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BPA has not been an effective indirect purchaser of the regions resources. For example, 

 billing credits have been in existence for 13 years with virtually no resources acquired. 

 Four major utilities (Clark PUD, Seattle City Light, Snohomish PUD and the Emerald 

 People's Utility District have proposed conservation power plants, and to date no 

 contracts have been signed. 



As to third parly financing-- BPA has only utilized this effective conservation tool on one 

 occasion with the city of Eugene. A decade ago, BPA agreed to "net bill" $30 million in 

 conservation bonds issued by that municipality. BPA would have been wise to offer that 

 same opportunity to all of its public utility customers. My utility and others would have 

 participated in such a program. Third party financing could also come from agreements 

 with Energy Service Companies. 



I have previously referred to the proposed Tenaska power project. The case for acquiring 

 Tenaska is flimsy at best. The regional act and the 1 991 regional plan make it clear that 

 conservation is the highest priority resource. Renewables are second, and efficient 

 thermal resources are third. Tenaska is none of these. It makes no sense for BPA to 

 be spending hundreds of millions of dollars to acquire Tenaska and plead poverty when 

 it comes to buying conservation which is our cheapest, cleanest, and highest priority 

 resource. I would feel more charitable on this issue if BPA had firm, long term 

 commitments in place to acquire the conservation resource that we are all waiting to 

 deliver. 



The secrecy surrounding the Tenaska power project contract is unacceptable. When a 

 resource sponsor wants public money for a project, they assume a responsibility to make 

 available to the public, information about the project, especially its cost. How do we 

 determine it is a good project without knowing the costs? The public's business ought 

 to be public. 



BPA does consider environmental externalities in its resource programs. For example, 

 BPA has assigned a one mill/kWh environmental penalty to the Tenaska project. This, 

 however, is only about one-tenth of the penalty assessed by states such as California, 

 Nevada and New York State which have adopted uniform methodologies . Bonneville 

 needs to look at adopting such a method. Assigning a 3% penalty for a combustion 

 resource over and above renewable resources does not have much credibility. 



Fuel switching is a real potential for our region. It is an untapped opportunity to obtain 

 cost-effective load reductions and defer new power plant construction. Fuel switching 

 and using direct gas heating is at least twice as efficient as producing electricity with gas. 

 A pilot fuel switching program carried out by the Snohomish PUD demonstrated a 

 substantial load reduction potential. 



In spite of the savings and efficiency gains resulting from fuel switching, Bonneville has 

 not pursued this opportunity. However, BPA's rate increase and their stated willingness 

 to look at tiered rates may result in future opportunities. 



Congressional Committee on Natural Resources BPA Task Force 

 Testimony by Bob Olsen July 12, 1993 Page 3 



