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Oregon Governor Kulongoski and the Pacificorp Klamath Dam Agreement in Principle 

Oregon Senator Doug Whitsett
December 29, 2008
"On The Floor" Radio Broadcast on KFLS 
 
   Last week, Governor Kulongoski pre-filed thirty legislative bills.

   Many of the bills are designed to further his agenda for the greening of Oregon. Senate Bill 76 is one of those green legacy bills.

   The bill is written to implement the Klamath Agreement in Principle for the removal of four PacifiCorp owned hydropower dams on the Klamath River. The bill directs the Oregon Public Utility commission to establish new and increased rates and tariffs, to be paid by PacifiCorp’s Oregon retail customers. Those surcharges on our power bills will be sufficient to provide the funds required for the recovery of Oregon’s allocated share of PacifiCorp’s un-depreciated investment in the dams. The Governor’s team helped negotiate the deal that requires Oregon ratepayers to reimburse PacifiCorp for about 90% of the company’s un-depreciated assets in the four dams, the related generating facilities, and the related transmission infrastructure.

   Additionally, the customers will pay for all capitol improvements that the United States, California, and Oregon may require for the continued operation of the dams up until their removal scheduled to begin in 2020. The customers will repay PacifiCorp for all money already spent by PacifiCorp in their attempt to relicense the dams. The customers will pay PacifiCorp for all amounts spent in their future attempts for settlement of relicensing issues.
 
   The customers will pay the first $200 million spent by PacifiCorp for removal of the dams.
 
   The customers will pay for all amounts spent by PacifiCorp in decommissioning the dams in anticipation of their removal. The customers will be responsible for paying all future amounts spent to replace the power generated by the four dams. The customers will be responsible for paying all future costs of replacing the unique peaking function currently provided primarily by the J. C. Boyle Dam.

   Surcharges will be added to all the monthly bills of PacifiCorp’s more than 500,000 Oregon ratepayers. Roughly 90% of the customer base that will be required to pay to compensate PacifiCorp for their signature on the agreement to transfer ownership of their dams to the Dam Removal Entity are Oregon ratepayers.
 
   Apparently, Governor Kulongoski and his staff are so focused on the Governor’s legacy, that they have ignored the reality that Oregonians will pay for the costs of the destruction of this critical energy infrastructure. The agreement they brokered will apply 90% of the costs of dam removal directly to the monthly bills of more than half a million PacifiCorp customers in Oregon. They ignored the reality that 90% of the ongoing replacement costs of power generation and transmission, as well as the costs of replacing the dams’ peaking functions, will be borne by Oregon ratepayers. They further ignored the reality that three of the four dams, as well as the preponderance of the generating and transmission facilities, are actually located in the state of California.

   It is my observation that Governor Kulongoski, and his negotiating team, simply gave away the farm in their pursuit of his legacy of dam removal.

   Moreover, the Governor allegedly wants to replace the 170 megawatts of clean hydropower with other renewable sources of electricity.  Under current economic conditions, the cost for that replacement power will be orders of magnitude more than the current hydropower costs for PacifiCorp’s more than 500,000 Oregon ratepayers.

   It is much more likely that the hydropower will be replaced with existing coal fired generation from PacifiCorp plants in Wyoming. In that event, the Governor’s proposed carbon cap and trade initiative will tax every electron of that coal fire generated electricity as it enters the state of Oregon.

   Governor Kulongoski’s negotiation of the Agreement in Principle is his gift to Oregonians. It is a gift that will continue to cost Oregon families for generations to come. Senate Bill 76 is the vehicle to deliver that gift.
 
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