 

 over $600 million post-budget cuts on conservation. 



So I still think we've got an adequate amount of money budgeted 

 to achieve the conservation goals. In addition, and even though 

 well discuss this principally in the next hearing, we're moving to- 



