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BPA customers or their representatives attend the Council's regular monthly meetings. 

 Much of the attendance is by representatives of organizations seeking funding. 

 Although the Council invites utility comment on its activities, for the most part the 

 Council ignores the input they do receive from utilities. 



Acquisition Pro cesses Sharin g of Costs and Benefits. 

 and BPA's Conservation Acquisition 



There are significant differences in the processes used by BPA for acquiring conservation and for 

 acquiring generating resources. Some of these differences are caused by the adjustments to the 

 conservation costs (downward) and the adjustments to generation costs (upward), but a basic problem 

 is that the cost of generating the electricity saved by conservation is not included in the conservation 

 resource cost before comparing with cost of other resources. The current process results in the rate 

 impact of conservation being high and the cost-effectiveness test being inappropriate. This point 

 was discussed earlier in my testimony. 



The resource acquisition costs and the benefits are not appropriately shared The consumer who 

 takes action to become more efficient should be expected to pay more of the cost because of the 

 benefits such consumer will realize. Under current practices, the benefitting consumer pays too little 

 of the cost -- but his neighbors who have already perhaps installed all available energy efTicient 

 measures on their own are expected to pay again through increased rates. The impact to the already- 

 efficient consumer is much greater than had generation been acquired at the same cost. 



Although it appears BPA is on track to acquire the 660 aMW of conservation which the Council has 

 targeted in its Plan, the cost-effectiveness test needs to be revised and publicized BPA is paying too 

 much for conservation. We support, of course, the acquisition of truly cost-effective conservation. 

 The current cost-effectiveness test includes adjusting the actual conservation costs such that they 

 appear to be much lower. The costs of traditional or conventional energy generating resources are 

 artificially inflated through environmental externalities before making the comparison with the 

 adjusted conservation costs. The environmental benefits to society are simply not sufficient to justify 

 the exceptionally high costs we are bringing upon ourselves. 



Tenaska Project 



BPA should proceed to acquire the output of the Tenaska Natural Gas Project because it has 

 attributes that renewables and conservation do not have. The Tenaska Project can be used to meet 

 peak load on a dependable basis - conservation and renewables cannot. The Tenaska Project can be 

 used to firm up non-firm hydro generation - the renewables and conservation cannot. 



We are concerned about the cost of the Tenaska Project but no more than we are concerned about 

 the cost of conservation and renewables. The impact of the Tenaska cost on BPA's rates will 

 certainly be less than the rate impact of BPA acquiring the same amount of conservation. 



When a utility seeks competitive proposals for providing a generating resource, it is absolutely 



