Klamath farmers' utility bills to rise

By JEFF BARNARD
Associated Press writer

Saturday, January 28, 2006

PORTLAND, Ore. -- The Federal Energy Regulatory Commission has denied a U.S. Department of Interior request to continue low electric rates enjoyed by 1,000 farmers on the Klamath Reclamation Project the past 90 years.

The decision means that farmers, the U.S. Bureau of Reclamation and the Lower Klamath National Wildlife Refuge face increases of 1,000 to 2,500 percent in the cost of pumping water around the Klamath Reclamation District, which covers 200,000 acres straddling the Oregon-California border, when a 1956 contract freezing rates at 1917 levels expires in April.

The Bureau of Reclamation will ask for FERC to reconsider and seek relief from the Oregon and California public utility commissions, said spokeswoman Rae Olsen.

"Our position is that if feasible, a cost-based power rate should be negotiated, which recognizes the value of water control and availability for PacifiCorp operations from the Klamath (Reclamation) Project.

Thanks to legislation enacted last year, Oregon farmers will see their rates phased in over seven years, at a savings of $31 million. But barring some concession from PacifiCorp, farmers on the California side of the project will see their electric bills jump in April.

Scott Seus, whose family grows 3,000 acres of onions, horseradish, peppermint and organic alfalfa around Tulelake, Calif., said farmers were not done fighting, arguing that fish, wildlife and PacifiCorp all benefit from their ability to move water cheaply.

Seus said he did not think it would put farmers out of business, but would force many to move from efficient sprinkler irrigation to cheaper flood irrigation, reduce the number of acres farmed on marginal lands, and increase the likelihood some career farmers would sell to people looking for rural homesites.

Unsuccessful in winning a federal buyout of irrigated farmlands to provide more water for salmon in the Klamath River, environmentalists, salmon fishermen and the Hoopa and Yurok tribes had opposed any extension of reduced electric rates.

"When the price increases for a resource, you tend to conserve it," said Steve Pedery, spokesman for the Oregon Natural Resources Council, an environmental group. "Right now, there is very little incentive to conserve water or electricity in the Klamath Basin."

Authorized in 1905, the Klamath Reclamation Project built a network of canals to drain Tule Lake in California and Lower Klamath Lake in Oregon and now irrigates 200,000 acres of farmland that produce grain, alfalfa, onions, potatoes, horseradish, and cattle.

On most projects around the West, Reclamation built dams to provide low-cost power for irrigators. On the Klamath Project, they ceded that responsibility to California & Oregon Power Co., which built dams to produce electricity. Copco has since been taken over by PacifiCorp.

PacifiCorp has said electric rates of 0.6 cents per kilowatt hour were 20 percent below market in 1956, and are now 99 percent below the 6 cents per kilowatt hour charged for irrigation power in Oregon. The rate in California is 8 cents per kilowatt hour.

Lumping together the 220 customers on the project in California, 720 on the project in Oregon, and 300 off the project in California -- including a golf course, cemetery and schools that pay 0.75 cents per kilowatt hour -- PacifiCorp has said it loses $8 million to $10 million a year.

Interior had asked FERC to continue the electric rates in annual extensions of PacifiCorp's license to operate dams on the Klamath River, which generate electricity with water that has run through the irrigation project.

The commission wrote in its decision that even if the contract was a term of the old dam operating license, it expires on April 16, so any annual renewal of the license, which expires in February, will not include the electric rate contract.

"The 1956 contract authorizes, but does not obligate, PacifiCorp to shape flows for the generation of electricity. PacifiCorp may choose to forgo this right by letting the contract expire, and its new license application indicates it plans to do so."