1998 Council Briefing Book
May 1998 | document 98-10
The briefing book provides information on the history of the Council
and issues the Council currently is addressing.
Related links: Current briefing book
1998 SUPPLEMENT ON CURRENT COUNCIL ISSUES
Fish and Wildlife Issues
Power Issues
HISTORY OF THE REGIONAL POWER SYSTEM
Fish and Wildlife Issues
THE COLUMBIA RIVER BASIN FISH AND WILDLIFE PROGRAM
FISH AND WILDLIFE PROGRAM COSTS AND RESULTS
SYSTEM PLANNING 30 RESEARCH
MAINSTEM PASSAGE
HABITAT AND PRODUCTION
RESIDENT FISH AND SUBSTITUTIONS
PROTECTED AREAS AMENDMENT
HARVEST
WILDLIFE MITIGATION
GLOSSARY OF FISH-RELATED TERMS
Power Issues
THE CHANGING UTILITY WORLD
COMPREHENSIVE REVIEW OF THE NORTHWEST ENERGY SYSTEM
TRANSMISSION
TRANSMISSION SYSTEM IMPACTS FROM BREACHING
JOHN DAY DAM
FEDERAL POWER MARKETING: THE ROLE OF THE
BONNEVILLE POWER ADMINISTRATION
COST REVIEW OF THE FEDERAL COLUMBIA RIVER POWER
SYSTEM
FOURTH NORTHWEST CONSERVATION AND ELECTRIC POWER PLAN
CONSERVATION ACQUISITION STATUS
GLOSSARY OF POWER-RELATED TERMS
Legal Issues
WHAT KIND OF LEGAL CREATURE IS THE COUNCIL?
PROCEDURES FOR AMENDING THE COUNCIL'S POWER PLAN
AND FISH AND WILDLIFE PROGRAM
COUNCIL INTERPRETATIONS OF THE NORTHWEST
POWER ACT
LITIGATION
Administrative Issues
FINANCE AND ADMINISTRATION
Central Office Staff
COUNCIL CENTRAL OFFICE STAFF FLOW CHART
COUNCIL CENTRAL OFFICE STAFF
DIRECTORY
1998 SUPPLEMENT ON CURRENT
COUNCIL ISSUES
A brief review of major tasks the Council is undertaking
May 1998
Fish and Wildlife Issues
1. Future Role of Fish Hatcheries
The Issue: The region lacks a coordinated policy to guide future
operation of fish hatcheries in the Columbia River Basin. At the request
of Congress, the Northwest Power Planning Council convened a panel of
scientists and an advisory committee to review all fish hatchery
production in the Columbia River Basin as a first step toward developing
such a policy.
Timeline: The review should be completed and delivered to
Congress by June 1999.
Background: Fish hatcheries have a long history in the Columbia
River Basin. For more than 100 years, hatcheries have been used to produce
fish for harvest, primarily in commercial fisheries in the lower Columbia
River. For the last 60 years, hatcheries also have been used to mitigate
the impact of federal dams on salmon and steelhead. Because most of this
fish production, and commercial fishing occurred downstream of Bonneville
Dam, many people believe the less-abundant wild salmon and steelhead that
spawn upriver were disproportionately affected. Hatcheries, regardless of
where they are located, also occasionally experience disease problems, and
these diseases can be passed to other fish if the diseased fish are
released.
On the other hand, proponents of artificial production say it may be
the only way to rebuild seriously depleted stocks of salmon and steelhead
that spawn in the wild. With care, hatcheries could provide the seed
stocks to rebuild naturally spawning runs. This practice, known as
supplementation, involves raising fish at hatcheries and then releasing
them into streams where they will return, by natural instinct, to spawn.
Last September, the Northwest Power Planning Council called for a
comprehensive review of artificial production of fish in the Columbia
River Basin. Earlier in the year, Congress called for a similar review as
a first step toward developing a coordinated policy to guide future
operation of federally funded hatcheries in the basin, and two recent
independent scientific reviews of fish and wildlife restoration in the
Columbia River Basin have done so, as well. The common concern in each
case was whether current hatchery practices and the level of production -
about 80 percent of the Basin's fish are produced in hatcheries - are
appropriate.
The Council's review, which will be conducted by five independent
scientists and monitored by a broad-based, 25-member advisory committee,
will address three major questions:
1. How does artificial production fit, or might it be altered to fit,
into the Columbia Basin ecosystem?
2. How can artificial production be used to meet the needs of society
for sustainable populations of fish that support harvest, as well as other
competing resources?
3. What institutional structures are needed to meet the needs of
society for sustainable populations of fish that support harvest?
Five scientists have been appointed by the Council to conduct the
hatchery review. Three are members of the Independent Scientific Advisory
Board, a panel of scientists who advise the Council and the National
Marine Fisheries Service. They are Jim Lichatowich, a consulting fisheries
biologist from Sequim, Washington; Rick Williams, a consulting geneticist
from Meridian, Idaho; and Brian Riddell of Nanaimo, British Columbia, a
fisheries biologist with the Department of Fisheries and Oceans, the
Canadian federal fisheries agency. The two other scientists are Ken
Currens, a biologist with the Northwest Indian Fisheries Commission in
Olympia, Washington, and Ernie Brannon, a biologist with the University of
Idaho.
2. Review of Corps of Engineers capital construction
projects
The Issue: What fish passage improvements should the Corps of
Engineers pursue in the future at dams on the lower Snake and Columbia
rivers?
Timeline: The review is scheduled to be completed early in 1999.
Background: In the Conference Report accompanying the Energy and
Water Development Appropriations Act for Fiscal Year 1998, Congress
directed the Northwest Power Planning Council to review "the major
fish mitigation capital construction activities proposed for
implementation at the federal dams in the Columbia River Basin." By
definition, then, this is a review of the U.S. Army Corps of Engineers'
Columbia River Fish Mitigation Program. Through this program, the Corps
improves fish passage at its Columbia and Snake River dams. Fish passage
devices include screens to keep juvenile salmon and steelhead from being
drawn into the turbines, bypass systems to carry juvenile fish around the
dams, collection devices to direct juvenile fish into barges or back into
the river on the downstream side of the dams, fish ladders to help adult
fish swim over the dams, and related equipment. The conference report
notes that the Corps' program appears to reflect multiple, sometimes
conflicting strategies. For example, why should the Corps spend tens of
millions of dollars to repair aging facilities at Ice Harbor Dam if there
is a possibility the dam will be breached, along with the other lower
Snake River federal dams, to improve migration conditions for endangered
Snake River salmon?
Congress did not ask the Council to resolve such conflicts, but to
point them out for further review. The Council also will identify policy
and technical questions that should be addressed. The Council will address
policy questions, and scientific or technical questions will be submitted
to the Independent Scientific Advisory Board, an 11-member panel of
independent scientists who advise both the Council and the National Marine
Fisheries Service.
The Council's review will focus primarily on fish passage improvements
proposed for implementation, rather than on those already under way or in
the research phase. However, the Council also will review three
particularly controversial projects that already are moving ahead. These
are:
- Relocating the bypass outlet pipe at Bonneville Dam.
- Installing extended-length screens in front of the turbine entrances
at John Day Dam.
- Further development and testing of the surface spill bypass system
at Lower Granite Dam.
3. Audit of Bonneville's Fish and Wildlife
Contracting Procedures
The Issue: A 1996 amendment to the Northwest Power Act requires
improved cost-effectiveness and accountability for fish and wildlife
spending in the Columbia River Basin. In response, the Council retained
Moss Adams LLP, an independent accounting firm, to conduct a management
review of contracting processes for implementing the Council's Columbia
River Basin Fish and Wildlife Program. In February 1998, after seven
months of work, Moss Adams reported that the contracting process needs
more competition, streamlined project procurement and improved
accountability.
Timeline: The Council, Bonneville and the region's Indian tribes
and fish and wildlife agencies will meet with Moss Adams to discuss how to
implement the recommendations.
Background: The audit came on the heels of a Council-sponsored
review of Bonneville's other costs. That review recommended $147 million
in annual savings at the agency.
Most of the findings and recommendations of the management review
address Bonneville's fish and wildlife project procurement and contract
administration. Specifically, the review made recommendations in four
areas: contract procurement, contract administration, program planning
and, monitoring and evaluation. Highlights of the recommendations include:
? Increase competition in solicitation and negotiation of contracts
and make the procurement process more efficient through more comprehensive
program planning.
? Require additional reporting and documentation to ensure accountability
for contract modifications, budgets and schedules, project status and
project monitoring.
? Planning documents should be more specific about project scoping, cost
definition and prioritization. Providing more specificity during planning
would allow project solicitations to be more focused.
? Ensure that monitoring and evaluation play a larger role in annual
planning so procurement can be guided by project results. Give one entity
responsibility for monitoring and evaluation.
4. Fiscal Year 1999 Fish and Wildlife Project
Selection
The Issue: Determining how to spend $127 million of Bonneville
ratepayer money on fish and wildlife restoration to implement the
Council's Columbia River Basin Fish and Wildlife Program in Fiscal Year
1999.
Background: Each September, the Northwest Power Planning Council
recommends projects to Bonneville for funding in the coming fiscal year.
The project selection process takes most of the year and includes project
review and prioritization by the Columbia Basin Fish and Wildlife
Authority, an association of the region's state, tribal and federal fish
and wildlife agencies; review of the prioritized projects by independent
panels of scientists and economists; and review by the public and the
Council.
Timeline: Schedule for Fiscal Year 1999 Project Selection
Process:
January 23, 1998: Project proposals due to Bonneville; projects
compiled for regional review and distributed.
April 22: Columbia Basin Fish and Wildlife Authority reviews
ongoing and proposed projects and drafts a work plan for independent
scientific review.
June 15 (or sooner): Independent Scientific Review Panel begins
review of individual projects and reports on the Basin Authority's draft
work plan for Fiscal Year 1999 by June 30.
June 16 - September 1: Public review and comment
September 15: Council recommends projects to Bonneville for
funding in Fiscal Year 1999.
October 1: Fiscal year begins. 5. A New Scientific Foundation
for the Fish and Wildlife Program
The Issue: Fish and wildlife recovery efforts in the Columbia
River Basin lack an underlying, unifying scientific foundation. The
Council is taking steps to develop one.
Timeline:
February 24-25, 1998: Meeting in Boise, the Council reviewed
draft scientific principles developed by the Council's staff. The
principles will be reviewed by a five-person technical group representing
state, tribal and federal fish and wildlife managers, and by the
Independent Scientific Advisory Board, an 11-member panel that advises
both the Council and the National Marine Fisheries Service.
March 17-18, 1998: Meeting in Spokane, the Council reviewed the
final draft of the scientific principles.
April 7-8, 1998: Meeting in Portland, the Council approved the
final draft of the scientific principles, but the document was not
released for public comment pending consultation with Columbia Basin
Indian tribes.
Background: The Council is developing steps to change the nature
of its Columbia River Basin Fish and Wildlife Program from a set of
individual measures to an overarching framework to guide annual
implementation decisions. The framework ultimately will be a set of goals,
objectives and strategies to guide fish and wildlife recovery in the
Columbia River Basin. It is called a framework because its goals,
objectives and strategies are interconnected: goals lead to objectives,
objectives lead to strategies, and strategies are implemented in the
annual fish and wildlife project selection process.
Before the Council can set goals, objectives and strategies through
amendments to the fish and wildlife program, it first must develop a set
of draft scientific principles that explain our understanding of the
interactions among fish and wildlife and the world they inhabit.
Scientific principles, described as physical and biological laws and
assumptions, will help the Council use the program amendment process to
determine which goals are reasonable and which strategies are most likely
to achieve them. By stating the scientific principles explicitly, the
Council will help the region refine them through program amendments and,
over time, through experience.
Because the principles will help shape all the other elements of the
framework that will be developed in program amendments - the goals,
objectives and strategies - the Council is focusing on the scientific
principles first.
Examples of possible draft principles are:
- Ecosystem conditions are controlled by physical and biological
factors, some of which are influenced by human activities;
- Watersheds are the basic ecological units;
- Genetic diversity contributes to persistence and productivity of
species.
Power Issues
1. Northwest Energy Review Transition Board
The issue: In 1996, a 20-member committee appointed by the
governors of Idaho, Montana, Oregon and Washington reviewed the Pacific
Northwest electricity system and made a number of recommendations for how
the region could take advantage of increasing electricity industry
competition as the result of deregulation and also preserve the benefits
of the region's mostly federal hydropower system. Following the conclusion
of the Comprehensive Review of the Northwest Energy System, the governors
appointed the four-member Northwest Energy Review Transition Board to
carry forward the recommendations of the review in the form of draft
legislation - a "Northwest Chapter" for federal energy
deregulation legislation.
Timeline: The Transition Board appointed subcommittees to work
on certain recommendations of the Comprehensive Review, including
separating Bonneville's transmission from its generation, and federal
hydropower subscription for the next rate case period (2002-2006). The
Transition Board intends to complete work on the Northwest Chapter and
submit it to the governors by July 1, 1998.
Background: Among the Comprehensive Review Steering Committee's
recommendations:
? Bonneville would sell power by subscription. Subscribers would contract
to purchase power from the system, at cost, for the periods of their
subscriptions. They would be able to buy power at cost, regardless of
whether that cost is above or below market prices.
? All electricity customers should be able to choose an electricity
supplier by July 1, 1999.
? An independent electricity transmission system operator should be
established to ensure reliable service and equitable access to
transmission.
? Utilities voluntarily should support local conservation, renewable
energy and low-income energy assistance programs, and state legislatures
should mandate support if the voluntary effort fails. Regionwide, this
funding should be approximately $210 million per year. Utility access to
the energy marketplace should be linked to funding for these public
purposes.
? Local utilities should retain control over local energy decisions.
? The region should continue to honor its obligation to restore salmon
and steelhead runs that have been affected by the hydropower dams.
2. Bonneville Cost Review: Cut Annual Spending By
$147 Million
The Issue: Deregulation of the nation's electricity industry is
driving down the cost of power. In order to attract customers after 2001,
when 90 percent of its power sales contracts expire, the Bonneville Power
Administration needs to cut its costs in order to reduce the price of its
power. At the request of Congress, the Council and Bonneville convened a
committee that included five experts in corporate management to review
Bonneville's costs and recommend ways to reduce them. The committee
recommended cuts that should yield approximately $147 million in annual
savings during the next five-year Bonneville rate period, beginning in
2001.
Timeline: The committee submitted its final recommendations to
Bonneville and members of the Northwest congressional delegation on March
9, 1998. Implementation of the recommendations will be Bonneville's
responsibility.
Background: The Bonneville cost review grew out of the 1996
Comprehensive Review of the Northwest Energy System, a year-long effort
initiated by the governors of Idaho, Montana, Oregon and Washington. In
that review, a 20-member committee recommended ways the Northwest could
take advantage of increasing electricity industry competition and also
retain the benefits of the federal Columbia River power system. One key
recommendation was to market Bonneville's power long-term to regional
customers.
Following the Comprehensive Review, the governors asked the Power
Planning Council to work with Bonneville to appoint a cost-review
committee. The work began last June. The committee included four Council
members, two representatives from Bonneville and five experts in corporate
management and finance.
The committee's recommendations include:
Washington Nuclear Plant 2: Cut the cost of the plant's power from
about 2.4 cents kilowatt hour to 1.9 cents by the year 2000 (estimated
annual savings: $19 million), and shut it down if it can't compete.
Energy conservation and renewable energy: Reduce conservation
funding and staff, and make no long-term commitments to renewable energy
projects beyond those currently planned. Estimated annual savings: $3.3
million.
Power system cost management: Initiate a cost management strategy
involving Bonneville, the Corps of Engineers and Bureau of Reclamation,
which operate the federal dams. Estimated savings: $48 million (Corps, $40
million, Bureau, $8 million).
Shrink the marketing department: 1) Reduce Bonneville staff and
expenses associated with power marketing and related activities. Estimated
annual savings: $14.7 million.
Cut overhead costs: 1) Reduce corporate overhead costs by 50
percent in areas including business services, planning, public affairs and
legal services (estimated annual savings: $32 million); 2) Pursue law
changes to improve administrative effectiveness and efficiency (estimated
annual savings: $10 million). Northwest Power Planning Council: Reduce
staff to reflect a changed power planning role, change law to require one
Council member from each state instead of two. Estimated annual savings:
$1.7 million.
Transmission: 1) Change certain cost allocations between the
transmission and power marketing business lines. Estimated annual savings:
$30 million to the Power Business Line. 2) Reduce internal overhead costs.
Estimated annual savings: $2.5 million.
Fixed costs: Further reduce nonfederal debt service through such
actions as bond refinancing. Estimated savings: $20 million.
3. Assessing Bonneville's Possible Stranded Costs
The issue: At the request of the Council's four-member Power
Committee, the staff conducted a reconnaissance-level analysis of
Bonneville's potential stranded costs, which could result if electricity
market prices are lower than the price of Bonneville's power. It is
important to estimate future market prices with confidence, as this will
help the region resolve the contentious issue of developing a
stranded-cost mechanism for Bonneville. The initial results indicate that
while breaching the four lower Snake River dams and John Day Dam on the
Columbia would have a significant impact on power capability in the
Northwest, there would be no significant impact on West Coast market
prices for electricity. It is important to emphasize that this was only a
preliminary analysis and that further work is necessary before any
conclusions can be drawn.
Timeline: The staff hopes to conclude its analysis and report to
the Council by mid-April 1998.
Background: The Council staff's analysis to date indicates that
Bonneville's potential transition costs are very dependent on market
prices. The Council's previous analyses were based on 1996 analysis done
for Bonneville by the consulting firm of Putnam, Hayes and Bartlett and
more-or-less ad hoc variations on that forecast. Market forecasts need to
be updated to reflect the latest information regarding load forecasts, gas
price forecasts, generation technologies, the possible effects of the
California restructuring and so on.
To accomplish this, the Council leased a computer program known as
Aurora, a market-fundamentals model. Aurora simulates the operation and
expansion of generating resources in the power system represented by the
Western Systems Coordinating Council (WSCC). The model incorporates the
logic and data for economic expansion and retirement of generating
capacity, as well as for retirement or reduction in capability of
generating units - as in the breaching of four lower Snake River dams or
the retirement of California nuclear plants. The model can estimate market
prices in various scenarios.
Because river conditions vary, affecting hydropower generation and
therefore Bonneville's revenues, this uncertainty needs to be reflected in
the model. It is possible for Bonneville to have no stranded costs under
average water conditions while experiencing an unacceptably large number
of periods in which it cannot recover its costs as a result of water
conditions. The model also needs to incorporate the best possible estimate
of river operations changes that might be implemented, and also their
costs and time schedules for implementation. Power system costs and
impacts from these river operations also need to be estimated and
reflected in the model.
Reflecting these and other components, the analysis produced by Aurora
should be useful in decision-making about the future of the region's power
system.
HISTORY OF THE REGIONAL POWER
SYSTEM
The development of the Columbia River system in the Pacific Northwest
began in the 1930s under a program of regional cooperation to meet the
needs of electric power production, land reclamation, flood control,
navigation, recreation and other river uses.
From the beginning, the federal government has played a major role in
the development of one of the largest multiple-use river systems in the
world. Thirty multi-purpose dams on the Columbia River and its tributaries
were built by the U.S. Army Corps of Engineers and the Bureau of
Reclamation. Investor-owned and publicly owned utilities also built a
major system of dams and generating facilities. Congress directed the
Bonneville Power Administration, in the Bonneville Project Act of 1937, to
build and operate transmission lines to deliver the power from dams, and
to market electricity from federal generating projects on the river at
rates set only high enough to repay the federal investment over a
reasonable period of time.
Canadian Treaty
As demand for power grew, the United States and Canadian governments
recognized a need for development of water storage sites in the upper
reaches of the Columbia River Basin. The governments of both nations
negotiated a treaty in the early 1960s for the cooperative use of dams
that would be built by both countries. Four treaty dams were built. Three
are on the Columbia River in Canada - Hugh Keenleyside, Duncan and Mica -
and the fourth, Libby, is on a major Columbia tributary, the Kootenai
River, in Montana. The Canadian dams were completed by 1973, and Libby was
completed in 1975. These dams provide flood control and additional power
generation at dams downstream in the United States. The power-generating
capability of downstream dams increased by the following percentages as a
result of the treaty storage: Grand Coulee, 13 percent; Chief Joseph, 14
percent; the five mid-Columbia public utility district dams, 18 percent;
and dams farther downstream on the Columbia, 11 percent collectively. In
return, Canada received a cash settlement for its share of the additional
power generation. The value of this power, known as the downstream
benefit, recently was renegotiated by the two countries.
Intertie
Also in the 1960s, Congress authorized the construction of three major
power lines linking the Columbia River hydro projects with power markets
in California and the rest of the Pacific Southwest. The interties benefit
the Pacific Northwest in several ways. They allow the sale of hydropower
from the Columbia when it is not needed here and would otherwise be lost
in the form of water spilled over dams without generating electricity, and
they permit this region to buy power from California when power is needed
here during shortages and periods of heavy use. In the first instance,
sales of surplus Northwest hydropower to California has saved the
equivalent of some 200 million barrels of oil. In the second case,
California utilities sold power to Pacific Northwest utilities in the
drought years of 1973, 1977, 1979, 1992, 1993 and 1994.
To protect Northwest access to power, Congress passed regional
preference provisions in 1964. Bonneville must offer any surplus power to
utilities in the Northwest before selling it to California. Sales to
California can be called back if the power is needed in the Northwest.
Sales of firm energy can be recalled with 60 days notice, sales of peaking
capacity can be recalled in five years.
Net Billing Agreements
With the dams developed in Canada as well as the United States, the
river system provided virtually all the electricity needed by the region
until the early 1970s. But by that time, all dam sites on the mainstem of
the Columbia that were economically feasible and environmentally
acceptable were either developed or under development, and the region was
looking for other ways to meet electric load growth. Bonneville and the
region's utilities were predicting shortages of electricity unless thermal
generating plants were brought on line in response to increasing demand.
The region's publicly owned utilities and investor-owned utilities
turned mainly to coal-fired and nuclear plants to meet growth throughout
the Pacific Northwest. Utilities believed the development of such plants
was the most economic and environmentally acceptable option available at
the time. Bonneville helped the utilities respond to these needs by
participating in a Hydro-Thermal Power Plan for the continued development
of electricity resources in the Pacific Northwest.
Under the plan, Bonneville agreed to acquire electricity by entering
into "net billing" agreements with its publicly owned utility
customers. These agreements made it possible for the publicly owned
utilities, which owned shares of power plants, to sell to Bonneville all
or part of the generating capacity of thermal projects. Bonneville
credited, and continues to credit, the wholesale power bills of these
utilities in amounts sufficient to cover the costs of their shares in
these plants. Bonneville then sells the output of these plants, melding
the higher costs of this thermal power with the lower costs of hydropower,
for the benefit of all customers. The plants were cooperative efforts of
both publicly owned and investor-owned utilities, but Bonneville purchased
only the shares of generating capacity owned by publicly owned utilities.
Hydro-Thermal Power Program
Under the Hydro-Thermal Power Program (Phase I), Pacific Power &
Light Company and other investor-owned utilities built the Centralia
coal-fired plant with the co-ownership of several publicly owned
utilities. Portland General Electric Company built the Trojan nuclear
power plant, with 30 percent co-ownership by Eugene Water and Electric
Board (EWEB) covered by a net-billing agreement. And the Washington Public
Power Supply System (WPPSS), under net-billing agreements, completed one
nuclear plant (WNP 2) and partially constructed two other nuclear plants (WNP
1 and 3) in Washington state. The Hanford N-reactor turbine generator,
built by WPPSS, also came on line just prior to the formal initiation of
the Hydro-Thermal Power Program, and before its closure in 1987 was
considered a part of the overall effort. Bonneville became the agent for
integrating these resources so the consumers of the region could benefit
from the greatest efficiency and lowest costs from operation of the
regional electric system. The thermal power plants, which run
continuously, would meet the base, or constant, power needs. The
hydroelectric dams would be operated to follow the fluctuation of energy
needs throughout the day.
In spite of the efforts of utilities and Bonneville to continue
developing the region's generating resources in a systematic way, the
region continued to lose ground to rapidly growing demands for
electricity. The Hydro-Thermal Program failed to meet the region's
expectations for two basic reasons. A revision of regulations by the
Internal Revenue Service denied tax exempt status to bonds sold by
publicly owned utilities to finance their plants if power from the
facilities was sold to Bonneville, a Federal body. And, Bonneville's
financial ability to participate in net-billing agreements reached its
limits far sooner than expected because of the climbing costs of new
thermal plants.
In 1973, Bonneville and the region's utilities initiated a
Hydro-Thermal Program, Phase II, in which the utilities would finance
their own plants without net-billing participation by Bonneville. Thus,
WPPSS nuclear units 4 and 5, now terminated, were not covered by
net-billing contracts. Nonetheless, Bonneville expected to provide
electric load management and power integration services and to supply
peaking power and reserves from federal facilities in order to bring about
the most efficient mix of resources possible. Bonneville's participation
in this program was enjoined by a federal court, which required that
Bonneville complete an environmental impact statement on its role in the
region.
The environmental impact statement found that fluctuation in the use of
hydroelectric dams would have to be limited to protect shore structures
along the river. In addition, delays in the construction of new plants,
costs higher than originally expected, and the realization that the
Hydro-Thermal Program would not be adequate to meet needs made it evident
that Bonneville would not be able to sell firm power to investor-owned
utilities and still provide first priority to serving "preference
customers" as directed by federal law.
Preference
The Bonneville Project Act of 1937 directed that the co-ops and
publicly owned utilities of the region be given first call on available
federal resources. They consequently came to be called "preference
customers." Until the 1970s, their legal preference had never been
exercised because there had been enough electricity for everyone. In 1973,
when Bonneville's firm-power contracts with investor-owned utilities
expired, Bonneville could not offer new ones if preference customers were
to continue to have first call on federal resources. So the firm power
contracts with the investor-owned utilities were not renewed.
