339 



hours is the level that PGE is currently saving in its residential 

 low income program. 



This provides the ESCO with an incentive to do a very com- 

 prehensive job or to maximize the revenues and to maximize the 

 savings that come from it. And the same type of thing happens re- 

 gardless of whether there's a tiered rate system. Because we're 

 paid on the results, we are not going to try and install things 

 which are not needed or which are not cost-effective. 



On the other hand, if I walk out of a house leaving something 

 undone that should have been done, I'm leaving money on the table 

 when I leave that place. Consequently, the performance conserva- 

 tion contract, whether it be commercial, industrial or residential, 

 has an incentive to do everything they can that's comprehensive 

 and cost-effective in that place up to the level of cost- effectiveness 

 for that. 



Other projects we have ongoing in the Pacific Northwest is we're 

 negotiating a contract now to Puget Soxmd Power and Light for 

 10,000 residences and cooperating in another project which would 

 retrofit 45,000 residences that are not electrically-heated. We also 

 have seven other contracts across the country with other utilities. 



Our experience at Bonneville goes back quite a ways, back to 

 1982 when I was working with an electric utility company on the 

 east coast. Bonneville became interested at that point in developing 

 a performance-based residential program. It went so far as to de- 

 velop a draft RFP for soliciting this service and sent it to us for 

 our comment £uid review. 



That, of course, went by the boards in the mid-1980s, as did 

 many other of Bonneville's programs. We heard again about Bonne- 

 ville in 1989 when we understood that they were to go out for an 

 all source bidding program, which would include conservation. We 

 were very impressed by this, but when we went to find out, we 

 found out that they had planned to not allow residential customers 

 to benefit from this program because they felt they were already 

 treating the residential customers as well as anyone could and 

 there were no more resources available. 



Fortimately, Bonneville did change its mind after some of the 

 utilities and other parties spoke with them. Bonneville is a very 

 large entity, but it is still a utiUty company. It's a utility company 

 with a bit of a difference. It has no retail customers. It has no over- 

 sight from local regulatory agencies. It has no need, even as a pub- 

 lic body, to put itself up for judgment by the electorate it serves. 



It also has almost unlimited resources in the short run and it has 

 the ability, because of its size, to appear to be immovable in its 

 policies. However, this is not unique to Bonneville Power. We've 

 seen the same type of thing occur in large institutions across the 

 country, though particularly true in the electric utility industry, 

 which is still ensunored with long-term central planning and mas- 

 ter plans and everything else that we thought had ^sappeared 

 with the Soviet-style central planning economy. 



However, what we see instead is that because of it's size, the 

 need to manage an extra large area, what you have are very large 

 programs, centrally planned and designed with very little local con- 

 trol, very little application changing at the local level. 



