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Our Experience With Resource Acquisition 



Our member utilities in Western Montana have always been requirements customers of BPA, None 

 have their own generation. A couple years ago we made a proposal to BPA for a billing credit 

 conservation resource which involved installing low-loss distribution transformers. BPA's proposed 

 contract was so administratively burdensome that the benefits to our utilities vanished. When we 

 attended a meeting in Missoula called by BPA to negotiate the proposed contract and seven BPA 

 people showed up, we knew we were in trouble — especially after we were informed nobody in the 

 group had any decision-making authority. 



Although not involving the Western Montana G&T, the Flathead Electric Cooperative and Lincoln 

 Electric Cooperative jointly have proposed a gas-fired generating facility in Northwest Montana, and 

 have attempted to arrange for BPA to acquire the output. Those two utilities have been extremely 

 frustrated in their attempt to sell the output to BPA, and it is my understanding BPA has turned 

 down this resource forcing the utilities to seek markets elsewhere. 



At this time it does not appear BPA is an effective indirect purchaser of resources such as through 

 the billing credit process. The administrative costs are excessive and there is little assurance the 

 Region will get what it pays for. An example of the latter is an arrangement BPA made for paying 

 a utility for reconductoring a distribution line to reduce losses, but with no assurance the utility will 

 manage its losses on the balance of its system to allow BPA to realize the savings. Reducing losses 

 on one delivery point can be easily offset by allowing losses to increase on the delivery point. Those 

 of us paying for that kind of conservation savings have reason to be concerned. 



In closing, I would like to stress that the distribution utilities, BPA, and the Council need to be 

 concerned about meeting the peak loads in the Region - something the Council has ignored in the 

 past. There has been a rapid loss of flexibility on the hydro system due to the Council's fish and 

 wildlife programs. Hydroelectric and gas-fired turbines are dependable peaking resources. Most 

 conservation and renewables are not dependable peaking resources. Having adequate peaking 

 resources is essential to allowing the development of renewables such as solar and wind. 



In our judgment, the long-term economy of the Pacific Northwest is at risk. Low rates are essential 

 for attracting manufacturing plants which fuel the economy. The cost of living is a large 

 consideration when business seeks a plant location. It affects the feasibility of establishing the 

 enterprise. Acquiring labor to run the plant is a big factor. Low electric rates are a key element m 

 retaining a low cost of living. The Pacific Northwest is losing its low power rate advantage. 



While we welcome and encourage your interest, Mr. Chairman, we do not need another quick fix by 

 Congress unless it is to undo its past mistakes. As a result of the Northwest Power Act passed by 

 Congress in 1980, we obtained the Power Planning Council. Under its Power Plan, the Northwest 

 has gone from a 4000 aMW surplus to a 900 aMW deficit. Most of the deficit is from the 800 aMW 

 loss of generating capability on the Federal system due to the Council's mandated fish and wildlife 

 program BPA's conservation acquisitions thus far are in the 350 aMW range - much less than what 

 has been given up. And it has cost us over a billion dollars for conservation acquisition. We do not 

 have an adequate power supply and it is fast becoming uneconomical. 



