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conservation targets. The Council believes that charging each utility with the 

 responsibility of meeting an annual conservation goal for a set budget will prompt much 

 more efficient resource acquisition than has been the case in the past. 



On the other hand, utilities frequently contend that Bonneville focuses entirely 

 too much effort on monitoring and verification - this requires a comparable effort by 

 the utility in order to comply ~ and is unwilling to assume modest levels of risk of non- 

 performance, due to factors outside the utilities' control. The consequence, they say, is 

 more money lost in monitoring and verification than is saved as a result of these efforts. 

 Further, several utihties contend that because Boimeville will not commit funding for 

 these programs for several years in advance, the utilities are forced to accept the risk of 

 hiring staff and the costs of that staff even though funding may not be available in the 

 future. Recent reductions in Bonneville's conservation budgets ~ these came after 

 Bonneville's commitment to increase conservation efforts — made some utilities wary. 



A significant characteristic of the programmatic approach to conservation 

 acquisition is that utilities have at best only an indirect incentive to reduce the cost of 

 their acquisition efforts. They cannot be assured that any savings they accomplish will 

 directly benefit their customers. While reducing a utility's cost ultimately will reduce 

 the cost to its customers, this is not a one-to-one correlation. Customer savings will be 

 spread around the region. This represents a serious disincentive to cost-efficient 

 conservation development. 



Other conservation acquisition methods 



Meanwhile, Bonneville has not been an effective indirect purchaser of regional 

 resources through third party financing, billing credits, conservation power plants and 

 other indirect means. The billing credits program has not been very effective, 

 particularly with respect to conservation resources. Most utilities believe the billing 

 credits formula exposes them to too much risk. Bonneville has recently revised its 

 billing credits program to attempt to address this problem. We will soon see whether 

 they have been successful. 



The Action Plan for the 1991 Power Plan calls for a review of the effectiveness 

 of Bonneville's billing credits program in encouraging utility resource development. U 

 billing credits are not effective, then the Action Plan calls for implementation of a 

 multilevel (tiered) priority firm rate. Bonneville has committed to a process to examine 

 tiered rates. Because development of a workable tiered rate will be time-consuming 



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