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Going With The Flow Replacing Energy from Four Snake River Dams NW Energy Coalition - April 2000

This is the executive summary of an April 2000 NRDC report that analyzes the costs and air pollution consequences of removing four dams in the lower Snake River and replacing the electricity these dams generate with energy from other sources. The federal government is considering partial removal of these dams to restore endangered salmon and steelhead trout populations. The study finds that energy from the dams can be replaced affordably for residential electricity users without increasing air pollution. To order a print copy of the complete report, see our Publications List.

EXECUTIVE SUMMARY

Federal agencies are considering partial removal of four federal dams on the lower Snake River as a centerpiece of a plan to rebuild endangered salmon and steelhead runs and restore a free-flowing reach of the Columbia's biggest tributary. The Columbia and Snake Rivers once formed the most productive salmon watershed in the world. Today, the Snake River's four major salmon and steelhead runs are threatened with extinction. Independent scientists have determined that a plan involving partial removal of the four dams is the best way to restore these runs to healthy, fishable levels.

Together, the dams produce about 1,136 average megawatts (aMW) of electricity, enough to supply almost five percent of the region's annual energy needs. Removing the earthen portions of the dams (about a third of their width) would allow the river to flow freely around the remaining concrete but render them unable to produce power.

Although deadly for fish, the dams produce electricity without generating carbon dioxide (carbon), a main cause of global warming. The Northwest Electric Power Planning and Conservation Act identifies energy conservation and non-hydropower renewables as priority resources to meet the region's electricity needs. Yet without a conscious effort to replace electricity from the dams through conservation and clean renewable resources, removing dams would result in construction of new natural-gas-fired power plants and/or increased production from existing coal- and gas-fired generators. Greater reliance on fossil fuel plants would increase emissions of carbon, nitrogen oxides and mercury from electricity production in the West.

This report analyzes the costs and carbon-emission consequences of removing the four lower Snake River dams -- and replacing their energy -- to restore salmon. It finds that replacing energy without increasing carbon dioxide and other emissions is affordable for residential electricity users. Our analysis shows the following:

Clean energy replacement is a good deal. If future energy prices are in the medium range of projected levels, replacing power produced by the dams with clean, pollution-free alternatives would cost no more than replacing it with fossil fuel sources. If future prices are high, clean energy would be cheaper than market energy options. Market intervention would be needed to promote energy conservation and renewable energy resources.

The Bonneville Power Administration (BPA) system will continue to provide benefits to Northwest customers if dams are removed to restore salmon. The cost of removing the dams and replacing their power with clean energy would increase residential electric bills by just $1 to $3 per month, assuming monthly electricity use of 1,000 kilowatt hours. BPA, which markets electricity produced by federal hydropower dams to Northwest utilities, would still have some of the lowest electricity rates in the nation, even after paying to remove the dams and replace their energy from clean sources.

We examined the following scenarios under low, medium, and high projections for future market energy prices over a twenty-year period (2001-2021):

Base case: increased flow and spill to help salmon relative to today's operations, with the Snake River dams still in place. Measures in our base case would decrease current federal hydropower generation by 196 aMW. Our base case and other scenarios also assume that additional efforts would be made, relative to the status quo, to bring the dams into compliance with the Clean Water Act.

Market-driven power replacement: partial removal of the four lower Snake dams, with market forces directing energy replacement. Removing the four dams would decrease hydropower generation by 940 aMW compared with the base case. The market would replace the power from the dams by causing some power plants in the western grid to run harder, and by accelerating construction of new combined-cycle gas-fired power plants. Using the AURORA electricity price forecasting model, we identified which plants would increase or decrease their operations (and associated carbon emissions) to replace lost energy and estimated by how much. We also used AURORA to estimate when new generation would be built and calculate its carbon emissions.

Allowing the market to replace 940 aMW from the dams would result in a net increase in carbon emissions of 0.7 percent between 2001and 2021 across the Western System Coordinating Council territory, which encompasses the western United States and Canadian electrical grid. Eighty-seven percent of the replacement generation would come from natural gas, and 13 percent from coal. We estimate the market replacement case would increase Northwest residential electricity bills by less than $2 per month.

Zero-carbon strategy: partial removal of the four dams with an energy replacement strategy designed to produce no net increase in carbon dioxide emissions and other pollutants. Power from all four dams could be replaced affordably with energy conservation measures and renewable energy investments that would not occur without government or other direct intervention. Substantial cost-effective conservation opportunities (costing less than the market price of power and/or the cost of new power plant construction) exist, but are not being pursued. A classic example is energy-efficient buildings, which save money over their lifetimes in the form of lower energy bills, but cost more to build initially. Because builders have incentives to minimize construction costs rather than life-cycle costs, this conservation opportunity will be lost unless special incentives or building efficiency standards are in place.

The analysis shows that a package of low- and high-cost conservation, wind generation, and a very small amount of solar power could offset the carbon-emission impacts of removing dams. Because of timing issues -- not all alternatives can be in place by 2004 to 2006, when dams would be removed in our scenarios -- the amount of clean energy needed to ensure no net carbon increase would be greater than the amount of hydropower it would replace. Thus, our zero-carbon strategy would replace 940 aMW of hydrogeneration with 1,091 aMW of new clean resources. About 75 percent of that energy would come from low-cost conservation measures; most of the rest would come from non-hydropower renewables.

In the medium market price case, a clean energy replacement strategy would cost no more than allowing the market to replace lost generation with natural gas and coal. When future energy prices are high, replacement with clean energy would actually be cheaper than the market-driven alternative. Only if future energy prices are low would the zero-carbon strategy be more expensive than the market case. And the clean energy strategy offers unique advantages over energy replacement through gas and coal generation, including global climate benefits, freedom from nitrogen oxides and mercury pollution, and insurance against the volatility of fossil fuel prices.

Compared to the base case, removing the four dams and replacing their energy from clean sources would add between $1 and $3 to the monthly electric bill of a residential customer fully dependent on BPA. Most residential customers would see a smaller rise because they are served by utilities that rely on BPA for only part of their electricity supply. If future energy prices are in the medium or high projected ranges, our analysis indicates that BPA energy prices would still be competitive, and the agency would continue to provide substantial benefits to its customers relative to the cost of buying power on the market. BPA will have cash-flow problems in individual years, but can solve those problems through advance planning. In all three energy price cases BPA would have generation costs among the lowest of any power marketer in the nation.

Recommendations

1. The Clinton administration should base its salmon recovery decision on the weight of the scientific evidence, which supports partially removing the four lower Snake dams as a recovery measure. It should develop a plan to mitigate the impacts of removing dams and assist affected communities in making a smooth economic transition.

2. BPA is currently developing a resource-acquisition plan to address its existing power shortfall. With assistance from the Northwest Power Planning Council, BPA should expand that plan to include targets for acquiring conservation and renewables capable of replacing the energy generated by the Snake dams with no net increase in carbon emissions. The plan should extend beyond the current five-year rate period to 2011. It should include:

investing in all cost-effective conservation measures;

investing in and/or acquiring new environmentally responsible non-hydropower renewable resources;

developing partnerships with organizations and institutions that can leverage increased investments in new non-hydropower renewable energy resources.

3. BPA should develop and pursue a plan to avoid cash-flow problems in individual years due to removing dams and replacing their energy, using a reserve fund, borrowing mechanisms, revenue-spreading rate mechanisms, or combinations of those tools.