404 



company, we made a significant difference in the amount of conver- 

 sion that took place. 



Our presence and our engineering data gave validity to the 

 claims that the gas company salespersons were giving in the field 

 to our customers and we saw a significant increase in the number 

 of conversions. Very, very successful at very, very lost cost. 



We, at that point in time during the negotiations to go into this 

 program, did leverage the gas company up from the 53 percent effi- 

 cient hot water tanks to somewhere around a 63 percent, and we're 

 looking at Mr. Sullivan to now leverage them up to 80-85 percent 

 or wherever he can down there. 



Mr. Sullivan. Well hopscotch them. Matt. 



Mr. Dillon. The difficulty they claim is that the market doesn't 

 provide them, but the fact of the matter is the market provides 

 what the gas company buys. It should be possible, either through 

 efforts such as our utility and Seattle City Light is taking, to lever- 

 age them up or perhaps through the state legislature adopting bet- 

 ter building codes. 



Mr. DeFazio. Matt, in your ideal world that you talked about at 

 the end of your testimony, where BPA would use one tool, which 

 would be the tiered rates, is that— do you really truly see that as 

 an ideal or is that because of this rather unpleasant or imsuccess- 

 ful experience that you had after two years of negotiations for your 

 conservation power plant? 



If BPA — you obviously had something you wanted to do that 

 made a lot of sense. I assume it was deUvering a large amount of 

 conservation at one cost, and maybe you can give me some num- 

 bers, what you projected with your CPP, what it would dehver at 

 what cost, even though it all fell apart at the end. 



If you could have achieved that, I assume you wouldn't have the 

 same opinion. 



Mr. Dillon. We learned many lessons as we went through the 

 process and we're very grateful and the Board, my own Board is 

 very grateful to the effort put forth by the Bonneville Power Ad- 

 ministration, and our own staff that worked very, very hard to 

 make the proposal come true. 



We began negotiating for all the — ^for many of the principles that 

 you've heard espoused by others today; long-term financing, flexi- 

 bihty at home, let us do our own thing and let us be flexible, set 

 a fair market value, we'll go get the financing. 



All of these kinds of things we thought would be very useful to 

 us to be able to take the risk of signing a 20-year commitment to 

 drive our load growth down below what we thought — ^we think it 

 will otherwise be. 



As time went on, it changed in concept from an output-based con- 

 tract to a capacity-based contract, and, in fact, sitting in the Board 

 member's chair, eventually I decided there was nothing there that 

 we couldn't do under existing contracts and, in fact, it was a big 

 step back from one of the existing contracts that we already had. 



So we were not, in fact, advancing conservation in the region. We 

 were about to go into contract negotiations on something that 

 would be a setback. So the Board ended the negotiations. 



It is uncertain at this point what kind of conservation reaction 

 we are going to get to having to raise our rates after 10 years of 