However, Bonneville continues to sell some peaking power to the
investor-owned utilities - power they need to get through periods of heavy
use in the winter heating season. Bonneville also sold
"non-firm" power to the investor-owned utilities and utilities
outside the region when electricity surplus to the needs of the preference
customers is available.
In 1976, Bonneville's power demand and supply projections showed that
federal power supplies were running short for preference customers, and
that Bonneville would no longer be able to guarantee preference customers
that their load growth could be met beyond 1983. Bonneville issued a
notice of insufficiency to the utilities in June of 1976.
Rate Disparities
With the investor-owned utilities relying on their own hydro and
thermal resources to meet the demand of their customers, and with the
prices of federal hydropower much lower than that of new thermal
generation, a divisive struggle for access to limited federal resources
grew. Sixty percent of the residential and farm customers of the region
are served by investor-owned utilities. These customers were paying, on
average, twice as much for electricity as customers of publicly owned
utilities receiving wholesale power from Bonneville. The City of Portland
sued Bonneville, claiming a right to a share of hydropower resources for
its citizens. The State of Oregon passed a law authorizing formation of a
statewide public utility - the Domestic and Rural Power Authority - to
seek service as a preference customer from Bonneville so that all
residential customers of private utilities could receive the rate benefits
of Federal resources. Elected officials of other states talked of forming
their own statewide public utilities.
Stimulated by rate disparities, the public power movement also
experienced a renaissance. A strong public power move to buy out
investor-owned utility service areas by means of elections in accordance
with State law was revived in Oregon. All votes to form new PUDs failed in
the November 1980 elections, but one long inactive PUD, the Columbia
Peoples Utility District west of Portland won voter approval for issuing
bonds to buy out utility properties in Columbia County.
Meanwhile, planning for more resources to meet demand was hamstrung by
uncertainty over the allocation of low-cost federal power among competing
claimants, existing and new. For example, Bonneville's contracts with its
direct service industries, which are large industrial firms that purchase
power directly from Bonneville, were to expire in the 1980s. The power
sold to these industries would have to be sold to public utilities under
the preference clause. If they were to survive in the Northwest, these
industries needed an assured source of electricity.
Declining salmon runs
Finally, by the late 1970s it became clear that our regional
prosperity, which resulted in large measure from inexpensive hydropower
from the federal dams, had extracted a price on fish and wildlife in the
Columbia River Basin. Just a century earlier, for example, between 10
million and 16 million salmon returned to the Columbia each year. But by
the late 1970s, there were only about 2.5 million salmon, and most of
those returned to hatcheries. Environmental groups and other advocates for
fish and wildlife considered filing petitions to protect dwindling fish
populations under the federal Endangered Species Act.
These pressures on our regional electric power supply, which once
seemed inexhaustible, caused Pacific Northwest residents to question the
institutions governing the development, sale, and distribution of
generating resources. Should new preference agencies be formed to replace
private companies in given areas? How would the supply needs of new
preference customers be met? Should private utilities undertake new
generating projects in a hostile atmosphere of rapidly rising rates and
the threatened shift to public power? How would large industrial customers
in the region be served? How should the public, and their elected
representatives, participate in decisions that were critical to the
region's economy and environment? Who ultimately would be responsible for
planning and acquiring new resources to avoid impending electricity
shortages? How would our region protect the fish and wildlife that had
been damaged over the years by the construction and operation of
hydropower dams?
The region continued to work for a cooperative solution that preserved
local options while obtaining regional efficiencies of an integrated
electric system. Several alternatives were explored, but no agreement was
reached. To avoid a court battle over allocation issues, the region turned
to Congress for a solution.
Toward a Congressional Solution
Revisions to the Bonneville Project Act were considered as early as
1975. The legislation was prompted by Bonneville's Notice of Insufficiency
in June 1976, coupled with the threat posed by Oregon's Domestic and Rural
Power Authority. However, it was not until 1977 that Bonneville and its
customers, through the Pacific Northwest Utilities Conference Committee (PNUCC),
drafted legislation to solve the region's energy problems. Senator Jackson
introduced the PNUCC bill in September of 1977, but neither that bill, nor
a less complex successor drafted a year later, managed to progress very
far by the time the 95th Congress adjourned in late 1978.
When the 96th Congress convened in 1979, a coalition of Bonneville
customers was solidly behind a legislative solution to the Northwest's
power crisis. Neither Bonneville nor its customers wanted an
administrative allocation of limited power supplies, although Bonneville
did propose an allocation scheme in October of 1979. Bonneville and its
customers, however, maintained that such an allocation would be subjected
to protracted litigation. They alleged that Congress could avoid the
uncertainties accompanying administrative allocation by devising a
legislative allocation scheme and equipping Bonneville with the authority
to purchase power from non-federal sources on a long term basis. Supplying
Bonneville with purchase authority was, they claimed, the key to
implementing any legislative allocation scheme. Congress apparently
agreed. The Senate passed the regional legislation on August 3, 1979; the
House passed an amended bill on November 17, 1980, which the Senate agreed
to two days later. On December 5, 1980, President Carter signed the
Pacific Northwest Electric Power Planning and Conservation Act into law as
Public Law 96-501.
Northwest Power Act - Major Provisions
After four years of deliberation, Congress devised methods for
protecting the preference that existing federal law gives publicly owned
utilities, while at the same time providing the benefits of federal
hydropower to residential and small farm customers of private utilities.
It should be noted that the Act passed largely because it seemed to
benefit all the interest groups that lobbied for it.
Here are some highlights of the Act: First, rate disparities between
consumers served by private utilities and those served by public utilities
were minimized by providing investor-owned utilities access to
Bonneville's lower-cost power. Second, the costs of this increased access
were paid for by increased rates charged to industrial customers. Third,
in return for paying increased rates, existing industrial customers were
promised new long term contracts. Fourth, preference customers were
guaranteed that their rates would not increase more than they would have
without the Act.
Fifth, Bonneville was given purchase authority to expand the system in
order to meet the requirements of its customers, but only pursuant to a
number of provisions designed to guard against any abuse of that
authority. In particular, in response to state claims of a lack of
involvement in major regional energy issues, the Act created a unique
interstate planning entity, the Pacific Northwest Electric Power and
Conservation Planning Council, to govern Bonneville's acquisition of major
resources and promote conservation and renewable resources programs
through a regional energy plan. This was the key provision from the
perspective of the Northwest states - Bonneville got new authority to
acquire resources in return for a Council appointed by the governors. This
Council would develop a regional plan and oversee its implementation.
Sixth, in an effort to minimize rate increases, the Act requires that
all acquisitions be "cost-effective," including consideration of
environmental costs, and establishes a resource priority scheme favoring
conservation and renewable resources over thermal plants. Seventh,
Columbia Basin fish and wildlife damaged by the hydroelectric system are
to be preserved and restored through a basin-wide program promulgated by
the Council.
Finally, the Act guarantees public involvement in all significant
resource decisions.
The Act directs that Bonneville should continue its traditional role of
transmitting and marketing power, but also carry out additional
responsibilities. Under the Act, Bonneville must acquire all necessary
energy resources to serve utilities who choose to apply to Bonneville for
wholesale power supplies. The Act contains checks and balances to insure
that all customers of Bonneville are treated equitably.
Bonneville remains accountable to the people of the Pacific Northwest
for the actions it takes to meet the needs of residents and industry. By
creating a regional planning council consisting of two members from each
of the four Northwest states to develop a regional plan, Congress provided
a regional decision-making system. It emphasizes local control of resource
development and power planning.
Here are the major provisions of the Pacific Northwest Electric Power
Planning and Conservation Act:
- The Northwest Power Planning Council was formed with representation
from each of the states. The Act directed the Council to draw up a
plan for meeting the electrical needs of the region at the lowest
possible cost. The plan must give highest priority to cost-effective
conservation, treating it as a resource preferable to all other means
of responding to demand for electricity. Renewable sources of energy
must be given next highest priority in the region's power planning, to
the extent that they are cost-effective ranking ahead of conventional
thermal generating resources. Among thermal options, fuel-efficient
methods of producing energy, such as cogeneration, must be given
priority.
- Bonneville became responsible for meeting loads of customers and
managing the regional electrical system to achieve the purposes of the
Act relating to fish, system efficiency, and experimental projects.
The plan adopted by the Council, which is amended periodically, is the
basis for Bonneville's actions in meeting loads of its customers.
Congress exercises budget review of all proposed Bonneville
expenditures. If Bonneville decides to acquire resources not
consistent with the Council's plan, specific Congressional approval is
required prior to any commitment by Bonneville. Bonneville must give
priority to cost-effective conservation and renewable resources in
meeting the region's needs. Bonneville may also purchase the
generating capabilities of new thermal projects, but only after
determination that they are required in addition to all cost-effective
conservation and renewables that can be achieved or developed in time.
Such projects must also be found reliable and compatible with the
regional electric system. Bonneville must spread the benefits and the
costs of resources among all of its customers through its rates.
- The supply preference and resulting price advantage to co-ops and
publicly owned utilities by Federal law was protected and enhanced.
Bonneville was given the responsibility of meeting the full future
requirements of preference customers - something Bonneville was not
previously authorized to do.
- Residential and farm customers of investor-owned utilities received
rate relief. The utilities sell to Bonneville, at the average cost of
their power, an amount of electric energy equal to their residential
and farm loads. Bonneville sells to them, in return, enough energy at
Bonneville standard rates to cover these residential and farm loads.
The rate advantages cannot enhance company profits, but must be passed
on directly to the customers.
- Direct service industries received new 20-year contracts for power
from Bonneville, but at a higher price than they paid under previous
contracts. In effect, they pay the cost of rate relief to residential
and small farm customers of investor-owned utilities during the first
four years, and a substantial portion thereafter, which they agreed to
do in exchange for assurances of long-term supplies.
- Bonneville sells electricity at a rate that reflects the melded cost
of Federal hydropower and more expensive thermal resources,
conservation, and renewable sources of energy. The Act contains
incentives, as well, to encourage conservation and renewables.
Bonneville may credit utilities for their individual actions to
implement conservation and renewables.
- The Council established a program to protect and enhance the
fisheries resources of the Columbia River and to mitigate damage
already done to anadromous fish. Funding for the program is to come
from Bonneville rate revenue.
- All planning for electric resources and fish protection must involve
the public. State and local control of land use and water rights is
protected under the Act and the decision to allow construction of new
resources is left with utilities and state siting authorities.
- The Council must provide a method for balancing environmental
protection and the energy needs of the region. For each new energy
resource, the provisions of the National Environmental Policy Act must
be complied with.
- The Council is required to seek the recommendations of the region's
tribal, state and federal fish and wildlife agencies. In addition, the
Council's measures must be consistent with the legal rights of the
region's tribes.
Challenges for the Future
The electricity industry in the United States is in the midst of
significant restructuring. This restructuring is the product of many
factors, including national policy to promote a competitive electricity
generation market and state initiatives in California, New York, New
England, Wisconsin and elsewhere to open retail electricity markets to
competition. This transformation is moving the industry away from the
regulated monopoly structure of the past 75 years. Today we are served by
individual utilities, many of which control everything from the power
plant to the delivery of power to our homes or businesses. In the future,
we may have a choice among power suppliers that deliver their product over
transmission and distribution systems that are operated independently as
common carriers.
There is much to be gained in this transition. Electricity consumers
are already benefiting from competition in a number of significant ways.
Competition in the natural gas industry has helped lower the cost of
electricity produced by gas-fired generating plants. Competition among
manufacturers and developers of combustion turbines has contributed to the
availability of less expensive, more efficient power plants that can be
built relatively quickly. Surplus generating capacity on the West Coast,
combined with increasing competition among wholesale suppliers, has
reduced the price utilities must pay for power on the open market. Broad
competition in the electricity industry that extends to all consumers
could result in lower prices and more choices about the sources, variety
and quality of their electrical service.
But, there are risks inherent in the transition to more competitive
electricity services. Merely declaring that a market should become
competitive will not necessarily achieve the full benefits of competition
or ensure that they will be broadly shared. It is entirely possible to
have deregulation without true competition. Similarly, the reliability of
our power supply could be compromised if care is not taken to ensure that
competitive pressures do not override the incentives for reliable
operation. How competition is structured is important.
It is also important to recognize the limitations of competition.
Competitive markets respond to consumer demands, but they do not
necessarily accomplish other important public policy objectives. The
Northwest has a long tradition of energy policies that support
environmental protection, energy-efficiency, renewable resources,
affordable services to rural and low-income consumers, and fish and
wildlife restoration. These public policy objectives remain important and
relevant. Given the enormous economic and environmental implications of
energy, these public policy objectives need to be incorporated in the
rules and structures of a competitive energy market.
In some respects, the transition to a competitive electricity industry
is more complicated in the Northwest because of the presence of the
federal Bonneville Power Administration. Bonneville is a major factor in
the region's power industry, supplying, on average, 40 percent of the
power sold in the region and controlling more than half the region's
high-voltage transmission. Bonneville benefits from the fact that it
markets most of the region's low-cost hydroelectric power. It is hampered
by the fact that it has high fixed costs, including the cost of past
investments in nuclear power and the majority of the costs for salmon
recovery. As a wholesale power supplier, Bonneville is already fully
exposed to competition and is struggling to reduce its costs so that it
can compete in the market. The transition to a competitive electricity
industry raises many issues for the Bonneville Power Administration and
the region. In the near term, how can Bonneville continue to meet its
financial and environmental obligations in the face of intense competitive
pressure? In the longer term, when market prices rise and some of
Bonneville's debt obligations have been retired, how can the Northwest
retain the economic benefits of its low-cost hydroelectric power when the
rest of the country is paying market prices? And finally, what is the
appropriate role of a federal agency in a competitive market? The question
is not only whether Bonneville can compete in the near term, but also,
should it be a competitor?
The federal power system in the Pacific Northwest has conferred
significant benefits on the region for more than 50 years. The
availability of inexpensive electricity at cost has supported strong
economic growth and helped provide for other uses of the Columbia River,
such as irrigation, flood control and navigation. The renewable and
non-polluting hydropower system has helped maintain a high quality
environment in the region.
But while the power system has produced significant benefits, these
benefits came at a substantial cost to the fish and wildlife resources of
the Columbia River Basin. Salmon and steelhead populations have been
reduced to historic lows, and many runs are or are about to be listed
under the federal Endangered Species Act. Resident fish and wildlife
populations have also been affected. Native Americans and
fishery-dependent communities, businesses and recreationists have suffered
substantial losses due in significant part to construction and operation
of the power system. The region's ability to sustain its core industries,
support conservation and renewable resources, and restore salmon runs is
clearly threatened if we cannot reach a consensus regional position to
bring to the national electricity restructuring debate. Without a
sustainable and financially healthy power system, funding for fish and
wildlife restoration could be jeopardized.
In 1996, the governors of Idaho, Montana, Oregon and Washington
initiated a comprehensive review of the region's energy system. This
review is discussed in more detail later in this briefing book.
THE COLUMBIA RIVER BASIN FISH
AND WILDLIFE PROGRAM
The Northwest Power Act requires the Council to review its power plan
and the Columbia River Basin Fish and Wildlife Program at least every five
years. The last review led to a revision of the fish and wildlife program,
which the Council approved in December 1994.
The 1994 program revisions incorporated more rigorous protections for
salmon and steelhead, particularly those Snake River salmon runs that have
been listed under the federal Endangered Species Act (Snake River
spring/summer chinook, fall chinook and sockeye). The 1994 salmon and
steelhead amendments responded to a commitment the Council made in the
previous revision of the salmon and steelhead chapters of the program, the
1992 Strategy for Salmon. The Strategy included a number of immediate
measures to boost salmon survival, but the Council recognized that those
measures alone would not be enough to rebuild the runs. So the Council
called for investigation of additional, longer-term measures and further
consideration in 1994. Some of those longer-term measures were included in
the December 1994 amendments.
By approving the amendments, the Council also responded to a ruling by
the Ninth Circuit Court of Appeals. In September 1994, the Court remanded
the Strategy to the Council in response to lawsuits that challenged
various measures in the program. The Court held that the Council needed to
do a better job explaining how its program protected fish and, in doing
so, should give greater deference to the region's fish agencies and Indian
tribes in designing the program. Many of the amendments approved in
December were based on recommendations of the agencies and tribes.
Important goals in the Strategy were preserved in the 1994 amendments.
For example, the goal of doubling adult salmon populations in the Columbia
Basin remains, as does protection for existing biodiversity, including
both anadromous and non-anadromous fish populations. The amendments also
reaffirmed the Strategy's ambitious rebuilding targets for the listed
Snake River salmon species. These targets are: 1) 50,000 spring chinook;
2) 20,000 summer chinook; and 3) 1,000 fall chinook crossing Lower Granite
Dam in southeastern Washington. In each run, the target is for adult
naturally spawning salmon.
Here are four key directives in the Council's fish and wildlife program
regarding anadromous fish:
Improve migration survival
To reach these targets, the program calls for actions at every stage in
the salmon's life cycle. Because salmon are killed in large numbers as
they attempt to migrate through reservoirs and past hydropower dams, the
strategy calls for higher flows and increased river speed, systems to keep
salmon smolts from going through turbines, new ways to operate the dams so
they kill fewer salmon, controls on predators that eat salmon, and
improved barge transportation of salmon to carry them past the dams. The
Council's program embraces a philosophy known as
"spread-the-risk," which means leaving juvenile salmon and
steelhead in the rivers to migrate naturally when river conditions are
good (high flows, cool water), and transporting the juvenile fish in
barges and trucks when river conditions are poor (low flows, warm water).
Reduce harvest
Because so many Columbia River Basin chinook, particularly those from
the Snake River Basin, are caught in both the ocean and in the lower
Columbia river, the program calls for more effective control of those
harvests.
Protect and improve habitat
Because more than a third of all the salmon habitat in the region has
been blocked by dams and more has been degraded by numerous human
activities, the program emphasizes habitat repairs that will increase the
productivity of anadromous fish in the wild.
Improve hatcheries
Because fish hatcheries can play an important supporting role in
rebuilding salmon runs, the program calls for improvements and consistency
in hatchery management practices. Here are some key measures the Council
amended into the program in 1994:
- Continue hatchery reforms and improvements.
- As part of updating the subbasin plans, agencies and tribes will
propose supplementation projects to help rebuild naturally spawning
salmon populations.
- Initiate emergency supplementation of Snake River fall chinook;
prepare for emergency supplementation of spring and summer chinook.
- Evaluate tributary, mainstem (including reservoirs), estuary, plume,
near-shore ocean and marine salmon survival, ecology, carrying
capacity and limiting factors.
- The Bonneville Power Administration should fund the design of an
impact assessment to examine the effects of Columbia River Basin
hatcheries (individually and collectively) on wild and naturally
spawning fish.
- Fishery managers should consult with appropriate genetics
specialists and develop basinwide guidelines to minimize genetic and
ecological impacts of hatchery fish on wild and naturally spawning
stocks.
FISH AND WILDLIFE PROGRAM COSTS AND RESULTS
Introduction
Rebuilding fish and wildlife populations won't be easy, quick or
inexpensive. Fish and wildlife activities funded by Pacific Northwest
ratepayers include Council program and non-program measures. Non-program
measures are activities funded by Bonneville that were initiated prior to
the adoption of the fish and wildlife program. These include ladders and
screens that were installed at the Corps of Engineers mainstem dams and
the 22 production facilities built under the Lower Snake River
Compensation Program. Provisions in the Northwest Power Act addressing
fish and wildlife were included in large part because Congress judged the
non-program activities to be inadequate to reverse the declines of salmon
and steelhead runs that had extended into the late 1970s.
This section of the Briefing Book explains how much money is available
for the Council's fish and wildlife program, where it comes from, and how
decisions are made to spend it.
Where the money comes from
Most of the money to pay for fish and wildlife recovery under the
Council's program comes from Bonneville Power Administration ratepayers.
Some of the money comes from the federal government in the budgets of
federal agencies, particularly the U.S. Army Corps of Engineers, and is
repaid by Bonneville.
The Council believes that because the fish and wildlife program is a
regional effort to rebuild weak salmon stocks, it is appropriate that
state and federal entities and others participate in funding. All levels
of government must bear responsibility for adequately funding and staffing
fish and wildlife rebuilding measures, or run the almost certain risk that
the recovery effort will be delayed, with potentially disastrous results.
1996 fish and wildlife budget memorandum of agreement
There are three significant categories of fish and wildlife costs that
affect the Bonneville Power Administration's rates. These are project
costs, Bonneville's repayment obligations to the U.S. Treasury for
improvements at the dams, and foregone hydropower revenues.
Project costs include Bonneville funding of hatchery construction,
habitat projects, research and other fish and wildlife initiatives in the
Council's program. Under a September 1996 memorandum of agreement between
Congress, Bonneville, the Council and Columbia River Basin Indian tribes,
the budget for these projects averages $127 million per year through 2001.
Bonneville repays the U.S. Treasury for most of the costs of passage
facilities at the Columbia and Snake river federal dams. These are the
original fish ladders, the screens and bypass systems whose installation
at the dams began in the 1980s, and the juvenile salmon transportation
facilities. The annual payment for these existing facilities is set in the
1996 memorandum of agreement at $125 million per year through 2001.
When the Council adopts measures to change river operations to provide
improved flows for salmon, Bonneville may not be able to make as much
money from power sales. In many winters, Bonneville must buy power from
other suppliers to allow the reservoirs to store water for spring and
summer salmon flow releases. Spill and lowered mainstem reservoir levels
also reduce the ability of individual dams to generate electricity. In
1984, the Council adopted its first "water budget," and in 1989,
adopted a spill agreement. The 1992 Strategy for Salmon boosted the water
budget volume and added about $45 million in average annual revenue
impacts to Bonneville. The amount of foregone revenue will vary year to
year, depending on water supplies. In years when storage and runoff are
plentiful, foregone revenue will be low. In below-average water years,
forgone revenues will be high. Based on an average of 50 water years, the
memorandum of agreement estimates that foregone revenues will average $183
million per year.
Thus, the cost of the Council's fish and wildlife program in an average
water year is $435 million - $127 million in projects, $125 million in
repayments and other fixed obligations, and $183 million in foregone
revenues.
The memorandum of agreement also dealt with the issue of whether
electricity ratepayers should bear the entire cost of fish and wildlife
recovery measures. Section 4(h)(8)(B) of the Northwest Power Act says
consumers of electricity will pay the cost of measures designed to deal
with adverse impacts caused by the development and operation of electric
power facilities. Yet construction of the dams of the Federal Columbia
River Power System was authorized by Congress for multiple purposes -
including hydropower. Accordingly, Section 4(h)(10)(C) of the Act allows
the Bonneville administrator to allocate the costs of fish and wildlife
recovery among the various purposes of the dams - irrigation, navigation,
etc., in addition to hydropower. While Bonneville has financed the entire
amount of the Council's program to date, the memorandum of agreement
recognizes Section 4(h)(10)(C) and assigns a value to the impact of these
other purposes - about $350 million. This amount is available to
Bonneville as a credit against future Treasury payments, if needed.
Annual prioritization of projects in the Council's program for
funding by Bonneville
In order to increase public scrutiny of the allocation of fish and
wildlife resources within the constrained fish and wildlife budget, in
1995 the Council initiated an ambitious process of prioritizing projects
for funding. In this process, the fish and wildlife managers recommend
funding priorities to implement the Council's fish and wildlife program.
After reviewing and prioritizing projects, the managers submit their
recommendations to the Council. The Council analyzes the recommendations,
conducts public hearings and consultations, invites written comments as
well, and then submits final recommendations to Bonneville in three broad
areas: anadromous fish, resident (non-ocean going) fish and wildlife. The
Council approves the projects, not their cost. That is a matter for
Bonneville to negotiate with contractors.
We have been working each year since 1995 to improve the process. For
example, at the Council's direction, projects considered for funding in
Fiscal Year 1997 included much more detailed information than was
available to the fish and wildlife managers in 1996. Managers now are able
to consider anticipated project costs for the coming five years, projected
results, milestones and citations of available project reports, and
peer-reviewed scientific literature pertaining to the projects. We
improved public review, as well, incorporating an analysis of public
comments received on the managers' recommendations. The managers have the
opportunity to respond to the comments and recommend revisions before the
Council makes its final recommendations to Bonneville.
The Independent Scientific Review Panel
In 1996, Congress amended the Northwest Power Act with a new section,
4(h)(10)(D), which provides for independent scientific review of the
projects in the Council's fish and wildlife program that are directly
funded by Bonneville - the annual $127 million established in the
memorandum of agreement. This amendment authorized the Council to
recommend projects to Bonneville for funding. Prior to the amendment, this
role was not explicitly sanctioned in the Act.
Section 4(h)(10)(D) directs the Council to appoint an 11-member
Independent Scientific Review Panel (ISRP) "to review projects
proposed to be funded through that portion of the Bonneville Power
Administration's annual fish and wildlife budget that implements the
Council's fish and wildlife program." The Council also is directed to
appoint Scientific Peer Review Groups "to assist the Panel in making
its recommendations to the Council." The Council is to select the
peer review groups from scientists nominated by the National Academy of
Sciences, "provided that Pacific Northwest scientists with expertise
in Columbia River anadromous and non-anadromous fish and wildlife and
ocean experts shall be among those represented."
The peer review groups, "in conjunction with the Panel," are
to review projects proposed for funding through Bonneville's annual fish
and wildlife budget and make recommendations to the Council no later than
June 15th of each year. The Panel and the review groups need not review
every project, but a "sufficient number of projects to adequately
ensure that the list of prioritized projects recommended is consistent
with the Council's program." Recommendations of the panel and the
peer review groups are to be based on a "determination that projects:
are based on sound science principles; benefit fish and wildlife and have
a clearly defined objective and outcome with provisions for monitoring and
evaluation of results." The Panel and review groups are also to
review annually "the results of prior year expenditures based upon
these criteria," and to submit its findings to the Council.
