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located particularly in those sort of sub-areas? You can't transmit 

 all of your needs and certainly transmission is becoming more and 

 more problematic. 



Mr. Golden. Certainly not all of them, but for the very same 

 reason that we're reaching capacity constraints in the Puget Sound 

 area, the Puget Sound area is the richest potential load of con- 

 servation savings. 



Mr. DeFazio. So would you give a higher avoided cost to con- 

 servation savings in that area. Rather than just looking at, say, 

 this melded sort of rate, but say, well, since it's got to involve addi- 

 tional transmission or whatever other reasons or environmental 

 concerns, that you give a higher avoided cost there? 



Mr. Golden. Sure. 



Mr. DeFazio. So you don't think we should have one avoided cost 

 for the region, but perhaps look at sub-regions in terms of deter- 

 mining what is the effective conservation to acquire. 



Mr. Golden. Right. And I think Bonneville has actually agreed 

 to do that in its response to the Puget Sound transmission capacity 

 constraint problem. It is, in fact, doing that for £ill west-side re- 

 sources, generating resources and conservation alike. 



Buried in your question I think is also the issue of how much it 

 costs Bonneville to deliver conservation relative to other utilities 

 doing it individually. I guess while I think there are definitely effi- 

 ciencies to be gained and Bonneville does need to learn how to do 

 what it does in a much more streamlined fashion, I think that 

 some of the recent accounts that suggest that Bonneville's costs are 

 way higher than other utilities are, in part, a bum rap. 



I thmk that Bonneville has shouldered a lot of the costs for 

 building the capability region-wide to set the machine in place for 

 this moment when we need the power. The incremental costs are 

 the costs not of building the conservation machine, as it were, but 

 simply activating it by including program pajnnents. 



Over the last decade, Bonneville made a big point out of saying 

 we don't need the power, but we do need to build the capability. 

 That capabiHty-building costs. 



Finally, on that point, I would submit that we have focused a lot 

 in the mills-per-kilowatt-hour equation that you saw on the chart 

 that was up there and Bonneville's resource dehvery. There are two 

 variables there. There's a numerator and a denominator. 



We focused a lot on the numerator, on how much Bonneville is 

 spending. I'd submit that the bigger problem is in the denominator 

 on how many kilowatt hours, as Randy Hardy said, they're deliver- 

 ing. The issue isn't that the/re spending too much money. The 

 issue is that they^ve achieved too little result. 



That's partly a function of the fact that for most of the last dec- 

 ade, we didn't need a big result in terms of new power resources 

 and partly, fi-ankly, as I testified earlier, a lack of determination 

 to get the job done. 



Mr. DeFazio. John. 



Mr. Carr. I think there are two answers to or two ways to look 

 at the question of whether Bonneville is competitive or not, or will 

 be competitive. One is the question. Are its customers competitive? 

 The second one is. Is Bonneville itself competitive? The first one 

 really gets to the question of the basic industries that Bonneville 



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