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FISH ISSUES AND THE REGIONAL ENERGY REVIEW:
A DISCUSSION PAPER
by
Lorraine Bodi, Co-Director, Northwest Regional
Office, American Rivers
Rick Applegate, West Coast Conservation Director, Trout Unlimited
May 1996
Goals
The salmon runs of the Columbia Basin are in decline. Federal, state, and tribal leaders have repeatedly stated their commitment to halt this decline and restore Columbia Basin fish runs to harvestable levels.
Our overall goal for fish and wildlife restoration as part of the Regional Energy Review is drawn from the 1980 Northwest Power Act:
To protect, mitigate, and enhance the fish and wildlife, including related spawning grounds and habitat, of the Columbia River and its tributaries, particularly anadromous fish which are of significant importance to the social and economic well-being of the Pacific Northwest and the Nation and which are dependent on suitable environmental conditions substantially obtainable from the management and operation of the Federal Columbia River Power System and other power generating facilities on the Columbia River and its tributaries.
As the Pacific Northwest Power System is restructured, the regional and national commitment to restoration of fish and wildlife under the Northwest Power Act and other laws and treaties must be preserved and our ability to meet that committment must be enhanced. Federal, state, and tribal resource protection treaties, laws, and obligations must not be set aside, weakened, or ignored. In addition to the fish and wildlife provisions of the Northwest Power Act, these include the Endangered Species Act, the Federal Power Act, the Clean Water Act, the U.S. Canada PacificTreaty, treaties with the tribes of the Pacific Northwest, and the federal government's trust obligation to the tribes. Specific commitments will be necessary to preserve current legal protections. For example:
- Explicit provision should be made for the restructured power system to carry out and meet restoration obligations.
- No portion of the restructured system should be excused from restoration obligations
- The restructured power system should provide the funding and river operations necessary to complement and meet restoration obligations.
Fish and wildlife goals and commitments should be achieved as efficiently and economically as possible. Consequently, analyses of restructuring options should consider their effects on the costs and consequences of fish and wildlife measures. This has not been a routine part of business decisions under the current power system.
Fish and wildlife are not the only public purpose served by the regional power system. Every effort should be made to integrate fish and wildlife options with other public purposes, such as energy conservation, renewable resources and low income energy assistance
Fish and Wildlife Governance
Improved fish and wildlife decisionmaking should be an essential part of a restructured system. Key elements of improved governance include:
- The development of a unified federal/state/tribal restoration plan and implementation plan for salmon.
- Joint decisions on fish and wildlife measures by federal, state, and tribal fishery managers.
- Where federal/state tribal representatives cannot agree, use of a formal dispute resolution process.
- Removal of fish and wildlife funding decisions from BPA (to be transferred to US Fish and Wildlife Service or other entity designated by the fish and wildlife managers).
- A procedure for scientific and fiscal oversight of fish and wildlife implementation, conducted in consultation with the fish and wildlife managers..
In the Northwest Power Planning Council's "180 day review" of fish and wildlife governance, these improvements in decisionmaking were requested by a wide range of interests, including conservation groups, fishing groups, tribes, and some utilities. This same coalition of interests declined to endorse the concept of an enhanced Power Council for fish and wildlife governance.
The Power Council recently submitted its report to the Congress based on the 180 day review. Fish governance issues have not been resolved by the Council's report, and will need to be addressed in connection with restructuring.
Key Restructuring Issues for Fish
The current Federal Columbia Power System is under real and perceived financial stress, due in large part to changing market conditions, business decisions made in response to short term political pressures, embedded debt particularly for economically unproductive nuclear plants, and various river operation subsidies.
These financial pressures have caused the operators of the system, improperly in our view, to question their ability to meet fish and wildlife obligations. Fish are bearing the burden of BPA's poor judgment and fiscal mismanagement. Indeed, absent nuclear debt and subsidies, the federal hydropower system could fully support fish and wildlife measures as well as conservation expenditures, renewables and low income assistance expenditures - and still sell power below current market prices.
Fish interests contend that, rather than restricting fish and wildlife obligations, the appropriate response is to carefully examine and restructure business arrangements so they make sense for fish and power. Our desired outcomes include:
- New marketing arrangements, eliminating fish harming subsidies,
- Equitable debt allocation, particularly nuclear debt and irrigation debt,
- Secure financial arrangements for fish and wildlife obligations,
- Improved dam management, reforming the Corps' gross inefficiencies and high costs for fish and power.
These types of changes will help fish, while also securing the financial health of the federal power system.
Restructuring Options
A number of regional interests have presented proposals for restructuring BPA and the regional energy system. All of the proposals presented so far are partial ones, addressing only certain aspects of restructuring. Most focus on the nuts and bolts of restructuring rather than the fundamental policy choices.
