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First, it must be understood that the prioritization in the Act is intended to provide a 

 system to screen resources in the development of a least-cost plan. The Act's prioritiza- 

 tion is designed to improve the comparative economics of conservation and renewables. 

 Ultimately, however, BPA is to select the resources that are least-cost, if, after 

 "tweakdng" the economics under the Act's prioritization standard, certain conservation 

 resources are not "least cost," then the Act directs BPA to acquire alternative resources. 



Second, prudent utility planning argues against acquiring conservation to the exclusion 

 of all other resources. The WPPSS experience demonstrates all too well the potential 

 risk of Placing too much emphasis on one resource type. New York State Commis- 

 sioner Peter Bradford, a strong conservation proponent, has warned against turning con- 

 servation into the "nuclear" resource of the 90' s. 



In addition, it must be understood that factors other than price enter into utility 

 resource acquisition decision. For instance, a utility may be willing to pay more for 

 resources that are dispatchable ~ a characteristic not attributable to conservation. 



I also understand that the Council's review of BPA's conservation costs suggest that 

 BPA can cut administrative overhead without reducing the amount of conservation that 

 can be acquired. 



As overhead is eliminated and the cost of acquiring conservation reduced, it is possible 

 that more conservation can be cost-effectively acquired. This is precisely the system of 

 resource review and selection intended by the Act- not the blind pursuit of a single 

 resource option. 



In considering whether or not BPA has accounted for the enviromental externalities as- 

 sociated with resource acquisition I would raise only one concern. Clearly the impact 

 on the retail rates, primarily in the rural non-growing areas of region, can have a very 

 substantial effect since not only is the BPA cost past on but the loss of revenue to the 

 local utility is reduced in the case of conservation resource acquisition. Thus, the local 

 utility must raise its retail rates to cover lost revenue. This is creating a significant en- 

 viromental impact on those areas which are not growing or in many cases actually 

 losing load, by placing a disproportionate economic burden on these already depressed 

 areas. A couple of examples would be where other enviromental or conservation issues 

 or programs have been issued or implemented, (ie) Timber areas the spotted owl or 

 commercial fishing or sport fishery salmon and agricultural farm land with the (CRP) 

 and (0-92) ASCS conservation programs. 



