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In addition to numerous references to maximizing revenues and improving profits, the author(s) state
that “minimizing costs may not be the most important objective”, and proceed to suggest that
maximizing revenues would constitute a mathematically equivalent approach.
From a WAPA customer perspective, we believe that there is a significant policy-level difference
between a statutory obligation that requires WAPA to market federal project hydropower at the lowest
possible rates to consumers consistent with sound business practices, and a revenue maximization goal.
On one hand, the author(s) correctly observe that the objective function of the GT Max model is to
minimize cost. In this regard, we believe that WAPA and Argonne have correctly oriented the tool so as
to be reflective of WAPA’s legal obligation.
On the other hand, the author(s) describe the business area where 100% of WAPA’s customers reside
as “the regulated IOU business model”, which suggests to us that the author(s) may not understand
the public power characteristics of WAPA’s customers.
The foregoing observations notwithstanding, the real damage in the revenue versus cost discussion is
the promulgation of the misleading suggestion that utility business entities (WAPA, WAPA’s customers,
other public power entities, IOUs, etc.) are exclusively focused on maximizing profits. This is
particularly harmful in the AMP arena, where the majority of participants are not utility business
professionals, and a perception that “profits trump natural resources” could be reinforced.
As in items 3-4 above, the promotion of false perceptions such as this serves only to establish or
strengthen barriers among AMP stakeholders who might otherwise be able to collaborate more
effectively.
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