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cost to do the job would be about $50 million. $50 million to 



serve a 140 megawatt peak is about $354 per kilowatt of installed 



generating capacity. That's about one-half to one-third of the 



cost of building a combustion turbine power plant to serve that 



load. Additionally, the combustion turbine power plant that 



would serve that electric load would operate at an efficiency of 



about 40 percent and would burn more than twice as much natural 



gas as compared to sending that natural gas directly to the homes 



for water heater service. The answer to your first question goes 



directly to the purpose and rationale of fuel switching. The 



direct use of natural gas in homes brings to the consumer an 



energy cost reduction, brings to the electric industry in the 



region a reduced demand on the electric system, and brings to all 



energy users in the region a reduction in the total use of the 



natural gas resource. 



The second part of question one is, "Do current market 



conditions create a sufficient incentive for fuel switching?" If 



not, what measure should BPA undertake to encourage fuel 



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