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PacifiCorp Drops Bid for Columbia River Dams by Peggy Steward Capital Press, January 4(?), 2002

Portland-based PacifiCorp has withdrawn its bid for the operating license of two Columbia River hydroelectric dams in Central Washington state.

Last August, PacifiCorp announced it was partnering with the Yakama Nation to try to take over the licenses for Wanapum and Priest Rapid dams from Grant County Public Utility District, the builder and operator of the dams.

The operating licenses for the dams, built in the 1950s, are up for renewal in 2005. The Grant PUD board vowed to fight the takeover attempt.

The issue was of concern to local farmers, said Chris Hesse, Grant County Farm Bureau president in Moses Lake. The Priest Rapids Project that includes both dams was built to supply reliable, reasonably priced electricity to power irrigation pumps and for food processing and fresh produce packing plants. The dams, along with other hydro projects in the area, have long been credited with making Columbia Basin agriculture economically competitive.

County Farm Bureau members attended a meeting with PacifiCorp and Yakama Nation representatives and asked the Yakamas their position on dam removal, Hesse said. The answer was that the nation favors dam removal, a position unacceptable to many farmers, he said.

Even though PacifiCorp has pulled out of the deal, the Yakamas vow to look for another partner to continue seeking the operating licenses.

"We remain committed to our original goal of filing a competing license application that will expand the benefits from these projects and restore our salmon runs," said Lonnie Selam, chairman of the Yakama Tribal Council in Yakima.

The Yakamas said they hoped to name a new partner within weeks. Stated goals would be to operate the system to improve fish and wildlife protection, enhance cultural and recreation values, stimulate economic development and maximize energy production for the region.

PacifiCorp does not discount working with the Yakamas on other energy initiatives, said Dave Kvamme, PacifiCorp spokesman in Portland. He declined to elaborate.

PacifiCorp pulled out of the partnership with the Yakamas when the company signed an agreement to purchase power from Grant PUD, literally hours before a Dec. 31 deadline.

Under the terms of the contract, power customers agreed not to challenge Grant PUD's relicensing efforts. PacifiCorp filed a lawsuit, arguing that clause amounted to restraint of trade. But a King County Superior Court judge ruled Dec. 21 that the agreement language was legal. There was not enough time for an appeal before the Dec. 31 deadline, Kvamme said.

The dams produce about 810 megawatts of power, with excess power sold to other utilities. PacifiCor will buy about 25 percent of the excess power. If PacifiCorp will buy about 25 percent of the excess power. If PacifiCorp had not signed the power purchase agreement, and had subsequently lost in the relicensing takeover bid, it could have lost as much as $800 million in power value over the life of the contract. The deal signed with Grant PUD saved PacifiCorp $50 million in enhanced benefits over previous efforts, Kvamme said.

"They sweetened the deal," he said. "We had deadlines looming and had to make a decision."

"The completion of negotiations of the power contracts signals a very important milestone in our relicensing process," said Don Godard, Grant PUD manager in Ephrata.

Utilities signing new agreements with Grant PUD include Seattle City Light, Tacoma Power, PacifiCorp, Puget Sound Energy, Eugene Water & Electric Board, Avista, Cowlitz PUD, Portland General Electric, City of Milton-Freewater, City of Forest Grove, Kittitas County PUD, Kootenai Electric Cooperative, Idaho County Power and Light, Northern Lights Inc., Clearwater Power and Snake River Power Association.

"Most of these utilities have known us well for nearly 50 years, and they have now concurred that we are best postioned to continue operating the dams that Grant County took the risk to build," Goddard said.

The contracts take effort in 2005 when the old contracts expire. Grant PUD's formal license application to continue operating the Priest Rapids Project after 2005 will be filed with the Federal Energy Regulatory Commission by October 2003, the PUD said. FERC gives preferences to existing license holders in renewal applications and has never transferred a license to a competing applicant.