The Panel's recommendations to the Council must be made available to
the public for review and comment. The Council makes final recommendations
to Bonneville "after consideration of the recommendations of the
Panel and other appropriate entities." The Council also must
"consider the impact of ocean conditions" in making its
recommendations, and "determine whether the projects employ cost
effective measures to achieve program objectives." The Council must
explain in writing if it decides not to incorporate a recommendation of
the Panel. The amendment directs Bonneville to pay the expenses of the
Panel and peer review groups, at a cost not to exceed $2 million. The
amendment's provisions expire on September 30, 2000. The Council appointed
the 11 members of the ISRP in January 1997, and members of the peer review
groups in April.
Independent Economic Analysis Board
Cost-effectiveness is an important consideration for projects in the
Council's fish and wildlife program, but until Congress amended the
Northwest Power Act in 1996 with Section 4(h)(10)(D), which added a
cost-effectiveness component, there was no specific direction in the Act
to employ a cost-effectiveness test. Prior to the amendment, the Act
directed the Council, at Section 4(h)(6)(C), to consider
cost-effectiveness only in the event that two proposed measures have
"... equally effective alternative means of achieving the same sound
biological objective" but different costs. In that event, the Council
is directed to "utilize ... the alternative with the minimum economic
cost." Elsewhere in the Act, the Council is directed to design the
program to deal with the river and its tributaries as a system, in
recognition of the "... unique history, problems, and opportunities
presented by the development and operation of hydroelectric facilities on
the Columbia River and its tributaries." Some have argued this means
the Council cannot include measures in the program that would upset the
operation of the power system by making it, for example, uneconomical.
To help sort through difficult economic issues, in January 1997 the
Council formed the Independent Economic Analysis Board. The Board is a
panel of eight economists, chosen from more than 70 applicants, whose
expertise will improve cost analysis of fish and wildlife recovery
measures. The panel will conduct annual reviews of measures proposed for
funding by Bonneville through the Council's fish and wildlife program. The
panel also will offer economic advice on other fish, wildlife and energy
issues, as the Council requests.
Conclusion
The Council has a thorough process in place to analyze fish and
wildlife expenditures annually, ensure public and scientific review and
comment on projects before they are recommended for funding, analyze
appropriate economic issues as they arise, and monitor and evaluate
results of the program expenditures. While the process is daunting and the
expense is substantial, the Council believes the cost of inaction
potentially is higher.
Without effective restoration measures, the region stands to lose wild
salmon stocks whose genetic resources may be critical to the long-term
sustainability of the Snake and Columbia river runs. Without an effective
regional program, a federally administered Endangered Species Act process
on behalf of salmon, resident fish or wildlife could impose substantially
more onerous costs on irrigators, electric utilities, navigators, fishing
communities and others who use the Columbia River and its resources. While
the Council has not sought to put a dollar value on this outcome, no one
should mistake the value of a determined, long-term regional fish and
wildlife recovery program.
SYSTEM PLANNING
In 1987, the Council established an interim goal to increase Columbia
River salmon and steelhead runs by 2.5 million adult fish. Achieving this
goal would double the runs over the 1977-1981 average levels. Doing so
requires careful consideration of production opportunities, mainstem
passage conditions and harvest. In short, it requires the development of a
systemwide plan addressing the complete life cycle of salmon and steelhead
with care to avoid undermining genetic resources.
System planning was initiated in September 1987, when the Council
contracted with the fisheries agencies and tribes to prepare the plans. In
June 1991, this effort resulted in an overall, basinwide plan composed of
individual salmon and steelhead production plans for 31 geographic areas
of the Columbia River Basin. These geographic areas are termed
"subbasins" for the planning process, and each is composed of a
major tributary or portion of the mainstem Columbia or Snake rivers.
System planning was pursued in an open, public process by subbasin
planners, system-level planners and senior staff from interested entities.
For each subbasin, a group of local technical experts was assembled to do
subbasin-level planning. These planners wrote the plans and gathered input
from affected entities to ensure that the plans considered needs of local
areas. Technical planners at the system or overall basin level were
organized in two groups - the Monitoring and Evaluation Group and the
System Planning Group. The System Planning Group provided overall
direction to the subbasin-level planners and wrote the system-level
reports that provided this direction. The Monitoring and Evaluation Group
was composed of experts in technical analysis of salmon and steelhead life
history. It provided the analysis that was used to determine whether
actions planned for individual subbasins were consistent among all
subbasin plans and with activities that occur outside the subbasins, such
as mainstem passage and ocean and mainstem harvest.
In the 1992 amendments to the fish and wildlife program, the Council
acknowledged that the subbasin plans, along with other resource management
plans, will be the starting point for identifying actions to help specific
salmon populations. Plans developed under the program, and otherwise, will
be used to address other fish and wildlife species.
The Council called on fishery managers and Bonneville to form
subregional teams to assist in implementation of fish and wildlife
measures in the following subregions of the Columbia River Basin:
* Below Bonneville Dam
* Bonneville Dam to Snake River
* Snake River to Chief Joseph Dam
* Above Chief Joseph Dam
* Snake River from the mouth to Hells Canyon Dam
* Above Hells Canyon Dam
The Council said these teams should use the Integrated System Plan,
subbasin plans, other fish and wildlife plans and any other available
relevant plans and information to prepare recommendations for the annual
implementation work plan and program monitoring report. Each team will be
responsible for identifying any conflicts with other resource management
plans in the relevant subregion, along with options for resolving these
conflicts. Guidelines for these recommendations are listed in Section
3.1D.1, Page 3-5, of the 1994 program (document 94-2).
Another aspect of system planning, coordination of watershed activities
in subbasins of the Snake and Columbia (model watersheds), is discussed in
Section 7.7 of the 1994 program, beginning on page 7-31 of document 94-2).
RESEARCH
Many uncertainties remain about the biology of Columbia River Basin
salmon and steelhead and how best to protect, mitigate and enhance them.
To address the major uncertainties and in an effort to end research
fragmentation, the program established six areas of research emphasis for
Bonneville funding: 1) solving disease problems affecting spring and
summer chinook; 2) improving the effectiveness of hatcheries; 3) improving
techniques for supplementation (introduction of artificially produced fish
into streams); 4) studying water budget effectiveness and reservoir
mortality; 5) improving bypass systems; and, 6) improving transportation
of juvenile fish past the mainstem Snake and Columbia dams. The last two
are areas of research funded by the Corps of Engineers.
These six research areas are believed to hold the most promise for
helping to achieve the doubling goal, and a sizable portion of program
expenditures supports this research. In the 1992 program amendments, the
Council called on Bonneville and the Corps to publish a summary of results
from all studies funded under the program and to conduct annual symposiums
at which contractors present the results of their studies, beginning in
March 1993. The Council also called on Bonneville to continue funding the
development of the Coordinated Information System to promote effective
exchange and dissemination of information in the standardized, electronic
format throughout the Columbia Basin. This system, now in place, is
operated by the Pacific States Marine Fisheries Commission and is known as
Streamnet.
Disease
Fish disease research focuses on combating three major disease problems
of cultured fish: bacterial kidney disease (BKD), a major killer of spring
and summer chinook; infectious hematopoietic necrosis (IHN), which
primarily affects steelhead; and fungal infections, which may debilitate
and kill all species. All the top-priority activities in the fish disease
work plan have been initiated. Future research will refine our ability to
fight BKD, IHN and fungal infections and to investigate additional disease
problems.
Hatchery Effectiveness
Hatchery effectiveness research focuses on improving the production and
survival of fish at existing hatcheries. This research is aimed at
identifying the rearing and release conditions and other elements of
hatchery production that yield highest fish survival rates.
In the 1992 program amendments, the Council concluded that regional
standards and procedures for hatchery operations should be developed that
are consistent with the goal of rebuilding weak wild naturally spawning
stocks. To help develop tools to reduce the impacts of hatchery production
on wild and naturally spawning stocks, the Council convened a group of
nationally recognized geneticists. These geneticists were asked to bring
the best current scientific knowledge to salmon and steelhead production
issues. A number of products have resulted from this effort and are being
reviewed at the technical and policy levels in the region.
The Council also called on fishery managers to create the Integrated
Hatchery Operations Team to develop regionally integrated hatchery
policies regarding fish health, genetics, ecological interactions and
hatchery performance standards. This work largely was completed, and in
1997 the Council voted to assign any uncompleted tasks to the
congressionally mandated review of artificial production in the Columbia
River Basin. This review is being undertaken by the Council with the
assistance of the Independent Scientific Advisory Board.
Supplementation
Supplementation research is aimed at developing improved techniques to
use hatchery production to rebuild natural runs, and at identifying
impacts of supplementation on native stocks. In 1988, the Council
stipulated that this research should take advantage of ongoing or planned
supplementation activities, such as those under the Lower Snake River
Compensation Plan. An analysis of the successes and failures of past and
ongoing supplementation was conducted by the Council's Regional Assessment
of Supplementation Project (RASP), which was created in 1990 to provide a
comprehensive framework for supplementation. The project was carried out
by technical representatives from the fishery managers, utilities,
Bonneville, the Council an others. One of its products was a recommended
planning process.
Three supplementation research projects were initiated in 1989. These
are 10- to 20-year projects. In the 1992 amendments, the Council called on
fishery managers to use existing processes, including RASP and the
Integrated System Plan to prepare evaluations, including biological risk
assessments, for proposed supplementation experiments that were submitted
by the Columbia River Inter-Tribal Fish Commission. Supplementation
research hatcheries operated by Indian tribes in the basin are discussed
elsewhere in this briefing book.
Reservoir Mortality/Water Budget Effectiveness
In its 1987 fish and wildlife program, the Council called for research
into reservoir mortality and water budget effectiveness. However, a
technical research work group was unable to agree on a single consensus
work plan. Therefore, research in this area has proceeded on a
year-to-year basis and has been devoted largely to studying predation of
young salmon and steelhead by predators such as squawfish and walleye.
Water budget effectiveness research remains controversial, but in the
1992 amendments the Council recognized that research on the relationship
between spring and summer flow, water velocity and fish survival has had
unsatisfactory progress to date, notwithstanding concerted efforts by
several parties.
Accordingly, the Council agreed to fund an independent, third-party
evaluation of all new and existing information and analysis on river
velocity and survival of juvenile spring, summer and fall chinook and
sockeye salmon. Based on this evaluation, which was completed in October
1993, the Council initiated a process to adopt program amendments stating
the Council's position on the relationship between flow, velocity, travel
time and survival of juvenile spring, summer and fall chinook, sockeye,
and steelhead. The evaluation was conducted by Oak Ridge National
Laboratories, Oak Ridge, Tennessee, and the flow-survival hypotheses were
amended into the program in May 1994. These hypotheses, which were amended
into the program in 1994 as Section 5.0E are considered essential starting
points for scientific experimentation.
In 1992, the Council called on Bonneville to fund additional
independent, third-party scientific evaluations to determine the
relationship of flow and water velocity to the travel time and survival of
juvenile spring, summer and fall chinook salmon. This evaluation of
survival in the Lower Granite and Little Goose reservoirs is being
conducted by the National Marine Fisheries Service. In the 1994
amendments, the Council called for an experiment to compare the survival
of transported fish with those that migrate in the river. While this
adaptive management experiment never was conducted, the Fisheries Service
research continues.
Bypass
A major goal of research on juvenile bypass systems is to improve the
bypass systems at Bonneville Dam, particularly at the second powerhouse.
Studies evaluated juvenile survival levels through the spillway, turbines
and bypass systems at Bonneville Dam. Researchers now have a better
understanding of why survival levels through the bypass system at the
second powerhouse are lower than expected. The Council, with the
assistance of the Independent Scientific Advisory Board, is conducting a
review of several controversial capital construction projects at Snake and
Columbia river dams. The extended outfall at the Bonneville Second
Powerhouse is one of those projects. The others are extended-length
screens at the John Day Dam and continued development and testing of the
surface-bypass system at Lower Granite Dam. Bypass research also is being
carried out at other Corps dams.
Transportation
Transportation research is aimed at determining the benefits of
juvenile fish transportation. Studies are underway to compare returns of
transported and non-transported fish. A major problem is determining
benefits for spring chinook, because of recent low flow years. Ongoing
studies also are evaluating effects of fish condition, particularly
incidence of bacterial kidney disease, on adult returns of transported and
non-transported fish. Studies are in progress to assess the use of PIT
(Passive Integrated Transponder) tags to evaluate transportation of wild
and hatchery fish, and to develop a PIT tag deflector system that would
allow tagged fish to return to the river at collector projects.
In the 1992 and 1994 amendments, the Council called on the Corps to
accelerate improvements in transportation. This would include evaluation
of techniques to improve transportation, such as the use of cooler water
in the barges, reduced densities of fish in the barges and broader
dispersion of the fish when they are released below Bonneville Dam. In the
longer term, depending on the results of continuing evaluation, barging
may be useful in the mix of techniques the region will employ to decrease
the mortality associated with migration through the reservoirs. The
Council also called on the Corps to evaluate further improvements,
including improved fish holding and loading facilities, alternative fish
collection sites and alternative transportation technologies.
MAINSTEM PASSAGE
The program employs a number of approaches to reduce downstream and
upstream salmon and steelhead mortality at and between Columbia and Snake
river hydroelectric dams. The Council's present strategy for improving
downstream fish passage includes:
* Spill for fish passage at each project on an interim basis until
bypass screens are installed and operational;
* Development, installation and improvement of permanent bypass systems at
all mainstem dams;
* Collection and transportation of smolts around mainstem hydroelectric
projects in barges and trucks;
* A water budget and phased-in reservoir drawdown strategy to augment
flows and increase river velocities during the critical spring
outmigration period.
* Control of predators such as squawfish.
* A number of measures to improve survival of returning adult fish.
In 1994, the Council amended the program with additional mainstem
survival actions in the following areas:
* An expedited program to improved fish bypass at mainstem dams through
the development and testing of surface-flow bypass systems and, until
these and other bypass improvements are in place, additional spill to
levels that do not exceed state-defined levels of nitrogen gas
supersaturation.
* Improvements in spill efficiency and installation of structural measures
to reduce high total dissolved gas at mainstem dams.
* Improved flows in the Snake River through acquisition of one million
acre-feet of additional water from willing sellers and additional water
from Brownlee Reservoir.
* Improved flows in the Columbia River through modified operation of Grand
Coulee and Albeni Falls dams and negotiations for additional water from
Canadian storage reservoirs.
* Enhanced velocity in the Snake and Columbia rivers through drawdown of
Lower Granite and Little Goose reservoirs to near spillway crest level and
operation of John Day reservoir at near minimum operating pool.
* Specific milestones to review the drawdown actions.
* An emphasis on inriver juvenile migration in all but the worst water
conditions, along with improved fish transportation and an accelerated
National Marine Fisheries Service-directed comprehensive scientific
evaluation of transportation and inriver migrant survival.
* An intensified effort to control predators and reduce competition with
depressed salmon stocks. Here is a look at specific actions to improve
mainstem survival:
Spill
The program calls on the region's dam operators and regulators to
develop and implement interim annual passage plans to protect juvenile
fish until permanent screening and bypass facilities can be developed and
installed at all mainstem dams. The most immediate interim solution is to
spill water laden with fish through a spillway to provide a non-turbine
passage route for juvenile fish migrating to the sea.
In the 1994 amendments, the Council called on dam operators to use
spill water so that 80-percent of the fish do not go through the turbines
at each Snake River dam from about April 15 to July 31, and at each
Columbia dam from about May 1 to August 31. Spill would be limited to
comply with the dissolved gas guidelines established by federal and state
water quality agencies.
To reduce levels of dissolved gas that results from spilling water at
the dams, the Corps installed "flip lips" at Ice Harbor and John
Day dams. The installation was completed in 1998. These spillway
deflectors should help reduce total dissolved gas levels below these
projects by as much as 10 percent.
Screening and Bypass Facilities
The Council's fish and wildlife program calls for improving or
installing systems to divert fish away from turbines and for continued
spill until the screens are in place.
In the absence of reservoir drawdown, the long-term solution to protect
juvenile fish involves installation of mechanical screening and bypass
facilities to divert, collect and bypass fish past each of 13 powerhouses
on the mainstem Columbia and Snake rivers.
The installation of juvenile fish bypass facilities varies from dam to
dam in both type and effectiveness. Some mainstem dams have no screening
and bypass facilities installed, while others have already been equipped
with new or improved systems. Currently, bypass facilities are installed
or undergoing improvements at Bonneville, John Day, McNary, Ice Harbor,
Lower Monumental, Little Goose and Lower Granite dams, all operated by the
Corps of Engineers, and at Wells Dam, operated by Douglas County Public
Utility District. Screens are installed at all federal dams except The
Dalles Dam.
The mid-Columbia public utility districts, in consultation with the
region's fishery agencies and tribes through a Federal Energy Regulatory
Commission settlement agreement, are in the process of developing and
testing prototype screening and bypass systems and surface bypass options
at the remaining four mid-Columbia dams (Priest Rapids, Wanapum, Rocky
Reach and Rock Island).
The Council's top federal budget priority has been to secure needed
funds to ensure that bypass systems can be installed and improved at all
federal mainstem dams. Consistently, this effort has been supported
unanimously by the Pacific Northwest Congressional delegation, the
fisheries agencies, the utility community and other sport and commercial
fishing groups.
Transportation
Smolt transportation involves the collection and movement of juvenile
salmon and steelhead around hydroelectric projects on the Columbia and
Snake rivers. It has been studied and implemented by the Corps of
Engineers since 1968. Smolts are collected at four projects operated by
the Corps: Lower Granite, Little Goose and Lower Monumental dams on the
Snake River and McNary Dam on the Columbia River. Transportation also has
been tested at Priest Rapids Dam on the mid-Columbia River.
Smolts are moved from the four federal collector projects in barges,
although trucks are used at the beginning and end of the migrations when
fish numbers are low or to supplement barge transportation during the peak
of the migration. Fish are released into the river below Bonneville Dam
for the remainder of their journey to the ocean. In recent years, the
number of transported fish has increased dramatically. For example, the
number of fish transported has increased from about 16 million in 1986 to
over 20 million in the low-water year of 1988.
The Council has actively assisted the Corps in efforts to secure
additional Congressional funds for the construction of improved holding
and loading facilities and new fish barges. This is to ensure that
adequate transportation facilities will be available when needed to
accommodate increased smolt production. In recent years, fish handling and
loading facilities were improved or expanded at Little Goose and McNary
dams. Two additional barges were constructed in 1990, bringing the total
number of available barges to six. Two more fish barges are presently
under construction and scheduled to be completed by spring of 1998.
Transportation appears to work well for steelhead and fall chinook
salmon. However, given the uncertain results of transporting spring
chinook, the Council determined that the agencies and tribes should
control whether and how many fish are transported. Typically, they support
transport in low water years. In recent years, the Corps has also deferred
to agency and tribal jurisdiction on the issue. A 1994 scientific peer
review of transportation concluded, in part, that available evidence is
not sufficient to identify transportation as either a primary or
supporting method of choice for salmon recovery in the Snake River Basin.
In its 1991 and 1994 amendments to the fish and wildlife program, the
Council called for accelerated improvements in transportation operations
and facilities. The Council recognized that, in the near term, especially
in low-water conditions, smolt barging is one of the few tools the region
has to improve survival. The Council called on the Corps to evaluate
techniques to improve transportation, such as the use of cooler water in
the barges, transporting fewer fish, reducing densities of fish in the
barges and broader dispersion of the fish when they are released below
Bonneville Dam. The amendments also call for research to test the survival
of fish that are transported in barges against those that migrate in the
rivers. In February 1998, the ISAB submitted a review of transportation
that concludes it is prudent to exercise caution in weighing the possible
risks against the perceived benefits of juvenile transportation because of
the "magnitude of uncertainty" of information available to
assess the strategy.
Water Budget and Flow Augmentation
Juvenile salmon and steelhead have adapted over thousands of years to
the Columbia River's natural runoff pattern. But the extensive development
of dams and hydropower projects in the basin has greatly altered natural
river flows. The historical peak spring runoff is now stored in reservoirs
for use during later periods of naturally low flows. Regulating the river
in this manner increases the power system's ability to generate firm
energy. However, it also reduces river flows, especially during the spring
when juvenile fish are migrating to the sea. The sluggish waters of the
reservoirs can more than double the time it takes for a smolt to reach the
ocean, thus increasing the risk of disease and predation. Higher water
temperatures in the reservoirs also contribute to higher mortalities.
To address reservoir mortality, the Council developed an annual water
budget. It is a volume of water composed of natural runoff and stored
water held in reserve at headwater dams for use during the April 15 to
June 15 spring smolt migration. The water budget was developed in response
to studies conducted during the last 20 years or so that suggested higher
salmon survival resulted from higher river flows. The Council contracted
with the Oak Ridge National Laboratories to conduct an independent
assessment of the available scientific knowledge on the relationship of
river flows to salmon survival. The review concluded that despite certain
data problems, the general relationship of increasing survival with
increasing flow in the Columbia River basin appears to be reasonable.
Studies of different stocks, using different analytical approaches, have
tended to show the same general patterns.
During the spring smolt migration, water that could be used to generate
electricity at other times of the year is released instead to augment
flows to create an artificial spring freshet to aid fish. The Council
first adopted a "water budget" in 1982 to reserve 3.45 million
acre-feet of upper Columbia water during the winter, plus 1.19 million
acre-feet of Snake River water, to be released in the spring when juvenile
salmon are migrating. In 1992, the Council added an additional 3 million
acre-feet to this storage reserve in the Columbia and identified volumes
of more than 1.4 million acre-feet for spring migrants and about 900,000
acre-feet for summer and fall migrants to be reserved in the Snake system
in the driest water years. These new volumes replaced the earlier 1.19
million acre-feet water budget in the Snake River and represent the
maximum attainable volumes for salmon flows called for in the fish and
wildlife program. In 1994, the Council added another million acre-feet for
spring flows in the Columbia River and 400,000 acre-feet for summer
migrants. The Council also asked that another 1.2 million acre-feet of
Snake River water be obtained from Dworshak and Brownlee reservoirs and
through voluntary measures from the upper Snake River Basin. These water
reserves result in constraints on winter power sales and even periodic
power purchases from outside the region to meet winter energy demands, as
well as operating constraints on storage reservoirs.
The Council's goal is to provide a minimum monthly average flow or
velocity equivalent in the Snake River of 140,000 cubic feet per second in
all water years. This would be accomplished with a combination of water
releases from upriver storage reservoirs and reservoir drawdowns in the
lower Snake. Brownlee Reservoir on the Snake River would be operated in a
manner that assists spring-migrating salmon downstream. In addition, Idaho
Power Company, which owns and operates Brownlee, will make water available
to ensure wild fall chinook redds (nests of eggs) downstream in Hells
Canyon remain wet during the winter and spring incubation period.
Meanwhile, the Council set a sliding scale of flow-equivalent
objectives for the Columbia River, measured at The Dalles Dam, for the
period between April 15 and August 31 varying from 300,000 cubic feet per
second during the main migration period (April 15 to June 15) to 160,000
cubic feet per second in August. This will mean increased water storage in
years when low runoff is forecasted. John Day Reservoir on the Columbia
would be operated at minimum irrigation pool during critical migration
periods. The reservoir would be lowered to minimum operating pool as soon
as irrigation systems are modified or relocated so they can operate at
this lower level. The program called for the Council to decide by 1998
whether to lower the John Day reservoir farther; however, John Day
drawdown is now being studied by the Corps of Engineers as part of its
1999 Snake River Feasibility Study. Flow objectives in the Snake and
Columbia should be met in most years, depending on water conditions.
Actual power system operations aim to be consistent with the terms of
the National Marine Fisheries Service's 1995 biological opinion for the
federal power system regarding Snake River salmon and the U.S. Fish and
Wildlife Service's biological opinion for Kootenai River sturgeon. The
biological opinion regarding endangered Snake River salmon does not
provide the same level of protection for resident fish in upriver storage
reservoirs as the Council's program. The Council adopted specific
"integrated rule curves" to regulate reservoir drawdowns and
protect resident fish and wildlife at Hungry Horse and Libby dams in
Montana. It also adopted water retention times and specific elevation
levels for Grand Coulee Dam. Water retention times and reservoir
elevations adopted by the Council in 1995 to protect resident fish are not
met in the biological opinion. The biological opinion for Snake River
salmon devotes more water from the upper Columbia to salmon flows and less
from the Snake River.
The measures also called for operating John Day Dam on the Columbia and
the four Lower Snake River dams at lower levels beginning in 1996. Thes---e
operations will require costly modifications to the dams and mitigation of
impacts to irrigators and other reservoir users. The program conditioned
implementation of these operations on prior completion of the mitigation.
During the spring and summer juvenile salmon and steelhead migration in
1998, the four lower Snake dams are being held at minimum operating pool
and John Day at minimum irrigation pool.
Here is a brief overview of the mainstem measures in the 1994 program
amendments:
Improved information:
* Intensified evaluations of improved inriver salmon migration and
improved barge transportation of salmon smolts.
Bypass improvements and turbine screens at the dams:
* Accelerate tests of surface bypass systems and schedule rapid
decisions on their installation.
* Spill water so that up to 80 percent of the juvenile fish that pass each
dam do not go through turbines. Insure that dissolved gas limits set by
Washington and Oregon are not exceeded.
* Accelerate structural changes to the dams to reduce gas supersaturation
and test slotted spillway gates to improve spill efficiency.
* Relocate problematic bypass outfalls.
* Continue juvenile fish screening and bypass improvements.
* Hold final decision to construct screens at The Dalles Dam until more is
learned about the benefits of surface bypass.
More water to boost salmon flows:
* Obtain from willing sellers 500,000 acre-feet in the upper Snake
River Basin by the spring of 1996. Obtain up to an additional 1 million
acre-feet from willing sellers by the spring of 1999. The latter proposal
is being evaluated by the Corps of Engineers in its 1999 Snake River
Feasibility Study. Continue to evaluate new upriver water storage dams.
* In the Columbia, provide a volume of water up to 4 million acre-feet in
low water years, limited by resident fish protections (see below). *
Negotiate with Canada for additional water for flows.
