1

Northwest Authors Comment on the Council

Charged with bringing new order to Columbia River management, the Council has generally drawn praise for its 

efforts at promoting energy conservation but has had a more diffi cult time gaining consensus on saving salmon.

 — William Dietrich, Northwest Passage: The Great Columbia River, 1995, Page 290.

The 1980 Northwest Power Act seem positively prescient in reducing the utility industry’s role in the region’s 

energy planning and in placing policy-making into the hands of the Power Planning Council. The Council would be 

appointed by the governors of the states of Oregon, Washington, Idaho and Montana. The law seemed as responsive 

to the needs of the public for its time as the construction of the hydropower system itself had seemed during the New 

Deal two generations before.

 — Joseph Cone, A Common Fate: Endangered Salmon and the People of the Pacifi c 

 Northwest, 1995, Page 30.

[The Council, under the Northwest Power Act] gave priority to the runs above the Bonneville Dam. And for the 

fi rst time, they tried to change the operation of the river rather than just mitigate the effects of management. Their 

plans regulated fl ows to help push the salmon downstream, and some dams were retrofi tted with juvenile bypass systems to keep the smolts out of the turbines. But given the gravity of the [salmon] situation, the changes were modest; 

they failed to achieve their goals.

 — Richard White, The Organic Machine: The Remaking of the Columbia River, 

 1995, Page 103.

The Northwest Power Act, in theory, spelled out a revolution in western water management. It put longtime 

inmates of the engineered river — Indian tribes and fi sh agencies — in a position of power. To administer the 

revolution, the Power Act created a novel bureaucratic creature. Not quite a federal agency, not a state agency, the 

Northwest Power Planning Council was made up of two gubernatorial appointees from each of the four states in the 

Northwest. The Council had powers (rather vaguely defi ned powers, as it turned out) to change the behavior of the 

federal agencies that managed the hydrosystem.

 — Blaine Harden, A River Lost: The Life and Death of the Columbia, 1996, Page 216.

... the Northwest Power Act forged a link between regional energy development and fi sh and wildlife recovery. At a conceptual level, the Act aimed for a power system that would meet energy demands through measures 

that impose the least economic and environmental cost on the region, while taking pressure off Columbia River 

fi sh and wildlife. For the power system, moving ahead would require modifi ed operation of the Columbia River 

dams and fi nancing for measures to offset the dams’ effects on fi sh and wildlife. For fi sh and wildlife interests, 

mitigation would require a healthy hydropower system capable of generating suffi cient revenues to fi nance energy 

and fi sh and wildlife conservation measures. Perhaps neither fi sh nor power interests perceived the connection 

clearly, but it is apparent in hindsight: Under the terms of the Northwest Power Act, neither fi sh and wildlife conservation nor power development could proceed without the other.

 — John Volkman, A River in Common: The Columbia River, The Salmon Ecosystem 

 and Water Policy, A Report to the Western Water Policy Commission, 1997, 

 Page IV-20 (68).
3

Contents

BACKGROUND ON THE COLUMBIA RIVER POWER SYSTEM 

AND THE NORTHWEST POWER PLANNING COUNCIL 7

BACKGROUND ON THE COUNCIL’S FISH AND WILDLIFE PLANNING 17

BACKGROUND ON THE COUNCIL’S POWER PLANNING 25

CURRENT COUNCIL ISSUES 39

 Fish and Wildlife Issues 39

 Power Issues 42

LEGAL ISSUES 51

ADMINISTRATIVE ISSUES 59

GLOSSARY OF TERMS USED IN THE FOURTH NORTHWEST POWER PLAN 63

GLOSSARY OF FISH AND WILDLIFE TERMS 77

DIRECTORY 83
5

Background on the Columbia River Power System and the 

Northwest Power Planning Council

The development of the Columbia River hydropower system in the Pacifi c Northwest began in the 

1930s under a program of regional cooperation to meet the needs of electric power production, land 

reclamation, fl ood control, navigation, recreation and other river uses.

