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Mr. DeFazio. Thank you. I would follow up on your testimony. 

 In the earlier panel, we didn't discuss any breakdown in terms of 

 where the potential conservation of 1,500 megawatts lies. What do 

 you see among your participant industries? You talked about this 

 one project, the one megawatt project at Gardner, at an extraor- 

 dinarily low cost. How much is out there below the numbers we 

 were talking about earlier, the 42 mills? 



Mr. Canon. I think there's a considerable amount. Based on this 

 experience, they're looking at three other projects. Two of those 

 total about 2 megawatts. They're looking at what you would call a 

 true cogeneration, small as far as essentially no additional fuel 

 used at all. 



Right now they have steam that's at 600 pounds per square inch 

 and they use it at 125 and they pipe it through a large pipe. They 

 have big valves that come through to cut it down. You can spin a 

 turbine with that steam. It's 2-4 megawatts and they're looking at 

 that with some Bonneville help. 



There are some good opportunities out there. And it can be trans- 

 acted in any number of ways. We're transacting it right now 

 through Bonneville because that's the available method. We could 

 transact it through billing credits or, as John mentioned, some of 

 the other t5rpes of transacting this conservation either to Bonneville 

 or to the utilities, but it's out there. 



Mr. DeFazio. How is this being done now? Is BPA paying up 

 front? 



Mr. Canon. Yes. 



Mr. DeFazio. Capital costs. 



Mr. Canon. Yes. Yes, it is. And that is all up to negotiation be- 

 tween Bonneville and the industry. It depends on what is needed. 

 Actually, it's not actually paid up front. IP has to expend a certain 

 amotint and then there's a progress payment, expend another 

 amount and another progress pajrment, and then they have to hit 

 a certain level of efficiency before they qualify for the last 20 per- 

 cent. 



We tried to set it up as best we could because IP recognizes that 

 they're a large ratepayer. They want to do something that's good 

 for the region. Obviously, they have a benefit, as well. They don't 

 want to set up a precedent that would allow other people and per- 

 haps competitors to take advantage of the system. 



Mr. DeFazio. We might just have a discussion among the panel, 

 following up the point raised by Mr. Carr, but it really goes to the 

 heart of what we're talking about here. 



How likely do panel members see the fact that BPA's power 

 might become non-competitive and under what conditions or what 

 might prevent BPA's power from becoming non-competitive? Again, 

 it's really hard to divide the subject matter between this hearing 

 and the next hearing, but given the number of people that testify 

 at these hearings and that, I thought this was a very logical divi- 

 sion. You c£in't separate some of these issues very well when you're 

 dealing with the amount of conservation that's out there or other 

 resources. 



So maybe everyone could address that briefly. 



Mr. Cavanagh. Mr. Chairman, if I could begin. I don't think that 

 anyone at Bonneville or anyone outside it wants to invite compla- 