* Hold Lake Pend Oreille higher during winter months to provide additional
water for salmon flows in the spring. Test the impact on kokanee spawning
in the lake.
* Use reservoir flexibility for summer migration improvements.
River velocity improvements
The 1994 Program called for a phased drawdown strategy with Council
review at each milestone date. Mitigation of adverse impacts to
irrigation, navigation and other activities would have been provided.
While the phased drawdown strategy was not implemented because the Corps
followed the 1995-1998 Biological Opinion, here is brief overview of what
the Council proposed:
In the Snake River:
* Beginning in 1995, draw down Lower Granite reservoir 28 feet (to
elevation 710 feet above sea level) for about two months during the spring
and early summer. At this level the adult fish ladder would still operate,
but the juvenile fish bypass system would not, and barge traffic would be
interrupted for the duration of the drawdown. Beginning in 1996, draw down
the reservoir to near spillway level for two months - an additional 17
feet - after modification of the adult ladder exit.
* Beginning in 1999, draw down Little Goose reservoir to near spillway
crest for two months in the spring - after modifications to adult and
juvenile passage facilities.
* Continue to evaluate additional drawdowns and make a decision on drawing
down Lower Monumental and Ice Harbor dams to near spillway crest - about
40 feet - prior to 2002.
In the Columbia River:
* Operate John Day reservoir near minimum operating pool - elevation
257, an 11-foot drawdown from full pool - by the spring of 1996. Operate
at this level year-round. Barge traffic continues, but some pumps would
need to be extended prior to the drawdown. This measure was not
implemented, but the reservoir is being held at minimum irrigation pool
during the 1998 migration season (elevation 262.5), which is five and one
half feet higher than minimum operating pool (elevation 257).
* Accelerate evaluation of lowering John Day reservoir to near spillway
crest - elevation 220, a 48-foot drawdown from full pool - and make a
construction decision by December 1996, after evaluation of structural
modifications to allow continued navigation and irrigation and impacts to
flood control and power production.
* Evaluate other reservoirs for flow or velocity improvements.
Barge transportation of juvenile fish:
* Make improvements in transportation, such as additional barges,
reduced fish density in barges, and dispersed release of fish.
* National Marine Fisheries Service, state fish agencies and Indian tribes
determine how many fish are transported.
Upstream Passage
Hydroelectric projects present a physical barrier to adult salmon and
steelhead migrating from the ocean to spawning areas upstream. To solve
this problem, fishways were constructed prior to the fish and wildlife
program at many of the dams in the Columbia River Basin. Flow and spill
criteria also have been adopted to provide unimpeded passage and maximum
attraction of the fish to the fishways.
However, not all these measures have been successful. For example, flow
and spill conditions in the tailraces of some mainstem dams tend to
discourage fish movement upstream or to mask the flows intended to attract
fish into the fishway. In addition, inadequacies in certain fishway
facilities and in their operation and maintenance reduce the success of
adult fish passage at both mainstem and tributary dams. These inadequacies
include failure to provide necessary attraction flows at fishway
entrances; ineffective fish ladders; mechanical failures of pumps that
supply fishway auxiliary water; and lack of fish counting facilities to
permit effective management of adult runs.
The program includes a number of measures to improve adult passage. The
program calls on the project operators to continue to implement adult fish
flow, spill and fishway operating criteria and evaluate measures to
improve fish passage at each project. The Corps of Engineers and the
mid-Columbia public utility districts implement adult fish flow, spill and
operating criteria in accordance with an annual operating plan developed
in consultation with the fishery agencies and tribes. The program also
calls on the Corps to correct problems created by unreliable pumps. In
response, the Corps has acquired spare parts to minimize pump outages,
rebuilt unreliable fish pump gearboxes, and developed annual pump
maintenance plans.
In 1994, the Council called on the Corps of Engineers to implement all
spill and operating criteria for mainstem adult fish passage facilities
and to make needed improvements. In addition, the Council called on the
Corps to leave juvenile fish screens installed for a longer period to
provide protection for adult salmon that may fall back through the
powerhouses.
Tributary projects to improve adult fish passage also have been
approved. In addition, the program also calls for research on issues such
as fish disease at adult passage facilities and the effectiveness of adult
passage facilities and flow and spill criteria. The Council also calls on
the Corps to investigate potential methods to reduce water temperature in
mainstem fish ladders, as well as to evaluate whether releasing cold water
from Dworshak Dam and Hells Canyon complex in late summer improves adult
fall chinook passage and survival.
HABITAT AND PRODUCTION
Hydropower development and operation, as well as other causes, have
eliminated much of the natural fish production in the Columbia River
system. Reservoirs created by dams have inundated nearly all of the
mainstem Columbia spawning habitat. The only free-flowing stretch of the
Columbia River, in the Hanford Reach below Priest Rapids Dam, supports a
sizable population of naturally spawning fall chinook. Large areas of the
basin have been blocked by dams that provide no passage to spawning and
rearing habitat in the areas above Chief Joseph/Grand Coulee, the Hells
Canyon complex of dams and numerous tributaries. Regardless, opportunities
do exist for enhancing remaining spawning and rearing areas through
habitat rehabilitation, improving and increasing hatchery propagation, and
providing passage around barriers that prevent fish from reaching
production areas.
The program supports a three-part approach to producing more salmon and
steelhead through a combination of natural production, hatchery
production, and supplementation of wild and natural fish produced by
releasing hatchery fish into natural habitats. To advance this effort, the
Council has adopted measures to provide water flows and temperatures
suitable for natural and wild propagation, improve habitat and tributary
passage, increase knowledge of appropriate timing and sites for release of
hatchery fish, improve existing artificial production facilities, and
build new hatcheries, mostly as supplementation facilities.
Maintaining the delicate balance between naturally spawning and
hatchery-produced fish will require a systematic, basinwide approach to
existing and new production. But a focus solely on production will not
yield success. Accordingly, the Council's program for increasing
production acknowledges the need for a systemwide approach that
coordinates production, harvest regulation and passage improvements.
Habitat Rehabilitation
Under the program, numerous projects were completed to improve
tributary passage and repair habitat for salmon and steelhead in the
Clearwater, Deschutes, Grande Ronde, John Day, Salmon, Umatilla,
Wenatchee, Willamette and Yakima River subbasins. More than 2,000 miles of
streams have been improved for salmon and steelhead. Typically, these
projects involve fencing and replanting stream banks and restoring
structure in the streams to provide cover, rearing areas and other
essential elements of habitat. Another 1,000 miles of habitat have been
opened to fish production by improving passage at or removing barriers.
Subregional approach
The subregional approach will be the basis for the program treatment of
habitat and production issues, but it is apparent that this approach will
take time to develop and implement. In the interim, many salmon and
steelhead populations continue to decline. Some of these populations, such
as chinook produced in the Snake River Basin, cannot wait for this
approach to be implemented. They require expedited actions. Council
evaluation indicates that even with improved salmon and steelhead survival
through changes in mainstem operations, many populations will not be
maintained, let alone rebuilt, without immediate and significant increases
in survival at other stages of their lives.
Habitat improvements and changes in hatchery operations (for example,
the use of supplementation) can be implemented to increase natural
production and survival significantly. In the short term, options appear
to be fairly limited in this area.
Yakima and Klickitat Projects
The Yakima River Basin is located east of the Cascade range in
Washington where annual precipitation is very low. Irrigation has changed
the Yakima River valley from a near-desert environment to one of the most
productive agricultural regions in the country. Development of the Yakima
River Basin for agriculture and irrigation has meant stream flows
sufficient to support salmon and steelhead have been greatly reduced. Yet
much of the Yakima's fish habitat remains largely intact, and fisheries
experts consider this basin to be one of the areas with the best potential
for producing salmon and steelhead in the Columbia River Basin.
The Yakima and Klickitat projects are a group of artificial production
facilities to be used primarily for supplementing natural runs of salmon
and steelhead. The Klickitat subbasin was added to the project because of
its close proximity to the Yakima and opportunities for siting facilities
and fish enhancement in the basin. The stocks that will be enhanced
include spring, fall and summer chinook, coho salmon, summer steelhead and
potentially sockeye salmon. It is estimated that some 76,000-175,000 adult
salmon and steelhead could result from the project, which will be
carefully monitored and evaluated. The facilities will include a central
hatchery used to raise juvenile fish for release and satellite stations,
acclimation ponds, adult traps and transportation facilities.
Originally, the two projects were pursued together, but work fell
behind on the Klickitat project, and so emphasis in recent years has been
on the larger Yakima project. The Council believes it is important to
proceed with this project because of the importance of the added
production to be provided by the facility, the potential learning benefits
of the facility, and the long lead time required for planning, design and
construction of the facility. The production facility, located near Cle
Elum, was completed in 1997 and will produce its first fish for release in
the spring of 1999.
Umatilla Hatchery
The hatchery is one of several key features of a program to rebuild
salmon and steelhead runs in the Umatilla River Basin. The program is part
of a compromise to settle disputes between irrigators and tribes over use
of the Umatilla River.
The Umatilla Basin Project is being pursued in two phases. The first
phase included diverting Columbia River water through an existing canal to
the Umatilla River below Three Mile Dam, thus putting more water in a
stretch of the river that had been dewatered in summer for many years. The
second phase involved installing new pipes and canals, and building a
major pumping complex on the Columbia to deliver water to the Hermiston
and Stanfield irrigation districts.
The combination of projects, including the hatchery, flow enhancement,
and passage and habitat improvements, is expected to re-establish salmon
runs of approximately 48,000 adult fish in the Umatilla River Basin. The
hatchery is located on the south shore of the Columbia River near Irrigon,
Oregon, about 10 miles below the mouth of the Umatilla River. The hatchery
began operation in the fall of 1991 and is designed to produce up to
290,000 pounds of fish. It is a state-of-the-art project, making use of
oxygen supplementation in rearing ponds to produce Pacific salmon. This
technique could allow the hatchery to produce more fish per rearing area
than a standard type of facility. However, the hatchery water supply
proved to be less plentiful than was envisioned when the facility was
designed. Engineering studies are being conducted to assess the water
supply and to recommend methods to boost the supply and improve the
efficiency and output of the hatchery.
The $16 million facility will supplement some $42 million in federal
funds and several million in ratepayer funds to improve passage, habitat
and flows in the basin.
Other Production Projects
Besides the planned hatcheries in the Umatilla and Yakima river basins,
several other artificial production projects are included in the Council's
fish and wildlife program. There has been controversy regarding these
projects, and the Council is working closely with the tribes, other
proponents and contesting parties to resolve the issues. Probably the most
energetic debate is over the merits of supplementation, which some
hatchery opponents argue poses genetic risks to fish populations. Hatchery
proponents are following National Environmental Policy Act guidelines as
they work to resolve these issues. There are other concerns. For example,
certain sport fishers oppose boosting salmon production in the Yakima
Basin because salmon would compete with resident trout, and there is an
important trout fishery in the river system.
In the 1994 amendments, the Council acknowledged that artificial
propagation and the proper use of hatchery fish to supplement wild and
naturally spawning populations of salmon and steelhead as a rebuilding
measure will continue to be as intensely debated as is the relationship of
increased mainstem flows to fish survival. Regardless, the outlook for
Snake River Basin chinook, as well as some other populations, requires the
immediate implementation of dramatic measures. Without immediate action,
these populations will not survive long enough to make the results of
these debates meaningful.
These hatchery projects are in various stages of implementation:
a) Northeast Oregon projects - Plans are under way for hatchery
facilities needed to raise salmon and steelhead for enhancement in the
Umatilla, Grande Ronde and Imnaha rivers and elsewhere.
b) Nez Perce Facility - Development of a propagation facility on the
Nez Perce Reservation is proceeding.
c) Pelton Dam - The Council recently approved a project master plan for
converting a 2.8-mile long fish ladder at Pelton Dam on the Deschutes
River for salmon and steelhead propagation. The program specifies that
this project will be low-cost and small-scale.
Tributary Passage Projects
A major area of program actions has been to improve passage for adult
and juvenile salmon and steelhead in the tributaries of the Columbia and
Snake rivers. Impediments to passage include low flows caused by water
diversion, diversion of fish into irrigation canals, and dams without
ladders or ladders that are ineffective.
Projects to improve tributary passage for salmon and steelhead have
been proposed for most of the subbasins in the Columbia Basin. Projects
have been completed in the Clearwater, Deschutes, John Day, Salmon,
Umatilla, Wenatchee, Willamette, Tucannon, Klickitat and Yakima river
subbasins. These projects have included construction and improvement of
ladders at tributary dams and screening irrigation diversions. In the
Yakima subbasin alone, more than 20 laddering and screening projects have
been completed. Subsequent evaluations indicated these projects were
performing at zero mortality for passing fish. In the Umatilla Basin,
projects included channel modification and pumping of water from the
Columbia River to improve flows for adult and juvenile fish
Ecosystem Approach to Maintain Biodiversity
In the 1992 program amendments, the Council emphasized an ecosystem
approach to salmon rebuilding activities. This approach requires close
coordination of habitat and production measures. The purpose is to ensure
that habitat and production measures are driven by the needs of specific
populations, and the condition of the watersheds in which these
populations live. Because opportunities to achieve significant salmon
production increases through improving natural habitats are limited,
additional salmon increases may have to be achieved through artificial
production - creating artificial spawning and rearing environments such as
hatcheries. But, as mentioned earlier, there is a dilemma: artificial
production can have negative effects on wild and naturally spawning salmon
populations.
In developing production measures to amend into the fish and wildlife
program, the Council identified actions that are consistent with the goal
of doubling the number of salmon and steelhead in the basin while
maintaining existing levels of biodiversity.
Specific actions in the program
Here are some of the specific production measures in the program:
* The program encourages improved and consistent basinwide hatchery
practices and better coordinated management throughout the Columbia Basin
so hatchery fish are better able to survive in the natural environment and
do not harm wild fish.
* Hatchery practices throughout the Columbia Basin were audited and the
results are being used to improve those practices.
* The Council calls on the National Marine Fisheries Service to quickly
develop guidelines on when to use captive broodstock technology and other
emergency measures to save seriously depleted salmon runs. Captive
broodstock technology was a last-minute tool for the Snake River sockeye.
* The program calls for the collection of additional information on
naturally spawning salmon populations, such as population status, life
history and other data.
* The Council calls for evaluation of new supplementation projects. We
also call for development of a policy for experimental conversion of
existing hatcheries to undertake supplementation projects in order to
conserve and rebuild naturally reproducing fish populations, and for an
assessment of the cumulative effects of existing and new supplementation
projects. The Council hopes scientists will pursue experiments in natural
production and supplementation in order to measure the relative success of
each approach.
* The Council called for a study of the juvenile fish carrying capacity of
the Columbia River mainstem, estuary and near-ocean environment in order
to ensure that hatchery releases are not exceeding that capacity.
* The program supports the continued involvement of appropriate genetics
experts in discussions of how to sustain the diversity of salmon runs.
* The program calls for evaluation of reintroducing anadromous fish into
the upper Cowlitz River Basin above the new Cowlitz Falls Dam. We also
call for development of appropriate recommendations for protecting and
enhancing runs of sockeye, coho and chum salmon, sea-run cutthroat trout
and lamprey in the Columbia River Basin.
Here are some of the specific habitat improvement measures included by
the Council:
* The program calls for, at a minimum, maintaining the present quality
of all habitat. It calls for comprehensive, coordinated watershed
approaches in all subbasins. It identifies specific habitat standards
designed to promote good habitat for fish and wildlife.
* The program seeks to expand and accelerate the cooperative approach to
watershed-wide salmon habitat and production improvements. Designating
model and focus watersheds will help focus federal, state and local
efforts to improve conditions for fish.
* Public and private-sector resources should be used to ensure timely
construction and installation of high-priority screens and water measuring
devices at water diversions in salmon rearing areas.
* All underwater diversions in the mainstem Columbia and Snake rivers
should be inspected regularly to determine whether screens, which deflect
fish from the intakes, are installed and operating.
* The program says permanent riparian management areas should be
identified and protected. Where water quality standards are being met,
these riparian areas would be maintained. Where standards are not being
met, revegetation would be promoted.
* Property easements should be accorded high priority as a means to
protect salmon habitat.
* The program calls on the states to review and, if necessary, improve
state water standards and mining laws to promote salmon productivity.
* The Council urges federal and state land managers to pay special
attention to insect infestations that may lead to catastrophic fires and,
in turn, promote increased erosion that damages salmon and steelhead
habitat.
RESIDENT FISH AND SUBSTITUTIONS
Resident Fish
The resident fish measures in the program address the impacts of
hydropower development and operation on Columbia River resident fish
populations, such as rainbow and cutthroat trout, kokanee and sturgeon.
Though resident fish species do not generally migrate between ocean and
freshwater environments, they rely on in-stream conditions to support them
during various life stages. Consequently, where these conditions have been
affected by hydropower projects or other activities, resident fish
populations, like salmon and steelhead populations, have declined.
The Council's program directs numerous actions to improve resident
populations, particularly in areas above Chief Joseph and Hells Canyon
dams which are permanently blocked to salmon and steelhead. These actions
include fish stocking, streambank enhancement and other efforts to reduce
impacts from reservoir operations.
Actions under way through the fish and wildlife program include:
a) Montana - Studies of the relationship between water levels and
resident fish populations in Hungry Horse and Libby reservoirs, and
development of mitigation strategies for the Flathead River and Flathead
Lake system. The Council's 1994 program amendments included new operating
procedures for Hungry Horse and Libby dams to protect resident fish and
wildlife in those reservoirs. Other actions are being implemented to
protect and improve resident fish populations in the Kootenai River
system, Lower Clark Fork drainage and below Milltown and Painted Rock
dams.
b) Idaho - Providing minimum flows in the South Fork Boise River;
protecting and enhancing fisheries in lakes Pend Oreille and Coeur d'Alene
and in the Spokane, Clearwater and Pend Oreille rivers; and evaluating
resident fish impacts of Dworshak Dam operations.
c) Oregon - Exploring opportunities to enhance bull trout and crayfish
populations in Lake Billy Chinook.
Resident Fish Substitutions
Salmon and steelhead probably never will return to some areas of the
basin because of blockages by dams. These areas include those above Chief
Joseph Dam, the Hells Canyon complex and other smaller blocked areas.
In 1987, the Council amended the program to include resident fish
substitutions for salmon and steelhead losses in blocked areas. At that
time the Council concluded that 1) mitigation in blocked areas is
appropriate where salmon and steelhead were affected by development and
operation of the hydroelectric system; 2) to treat the Columbia River and
its tributaries as a system, some level of substitution is reasonable for
lost salmon and steelhead in areas where in-kind mitigation cannot occur;
and 3) some flexibility in approach is needed to develop a program that
complements the activities of fish and wildlife agencies and tribes and is
based on the best available scientific knowledge. For substitution
purposes, the program notes that resident fish may include landlocked
anadromous fish, such as white sturgeon, kokanee and coho, as well as
traditionally defined resident fish species.
The program contains resident fish substitution projects only for the
major blocked areas above Chief Joseph Dam and the Hells Canyon Complex.
These measures range from hatchery construction to habitat survey and
improvement.
The Colville Reservation Trout Hatchery was dedicated in September
1989, and two kokanee hatcheries that stock Lake Roosevelt behind Grand
Coulee Dam were completed later. In addition, the program calls for
construction of a trout hatchery on the Coeur d'Alene Indian Reservation,
a bass hatchery on the Kalispel Indian reservation, net-pen rearing of
trout in Lake Roosevelt and an investigation of the most feasible measures
for enhancing desirable fish populations in Washington's Moses Lake.
Resident fish substitution projects also are contemplated in the blocked
areas above Dworshak Dam in Idaho and Pelton Dam in Oregon.
For the area above Hells Canyon Dam, the program calls on Bonneville,
the Idaho Power Company and the Bureau of Reclamation to consult with the
relevant fish agencies and tribes to apportion funding responsibilities
for various projects. These include development of a comprehensive
fisheries plan for the Duck Valley Indian Reservation, as well as planting
trout in reservation lakes, habitat restoration and enhancement activities
on the Fort Hall Reservation, and propagation of resident fish species for
planting on the two reservations and in C.J. Strike, Lucky Peak, and
Cascade reservoirs.
Bull trout
Bull trout once were abundant in the Columbia River Basin, but
population levels have declined in some areas. The program calls for
studies and evaluations to determine on-the-ground projects that could be
implemented as soon as possible to address the needs of the species,
particularly in Montana and Oregon.
Other resident fish populations
The program also includes actions to protect and enhance other resident
fish populations, including rainbow trout in the Clearwater River,
spiny-rayed fish in the Pend Oreille River, burbot in the Kootenai River,
and kokanee in Banks Lake and Lake Pend Oreille.
Sturgeon
Sturgeon research is being cooperatively funded to determine: 1) the
impact of development and operation of the Columbia River Basin hydropower
system on sturgeon populations; 2) habitat requirements, genetics, status,
potential for artificial production, and potential for migration of
sturgeon; and 3) ways to protect and enhance sturgeon. These objectives
were pursued through three projects that were cost-shared by state and
federal agencies and ratepayers: 1) a study of sturgeon genetics and life
history; 2) a survey of the badly depleted Kootenai River sturgeon
population and analysis of the potential to artificially enhance this
population, which led to an emergency hatchery program (these fish were
listed as an endangered species under the federal Endangered Species Act
in 1994); and 3) a study of lower river population status and habitat
requirements.
These studies indicated that sturgeon harvest rates were too high to
sustain the population; management agencies responded by further
restricting harvest.
PROTECTED AREAS AMENDMENT
On August 10, 1988, the Council adopted a proposal to designate some
44,000 miles of Northwest streams as "protected areas" because
of their importance as critical fish and wildlife habitat.
The "protected areas" amendment was a major step in the
Council's efforts to rebuild fish and wildlife populations that have been
damaged by hydroelectric development. Low cost hydroelectric power has
provided tremendous benefits to the Northwest, but those benefits also
have imposed significant costs. The Northwest's fish and wildlife have
suffered extensive losses; salmon and steelhead runs in the Columbia River
drainage, for example, are a fraction of their former numbers. The
region's concerted efforts to restore these populations could not be fully
effective without strong protection of fish and wildlife habitat. The
Council's goal of doubling salmon and steelhead runs in the Columbia River
Basin will require hardy wild and natural fish populations, which rely on
high-quality habitat. To protect the ratepayers' investment in fish and
wildlife restoration, it is necessary to protect the best remaining
habitat.
The designation of protected areas also is intended to play a positive
role in the efficient development of environmentally benign hydropower.
New hydro development in the region's most critical fish and wildlife
habitat is likely to generate divisive, time-consuming and costly
controversy. By identifying this habitat as "protected," the
Council hopes to point developers to less sensitive areas, where the time
and cost of development will be lower. Ratepayers should benefit from both
more productive fish and wildlife investments and from reduced hydro
development costs.
While the Council does not license hydroelectric development, certain
federal agencies have a legal obligation to take the Council's action into
account in their decision-making. Those agencies include the Federal
Energy Regulatory Commission, which grants licenses to nonfederal
hydropower projects, and the Bonneville Power Administration, which
acquires and transmits electrical power from the projects.
The Council periodically amends new areas into the protected-areas rule
and removes the designation from other areas, based on analysis and public
comment. The Council last amended the protected-areas rule in June 1992.
HARVEST
The Council has no direct harvest management authority. But harvest
management can affect the Council's program and the substantial investment
of ratepayers to rebuild salmon and steelhead resources in the Columbia
River Basin. Because of this, the program calls on fishery managers to
regulate harvest as needed, especially in mixed-stock fisheries, in order
to support efforts to rebuild runs.
The Council monitors ocean and inriver harvest and receives biannual
reports on developments and arising issues. Significant improvements in
harvest regulation have occurred through adoption of the U.S./Canada
Pacific Salmon Treaty and through settlement of the U.S. v. Oregon inriver
harvest litigation. Negotiations under the U.S.-Canada salmon treaty are
continuing.
The commercial, recreational and tribal fisheries in the ocean and
mainstem Columbia River are mixed-stock fisheries. They harvest a mixture
of hatchery and naturally produced stocks from numerous areas of origin.
Generally, mixed-stock fisheries are unable to harvest specific stocks
selectively and, therefore, overfishing can occur for some stocks in order
to harvest the surplus of other stocks. In the Columbia River, the problem
associated with mixed-stock fisheries results in part from operations of
hatcheries constructed to mitigate the effects of hydropower development.
In addition, fish productivity is reduced by the effects of passing dams
on outward and upstream migration.
The Council also took an active role in the effort to ban the use of
driftnets in the high seas squid fishery, fearing this fishery could
intercept salmon and steelhead.
Key elements of the harvest recommendations in the fish and wildlife
program include:
* In general, harvest must be limited further in order to allow a
sufficient number of adult fish to return upstream to spawn.
* In order to protect endangered Snake River sockeye, there should be no
commercial harvest of sockeye below the confluence of the Snake and
Columbia rivers.
* Overall harvest rates on Snake River fall chinook have been reduced to
less than 50 percent of the run from levels greater than 70 percent in
recent years. Snake River fall chinook return through the most intense
mixed-stock fisheries. Reducing the harvest rate of Snake River fall
chinook required vastly greater harvest reductions in the overall fishery.
* River harvest of spring chinook in non-treaty fisheries has been limited
to about 4 percent of the upriver run, the 1987-1991 average.
* There has been no commercial fishery for summer chinook until rebuilding
allows it, continuing the ban that has been in place since the mid-1960s.
* Substantial reductions in Canadian harvest of U.S. salmon are needed to
protect depleted stocks.
* Voluntary lease-back and buy-back programs should be developed for
commercial fishing licenses to further reduce harvest until rebuilding can
occur.
* Harvest alternatives, such as live-catch, known-stock and terminal
harvest fisheries, should be demonstrated and evaluated.
* Sport fishing regulations should be reviewed and catch-and-release rules
adopted where appropriate.
