19–010 

Calendar No. 272 

112TH CONGRESS REPORT " ! SENATE 2d Session 112–110 

BONNEVILLE UNIT CLEAN HYDROPOWER FACILITATION 

ACT 

JANUARY 13, 2012.—Ordered to be printed 

Filed, under authority of the order of the Senate of December 17, 2011 

Mr. BINGAMAN, from the Committee on Energy and Natural 

Resources, submitted the following 

R E P O R T 

[To accompany S. 499] 

The Committee on Energy and Natural Resources, to which was 

referred the bill (S. 499) to authorize the Secretary of the Interior 

to facilitate the development of hydroelectric power on the Diamond Fork System of the General Utah Project, having considered 

the same, reports favorably thereon without amendment and recommends that the bill do pass. 

PURPOSE

The purpose of S. 499 is to authorize the Secretary of the Interior 

to facilitate the development of hydroelectric power on the Diamond Fork System of the Central Utah Project. 

BACKGROUND AND NEED

The Central Utah Project was authorized in 1956 as part of the 

Colorado River Storage Project Act. The Bonneville Unit is the 

largest unit of the Central Utah Project. The Diamond Fork System 

is a completed project within the Bonneville Unit and is located in 

Utah County, Utah. Pursuant to the Central Utah Project Completion Act of 1992 (CUPCA) (Public Law 102–575), the Central Utah 

Water Conservancy District is responsible for completion of the 

Central Utah Project, including the Bonneville Unit. 

Hydropower development on Central Utah Project facilities was 

authorized as part of the original Colorado River Storage Project 

Act of 1956 (Public Law 84–485). The 2004 Supplement to the 1988 


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Definite Plan Report for the Bonneville Unit and the 2004 Utah 

Lake Drainage Basin Water Delivery System Final Environmental 

Impact Statement detail the proposed power facilities that could be 

developed within the Diamond Fork System, which include two hydroelectric power plants. It is estimated that the Diamond Fork 

project has the capability to generate up to 50 megawatts of hydroelectric power. 

The Colorado River Storage Project Act requires that project 

costs be allocated for repayment by power generation and, as a result, any non-federal developer of power within the Diamond Fork 

system would be responsible for payment of those costs prior to initiation of power production. S. 499 provides that the project costs 

would be permanently deferred under the same terms as certain 

municipal and industrial costs are allowed to be deferred under 

section 211 of CUPCA so long as the Central Utah Water Conservancy District complies with certain water management requirements. 

LEGISLATIVE HISTORY

Senator Hatch introduced S. 499 on March 7, 2011. The bill is 

co-sponsored by Senator Lee. The Subcommittee on Water and 

Power of the Committee on Energy and Natural Resources held a 

hearing on S. 499 on May 19, 2011 (S. Hrg. 112–63). The Committee on Energy and Natural Resources ordered S. 499 favorably 

reported without amendment at its business meeting on November 

10, 2011. 

The Committee on Energy and Natural Resources considered 

similar legislation during the 111th Congress, S. 1758, sponsored 

by Senators Bennett and Hatch, and H.R. 2008, sponsored by Representative Matheson, which passed the House of Representatives 

by voice vote on June 8, 2010. The Subcommittee on Water and 

Power held a hearing on S. 1758 on November 5, 2009 (S. Hrg. 

111–339). The Committee on Energy and Natural Resources considered H.R. 2008 at its business meeting on June 16, 2010, and ordered the bill favorably reported without amendment at its business meeting on June 21, 2010. 

COMMITTEE RECOMMENDATION

The Senate Committee on Energy and Natural Resources, in 

open business session on November 10, 2011, by a voice vote of a 

quorum present, recommends that the Senate pass S. 499. 

SECTION-BY-SECTION ANALYSIS

Section 1 identifies the short title of the bill as the ‘‘Bonneville 

Unit Clean Hydropower Facilitation Act’’. 

Section 2 defines the Diamond Fork System as the facilities described in chapter 4 of the October 2004 Supplement to the 1988 

Definite Plan Report for the Bonneville Unit. 

Section 3 provides that the current amount of reimbursable costs 

allocated to project power for the Diamond Fork System shall be 

the final costs. 

