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Council Letter Details View of Fish Funding to Senate Panel by Barry Espenson Columbia Basin Bulletin - June 20, 2003

Saying that testimony presented June 4 by Bonneville Power Administration administrator Steve Wright "is not consistent with the facts," The Northwest Power and Conservation Council has fired off a three-page letter to a congressional committee in an attempt to set the record straight.

As of this morning Bonneville was still developing a response to the Council missive with the intent of clarifying what agency officials say was a misunderstanding.

In particular, the Council took affront at comments made by Wright in response to questions from Oregon Sen. Gordon Smith during a Senate Indian Affairs Committee hearing on Northwest tribal fish and wildlife programs. The Council's fish and wildlife program, which is funded by BPA, fuels many of the research, hatchery and habitat projects within Columbia River Basin tribal programs.

The Council is concerned that Wright comments might imply that the Council has tried to overspend Bonneville's fish and wildlife funding commitment. And that is not true, according to the letter signed by Council Chair Judi Danielson of Idaho. The letter was sent Wednesday to ranking committee member Sen. Daniel K. Inouye and the committee chairman, Ben Nighthorse Campbell.

According to a transcript of the video-taped hearing produced by Council staff, Sen. Smith asked if people in the region had funding expectations -- stemming from an expired memorandum of agreement -- beyond what Bonneville will or can provide.

"Senator, there are in fact very different expectations that are out there. The Memorandum of Understanding that was entered into in 1996 expired in 2001 and there are two issues with respect to that. First of all, there are some expectations with respect to carry over funds -- funds that were not spent in that period. And we have had disagreements with the region's tribes about what the specific language says in those agreements," Wright said. "Our view is that we have completely complied with that agreement and provided all the funding that was required by that agreement."

"Beyond that there are expectations now in the post 2001 period with respect to the level of funding that we're providing. Under the old MOA we provided $100 million per year to the direct program, the program that I've described here. Under our new rates we are providing $139 million per year -- a 40 percent increase in funding, Wright said. "Despite that, the Northwest Power Planning Council created a lengthy process to look at potential projects that could be funded and had approved a number of projects that when we added them up added up to a lot more than that $140 million a year.

"So expectations were created in that process that we would provide more money. Given our current financial circumstances we are not able to provide more than the budgeted amount. So yes, there has been a problem with respect to these different expectations. And why we have some who say we've reduced funding when in our view we've actually increased funding compared to the budgets," Wright said.

Danielson's letter says, "The Council has recommended program implementation budgets that are within Bonneville's commitment, and Bonneville has repeatedly confirmed that the Council's recommendations were not the cause of the potential to spend more than was planned in 2003. Rather, Bonneville's accumulated outstanding contract obligations caused the problem."

Therese Lamb, BPA acting vice president for Environment, Fish and Wildlife, said this morning that it "is not Steve's intent to blame the Council" either for BPA's financial crisis or the fact that a spending cap had to be imposed on the program this past winter for fiscal 2003.

The Council letter said that "It is important for the Committee to also understand that Bonneville collected sufficient funds for fish and wildlife activities from its customers in the 1996-2001 contract period that could have paid its outstanding contract obligations. However, while the obligation to pay for fish and wildlife activities that were accomplished prior to 2002 were 'rolled over' into the 2002-2006 rate period, funds collected to pay for those projects were not."

Danielson pointed out that the imposition of the "no carryover" policy forced some $40 million in bills from the pre-2002 period into the fiscal 2003 program budget. When BPA's own financial crisis forced it to impose a $139 million spending cap in 2003, as opposed to a $139 million average, the Council was then charged with the unsavory task of paring back and deferring fish and wildlife projects.

"The Council reviewed several options including terminating $40 million of ongoing or scheduled projects. Instead, the Council recommended a strategy of project-specific spending limits that kept the full roster of projects in place but would likely result in some tasks being deferred to future years," Danielson said "In this way, the Council intended to preserve the full scope of its implementation recommendations even if substantial work would be delayed because of Bonneville's financial crisis."

BPA does not agree with several of the points made in Danielson regarding fish and wildlife funding.

"We don't see how you can say we haven't increased funding," Lamb said. The average annual amount expensed during the MOA period was $96 million, she said. BPA expensed $137 million for the program in 2002 and expects to fund the full $139 million this year.

The MOA language specifically said that funds collected for fish and wildlife could not be "reprogrammed" for other uses, and it hasn't been, Lamb said. Any amount underspent in the previous rate period would easily be absorbed in what BPA anticipates could end up to be an overall $250 million increase for the 2002-2006 period. That estimate includes capital spending.

Danielson pointed out that BPA's financial condition is much improved, with more water for generation available than was expected and increased revenues from the sale of surplus energy on a strong, high market. The letter also pointed out that the agency is also pondering a 5 percent rate increase to "further bolster its financial position."

"While Bonneville was quick to insist on funding reductions for fish and wildlife when its financial picture looked bleak, we have received no indication that any funds will be restored now that Bonneville's fiscal position has improved or that monies will be refunded to electricity ratepayers," Danielson wrote.

Lamb said today that the agency was still trying to rein in costs to minimize the economic damage that a wholesale electricity rate increase might have "in a region that has the highest unemployment rate in the region."

Danielson's letter concluded by saying "The Council regrets the need to contact you, but believes the public record should reflect the complexity regarding Bonneville's commitments to fund fish and wildlife activities. In addition, considering Bonneville's failure to carry funds it collected for fish and wildlife purposes into the current contract period, its reduction in capital spending, and the fact that Bonneville's internal costs have escalated significantly, we find the Administrator's statements of a 40-percent increase in spending to be inconsistent with the facts."