Ken Olsen Responds
by Ken Olsen
High Country News, May 18, 2009
I stand by the story I wrote (HCN, 5/11/09). I don't believe the facts support BPA's arguments.
Take publicly subsided hydropower: My story says that the region enjoys publicly subsidized hydropower at national taxpayer expense and that is accurate. Here's why: The hydropower dams were built at national taxpayer expense and for about the first 50 years, BPA repaid its portion of the construction costs at below-market interest rates. Taxpayers made up the difference between BPA's interest rate and what it cost the federal government to borrow the money. It's a substantial sum.
Taxpayers also have eaten a huge chunk of BPA's original debt in the course of readjustments to BPA's financing deal - readjustments that were pushed by politicians from regions that don't enjoy our subsidized electricity. For example, BPA's subsidized interest rates cost taxpayers nearly $2 billion from 1992-97, according to the Government Accountability Office. In addition, Congress forgave $2 billion of BPA's debt as part of an interest rate restructuring. The alternative was raising electrical rates.
BPA also is allowed to deduct a substantial portion of its fish and wildlife expenditures from its debt to taxpayers. The credit is roughly 22 percent of the cost of additional power BPA purchases to make up for electricity it is unable to generate when water is instead used to help salmon migration. This ranges from tens of millions of dollars a year to hundreds of millions of dollars a year.
GAO has identified other financial advantages BPA enjoys at taxpayer expense that allows it to sell power for a lower price. This includes the fact that, as a federal agency, BPA is not required to pay income taxes. "In contrast, according to the Energy Information Administration, investor owned utilities paid taxes averaging between 8.1 and 13.5 percent of operating revenues from 1995 through 2001," GAO reports. BPA also has access to more favorable financing than investor owned utilities, as it has received favorable loan terms from the treasury. "These cost advantages have historically benefited the region's electricity consumers," GAO says.
When an investor-owned utility makes a rate case, it does so based on all of its costs, from income taxes to interest on debt and legal fees. All of those factors figure into what they charge a customer for a kilowatt. In an apples-to-apples comparison, BPA would bear all of these costs and charge customers accordingly, including the cost of litigation over salmon recovery. Fortunately for its customers, BPA is represented by the U.S. Department of Justice, whose bill is covered by taxpayers.
Even former Oregon governor John Kitzhaber has characterized BPA as a publicly subsidized entity selling below market power. He's rare among Northwest politicians, who want to protect this great deal. He's also correct.
As to the general points in Mr. Delwiche's letter:
My story also is accurate in the face of the West Coast salmon crisis. It acknowledges that salmon have suffered many assaults. However, major salmon producing rivers in the lower 48 that are in trouble - including the Columbia/Snake and the Klamath - share the dam problem. Note that there's a preliminary deal to remove the four major Klamath dams to restore salmon. And everywhere a dam has come out, salmon have returned more quickly and in more robust numbers than anticipated. That's true in Maine. It's true in the Northwest. And it's a substantial piece of evidence in this debate.
In addition, Alaskan rivers have sustainable wild salmon populations despite intense commercial, sport and subsistence harvest as well as the presence of hatcheries. They share the some of the same ocean conditions as Columbia/Snake fish during their growth to maturity. The difference: Alaska's major salmon-bearing rivers are not dammed.
Saying nine of 13 listed salmon don't return to the Snake misses an important point: The Snake basin once produced nearly half of the region's 16 to 30 million salmon. Salmon recovery in the Snake River basin is, therefore, a huge part of the wild salmon recovery equation, not withstanding the concerns scientists have raised about climate change eliminating salmon from their lower-elevation range in the lower section of the Columbia River.
On wind vs. hydropower: The average amount of power generated by wind in the region is currently 1,000 megawatts. The average amount of power generated by the four lower Snake River dams is 1,000 megawatts.
