Settlement Details Pose Risk

Last month on this page, I highlighted a secret deal between plaintiffs and the federal government regarding the Federal Columbia River Power System operations.

Central Electric Cooperative relies on the FCRPS for nearly all of its wholesale electricity. The recent agreement could have long-term adverse impacts on rates and system reliability.

Since 1992, litigation has persisted on how to operate the FCRPS to balance the needs of salmon and electric ratepayers.

Sixteen months ago, the federal district court judge overseeing the latest round of litigation approved a stay, while the White House’s Council on Environmental Quality engaged federal mediators to resolve the litigated issues, resulting in the federal government and the six sovereigns—four federated tribes and the states of Oregon and Washington—striking a deal behind closed doors.

Several Pacific Northwest congressional members leaked the agreement once they learned of it to spotlight the lack of transparency and involvement of stakeholders, including public power.

Since then, public power has gained a greater understanding of the deal’s implications. The outlook is grim.

The agreement:

Shows a clear path toward breaching the Lower Snake River dams.

The dams represent 12% of the Bonneville Power Administration’s total generation, which is affordable, reliable, clean and environmentally responsible power. The dams also play a critical role in keeping the lights on during extreme weather events.

The agreement calls for feasibility studies, the first step toward breaching the dams.

Exposes BPA and its public power customers to tremendous financial risk with the cost of replacing lost generation.

The early estimated cost is $2 billion to $6 billion to bring renewable energy—a variable and intermittent resource—to replace the 24/7 firm hydropower resource, a system already in place with a proven track record. BPA has estimated this replacement resource would cost $415 million to $860 million annually, equivalent to a 21% to 43% increase in BPA power rates.

Creates uncertainty in operating the Federal Columbia River Power System.The agreement calls for adaptive management of the hydropower system, allowing the six sovereigns to make decisions without any protection or standards for the power system impacts.

The result will lead to less available hydroelectricity at a much higher cost.

Will not stop lawsuits and claims.

While the six sovereigns agree to not pursue litigation during the next five years, entities not bound by the agreement or not parties to the case can bring lawsuits.

At this writing, two lawsuits and a claim have already been filed since the agreement became public. Parties may also continue to litigate against BPA’s rates, budget and other agency proceedings.

CEC and the public power community are seeking ways to protect its investment in the FCRPS to ensure hydroelectricity is affordable and reliable while exploring potential alternative power resources.

I will continue to keep you apprised as developments occur.

President and CEO Brad Wilson