SB 76 TESTIMONY

By Oregon Senator Doug Whitsett, 2/3/09

Senate Bill 76 creates the revenue stream to pay for the removal of the PacifiCorp Klamath River hydroelectric project.

The Agreement in Principle reached by PacifiCorp, California, Oregon, and the Department of Interior cannot move forward until that revenue source is established.

This bill is not about the Klamath Restoration agreement. It is about dam removal, the related costs, and who will pay.

I want to briefly make three points:

First point:

The Agreement in Principle is an end run around the FERC process. That process is a deliberative analysis of the science and of the economic issues that are in the best interest of the public. In my opinion, the AIP replaces that deliberative process with political aspirations and economic double speak.

I believe that the promise of excessive environmental regulatory costs, the promise of excessive fish passage costs, and the promise of excessively reduced flows available to generate electricity may have helped persuade PacifiCorp to give their hydroelectric project to a Dam Removal Entity.

This AIP process establishes the precedent to be used to force the removal of other dams. The ink was hardly dry on the AIP when the Websites and blogs lighted up from the headwaters to the mouth of the Klamath River. Tribes and environmental interests were all claiming imminent victory, imminent dam removal. They were virtually unanimous in their expectations to force the removal of the Snake River dams as their next agenda item.

In 2007 Salmon mitigation on the Snake and Columbia River dams cost BPA ratepayers about $980 million. This was the combined environmental and fish passage costs as well as the reduced river flow allowed for power generation being passed on to BPA ratepayers. An additional effort to lower pools behind Columbia River Dams by about six feet to enhance fish passage failed during the 2007 session. The reduction in power generation potential would have been draconian.

The fact of the matter is that the same strategy that was used to make the Klamath River Project dams worthless is already in play on the Columbia River systems.

Second point:

The Agreement in Principle, and Senate Bill 76, assign 90% of the entire cost of demolition and removal of the Klamath River hydroelectric project to the monthly bills of 548,000 Oregon PacifiCorp ratepayers. The proposed 2% surcharge on PacifiCorp revenue of about $930 million will produce about $18.6 million annually for 10 years to create the $180 million that is deemed Oregon’s fair share by the AIP.

We might ask why Oregon’s fair share is 90% when PacifiCorp serves ratepayers in six states. Also we might ask why Oregon’s fair share is 90 % when three of the dams and much of the associated infrastructure to be destroyed are actually located in California. Finally we might ask about the wisdom of demolishing a renewable low cost producer of enough electricity to supply virtually all of Eugene and Springfield.

The projected cost of the dam and infrastructure demolition and removal appears to be a small part of the near certain total cost of this demolition project. Section 6 of the dash 2 amendment appears to leave an open checkbook for additional charges on ratepayers. It allows any additional costs before dam removal to be recovered from ratepayers. And it allows all cost for replacement renewable power to be recovered from the ratepayer. The 2006 FERC EIS report estimates those costs to be at least $35 million annually. Industrial power users believe this estimate to be grossly underestimated. The combined cost of dam removal and replacement power may cost the average PacifiCorp ratepayers 10% or more in their monthly bills for something they do not need and don’t want.

Third point:

The 2006 FERC EIS report estimates a total of 9,000 acre feet of sediment buildup behind the dams. The estimate is tenuous at best because of unknown bathymetry is the canyon prior to dam construction and inundation.

9000 acre feet is about equal to 14 square miles 1 foot deep in mud. It is equal to about 1.5 million 10 yd dump truck loads of muck. The report estimates the cost of removal at between $150,000 and 500,000 per acre foot for a total of between $1.5 billion and $4.5 billion.

Disposal of all this muck is NOT ADDRESSED IN SB 76.

The alternative is to allow the sediment to flow down the river after dam removal. This is unstable colloidal sediment in a white water river canyon. The potential environmental liability is unlimited

Disposal of all this muck is NOT ADDRESSED IN SB 76

WHO WILL PAY---THE PACIFICORP RATEPAYERS?

Or in the alternative, once this legislature indemnifies PacifiCorp to a cap of $200,000 million for dam removal:

WILL OREGON TAXPAYERS BE STUCK WITH THE REST OF THE MULTI-BILLION DOLLAR BILL?

(Permission to post from the author.)