350 



According to ORNL, even assuming the 1330 kWh/year savings to remain 

 constant over a 31-year period (with zero deterioration), the cost would still be 83 

 mills/kWh (real levelized 1989 dollars)-far above the Northwest Power Planning 

 Council (NPPC)s cost-effectiveness ceiling. See Chart 3. This figure apparently 

 does not include (1) a substantial portion of BPA's central administrative costs, and 

 (2) the cost of BPA's new "lost revenue" compensation payments (up to 20 mills/kWh 

 assumed to be saved) to its customer utilities. Were we to include the 12% average 

 annual savings deterioration alone, the cost would easily reach into the hundreds of 

 miils/kWh. BPA had already evaluated the SESCO projects as providing savings at 

 25-29 mills/kWh in real levelized 1990 dollars to be paid over a 20-year period. If 

 savings deteriorate, so would the payments to SESCO. Similar prices and terms 

 were offered for the other ESCO projects. 



Members of the Negotiating Team tried to disavow the latest ORNL study BPA 

 did not produce it when asked in 1993 Rate Case discovery for all evaluations of its 

 residential conservation projects. The BPA rate case witness on this subject then 

 sought to disavow the ORNL study, even though she herself had previously written a 

 memo in January 1993 stating: 



At our [BPA] meeting on January 14, 1993, we discussed the 1988 and 

 1989 Residential Weatherization savings estimates published in the Oak 

 Ridge National Laboratory report, ORNL/CON-323. These latest findings 

 are robust and the methodology used to estimate the savings and costs 

 listed below is defensible and is in accordance with professionally accepted 

 standards of the program evaluation discipline. 



While the savings estimates may be methodologically robust, and in fact, 

 corroborate a 10 year trend of declining first year savings, they are 

 substantially lower than any previous years' savings. 



The BPA witness then claimed that a new study by Synergic Resources 

 Corporation (SRC) would show the BPA residential weatherization program to be 

 cost-effective. But the final draft of that study corroborated the excessive costs of the 

 BPA centrally designed programs, concluding that the weatherization program costs 

 over 77 mills/kWh (1991 dollars, real levelized), without counting BPA's own 

 considerable administrative costs. The BPA witness then claimed that the SRC study 

 would somehow be changed and produce "higher savings and lower costs." SESCO 

 has since checked with the author of the study at SRC, who feels that the study was 

 conducted in accordance with accepted measurement procedures and with the 

 instructions previously provided by Bonneville. We are now awaiting the final report. 



Despite these studies, BPA now merely assumes that its residential 

 weatherization program saves 2800 annual kWh/house, undiminished for 40 years! 

 This level of savings have not been realized by Bonneville programs since its 1986 

 programs - which then dropped by over 500 kWh the following year. AS far as we 



TESTIMONY OF RICHARD ESTEVES Page 13 