* Incidental harvest of salmon in other fisheries should be accounted for;
ocean fishery managers should report to the Council on incidental harvest
of salmon in other fisheries.
* States and tribes have increased law enforcement and public education to
deter illegal fishing.
* The Pacific States Marine Fisheries Commission will prepare and
circulate a unified, annual report by June 1 each year on harvest and
escapement of various Columbia Basin salmon stocks.
WILDLIFE MITIGATION
The development of the hydropower system in the Columbia River Basin
has affected many species of wildlife as well as fish. Some floodplain and
riparian habitats important to wildlife were inundated when reservoirs
were filled. In some cases, fluctuating water levels caused by dam
operations have created barren vegetation zones, which expose wildlife to
increased predation. In addition to these reservoir-related effects, a
number of other activities associated with hydroelectric development have
altered land and stream areas in ways that affect wildlife. These
activities include construction of roads and facilities, draining and
filling of wetlands, stream channelization and shoreline riprapping (using
large rocks or boulders to reduce erosion along streambanks). In some
cases, the construction and maintenance of power transmission corridors
altered vegetation, increased access to and harassment of wildlife, and
increased erosion and sedimentation in the Columbia River and its
tributaries.
The habitat that was lost because of the hydropower system was not just
land, it was home to many different, interdependent species. In responding
to the system's impacts, we should respect the importance of natural
ecosystems and species diversity.
While the development of the hydropower system harmed wildlife, it also
resulted in a number of beneficial effects. For example, the creation of
reservoirs provided important resting, feeding and wintering habitat for
waterfowl. In addition, where reservoir storage is used for irrigation as
well as power generation, the irrigation water promoted extensive growth
of grass and food that provided some seasonal benefit to species that
could not otherwise exist in such a dry climate. A large body of
scientific evidence shows that some of the species have not sustained
initial population increases. Programs to protect, mitigate and enhance
wildlife affected by hydroelectric development should consider the net
effects on wildlife associated with hydropower development.
Although the Northwest Power Act refers to them as "hydropower
facilities," the dams serve multiple purposes: hydropower, flood
control, navigation, irrigation, recreation and other purposes. Congress
encouraged a comprehensive response to the fish and wildlife impacts of
dams on the Columbia River and its tributaries, and rejected the
piecemeal, fragmented approach that characterized past mitigation efforts.
The Council believes the region will benefit from a coordinated approach
to wildlife mitigation. At the same time, as Congress specified, consumers
of electric power should pay only the cost of measures to deal with the
effects of electric power. The Act gives Bonneville the responsibility to
allocate expenditures to the various project purposes, in consultation
with the Corps of Engineers and the Bureau of Reclamation and in
accordance with existing accounting procedures.
The Council's program addresses the full impacts of the
"hydropower facilities" in the broad sense that Congress
intended, including all effects traceable to any of the projects'
purposes.
The goal of the program's wildlife strategy is to achieve and sustain
levels of habitat and species productivity as a means of fully mitigating
wildlife losses caused by construction and operation of the federal and
non-federal hydroelectric system. Through the program, Bonneville has
financed the acquisition of thousands of acres of wildlife habitat in the
Columbia River Basin.
Here are some specific measures in the wildlife strategy:
* The program called on Bonneville to consult with the Corps of
Engineers, the Bureau of Reclamation, wildlife managers, state and federal
land management agencies, tribes, utilities, the Council and other
interested parties to allocate wildlife mitigation expenditures to the
various project purposes in accordance with existing accounting
procedures.
* The program defines mitigation as achieving and sustaining the levels of
habitat and species productivity for the habitat units lost as a result of
the construction and operation of the federal and non-federal hydropower
system.
* The program called on Bonneville to use the estimates of inundation
losses as the basis for identifying wildlife measures and developing
short-term and long-term wildlife mitigation agreements.
* The program called on Bonneville to fund studies to develop statements
of wildlife and/or habitat losses and gains caused by the operation of the
federal hydropower system. The studies should be designed to identify both
direct and indirect operational losses and gains to fish and wildlife
habitat and should be based on a written plan designed to promote
consistency of results between and among projects and encourage early
public and local involvement.
* Through the Council's program, Bonneville has purchased thousands of
acres of wildlife habitat, most recently a 10,300-acre parcel bordering
Joseph Creek in Northeast Oregon. The land will be managed by the Nez
Perce Tribe as wildlife habitat.
GLOSSARY OF FISH-RELATED TERMS
acclimation pond
Concrete or earthen pond or a temporary structure used for rearing and
imprinting juvenile fish in the water of a particular stream before their
release into that stream.
adaptive management
A scientific policy that seeks to improve management of biological
resources, particularly in areas of scientific uncertainty, by viewing
program actions as vehicles for learning. Projects arc designed and
implemented as experiments so that even if they fail, they provide useful
information for future actions. Monitoring and evaluation are emphasized
so that the interaction of different elements of the system are better
understood.
adult equivalent population
The number of fish that would have returned to the mouth of the
Columbia River in the absence of any prior harvest.
anadromous fish
Fish that hatch in freshwater, migrate to the ocean, mature there and
return to freshwater to spawn. For example, salmon or steelhead.
biodiversity
The variety of and variability in living organisms, with respect to
genetics, life history, behavior and other fundamental characteristics.
captive brood stock
Fish raised and spawned in captivity.
carrying capacity
The number of individuals of one species that the resources of a
habitat can support.
Coordinated Information System
Still under development, this system is designed to allow interested
parties to access technical information about Columbia River salmon and
steelhead.
deflector screens/diversion screens
Wire mesh screens placed at the point where water is diverted from a
stream or river. The screens keep fish from entering the diversion channel
or pipe.
demography
The study of characteristics of human populations, especially size,
density, growth, distribution, migration and vital statistics, and the
effect of these on social and economic conditions.
drawdown
The release of water from a reservoir for power generation, flood
control, irrigation or other water management activity.
economies of scale
Reductions in the average cost of a product that result from increased
production.
ecosystem
The biological community considered together with the land and water
that make up its environment.
embeddedness
The degree to which dirt is mixed in with spawning gravel.
escapement
The number of salmon and steelhead that return to a specified point of
measurement after all natural mortality and harvest have occurred.
Spawning escapement consists of those fish that survive to spawn.
evolutionary biology
The study of the processes by which living organisms have acquired
distinguishing characteristics.
extinction
The natural or human-induced process by which a species, subspecies or
population ceases to exist.
fish flows
Artificially increased flows in the river system called for in the
fish and wildlife program to quickly move the young fish down the river
during their spring migration period. (See "water budget.")
fish passage efficiency
The percentage of the total number of fish that pass a dam without
passing through the turbine units.
flows
The rate at which water passes a given point in a stream or river,
usually expressed in cubic-feet per second (cfs).
flow augmentation
Increased flow from release of water from storage dams.
gametes
The sexual reproductive cells, eggs and sperm.
gas supersaturation
The overabundance of gases in turbulent water, such as at the base of
a dam spillway. Can cause a fatal condition in fish similar to the bends.
genetic conservation refuge
Reserve area whose goal is to protect genetic diversity and natural
evolutionary processes within and among natural populations, while
allowing varying degrees of exploitation and modification.
genetic diversity
All of the genetic variation within a species. Genetic diversity
includes both genetic differences among individuals in a breeding
population and genetic differences among different breeding populations.
genetic integrity
The ability of a breeding population or group of breeding populations
to remain adapted to its natural environment.
genotype
The complement of genes in an individual.
glides
Stream areas with velocities generally less than one cubic foot per
second and with a smooth surface. Water depth generally is less than two
feet.
harvest controls
Regulations established for commercial and sport fisheries to ensure
that the correct proportion of the different stocks escape to spawn.
impoundment
A body of water formed behind a dam.
imprinting
The physiological and behavioral process by which migratory fish
assimilate environmental cues to aid their return to their stream of
origin as adults.
mainstem
The main channel of the river in a river basin, as opposed to the
streams and smaller rivers that feed into it. In the fish and wildlife
program, mainstem refers to the Columbia and Snake rivers.
minimum operating pool
The lowest water level of an impoundment at which navigation locks can
still operate.
mixed-stock fishery
A harvest management technique by which different species, strains,
races or stocks are harvested together.
morphology
A study of the form and structure of animals and plants.
naturally spawning populations
Populations of fish that have completed their entire life cycle in the
natural environment and may be the progeny of wild, hatchery or mixed
parentage.
naturalization
The process by which introduced fish successfully establish a
naturally spawning population.
outfall
The mouth or outlet of a river, stream, lake, drain or sewer.
PIT tags
PIT tags are used for identifying individual salmon for monitoring and
research purposes. This miniaturized tag consists of an integrated
microchip that is programmed to include specific fish information. The tag
is inserted into the body cavity of the fish and decoded at selected
monitoring sites.
plume
The area of the Pacific Ocean that is influenced by discharge from the
Columbia River, up to 500 miles beyond the mouth of the river.
population
A group of organisms belonging to the same species that occupy a
well-defined locality and exhibit reproductive continuity from generation
to generation.
population vulnerability analysis
A systematic process for estimating species, location and
time-specific criteria for persistence of a population.
redd
A spawning nest made in the gravel bed of a river by salmon or
steelhead.
reproductive isolating mechanisms
Mechanisms that retain genetic diversity among populations. The
primary reproductive isolating mecha-nism for anadromous fish is accuracy
of homing, which can be reduced by improper hatchery operations. Stock
transfers also reduce reproductive isolation.
resident fish
Fish that spend their entire life cycle in freshwater. For program
purposes, resident fish includes land-locked anadromous fish (e.g., white
sturgeon, kokanee and coho), as well as traditionally defined resident
fish species.
riffle
A shallow extending across the bed of a stream over which water flows
swiftly so that the surface of the water is broken in waves.
riparian habitat
Habitat along the banks of streams, lakes or rivers.
rule curves
Graphic guides to the use of storage water. They are developed to
define certain operating rights, entitlements, obligations and limitations
for each reservoir.
sinuosity
The amount of bending, winding and curving in a stream or river.
smolt
A juvenile salmon or steelhead migrating to the ocean and undergoing
physiological changes (smoltification) to adapt its body from a freshwater
to a saltwater existence.
spill
Releasing water through the spillway rather than through the turbine
units.
spillway crest elevation
The point at which the reservoir behind a dam is level with the top of
the dam's spillway.
stream morphology
The study of the form and structure of streams.
supplementation
The release of hatchery fry and juvenile fish in the natural
environment to quickly increase or establish naturally spawning fish
populations.
tailrace
The canal or channel that carries water away from the dam.
velocity
The speed of water flowing in a watercourse, such as a river.
velocity barrier
A physical structure, such as a barrier dam or floating weir, built in
the tailrace of a hydroelectric powerhouse, which blocks the tailrace from
further adult salmon or steelhead migration to prevent physical injury or
migration delay.
water budget
A means of increasing survival of downstream migrating juvenile fish
by increasing Columbia and Snake river flows during the spring migration
period. The water budget was developed by the Council, which oversees its
use in conjunction with the fish and wildlife agencies and Indian tribes,
the U.S. Army Corps of Engineers, the Bonneville Power Administration and
the Bureau of Reclamation.
watershed
The area that drains into a stream or river.
weak stock
Listed in the Integrated System Plan's list of stocks of high or
highest concern; listed in the American Fisheries Society report as at
high or moderate risk of extinction; or stocks the National Marine
Fisheries Service has listed. "Weak stock" is an evolving
concept; the Council does not purport to establish a fixed definition. Nor
does the Council imply that any particular change in management is
required because of this definition.
wild populations
Fish that have maintained successful natural reproduction with little
or no supplementation from hatcheries.
THE CHANGING UTILITY WORLD
The past several years have been marked with tremendous change in the
electric utility industry. Those changes are already having an impact on
the Council and the Northwest. The Council will need to adapt its planning
approaches to this new environment in some fairly significant ways to
remain effective. Most of the changes are the result of a trend toward
greater market orientation and less regulation in the utility industry.
This trend is the product of a number of factors and developments:
* Low price and apparently abundant supplies of natural gas, combined
with relatively low capital cost, short lead time gas turbine technology,
have made it feasible for non-utility entities to compete in the supply of
new generation;
* Policy initiatives also encourage resource development by non-utility
entities;
* New policies are opening access to transmission systems to wholesale
transactions - facilitating competition among potential suppliers;
* Retail utilities are also being opened to competition - for example,
the California Public Utility Commission has ordered retail access to
utilities' distribution systems to allow consumers to choose their power
supplier.
These trends have resulted in a world that is already a great deal
different than the one that existed when the Council was established. In
many respects, the changes are beneficial. Competitive markets will
require efficiency in the delivery of electricity services, which may
drive consumers' costs down. Competition will offer consumers choices that
allow them to tailor their electricity purchases to their needs.
Competition may, however, have other characteristics that are more
problematic. Will competition result in all cost-effective conservation
being implemented or are there market barriers that still must be
addressed? Will competition take environmental considerations adequately
into account? Will a competitive utility industry be inordinately focused
on the short term to the detriment of the long term? Will the sum of the
benefits of local competitive decisions be less than the aggregate benefit
that might be derived from more coordinated development of the regional
system? Will competition shift costs unfairly to those less able to take
advantage of competitive alternatives?
To address these concerns, the governors of Idaho, Montana, Oregon and
Washington convened in 1996 the Comprehensive Review of the Northwest
Energy System. The governors appointed a broadly representative steering
committee, which in turn created a number of work groups to address
specific issues. After approximately a year of intense meetings and
discussion, the Steering Committee proposed a set of recommendations. The
governors then appointed the Northwest Energy Review Transition Board to
oversee refinement and implementation of those recommendations.
The Transition Board members are John Etchart, Montana Power Planning
Council member; Todd Maddock, Idaho Council member; Mike Kreidler,
Washington Council member; Roy Hemmingway, representing Oregon's Governor
John Kitzhaber. The Board and its work groups have been meeting since
January 1997 to carry out the recommendations of the Steering Committee.
COMPREHENSIVE REVIEW OF THE NORTHWEST ENERGY
SYSTEM
In January 1996, the governors of Idaho, Montana, Oregon and Washington
established a 20-member committee, broadly representative of Northwest
power issues, to study changes sweeping the electricity industry and
recommend a constructive response tailored to the Northwest. The Steering
Committee of the Comprehensive Review of the Northwest Energy System met
29 times, conducted 10 public hearings around the region on its draft
report and reviewed more than 1,000 written comments. Former Power
Planning Council Member Chuck Collins of Seattle, was the committee's
chairman.
The Steering Committee's efforts represented the first time an entire
region worked together, in public, to craft a single, common-sense
approach that addresses electricity industry restructuring. In December
1996, the Steering Committee presented its recommendations to the
governors.
These recommendations are summarized in the following sections: federal
power marketing; governance of the Columbia River system (a related topic
to federal power marketing); conservation, renewable resources and
low-income energy services; consumer access to the competitive market;
transmission; and future power system roles for a four-state regional
body. Issues related to federal power marketing; conservation, renewable
resources and low-income services; consumer access to the competitive
market; and transmission were analyzed and discussed in work groups during
the review process. Although described as distinct parts, this is an
integrated set of recommendations, the parts of which are interdependent.
Federal Power Marketing - the Bonneville Power Administration
The Steering Committee's goals for federal power marketing were: 1)
align the benefits and risks of access to existing federal power; 2)
ensure repayment of the debt to the U.S. Treasury with a greater
probability than currently exists while not compromising the security or
tax-exempt status of Bonneville's third-party debt; and 3) retain the
long-term benefits of the system for the region. The recommendation is
also intended to be consistent with emerging competitive markets and
regional transmission solutions. The mechanism proposed to accomplish
these goals is a subscription system for purchasing specified amounts of
power at cost with incentives for customers to take longer-term (15 to 20
year) subscriptions. Public utility customers with small loads would be
able to subscribe under contracts that would accommodate minor load
growth. Subscriptions would be available first to regional customers in a
specified multi-part priority order, starting with preference customers,
then the direct service industrial customers of Bonneville and the
residential and small farm customers of those investor-owned utilities
currently participating in Bonneville's residential exchange, followed by
other regional customers. Non-regional customers could subscribe after
in-region customers. Within each phase of the subscription process,
longer-term contracts would have priority over shorter-term contracts if
the system is oversubscribed.
Longer-term subscribers would have the right to purchase power at cost
for the term of the contract. While the cost of the power from the federal
system is currently somewhat above market prices, the costs are generally
expected to be below market prices in the future. Short-term subscribers
also get the right to purchase power at cost. If they wish to be assured
the ability to renew their contracts at cost, they must pay an option fee
for the term of their contracts to compensate the U.S. Treasury for the
risk of shorter-term contracts. A sliding-scale option fee, ranging
between 2 mills per kilowatt-hour for a five-year contract to 0 mills for
a 15-20 year contract has been proposed.
The longer-term subscribers assume more risk than current Bonneville
customers from the effects of year-to-year variations in weather, future
power system cost increases and changes in market conditions. For example,
if we were to experience lower than expected market prices that are below
Bonneville costs for an extended period of time, the subscribers would
still be obligated to pay Bonneville's costs. At the end of their
subscription period, short-term subscribers would be able to let their
subscriptions lapse and buy at market prices. If they let their
subscriptions lapse, however, they would not be able to buy at cost in the
future, should that become desirable.
The Steering Committee recognized Bonneville's existing fish and
wildlife obligations and intended that none of its recommendations affect
existing trust obligations or treaty rights. The Steering Committee
further recognized that the region will need to provide most of the
required fish and wildlife funding, but supported assistance and cost
sharing by the federal government. The Committee recommended detailed
multiyear fish and wildlife budgets be developed in
government-to-government consultations by federal, state and tribal
authorities. These budgets would be incorporated into Bonneville rate
projections, allowing shorter-term customers certainty regarding fish and
wildlife costs. If market prices are above costs, the Treasury would share
in these benefits by getting some percentage of the difference between
market prices and the cost. The Treasury's share would be applied to
accelerate repayment of the federal debt.
Competition raises the possibility of stranded costs - previously
incurred fixed costs that cannot be recovered at market prices. If
successfully implemented, the subscription system should greatly reduce
the possibility of Bonneville experiencing any stranded cost. However, if
unmitigable stranded costs remain, a mechanism for recovery of those costs
will be required.
Subscribers may resell power in cases of loss of load and/or to the
extent allowed by existing law. Other commercial transactions by the
subscriber would not disqualify the purchase of federal power. The
benefits of purchases for residential and small farm customers of
exchanging investor-owned utilities should be passed on to end users.
The recommendations would have the effect of disposing of much if not
all of the firm power available from Bonneville on a long- or
intermediate-term basis. The fact that most of Bonneville's power would be
subscribed at cost would limit Bonneville's market role. Any remaining
firm power and other power products would be sold at Federal Energy
Regulatory Commission (FERC)-regulated prices or at competitive prices,
where FERC determines that competitive markets exist. To the extent
consistent with its obligation to repay Treasury, Bonneville should return
to its historic role of marketing power generated by the Federal Columbia
River Power System, rather than becoming an aggressive marketer of
products and services in the emerging competitive power market. Bonneville
should develop a quantitative marketing plan. The plan should be presented
to a transition board reporting to the Governors.
In addition, it is recommended that Bonneville would not acquire
resources to serve its customers' load growth except on a direct bilateral
basis where the customer takes on all the risk of the acquisition.
Similarly, it is proposed that Bonneville would not sell directly to new
retail loads, beyond the existing direct service industry loads, although
it may sell through intermediaries whose transactions would be subject to
state or local jurisdiction.
The Steering Committee recommended that the governors of Idaho,
Montana, Oregon and Washington appoint a transition board to oversee
implementation of these and other recommendations. In particular, the
board should periodically determine whether the subscription process is
making adequate progress or whether another approach is necessary.
Columbia River System Governance
The Steering Committee concluded that the region cannot expect to
achieve both the degree of cost stability the electricity industry
requires to maintain the benefits of the Columbia River power system for
the region and achieve sustainable fish restoration unless the region
ensures predictability, accountability and effective governance for the
fish and wildlife interests of the river. In short, an effective
conclusion of the region's effort is not possible without an improved
system of river governance that pursues fish restoration as a high
priority.
The Steering Committee was asked by the Northwest governors to focus on
the restructuring of the electricity system and to address the financial
stability of the federal power system. The Committee recommended changes
to the federal system that accomplish that goal. It recognized that there
are other important, related issues and decisions, including those
affecting fish and wildlife, that must be resolved before a truly
comprehensive package can be achieved.
The Steering Committee considered a number of matters related to the
governance of the river and the power system. The role of the Northwest
Power Planning Council in river governance was not addressed, but needs to
be. The governors should hold the Council or its successor accountable for
ensuring that the region is making the most cost-effective use of fish and
wildlife funding. River governance is a fundamental part of any effective
response to changes in the electric utility industry. Until governance
deliberations move forward through a government-to-government consultation
among federal, state and tribal authorities, the prospects for a consensus
on the regional response to utility restructuring are diminished and
controversial. The Steering Committee requested the governors to initiate
a broadly based discussion of improvements in river system governance that
would provide more effective decision-making for this complex ecosystem
and all of its competing uses.
Conservation, Renewable Resources and Low-Income Energy Services
The Northwest electric utility industry has a long and successful
history of developing cost-effective conservation and supporting the
development of renewable electricity sources, such as wind, geothermal and
biomass energy. In addition, the utilities have played a major role in
delivering weatherization to low-income households and helping low-income
households with their energy bills. Competitive pressures, however, are
expected to make significant changes in the ways utilities carry out these
activities in the future. The goal of the Steering Committee's
recommendations was to provide for maximum local control in the
implementation of conservation, renewables and low-income energy services,
while establishing an effective minimum standard that ensures stable
funding for these purposes.
To ensure that cost-effective conservation, renewable resource
development and low-income weatherization are sustained during the
transition to competition and beyond, the Steering Committee recommended
that by July 1, 1997, and annually thereafter for a period of 10 years, 3
percent of the revenues from the sale of electricity services in the
region ($210 million in 1995) be dedicated to those purposes. After 10
years, this commitment should be re-evaluated. Three percent of revenues
is roughly 65 percent of what was spent for these purposes by the region's
utilities and Bonneville in 1995.
The Steering Committee recommended that by July 1, 1999, each of the
Northwest states enact legislation that ensures that all electric
utilities operating within its borders are meeting the minimum standard
for investment in the development of conservation and renewable resources
and provision of weatherization and energy-efficiency services to
low-income consumers. Utilities should demonstrate compliance with the
minimum standard by July 1, 1999. Public utilities may satisfy the
standard in aggregate. If this minimum standard is not being met, the
legislation should provide for the assessment of a uniform system benefits
charge that ensures the collection and investment of funds for these
purposes. Due to the rapid emergence of competitive pressures, the
Committee strongly recommends prompt legislative action. Legislation
implementing these requirements should be implemented simultaneously with
open retail access.
The Steering Committee proposed that between two-thirds and five-sixths
of the funds be retained by local distribution utilities to carry out
locally initiated cost-effective conservation, low-income weatherization
and energy-efficiency services and renewable energy projects. Conservation
projects implemented and funded by large consumers should be credited
against the local conservation target, not including low-income
energy-efficiency services. Local utilities would also offer, or allow
other electricity service providers to offer, "green" power to
their consumers - power from renewable assistance energy sources. The
Steering Committee recommended that utilities maintain their current level
of low-income energy assistance until states adopt alternative mechanisms
for providing these services. The report recognized and affirmed the
energy system's historic role in providing energy assistance and proposes
that states now provide this assistance by establishing a "Universal
Electrical Service Fund" to provide energy bill assistance. This fund
could be supported by federal Low-Income Home Energy Assistance Program (LIHEAP)
funds, state or local government funds, other funds and/or by a retail
distribution system access fee or meters charge.
Some conservation and renewable resource activities benefit from
regional planning and coordination. Consequently, it is proposed that
between one sixth and one third of the funds be used by a regional
non-profit entity with utility, government, consumer and public interest
membership. Its functions would be to bring about changes in the markets
for targeted energy-efficiency products and services that will improve
their market share; to plan and contract for research and limited
demonstration of renewable energy technologies, and to support the
development of several megawatts annually of renewable generating
capacity. A regional technical forum would be established to track
regional progress toward the achievement of regional goals and provide
feedback and suggestions for improving the effectiveness of conservation
and renewable resource development programs. Funding for these activities
should be collected in part through Bonneville wholesale rates to the
extent regional firm loads are served by power from Bonneville.
How the funds are collected is a matter for state or local decision, as
appropriate. The Steering Committee expected that methods of collection
that are competitively neutral and affect all participants in the market
equally will be found to be preferable.
Consumer Access to the Competitive Market
The goals of the recommendations on retail markets and customer choice
were to encourage a more efficient power system, lower electricity costs,
increased product choice and greater product innovation for all consumers.
These goals were adopted subject to a commitment to maintain the
reliability and safety of the electrical power system. The Steering
Committee concluded that this goal could best be accomplished by putting
in place a competitive electricity market that is driven by consumer
choice. However, there is concern that the benefits of a competitive
market may flow unevenly to different classes of consumers and that some
small consumers may even suffer harm. The report recommends safeguards
intended to help mitigate these concerns.
The Steering Committee recommended that regulators and local utility
boards and commissions offer open access for all customers that desire it
no later than July 1, 1999. The Committee recognized that some of these
regulatory bodies may choose to phase in full retail access. In these
cases, a similar phase-in of the recommendations on conservation,
renewable resources and low-income energy services may be effected.
Direct access may occur prior to July 1, 1999, however, for direct
retail access to be implemented promptly, several activities must be
accomplished. These include the identification of any stranded costs and,
if any stranded costs are determined to exist, the creation of a stranded
cost collection mechanism; unbundling and cost-based pricing of delivery
services; pilot programs to explore aggregation for small commercial and
residential customers; the exploration of market index pricing options for
residential and small commercial customers; and implementation of public
purposes funding, energy assistance funding and consumer protection
mechanisms consistent with this report's recommendations.
