Bill would pass cost of Klamath Dam removal to ratepayers

by Matthew Preusch

The Oregonian

February 3, 2009

AP  Copco No. 1 dam on the Klamath River outside Hornbrook, Calif.. The dam is one of four on the Klamath owned by PacifiCorp that could be removed by 2020.

A plan to pass much of the tab for removing Klamath River dams to Oregon power users gets its first hearing in Salem today.

The bill is considered a critical step in a larger agreement amongst farmers, fishers, tribes and others to improve salmon runs and provide stability for agriculture in the historically fractious Klamath Basin.

Senate Bill 76 would allow PacifiCorp, which owns the four Klamath River dams, to collect surcharges from its customers to cover up to $200 million of the cost of removing the dams. A maximum of about $180 million of that would come from Oregon ratepayers.

Opponents and supporters will make their case at 3 this afternoon in front of the state senate's Environment and Natural Resources committee. The committee could vote on the bill as soon as Thursday.

In November, Gov. Ted Kulongoski signed an interim agreement with California, the U.S. Department of the Interior and PacifiCorp spelling out the steps to remove the dams by 2020, including this bill.

Dam removal is central to the larger Klamath Basin Restoration Agreement, a broad compromise meant to calm continuing disputes over water and resources in the region spanning southern Oregon and northern California.

Ratepayer advocates opposed early versions of the PacifiCorp bill, but amendments added in recent weeks have calmed most of their concerns.

"What's important is to have a process that reviews it so customers can tell whether it's a good deal or not," said Bob Jenks, executive director of the Citizens Utility Board of Oregon. "This set of amendments that are out there, they are close, but they are not quite there."

It's standard practice for utilities to recover costs of environmental improvements to dams through rate increases, and Jenks and others want to ensure that this bill includes the same consumer safeguards as a rate jump proposed through the Public Utility Commission would.

In its current form, if one of more of the dams is not removed the collected money would go to PacifiCorp to pay for a relicensing of the remaining dam or dams.

"What we'd like to see the bill do is say if you collect money for dam removal, and the dam is not removed, the relevant funds are simply refunded by PacifiCorp to the ratepayer," said Lisa Brown, an attorney with WaterWatch of Oregon.

PacifiCorp, which provides power to 1.7 million customers in six western states, says this bill would cap the amount it could legally pass along in rate increases to its customers, who would end up paying more if the aging dams had to be retrofitted for a new federal license.

"You can make the argument that this is saving customers money," said Steve Rothert, director of the California office of the conservation group American Rivers, which supports the bill.

-- Matthew Preusch; mattpreusch@news.oregonian.com

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