For example, some interests would like an independent transmission system free of all nuclear debt or other surcharges; a BPA/hydropower system saddled with all nuclear debt, so it is not a utility competitor; and complete freedom to leave BPA without assuming financial responsibility for nuclear debt, leaving the U.S. Treasury responsible if BPA cannot pay its bills. Others have proposed a passive BPA, marketing power by subscription or allocation.
In the meantime, BPA's larger customers seek to continue their recent practice of negotiating "fire sale" deals with BPA, even striking bargains at prices lower than BPA's actual costs. This approach will continue, and probably worsen, the current squeeze on fish, other public purposes, and the Treasury.
None of the proposals presented to date fully addresses the concerns of fishery interests, or the restructuring issues listed above. With fish issues in mind, we have been considering the following restructuring options:
1. Marketing
Fish interests are urging a full examination of federal subsidies as part of the Regional Review, with a particular focus on aluminum, irrigation, and navigation subsidies. American Rivers, Trout Unlimited, and Oregon Natural Resources Council are close to completion of a joint report documenting these subsidies.
Future marketing arrangements should level the playing field and preclude below costs transactions. A number of options, including subscriptions and allocations, should be examined for their impacts on stable fish operations and adequate fish expenditures.
2. Transmission
Fishery interests will oppose separation of transmission without assurances regarding allocation of nuclear debt and secure financing for fish and wildlife obligations. Otherwise, the hydro system - and fish - will bear the financial burden of this debt for the next decade and beyond. This approach would undermine, not enhance, the ability of the power system to meet its fish and wildlife obligations.
We are considering the option of placing some or all fish and wildlife costs on the transmission system, since it was the impetus for expanded development of the federal hydro system in the 60s and 70s. Thus, the transmission system should bear some level of responsibility for mitigating the damage to fish and wildlife.
3. Obligation to Serve
There appears to be an emerging view that BPA should only market the power it produces, freed from an obligation to serve its customers' loads. Fish interests will likely support this change, because it will reduce the alleged costs of BPA's fish mitigation, which now includes power purchases to serve customers.
4. Debt Allocation
Fishery interests believe that BPA liabilities, such as nuclear debt and irrigation default loans, must be individually examined and equitably allocated.
Nuclear debt can not simply be allocated to the hydro system, as some have proposed. In fact, WPPSS bonds are secured by revenues from both the transmission and the generation systems. And, the revenue requirement for the WPPSS debt ($550 million) is about equal to the annual revenue from the transmission system.
All or part of the nuclear debt could be addressed through exit fees, systems benefits charges, broad-based surcharges on transmission, or some combination of these apporoaches. Irrigation default debt could be "returned" to the U.S. Treasury, or more of it could be borne by those who benefit if they are able to pay it..
5. WNP 2
WNP 2 currently acts as a financial drain on the federal hydropower system. We believe it makes sense to consider a separate subscription for WNP-2, so participants can decide whether the project is economical and should continue to operate.
6. River regulation
It is impossible to discuss the hydropower system without addressing the need for a predictable, fish friendly river regulation plan. As a general concept, fish needs should be met first, with power marketing following from the fish plan. In actual practice, given the economic stakes, this priority for fish has been difficult to achieve.
Details on the fish plan and decisionmaking are addressed under the Governance section above.
7. Dam management
A major problem for implementation of fish measures is the Corps of Engineers. The Corps' management of its dams - for fish and power -- is inefficient, costly, and dilatory. Overall, Corps implementation of fish and wildlife measures is an unaccountable feature of ongoing restoration efforts. For example, an experimental surface collector for fish passage costs twice as much and takes twice as long at a Corps dam, compared with a PUD dam. Similarly, replacement of out-of-service power equipment at Corps dams can take years, resulting in lost power generation. Even worse, the Corps sometimes fails to meet its fish obligations at all.
American Rivers has requested that BPA prepare a summary of turbine outages, repair timelines, and implications for generation as part of the Regional Review. We have identified three preliminary options for reforming dam management (and undoubtedly there are more): removing the Corps and putting BPA in charge of the dams (as TVA is for its dams); requiring review of Corps actions and decisions by the federal/state/tribal entities responsible of the unified salmon plan; and requiring FERC licenses for the federal dams. Another, less effective option would be to put BPA in charge of contracting for fish measures and O&M, which it already has legal authority to undertake.
Comments?
We welcome your comments on this discussion paper. Please send them to American Rivers via fax, (206) 323-8188, or e-mail, arnw@igc.apc.org and to Trout Unlimited via fax, (503) 650-5410.
Lorraine Bodi is Co-Director of the Northwest Regional Office of American Rivers and has extensive experience in hydroelectric licensing and Columbia Basin salmon recovery. She previously served as counsel for the National Marine Fisheries Service. Rick Applegate is West Coast Conservation Director for Trout Unlimited. He previously served as Fish and Wildlife Director at the Northwest Power Planning Council. His e-mail address is rick_applegate@psmfc.org.
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