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The BPA wind bid is for a project or projects scheduled to come on-line on January 1 , 1996. 

 Thus, it will have no effect on BPA's near-term budget. Since wind energy will be purchased 

 under a contract, as delivered, it will not require an up front capital outlay by BPA. Adding 

 50 MW of wind energy (needed generation) into a 17,000 MW system will add no cost to BPA's 

 customers compared to the alternatives. Further, since wind energy has no fuel cost, future 

 prices will remain stable. Adding larger quantities of wind would, in our view, help to stabilize 

 power prices in the region and mitigate fuel price risk. 



Are there significant differences in the processes in practice used by BPA to acquire 

 conservation, renewable and fossil resources? 



As previously stated, we feel BPA should target resource diversity and place some value on risk 

 avoidance and should also include environmental values in its resource acquisition criteria. 



We would also request that all bidders be treated equally in any bids that BPA undertakes. That 

 BPA has a close relationship with their municipal utility customers is well known and accepted. 

 It is also accepted that these municipals have access to tax exempt financing with lower than 

 commercial market rates. Finally, we recognize that, in part due to their size, BPA may 

 guarantee the debt of these entities from time to time in order for them to realize the 

 aforementioned benefits. 



We are concerned, however, that these "entirely appropriate" financial guarantees do not 

 inadvertently result in BPA assuming the "equipment" risk in a project. It seems to us that there 

 are two considerations of which to be mindful. The first is that BPA will suffer a financial loss 

 because of equipment failure. In spite of the many technological gains over the past several 

 years wind turbines remain a relatively new technology. Secondly, by removing the 

 responsibility for equipment performance from some equipment suppliers, but not all suppliers, 

 the bid process cannot possibly treat all bidders equally. This undermines a fundamental 

 objective of a public bidding process - the best equipment at the best price with the risk of 

 performance placed on the supplier. By its debt guarantees BPA can, in affect, artificially 

 influence the market forces otherwise at work. 



Fortunately, both of these concerns can be addressed simply and straightforwardly - require 

 equipment performance bonds in any transaction in which BPA is ultimately responsible for the 

 project's debt. This requirement has the added benefit of being "normal practice" even with 

 mature generating technologies. Performance bonds are routinely sought and received for 

 municipal gas turbine projects as well as other technologies. Performance bonds are also 

 available for wind energy production equipment once insurers have satisfied themselves as to the 

 efficacy of the particular equipment and the supplier's ability to support the warranty. 



In summary, such an approach would: 



1 . Insulate BPA from the risk of loss due to equipment failure 



