Dams in the bull's-eye

March 8, 2008

By Michelle Ma

Triplicate staff writer

In or out?

That's the question PacifiCorp faces over the fate of four hydroelectric dams on the Klamath River .

The Portland-based power company is being pressured by numerous groups to remove the dams.

Critics of the dams say they block salmon from reaching the Klamath's upper stretches and tributaries.

"We want salmon to get up here the best way they can. That's with the dams out," said Jeff Mitchell, a Klamath Tribes councilman.

Not everyone wants them out. They generate power for utility customers that include Crescent City residents, and they also create reservoirs that provide recreational opportunities.

A draft agreement among 26 Klamath River stakeholders calls for PacifiCorp to demolish the dams. Those stakeholders include American Indian tribes, farmers, fishermen, environmental groups, and state and federal agencies.

If the company doesn't comply, the agreement won't go forward.

Almost simultaneously, PacifiCorp is in the process of relicensing its Klamath dams.

The power company has a choice: dams in, or dams out.

"If you really want to reach an agreement with us that results in dam removal, we can live with that, but ... it needs to be a better option for our customers than relicensing this project and moving forward," said Toby Freeman, PacifiCorp's regional community manager based in Klamath Falls , Ore.

Federal regulators support PacifiCorp's application to relicense the dams for continued operation, with changes to make them more fish-friendly.

Installing fish ladders on all four dams might be more expensive than taking the dams out, state and federal regulators say.

A less costly alternative would be to devise a method for trapping salmon and then hauling them around the dams, but federal wildlife agencies have indicated they'll require fish ladders as a condition of relicensing.

Parties who want the dams out have met to settle basin-wide arguments over water and fish. They announced a draft agreement in January that is contingent on the removal of PacifiCorp's four biggest hydroelectric dams on the Klamath.

Confidential talks with the power company are happening now to try to reach a deal that would make financial sense for PacifiCorp—and still remove its Klamath dams.

"A lot of people believe the argument to take out dams is real clear from a business perspective," said Troy Fletcher, a member of the Yurok Tribe and lead negotiator on settlement issues for the tribe. "It's very clear from a resource perspective, so it's just a matter of what it's going to take to get the company there."

The Daily Triplicate looks today at what it would mean to relicense and leave the dams in place. Next Saturday's installment will consider potential gains and losses if the dams are removed.

Economic, versatile power source

PacifiCorp has its reasons for wanting to keep the four dams. The facilities represent emission-free energy for the power company and a way to provide reasonably priced power to its customers.

Hydro plants like those on the Klamath are valued because they can be easily manipulated to respond quickly to varying power needs, depending on how much electricity customers use. Hydro plants adapt to high-demand periods by releasing more water through the dams' powerhouses, which then generate electricity.

"It takes a lot to replace an on-demand system like hydro," said Tom Gauntt, a PacifiCorp spokesman.

The Klamath project is particularly important to PacifiCorp because of its proximity to many customers in rural Southern Oregon and Northern California . It's helpful, Freeman said, to have electricity-generating facilities throughout PacifiCorp's service area, even though electricity from each facility feeds into the power grid, not directly to homes or businesses.

Keeping the hydro project in motion also makes sense to the company as it installs renewable energy units, such as wind power.

Wind turbines can be more efficient when coupled with available hydro power. Turbines are dependent solely on wind, so when gusts are few, hydro power can fill that electricity gap with a flick of the switch.

Proponents of dam removal say PacifiCorp only has its eyes on making money, regardless of the dams' potential detriment to fish and wildlife. The power company also doesn't want to set a precedent of being the first to remove a massive hydro project, said Larry Dunsmoor, a biologist with the Klamath Tribes headquartered in Chiloquin , Ore.

"(The dams) are having all these other impacts on the landscape. It's just a money-making venture for the company," Dunsmoor said. "As long as they can just string this thing out, they keep making money."

In California , PacifiCorp is able to offer its customers some of the lowest power rates in the state because most of the company's electricity comes from facilities it owns, Freeman said. Other power companies buy more electricity on the open market.

Power rates are also kept low because many of PacifiCorp's facilities are older and already paid for, similar to a paid-off mortgage, Freeman said.

Additional costs inevitable

Whether the dams are removed or relicensed, the company will have to pass along its additional costs to its customers.

In addition, the power company has already spent nearly $50 million over the past 10 years in relicensing costs to hire consultants, send employees to countless meetings, conduct field studies and do scientific research, Freeman said.

Once a solution is reached, all of these incurred costs will be folded into customers' electricity rates. But before that happens, the power company must present its plans to each state's public utilities commission, regulatory groups that protect ratepayers from unreasonable actions taken by utility companies.

"Everything we spend money on to deliver service to our customers is reviewed for prudency by our public utilities commissions," Freeman said. "At the end of the day, we know we've got to be able to stand there and explain to public utilities commissions throughout the West that we incurred these costs in a reasonable manner."

Is removing dams cheaper?

PacifiCorp has moved forward in relicensing its Klamath dams with the Federal Energy Regulatory Commission to operate the project for another 30-50 years.

