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public utility commissions are requiring that utilities acquire new resources exclusively 

 or primarily through competitive bidding. 



BPA started a competitive free market bid process in 1990 and issued its RFP 

 for 300 MW in January 1991, with bids due June 1991. The RFP automatically 

 protected all existing or planned BPA conservation programs from competition from 

 ESCOs and set out detailed guidelines for what would be acceptable and how it 

 would be evaluated. Nevertheless, based upon the opportunities found in the Region 

 which were not yet served by BPA, numerous ESCOs submitted bids. From these 

 BPA accepted the top 9 conservation proposals (some involving multiple projects), 

 totalling some 80 aMW, for negotiation. Each of these proposals had offered to 

 Bonneville a commitment to be evaluated and paid on the basis of their measured 

 results over a period of years - and to finance those installations without direct BPA 

 help. And Bonneville accepted a single generation proposal, the 200+ aMW Tenaska 

 plant. 



SESCO's 10 weatherization projects, which BPA evaluated to cost 25-29 

 mills/kWh (1990 dollars, real levelized), represented the single largest group of 

 winning DSM bids. SESCO offered to be paid on the basis of the measured, 

 metered, verified savings over a period of 20 years following treatment of each 

 house. SESCO also cooperated with two other ESCOs that specialize in water 

 heating and "basic service" houses to offer a unified residential program that would 

 provide comprehensive services to over 400,000 residences throughout the Region. 

 Together, these companies made a firm offer to invest a total of over $235 million in 

 private capital to provide free conservation services to the residences of the Region. 



Having made the offer and having accepted for negotiation several quality 

 proposals that met the standards required, the only thing remaining for a test of the 

 process was to complete the contracts and implement the programs. 



As of this date, over 2 years after Bonneville received those proposals, BPA has 

 failed to contract for even a single kWh of conservation from any of the winning 

 bidders, many of them respected nationally as expenenced, quality ESCOs. To our 

 knowledge, SESCO is the only ESCO to have undertaken extended negotiations with 

 BPA. 



BPA assigned low priority to this task of completing negotiations, as the BPA 

 10-15 person "Negotiating Team" included no senior management personnel. BPA 

 then prohibited SESCO from communicating with BPA management at all, even when 

 we had reason to believe that the Negotiating Team was misrepresenting SESCO's 

 program and SESCO's positions to the various upper levels of BPA management. 



TESTIMONY OF RICHARD ESTEVES Page 6 



