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Testimony of Sara Patton NW Energy Coalition 9/14/00 - Delivered before the Committee on Environment and Public Subcommittee on Fisheries, Wildlife, and Water Works

My name is Sara Patton and I am the Coalition Director of the NW Energy Coalition. First I want to thank Senator Crapo and Senator Boxer for holding these hearings and for allowing me to testify on this issue of paramount importance for the people, the economy and the environment of the Northwest. In November 1998, the NW Energy Coalition endorsed bypassing the four Lower Snake River dams to restore endangered salmon and steelhead on the Snake River and to replace the power from the dams with energy efficiency and clean renewable energy resources.

Second I want to describe the NW Energy Coalition to give you an idea of the breadth of our membership. The Energy Coalition has almost 100 member organizations including utilities like Snohomish County PUD and Portland General Electric, environmental groups like the Sierra Club and the Idaho Conservation League, consumer protection groups, low income weatherization groups, good government groups, energy efficiency businesses and renewable resource developers. The Coalition has ten member organizations in Idaho who span most of the Coalition's range from Idaho Rivers United to the League of Women Voters of Idaho to the South Central Idaho Community Action Agency to Idaho Citizens Network.

The Coalition's diverse member organizations do not share all of each other's goals and agendas. They are united in working for a clean and affordable energy future. When the Coalition Board debated endorsing bypassing the dams, the first question was, of course, whether the science calls for dam removal. Once the Board was convinced that the best scientific analysis shows that dam bypass is necessary to save these magnificent fish, they turned to the second and equally important question: whether there was enough clean and affordable energy to replace the power the four dams produce. The Coalition Board insisted that the replacement power strategies must result in no net increase in carbon dioxide emissions. The Northwest must not trade fish and wildlife restoration for air emissions, which cause local air pollution and global climate change.

My testimony will focus on the answer to that question and on the relationship of dam bypass to the current energy supply problems in the Northwest, California and the Southwest. The third question was how to mitigate any dislocation or other difficulties that dam bypass might cause to dam dependent communities and businesses. I will not talk about the third question except to say that the Coalition Board was convinced that there are reasonable and affordable ways to mitigate that transition and the Board strongly supports funding for that mitigation.

The question of whether there is enough clean and affordable energy to replace the power from the four Lower Snake River dams was answered in the affirmative by a study entitled Going with the Flow: Replacing Energy from Four Snake River Dams. The Energy Coalition worked on the study with the primary authors from the Natural Resource Defense Council. I have appended the Preface and Executive Summary of this report to my testimony and cite you to the Natural Resources Defense Council web page for more detail (www.nrdc.org).

Going with the Flow finds that the power from the dams can be replaced with energy conservation and clean renewable energy at a cost which is equivalent to market purchases primarily from natural gas plants. Please note that the market price forecast on which Going with the Flow relied was a medium range forecast done in 1999. The recent very high market prices, overall electricity market volatility and avoided pollution make the conservation and renewable energy strategy both the most environmentally responsible and the most cost-effective power replacement option. The rate impact for residential customers of utilities which buy power from BPA for this clean energy replacement strategy would be about $1-3 per month.

Going with the Flow finds that the total power production of the four dams is approximately 1136 average megawatts or about 10% of the Bonneville Power Administration's power and about 5% of the region's power. If the dams are not removed, additional required flow augmentation would reduce the power by 196 average megawatts for a total impact of approximately 940 average megawatts. The region can replace that power with an affordable combination of clean resources: 82% energy conservation and 18% renewable energy from wind and solar generation. New gas combustion turbines are forecasted to produce electricity at 3.1› to 3.7› per kilowatt-hour. Three quarters of the energy conservation comes in at 2› per kilowatt-hour or less. The rest is under 3› per kWh.

Going with the Flow relied on the Northwest Power Planning Council's (NPPC) most recent regional conservation potential assessment. The 1998 Fourth NPPC Power Plan finds 1535 average megawatts of cost effective conservation in the region, 515 of which will probably be captured by utility acquisition programs and market response. The remaining 1020 average megawatts are all under 3› per kWh, but most (835 average megawatts) are under 2› per kWh.

This low price is important to remember since the analysis cuts off its consideration of cost-effective conservation measures at the marginal or avoided price of energy. Since the last Northwest Power Planning Council analysis was completed, the marginal price of energy, based on the price of new natural gas plants and the cost of the gas to run them, has gone up dramatically. A new analysis done by the NPPC and its Regional Technical Forum uses an avoided cost of almost 4› per kWh to analyze conservation potential.

Another recent Northwest Power Planning Council study analyzed the conservation potential for Seattle City Light. Seattle has had one of the most consistent and effective energy conservation programs in region and in the nation for the last 20 years. Even with this aggressive harvest of energy conservation, the NPPC found between 180 and 260 average megawatts of energy savings available in Seattle over the next 20 years at a cost of 2› per kWh and below. Seattle has an average electricity load of about 1100 MW. Seattle is now making plans to double its rate of conservation acquisition in order to reap that resource at a value of $310 to $420 million to its service territory.

I want to return to the 1998 Northwest Power Planning Council analysis on which Going with the Flow relied. There are several reasons why that potential estimate was conservative at the time it was completed. First the analysis showed that if the region valued carbon emissions at between $10 and $40 per ton, another 130 to 350 average megawatts of energy conservation would be cost-effective. Second the analysis included no efficiency improvement estimates for aluminum smelters and other BPA direct service customers. More recent analysis shows a cost effective potential of between 300 and 400 average megawatts from aluminum in the Northwest. Third the potential for efficiency savings in the commercial and non-aluminum industrial sector was underestimated in the NPPC 1998 analysis. Data from the region's utilities with solid experience in delivering conservation in these sectors showed an additional 400 average megawatts of achievable conservation potential not included in the 1998 analysis.

