**Questions to discuss with EPA on September 19 th**  **conference call**

1. How should states view the compliance approaches discussed in the TSDs versus the approach described in the Preamble, especially in cases where the former contrasts significantly with the latter. Specifically, Oregon would like to know how we should consid er the compliance approaches for crediting energy efficiency in the State Plan Considerations TSD versus the approach described in the Preamble given the huge disparity in these different proposals. For example, the approach described on page 480 of the Pr eamble suggests states would credit only the emission reductions resulting from their energy efficiency that can be traced back to fossil EGUs within their state. For Oregon, this would credit only 10% - 20% of the total emission reductions that result from our energy efficiency investments, depending upon the water year. In contrast, the “State that Implements the Measure Claims the Emission Effects” approach described on page 92 of the State Plans Consideration s TSD would appear to credit Oregon with the fu ll breadth of emission reductions associated with Oregon’s EE investments. So, given the enormous disparity between these two approaches, should we assume the Preamble approach is the presumed default method EPA is expecting states will use? Or, is this si milar to the different way s EPA is proposing to set Block 3, where we’ve heard from EPA that states should consider the “main” and “alternative” approaches to setting Block 3 equally? Joe Bryson .Robyn deYoung/Chris **1b.** “ a state could take into account in its plan only CO2 emission reductions occurring (or projected to occur) in the state that results from demand-side EE measures in the state. ” Oregon has interpreted the above proposal language to mean either: 1. Oregon may apply all of its energy efficiency M Wh against all in - state 111(d) generators MWh output regardless of the percentage of in - state load served by these generators. OR 2. Oregon may only apply EE savings that conceivably have an effect on dispatch of the in - state generators. In this case it helps to know that Oregon’s in - state 111(d) generators that serve in state load amounts to roughly 15% of total 111(d) generation (in - state and out - state). In this interpretation Oregon could only utilize roughly 15% of its EE to offset MWh generated at in sta te 111(d) generators. 2. How does EPA envision states will be able to credit energy efficient in utility territories served almost exclusively by hydro? We’ve not found a discussion of this issue in the EPA’s documentation, but it is a significant issue for Oregon. Consumer owned utilities in our state are served almost exclusively by Bonneville Power Administration, which is almost entirely hydroelectricity. Has EPA considered or evaluated whether a regional marginal emission factor would be an appropri ate mechanism for accounting for and crediting the emission reductions due to EE investments in situations like this where the demand savings does not immediately affect thermal EGUs but can be shown to do so directly given how electricity is dispatched in the region? DeYoung/Critchfield3 a . To the extent that states like Oregon include in their state plans emission reductions resulting from

RE/EE investments made by a federal Power Authority (e.g. Bonneville Power Administration), what degree of authority or enforcement will the states need to have over that federal entity to satisfy EPA? States generally have limited authority over federal entities like BPA, yet our rate payers provide funding for the significant RE/EE investments BPA does in our states and thus the emission reductions produced by these investments will likely play an important role in our 111(d) compliance approach. How can states like Oregon provide EPA reasonable assurance that we will achieve the emission reductions identified in our plans from entities like BPA? Sherry/Jim K - C 3b . Similarly, how does EPA envision states in the Pacific Northwest will share compliance credit from the investments made by BPA? We anticipate a reasonable approach would be to apportion the credits based on each of the four states’ share of the federal hydro system, but haven’t seen anything in EPA’s documentation that discusses this. Sherry/Jim K - C 4 . Does EPA envision a different crediting system for demand - response resources than for other demand - side r esources? We can elaborate on this in our conversation if this is unclear. DeYoung/Bryson/Clouse 5. What is the “later date” after which incremental hydro generation must be constructed in order to be eligible to generate 111(d) compliance credit? Critchfield/Clouse 6. Are there any non - emitting generation technologies explicitly excluded from eligibility for generating 111(d) compliance credit? Sherry