To achieve a competitive retail electricity market requires separation
of the distribution and electricity marketing functions of current retail
utilities. This is necessary to ensure that consumers will have unimpeded
access to alternative electricity suppliers, and vice versa, over the
wires of the distribution utility. The distribution utility would continue
to be a regulated monopoly responsible for the reliable and safe delivery
of electricity from electric service companies to consumers over local
distribution wires. Electricity service companies will offer a variety of
electricity products and services (e.g., firm or interruptible power,
power from renewable resources, peak or off-peak power, fixed or
spot-market prices) to consumers on a competitive basis and may, in fact,
offer other products unrelated to electricity markets. The electricity
services portion of current integrated retail utilities could compete in
this market if the distribution utility function is sufficiently separated
from the electricity services business to ensure that control of
distribution is not used to advantage the electricity services business.
Putting such a competitive market in place will require a significant
transition and ongoing market maintenance procedures. There is a danger
that, until competitive markets have fully developed for all consumers,
some of the benefits of increased competition may be realized primarily by
large consumers at the expense of small consumers. Therefore, the Steering
Committee calls for active government oversight of the transition and
active ongoing programs to facilitate and encourage the development of
meaningful market access for all consumer classes and to prevent
unwarranted cost shifts among consumer classes. Specifically, the policy
calls for licensing of new electricity service providers, applicability of
consumer protection laws, formal complaint processes, consumer information
programs, and a "provider of last resort" to ensure continued
affordable service to all consumers. To further minimize cost shifts to
small consumers, policies should be adopted to provide utilities a fair
opportunity to recover costs of previous investments that may be stranded
by the opening of the market. This is viewed as a transitional problem
only, and incentives must be included for utilities to mitigate any
stranded costs they potentially face.
TRANSMISSION
Transmission is the "highway system" over which the products
of electrical generation flow. If there is to be effective competition
among generators, transmission facilities should be operated independently
of generation ownership. An independent grid operator (IGO) regulated by
the Federal Energy Regulatory Commission with broad membership, including
Bonneville and the region's other major transmission owners, was proposed
as a means of ensuring independence of transmission operation and
improving the efficiency of transmission operation. An independent grid
operator should also have clear incentives to maintain reliability and
encourage efficient use of the transmission system.
The independent operation of Bonneville's transmission facilities is
particularly important to effective competition among generators in this
region because Bonneville's facilities make up a large part of the
regional transmission system. To ensure this independence, it was
recommended that Bonneville be legally separated into two organizations -
a power marketing organization to market the power from the federal power
system and a transmission organization to carry out the transmission
functions. The separation of these functions should be structured so that
it does not jeopardize or diminish the legal obligation and ability of
Bonneville to meet fish and wildlife and other obligations. A separated
federal transmission owner (e.g., the Bonneville Transmission Corporation)
could lease its assets to an independent grid operator, or could be an
independent grid operator and operate other participants' assets if FERC
and the other participants agree.
Legislation will be required to accomplish these goals. While
legislation is under consideration, Bonneville should move quickly to
achieve as much administrative separation as possible, and to participate
in efforts to form an independent grid operator that could operate both
federal and non-federal transmission assets.
Future Power System Role for a Four-State Regional Body
When the Northwest Power Act was passed in 1980, the authors
contemplated an extended time of electricity shortage and the need for
increasingly costly large-scale power plants. The Northwest Power Planning
Council was established with two representatives from each of the
Northwest states (Idaho, Montana, Oregon and Washington) to provide the
states and the public a role in determining the region's future need for
electricity and how that need could best be met. The Council was also
charged with furthering the goals of: encouraging conservation and
renewable resources; helping assure an adequate, efficient, economical and
reliable power system; providing environmental quality; and protecting,
mitigating, and enhancing the fish and wildlife of the Columbia Basin.
The Power Planning Council has been credited with many improvements in
electricity planning. However, in an era in which market forces will play
the primary role in determining what plants are built and what can be
charged for their output, the Council's resource acquisition planning role
is no longer relevant. The Steering Committee believed, however. that the
remaining goals are still important to the citizens of the region. The
issue is how they are to be achieved in the context of a competitive
market.
There is much that is unknown about the competitive future we are about
to embrace. As the Northwest transitions toward a competitive electricity
industry, there are roles that the region would want carried out by a
regional body. These roles do not involve resource acquisition planning,
regulation or implementation. They do involve monitoring and analyzing the
transition to a competitive electricity market and informing policy-makers
and the public. This will help ensure that the transition to a competitive
market is accomplished efficiently and fairly throughout the region and
that the public values the Northwest has sought from its power system are
preserved and enhanced.
These roles include:
Conservation and Renewables - working with regional interests to
devise ways of overcoming market barriers, participating in market
transformation activities, providing guidance in meeting the region's
conservation and renewable goals and working with the regional technical
forum to track regional progress;
The Competitive Marketplace - providing information, evaluation
and analysis of the evolving marketplace to ensure full, fair and
effective competition throughout the region; and
Public Participation and Involvement- informing and involving
interested members of the public on matters that affect them, their
environment and their economy.
The funding of the Northwest Power Planning Council has been through a
charge on Bonneville Power Administration rates. If federal legislation
affecting the role of the Northwest Power Planning Council or a similar
regional body is pursued, the question of the level and sources of the
funding should be addressed.
TRANSMISSION
Orders 888 and 889 issued by the Federal Energy Regulatory Commission (FERC)
in April 1996 indicated that the Commission's implementation of the
National Energy Policy Act of 1992 would require several things of
utilities under its jurisdiction: 1) "unbundling" of the costs
and operation of transmission from those of generation; 2) transmission
tariffs that offered transmission service to other parties on the same
terms as the utility applies to itself; and 3) providing timely
information about availability and costs of transmission. The goal of
these orders was a transmission system that would be open to all
competitors in the generation market on equal terms, and would make
possible effective competition in the wholesale market for electricity.
The Council's draft power plan described alternatives for separation of
transmission and generation, and it described the alternatives' relative
effectiveness in reducing the opportunities and temptation to use control
of transmission to benefit a utility's generation business. The
alternatives (listed in order of increasing certainty that effective open
access to transmission will be achieved) are: 1) functional separation
within the utility; 2) spinning off generation and transmission
subsidiaries within an existing corporation; 3) turning over control of
transmission assets to an independent operator; and 4) divestiture -
selling off the generation or transmission assets to new owners.
Unfortunately, the more certain alternatives are also the most complex to
implement.
Recommendations from the Comprehensive Review
The Steering Committee stated that its primary goal for transmission
was "a transmission system whose structure and operation help ensure
a fully competitive generation market." It recommended the formation
of an independent grid operator to operate the region's transmission
system, including Bonneville's assets. It recommended that
"Bonneville's generation and transmission functions should be fully
and legally separated (including separated funds)" and that the
separation "be achieved in such a way that it does not jeopardize or
diminish the legal obligation and ability of Bonneville to meet fish and
wildlife and other obligations." The Steering Committee also
recommended that Bonneville's transmission be subject to FERC regulation
"that is equivalent to FERC regulation of investor-owned
utilities."
IndeGO proposal
The formation of an independent grid operator along the lines of the
Steering Committee's recommendations (IndeGO) was begun in July 1996. In
late 1997, participants released for public review a draft IndeGO proposed
structure. Under the IndeGO model, scheduling of all transmission would be
turned over to the grid operator. Pricing of transmission services would
also be governed by IndeGO, subject to regulation by the Federal Energy
Regulatory Commission.
That proposal was dropped when at least one utility refused to
participate in it. Efforts to redesign the IndeGO proposal have been
suspended. However, separate discussions are under way to create either an
independent system operator or an independent grid scheduler. These new
entities would have limited authority.
Bonneville transmission issues
The governors' Transition Board formed a transmission working group to
discuss how best to accomplish the separation of Bonneville generation and
transmission. That work group has been meeting since April 1997. One of
the major issues the group is examining is how to effectively separate
generation and transmission without threatening the security of bonds
issued by the Washington Public Power Supply System (WPPSS), and without
compromising the ability of Bonneville to mitigate the effects of the
power system on the region's fish and wildlife. If the separated power
marketing organization has trouble meeting its revenue requirements,
should it be able to call on the separated transmission organization for
financial support? Holders of WPPSS bonds, fish and wildlife advocates and
the federal Treasury are likely to resist a separation that appears to
threaten their interests. On the other hand, prospective users of the
separated transmission system and competitors of the separated power
marketing organization will not be satisfied with an arrangement that
leaves Bonneville with significant incentive and ability to use the
transmission system to benefit its power marketing revenues.
Another of the Steering Committee's recommendations that the working
group is discussing is regulation of Bonneville's transmission by the
Federal Energy Regulatory Commission that is equivalent to its regulation
of investor-owned utilities. The work group has made progress toward
definition of "equivalent" regulation of Bonneville's
transmission. Next, the group intends to consider to what extent, and in
what areas, it would be appropriate for FERC regulation of Bonneville to
depart from "investor-owned equivalency."
TRANSMISSION SYSTEM IMPACTS FROM
BREACHING JOHN DAY DAM
As the Pacific Northwest explores lowering reservoir elevations as a
potential option to improve salmon survival, it is imperative that all
costs and impacts be assessed. Many scenarios have been discussed, ranging
from complete bypass of the four lower Snake River and John Day dams year
round to a partial drawdown implemented only during the migration season
(April to August). The potential impacts of such actions are far reaching,
affecting irrigation, navigation, industrial river users, recreation,
flood control, cultural resources, and of course, power production and the
transmission system. Many parties in the Northwest are in the process of
analyzing the biological benefits and societal costs of various drawdown
scenarios. This paper addresses one such scenario in which the John Day
Dam is bypassed or breached, permanently returning the river to a more
natural state. This option eliminates all power generation at the John Day
Dam.
What is not widely appreciated is the role that the generation at John
Day plays in maintaining the transfer capability and reliability of the
transmission system. Previous cost estimates for similar drawdown
scenarios may be understated due to the omission of costs for actions that
would have to be taken to compensate for transmission impacts due to loss
of generation. This paper focuses only on the costs associated with power
generation and, in particular, the impacts to the transmission system.
Total power system cost falls into three categories: 1) energy losses,
2) capacity losses, and 3) transmission impacts. Assessing the cost of
energy loss is perhaps the most intuitive. On average, John Day generates
about 10.5 million megawatt-hours of energy per year (about 12 percent of
Bonneville's average annual energy production). The value of that energy
depends on the price, which varies by month and by time of day. Current
estimates indicate the cost to be between $100 and $200 million per year.
The cost of capacity loss is a little more complicated to evaluate. The
ability of John Day's generators to swing with fluctuations in demand
saves the region money and contributes to the stability of the Northwest's
power system. John Day generators provide up to 2,500 megawatts of peaking
capacity (about 11 percent of Bonneville's total generating capacity). The
value of that capacity is currently estimated to be in the range of $25 to
$50 million per year.
A better estimate of capacity loss is much more difficult to assess.
Hydroelectric projects contribute greatly to system reliability through
the Automatic Generation Control (AGC) system that adjusts the generation,
second by second, to match changes in demand. The dams also fulfill part
of the Western Systems Coordinating Council (WSCC) reserve requirements
and provide backup generation in the event of an unexpected outage. In
addition, they provide extra energy during extreme cold weather periods
and help maintain transmission stability during system disturbances. The
U.S. Army Corps of Engineers and other federal agencies are examining
capacity losses and their cost in more detail in a study to be completed
in 1999.
The impact to the transmission system is even more complicated to
evaluate. Due to John Day's proximity to the California-Oregon Intertie (COI),
a loss of generation at John Day would affect both exports and imports. In
either case, energy would have to be transmitted over greater distances.
The further energy is transferred, the harder it is to maintain constant
voltage on the transmission system and the higher the losses. Even though
sufficient generation may be available in the West to make up for the loss
at John Day, actions would have to be taken to upgrade the transfer
capability of transmission paths in order to maintain the same level of
reliability to Northwest customers. While at this time no estimate is
available, it would be safe to say that the added cost to offset
transmission impacts is significant.
FEDERAL POWER MARKETING: THE ROLE OF THE
BONNEVILLE POWER ADMINISTRATION
The Council's draft power plan raised several key issues about the
future role of the Bonneville Power Administration in a competitive
market. These issues were divided into three main areas: 1) the
consistency of various aspects of Bonneville's status as a federal power
marketer with a competitive market, including separation of transmission
and generation, market power, and risk and reward trade-offs; 2) the
allocation of the benefits of the federal hydropower system; and 3) future
support for the various public purposes that Bonneville historically
supported.
The draft power plan discussed some key characteristics of competitive
markets and suggested that Bonneville, because it controlled large
portions of both the region's transmission and generation capability, has
the potential to exercise too much control over the power market. That
would be inconsistent with open and fair competition. Furthermore, as a
federal agency, Bonneville is limited in its ability to deal with the
risks and rewards that are essential aspects of a competitive market. The
draft power plan discussed several alternative approaches to the
separation of Bonneville's generation and transmission functions. The plan
also examined different approaches to the disposition of federal power
marketing rights that would better balance risk and reward, and be more
consistent with a competitive power market.
The draft power plan also examined the allocation of historic and
expected future regional benefits of the federal hydropower system
operated by Bonneville, including future mechanisms that would retain
those benefits for the region while being more consistent with a
competitive market and the risk and reward balancing that it implies.
Finally, the draft power plan suggested that several of the public
purposes that Bonneville had historically supported, such as funding
energy-efficiency programs and renewable resources, and special rates for
certain classes of customers, could be inconsistent with a competitive
power market and would be unlikely to be the kinds of things that
Bonneville would be able to support in the future.
Recommendations from the Comprehensive Review
The Comprehensive Review Steering Committee also concluded that the
issues identified in the draft plan were critical and addressed them in
its deliberations (see previous discussion of the Comprehensive Review).
The Steering Committee recommended that Bonneville's role in a competitive
market, particularly its potential market power, be limited by selling
Bonneville's power, to the extent possible, under longer-term
subscriptions. The recommendations also called for a more limited
Bonneville role in resource acquisition. These limitations would tend to
minimize the political exposure of Bonneville as a government-owned
supplier in a competitive market. The recommendations also limited the
market risk that Bonneville could take on, given that, as a federal
agency, it lacks risk-taking owners, the means by which typical
participants in competitive markets deal with risk and absorb losses.
The Review's final report summarized this issue as follows:
The recommendations would have the effect of disposing of much if not
all of the firm power available from Bonneville on a long- or
intermediate-term basis. The fact that most of Bonneville's power would be
subscribed at cost would limit Bonneville's market role. Any remaining
firm power and other power products would be sold at Federal Energy
Regulatory Commission (FERC)-regulated prices or at competitive prices,
where FERC determines that competitive markets exist. To the extent
consistent with its obligation to repay Treasury, Bonneville should return
to its historic role of marketing power generated by the Federal Columbia
River Power System, rather than becoming an aggressive marketer of
products and services in the emerging competitive power market.
In addition, it is recommended that Bonneville would not acquire
resources to serve its customers' load growth except on a direct bilateral
basis where the customer takes on all the risk of the acquisition.
Similarly, it is proposed that Bonneville would not sell directly to new
retail loads, beyond the existing direct service industry loads, although
it may sell through intermediaries whose transactions would be subject to
state or local jurisdiction.
The related questions of balancing risk and reward and of allocating
the benefits of the federal hydropower system were central to the
deliberations of the Comprehensive Review.
The Steering Committee summarized its goals for federal power
marketing:
* align the benefits and risks of access to existing federal power;
* ensure repayment of the debt to the U.S. Treasury with a greater
probability than currently exists while not compromising the security or
tax-exempt status of Bonneville's third-party debt; and
* retain the long-term benefits of the system for the region. The
recommendation is also intended to be consistent with emerging competitive
markets and regional transmission solutions.
The Steering Committee chose a solution that favored long-term
subscriptions to federal power that would be sold at cost. Cost might be
somewhat higher than market prices in the near term, but is expected to be
lower in later years. This scheme aimed at having the subscribers take on
more of the current business risk of Bonneville, in return for an assured
ability to buy electricity at below-market prices in the future. Some
customers might wish to limit their exposure to Bonneville's costs being
at above-market prices by deferring making longer term commitments until
the risk has been reduced by the passage of time and by the consequent
better knowledge. Those wishing to make short-term purchases would have to
pay a premium, in the form of an option payment, to renew the contracts at
cost at a later time.
Actions since the Comprehensive Review
Bonneville and the Pacific Northwest Utilities Conference Committee
have formed a subscription work group open to all regional interests to
implement the federal power marketing recommendations from the
Comprehensive Review. The work group reports regularly to the Transition
Board.
The subscription work group has set out a multiyear work plan for
implementing the Steering Committee's recommendations and permitting the
signing of new Bonneville power sales contracts in advance of the
termination of current contracts. During Phase 1 of the workgroup's
effort, through mid-1998, the group is addressing business interests,
product definition, pricing principles and potential legal issues. Phase
2, mid-1998 through mid-2000, is expected to be devoted to a rate case and
final contract negotiations. Currently, the work group is well ahead of
schedule in its Phase 1 work, having explored the business interests of
potential subscribers and the definition of the products they are
interested in buying from Bonneville. Alternatives for an overall
contractual relationship with Bonneville and more detailed definition of
products are the current focus of the work group.
COST REVIEW OF THE FEDERAL COLUMBIA RIVER
POWER SYSTEM
In 1997, the four Northwest Governors asked the Northwest Power
Planning Council to establish a cost control forum to assist the
Bonneville Power Administration in controlling the costs it recovers
through rates in preparation for a subscription process for the post-2001
period. This Cost Review has covered planned costs of the Federal Columbia
River Power System (FCRPS), including transmission, with a focus on
projected costs for the 2002-2006 period. The objective has been to ensure
that Bonneville's near and long-term power and transmission costs are as
low as possible consistent with sound business practices, thereby enabling
full cost recovery with power rates at or below market prices.
Following are the recommendations of the Cost Review Management
Committee. They reflect the Committee's consideration of extensive public
comment on its draft recommendations. In particular, the Committee has
heeded the admonitions of many commentors to ensure that its
recommendations for conservation and renewable resource development are
consistent with the recommendations of the Comprehensive Review of the
Northwest Energy System . In addition, the recommendations regarding
Washington Public Power Supply System Plant 2 have been modified to
respond to legal and operational issues that have been identified.
* Power system cost management: Initiate a consolidated,
integrated asset management strategy for the Federal Columbia River Power
System involving Bonneville, the Corps of Engineers and Bureau of
Reclamation. Estimated operations and maintenance savings and enhanced
revenues: $48 million (Corps, $40 million; Bureau $8 million).
* Power marketing: 1) Reduce staff and expenses associated with
power marketing and related activities. Estimated annual savings: $14.7
million.
* Energy conservation: Contribute to regional efforts to develop a
market for energy-conserving products and services, reduce the cost of
ongoing energy conservation projects and do not modify or extend them,
with the exception of a program to weatherize low-income homes. Reduce
associated staffing. These recommendations are consistent with those of
the 1996 Comprehensive Review of the Northwest Energy System. Estimated
annual savings: $7.1 million.
* Northwest Power Planning Council: Reduce staff to reflect a
changed power planning role, change law to require one Council member from
each state instead of two, determine the Council's future role through a
regional process. Estimated annual savings: $1.1 million.
* Renewable energy: Fund three planned projects and research and
development; annual losses from projects not to exceed $15 million; no
additional projects unless Bonneville's costs are fully recovered by
project revenues. Estimated annual savings: $2.2 million.
* Washington Nuclear Plant 2: Combine aggressive cost management
with a flexible response to market conditions and unforeseen costs. Manage
annual operating costs to annual revenues achievable at market prices.
Sell a portion of Bonneville's power, equal to the output of WNP2, at a
price that will recover the plant's operating costs. Test the plant's
power prices against market prices every two years, and evaluate
terminating the plant if projected operating costs exceed projected
revenues. If revenues exceed costs, use a portion to build a
decommissioning fund. Estimated annual savings: $19 million.
* Administrative and other support service costs: 1) Reduce by 50
percent, in aggregate, from 1996 levels including business services,
planning, public affairs and legal services costs, among others. Estimated
annual savings $31.7 million. 2) Pursue legislative changes in internal
personnel and management laws to improve administrative effectiveness and
efficiency. Estimated annual savings: $10 million.
* Transmission: 1) Change certain cost allocations between the
transmission and power marketing business lines. Estimated annual savings:
$30 million to the Power Business Line. 2) Reduce internal overhead costs.
Estimated annual savings: $2.5 million.
* Fixed costs: Further reduce debt service through such actions as
bond refinancing. Estimated savings: $20 million.
These recommendations have been forwarded to the Bonneville
Administrator and to the region's governors, the Northwest Congressional
delegation, and the House and Senate Committees on Appropriations in
Congress. Responsibility for decision and action lies with the
Administrator. The recommendations identify $146 million in reductions to
planned power expenses for Bonneville's next rate period, Fiscal Years
2002-2006. These reductions are in addition to substantial cost cutting
already undertaken. Fully implemented, the cost reductions identified
herein, and those identified in earlier Bonneville budget planning, would
reduce annual power expenses in the Fiscal Year 2002-2006 period more than
$200 million beyond what Bonneville planned when rates were set for the
current rate period, Fiscal Years 1997-2001.
FOURTH NORTHWEST CONSERVATION AND ELECTRIC POWER
PLAN
The Council released its draft fourth Northwest Power Plan in the
spring of 1996 for public review and comment. Because of the concurrent
process - the Comprehensive Review of the Northwest Energy System -
comment on the draft was kept open until conclusion of the Review.
Recommendations from the Review and suggestions on how to implement the
recommendations were then incorporated into the draft in the form of an
addendum. The addendum was available for public comment until late fall
1997. It is unclear at this time when the new power plan, with its
addendum, will be adopted formally.
The addendum has two principal objectives. First, it reviews important
developments since the release of the draft power plan. These developments
include what has happened with respect to: generation and conservation
resources, gas and electricity markets, electricity loads, institutions,
and policies. While there have been significant developments in the
electricity industry since March 1996, none of them invalidates the
analysis contained in the draft power plan. The more important
developments include the creation of new institutions in response to the
increasingly competitive utility industry, and the continued evolution of
policies at the state and federal levels designed to facilitate
competitive electricity markets. These are discussed in detail in the
addendum.
The second purpose of the addendum is to examine the relationships
between the analysis contained in the draft power plan and the
recommendations from the Comprehensive Review's Steering Committee. In
several instances, the addendum suggests approaches that would help move
the Northwest from the usually general nature of the Steering Committee's
recommendations to the specifics that will have to be addressed by
legislatures and state and local regulators.
The draft power plan focused primarily on issues raised by the
transition to competitive electricity markets and highlighted, where
possible, important considerations and principles in that transition. The
Comprehensive Review dealt with many of the same issues. In general, the
recommendations from the Review are supported by the analysis of the draft
power plan or, where they are not, the recommendations reflect legitimate
policy choices on the part of the Review's Steering Committee. In many
instances, however, the recommendations from the Review are specific in
intent but, of necessity, lacking in detail. For example, one
recommendation is that provisions for recovering stranded investments be
made as part of opening retail electricity markets to competition.
However, the recommendation provides little guidance regarding how
stranded investment recovery might be structured and why. The addendum
builds on the analysis in the draft power plan to suggest important
considerations in recovering stranded investments. The same is true with
respect to several of the recommendations for competition and consumer
access, and provisions for conservation and renewable resources.
The addendum also describes potential new roles for the Northwest Power
Planning Council that are based on recommendations from the Comprehensive
Review. During the transition to a more competitive electricity market,
the Council has been asked to help the region ensure that the benefits of
competition are shared by all electricity consumers, and that public
purposes, such as energy-efficiency improvements, development of renewable
resources and services to low-income customers, continue to be provided.
CONSERVATION ACQUISITION STATUS
The Council's 1991 Northwest Conservation and Electric Power Plan
called for acquiring at least 1,500 megawatts of conservation resources by
the year 2000. The region's utilities and Bonneville acquired
approximately 250 megawatts by the end of 1993 through programs they
operated. In addition, by the end of 1994, both Oregon and Washington
adopted new energy codes for commercial buildings that will capture about
50 percent of the cost-effective conservation identified as available in
new commercial buildings in the Council's 1991 plan. Nationally, the US
Department of Energy has issued revised standards for several residential
appliances that incorporate most of the energy savings featured identified
as cost effective in the 1991 plan. Also, the US. Department of Housing
and Urban Development adopted revised energy standards for new
manufactured housing that has improved the efficiency of these homes by
over 35 percent.
In its Draft Fourth Northwest Power Plan, the Council identified
another 1,500 megawatts of energy savings that remain cost-effective to
acquire for the region, despite new lower alternative resource costs.
Acquiring these additional savings under the new utility scenario of
competition poses new challenges to Northwest utilities.
Sustaining Conservation Investments in a More Competitive
Environment
The National Energy Policy Act of 1992, which permits open competition
at the wholesale level and the reduced cost of natural gas-fired
generation technologies, have left some utilities concerned about their
ability to remain cost competitive. Some utilities have asserted that
continued investments in conservation are not sustainable in a competitive
market. They argue that because their likely competitors (AKA, independent
power producers) need not invest in conservation, the price (i.e. rates)
they can charge for power will be lower.
While energy conservation costs less than other alternatives, it can
increase utility rates slightly. Conservation programs cost money and
reduce the sales of electricity. Therefore, the cost per kilowatt-hour can
go up.
The Council, working with Bonneville and other utilities, regulators
and others, developed alternative approaches to acquiring conservation
that would reduce costs to utilities and potentially mitigate some
conservation rate impacts. These approaches are known collectively as
"market transformation ventures."
Market transformation is a strategic effort by utilities and other
entities to induce lasting structural or behavioral changes in the market
that result in increases in the adoption and penetration of energy
efficient technologies and practices. Because the market for energy using
products (e.g. motors, refrigerators) does not match the service territory
of individual utilities, it is necessary for utilities to act collectively
to leverage change. In the Northwest, Bonneville and the region's
utilities have historically cooperated on some of the nation's most
successful market transformation programs, the Super GOOD CENTS/Northwest
Energy Code programs and Manufactured Housing Acquisition Program (MAP).
