145 



12 



agency decided to incorporate environmental costs explicitly in its 

 evaluation of potential new power supply sources. BPA staff 

 devised a detailed accounting system for environmental costs, which 

 included a specific dollar value for emissions of carbon dioxide, 

 nitrogen oxides, sulfur oxides, and total suspended particulates. 



On March 28, 1991, a letter demanding withdrawal of the C02 

 adjustment was mailed to DOE Secretary Watkins by four Senators 

 acting on behalf of the coal industry, which correctly feared 

 competitive disadvantage.'* The Natural Resources Defense Council 

 worked with BPA and DOE to devise an alternative way of addressing 

 the potential costs of carbon dioxide. 



We settled on a BPA pledge to "seek assurances that [resource] 

 sponsors are prepared to absorb costs should their plants be 

 subject to future regulations on greenhouse gases."" As a result, 

 BPA's subsequent agreement to purchase the Tenaska generator's 

 output included requirements to fund carbon-dioxide absorption 

 strategies and to hold the agency harmless against costs of future 

 carbon-dioxide emissions limits." 



Agreement with Tenaska on how to treat carbon-dioxide taxes, 

 however, was deferred to negotiations that will be convened 

 promptly after imposition of such levies;" attempts by the plant 



'*The signatories were Quentin Burdick, Kent Conrad, Alan 

 Simpson and Conrad Burns. 



'^Bonneville Power Administration, Department of Energy 

 Information, December 10, 1991, at p. 2. 



"Power Purchase Agreement executed by Bonneville Power 

 Administration and Tenaska Washington Partners (July 16, 1992), at 

 7 ("The purchase price shall not be adjusted for any costs of 

 additional equipment or modifications made to the Project required 

 to comply with any future . . . regulation of carbon dioxide 

 emissions") . A Letter of Intent executed by the parties on July 

 16, 1992 further provides (p. 5) that Tenaska will set aside $1 

 million to sequester carbon dioxide emissions from the project. 



"The contract (note 18 above) provides that in the event such 

 taxes are imposed "the Parties will conduct good faith negotiations 

 to determine an adjustment, if any, to the purchase price" (p. 7) . 



