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Ic Will near-tenn budget cuts prevent the regioii bvm achieving those goals? 



Administrator Hardy recently announced a 12 percent cut in conservation program 

 spending. We have not examined the budget cuts and their potential impacts in detaiL 

 They do not have to derail our long-term acquisition strategy but they could. 



.From our perspective, we believe cuts in incentive levels would have the least impact on 

 long-term acquisition goals, and in some cases may even help. However, eliminating 

 whole programs or cutting them to the point of ineffectiveness would seriously harm the 

 region's conservation efforts. 



2. Shonld BPA proceed with the proposed contract for the ontpnt of the Tenaska 



natural gas combustion turbine? If so, wh3r? If not, why not? BPA has agreed to 

 maintain the confidentiality of certain escalator clauses in the proposed Tenaska 

 contract Was this confidentialily agreement appropriate? 



Yes, BoimeviUe should proceed. Even with only moderate growth, Bonneville must 

 acquire 1,500 average megawatts of new resources over the next ten years to meet 

 demand from all their customers. Cost-effective conservation, power purchases and 

 exchanges, and renewable resources can't meet all of that demand. Boimeville's least- 

 cost supply plan rightly specifies that some portion of new supply should come from cost- 

 competitive natural gas-fired power plants, such as the Tenaska project 



The reported levelized cost of the Tenaska project is "^S to 4.0 cents per kilowatt-hour. 

 That is in the range of other proposed natural gas-fi i projects that we have examined 

 more closely. The ultimate long-run cost of such projects, of course, depends on the 

 future price of natural gas and the specific fuel-price escalators built into the contracts. 



We support confidentiality during negotiations. We do not support maintaining the 

 confidentiality of contract provisions once contracts are signed to assure adequate public 

 scrutiny of the contract terms. 



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