Although most of the major public and private utilities in the region have
indicated a preference for pursuing market transformation programs where
they make economic sense, few have been willing to allocate staff to
develop these programs. Moreover, with increasing utility concerns about
competition, there may be less willingness to continue such collaboration
in the future.
Bonneville's Conservation Reinvention
Bonneville, as part of its overall effort to become more business-like,
revised the way it acquires conservation. Under the Northwest Power Act,
Bonneville is charged with acquiring "all regionally cost-effective
conservation." Historically, the agency has carried out this
obligation by providing funds to its customer utilities to operate
Bonneville-designed conservation programs. The cost of these conservation
programs is recovered in Bonneville's rates, just like other resource
acquisitions.
As of Fiscal Year 1996, however, Bonneville has been providing funds
only for conservation programs that are designed to transform regional
markets, in other words, collective actions that bring economies of scale.
(Projects with existing long-term budgets are continuing under Bonneville
funding but only until they are completed.) Investor owned utilities in
the region have joined with Bonneville to form the Northwest Energy
Efficiency Alliance to carry out these collective market transformation
activities.
The Northwest Energy Efficiency Alliance
Formed January 1, 1997 (after lengthy negotiations in 1996), the
Northwest Energy Efficiency Alliance brings together all the Northwest's
investor-owned utilities; Bonneville's public utility customers; utility
regulators and governors' representatives from Idaho, Montana, Oregon and
Washington; public interest groups; and the energy efficiency industry to
carry out regionwide market transformation ventures. The Council was
instrumental in forming the Alliance.
The Alliance has $65 million in funding to carry its programs through
the year 2000. In its second year of operation, the Alliance has committed
$44 million to operate 26 projects, including public information and
training efforts. The Alliance has its own Internet web site:
www.nwalliance.org and underwrites several other public information
Internet sites throughout the region. The Alliance also operates a $7
million program to introduce resource-efficient clothes washers in the
region, which has already exceeded its goals. In addition, the Alliance is
coordinating a regionwide effort to improve the energy efficiency of new
residential and commercial buildings. A joint project co-sponsored by the
Alliance and Siemen's Solar Industry in Vancouver, Washington, is designed
to improve the efficiency of photovoltaic cell development. In addition to
saving electricity, this project, if successful, could reduce the cost of
photocell technologies by approximately 10 percent. The Alliance is also
working with irrigating farmers across the region to save both water and
electricity by using more sophisticated equipment to target watering times
and amounts.
GLOSSARY OF POWER-RELATED TERMS
administrative costs
Certain overhead costs related to conservation or generating
resources, such as project management and accounting costs incurred by
utility or contractor staff.
alternating current (AC)
An electric current in which the electrons flow in alternate
directions. In North American electrical grids, this reversal of flow is
governed at 60 cycles per second (Hertz). With some exceptions (see
"direct current"), commercial electric generation, transmission
and distribution systems operate on alternating current.
anadromous fish
Fish that hatch in freshwater, migrate to the ocean, mature there, and
return to freshwater to spawn. For example, salmon or steelhead trout.
available technology
In the power plan, the term "available technology" refers to
equipment or facilities for generating and conservation resources,
including electrical appliances, that are currently available and are
expected to be generally available in the marketplace during the 20-year
planning period.
average cost pricing
A concept used in pricing electricity. The average cost price is
derived by dividing the total cost of production by the total number of
units sold in the same period to obtain an average unit cost. This unit
cost is then directly applied as a price.
average megawatt or average annual megawatt
Equivalent to the energy produced by the continuous operation of one
megawatt of capacity over a period of one year. (Equivalent to 8.76
gigawatt-hours, 8,760 megawatt-hours or 8,760,000 kilowatt-hours.)
avoided cost
An investment guideline, describing the value of conservation and
generation resource investments in terms of the cost of more expensive
resources that would otherwise have to be acquired.
base loaded resources
Base loaded electricity generating resources are those that generally
are operated continually except for maintenance and unscheduled outages.
billing credit
Under the Northwest Power Act, a payment by Bonneville to a customer
(in cash or offsets against billings) for actions taken by that customer
to reduce Bonneville's obligations to acquire new resources.
Bonneville Power Administration (Bonneville)
A federal agency that markets the power produced by Federal Base
System resources and resources acquired under the provisions of the
Northwest Power Act of 1980. Bonneville sells power to public and private
utilities, direct service industrial customers and various public
agencies. The Northwest Power Act charges Bonneville with other duties,
including pursuing conservation, acquiring sufficient resources to meet
its contract obligations, funding certain fish and wildlife recovery
efforts and implementing the Council's plan.
Btu (British thermal unit)
The amount of heat energy necessary to raise the temperature of one
pound of water one degree Fahrenheit (3,413 Btus are equal to one
kilowatt-hour).
Buy-back program
A conservation program that, in effect, purchases electrical energy in
the form of conservation measures installed by a consumer. The consumer is
paid a certain amount per kilowatt-hour of energy saved.
callback
A power sale contract provision that gives the seller the right to
stop delivery of power to the buyer when it is needed to meet other
specified obligations of the seller.
capacity
The maximum power that a machine or system can produce or carry under
specified conditions. The capacity of generating equipment is generally
expressed in kilowatts or megawatts. In terms of transmission lines,
capacity refers to the maximum load a line is capable of carrying under
specified conditions.
climate zone
As part of its model conservation standards, the Council has
established climate zones for the region based on the number of heating
degree days, as follows: Zone 1: 4,000 to 6,000 heating degree days (the
mild maritime climate west of the Cascades and other temperate areas);
Zone 2: 6,000 to 8,000 heating degree days (the somewhat harsher eastern
parts of the region); and Zone 3: more than 8,000 heating degree days
(western Montana and higher elevations throughout the region).
coal gasification
The process of converting coal to a synthetic gaseous fuel.
cogeneration
The sequential production of electricity and useful thermal energy. This
is frequently accomplished by the recovery of reject heat from an electric
generating plant for use in industrial processes, space or water heating
applications. Conversely, cogeneration can be accomplished by using reject
heat from industrial processes to power an electricity generator.
combined-cycle power plant
The combination of a gas turbine and a steam turbine in an electric
generation plant. The waste heat from the gas turbine provides the heat
energy for the steam turbine.
combustion turbine
A turbine engine generator, often fired by natural gas or fuel oil,
used to generate electricity. The turbine generator is turned by
combustion gases rather than heat-created steam.
conductor
Wire or cable for transferring electric power.
conservation
According to the Northwest Power Act, any reduction in electric power
consumption as a result of increases in the efficiency of energy use,
production or distribution.
construction lead time
The length of time between a decision to construct a resource and when
the resource is expected to deliver power to the grid. Generally defined
for purposes of this plan as the interval between detailed engineering and
equipment order to completion of start-up testing.
cost-effective
According to the Northwest Power Act, a cost-effective measure or
resource must be forecast to be reliable and available within the time it
is needed, and to meet or reduce electrical power demand of consumers at
an estimated incremental system cost no greater than that of the
least-costly, similarly reliable and available alternative or combination
of alternatives.
cost of debt
The amount paid to the holders of debt (bonds and other securities)
for use of their money. Generally expressed as an annual percentage in the
power plan.
cost of equity
Earnings expected by a shareholder on an investment in a company.
Generally expressed as an annual percentage in this plan.
critical period
The sequence of low water conditions during which the regional
hydropower system's least amount of en-ergy can be generated (see
"critical water") while drafting storage reservoirs from full to
empty. Under the Pacific Northwest Coordination Agreement, critical period
is based on the lowest multi-month streamflow observed since 1928. Based
on analysis of streamflows at The Dalles Dam, this is also the lowest
streamflow since recordkeeping began in 1879.
critical water
The sequence of streamflows in the critical period under which the
hydropower system will generate about 12,500 average megawatts. In an
average year, the Northwest hydropower system will produce about 16,600
average megawatts.
curtailment
An externally imposed reduction of energy consumption due to a
shortage of resources.
debt
Investment funds raised through the sale of securities having fixed
rates of interest.
debt/equity ratio
The ratio of debt financing to equity financing used for capital
investment.
demand forecast
An estimate of the level of energy that is likely to be needed at some
time in the future. The Council's demand forecast contains a range of
estimated consumption based on various assumptions about demographics and
the state of the economy.
direct application renewable resource
Technologies that use renewable energy sources to perform a task
without converting the energy into electricity. These sources and their
functions may include wood for space heat, solar for space heat and
drying, geothermal space and water heating, and wind machines used for
mechanical drive (such as pumping).
direct current (DC)
An electrical current in which the electrons flow continuously in one
direction. Direct current is used in specialized applications in
commercial electric generation, transmission and distribution systems.
direct service industry
An industrial customer that buys power directly from the Bonneville
Power Administration. Most direct service industries are aluminum smelting
plants.
discount rate
The rate used in a formula to convert future costs or benefits to
their present value.
dispatch
Operating control of an integrated electrical system involving
operations such as control of the operation of high-voltage lines,
substations or other equipment.
distribution
The transfer of electricity from the transmission network to the
consumer. Distribution systems generally include the equipment to transfer
power from the substation to the customer's meter.
drawdown
Release of water from a reservoir for purposes of power generation,
flood control, irrigation or other water management activity.
economic feasibility
The Northwest Power Act requires all conservation measures to be
"economically feasible" for consumers. The Act does not define
this concept. In this plan, the Council considers a program or measure to
be economically feasible if the measure or program results in the minimum
life-cycle costs to the consumer, taking into account financial assistance
made available pursuant to other provisions of the Act.
end use
A term referring to the final use of energy. In the aggregate, it is
used the same as "energy demand." In a more detailed use, it
often refers to the specific energy services (for example, space heating),
or the type of energy-consuming equipment (for example, motors).
energy
That which does, or is capable of doing, work. Energy is measured in
terms of the work it is capable of doing. Electrical energy is commonly
measured in kilowatt-hours, or in average megawatts (8,760,000
kilowatt-hours).
energy services
The actual service energy is used to provide (for example, space heat,
refrigeration, transportation).
equity
Investment funds raised through the sale of shares of company
ownership.
equivalent availability
The ratio of the maximum amount of energy a generating unit can
produce in a fixed period of time, after adjustment for expected
maintenance and forced outage, to the maximum energy it could produce if
it ran continuously over the fixed time period. This represents an upper
limit for a long-run (annual or longer) capacity factor for a generating
unit. For example, a unit with an equivalent availability of 70 percent
and a capacity of 500 megawatts could be relied on to produce 350 average
megawatts of energy over the long term, if required.
externality
Any costs or benefits of goods or services that are not accounted for
in the price of the goods or services. Specifically, the term given to the
effects of pollution and other environmental effects from power plants or
conservation measures.
Federal Base System
The system includes the Federal Columbia River Power System
hydroelectric projects, resources acquired by the Bonneville Power
Administration under long-term contracts prior to the Northwest Power Act,
and resources acquired to replace reductions in the capability of existing
resources subsequent to the Act.
Federal Energy Regulatory Commission (FERC)
A federal agency that regulates interstate aspects of electric power
and natural gas industries. It has jurisdiction over licensing of
hydropower projects and setting rates for electricity sold between states.
FERC was formerly the Federal Power Commission.
firm capacity
That portion of a customer's capacity requirements for which service
is assured by the utility provider.
firm energy
That portion of a customer's energy load for which service is assured
by the utility provider. That portion for which service is not assured is
referred to as "interruptible."
firm energy load carrying capability (FELCC)
The amount of firm energy that can be produced from a hydropower
system based on the system's lowest recorded sequence of streamflows and
the maximum amount of reservoir storage currently available to the system.
firm surplus
Firm energy in excess of the firm load.
fuel cycle
The series of steps required to produce electricity from power plants.
The fuel cycle includes mining or otherwise acquiring the raw fuel source,
processing and cleaning the fuel, transporting, generating, waste
management and plant decommissioning.
generation
The act or process of producing electricity from other forms of
energy.
geothermal
Useful energy derived from the natural heat of the earth as manifested
by hot rocks, hot water, hot brines or steam.
head
The vertical height of water in a reservoir above the turbine.
heat engines
Devices that convert thermal energy to mechanical energy. Examples
include steam turbines, gas turbines internal combustion engines and
Stirling engines.
heat rate
The amount of input (fuel) energy required by a power plant to produce
one kilowatt-hour of electrical output. Expressed as Btu/kWh.
heating degree days
A measure of the amount of heat needed in a building over a fixed
period of time, usually a year. Heating degree days per day are calculated
by subtracting from a fixed temperature the average temperature over the
day. Historically, the fixed temperature has been set at 65 degrees
Fahrenheit, the outdoor temperature below which heat was typically needed.
As an example, a day with an average temperature of 45 degrees Fahrenheit
would have 20 heating degree days, assuming a base of 65 degrees
Fahrenheit.
hydroelectric power (hydropower)
The generation of electricity using falling water to turn
turbo-electric generators.
independent power producer (IPP)
An independent power producer is a power production facility that is
not part of a regulated utility. Power production facilities that qualify
under PURPA (see "qualifying facility") are considered
independent power producers, together with other independent power
production facilities, such as independently owned coal-fired generating
plants.
infiltration control
Conservation measures, such as caulking. better windows and
weatherstripping, which reduce the amount of cold air entering or warm air
escaping from a building.
insolation
The rate of energy from the sun falling on the earth's surface,
typically measured in watts per-square meter.
integrated resource planing
See "least-cost planning."
interruptible power
Power that, by contract, can be interrupted in the event of a power
deficiency.
intertie
A transmission line or system of lines permitting a flow of
electricity between major power systems.
investor-owned utility
A utility that is organized under state law as a corporation to
provide electric power service and earn a profit for its stockholders.
ISAAC
A computer model used by the Council to simulate system operation,
decisions to option and build resources, and the associated costs of
providing power across a large number of possible load forecasts. ISAAC
accounts for the effects of uncertainty on the load forecast variations in
hydropower availability for analyzing various resource strategies. The
Council uses the model to help choose the best mix of resources and to
establish the power plan Action Plan.
kilowatt (kW)
The electrical unit of power that equals 1,000 watts.
kilowatt-hour (kWh)
A basic unit of electrical energy that equals one kilowatt of power
applied for one hour.
lead time
The length of time it takes to move a resource from concept to
completion.
least-cost planning
Least-cost planning or, as it is often called, "integrated
resource planning," is a name given to the power planning strategy
and philosophy adopted by the Council. This strategy recognizes load
uncertainty, embodies an emphasis on risk management, and reviews all
available and reliable resources to meet current and future loads. The
term "least-cost" refers to all costs, including capital, labor,
fuel, maintenance, decommissioning, known environmental impacts and
difficult-to-quantify ramifications of selecting one resource over
another.
levelized life-cycle cost
The present value of a resource's cost (including capital, financing
and operating costs) converted into a stream of equal annual payments.
This stream of payments can be converted to a unit cost of energy by
dividing them by the number of kilowatt-hours produced or saved by the
resource in associated years. By levelizing costs, resources with
different lifetimes and generating capabilities can be compared.
life-cycle costs
See "levelized life-cycle cost."
load
The amount of electric power required at a given point on a system.
load forecast
An estimate of the level of energy that must be generated to meet a
need. This differs from a demand forecast in that transmission and
distribution losses from the generator to the customer are included.
load path
One future scenario for electric load growth, as opposed to a range
that accommodates multiple forecasts of future load growth.
lost-opportunity resources
Resources that, because of physical or institutional characteristics,
may lose their cost-effectiveness unless actions are taken to develop
these resources or to hold them for future use.
major resource
According to the Northwest Power Act, a resource with a planned
capability greater than 50 average megawatts and, if acquired by
Bonneville, acquired for more than five years.
manufactured home
A structure, such as a mobile home, that is transportable in one or
more sections, and that is built on a permanent chassis and designed to be
used as a dwelling, with or without a permanent foundation, when connected
to the required utilities. These homes must comply with the Manufactured
Home Construction and Safety Standards issued by the U.S. Department of
Housing and Urban Development.
This does not include other categories of homes whose components are
manufactured, such as modular, sectional, panelized and pre-cut homes.
These homes must comply with state and local building codes.
marginal cost
The cost of producing the last unit of energy (the long-run
incremental cost of production). In the plan, "regional marginal
cost" means the long-run cost of additional consumption to the region
due to additional resources being required. It does not include
consideration of such additional costs to any specific utility due to its
purchases from Bonneville at average cost.
measure
In the power plan, a measure refers to either an individual
conservation measure or action or a combination of actions.
megawatt (MW)
The electrical unit of power that equals one million watts or one
thousand kilowatts.
mill
A tenth of a cent. The cost of electricity is often given in mills per
kilowatt-hour.
model conservation standards
Any energy-efficiency program or standard adopted by the Council,
including, but not limited to: 1) new and existing structures; 2) utility.
customer and governmental programs; and 3) other consumer actions for
achieving conservation. The most well-known are the energy-efficient
building standards developed by the Council for new electrically heated
buildings.
Monte Carlo simulation
The mathematical simulation of uncertain events having known
probability characteristics by random sampling from a known probability
distribution function.
municipal solid waste (MSW)
Refuse offering the potential for energy recovery. Technically,
residential, commercial and institutional discards. Also included in the
definition of municipal solid waste for purposes of this plan are
non-hazardous processable byproducts from manufacturing activities. Not
included are combustible byproducts of the lumber, wood products, paper
and allied products industries. These are considered separately as mill
residue.
net billed plants
Refers to the 30 percent share of the Trojan Nuclear Plant, all of
Washington Public Power Supply System's nuclear project 1 (WNP-1) and
WNP-2, and 70 percent of WNP-3.
net billing
A financial arrangement that allowed Bonneville to underwrite the
costs of electric generating projects. Utilities that owned shares in
thermal projects, and paid a share of their costs, assigned to Bonneville
all or part of the generating capability of these resources. Bonneville,
in turn, credited and continues to credit the wholesale power bills of
these utilities to cover the costs of their shares in the thermal
resources. Bonneville then sells the output of the thermal plants,
averaging the higher costs of the thermal power with lower-cost
hydropower.
nominal dollars
Dollars that include the effects of inflation. These are dollars that,
at the time they are spent, have no adjustments made for the amount of
inflation that has affected their value over time.
non-firm energy
Energy produced by the hydropower system that is available with water
conditions better than critical and after reservoir refill is assured. It
is available in varying amounts depending upon season and weather
conditions.
non-utility generator
A generic term for non-utility power plant owners and operators.
Non-utility generators include qualifying facilities, small power
producers and independent power producers.
option
As used in the power plan, a project that has been sited, licensed and
designed, but not yet constructed. Options are held in inventory until new
resources are clearly needed.
overnight cost
Total of all direct and indirect project construction costs, including
engineering, overhead costs, fees and contingency. Exclusive of costs
attributable to interest and escalation incurred during construction.
Pacific Northwest (the region)
According to the Northwest Power Act, the area consisting of Oregon,
Washington, Idaho and Montana west of the Continental Divide, and those
portions of Nevada, Utah and Wyoming that are within the Columbia River
Basin. It also includes any contiguous areas not more than 75 miles from
the above areas that are part of the service area of a rural electric
cooperative served by Bonneville on the effective date of the Act and
whose distribution system serves both within and outside of the region.
Pacific Northwest Coordination Agreement
An agreement between federal and nonfederal owners of hydropower
generation on the Columbia River system. It governs the seasonal release
of stored water to obtain the maximum usable energy subject to other uses.
Pacific Northwest Utilities Conference Committee (PNUCC)
Formed by Pacific Northwest utilities to coordinate policy on regional
power supply issues, PNUCC lacks contractual authority, but it does play a
major role in regional power planning through its policy, steering, fish
and wildlife, and lawyers committees, and the Technical Coordination
Group. PNUCC publishes the Northwest Regional Forecast containing
information on regional loads and resources.
peak capacity
The maximum capacity of a system to meet loads.
peak demand
The highest demand for power during a stated period of time.
penetration rate
One annual share of a potential market for conservation that is
realized, as in "7 percent of the region's homes have been
weatherized this year."
photovoltaic
Direct conversion of sunlight to electric energy through the effects
of solar radiation on semi-conductor materials.
post-operational capital replacement costs
The cost of major equipment replacements occurring during the
operating life of a project. In practice, these costs generally are
capitalized (i.e., financed by debt or equity). For resource
cost-effectiveness analyses, these costs are frequently treated as
expenses.
preference
Priority access to federal power by public bodies and cooperatives.
present value
The worth of future returns or costs in terms of their current value.
To obtain a present value, an interest rate is used to discount these
future returns and costs.
public utility commissions
State agencies that regulate, among others, investor-owned utilities
operating in the state with a protected monopoly to supply power in
assigned service territories.
Public Utility Regulatory Policies Act of 1978 (PURPA)
Federal legislation that requires utilities to purchase electricity
from qualified independent power producers at a price that reflects what
the utilities would have to pay for the construction of new generating
resources (see "avoided cost"). The Act was designed to
encourage the development of small-scale cogeneration and renewable
resources.
qualifying facility (QF)
Qualifying facility is a power production facility that qualifies for
special treatment under a 1978 federal law-Public Utility Regulatory
Policies Act (PURPA). PURPA requires a utility to buy the power produced
by the qualifying facility at a price equal to that which the utility
would otherwise pay if it were to build its own power plant or buy the
power from another source. A qualifying facility must generate its power
using cogeneration, biomass. waste, geothermal energy, or renewable
resources, such as solar and wind, and, depending on the energy source and
the time at which the facility is constructed, its size may be limited to
80 megawatts or smaller. PURPA prohibits utilities from owning majority
interest in qualifying facilities.
quantifiable environmental costs and benefits
Environmental costs and benefits capable of being expressed in numeric
terms (for example, in dollars, deaths, reductions in crop yields).
quartile
The direct service industries load is divided into four quartiles. The
top quartile is the portion of that load most susceptible to interruption.
R-value
A measure of a material's resistance to heat flow. The higher the
R-value, the higher the insulating value.
real dollars
Dollars that do not include the effects of inflation. They represent
constant purchasing power.
region
See "Pacific Northwest."
reliability
The ability of the power system to provide customers uninterrupted
electric service. Includes generation, transmission and distribution
reliability. The plan deals only with generation reliability.
renewable resource
Under the Northwest Power Act, a resource that uses solar, wind, water
(hydro), geothermal, biomass or similar sources of energy, and that either
is used for electric power generation or for reducing the electric power
requirements of a customer.
reserve capacity
Generating capacity available to meet unanticipated demands for power,
or to generate power in the event of outages in normal generating
capacity. This includes delays in operations of new scheduled generation.
Forced outage reserves apply to those reserves intended to replace power
lost by accident or breakdown of equipment. Load growth reserves are those
reserves intended for use as a cushion to meet unanticipated load growth.
resource
Under the Northwest Power Act, electric power, including the actual or
planned electric capability of generating facilities, or actual or planned
load reduction resulting from direct application of a renewable resource
by a consumer, or from a conservation measure.
retrofit
To modify an existing generating plant, structure or process. The
modifications are done to improve energy efficiency, reduce environmental
impacts or to otherwise improve the facility.
sectors
The economy is divided into four sectors for energy planning. These
are the residential, commercial (e.g., retail stores, office and
institutional buildings), industrial and irrigation sectors.
simple payback
The time required before savings from a particular investment offset
costs. For example, an investment costing $100 and resulting in a savings
of $25 each year would be said to have a simple payback of four years.
Simple paybacks do not account for future cost escalation, nor other
investment opportunities.
siting agencies
State agencies with the authority for issuing permits to locate
generating plants of defined types and sizes to utilities at specific
locations.
siting and licensing
The process of preparing a power plant and associated services, such
as transmission lines, for construction and operation. Steps include
locating a site, developing the design, conducting a feasibility study,
preliminary engineering, meeting applicable regulatory requirements, and
obtaining the necessary licenses and permits for construction of the
facilities.
space conditioning
Controlling the conditions inside a building in order to maintain
human comfort and other desired environmental conditions through heating,
cooling. humidification, dehumidification and air quality modifications.
sunk cost
A cost already incurred and therefore not considered in making a
current investment decision.
supply curve
A traditional economic tool used to depict the amount of a product
available across a range of prices.
surcharge
Under the Northwest Power Act, an additional sum added to the usual
wholesale power rate charged to a utility customer of Bonneville to
recover costs incurred by Bonneville due to the failure of that customer
(or of a state or local government served by that customer) to achieve
conservation savings comparable to those achievable under the Council's
model conservation standards. Surcharges can range from 10 to 50 percent
of a customer's bill.
System Analysis Model (SAM)
A computer model used by the Council to determine resource
cost-effectiveness. SAM performs a detailed simulation of the Northwest
generating system to estimate the cost associated with a specific set of
loads and resources. It incorporates uncertainty associated with
hydropower, thermal availability, resource arrival and load fluctuation
due to economic cycles.
system cost
According to the Northwest Power Act, all direct costs of a measure or
resource over its effective life. It includes, if applicable, distribution
and transmission costs, waste disposal costs, end-of-cycle costs, fuel
costs (including projected increases) and quantifiable environmental
measures. The Council is also required to take into account projected
resource operations based on appropriate historical experience with
similar measures or resources.
thermal resource
A facility that produces electricity by using a heat engine to power
an electric generator. The heat may be supplied by burning coal, oil,
natural gas, biomass or other fuel, by nuclear fission, or by solar or
geothermal sources.
tipping fee
The fee assessed for disposal of waste. This fee is used when
estimating the cost of producing electricity from municipal solid waste.
transformer
A device for transferring energy from one circuit to another in an
alternating-current system. Its most frequent use in power systems is for
changing voltage levels.
transmission
The act or process of long-distance transport of electric energy,
generally accomplished by elevating the electric current to high voltages.
In the Pacific Northwest, Bonneville operates a majority of the
high-voltage, long-distance transmission lines.
