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Rand Report Looks at Economics of Lower Snake Dam Removal by Mike O'Bryant Columbia Basin Bulletin - September 6, 2002

A report by the RAND Corporation says removal of the four lower Snake River dams and replacing the lost power with at least 20 percent conservation and renewable energy would have a negligible effect on the Northwest's economy and could even add up to 15,000 new jobs.

The $75,000 study, funded by the PEW Charitable Trust, looked at three issues, but the most controversial is the one that environmental groups hope will reopen the debate about removing the Snake River dams to help salmon recovery. On that count, Mark Bernstein, senior policy analyst at RAND, said the report found that the approximately 1,250 average megawatts produced by the dams could be replaced with a variety of alternatives, including a mix of energy efficiency and wind power, along with the "business as usual" combined cycle gas power plants, with no adverse impact on the economy.

Donald Sampson, executive director of the Columbia River Inter-Tribal Fish Commission, said the report verifies what his organization had suggested in its energy plan, that the Northwest's energy future can be met with a diversity of resources, including conservation and renewable energy, such as wind and solar power. He said the recommendations in the report, such as removal of the dams would take pressure off the river and "off the backs of salmon and the environment." Removing the dams also would restore a normative river flow.

"Still, the RAND report fails to identify the benefits of restoring the tribal fishery," Sampson said. "The Columbia River system is over-appropriated. It is not solely an energy machine."

Sampson said removal of the dams would increase the number of adult fish moving up into the Snake River system and into Idaho by 200 percent to 400 percent, increase tribal harvest about 30 percent and open up 140 miles of new mainstem river for spawning. The benefits would not be just to river fishermen, he said, but would be felt all the way to Alaska.

"With dam removal, there is an 80 percent chance of recovery in 48 years," he said. "Now the chance of recovery is under 50 percent."

"The RAND study confirms that economic development and energy efficiency go hand in hand," said Nancy Hirsch, policy director for the Northwest Energy Coalition. "This study makes the case for stabilization: it reduces price instability, restores fish runs and provides a long-term stable investment in renewables."

Although the Bush administration has made it clear it doesn't want the dams' removed, "this study increases the prospects of getting this done," said Steve Moyer, vice president of conservation at Trout Unlimited.

"This study shows this issue is not going away," Moyer said. "Salmon are incredibly flexible and diverse, but their demise shows the limits to their flexibility and diversity."

He said Northwest will come to the checkpoints in the region's salmon recovery plan in 2003 and 2005 when the "government will have to face up to the facts that the plan is not going to get the numbers" required in the National Marine Fisheries Service 2000 biological opinion.

"We're going to increase our pressure on Congress and the administration in the coming months and year," Moyer said. "This study shows us the way out."

Former Secretary of the Interior Bruce Babbit said there is no reason to continue to delay removal of the dams.

"Snake River salmon have declined by 90 percent since we built the four lower Snake River dams," he said. "But what the RAND report tells us is that we can change that mistake. This report demonstrates that by removing the dams, we can both improve the regional economy and save the salmon."

However, John Fazio of the Northwest Power Planning Council staff said that organization already is pushing to get as much conservation and renewables in the energy mix as possible. Under the Northwest Power Act, conservation and renewable resources are already given a 10 percent break, Fazio said. That means they could cost up to 10 percent more than a combined cycle gas turbine, yet be chosen as a preferred resource in one of the Council's energy plans.

"It's kind of an odd argument they make in my opinion," Fazio said. "If the dams are removed, it doesn't mean the region would do more, but it might force us to do it faster."

Even if the dams were removed and the power they generate would have to be replaced, Jeff King of the Council staff said there is little the region can do to direct what generating resources would be built to replace the 1,250 aMW and the 2,000 MW of peaking capacity the dams represent.

He said the power system is now semi-deregulated. Most generating projects are built by independent power producers, not electric utilities with a planning function, and so the future electricity supply is not determined by regional planning as it once was. It is driven more by market prices or by contracts between the IPPs and retail utilities.

"The only way out of this is some level of planning to develop long-term contracts and to develop projects," King said. "The only entity in a position to do that (in the Northwest) is Bonneville and time and again Bonneville customers have said they don't want it to be in the resource development business."

There was a flurry of proposals to build generators, most of them powered by natural gas, but that has scaled back due to low market prices and failing financial conditions, King said. However, some renewable energy resources will get developed in the next few years because of Oregon's system benefits fund that will drive up to 100 MW of renewables development and because some utilities are still "bringing renewables into their mix," but he predicts that too will decline soon.

The report relies on power generating information from the Energy Information Administration and on economic impact information from the studies completed by the U.S. Army Corps of Engineers in its 1999-2000 review of the economic impacts of removing the four lower Snake River dams.

The study concludes that salmon issues in the Northwest would likely prevent the addition of new hydroelectric dams to meet new growth, so the region will have to rely on other energy resources, most of which will come from natural gas generating plants. About 82 percent of generation today is from hydropower resources, according to the report, but that will drop to 64 percent by 2010, with natural gas generators making up 22 percent and coal, nuclear and renewable energy will make up the remainder. However, there is risk in using more natural gas generators. They are more expensive than hydropower, are subject to gas price fluctuation and emit pollutants.

But there also is risk in having such a high percentage of hydropower. The report says hydropower is subject to swings in generating capacity of up to 20 percent between wet and dry years (the federal Columbia River system lost nearly 4,000 MW due to low water during 2000-01).

"From a business standpoint, this uncertainty presents concerns because it affects costs," the report says. With a more diverse generating portfolio, risks will be spread out more, the report says.

According to Save Our Wild Salmon and the NW Energy Coalition, the report's conclusions are conservative and fail to account for the "substantial economic costs of increased air pollution or salmon extinction."

Among the report's other findings are:

• The Northwest could shift some of its energy portfolio toward renewable generation without harming the economy.
• Replacing some future natural gas generation would have positive environmental benefits.
• Immediate benefits would be realized by introducing conservation in the short term and phasing in renewables later.

Related Sites:
RAND Corporation: www.rand.org
Save Our Wild Salmon: www.wildsalmon.org
NW Energy Coalition: www.nwenergy.org
NW Power Planning Council: www.nwppc.org