210 



something has changed. Bonneville is much more risk adverse than 

 ever before. This preoccupation with identifying possible risks and 

 assigning them to others placed additional pressures on Bonne- 

 ville's short-term revenue requirements. 



BPA deserves continued support in pushing forward this aspect 

 of their renewable resource agenda. Due to budget restrictions, 

 Bonneville may not be acquiring all the cost-effective efficiency and 

 renewable resources. They may, therefore, not be on track in devel- 

 oping the amoimt of energy efficiency called for in the 1991 power 

 plan. 



Our concern is that they will indeed prevent the region from 

 achieving these goals. 



Relative to some of your questions on Tenaska, we b'elieve that 

 Bonneville should proceed with the proposed contract for the out- 

 put of the Tenaska natural gas combustion turbine. The problem 

 for us is not acquiring Tenaska, but rather, that Bonneville contin- 

 ued to be in a position to acquire other significant conservation and 

 renewable resources. 



It is appropriate for BPA, in our opinion, to maintain its con- 

 fidentiality around certain escalation clauses in the proposed 

 Tenaska contract. Bonneville acquired these resources under com- 

 petitive conditions and disclosure of this information may adversely 

 affect Bonneville and its customers regarding additional resource 

 acquisitions. 



The concern over confidentiality of certain escalation clauses fo- 

 cuses on BPA's critical need to ensure the long-term cost of the 

 Tenaska project will be as expected. Bonneville needs to ensure its 

 customers that the fuel cost risks have been adequately addressed. 



BPA needs a standard approach to assuming the fuel risks that 

 its customer resource developers can understand and support. An- 

 other aspect of this acquisition is that the pricing of the Tenaska 

 project is forming a ceiling above which Bonneville does not appear 

 willing to pay for power from conservation and other renewable re- 

 sources, regardless of other relevant considerations. 



It would be a travesty if, because of luicertain fuel costs, Bonne- 

 ville ended up paying more for the Tenaska project than expected 

 while, at the same time, holding down the maximum cost it will 

 pay for alternate conservation and renewable acquisitions. 



Relative to differences between their processes for acquisition of 

 renewables and supply side resources, we believe there are signifi- 

 cant differences in the processes used by Bonneville to acquire con- 

 servation as opposed to generation resources which have disadvan- 

 taged the acquisition of conservation resources. 



Generation resources have been acquired on competitive condi- 

 tions where the market is indicating a value for this power. Com- 

 petitive bids are also seen as a way for conservation to be turned 

 from a cost-based purchase to a value-based purchase, with utilities 

 accepting more risk for getting the savings for Bonneville. 



Bonneville, however, appears unwilling to pay this value-based 

 amount for conservation and other demand side acquisitions, even 

 through the competitive bidding process or the billing credits for 

 demand side resources. The first and only round of competitive bids 

 closed in Jime of 1991. 