In summary the cost-effective conservation potential derived from the 1998 Northwest Power Planning Council's Fourth Power Plan shows more than enough affordable conservation to replace 82% of the power from the four Lower Snake River dams. When one takes the conservatisms of the analysis at the time it was conducted into account (no carbon value, no estimate for increased aluminum efficiency, and underestimate of commercial and non-aluminum industrial conservation) along with the new information (higher marginal value of energy and new Seattle conservation potential forecast), it is exceedingly clear that there is plenty of cost-effective energy conservation available in the region to replace the power from these four dams.

The Going with the Flow estimate that 18% of the power from the four dams can be replaced with clean renewable energy generation may also be an underestimate. The Northwest has tens of thousands of megawatts of wind power potential. Currently over 350 megawatts of wind energy are proposed or being developed in Oregon and Washington alone. Smaller scale projects are underway or planned in Idaho and Montana. Idaho Power has expressed interest in purchasing the output of a small wind project near Rupert, Idaho. The price range for wind power is 4 to 6› per kWh. The region has about 2000 megawatts of developable geothermal potential. Currently over 60 megawatts are being developed in Oregon and northern California with power bound for the Northwest. The price range is 4.5-7› per kWh.

The Renewable Northwest Project estimates that the region could acquire 420 average megawatts over ten years at a net cost of approximately $10-14 million per year over the financial life of the plants assuming 30 average megawatt projects. An additional 50 average megawatts of small scale distributed renewable energy technologies, such as solar water heaters, micro-wind turbines and photovoltaic systems for remote locations can be cost-effectively developed.

The soonest the dams can be bypassed with the speediest imaginable decision, funding and implementation process is five years. Five years is plenty of time in which to develop the resources to meet the need to replace the power from the dams. The draft Biological Opinion gives the region even more time to prepare for power replacement. And right now the region is embarked on intensive resource development to meet an immediate power deficit. The conservation resource is being developed by utilities like Seattle City Light, by the Bonneville Power Administration through its Conservation and Renewables Rate Discount and its Conservation Augmentation acquisition program and through new requirements in the Montana and Oregon utility restructuring statutes for investment in energy conservation and renewable energy. As noted above wind and geothermal power is being developed at a quickening pace.

At the same time the region is getting ready to develop major new gas fired generation. In the four states almost 10,000 megawatts of gas combustion turbines have been sited or proposed. In Idaho, 500 MW have been sited or proposed, and 270 MW from the Rathdrum project are expected to come on line within one year. In Oregon, more than 1,800 megawatts are sited or proposed, and 1,300 of those are expected to come on line within three years. Montana has a proposal for a 500 megawatt plant in Butte. Washington has over 7,000 megawatts sited or proposed with between 1600 and 2800 likely to be built in the next five to ten years. Indeed, some state agency energy experts are wondering if Washington's position on the transmission and pipeline grids combined with its less stringent siting and emissions regulations may be setting it up to become an energy farm for California and the Southwest.

The NW Energy Coalition will be working to ensure that cost-effective conservation and renewables are first on regional energy resource priority lists. The Coalition will also push for strong emissions regulation and for full mitigation of carbon dioxide and other green house gases from the new natural gas plants. We hope this mitigation and the continuing good news in the development of wind, geothermal, solar, fuel cells and other clean renewable resources will make the region's dependence on natural gas as short and clean as possible. None-the-less, we definitely expect significant increases in gas generation in the near term.

The intense investment in gas, wind and geothermal plants and in conservation is most likely to produce at least a sufficiency of power to replace the contribution of the four Lower Snake dams. I have been working in electricity in the Northwest for over 20 years, and my educated guess is that the region will be in a power surplus in five years and the issue of power replacement will not be important in the implementation of dam bypass.

I do not mean to discount the difficulties regional electricity suppliers are facing at the moment. The NW Energy Coalition was appalled when the Bonneville Power Administration reduced spill to aid juvenile migration not once but several times this spring and summer in order to meet power shortages in California and in the region. BPA reduced spill at Bonneville Dam and at the Dalles below the minimums of the current Biological Opinion because the region and California energy suppliers have been asleep at the wheel. They relied on a new and volatile wholesale market to provide power at low prices for more than five years. Northwest power suppliers could have taken a lesson from the Northeast and the Midwest which have already felt the wrath of the semi-deregulated market, but they ignored that warning. When the market spiked as markets will, it was the fish that were sacrificed to this human failure.

I will end by saying a few words about the relationship of the draft Biological Opinion to the current energy crisis. Regional energy suppliers need all the certainty they can get in their increasingly uncertain world. The draft Biological Opinion needs significant improvements, but its framework of certain timetables with certain criteria and certain consequences for failure to meet those criteria provides the kind of certainty the power suppliers need to help them manage the new dance of market prices and resource development. They will know in time, with time to spare, when and if they will need to replace the power from the four Lower Snake River dams. Significant changes need to be made in the specific timetables, criteria and consequences but the draft Biological Opinion provides a framework that can accommodate those changes.

Thank you once again for the opportunity to speak to the subcommittee and to answer questions if you have any.