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<br />SECTION 3 <br />POLICY ISSUES AND ASSUMPTIONS <br /> <br />3.1 INTRODUCTION <br /> <br />After the public comments received during Phase One of the Replacement Resources <br />Process, it became clear at the beginning of Phase Two that certain fundamental policy <br />issues would need to be resolved by Western to produce a useful and focused Methods <br />Report. This. section begins with a summary of the policy issues identified, followed by a <br />discussion of the assumptions made with respect to each issue. Finally, related issues that <br />affect the Replacement Resources Process are discussed. <br /> <br />March 1998 <br /> <br />Western Area Power Administration <br /> <br />3-1 <br /> <br /> <br />3.2 REPLACEMENT RESOURCES PROCESS POLICY <br />ISSUES <br /> <br />According to Western's latest contract amendment, customers will decide whether to <br />replace "lost" GCD power themselves ("Customer Displacement Power" or CDP), or to <br />request Western Replacement Power (WRP). Favorable market conditions currently exist <br />on regional bulk power supply markets, due in part to existing regional capacity surpluses. <br />Electric utility industry deregulation is beginning to allow transmission access to additional <br />power suppliers, thereby increasing competition and decreasing prices on the bulk power <br />supply market. Therefore, the primary concern to Western's SLCNIP customers is the <br />cost of replacement resources relative to other power available in the new, more <br />competitive, wholesale power market. Cost competitiveness is an overall concern <br />influencing other fundamental policy issues associated with the Replacement Resources <br />Process. These policy issues are listed below and discussed in the paragraphs that follow. <br /> <br />· Relationship to Western's Other Strategic Goals <br />· Resource Evaluation Criteria. <br /> <br />· External Costs <br /> <br />. Energy Efficiency <br /> <br />. Planning Horizon <br /> <br /> <br />· Frequency and Duration of Replacement <br /> <br />. Public Involvement <br /> <br />, <br />