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Report: Fish Hydro Measures Cost BPA $1.5 Billion in FY2001 by Barry Espenson Columbia Basin Bulletin - September 13, 2002

The Bonneville Power Administration says that power purchases and foregone revenues forced by federal hydrosystem operations to help migrating salmon and steelhead cost the agency's ratepayers $1.5 billion during fiscal year 2001, according to a Northwest Power Planning Council report released Wednesday.

The high cost -- five times greater than the previous high -- was the result of "skyrocketing" power market prices during late fall 2000 and early winter 2000, according to BPA's Roger Schiewe. All but $115.9 million of the total was for power purchases. Foregone revenues typically are generating opportunities lost when water is spilled to help fish passage instead of run through turbines.

The wholesale power prices increased more than tenfold as the result of an energy crisis in California and a lingering drought reduced the hydrosystem's generation potential. Bonneville had to buy power on the wholesale market because it is unable to generate enough electricity to meet all of its customers' demand, according to the NPPC.

If 2001 had been a more normal water year, the value of the same amount of power purchases and foregone revenues would have been $122.3 million, according to an analysis by the Council.

The report has been offered for public review and comment. The draft will be posted on the Council's website, www.nwcouncil.org. Comments will be accepted through Friday, Oct 11.

According to a Council memo distributed along with the draft report, Bonneville tracks the total amount it spends for purchased power. To separate out the cost resulting from fish and wildlife actions, a base operation without any fish and wildlife operations is defined.

"Purchase costs under the "no fish and wildlife" case are then subtracted from the actual purchase costs to assess that portion to be attributed to the biological opinion," according to the memo.

"Those hydrosystem operations were extraordinarily expensive last year," said Washington's Tom Karier, the council member principally involved in preparing the report along with the staff's John Harrison.

Information presented to the Council Wednesday by Schiewe showed that, as an example, power purchased in the Mid-Columbia averaged $508 per megawatt hour for the month of December 2000. That was the peak by far, but that Mid-Columbia average stayed between $289 mwh and $223 mwh before dropping to $61 mwh in June when demand is relatively low. The December figure compares to a $23.70 mwh mid-Columbia price in December 1999. December prices for several years prior had also been in that $18 mwh to $25 mwh range, Schiewe said.

"Bonneville estimates power purchases and foregone revenues increased costs and reduced revenues, respectively -- that results from the annual water storage and river operations requirements adopted to protect fish and wildlife from the impacts of the Columbia River Basin hydropower system, or to mitigate for those impacts, including protection for threatened and endangered species," according to the report's summary.

"For Bonneville, reduced hydropower production can result in both increased cost for power purchases and lost revenues from hydropower sales it could not make," the report says. The $1.5 billion cost for power purchases and foregone revenues alone during 2001 account for nearly 25 percent of Bonneville's overall fish and wildlife costs since 1978.

"Primarily, the costs were due to power purchases in the first several months of the year, when market prices were high and Bonneville sought to meet the April 10 reservoir levels stipulated in the Biological Opinions," the report said. Those BiOps were released in December 2000 by National Marine Fisheries Service and the U.S. Fish and Wildlife Service. They prescribe measures that the agencies feel necessary to avoid jeopardizing the survival of anadromous and resident fish stocks listed under the Endangered Species Act. Those operations include holding water in reservoirs for later use to augment flows for migrating salmon and steelhead.”

The NPPC report documents expenditures of $6 billion by the federal Bonneville Power Administration between 1978 and 2001 to protect and enhance fish and wildlife affected by hydropower dams in the Columbia River Basin. Of that total, $2.5 billion was spent during 2000 and 2001, according to the report. The inaugural report published last year shows Bonneville's fish and wildlife costs at $3.5 billion for the period from 1978 through fiscal year 1999.

Bonneville listed $221 million in other fish and wildlife expenditures, including $101 million for the NPPC fish and wildlife program, for a total of $1.726 billion for 2001.

The report shows BPA's 2000 fish and wildlife expenditures to be $560 million, including $108 million for the Council's fish and wildlife program. Foregone revenues that year were calculated to be $272 million and power purchase costs resulting from fish and wildlife operations were $62.8 million.

"While our report responds to a request from the governors of the four Northwest states, it also should be useful to electricity ratepayers who want to understand how their money is being spent on fish and wildlife in the Columbia River Basin," said Karier, chairman of the Council's Power Committee.

The report is based on information provided by Bonneville, the federal agency that markets and transmits the output of 31 hydroelectric dams and one non-federal nuclear power plant in the Columbia River Basin.

According to the report, Bonneville assigns more than half of its total fish and wildlife expenditures -- $3.44 billion -- to the value of power purchases and foregone revenues.

Also according to the draft report, Bonneville spent $1.02 billion since 1978 to implement the Council's Columbia River Basin Fish and Wildlife Program, which includes on-the-ground efforts such as habitat improvements, habitat purchases, research, fish production, and other projects.

The remainder of the fish and wildlife spending was on fixed expenses, such as debt service on federal bonds to pay for fish passage projects ($957.7 million), and to repay a portion of the fish and wildlife expenses of other federal agencies ($582.9 million), primarily the U.S. Army Corps of Engineers.

The Council's draft report is the second issued this year dealing with government spending in the Columbia River Basin. In July, the U.S. General Accounting Office issued a report on the expenditures of 11 federal agencies on Columbia River salmon and steelhead.

The Council report and the GAO report were developed separately and differ in several aspects, according to the Council:

• The Council's report focuses only on expenditures of the Bonneville Power Administration, for two primary reasons: that was the charge to the Council from the governors, and Bonneville implements the Council's fish and wildlife program.
• The Council's report documents Bonneville's spending on all fish and wildlife affected by hydropower in the Columbia basin, which is Bonneville's legal requirement, not only on salmon and steelhead.
• The GAO report counts Bonneville's payments to other federal agencies as salmon expenditures of those agencies; the Council's report treats those payments as Bonneville expenditures.
• The GAO did not include Bonneville's power purchases and forgone revenues because, according to the GAO, they do not reflect expenditures for actual recovery actions and are difficult to determine. The Council's report includes them because Bonneville attributes them to its fish and wildlife budget and is recovering them in its electricity rates.

The Council's draft report documents Bonneville's fish and wildlife spending in several ways, such as by species, geographic region and general purposes. The report also includes specific information on expenditures related to wildlife, as opposed to fish, and on adult salmon and steelhead returns.

In July of 1999, the governors of Idaho, Montana, Oregon, and Washington asked that the Council begin reporting annually on BPA fish and wildlife expenditures. The first was issued in January 2001.

The Council is an agency of the states of Idaho, Montana, Oregon and Washington and is directed by the Northwest Power Act of 1980 to prepare a program to protect, mitigate and enhance fish and wildlife of the Columbia River Basin affected by hydropower dams while also assuring the region an adequate, efficient, economical and reliable power supply.

Related Links:
NWPPC website, www.nwcouncil.org