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PacifiCorp: Removal, not relicensing, in best interest of customers

By Ty Beaver
Herald – News

The Klamath Hydroelectric Settlement Agreement calls for removal of four Klamath River hydroelectric dams, with PacifiCorp customers paying for the removal over the next decade.

PacifiCorp officials say removal — rather than relicensing the dams — is in the best interest of its customers, but others have questioned that statement. And a number of people are wondering what the long-term impacts of dam removal will be.

Why is dam removal in the best interest for PacifiCorp customers? And what are the long-term impacts of removal?

Dean Brockbank, vice president and general counsel for PacifiCorp Energy, said dam removal is the best course because it provides the most certainty. State legislation capped the cost of dam removal to no more than a 1.5 percent surcharge to customers for the next 10 years.

The overall cost of relicensing the dams isn’t known, Brockbank said, but the cost of improving dams for fish passage would have exceeded the cost of removal.

"In other words, customers’ rates will increase whether the Klamath Hydroelectric Project is removed or relicensed — our primary objective has been to minimize that cost and risk impact to our customers,” he said in an e-mail. "The only rate certainty at this point comes from removal.”

Larry Dunsmoor, fisheries biologist for the Klamath Tribes, said the Tribes agree that dam removal is the best course. Without removal, litigation about water quality, fish passage and other issues could result, and the cost of PacifCorp’s participation in litigation likely would be passed on to its customers.

"Those are all substantial costs,” he said.

Greg Addington, executive director of Klamath Water Users Association, said irrigators on the Klamath Reclamation Project haven’t done a formal evaluation of how removal would impact costs, but he noted that reports from the Federal Energy Regulatory Commission indicated continued operation could have cost PacifiCorp tens of millions of dollars each year.

"It looks to us that it makes some economic sense,” he said of removal.

Brockbank said it’s not yet known what will replace the 80 average megawatts the dams produce annually, but the company has aggressive renewable energy acquisition goals and a track record of adding significant renewable resources in recent years.

"We can assure you that if the public policy discourse determines that dam removal in the Klamath Basin should proceed, Pacific Power will continue to supply clean, reliable replacement power necessary to meet its customers’ needs,” he said.

Financial impact on Siskiyou County

The dam removal agreement also calls for Siskiyou County to receive $20 million. What’s that money for, and where will it come from? Does it address the county’s needs stemming from dam removal?

Tom Guarino, counsel to the Siskiyou County Board of Supervisors, said the $20 million allocated for Siskiyou County as written into the dam removal agreement would be an economic offset, which the county could use to promote economic activity, including developing new energy resources such as biomass.

Though the money could help the county, Guarino said, supervisors do not support the dam removal agreement’s language on it, and they note other problems.

None of the money would go toward potential lost property tax revenues, diminished property values of landowners with land next to the dams’ reservoirs or toward restoration that could be necessary along the river.

Source of funds

The source of the money also is an issue. It would come from a bond measure being considered by the California Legislature to help address water infrastructure issues in the state, such as issues in the Sacramento River Delta. It’s not yet known when the bond measure would go before voters.

"To say it’s controversial is the understatement of the year,” Guarino said about the bond measure.

Larry Dunsmoor, fisheries biologist for the Klamath Tribes, said the Klamath Tribes were not heavily involved in discussions regarding the compensation to Siskiyou County, but the county’s representatives had requested a dollar amount about that size of the allocation in past talks.

Greg Addington, executive director of Klamath Water Users Association, said he also heard figures similar to the proposed allocation during discussions with Siskiyou County, primarily in regard to the broader Klamath Basin Restoration Agreement.

That agreement aims to settle water rights among Klamath River stakeholders, stabilize power rates for irrigators and advocates for dam removal.

Herald – News
Klamath Falls, OR
October 23, 2009

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