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Mason 3, has always been a strong advocate of utilizing energy efficiency measures. We 

 are excited about the prospect of doing things and are not alone in this-- countless 

 utilities want to deliver cost effective conservation but are unable to do so because of 

 BPA budget constraints. 



If BPA cut its conservation budget 20%, this would reduce BPA's rate increase by only 

 two hundredths of a cent per kilowatt hour. The region has learned over the past decade 

 that stretching out the benefits of our hydro-power system through efficiency is the 

 cheapest most effective resource that we have. Conservation- (energy efficiency) is 

 the answer to our problem- not one of its causes. 



Two examples from my utility's experience with Bonneville's resource acquisition 

 processes demonstrate the problem. In response to a Bonneville solicitation, our utility 

 submitted nine separate conservation proposals for billing credits. Out of the nine 

 proposals, not one contract resulted. These conservation resource proposals were 

 burdened with unnecessary and inappropriate administrative requirements (reporting and 

 record keeping) and too much emphasis on verification. There is an old adage that you 

 do not fatten the pig by weighing it. In essence, nine conservation resources were buried 

 by paperwork. 



On our own initiative, Mason 3 and two other utilities approached BPA with a proposal 

 to implement a conservation transfer program. This initiative was in response to the 

 Power Planning Council's energy plan and proposed to implement conservation at no cost 

 to Bonneville. The proposal called for Puget Power to pay for conservation done in our 

 service temtory, and in return, Puget Power received the saved kilowatt-hours. Bonneville 

 was relieved of the cost of funding conservation, power flowed to a deficit utility, and my 

 ratepayers were to receive conservation benefits. 



Our conservation transfer proposal was met with resistance. It took more than two years 

 of constant negotiating, pleading and cajoling a before a contract was finally executed. 

 Until Bonneville can find a way to respond rapidly, and provide customers' with proper 

 incentives for taking the initiative to develop resources- cost effective resource 

 opportunities will continue to be lost to the detriment of the ratepayers and the region. 



BPA's administrative processes seem to be different for generation as opposed to 

 conservation. BPA moved quickly to negotiate with Tenaska and others for gas fired 

 "resource options." But, Bonneville would not offer an equal price to the Snohomish PUD 

 for its conservation power plant. 



Differing standards are applied in the area of resource costs. Bonneville has a target of 

 acquiring conservation on a regional basis at a cost of 55 mills/kWh or less. In practice 

 BPA rarely if ever has been willing to pay this limit for conservation. In contrast, 

 Bonneville has paid in excess of 60 mills/kWh for a variety of generating resources 

 (geothermal and wind projects). 



Congressional Committee on Natural Resources BPA Task Force 

 Testimony by Bob Olsen July 12, 1993 Page 2 



74-346 0-93-9 



