159 



effective fuel conversion in order to protect the revenues and market shares of its 

 utility customers. However, energy consumers at large would be more economically 

 served by burning gas directly than by buying electricity that BPA generates with gas 

 to meet the same energy needs. BPA's challenge as a public agency acting in the 

 puDlic interest is to put consumers first. The agency must structure its financial 

 arrangements with its utility customers such that those customers are rewarded for 

 minimizing the cost of providing the best service to retail consumers, not for selling 

 the maximum possible number of kilowatt-hours. Such arrangements are a 

 prerequisite not only for effective fuel conversion programs, but also for conservation 

 programs. 



With respect to accounting for environmental costs, BPA has made slow 

 progress. It has put extraordinarily low quantitative values on certain air emissions - 

 a step in the right direction, but a small and grudging step. The glaring omission in 

 BPA's accounting for environmental costs is carbon dioxide. C02 is the most 

 important emission to account for because, unlike other air pollutants, it remains 

 entirely free and unregulated. All of the costs of carbon dioxide emissions are 

 presently external. The prospect of their internalization should dramatically affect 

 today's financial decisions regarding acquisition of fossil-fueled resources. 



Carbon dioxide emissions pose enormous environmental and financial risks. 

 BPA tried to insure itself against those risks by asking Tenaska to be responsible for 

 all financial costs associated with future regulation of carbon emissions. Tenaska was 

 apparently unable to secure insurance against that risk. 



It is hardly surprising that the insurance industry reacted as it did. Purchasing 

 the Tenaska project amounts to making a bet that carbon dioxide, the principal cause 

 of what is likely to be the pre-eminent environmental challenge of our lifetimes, will 

 remain totally free and unregulated for the life of this contract. As consumers, we 

 would not make such a bet voluntarily. We are no more anxious to provide this 

 insurance to the fossil fuel industry than the insurance companies are; the difference 

 appears to be that they have a choice in the matter. 



In view of this enormous risk, BPA should immediately revisit its policy 

 against accounting quantitatively for the cost of carbon dioxide emissions. BPA tried 

 to make such an accounting several years ago, but scuttled the effon under pressure 

 from Senators representing coal interests who could not sell power to BPA 

 competitively unless BPA transferred this enormous risk from the industry to 

 consumers. Our colleague Ralph Cavanagh from the Natural Resources Defense 

 Council will provide more detailed testimony on this point. 



In conclusion, we want to congratulate you and thank you for convening this 

 Task Force and giving these matters the urgent priority they deserve. As we noted 

 earlier, the single most important ingredient for successful implementation of the Plan 

 is the commitment of public policy makers and the public at large to make it work for 

 all of us. In the same breath that we thank you for initiating this process, we want to 

 challenge you and ourselves to join in a concerted and unrelenting campaign to make 

 the bright energy future envisioned by the Act a reality. 



Testimony of K.C. Golden, NCAC BPA Task Force 



July 12, 1993 Page 8 



