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a standard approach to assuming fuel risk that its customer resource developers can 

 understand and support. 



Another 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 the power from 

 conservation and other renewable resources, regardless of other relevant considerations. It 

 would be a travesty if, because of uncertain fuel costs, Bonneville ended iq) paying more for 

 the Tenaska project than expected while at the same time holding down the maximum cost it 

 will pay for alternative conservation and renewable acquisitions. BPA should address this 

 through a "diversity" credit applicable to non-gas-fired acquisition and the price structure 

 BPA wiU pay for new resources. 



3. In practice, are there significant differences in the processes used by BPA to 

 acquire conservation, renewable and fossil resources? Are procedures, 

 requirements and administrative demands essentially equivalent for equivalent 

 resources? Are resource acquisition costs and benefits appropriately shared? 



rnmpetitive Bids 



There are significant differences in the processes used by BPA to acquire conservation 

 as opposed to generation resources, which have disadvantaged acquisition of conservation 

 resources. Generation resources have been acquired on "competitive" conditions where the 

 market is indicating a value for this power. Competitive bids are also seen as a way for 

 conservation to be turned from a "cost"-based purchase to a "value"-based purchase with the 

 utilities accepting more risk for getting the savings for BPA. BPA, however, appears 



