Editor’s note: Hydropower is a critical energy resource for California and the West. However, shifting precipitation patterns caused by global warming, efforts to protect plummeting fish populations, and the need to protect water quality are squeezing hydropower production. The Klamath hydro project is at the confluence of these critical environmental and economic trends and may well foretell what’s in store for other hydro facilities. Interior Secretary Dirk Kempthorne announced an eleventh-hour deal mid-November to remove PacifiCorp’s hydroelectric dams on the Klamath River. Before the ink was dry, some stakeholders questioned why PacifiCorp was rushing to sign an agreement with the outgoing Bush Administration and put on hold its application to relicense its Klamath Hydroelectric Project. The outgoing President’s Interior Department Secretary, PacifiCorp, and the states of California and Oregon, which house the facilities, signed an agreement to remove four Klamath dams beginning in 2020. The agreement calls for Congress to appropriate $1 billion to restore the once-bountiful salmon runs decimated by the towering dams that have blocked their passage upstream for the past half century. The California Energy Commission concluded four years ago that decommissioning the relatively small-scale Klamath hydroelectric project, which generates an average of 656 GWh annually, would not jeopardize the reliability of the region’s power supply or the state grid. The Klamath dams have a 169 MW capacity, but generate only about 80 MW a year because of operating restrictions to protect endangered coho salmon. Consequently, the Klamath hydro project is not a big money maker for PacifiCorp. The Energy Commission and State Resources Secretary Michael Chrisman in 2004 urged the Federal Energy Regulatory Commission to consider decommissioning the Klamath dams rather than granting PacifiCorp a new 50-year license. On balance, the small amount of power generated by the Klamath project and its high environmental impacts make removing the dams a preferable option, the agencies said. Last month’s nonbinding agreement was hailed by many stakeholders as a major breakthrough in one of the West’s most contentious water wars that could lead to the largest dam removal in U.S. history. A look behind the scenes reveals some disturbing facts. The agreement contains some financial minefields. California voters will have to approve a $250 million water bond to cover the state’s share of decommissioning costs for the Klamath dams, hardly a slam dunk in tough economic times. But, dam removal is a relatively cheap option. PacifiCorp officials lauded the agreement as a good business deal that caps the company’s dam removal costs at $200 million, which it plans to finance through a two percent surcharge on its customers’ electric bills. By contrast, the Energy Commission and federal wildlife agencies estimated that it would cost up to $350 million to install mandatory fish ladders and screens at all four dams. The agreement also lets PacifiCorp off the hook for any future liability or risks for the dams and gives the utility 12 years to procure low-cost renewable replacement power through a public-private partnership with federal and state partners. The Klamath is listed as an impaired water body because of toxic algae from the reservoirs, water diversions, and agricultural runoff. The California Water Resources Control Board just concluded public hearings on PacifiCorp’s application for water quality certification, the utility’s last regulatory hurdle before FERC can re-license the dams. PacifiCorp likely would have had to invest millions of dollars for water quality improvements to bring the Klamath into compliance with the Clean Water Act. However, under the terms of the dam removal agreement California and Oregon agreed not to exercise their Clean Water Act permitting authority to reduce polluted discharges from the Klamath dams. The agreement calls for state legislation bypassing the commissions’ ratepayer recovery authority for the Klamath project. PacifiCorp persistently sought a new 50-year license for the Klamath project even after the Energy Commission and FERC concluded it would be far cheaper to remove the dams than build fish ladders to protect salmon and steelhead. PacifiCorp challenged the agencies’ fish prescriptions in federal court last year and lost. PacifiCorp spokesman Art Sasse conceded that there was a very strong possibility that federal regulators would have denied PacifiCorp a new license for the Klamath hydro project since both California and Oregon strongly advocated for removing the dams. “You could always end up with dead assets,” he said. Some of the parties that have been negotiating with PacifiCorp over relicensing its Klamath hydro dams for the past five years didn’t even see the agreement until the day before it was announced, much less sign off on it. While pleased that PacifiCorp has finally committed to removing the dams, they argue that the Klamath Basin and its beleaguered fish, Indian tribes, farmers, and fishermen would get a better deal under the Obama administration. Oregon farmers grow water intensive crops, like cotton and alfalfa. They receive heavily subsidized water from the federal government and largely vote Republican. The recent agreement contains numerous deal breakers and loopholes that could enable PacifiCorp to delay removing the Klamath dams for years. For starters, the dams would not even begin to come down until 2020. And, they will be removed only if the Interior Department determines that the benefits of dam removal justify the costs and risks after conducting a scientific and economic study. The federal cost-benefit assessment won’t be completed until 2012. Outgoing Interior Secretary Dick Kempthorne, considered an ardent “dam hugger,” embraced the deal, making some suspicious. When governor of Idaho, he defeated campaigns to remove hydropower dams blocking salmon runs on the Snake and Columbia rivers. Congress will have to enact legislation adopting the dam removal and river restoration agreements, guaranteeing that farmers in the Upper Klamath Basin will continue to receive low cost water and power. Whether federal lawmakers will pony up $1 billion of taxpayer money to restore the Klamath River, the region’s economic engine, is anyone’s guess. Matt Baun of the Fish and Wildlife Service in Yreka argues it’s a prudent investment to restore the Klamath and rebuild California’s billion dollar salmon industry rather than spending money on temporary band aids, such as emergency relief for salmon fishermen and Klamath farmers. “People who live here have worked hard on this,” added Craig Tucker, spokesman for the Karuk tribe. Chuck Bonham of Trout Unlimited also supports the deal, but warned, “People really need to keep their eye on the ball and save the celebration until we get to a final agreement.”
