Klamath Water Users Association

2455 Patterson Street, Suite 3       

Klamath Falls , Oregon 97603

(541)-883-6100   FAX (541)-883-8893  

                 

 

 

KWUA Perspective on the Current Power Rate for Klamath Basin Irrigators

 

The Klamath Water Users Association (KWUA) is a non-profit corporation that has represented Klamath Irrigation Project farmers and ranchers since 1953. Our members include rural irrigation districts and other public agencies, as well as private concerns operating on both sides of the California-Oregon border. KWUA’s Power Committee, consisting of volunteers from the local agriculture and business community, have over the past four years prepared a strategy to engage in the FERC relicensing process and to advocate for continued affordable power for Upper Klamath Basin agriculture.

 

After months of soliciting proposals, reviewing qualifications and interviewing potential candidates, KWUA last fall entered into an agreement with a Portland law firm to guide the association’s efforts to address pending electrical power issues. KWUA signed into a formal agreement with Cable Huston Benedict Haagensen and Lloyd, to provide the association with professional legal and other consulting guidance as Klamath Project irrigators face the expiration in 2006 of a contract, which presently provides for power pricing in the Klamath Project. The Klamath Project’s power contract dates to 1917, when PacifiCorp's predecessor – Copco – negotiated a deal with the U.S. government to build Link River Dam. The power company received the run of the river and storage benefits for hydropower, while the government and water users received affordable electricity for the Klamath Project. PacifiCorp and the federal government negotiated the current 50-year deal in 1956. KWUA was formed in 1953 in part to specifically address the power contract that was in place at that time.

We believe the farmers of the Klamath Basin have certain legal rights that are reflected in the conditions on the current FERC license, and any entity that acquires a new license will be required to offer low cost power to the farmers, or equivalent consideration. In essence, the water users have a right to power benefits. Further, waters used by PacifiCorp are only available to the Klamath Irrigation Project and only so long as they are not required by the irrigation project.

The Reclamation Act was enacted in 1902 to encourage irrigation and homesteading in arid western states.  It was anticipated that the irrigation would require two interrelated resources: water and power. The Bureau of Reclamation (Reclamation) asserted legal claim to all residual or inchoate water rights within the Project boundary.  Reclamation also has authority to develop hydroelectric power projects.    

 

Within the Klamath Irrigation Project, Reclamation gave permission to Copco to begin developing key components of the Klamath Hydroelectric Project pursuant to terms of the 1917 agreement. In 1951 Copco sought a federal license for two new hydroelectric facilities—now known as JC Boyle.  Reclamation and local interests vigorously opposed the license, as it would impede the federal agency from ever developing its own power resources.

 

In a document called Protest of the United States to the Application For License of the California-Oregon Power Company, Project No. 180, June 1, 1951, Reclamation made the following arguments to FERC, which are no less true today:

 

However important future agricultural development of the Klamath Basin may be, vastly more important is the preservation of the existing agricultural economy of the region.  This economy is largely dependent upon low cost power for pumping.  Without low cost power, many thousands of acres in the project would be forced out of production.  Low cost power has been available for over 25 years by virtue of a contract between the United States and the California-Oregon Power Company.  However, this contract terminates in 1967 and, if the water if not available at that time for the development of power either by the United States or the water users, the success or failure of a majority of the farmers with the project will depend entirely upon what rate the California-Oregon Power Company shall charge.

 

FERC interpreted the Bureau’s objection as an exercise of the Bureau’s mandatory conditioning authority under Section 4(e) of the Federal Power Act.  FERC ultimately issued the license solely upon the condition that the 1917 agreement be renewed for the term of the license.  

 

Under Section 4(e) of the FPA, 16 USC § 797(e), federal agencies can require conditions for projects located on or within federal “reservation” lands.  In general, the agency can require conditions to ensure that the hydroelectric project, as operated pursuant to the license, is consistent with the basic purpose of the federal reservation.  Reclamation is entitled to require license conditions to ensure that the hydro Project license is not inconsistent with the irrigation purposes of the Klamath Irrigation Project. In addition to the mandatory conditioning authority, there are several other bases under Federal Power Act upon which FERC would have discretion to condition PacifiCorp’s license.

 

We object to the terms “preferential rate” and “subsidized rate”, favorite characterizations of Klamath Project critics. The current contract is the product of negotiation among sophisticated parties that resulted in an acceptable agreement for all concerned. We believe that the current rate schedule is a reasonable consideration of the relationship between the Klamath Hydroelectric Project and the federal Klamath Irrigation Project.

 

We have monitored PacifiCorp's collaborative pre-filing consultation process for the Klamath relicensing, and we believe that PacifiCorp has striven to provide an inclusive, fair and open process.  PacifiCorp has funded studies that have provided a much better understanding of this unique, complex environment that we in the Klamath basin call "home". We generally support the PacifiCorp application as presented, although we will submit more detailed concerns in writing in the coming month. This support is concurrent, of course, with an understanding that all practical measures will be taken to ensure that continued affordable power rates are provided to Upper Basin irrigators.