278 



DRAFT 



CONSERVATION, AND THE APPARENT CONFLICT 

 REGARDING IT. IN THE REGIONAL ACT 



HYPOTHESIS : The Regional Act contains a serious conflict regarding the determination 

 of "cost-effectiveness" and the determination of "bilhng credits" a BPA customer can 

 receive. 



DISCUSSION : It appears the drafters of the Regional Act made an assumption which is 

 incorrect. That assumption is that the rate impact of acquiring conservation costing a 

 certain amount per kWh is the same as developing a like amount of generation costing the 

 same amount per kWh. 



Please refer to Sections 6(h)(3) and 6(h)(4), dealing with the amount of billing credits for 

 conservation and for resources other than conservation (copy attached). Please note the 

 concern over rate impact on "the Administration's other customers" and the phrase, ". . . 

 had the Administrator been obligated to acquire resources in an amount ..." (emphasis 

 added) 



The term "resource" is defined as electric power from generating facilities, or load 

 reduction from application of a renewable energy resource by a consumer, or from a 

 conservation measure, [paraphrased from Section 3.(19)] The rate impact of the 

 Administrator acquiring conservation resources (or renewable resources of a consumer) is 

 substantially more than the rate impact of acquiring generating resources. This fact was 

 not recognized by the drafters of the Act; if it had been, the language would have 

 specified the type of resource to be used for the rate impact test. 



The conflict can be noted in Section 3.(4XAXii) which defines "cost effective" as a 

 measure or resource which reduces the electric power demand at an estimated incremental 

 system cost no greater than that of the least-cost alternative measure or resource. As 

 mentioned earlier, the rate impact of a conservation measure will always exceed the rate 

 impact of a generating resource with the same incremental system cost. 



