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M E M O R A N D U M
TO: Members of the Canon Subgroup
FROM: Rick Applegate
DATE: March 12, 1996
SUBJECT: Group Issues Report
Terry Morlan has done an excellent job capturing our discussions concerning the givens, goals and issues that need to be addressed further as the steering committee continues its review. I have written up a few notes for the Group Reporting Summary that I believe reflect our earlier discussion on some of the key public purposes and obligations of the power system.
I believe very strongly that we will need a Public Purposes and Obligations Work Group that will look very carefully at the alternative means by which the power system can improve its ability to meet its fish and wildlife obligations and serve its other public purposes. As I have noted earlier, this will require a searching review of the subsidies and debts currently embedded in power system operations--particularly since they have, according to Bonneville and some of its customers, adversely affected Bonneville's ability to fund fish and wildlife protection and restoration while remaining competitive in today's emerging markets. I will provide more written detail on these issues to the steering committee in the near future, but for now, here are some items that I want to be sure are fully reflected in the summary of our discussions to date.
In our previous discussion of goals, I think we agreed that a couple important goals for the new power system were:
- Improve the ability of the power system to meet its legal obligations--including the obligation to protect and enhance fish and wildlife resources to the extent they have been damaged by construction and operation of the hydroelectric system. Some of these obligations are stated in the Northwest Power Act. Others arise under various other statutes and treaties that create federal duties and obligations and thereby constrain the power system or require Bonneville to take action. My view is that the power system must continue to meet these obligations. At a minimum, the scope and means for meeting the obligations are issues for further discussion in the public purposes work group and the steering committee. The key question is how can we provide solid and binding assurances that the obligations will be met and the public purposes will be provided--particularly as transmission is separated from generation and other competitive changes in the power system are instituted.
- Attain the benefits of enhanced cooperation throughout the West Coast energy system. The opportunities for improved cooperation between British Columbia, the Pacific Northwest, California and the Southwest need to be explored as part of this review. For example, there are likely to be opportunities to operate the river system in a manner that is friendlier to the salmon resource if we are able to link up more closely with California's late spring and summer power needs in the future. That should be examined carefully as we construct the theoretically optimal power system. In addition, as I noted in our previous discussion, we need to remember that the Columbia River is not "our river" in the Northwest. If we become too parochial about the competitiveness/restructuring issues, we will generate opposition from California in particular on the business of regional control of the federal hydroelectric system. A searching exploration of opportunities for cooperation is a good antidote to our sometimes narrow view of the power system and its future.
- The ability of the power system to meet its obligations and fulfill its historic public purposes is at risk. The risk is at minimum a strongly perceived one, if not a real one. These obligations and purposes include fish and wildlife protection and enhancement; conservation; renewable resources; universal service; low income energy assistance; and so on. We will need to examine very carefully how these obligations and purposes can be addressed by the emerging markets; the levels at which they will be pursued; the forums that will be responsible for making decisions about them; and the entities responsible for meeting the obligations and serving the purposes. As part of our examination of this risk, we will need to evaluate the current costs to the system when subsidized operations are undertaken for irrigation, navigation and other industries. I can't imagine how we can satisfactorily address the risk of financial failure or other financial difficulties without a careful review of the subsidies embedded in the current system operations. Bonneville is preparing some information on these matters for our review. In addition, as I have noted before, a number of conservation groups have prepared and are preparing some materials that will be submitted to the steering committee. We need to find a home for those discussions--whether it is in a work group or the full steering committee or, more likely, both.
- The governance structure of the power system and, in particular, river operations does not work well now. Nearly everyone has agreed that a more coordinated, less fragmented approach is required. Brett Wilcox has suggested one institutional approach to power system governance in his recent memo on the regional review. I believe that his proposal does not provide a sufficiently serious or strong decision-making role for the federal government or the tribes to which the federal government and the power system have obligations that are not currently being met. As I noted earlier, the Columbia River does not "belong" to the four Northwest states--and it is not solely theirs to govern. There are broad and very important national and international implications in its operation for power purposes and fish and wildlife matters. I will develop more thoughts on that soon. For now, I think this is clearly an issue that is on the table as noted by Jim Litchfield, Brett Wilcox and, more recently the Confederated Tribes of the Umatilla Indian Reservation (see attached letter from them.) The latter will be meeting with the steering committee to discuss their concerns in the near future. While the Council's governance review addresses means to "enhance regional control" in salmon recovery, it does not address squarely how the power system is to be managed in the future for power or fish purposes and I believe we'll have to deal directly with those issues in this review.
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Last modified: April 4, 1996
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