U-value
The measure of a material's ability to conduct heat, numerically equal
to 1 divided by the R-value of the material.
Washington Public Power Supply System (WPPSS)
Municipal corporation and joint operation agency in Washington
comprising representatives of public utility districts and municipal
utilities. Based on power purchase contracts of its members or other
utilities, WPPSS has the power to acquire, construct and operate
facilities for the generation or transmission of electric power.
water budget
A means of increasing survival of downstream migrating juvenile fish
by increasing flows during spring and early summer migrations. The water
budget was proposed by the Council and is overseen by it in conjunction
with the U.S. Army Corps of Engineers, the fishery agencies and Indian
tribes, the Bonneville Power Administration and the Bureau of Reclamation
watt
The electrical unit of power or rate of energy transfer. One
horsepower is equivalent to approximately 746 watts.
WHAT KIND OF LEGAL CREATURE IS THE COUNCIL?
The Northwest Power Act specifies that the Council is not a federal
agency. The Council is also not a state agency in the usual meaning of the
words, because it acts on behalf of more than one state. So what is it?
The Council is one of a small group of hybrid organizations known as
interstate compact agencies. These multi-state organizations are created
by an agreement among the participating states with the consent of
Congress. The Council was authorized by Congress in December 1980, and
came into being when each of the legislatures of the participating states
passed a law agreeing to participate in the Council, subject to the
conditions spelled out in the Northwest Power Act.
Interstate compact agencies are usually created to deal with issues or
to manage resources that involve more than a single state. The
Constitution gives most of the authority over matters between states to
the federal government exclusively. In the Northwest Power Act, however,
Congress gave back to the Northwest states some of this federal authority.
In other words, although the Council is not a federal agency, it exercises
certain powers granted to it by the federal government.
In particular, the Council has authority to adopt plans and programs
that guide the actions of federal agencies. The Bonneville Power
Administration is required to ensure that its actions are
"consistent" with these plans and programs. Other federal
agencies are required to take the Council's fish and wildlife program into
account "at each relevant stage of decision-making processes to the
fullest extent practicable." The Council also must make
recommendations on Bonneville's annual expenditure of fish and wildlife
funds, based on advice of an independent scientific panel. These are
unique authorities. This grant is one of only a few instances in which the
federal government has given states significant power over a federal
agency.
Federal Laws Applicable to the Council
State agencies are governed by state law. Federal agencies are governed
by federal law. For interstate compact agencies, there is no general body
of governing law.
When Congress created the Council, it solved this problem by making a
number of laws regulating federal agencies applicable to the Council. In
Section 4(a)(4) of the Northwest Power Act, the open meetings law
applicable to the Federal Energy Regulatory Commission, and federal laws
applicable to Bonneville relating to contracts, conflicts of interest,
financial disclosure, advisory committees, disclosure of information,
judicial review, and "related matters" are made generally
applicable to the Council.
However, Congress recognized that not all of these laws would fit the
Council exactly and therefore gave the Council yet another unique
authority, the power to adapt federal laws to fit its own circumstances.
The Northwest Power Act says that specified federal laws "shall apply
to the Council to the extent appropriate." The legislative history of
the Act explains that the Council is to determine when it is and is not
"appropriate" to follow the federal law, and explains that the
Council has discretion to depart from the requirements of federal law
where it has good reason to do so.
For the most part, the applicable federal laws have proved to be
workable, and the Council has followed them as written. However, various
administrative details have been modified to fit the Council. For example,
financial disclosure forms are filed with the Council's General Counsel,
not with the U.S. Department of Energy. When the Council has departed from
the federal laws, it has usually made written findings explaining why the
law as written was inappropriate, and how the adaptation was more
appropriate.
There are a few rules regarding the financial disclosure and ethics
laws that apply to the Council. The Council recently adopted a policy
covering these matters, a copy of which will be provided to you. First,
Council Members and staff are required to file financial disclosure forms,
some parts of which are public records and some parts of which are
confidential. Second, Council Members and staff may not participate in
particular Council matters that will have a direct and predictable effect
on their own financial interests, including, among others, those of their
spouses and dependent children. Participation will be permitted in the
case of de minimis holdings and/or if the individual is granted a waiver.
The Council has always observed a blanket prohibition on holding a
financial interest in some firms, primarily energy companies and fish and
wildlife concerns doing business in the Western United States. While this
is part of the Council's current policy, it is under review, in light of a
recent change in the law. Third, Council Members and staff generally
cannot accept anything of more than nominal financial value from people
whose interests stand to be affected by Council actions. The Council's
legal division has always advised that political activity is not
disallowed, provided you are not a candidate for partisan office and you
do not use your Council position for political purposes. The candidacy
prohibition is currently under review. In addition, the legal division
seeks guidance from other federal laws and regulations as issues arise.
The legal division is available for advice on any questions that may arise
with Council Members and staff.
State Laws Applicable to the Council
While federal laws govern most of what the Council does as a body, some
state laws are still applicable to individual Council members and Council
staff. In particular, Council members are officers of their respective
states, and, if paid by their states, are state employees subject to the
various state laws and regulations that apply to state officers and
employees, including requirements governing how much time must be devoted
to Council activities, state salary schedules, and the like. These state
laws apply to Council members so long as they do not conflict with the
federal laws that are made applicable under Section 4(a)(4).
Employees in the Eastern Washington office are state employees and,
like Council members, are employed subject to the laws and regulations of
their state governments. Employees of the Council's central office and the
remaining Council offices are employees of the Council, rather than of a
single state. The Council sets the salaries, benefits, employment
conditions, and the retirement plans for the central staff. In questions
of labor laws and workers compensation, the Council follows the applicable
laws of each state as applied to non-profit and governmental
organizations.
In some instances, state and federal laws applicable to Council members
may overlap or have conflicting requirements. Only rarely has such overlap
resulted in a public debate. In 1988, for example, an Oregon member who
was leaving the Council was offered employment with a public utility.
Under the federal conflict of interest law, the member was allowed to take
the job. Under Oregon conflict of interest law, the member was not allowed
to take the job. The Council took the position that the federal law
preempted state law on this point. A protective lawsuit was filed by the
utility based on threats of prosecution by the Oregon Attorney General.
However, nothing further came of the matter, and the suit was eventually
withdrawn.
Liability and Indemnification
As of 1988, the attorneys general of each of the Northwest states had
confirmed in writing that Council members from their state were considered
state employees for liability purposes, and that each state was obligated
to defend Council members and pay judgments rendered against them in the
same manner as with other state employees. Thus, it is unlikely that any
Council member would be subject to personal liability for an official
action taken while a Council member.
The Council has also entered into an indemnification agreement with
each of its members, promising to defend claims and pay judgments. The
indemnification appears in Chapter 19 of the Council's bylaws.
For the first several years of its existence, the Council was able to
obtain an insurance policy to cover such claims. However, as a result of
the Washington Public Power Supply System (WPPSS) nuclear power plant bond
default, the premiums for this type of insurance increased enormously, and
the available policies contained exclusions removing coverage for
decisions relating to nuclear plants and other power planning decisions.
For these reasons, the Council chose to adopt an indemnification agreement
rather than to continue to purchase this type of insurance.
The Council continues to maintain a normal commercial liability policy,
which covers such matters as personal injuries on Council premises. This
policy also covers Council members while driving rental cars on Council
business. It is therefore not necessary for Council members to purchase
the optional additional insurance offered by rental car companies when
renting cars on Council business.
PROCEDURES FOR AMENDING THE COUNCIL'S POWER
PLAN AND FISH AND WILDLIFE PROGRAM
In developing the Power Plan and the Fish and Wildlife Program, the
Northwest Power Act directs the Council to observe certain procedures
unique to the Power Act, the informal rulemaking procedures of the federal
Administrative Procedure Act (APA) and any other procedures the Council
may adopt. The Council must hold public hearings in each of the member
states before adopting the plan or program, or substantial, non-technical
amendments to either. The Council must review the plan at least every five
years.
Power Plan Amendments
For purposes of power plan amendments, the federal APA requires public
notice of proposed amendment or a description of the subjects and issues
involved, and a statement of how the public may participate in the
process. The public must be given an opportunity to submit written
material.
Once the period for public comment has closed, people outside the
Council may be foreclosed from communicating with the staff and Council
members on the subject of the rulemaking. In some rulemakings the Council
has allowed limited, additional public comment up to the time of decision,
although the Council must have enough time to analyze all comments before
taking final action.
An agency must give a concise general statement of the basis and
purpose of the rules it adopts. The Council, following an approach
approved by the courts, has satisfied this requirement by publishing a
Response to Comments, which briefly summarizes the major comments received
and explains how the Council has dealt with them.
Fish and Wildlife Program Amendments
The Fish and Wildlife Program is published separately from the Power
Plan, although it is legally an element of the Plan. But the Act sets out
specific procedural requirements for developing and amending the Fish and
Wildlife Program that make it quite distinct from the Power Plan.
In amending the Fish and Wildlife Program, the Act requires the Council
to request from the region's fish and wildlife agencies and appropriate
Indian tribes recommendations for measures for fish and wildlife affected
by hydropower in the Columbia and its tributaries. Section 4(h)(2) of the
Act provides that recommendations must be solicited prior to the
development or review of the power plan, or any major revision to the
plan. Others may also make such recommendations. Once the Council has
received these recommendations, along with supporting documentation, it
must make them available for comment. Typically, the Council also issues
its own draft fish and wildlife amendments, which reflect the Council's
attempt to fit the recommendations into a systemwide context, and invites
public comment. The Council must act on the recommendations within one
year. The Council may reject a recommendation only for certain reasons
spelled out in Section 4(h)(7) of the Act. If the Council rejects a
recommendation, it must give its reasons in writing.
The role of the fish and wildlife agencies and Indian tribes is
particularly important. Not only must the Council solicit their
recommendations for fish and wildlife measures, but if there are
conflicting recommendations, the Council must consult with the tribes and
agencies and give "due weight" to "their recommendations,
expertise and legal rights and responsibilities" in resolving the
inconsistency. In determining which recommendations to accept, moreover,
the Council must determine whether a proposed measure would: (1)
"complement the existing and future activities" of the agencies
and tribes, and (2) be consistent with the tribes' legal rights. In 1994,
the federal appeals court said, in dicta, that the Council must give a
"high degree of deference" to the fish and wildlife agencies and
tribes.
The 1994 court opinion also said that the program must include sound
biological objectives to structure the program and guide Council
decisions.
Because the Fish and Wildlife Program must be based on recommendations
submitted to the Council, and because the Council must make findings on
any recommendations it rejects, program amendment processes are organized
around the recommendations. Most of the comments the Council receives are
directed to recommendations, and most of the Council's responses to
comments are made in findings.
Petitions for Rulemaking
The APA also requires administrative agencies to give interested
persons the right to petition for the issuance, amendment or repeal of an
administrative rule, such as changes in the Power Plan or Fish and
Wildlife Program. The Council has adopted a policy for how it will treat
such petitions. A petition must set forth the substance or text of a
proposed amendment or identify the provision to be repealed; explain the
interest of the petitioner; and set forth the facts, reasons and new
information that support the petitioner's request. The Council will
conduct such study as it deems appropriate and within 120 days of receipt
of the petition, grant or deny it. If an amendment process results from
the petition process, the Council has committed to completing the process
within seven months from the decision to begin the amendment process.
COUNCIL INTERPRETATIONS OF THE
NORTHWEST POWER ACT
Section 6(c)
In November 1986, the Northwest Power Planning Council and the
Bonneville Power Administration each issued complementary policy
statements on the implementation of Section 6(c) of the Northwest Power
Act. Section 6(c) requires Bonneville to submit certain proposals related
to major resources to a public review process to determine whether they
are consistent with the Council's Northwest Power Plan. The Council then
has the right to make its own determination regarding consistency. If
either Bonneville or the Council finds a resource inconsistent with the
power plan, the resource can be acquired only after congressional action.
The Act identifies as "major" resources those over 50
megawatts with more than five years' duration.
The purpose of review under Section 6(c) is to ensure that a major
resource is needed and is cost-effective before the Northwest invests a
great deal of money in it. The process speaks directly to the balance of
power between state and federal interests. The Northwest Power Act
established Bonneville's authority to acquire resources, but it also gave
the states, through the Council, the right to review those acquisitions
before committing ratepayers to large expenditures.
In March 1993, the Council and Bonneville completed a five-year review
of their respective 6(c) policies. The region had had little experience
under Section 6(c) in the years since the adoption of the original
policies, and therefore, little was changed. The revised policies were
expanded, however, to cover all the Bonneville proposals made subject to
review under the terms of the Act. In early 1998, in light of the
restructuring occurring in the utility industry, the Council and
Bonneville decided to postpone for five years further review of their 6(c)
policies.
Section 5(d)
Bonneville was authorized under Section 5(d) of the Act to sign power
sales contracts on special terms with existing direct service industrial
customers (DSIs) for an amount of power that each customer was receiving
under its earlier contract. The DSIs are customers that had industrial
firm power contracts with Bonneville in 1975. The Act expressly precluded
sales to new direct service industrial customers, but did permit
Bonneville to sell additional power to existing DSIs, provided Bonneville
and the Council made certain findings.
In late 1989, Bonneville tentatively agreed to sell additional power to
an existing DSI customer without the review called for under Section 5(d),
provided the customer could arrange an assignment of unused contract
demand from another existing direct service customer. Bonneville took the
position that Section 5(d) review was not required so long as the total
amount of power it sold to the DSIs did not exceed the aggregate amount to
which all the DSIs were entitled when the Act was passed. Public comment
brought this proposed transaction to the Council's attention.
The Council has adopted an interpretation of Section 5(d) that requires
review whenever a proposed sale to an individual DSI would result in that
DSI receiving more power than it received under its initial entitlement.
The Council's interpretation does not call for review if an existing DSI
assigns its power sales contract to a successor in interest for use at the
same location for purposes similar to those established under the original
contract. Except for transfers of the sort just described, an amendment or
assignment of a contract that results in the delivery of additional power
to an existing DSI is a sale subject to Section 5(d) review.
LITIGATION
Seattle Master Builders Association, et al. v. Northwest Power
Planning Council
On April 10, 1986, the United States Court of Appeals for the Ninth
Circuit decided this challenge to the Council's model conservation
standards (MCS) brought by several construction-related organizations. The
petitioners had advanced two principal lines of argument. First, with
respect to the Council's model conservation standards, petitioners
challenged the cost effectiveness of the measures to make new residential
buildings more energy efficient, and the methodologies used by the Council
to determine cost effectiveness. Petitioners also argued that the Council
should have prepared an environmental impact statement regarding
promulgation of the standards.
Second, petitioners challenged the constitutionality of the Council,
citing the appointments clause of the U.S. Constitution, which requires
officers of the United States to be appointed by the executive branch of
government. Council members are officers of an interstate compact agency
appointed by the governors of the four Northwest states and not by the
President.
The Bonneville Power Administration intervened in the case and
ultimately argued that the Council's adoption of the MCS did not violate
the constitution. Bonneville said that the Council's model conservation
standards did not impose a legal obligation on anyone, and therefore
adoption of the standards was not the sort of exercise of significant
authority over a federal agency that might require Council members to be
appointed by the executive branch.
In earlier communications, however, regarding what posture the
Department of Justice should adopt, the Department of Energy had taken a
more aggressive position. The Secretary of Energy, Don Hodel, wrote to
Justice in early 1985 and urged that if the Council were, indeed, anything
more than advisory, and if it could, in fact, significantly limit
Bonneville's actions, it ought to be found unconstitutional and replaced
by a federal council. John Dingell, the Chairman of the House Energy and
Commerce Committee that drafted the Northwest Power Act, wrote a strong
letter in opposition to Energy's request. Mr. Dingell fully supported the
view that the Council was intended to be more than an advisory body, with
functions that are more significant than the Secretary of Energy had
contended. He also concluded that the Council was properly formed and was
operating according to the expectations of Congress.
In a two-to-one decision, the Ninth Circuit ruled for the Council on
all the issues. With respect to the model conservation standards, the
court held that the Council had adopted a proper approach to determining
the cost effectiveness of conservation measures; that the methodology the
Council used for determining conservation value was within the Council's
discretion; and that the Council was not obliged to prepare an
environmental impact statement on the standards, pursuant to the laws of
the states that are members of the interstate compact. On the
constitutional question, the court noted that the functions of the Council
and Bonneville "directly overlap," and held that the Council
"violates neither the compact nor appointments clauses of the United
States Constitution. The Act established an innovative system of
cooperative federalism under which the states, within limits provided by
the Act, can represent their shared interests in maintenance and
development of a power supply in the Pacific Northwest and in related
environmental concerns."
The Master Builders petitioned the Ninth Circuit for rehearing en banc
(before a larger panel of judges in the circuit) on the ground that the
panel overlooked material laws and facts. The United States also
petitioned for rehearing or for rehearing en banc, arguing that the court
decided constitutional questions not presented by the case. The Ninth
Circuit denied both petitions. The Master Builders' subsequent petition
for certiorari was denied by the Supreme Court of the United States.
Northwest Conservation Act Coalition, et al. v. Northwest Power
Planning Council
The Coalition and the Natural Resources Defense Council filed a
petition for review in the Ninth Circuit challenging the model
conservation standards amended in 1986, in an effort to make the
requirements of the amended standards more rigorous. In particular,
petitioners alleged that the Council's standards for conservation in new
commercial buildings ought to be more stringent; that a surcharge is
necessary if the standards governing the energy efficiency of buildings
that convert to electric space heat are to be effective; and that the
Council's amended standards ought to contain standards for
utility-financed incentives to conserve electricity in existing
residences. Upon petitioners' request, the Council entered rulemaking to
amend the standards in the respects summarized above. Petitioners then
dismissed their suit in the Ninth Circuit.
Cascade Natural Gas Corp. v. Evans
In 1983, six regional natural gas companies brought suit challenging
the Council's plan, arguing, among other things, that the Council had
unfairly ignored natural gas as a conservation resource. The case was
settled before trial and the Council agreed to modify the plan to make
clear that the model conservation standards apply only to electrically
heated homes. The Council also said that it would consider modifying the
plan if significant fuel switching from natural gas to electricity were
demonstrated. The terms of this settlement expired on April 27, 1988.
CASE, The Utility Reform Project and Michael Rose v. Northwest Power
Planning Council
In May of 1986, CASE (Citizens for and Adequate Supply of Energy), The
Utility Reform Project and Michael Rose filed suit in the Ninth Circuit,
challenging certain portions of the 1986 model conservation standards.
Petitioners also asked the Council to enter rulemaking to address the
matters raised in the Ninth Circuit. In response to these two actions, the
Council: Clarified that its then current MCS rulemaking addressed model
standards for new residential and commercial buildings at federal agency
facilities; committed to assess the conservation potential of existing
buildings and other electricity uses at federal agency facilities as part
of the next major plan revision; and extended the period for comment and
consultation on MCS for federal agency customers beyond the deadline for
the then current MCS rulemaking. The Council also agreed to defer action
on the CASE petition to enter rulemaking to develop model conservation
standards for the direct service industries, pending further analysis of
increased interruptibility of the direct service industries, which the
Council agreed to conduct before calling for Bonneville acquisition of new
resources or before the next major revision of the Power Plan, whichever
is first. As a result of these actions by the Council, the petitioners
agreed to settle the case.
Northwest Resource Information Center, Inc., et al v. Northwest
Power Planning Council; Confederated Tribes and Bands of the Yakima Indian
Nation v. Northwest Power Planning Council (the "Phase Two"
cases)
To act as quickly as possible to improve conditions for salmon and
steelhead, which were then proposed for listing under the Endangered
Species Act, beginning in August 1991 the Council began a multi-phase
rulemaking on salmon and steelhead measures. In January 1992, the Council
published its notice of final action on measures dealing with increased
flows and drawdown of the lower Snake River. Three petitions were
subsequently filed challenging the measures, one by the Northwest Resource
Information Center, Trout Unlimited, the Oregon Natural Resources Council,
Idaho Steelhead and Salmon Unlimited, and The Wilderness Society,
represented by the Sierra Club Legal Defense Fund; a second petition was
filed by the Yakama Tribe; and a third was filed by a group of aluminum
companies and other industrial customers of the Bonneville Power
Administration. After the petitions had been filed, 15 to 20 additional
parties intervened, including Oregon Trout, the United States government,
a number of utilities and the State of Idaho.
On September 9, 1994, the Court ruled that the Council had not
adequately explained its reasons for rejecting amendment recommendations
because the Council's findings on the recommendations were put in a
separate document, rather than in the fish and wildlife program itself.
The Court also held that the Council's findings in an early phase of the
amendment process were voided by findings in a later phase. While the
Court's holdings were limited to these procedural matters, the opinion
offered extensive interpretations (called "dicta" because they
are not strictly binding) of the Northwest Power Act. Some of the dicta
told the Council that it should give a "high degree of
deference" to the fish and wildlife agencies' and Indian tribes'
recommendations and expertise, and that the Council's discretion to reject
these recommendations is narrow. The Court remanded the Strategy for
Salmon for the Council to develop new findings.
A.H. Canada v. Northwest Power Planning Council
In 1994, Mr. Alfred H. Canada, a retired power engineer, sued the
Council in federal District Court. Mr. Canada sought to overturn the
Council's denial of a petition for rulemaking he had earlier filed. The
rulemaking would have considered replacing the plan's call for
conservation with an equivalent amount of solar photovoltaics. The
District Court dismissed, reaffirming the established rule that suits
challenging final actions of the Council are to be brought in the Ninth
Circuit Court of Appeals.
Nez Perce and other tribes v. Northwest Power Planning Council
In 1997, four Indian tribes challenged the Council's recommendations
pursuant to Section 4(h)(10)(D) of the Northwest Power Act regarding the
Bonneville Power Administration's fish and wildlife expenditures. The
challenges are still pending before the Ninth Circuit Court of Appeals.
FINANCE AND ADMINISTRATION
Council Funding
Expenses of the Council necessary for carrying out its functions and
responsibilities under the Northwest Power Act are paid from funds
received from the Bonneville Power Administration. Funds are advanced to
the central office from Bonneville on a request basis. Each state, in
turn, requests funds to be advanced from the central Council office to the
state to cover the operating expenses of the state Councils.
Costs associated with the operation of the Council's central office in
Portland are paid for from the central office budget. Expenses for each
state Council office are paid from each state Council budget by the state
agency which provides accounting/payroll services to each state Council
office. In some instances, state expenses are paid directly from the
central office accounting and payroll systems.
Budgets
The Council is required to develop annual (state and central office)
budgets for transmittal to the Bonneville Power Administration and which
are included in Bonneville's budget submittal to the Department of Energy,
Office of Management and Budget, and Congress.
The Council's budget is limited to an amount equal to 0.02 mills
multiplied by the kilowatt hours of firm power forecast to be sold by the
Bonneville Administrator during the year to be funded. In most years, this
limitation represents approximately $2 million. However, based on an
annual showing by the Council that such limitation will not permit the
Council to carry out its functions and responsibilities under the Act, the
Administrator may raise such limit to any amount not in excess of 0.10
mills. In most years, this maximum limitation represents approximately $10
million. From 1981 to 1997, the Council's budget has ranged from
approximately $5.9 million to $8.5 million annually. The average annual
percent of increase for the Council's budget since 1988 through 1996 is
3.2 percent. For the same period, annual inflation for the Portland area
has averaged 3.8 percent.
The Council is currently on a $1.7 million budget reduction trajectory
from approximately $8.0 million in Fiscal Year 1997 to $6.2 million in
Fiscal Year 2001. These reductions are being made in order to conform with
the Council budget cap that will result from the phase-out of Bonneville's
residential exchange of firm power sales in 2001.
The Council's annual budget process occurs between the months of March
and June. Each state Council office develops its budget (usually on a
biennial basis) which is approved through the state legislative process
and then integrated with the Council's central office budget.
The Council's draft budget is distributed for a 30 to 60-day public
review and comment period during which time consultations are held with
interested parties regarding the Council's proposed funding requirements.
Following final revision and adoption by the Council, the budget is
transmitted to Bonneville.
Audits
The U.S. General Accounting Office (GAO) is the government entity
authorized to audit the Council's fiscal and program operations. However,
the Council, through an agreement with Bonneville, engages an independent
CPA firm to conduct annual financial audits of the Council's operations. A
copy of these audits is forwarded to the Portland office of the General
Accounting Office and to other interested parties, as well as being
included in the Council's Annual Report to Congress. In addition, state
audit agencies audit each state Council office's fiscal operations in the
course of their regular state agency audit schedules. In 1996, the GAO
conducted an extensive audit of the Council's business policies and
practices. That audit resulted in a very positive finding by the GAO.
Council organization
The Act provides that the Council shall determine its organization and
prescribe its practices and procedures for carrying out its functions and
responsibilities under the Act.
State offices
Council members organize and staff their state offices based on the
level of support they determine necessary. This typically includes
technical assistants and/or policy analysts in the areas of power
planning, fish and wildlife, and public information and public
involvement. Administrative support is also provided.
Council members may also use outside contractors or the technical
services of state agencies to conduct special studies and analyses
regarding issues stemming from the power plan and the fish and wildlife
program as they impact their respective states.
State staff are usually employees of the state. State laws, rules and
regulations are applicable. There are some exceptions where state support
for Council members is administered (payroll, travel and office expenses)
by the central office.
The central office provides overall support to the Council in the areas
of power planning, fish and wildlife, public affairs, legal matters, and
finance and administration.
Staffing levels for the central office are established by the Council
in its budget. All personnel actions are authorized by the executive
director after consultation/approval by the Council chairman. Staff
compensation plans and benefit programs are established by the Council
based on recommendations by outside consultants, and are subject to
periodic reviews by the consultant with the Council.
Travel rules and expense reimbursement policies for central staff are
set by the Council.
Contracts to assist the Council in carrying out its responsibilities
are awarded on a competitive basis. Contracts over $25,000 require
approval by the full Council.
The central office also provides computing and information systems
support to the state offices augmented by occasional assistance from state
agencies and local vendors.
Council central office staff
directory
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