Section 4 provides that nothing in the Act shall obligate the 

Western Area Power Administration to purchase or market any of 

the power produced by the Diamond Fork power plant and that 


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none of the costs associated with development of transmission facilities to transmit power from the Diamond Fork power plant shall 

be assigned to power for the purpose of Colorado River Storage 

Project ratemaking. 

Section 5 prohibits the use of tax-exempt financing to fund any 

facility for the generation or transmission of hydroelectric power on 

the Diamond Fork System. 

Section 6 requires the Secretary of the Interior to report to the 

Committee on Natural Resources of the House of Representatives 

and the Committee on Energy and Natural Resources of the Senate 

if hydropower production on the Diamond Fork System has not 

commenced within twenty-four months after the date of enactment 

and to supply a detailed timeline for future hydropower production. 

Section 7 contains language complying with the Statutory PayAs-You-Go Act of 2010. 

Section 8 provides that the authority under the provisions of section 301 of the Hoover Power Plant Act of 1984 (Public Law 98– 

381; 42 U.S.C. 16421a) shall not be used to fund any study or construction of transmission facilities developed as a result of the bill. 

COST AND BUDGETARY CONSIDERATIONS

The Congressional Budget Office estimate of the costs of this 

measure has been requested but was not received at the time the 

report was filed. When the Congressional Budget Office completes 

its cost estimate, it will be posted on the Internet at www.cbo.gov. 

REGULATORY IMPACT EVALUATION

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee makes the following evaluation 

of the regulatory impact which would be incurred in carrying out 

S. 499. 

The bill is not a regulatory measure in the sense of imposing 

Government-established standards or significant economic responsibilities on private individuals and businesses. 

No personal information would be collected in administering the 

program. Therefore, there would be no impact on personal privacy. 

Little, if any, additional paperwork would result from the enactment of S. 499, as ordered reported. 

CONGRESSIONALLY DIRECTED SPENDING

S. 499, as reported, does not contain any congressionally directed 

spending items, limited tax benefits, or limited tariff benefits as defined in rule XLIV of the Standing Rules of the Senate. 

EXECUTIVE COMMUNICATIONS

The testimony provided by the U.S. Department of the Interior, 

Bureau of Reclamation at the May 19, 2011 Subcommittee hearing 

on S. 499 follows: 

STATEMENT OF DAVID MURILLO, DEPUTY COMMISSIONER, 

OPERATIONS, BUREAU OF RECLAMATION, DEPARTMENT OF

THE INTERIOR

Madam Chairwoman and members of the Committee, I 

am David Murillo, Deputy Commissioner for Operations of 


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the Bureau of Reclamation. I am pleased to be here today 

on behalf of the Assistant Secretary for Water and Science 

who oversees the Central Utah Project Completion Act activities to present the Administration’s views on S. 499, 

the Bonneville Unit Clean Hydropower Facilitation Act. 

The proposed legislation is associated with development of 

hydropower on the Diamond Fork System, Bonneville 

Unit, Central Utah Project. 

The Central Utah Project Completion Act (CUPCA) provides for the completion of the construction of the Central 

Utah Project (CUP) by the Central Utah Water Conservancy District (CUWCD). CUPCA also authorizes programs for fish, wildlife, and recreation mitigation and conservation; establishes an account in the Treasury for 

deposit of appropriations and other contributions; establishes the Utah Reclamation Mitigation and Conservation 

Commission to coordinate mitigation and conservation activities; and provides for the Ute Indian Water Rights Settlement. 

Hydropower development on CUP facilities was authorized as part of the Colorado River Storage Project Act 

(CRSPA) under which the Central Utah Project is a participating project. The development of hydropower on the 

Diamond Fork System has been contemplated since the 

early days of the CUP. The 1984 Environmental Impact 

Statement on the Diamond Fork System described the construction of five hydropower plants with a combined capacity of 166 MW of power. 

However, these hydropower plants were never constructed and the 1999 Environmental Impact Statement 

on the Diamond Fork System presented a plan which specifically excluded the development of hydropower, stating 

‘‘there are no definite plans or designs, and it is not known 

if or by whom they may be developed.’’ 

