146 



13 



sponsor to procure some form of insurance or indemnity against the 

 tax risk had proved unavailing. That is itself sobering news for 

 those who contemplate long-term commitments to resources with 

 significant C02 emissions — and for their regulators and 

 customers. 



Ignoring these risks does not eliminate them; at most, it 

 converts BPA customers into involuntary insurers for the fossil 

 fuel industry. A better response is that of California, Wisconsin 

 and Oregon, which use different combinations of explicit risk- 

 shifting and the assignment of costs to greenhouse gas emissions.^" 

 Particularly apt excerpts from recent regulatory decisions in 

 California and Wisconsin appear below: 



[Utilities] should undertake a long-term purchase [of 

 fossil generation] only if the supplier provides 

 assurances that it alone will bear the cost of meeting 

 any future costs resulting from a carbon tax, acquisition 

 of tradeable emission permits, retrofits, or any other 

 carbon emission control strategy or regulation applicable 

 to the supplier's plant(s). 



— Cal. PUC, D. 92-04-045, at 28-29 (Apr. 22, 1992) 



A national and international consensus to regulate 

 greenhouse gas emissions is emerging. When the 

 likelihood of future regulation is high, it is reasonable 

 to estimate the cost of compliance to utilities. 

 Ignoring this financial risk would be imprudent. 



— Wisconsin PSC, Advance Plan 6 Order (Sept. 1992) 



BPA's procurement systems incorporate neither of these 

 policies. That should change immediately. 



^"For a fuller treatment of these issues, see R. Cavanagh et 

 al. . Utilities and C02 Emissions: Who Bears the Risks of Future 

 Regulation . March 1993 Electricity Journal, at pp. 64-75. 