The commission has recommended relicensing the dams, and trucking and hauling fish around the structures. But other fish-passage structures, such as ladders, would be mandated by federal wildlife agencies if the dams are relicensed. These additions would cost about $300 million.

Both the Federal Energy Regulatory Commission and California Energy Commission have reviewed studies prepared on Klamath dam removal and have offered estimates on what it would cost the company to take them out.

The federal group estimated it would cost about $80 million to remove the four dams. Included in that price are construction costs, engineering and permitting, among other things. When compared with the $300 million required to bring the dams up to environmental standards, the commission found dam removal to be cheaper.

The power company would face a net power loss of $13 million each year with dam removal, compared with a net loss of $20 million per year with fish ladders, saving the company about $7 million each year if the dams came out, according to the Federal Energy Regulatory Commission.

The California Energy Commission also compared costs of leaving the dams in place and taking them out. The commission's removal estimate was about $90 million. When replacement-power costs are factored in, the commission found that it would be about $114 million less costly to take out the dams than add fish ladders and keep them in.

But PacifiCorp officials question those figures. They contend the estimates are the product of a consultant's preliminary work, rather than the exhaustive study that would be required to justify removing the dams.

"None of the work they did was as rigorous as one would probably want to do to really make any sort of confident decisions on dam removal," Freeman said.

Reach Michelle Ma at mma@triplicate.com.

Evolution of a debate: Relicensing the dams vs. removal

By Michelle Ma

Triplicate staff writer

PacifiCorp's license to operate its Klamath Hydroelectric Project expired in 2006, prompting the power company to file an application four years ago to relicense the dams.

But before that application was filed with the Federal Energy Regulatory Commission, PacifiCorp gathered together parties that have an interest in the Klamath River , including American Indian tribes and farmers, to talk about issues relating to the river and hydro project.

It's common for utility companies to convene talks with folks who take interest in the project or nearby resources when they consider relicensing, but with this project, dam removal became an emphasis early on.

"Folks picked that (dam removal) outcome even before there was any evaluation done on other options, let alone dam removal itself," said Toby Freeman, PacifiCorp's regional community manager based in Klamath Falls , Ore. Freeman has been involved with relicensing the Klamath project since 2002.

Parties involved affirm that dam removal has been a goal from the start. Indian tribes along the Klamath and its headwaters see dam removal as key to restoring salmon and other fish to the river's upper stretches and tributaries.

"We went into this from the beginning wanting to focus on the fish issue, wanting to focus on how to get salmon back up here in the upper basin," said Jeff Mitchell, a Klamath Tribes councilman.

With that goal in mind, the Klamath Tribes, headquartered in Chiloquin, Ore., spoke with lower-river tribes, including the Yurok Tribe, that have expertise in managing salmon, Mitchell said.

"The answer is you've got to get rid of those dams if you really want to secure and protect those fisheries in the future," Mitchell said.

PacifiCorp moved ahead and decided to file its application in 2004 to try to keep the dams running another 30-50 years.

By that time, negotiations reconvened with interested parties, and about a year and a half later, a separate group broke off from talks with the power company to focus on other issues, including water provisions for farming and fish.

Last November, the Federal Energy Regulatory Commission finished evaluating the hydro project's environmental impacts, which is part of the relicensing process. The commission recommended leaving the dams in place, trucking and hauling fish around the structures and issuing a new license for the project.

But federal wildlife agencies have mandated that the power company update its dams—if they stay—with fish ladders costing about $300 million.

Fast forward to Jan. 15, when the settlement group, now including tribes, farmers, fishermen, environmental groups, and state and federal agencies, released its draft agreement to restore the Klamath River Basin and settle long-time feuds between parties that depend on the river.

And this group's mandate is that PacifiCorp remove its four hydroelectric dams on the river.

So the question remains: After nearly 10 years of meetings and negotiations, will an agreement be reached with PacifiCorp to remove its dams, or will they be relicensed with fish-friendly additions?

PacifiCorp and hydropower

Portland-based PacifiCorp, known as Pacific Power to Californians, is a subsidiary of billionaire Warren Buffett's MidAmerican Energy Holdings Company. PacifiCorp has about 45,000 customers in California and more than 1.6 million customers in six Western states.

Each dam within PacifiCorp's Klamath Hydroelectric Project is engineered to capture the energy of falling water that then translates into electrical power.

The Klamath project can produce up to 169 megawatts of power at a given time and more than 700,000 megawatt hours annually. That's enough to power about 70,000 homes each year.

The Klamath dams generate about 2 percent of the power company's total output.

In total, almost 50 PacifiCorp hydro-power facilities feed about 10 percent of the company's electricity supply. In megawatt capacity, the Klamath project is the company's third-largest hydro project.

The power company wants to decommission two low-generating dams in the Klamath project, known as East Side and West Side , and leave the remaining four hydroelectric dams on the river in place. PacifiCorp would also like to keep in place another small hydroelectric dam on a tributary.

—Triplicate staff  

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