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Conservation, Renewables, Public Purposes
Work Group:

Draft Scope of Work

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Discussion

The conservation, renewables, public purposes work group combines several topic areas from the template. They include:

Conservation
Renewable resources
Environmental costs
Low income energy assistance; and
Public purposes, obligations and cost transfers such as rural development, irrigation, flood control, recreation, navigation, public preference, residential exchange and so on.

There was general agreement that the primary focus of this group should be on conservation and renewables. There was agreement that the market will develop some conservation. The tasks for the work group are identifying the kinds of cost-effective conservation that the market will not secure, the actions appropriate to mitigate those market failures, the means of financing those actions and the means of administering them. It was generally acknowledged that financing mechanisms need to be broad-based, not bypassable and should not distort the competitive balance within electricity markets and between alternative fuels. A "systems benefit charge" was mentioned as one possible financing mechanism. The question of whether such mechanisms should extend beyond electricity to natural gas and possibly other fuels should also be addressed.

There was less agreement about renewables. Some believe that the market will develop cost-effective renewable resources while others believe there are regulatory and market barriers to be overcome. The general sense was that the focus for renewables should be on preserving renewables as a long term option rather than near term development. This was reflected in an emphasis on research, development and demonstration (RD&D) rather than commercialization. The tasks for the work group include identifying the barriers to preservation of renewable resource options and renewables development; identifying strategies to overcome those barriers including RD&D, and identifying the means of financing and administering those strategies.

Environmental costs were discussed. The mitigation of environmental costs that are legitimately attributable to the power system, including fish and wildlife costs, were acknowledged to be the responsibility of the power system. While there may be disagreement with specific mitigation requirements, establishing those requirements was generally believed to be the responsibility of the appropriate environmental regulators. The issue of governance of fish and wildlife mitigation is being addressed by the 180-Day Review. The risk associated with fish recovery requirements will be addressed by the Federal Power Marketing group. There does not appear to be any specific task for the work group on this issue.

There was no agreement on whether low-income energy assistance was appropriate topic for the Review.

Opinion regarding treatment of Bonneville's public purposes, obligations and cost transfers such as rural development, irrigation, flood control, recreation, navigation, residential exchange and public preference was mixed. Some are concerned that these issues are so difficult as to prevent progress on other issues. Others felt that it is necessary to address them. It was agreed that at a minimum, an effort would be made to identify and quantify these purposes, obligations and cost transfers. Bonneville has performed an initial assessment that has been delivered to the Steering Committee. The necessity of linkages between these issues and the work of other groups, notably the groups considering marketing of the Federal Base System and transmission, was noted.

Primary Tasks

1. IDENTIFY AND EVALUATE ALTERNATIVE MEANS OF SECURING COST-EFFECTIVE CONSERVATION THAT ARE CONSISTENT WITH INCREASINGLY COMPETITIVE ELECTRICITY MARKETS.

Explicit evaluative criteria should be developed and utilized. Specific tasks include:

Identify kinds of conservation market is likely to develop;
Identify the kinds of cost-effective conservation that the market is unlikely to develop;
Identify the kinds of market failure that impede development of that conservation;
Identify alternative strategies for overcoming those market failures, estimate their financial requirements and evaluate the relative effectiveness of those strategies;
Identify and evaluate alternative mechanisms for financing implementation of those strategies that are broad based and competitively neutral, including consideration of whether such mechanisms should apply to fuels other than electricity;
Identify and evaluate alternative mechanisms for administration; and
Identify implementation steps.

2. IDENTIFY AND EVALUATE ALTERNATIVE MEANS OF PRESERVING RENEWABLES AS A LONG-TERM OPTION AND ENCOURAGING DEVELOPMENT OF RENEWABLE RESOURCES.

The alternatives must be consistent with increasingly competitive electricity markets. Explicit evaluative criteria should be developed and utilized. Specific tasks include:

Identify the barriers to the preservation of renewable resource options and development of renewable resources, considering both RD&D and commercialization;
Identify alternative mechanisms for overcoming those barriers, estimate their cost and evaluate the relative effectiveness of those strategies.
Identify and evaluate alternative mechanisms for financing implementation of those strategies that are broad based and competitively neutral;
Identify and evaluate alternative mechanisms for administration; and
Identify implementation steps.

3. PUBLIC PURPOSES, OBLIGATIONS AND COST TRANSFERS

Identify and estimate the costs of public purposes, obligations and cost transfers including rural development, irrigation, flood control, recreation, navigation, and public preference. Specific tasks include:

Review Bonneville analysis of public policies and their benefits and costs recently delivered to Steering Committee for completeness and modify the list as appropriate;
Estimate, to the extent possible, the costs associated with the public purposes, obligations and cost transfers identified.

Implications for, and links to, other work groups

Maintain liaison with the group considering federal base system marketing and transmission regarding the treatment of public purposes, obligations and cost transfers.

Schedule

The work groups are scheduled to complete their work by July 11, a period of about 100 days from April 1. By the May 9 meeting of the steering committee, the workgroup should be prepared to give a progress report. The report should include the group's strategy for addressing the issues assigned to it, tasks that have been assigned to subgroups, research and data requests issued by the group and staff or contractors responsible as well as a report on the status of the initial work tasks.

At the June 6 steering committee meeting, the group should be prepared to present its preliminary findings regarding alternative strategies it has evaluated with respect to conservation and renewables as well as its assessment of the costs of public purposes, obligations and cost transfers.

At the July 11 steering committee meeting, the group's work should be done. A detailed written report should be available for the steering committee to use in its deliberations. It addition to the facts gathered and the evaluation of the alternatives examined, it should address the necessary steps to be taken to implement each alternative with a discussion of feasible strategies for phasing in the alternative. Proposed timelines for the tasks are shown below.

Conservation

Task	April	May	June	July
Report to Steering Committee		9	6	11
Develop workplan, information needs and assignments	------X
Identify conservation market likely will and will not develop and kinds of market failure	---------------	-X
Identify and evaluate strategies for overcoming market failures	-------	--------------	X
Identify and evaluate financing mechanisms, including implementation step		---------	--------------	--X
Identify and evaluate administrative mechanisms, including implementation steps		-----	--------------	--X
Document			------------	--X

Renewables

Task	April	May	June	July
Report to Steering Committee		9	6	11
Develop workplan, information needs and assignments	------X
Identify barriers	---------------	-X
Identify and evaluate strategies for overcoming barriers	-------	--------------	X
Identify and evaluate financing mechanisms including implementation steps		---------	--------------	--X
Identify and evaluate administrative mechanisms, including implementation steps		-----	--------------	--X
Document			------------	--X

Public purposes, obligations and cost transfers

Task	April	May	June	July
Report to Steering Committee		9	6	11
Develop workplan, information needs and assignments	------X
Review Bonneville Analysis of public policies benefits and costs and modify list as appropriate.	----------------	--X
Estimate cost of Public purposes, obligations and cost transfers		--------------	X
Maintain liaison with Federal Power Marketing and Transmission groups	---------------	--------------	--------------	--
Document		-----	------------	--X