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resources. Could it be that the Congress v^en considering the Act did not recognize 

 there would be a difference in rate impact between those two resources? 



There would be no difTerence in rate impact if the cost of generating the electricity 

 which is saved by conservation were included in the cost of the conservation resource. 

 The Act in Section 3 appears to overlook this important fact which is and will in the 

 future, if not changed, drive electric rates in the Northwest out of sight. Any energy 

 resource must include the cost of producing the electricity serving new loads. 



For more information on this apparent conflict, please see the attached draft paper 

 entitled, "Conservation and the Apparent Conflict Regarding It in the Regional Act," 

 dated January 5, 1993. I urge your Task Force, Mr. Chairman, to carefully study this 

 matter and to correct one of the major obstacles to developing low-cost resources for 

 the Pacific Northwest. 



Separation of Planning and Implementation. Any student of successful business 

 enterprises will agree that the planning and implementation functions of an 

 organization must work in close harmony to achieve a desired objective. With the 

 Act, the planning and implementation activities are placed in completely different 

 organizations each with its own autonomy. Clearly the planners are not accountable 

 for the result. Clearly the implementors are not accountable for the plan. 



To complicate matters further, the Council indicates some disagreement over its role 

 and the role of BPA is "creative tension" and that this is probably healthy. I disagree. 

 Rather than giving lip service to being a partaer to BPA, the Council must stand 

 shoulder-to-shoulder with BPA and work together as if they are one entity for the 

 benefit of the Pacific Northwest. 



Resource Acquisition — Pluses and Minuses 



To assess the strengths and weaknesses of the entities involved and other related matters, I will 

 address the performance of BPA, the performance of the Council, the processes being used, and 

 again touch on the cost-effectiveness test. 



A. The strengths of BPA with regard to resource acquisition are: 



1. They have an established business relationship with most of the utilities in the Pacific 

 Northwest; 



2. They can acquire larger resources and gain economy of scale; and 



3. They can integrate a large variety of resources into the Columbia River Federal Power 

 System including intermittent renewables. 



4. A number of BPA employees have an excellent grasp of the Northwest Power System 



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