Although hydropower development was not included, 

construction of pipelines and tunnels for the Diamond Fork 

System were completed and put into operation in July 

2004. Under full operation the Diamond Fork System will 

annually convey 101,900 acre-feet of CUP Water and 

61,500 acre-feet for Strawberry Valley Project water users. 

In 2002 CUPCA was amended to authorize development 

of federal project power on CUP facilities. With this new 

amendment, plans for hydropower development at Diamond Fork were included in the 2004 Utah Lake System 

Environmental Impact Statement and the 2004 Supplement to the Definite Plan Report for the Bonneville Unit 

(DPR). These documents describe the construction of two 

hydropower plants on the existing Diamond Fork System 

for a total generating capacity of 50 MW. 

Section 208 of CUPCA included provisions that power on 

CUP features would be developed and operated in accordance with CRSPA and CUP water diverted out of the Colorado River Basin for power purposes would be incidental 

to other project purposes. 


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There are two options for hydropower development on 

the Diamond Fork System: 1) federal project development 

or 2) private development under a Lease of Power Privilege contract with the United States. 

Under the first option the CUWCD would construct the 

Diamond Fork hydropower plants under contract with the 

United States and contribute an upfront local cost share of 

35 percent of the construction costs. In addition to the hydropower plant construction costs, the costs of conveyance 

facilities upstream of Diamond Fork System that are allocated to power would have to be repaid. The DPR allocates 

costs of the CUP according to project purposes. The reimbursable costs allocated to power are $161 million based 

upon the costs of developed features upstream of the Diamond Fork System. It is anticipated that under this option, these allocated costs would be repaid through an arrangement among Interior, CUWCD, and the Western 

Area Power Administration (WAPA). 

Under the second option, private hydropower could be 

developed. Although the DPR and 1999 EIS describe federal hydropower development, they also provide the option 

for a Lease of Power Privilege arrangement with the 

United States. Under this arrangement Interior would implement a competitive process to select a lessee for private 

development of hydropower at Diamond Fork. The lease 

arrangement would require repayment of the $161 million 

of upstream costs plus annual payments to the United 

States for the use of the federal facilities, amounting to at 

least a 3 mil rate paid by the lessee to the United States. 

S. 499 does not preclude federal development of hydropower, but it does increase the likelihood of private development. If enacted, this bill would indefinitely defer the 

$161 million in costs allocated to power development in the 

Diamond Fork System under section 211 of CUPCA, thus 

reducing the cost of hydropower development at this site. 

This bill would increase the likelihood that a private developer would pursue a Lease of Power Privilege arrangement 

because the private developer would not, under this legislation, be required to repay the $161 million of construction costs that were allocated to power as would be required under existing law. 

We understand and appreciate the goal of this legislation of facilitating the development of hydroelectric power 

on the Diamond Fork System. 

However, the Administration has serious concerns about 

losing our ability to recoup the Federal investment made 

in these facilities as set forth in this legislation. The Federal government may benefit in the medium term from the 

annual payments for the use of Federal facilities that 

would be paid if a lessee entered into a Lease of Power 

Privilege arrangement for production of hydroelectric 

power on the Diamond Fork System. Assuming only a 

summer water supply as under current deliveries, these 

payments are estimated at about $400,000 a year starting 

the year that the project is completed and continuing for 


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the life of the project. However, because payment of $161 

million of allocated power costs would be postponed indefinitely, it is unclear what the long-term fiscal implications 

of enactment of this legislation would be and how the 

United States Treasury would be made whole. This legislation would potentially permanently postpone anticipated 

receipts to the U.S. Treasury at the expense of the Federal 

taxpayer. While it is not clear at this time whether a nonfederal developer would propose a hydroelectric project at 

Diamond Fork under current law, if this were to occur, repayment of the allocated power costs would begin after the 

hydroelectric project is completed and average $5.3 million 

a year for 50 years. 

Section 5 of S. 499 would prohibit the use of tax-exempt 

financing to develop any facility for the generation or 

transmission of hydroelectric power on the Diamond Fork 

System. This provision was added to the bill to prevent 

any loss of revenue to the federal government as a result 

of the financing mechanism used for development of hydropower at this site. 

This concludes my testimony. I am happy to answer any 

questions. 

CHANGES IN EXISTING LAW

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, the Committee notes that no changes in existing law are made by S. 499, as ordered reported. 

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