From the beginning, the federal government has played a major role in the development of one of 

the largest multiple-use river systems in the world. The U.S. Army Corps of Engineers and the Bureau of Reclamation built 30 multi-purpose dams on the Columbia River and its tributaries. Investorowned and publicly owned utilities also built a major system of dams and generating facilities. Congress directed the Bonneville Power Administration, in the Bonneville Project Act of 1937, to build 

and operate transmission lines to deliver the power from dams, and to market electricity from federal 

generating projects on the river at rates set only high enough to repay the federal investment over a 

reasonable period of time.

The Columbia River Treaty with Canada

As demand for power grew, the United States and Canadian governments recognized a need for 

development of water storage sites in the upper reaches of the Columbia River Basin. The governments of both nations negotiated a treaty in the early 1960s for the cooperative use of dams that would 

be built by both countries. Four dams were built under the treaty. Three are on the Columbia River 

or a tributary in Canada — Keenleyside, Duncan and Mica — and the fourth, Libby, is on a major 

Columbia tributary, the Kootenai River, in Montana. The Canadian dams were completed by 1973, 

and Libby was completed in 1975. These dams provide fl ood control and water storage for the purpose of additional power generation at dams downstream in the United States. The power-generating 

capability of downstream dams increased by the following percentages as a result of the treaty storage: Grand Coulee, 13 percent; Chief Joseph, 14 percent; the fi ve mid-Columbia public utility district 

dams, 18 percent; and dams farther downstream on the Columbia, 11 percent collectively. In return, 

Canada received a cash settlement for its share of the additional power generation. The value of this 

power, known as the downstream benefi t, was renegotiated by the two countries in the late 1990s.

Interties Between the Northwest and Southwest

Also in the 1960s, Congress authorized construction of three major power lines linking the Columbia River hydropower dams with power markets in California and the rest of the Pacifi c Southwest. 

The interties benefi t the Pacifi c Northwest in several ways. They allow the sale of hydropower from 

the Columbia when it is not needed here and would otherwise be lost in the form of water spilled over 

dams without generating electricity, and they permit this region to buy power from California when 

power is needed here during shortages and periods of heavy use. In the fi rst instance, sales of surplus 

Northwest hydropower to California has saved the equivalent of some 200 million barrels of oil. In 

the second case, California utilities sold power to Pacifi c Northwest utilities in the drought years of 

1973, 1977, 1979, 1992, 1993, 1994 and 2001.

To protect Northwest access to power, Congress authorized regional preference provisions in 1964. 

Bonneville must offer any surplus power to utilities in the Northwest before selling it to California. 
6

Sales to California can be called back if the power is needed in the Northwest. Sales of fi rm energy 

can be recalled with 60 days notice, sales of peaking capacity can be recalled in fi ve years.

Net Billing Agreements

With the dams developed in Canada as well as the United States, the river system provided virtually all the electricity needed by the region until the early 1970s. But by that time, all dam sites on 

the mainstem of the Columbia that were economically feasible and environmentally acceptable were 

either developed or under development, and the region was looking for other ways to meet electric 

load growth. Bonneville and the region’s utilities were predicting shortages of electricity unless thermal generating plants were brought on line in response to increasing demand.

The region’s publicly owned utilities and investor-owned utilities turned mainly to coal-fi red and 

nuclear plants to meet growth throughout the Pacifi c Northwest. Utilities believed the development 

of such plants was the most economic and environmentally acceptable option available at the time. 

Bonneville helped the utilities respond to these needs by participating in a Hydro-Thermal Power Plan 

for the continued development of electricity resources in the Pacifi c Northwest.

Under the plan, Bonneville agreed to acquire electricity by entering into “net billing” agreements 

with its utility customers. These agreements made it possible for the publicly owned utilities, which 

owned shares of power plants, to sell to Bonneville all or part of the generating capacity of thermal 

projects. Bonneville credited, and continues to credit, the wholesale power bills of these utilities in 

amounts suffi cient to cover the costs of their shares in these plants. Bonneville then sells the output 

of these plants, melding the higher costs of this thermal power with the lower costs of hydropower, for 

the benefi t of all customers. The plants were cooperative efforts of both publicly owned and investorowned utilities, but Bonneville purchased only the shares of generating capacity owned by publicly 

owned utilities.

