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that deal with the lost revenue issue which you raised, but in a 

 way, that recognizes that that's a cost of delivering the resource. 



We need to learn to write contracts that go not just to utility cus- 

 tomers, but to ESCO and industrial users and chains and fran- 

 chises. We need to learn to write contracts in a timely manner, as 

 Ms. Ervin observed, and without the kind of excessive verification 

 assurances that basically end up eating up the savings in process 

 costs. 



And I think we need to learn to write contracts that extend over 

 the Ufe of the energy conservation power plant, if that's what we're 

 doing, contracts that are not driven by a budget cycle. We are hope- 

 ful, and we've certainly had these discussions with Bonneville and 

 with many of the customers, that we will increasingly move to cus- 

 tomer-financed performance contracts of the sort that Mr. Berggren 

 has been trying to negotiate with Bonneville for some time, and 

 that those contracts will extend over the life of the conservation 

 power plant, the measures in there, and not be subject to a 2-year 

 budget cycle. 



Now, that constrains Bonneville's ability to manage its budget, 

 but it constrains it, I think, in an appropriate way, entirely parallel 

 to the way it acquires a supply side conservation plan. 



If nothing else comes out in this hearing for my purposes with 

 respect to how we ought to proceed with conservation, it ought to 

 be that we still haven't figured out how to treat conservation as a 

 resource. We've got a long way to go. 



Mr. DeFazio. I think that's an observation well taken and I hope 

 that BPA was cogitating on that, because I see not only their budg- 

 et cycle driving or turning conservation on and off, but our percep- 

 tions of power supply. As in the 1980s surplus, I remember when 

 I was first elected to Congress, being a bit critical of Mr. Jura 

 about what I saw as rather laggard conservation efforts. I said the 

 best time to do this stuff is when you've got a surplus because you 

 can afford it. 



The thing I would observe is that the price of natural gas is sub- 

 ject to a lot more risk than installed conservation. Now, it may 

 seem cheap today, but as it comes to dominate the market, given 

 a catastrophe or any other unexpected event, it may not be that 

 cost-effective in the fiiture or that available. 



So I would just say that that is a much longer-term way to look 

 at it, and the key word used is to look at it as a resource. We're 

 still looking at it as something else that's kind of nice to do as op- 

 posed to a resource installed. 



Mr. Duncan. Mr. Chairman, if I could follow up. When you get 

 to the point of addressing the issue of Bonneville's competitiveness, 

 the key question on which that discussion, it seems to me, ought 

 to turn is the question of long-term competitiveness versus short- 

 term competitiveness, which is an issue that far transcends Bonne- 

 ville's or this region's predilections. 



We tend to be a cashflow-driven society; we need to become in- 

 creasingly an investment-driven, long-term investment-driven soci- 

 ety. But well get to that. 



Mr. DeFazio. We're going to take the same view Congress does. 

 Well do it short- and long-term. Well look at their competitiveness 



