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5. What is the potential for cost-efTectiTe electricity savings in the Northwest region 

 from fuel switching to natural gas? Do current market conditions create a 

 sufHcient incentive toe fnel switching? If not, what measures should BPA 

 undertake to encourage fuel switching? 



Should BPA prohibit the expenditure of Super Good Cents incentives in areas 

 where natural gas service is currently available? 



It is important to recognize the electric -to-natural gas fuel switching question is only a 

 part of the broader issue of fiiel substitution. Fuel substitution includes the following three 

 elements: 



1. Residential fuel switching from existing electric water and space heating 

 systems to those usmg natural gas 



2. Residential fiiel choice decisions about what kinds of equipment to install in 

 new dwellings 



3. The substitution of natural gas for electricity or electricity for natural gas in 

 commercial and mdustrial applications where the substitution provides greater 

 value to the end user 



The answer to the cost-effectiveness question varies around the region due to 

 differences in the relative prices of electricity and gas. In addition, there are technical 

 constraints on how much potential there is for gas to serve thermal end loads now being met 

 with electricity. These technical issues rai^e from whether or not an existing home can 

 easily be retrofitted with a gas heating system to issues about indoor air quality. 



Thousands of homes in the Northwest use electricity for space and/or water heating. 

 The electric power system could reduce its need for new generation resources by encouraging 

 some of those customers to convert from electric space and water beat to nauiral gas. A 

 number of studies and pilot programs have identified many cases where it was and is cost- 



