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In addition to the inspections, each customer is asked to complete a satisfaction 

 survey. SESCO, a performance contractor, recognizes the performance of its crews. 

 Crew bonuses are provided for inspection ratings, customer satisfaction and the 

 comprehensiveness of the work done in each house. Unless the customer has a 

 later need for warranty work, that is the end of the process for the customer 



Meanwhile, the utility and SESCO will monitor the savings by compahng that 

 customer's energy consumption before the work was done with that after the work 

 was done, often in comparison with a control group of nontreated houses. After 

 adjustments in accordance with the utility-approved measurement plan, payment is 

 made per kilowatt hour saved each year of the SESCO-utility contract. 



SESCO PROJECTS COMPLETED OR NOW UNDERWAY 



PGE Project(s) 



Since early 1993, Portland General Electric Co. (PGE) and SESCO have been 

 conducting a 5,000 house pilot project for lower income electric heat customers in the 

 greater Salem, Oregon area. PGE is purchasing the first 1200 kilowatt hours per 

 house at 39% of avoided cost and the rest of the savings at 90% of avoided cost. 

 PGE's own low income weatherization is achieving about 1200 kWh/house in savings 

 annually SESCO expects to save at least twice as much per house. 



This two-tiered pricing system, the first in the nation, indicates the flexibility of 

 performance contracting to meet the needs of the utility. By providing the first block 

 of savings to the utility for free or for a very low price, the ESCO assures that the 

 utility and its ratepayers receive their benefits before the ESCO gets any profits. By 

 setting the final block price near avoided costs, the concept assures that the ESCO 

 will be as comprehensive as possible in each treated house, maximizing the savings 

 in order to maximize the revenues. 



PGE is also evaluating a similar two-tiered proposal to expand the program 

 throughout Its service area to an additional 10,000 electric heat customers. It is also 

 looking at providing 30,000 other residential customers with free energy efficient 

 lighting. 



Other Pacific Northwest Projects 



Puget Sound Power & Light Co. and SESCO are negotiating a 10,000 house 

 contract for the greater Puget Sound area. SESCO is also working with two other 

 ESCOs in a coordinated effort for Puget Power that will provide comprehensive water 

 heating and lighting improvements to about 45,000 residences without electric heat. 



TESTIMONY OF RICHARD ESTEVES Page 3 