The wind doesn't blow all of the time nor do the rivers run full all of the time. In fact, those four dams produce an average of about 600 MW megawatts during eight months of the year. Meanwhile, according to BPA staff, the wind production in the gorge peaks in June - also one of the four months that the Snake dams produce maximum hydropower. Finally, BPA purchases wind power from as far away as Wyoming, where wind towers are being constructed apace not because there's the same sizeable hydro production, but because they have even more wind and the space to build the towers. And Rocky Mountain Power is building it's own transmission line to carry kilowatts from Wyoming to California. This electricity is going to be readily available to states now relying on BPA power.
Groups calling for dam removal also are calling for conservation - the cleanest, greenest, cheapest source of power production that also is renewable. This is not a fantasy. The Pacific Northwest has been steadily cutting its electrical use since the early 1980s. It saved 250 megawatts in 2008 - enough to power about 250,000 homes, and by some estimates the region could offset all of its growth in electrical demand - estimated to hit 340 megawatts per year - by 2010 with additional conservation efforts. Amid the 1979 energy crisis, the Harvard Business School issued a comprehensive analysis called "Energy Future," which concluded that the United States could focus on conservation and alternative energy and enjoy an equal or greater standard of living. That's presumably more true today, with the significant improvements in most renewable energy technology.
As to the other specific questions BPA raises in its attachment:
There are other problems with BPA's analogy. Last I checked, about 7,200 spring/summer chinook were tallied at Lower Granite dam, the uppermost Lower Snake dam. It appears the run may be all but over. That leaves us with far less than the annual average of 29,000 spring/summer salmon (based on a decade of data). Wild fall chinook show the best recovery relative to 1990 levels, but wild fish populations still are far below 1962 levels and are not at the numbers required for delisting. In addition, fall chinook have the lowest recovery target because most of their habitat is under dams. So it's even more convenient to use this run as an example, but it's not indicative of the health of the 13 wild fish runs now in danger of going extinct.
As to spill: Sustained levels of spill sufficient to help salmon during key migration periods has come at court order. This is not something the agencies jump to do. The agencies shut off spill in defiance of the court's order in 2007, a fact that only came to light after a whistleblower tipped off Judge James Redden. Redden effectively made the agencies read his order to key employees because he wanted to be sure they understood the ESA and what he required. In March, meanwhile, the agencies told Judge Redden that continuing spill at the levels he previously ordered is a huge sacrifice.
BPA questions whether scientists say barging kills more fish? There are numerous studies including the PATH Group, Fish Passage Center Migration Survival Studies and the study by scientists Phaedra Budy and Gary P. Thiede (USGS), Nick Bouwes (Eco Logical Research, Providence, Utah) C. E. Petrosky (Idaho Department of Fish and Game) and Howard Schaller (USFWS). In essence, these studies show the smolts don't necessarily die immediately, but die as a result of the trip.
As to habitat: There are millions of acres and thousands of river miles of intact spawning habitat in wilderness areas in Idaho that are not blocked by the Hell's Canyon complex, including the Middle Fork, main and Lower Salmon River system - one of the longest undammed rivers in the lower 48 states. Oregon offers access via the Grand Ronde system, also downstream of the dams. This and other readily available habitat constitutes 70 percent of the remaining intact habitat in the Columbia Basin. (HCN covered the problems with the Hells Canyon dams in a story I wrote last year. But that dam complex is a red herring as far as this story is concerned, to use a fish analogy.)
Finally, part of the issue always has been the number of dams salmon and steelhead have to negotiate. Hanford Reach fall chinook, arguably the healthiest run of the lower Columbia River, deal with only four dams. Snake River stocks must deal with twice that number.
As to the damaged tributary allegation: The Frank Church River of No Return Wilderness alone includes million of acres of incredibly rugged country that no cow could graze.
Salmon Simplification by Gregory Delwich, High Country News, 5/18/9
Salmon Salvation by Ken Olsen, High Country News, 5/4/9
Columbia Basin (Political) Science by Steve Hawley, High Country News, 4/13/9
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