102 



We recognize that blame does not lie with Bonneville. The Bush administration rejected 

 Bonneville's proposed policy to use dollar estimates of the costs of carbon dioxide 

 emissions to measure the total costs of new electricity resources. We believe that in Ught 

 of the Clinton administration's goal of stabilizing emissions of greenhouse gases at 1990 

 levels by 2000, that policy should change. 



We recommend the following: 



1. Adopt an environmental cost adder of at least SIO per ton of carbon 

 dioxide emissions in calculating the total costs of new suppUes. A SlO per 

 ton benchmark translates into a cost adder of a little more than 4 milU per 

 kilowatt-hour for a combustion turbine power plant For comparison, 

 Bonneville assigned a cost of 2 mills per kilowatt-hour for all financial and 

 environmental risks associated with buying the power output from the 

 Tenaska project 



2. Increase investments in carbon dioxide emission oSisets. We support 

 Bonneville's contract provisions that required Tenaska to fund emission 

 o&ets and to bear the risk of future carbon dioxide emission limits. In 

 response, the developers are dedicating $1 million for o&ets. It is a start, 

 but only that 



A third proposed policy would be to shift all risks of carbon dioxide emission regulations, 

 including future carbon dioxide taxes, onto developers. However, the Tenaska 

 negotiations proved to be a test case for such a policy. Tenaska tried to secure insurance 

 against future taxes, but could not This shows financial markets are sending a signal to 

 Bonneville and its customers about the risks associated with carbon dioxide-emitting 

 resources. 



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