229 



We've also been involved with two cogen plants, 400 megawatts 

 each, in the Hermiston area. Both have left Bonneville's acquisition 

 process. They both started there because Bonneville needed more 

 resources. The one plant, Portland General Electric, has decided 

 that they wanted to replace their part of Trojan and they've with- 

 drawn. 



The other is a consortium of Pacific Gas and Electric and 

 Battelle, very experienced developers, and they've decided that they 

 don't want to wait 2 or 3 years and they've removed themselves 

 from the convoluted process that BPA has. And that was a very 

 competitive plan. 



Also related to this is this extensive discussion of tiered rates. It 

 appears to me that the tiered rates discussion is driven primarily 

 with the dissatisfaction of Bonneville's process in acquiring con- 

 servation and new resources, in general. 



I'm bothered by the fact that we're going to pick a solution like 

 tiered rates rather than fixing the process we have. I would much 

 rather make the acquisition process as effective as possible and 

 then if tiered rates falls out as a natural consequence, I think 

 that's a healthier way to get to tiered rates. 



Now, it's been proposed by some that BPA should be paying end 

 users to convert from electricity for space and water heating to 

 using natural gas. We've lived through quite a bit of fuel switching 

 and it was said today that up to a thousand megawatts could be 

 saved by switching to natural gas, and I share a lot of the concerns 

 that Randy hinted at. 



Back in the 1970s, our food processing plants, their boilers were 

 heated by gas and oil, and then, if you remember, Canada jacked 

 up the price of gas. In fact, there was a moratorium in Oregon for 

 any new gas hookups. And suddenly electricity was the better buy 

 and more reliable. So all those gas steam boilers went to electricity. 



Then at the end of WPPSS in 1982 and 1983, they all went back 

 to gas and oil and we lost about 30 percent of our load. The same 

 thing happened in the residential sector. About 40 percent of our 

 residentials started heating with wood. Now they're turning away 

 from that and they're coming back and wanting electricity. 



In rural eastern Oregon, until just a few years ago, even most 

 of the metropolitan areas didn't have much natural gas. 



But now nat\u*al gas is doing what investor-owned have always 

 done and picked the population areas and run gas lines in and pro- 

 vided service. 



It seems to me that we're not asking the right question on this 

 fuel switching. It seems to me that the best public policy and what 

 we as a utility try to do is encourage energy efficiency, because 

 long term, that's the best buy for our customers. The questions 

 should be, Why are the natural gas companies encouraging people 

 changing from a 98 percent efficient water heater to a 65 percent 

 gas-fu'ed water heater and why isn't there a natural gas super en- 

 ergy efficient home design, and is there a natural gas water heater 

 wrap program or an energy efficiency window program or even a 

 house insulation program? 



No, there's not. We went through our fuel conversion and 111 bet 

 that the next big in-rush we're going to see in residential load is 



