162 



exercise interruption rights rather than subjecting dense populations to 

 dangerous air quality conditions. 



Thirti, the project clearly does not qualify as an immediate acquisition candidate 

 under the Plan. One of the arguments that staff use to justify a finding of 

 consistency in spite of this fact is that the project would be used for 

 hydrofirming. We have seen no analysis to indicate that this would be the 

 case; conventional wisdom seems to indicate that BPA has every intention of 

 using the project as a baseload resource. 



Fourth, in recognition of the extraordinary risks associated with 

 overdependence on fossil fuels, the Plan put limits on acquisition of gas-fired 

 electric resources. Gas acquisitions are proceeding at a pace that will exceed 

 those limits by a disturbingly wide margin. When gas use is expanding so 

 rapidly, thermodynamic efficiency becomes an urgent priority. Yet BPA has yet 

 to seriously consider the possibility of capitalizing on the enormous potential to 

 encourage cost-effective fuel conversions at costs well below the Tenaska 

 contract Estimates of that potential range widely, but even BPA has 

 acknowledged that it is at least twice as large as Tenaska's output. Direct 

 application is, as yon know, substantially more efficient than Tenaska. 



Fifth, Ac system cost and risk factor adjustments on page 15 are classic 

 examples of why quantitative analysis must complement, rather than supplant, 

 good judgment. The Council made this argument persuasively during its 

 deliberations on the Plan. We have always contended that any positive 

 number used to represent environmental externalities would be better than 

 zero. We may have been wrong; an infinitely small positive number may be 

 worse than zero, in that it gives the iUusion of action without actually doing 

 anything. A one mill adjustment for environmental costs is patently inadequate 

 and conspicuously out of step with all sincere attempts to quantify these costs. 

 BPA rejected higher priority, renewable generating resources by a very narrow 

 margin - a margin that any legitimate accounting for the environmental costs of 

 fossil fuel emissions would have bridged. 



Your stated philosophy is to incorporate extcnudities by making wise policy 

 judgments. Providing tacit or explicit assent to this adder would constitute a 

 pwlicy judgment on your part that the external environmental costs of a fossil- 

 fueled, fourth priority resource are less than 4% of its internalized costs. That's 

 not wise policy; it's choosing to look die other way. We would make the same 

 argument with respect to the woefully inadequate fuel price risk adjustment of 

 2 mills. 



Finally, and most importantly, the issue paper incorrectly implies that 

 Tenaska's token "carbon sequestration" gesture adequately addresses the 

 enormous financial risk of carbon regulation. That risk is so great that the 

 project sponsors were unable to insure themselves against it. It is hardly 

 surprising that the insurance industry reacted as it did. Are you willing to 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 