The Hydro-Thermal Power Program

Under the Hydro-Thermal Power Program (Phase I), Pacifi c Power & Light Company and other 

investor-owned utilities built the Centralia coal-fi red plant with the co-ownership of several publicly 

owned utilities. Portland General Electric Company built the Trojan nuclear power plant, with 30 percent co-ownership by Eugene Water and Electric Board (EWEB) covered by a net-billing agreement. 

And the Washington Public Power Supply System (WPPSS), under net-billing agreements, completed one nuclear plant (WNP 2) and partially constructed two other nuclear plants (WNP 1 and 3) in 

Washington state. The Hanford N-reactor turbine generator, built by WPPSS, also came on line just 

prior to the formal initiation of the Hydro-Thermal Power Program, and before its closure in 1987 was 

considered a part of the overall effort. Bonneville became the agent for integrating these resources so 

the consumers of the region could benefi t from the greatest effi ciency and lowest costs from operation 

of the regional electric system. The thermal power plants, which run continuously, would meet the 

base, or constant, power needs. The hydroelectric dams would be operated to follow the fl uctuation of 

energy needs throughout the day.

In spite of the efforts of utilities and Bonneville to continue developing the region’s generating 

resources in a systematic way, the region continued to lose ground to rapidly growing demands for 

electricity. The Hydro-Thermal Power Program failed to meet the region’s expectations for two basic 

reasons. A revision of regulations by the Internal Revenue Service denied tax exempt status to bonds 
7

sold by publicly owned utilities to fi nance their plants if power from the facilities was sold to Bonneville, a Federal agency. And, Bonneville’s fi nancial ability to participate in net-billing agreements 

reached its limits far sooner than expected because of the climbing costs of new thermal plants.

In 1973, Bonneville and the region’s utilities initiated Phase II of the Hydro-Thermal Power Program, in which the utilities would fi nance their own plants without net-billing participation by Bonneville. Thus, WPPSS nuclear units 4 and 5, now terminated, were not covered by net-billing contracts. Nonetheless, Bonneville expected to provide electric load management and power integration 

services and to supply peaking power and reserves from federal facilities in order to bring about the 

most effi cient mix of resources possible. Bonneville’s participation in this program was enjoined by 

a federal court in 1975. The court required that Bonneville complete an environmental impact statement on the impact of the Hydro-Thermal Power Program. 

The environmental impact statement, which was not completed until 1980, found that fl uctuation 

in the use of hydroelectric dams would have to be limited to protect shore structures along the river. 

Bonneville put the Hydro-Thermal Power Program on hold while the impact statement was being prepared, and during those fi ve years a number of events occurred that led to the demise of plants 4 and 

5. These included construction delays at all fi ve of the WPPSS nuclear plants, cost increases for those 

plants as the result of overruns and mismanagement, decreasing regional demand for power, growing 

public interest in energy conservation as a low-cost alternative to the extraordinarily expensive nuclear plants, and court decisions that relieved the participating utilities of their obligation to pay for the 

plants. Bonneville continues to pay for the net-billed plants, even though construction was suspended 

on plants 1 and 3 in 1983 and never restarted.

Public Power Preference

The Bonneville Project Act of 1937 directed that the electric cooperatives and other publicly 

owned utilities of the region be given fi rst call on available federal resources. They consequently 

came to be called “preference customers.” In 1964, Congress authorized the Pacifi c Northwest Consumer Power Preference Act, which directed that only surplus energy from the Columbia River system 

could be sold outside the Northwest. Firm power from the system was reserved for the Northwest, 

except under conditions specifi ed in the Act. Until the 1970s, the legal preference of public customers was unchallenged, largely because there had been enough electricity for everyone. In 1973, when 

Bonneville’s fi rm-power contracts with investor-owned utilities expired, Bonneville could not offer 

new ones if preference customers were to continue to have fi rst call on federal resources. So the fi rm 

power contracts with the investor-owned utilities were not renewed.

However, Bonneville continues to sell some peaking power to the investor-owned utilities — power they need to get through periods of heavy use in the winter heating season. Bonneville also sells 

“non-fi rm” power to the investor-owned utilities and utilities outside the region when electricity surplus to the needs of the preference customers is available.

