107 



Ms, HiCKEY. We actually do run a lost revenue compensation 

 program, a minor program that started this year. But when we re- 

 viewed the issue, that's actually a barrier for no-growth or declin- 

 ing-load utilities in doing conservation and we wanted to address 

 that barrier. So we do have a very, very small program that we 

 started running this year. 



Mr. DeFazio. Appreciate that. But, just back to this point from 

 the first hearing. If we're talking about a utility operating on a 

 margin— that's what comes to them versus what they pay you 

 wholesale — and you go out and purchase whole a certain amount 

 of power, and you're saying that to purchase that power, it would 

 cost you less than what it would cost you to reimburse them on the 

 margin for their voluntary curtailment. 



Mr. Hardy. I'd say that's the judgment that we made in reaching 

 that contract. 



Mr. DeFazio. You've just spent $175 million, as I recall, and that 

 was part of your financial difficulty. 



Mr. Hardy. That's right. And in fairness, we need to go back and 

 look at that. I can't tell you for the past experience we went 

 through this winter whether that's true or not. That's the calculus. 

 That's the reasoning that went into the share-the-shortage agree- 

 ment and the revenue compensation that resulted. 



That's why we made a decision to tiy to do that so we could get 

 all the utilities to voluntarily curtail without having to worry about 

 a lost revenue problem. 



If we decided not to do that. Congressman, because we made a 

 calculation that, in this instance, it would have cost us more to 

 purchase power then the lost revenue at the retail level would be 

 it. I'm not sure how that would play with our individual utility cus- 

 tomers. 



We're still faced with a dilemma: When you reach that kind of 

 a situation and there is a significant problem of an actual power 

 shortage that's looming up before you, how do you get everybody 

 to share the burden when you have an interconnected system. 



The experience that we had in 1977 was that we did not have 

 that type of an agreement. We went out and curtailed. Some utili- 

 ties conveniently leaned on the system. So Bonneville bore a dis- 

 proportionate share of the costs. Others did what they were going 

 to do. With a voluntary system that is interconnected, there is no 

 effective way to police that from happening unless you've got every- 

 body volimtarily going in in the first place, and that's the dilemma. 

 Mr. DeFazio. But I think maybe this is something you can deal 

 with in tiered rates and maybe there will be a special tiered rate 

 for periods of shortage or curtailment, which will be a penalty rate 

 for people who don't voluntarily curtail so that you don't have peo- 

 ple leaning on the system and you do get some imiform curtailment 

 through the system, although certainly some utilities are more effi- 

 cient than others. 

 Mr. Hardy. That clearly is a possibility and that is probably one 



of the things we'll 



Mr, DeFazio. I still find that provision particularly problematic 

 and I will be asking further questions about that, the statutory au- 

 thority and what was submitted to me for that sort of agreement. 



