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tional and industrial sectors. Our experience in other parts of the 

 country with utility programs that have targeted these sectors tells 

 us that the long-term economic benefits are tremendous and con- 

 tribute greatly to a stable economic environment. 



The opportunities in the commercial, institutional and industrial 

 sectors for comprehensive conservation programs are much less en- 

 cumbered. There are fewer numbers of customers to contact, great- 

 er savings available per facility, and lower administrative costs. 



In most cases, the decision criteria for participation is more 

 clearcut. The program delivery systems for the commercial, institu- 

 tional and industrial conservation markets are larger scaled and 

 more interactive than residential programs. 



The key, we believe, for acquiring substantial energy savings in 

 the non-residential sectors is timing. If funding for these projects 

 is not available at the time the industry is ready to imdertake ret- 

 rofits, it is likely that the opportunity will be lost forever. 



We generally agree that Bonneville is on track to acquire its 

 share of the region's targeted level of cost-effective conservation. 

 However, after encouraging utilities to rapidly accelerate their effi- 

 ciency programs, Bonneville is now in a position of near-term budg- 

 et constraints. We believe that if the region's utilities continue to 

 depend on Bonneville for full funding of conservation programs, 

 budget cuts in the near term will significantly compromise the abil- 

 ity of the region to achieve its acquisition goals. 



We think a major conservation acquisition program requires a 

 steady, long-term commitment of both staff and budgets. The con- 

 cept that energy conservation is a resource, like any generating 

 power plant, was first introduced by the Northwest Povver Act. 

 Treating conservation as a one-time program, as Bonneville cur- 

 rently does, exposes it to the risk of budget cuts, which translate 

 to uncertainty in the regional planning mechanisms of its utility 

 customers. The problem shifts from one of achievable conservation 

 targets to one of uncertainty and risk. 



In response to Question 2 regarding why energy services compa- 

 nies, such as Proven Alternatives, have played a major role in 

 other parts of the coimtry, but have not been particularly active in 

 the northwest, the primary reason for the relative success of com- 

 panies like ours in other parts of the country is due to the fact that 

 the rest of the country pays substantially more for electricity. 



Higher prices simply mean more conservation is economical 

 under more customers' financial decision criteria. This allows for 

 more creative and comprehensive programs, but longer-term sav- 

 ings assurances. 



We've also seen that in other regions where capacity constraints 

 are a big problem, utilities have adopted more flexible DSM pro- 

 gram offers. In a low rate environment like the northwest, we, as 

 a private company, take considerable risks for very small profit 

 margins. As a result, we don't see the kind of conservation acquisi- 

 tion activity going on here like we do in California and, particu- 

 larly, the east coast, where we have three offices. Consequently, 

 conservation acquisition has developed risks less rapidly in our re- 

 gion by ESCOs. 



In a period of budget constraints, energy service companies, like 

 Proven Alternatives, can play a very important role in providing 



