169 



• Require all energy generators to include some percentage of renewable energy. The 

 percentage could start low, and grow over time, and developers could by and sell 

 credits toward the achievement of the appropriate percentage, much as pollution credits 

 are marketed under the Clean Air Act. 



5. If regional utilities leave the BPA system, can we expect to regionalize conservation and 

 renewable resources development costs through BPA rates? 



This question must be answered in its financial context, which includes the following 

 additional questions: Can we expect to finance the above-market operating costs of WNP-2 

 through BPA rates? Can we expect to fund uneconomic fossil fuel development through 

 BPA rates? Can we continue to allow BPA's customers to abandon their nuclear debts 

 with impunity by paying for those debts through BPA rates? Can we continue to immunize 

 the Bureau of Reclamation from the cost of power by failing to charge BPA rates? These 

 questions are not meant to be argumentative or rhetorical; our ability to pay for things 

 through wholesale rates is indeed hmited. What are our priorities? 



The first purpose of the Regional Act is "to encourage, through the unique opportunity 

 provided by the Federal Columbia River Power System: conservation and efficiency in the 

 use of electric power, and the development of renewable resources within Pacific 

 Northwest" (emphasis added). This remains a vitally important purpose that will be 

 impossible to achieve without BPA's active participation and commitment. TTie "unique 

 opportunity" presumably refers to the ability of the FCRPS to generate revenues sufficient 

 to repay its costs and support investments that maximize its long-term productivity. The 

 choice before BPA is whether to seize that opportunity or squander it in favor of acting as 

 the receptacle for the region's bad nuclear debt. If it chooses the latter, it will have 

 relinquished the primary defense against privatization. 



We believe that regional utilities wall leave BPA only if, in contradiction to FARC's policy 

 on stranded costs, those utilities can leave their bad debts behind when they go. Once 

 again, it is only the illusory and counterproductive promise of immunity from nuclear debt 

 that makes BPA's competitors possible. Even if some of BPA's customers pursue that 

 phantom promise, the market for the output of the FCRPS remains strong. Gaining 

 unfettered access to that market will probably entail forfeiting any claim to retaining the 

 benefits of the FBS in the Northwest. That appears to be a logical and perhaps fair 

 consequence of some customers' success in eluding nuclear debt, but it does not seem to us 

 a happy outcome for the citizens of the Northwest. 



We also believe that BPA can reduce its conservation costs through a variety of measures 

 that we have proposed repeatedly in "conservation reinvention" discussions. However, we 

 do not believe that regional conservation and renewable resources can or should be 

 achieved as the result of the independent actions of 130 wholesale customers. Intelligent 

 management of the FCRPS is fundamentally a re gional enterprise, not the sum of what 

 BPA's wholesale customers decide to do. 



We suppon the proposition that regional conservation and renewable resource development 

 would benefit from greater buy-in and commitment on the part of BPA's customers. That 

 is why we've been staunch supporters of the CARES project and conservation program 

 designs such as Energy Smart design that allow BPA's customers almost unlimited 

 fiexibility to tailor programs to meet local needs. We do not, however, believe that BPA 

 can successfully pass the baton to customers simply by dropping its end. 



We are particularly disturbed by BPA's apparent intention to abandon conservation funding 

 this October, without having implemented SDy of the reforms (such as tiered rates and 

 contract commitments) designed to encourage greater customer responsibility. This is in 

 flagrant violation of BPA's FY 95 appropriations language on conservation reinvention. 

 Worse, it virtually guarantees a precipitous decline in conservation performance starting 

 this fall. 



Recognizing the urgency of this imminent collapse in regional conservation potential, a 

 number of utilities are proposing an interim, FY 96 conservation solution to BPA that 

 would dramatically reduce BPA's costs while sustaining conservation momentum next 



