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BPA received over 1,500 megawatts of proposals for a 300-mega- 

 watt request. Although BPA has signed for a natural gas turbine 

 for over 200 average megawatts, EWEB hasn't had a contract nego- 

 tiation session yet for our under one-megawatt residential con- 

 servation bid, nor have we received any contract offers for our 

 under one-megawatt industrial conservation bid. 



BPA's first billing credit solicitation was a test for about 50 

 megawatts. A few small conservation projects made it to the con- 

 tract signing stage. However, the majority of contracts were award- 

 ed for generation projects. EWEB withdrew 5 conservation propos- 

 als due to low alternative costs, negative billing credits, and high 

 cost of verification requirements. 



These three factors have proved to be substantial obstacles to es- 

 tablishing a viable conservation acquisition program. BPA's second 

 billing credit solicitation is for 200 megawatts. Revisions were 

 made to the billing credit guidelines. However, they were focused 

 more toward generation acquisition. This may explain why the 14 

 proposals submitted for about 250 average megawatts, only 2 are 

 for conservation and they account for under one megawatt. 



In practice, Bonneville seems to be spending an inordinate 

 amount of time developing and administering acquisition contracts. 

 Bonneville has yet to differentiate the amount of oversight involved 

 with a one-megawatt residential bid or a 220-megawatt combined 

 cycle combustion turbine. 



We believe Bonneville needs to offer a short-term, simplified, 

 standard offer acquisition contract for small resource acquisitions. 

 Bonneville has been effective in acquiring conservation in the past, 

 but recent changes in Bonneville's concern over risk assignment 

 and budget Umitations has reduced its effectiveness. 



Current contract offerings by Bonneville are detailed and com- 

 plex in their attempts to identify, quantify and assign risks. In ad- 

 dition, the cost of financing the needed levels of conservation has 

 raised concern about Bonneville's borrowing limits. 



In 1985, Bonneville and EWEB participated in a conservation 

 bond program in which EWEB sold municipal bonds to fimd con- 

 servation acquisitions in Eugene. Bonneville paid the cost of the 

 bonding. This program produced levels of conservation activity in 

 Eugene that has not been matched in any of the numerous con- 

 servation mechanisms offered by Bonneville since then. 



Of EWEB's attempts to sohcit a conservation billing credit tar- 

 geted acquisition contract, competitive bids for conservation con- 

 tracts or an extension of the current EWEB bond contract, none 

 have yet been accepted. 



A renewal of the 1985 third-party financing project between Bon- 

 neville and EWEB could work to overcome the current budgeting 

 and complexity problems that plague Bonneville's current conserva- 

 tion programs. Conservation should be treated as a resource, par- 

 ticularly when the risks are shared £uid utiUties assume acquisition 

 management. 



A revival of that partnership of the early 1980s in combination 

 with a financing capability of its utiUty customers could make Bon- 

 neville an effective conservation purchaser again. We believe Bon- 

 neville has been effective in pxirchasing generation resources 



