CREDA

Colorado River Energy Distributors Association

ARIZONA Arizona Municipal Power Users Association Arizona Power Authority Arizona Power Pooling Association Irrigation and Electrical Districts Association Navajo Tribal Utility Authority (also New Mexico, Utah) Salt River Project COLORADO Colorado Springs Utilities Intermountain Rural Electric Association Platte River Power Authority Tri-State Generation & Transmission Association, Inc. (also Nebraska, Wyoming, New Mexico) Yampa Valley Electric Association, Inc. NEVADA Colorado River Commission of Nevada Silver State Energy Association NEW MEXICO Farmington Electric Utility System Los Alamos County City of Truth or Consequences UTAH City of Provo City of St. George South Utah Valley Electric Service District Utah Associated Municipal Power Systems Utah Municipal Power Agency WYOMING Wyoming Municipal Power Agency Leslie James Executive Director CREDA 10429 S. 51st St., Suite 230 Phoenix, Arizona 85044 Phone: Fax: Cellular: Email: Website: 480-477-8646 480-477-8647 602-469-4046 creda@qwest.net www.creda.org

FOR IMMEDIATE RELEASE March 22, 2012

CREDA Questions Energy Department Memo to the Power Marketing Administrations

PHOENIX, Az. -- CREDA questions the need for a directive issued March 16 by the Department of Energy. In that memo, Energy Secretary Chu outlined a listing of directions to Power Marketing Administrations (PMAs), including the Western Area Power Administration (Western), regarding the facilitation of energy efficiency, demand response programs, preparation for electric vehicle deployment and the integration of renewable energy. CREDA appreciates the memos acknowledgement of the PMAs obligations to their customers and the mandate to deliver clean federal hydropower at cost-based rates. However, proposals contained in the memo appear to attempt to significantly deviate from this statutory mission. While some of the stated objectives are laudable from a national energy standpoint, those objectives could have significant costs attached and in addition, leave Westerns wholesale customers scratching their heads as to why Western would be involved in their responsibilities for demand response programs, energy efficiency and preparation for electric vehicle deployment. The memos assertion that the PMAs will be able to achieve the objectives associated with the proposals "while at the same time reducing costs to consumers is highly unlikely. On the contrary, CREDA believes that these proposals may raise the costs to consumers considerably. Western and its utility customers have undertaken significant efforts regarding energy efficiency and integrating variable energy integration. CREDA member utilities support and include renewable energy resources in their portfolios. Further initiatives that may be imposed on Western must be consistent with the agencys statutes and responsibilities, and must not create costs to ratepayers without commensurate benefits. The memo is very general, and CREDA is concerned about the lack of a robust cost/benefit assessment, as well as legal assessment, of the proposed new starts. For example, the memo contains a proposal to have the PMAs serve as "test beds" for cyber-security technologies. This proposal raises serious concerns with regard to impacts on reliability and costs to consumers. The memo also calls for modification of the PMAs' rate design to "incentivize" variable resource integration, demand response, and energy efficiency programs. In reality, this means shifting costs from one market participant to another. CREDA looks forward to working closely with Western to support CREDAs mission To preserve and enhance the availability, affordability, and value of Colorado River Storage Project (CRSP) facilities while promoting responsible stewardship of the Colorado River System.

Contact: Leslie James