In 1976, Bonneville’s power demand and supply projections showed that federal power supplies 

were running short for preference customers, and that Bonneville would no longer be able to guarantee preference customers that their load growth could be met beyond 1983. Bonneville issued a 

notice of insuffi ciency to the utilities in June of 1976. The following month, 88 public utilities signed 

contracts with WPPSS to build nuclear plants 4 and 5, as discussed earlier in this Briefi ng Book. The 

WPPSS nuclear construction program proved to be a debacle, but it also prompted changes in regional 
8

energy policy. Mismanagement and cost overruns at the fi ve WPPSS plants were at the root of the 

fi nancial problems, but the WPPSS debacle also was a failure of electricity demand forecasting. 

The impetus for the nuclear construction effort lay in demand forecasts produced by the region’s utilities, through the Pacifi c Northwest Utilities Conference Committee, and Bonneville, and the forecasts 

proved to be too high.

Rate Disparities

With PNUCC and Bonneville warning of future power shortages, with the investor-owned utilities relying on their own hydro and thermal resources to meet the demand of their customers, and 

with the prices of federal hydropower remaining much lower than that of new thermal generation, a 

divisive struggle developed for access to the limited federal resources. Sixty percent of the residential and farm customers of the region were served by investor-owned utilities. These customers were 

paying, on average, twice as much for electricity as customers of publicly owned utilities receiving 

wholesale power from Bonneville. The City of Portland sued Bonneville, claiming a right to a share 

of hydropower resources for its citizens. The State of Oregon passed a law authorizing formation of a 

statewide public utility — the Domestic and Rural Power Authority — to seek service as a preference 

customer from Bonneville so that all residential customers of private utilities could receive the rate 

benefi ts of Federal resources. Elected offi cials of other states talked of forming their own statewide 

public utilities.

Stimulated by rate disparities, the public power movement also experienced a renaissance. A strong 

public power move to buy out investor-owned utility service areas by means of elections in accordance 

with state law was revived in Oregon. All votes to form new PUDs failed in the November 1980 elections, but one long inactive PUD, the Columbia Peoples Utility District west of Portland won voter approval for issuing bonds to buy out utility properties in Columbia County.

Meanwhile, planning for more resources to meet demand was hamstrung by uncertainty over the allocation of low-cost federal power among competing claimants, existing and new. For example, Bonneville’s contracts with its direct service industries, which are large industrial fi rms that purchase power 

directly from Bonneville, were to expire in the 1980s. The power sold to these industries would have to 

be sold to public utilities under the preference clause. If they were to survive in the Northwest, these 

industries needed an assured source of electricity.

Declining Salmon Runs

Finally, by the late 1970s it became clear that our regional prosperity, which resulted in large measure from inexpensive hydropower from the federal dams, had extracted a price on fi sh and wildlife 

in the Columbia River Basin. Just a century earlier, for example, between 10 million and 16 million 

salmon returned to the Columbia River each year. But by the late 1970s, there were only about 2.5 

million salmon, and most of those returned to hatcheries. Environmental groups and other advocates 

for fi sh and wildlife considered fi ling petitions to protect dwindling fi sh populations under the federal 

Endangered Species Act.

These pressures on our regional electric power supply, which once seemed inexhaustible, caused 

Pacifi c Northwest residents to question the institutions governing the development, sale, and distribution of generating resources. Should new preference agencies be formed to replace private companies in given areas? How would the supply needs of new preference customers be met? Should 
9

private utilities undertake new generating projects in a hostile atmosphere of rapidly rising rates and 

the threatened shift to public power? How would large industrial customers in the region be served? 

How should the public, and their elected representatives, participate in decisions that were critical 

to the region’s economy and environment? Who ultimately would be responsible for planning and 

acquiring new resources to avoid impending electricity shortages? How would our region protect the 

fi sh and wildlife that had been damaged over the years by the construction and operation of hydropower dams?

The region continued to work for a cooperative solution that preserved local options while obtaining regional effi ciencies of an integrated electric system. Several alternatives were explored, but no 

agreement was reached. To avoid a court battle over allocation issues, the region turned to Congress 

for a solution.

Toward a Congressional Solution

Revisions to the Bonneville Project Act were considered as early as 1975. The legislation was 

prompted by Bonneville’s Notice of Insuffi ciency in June 1976, coupled with the threat posed by Oregon’s Domestic and Rural Power Authority. However, it was not until 1977 that Bonneville and its 

customers, through the Pacifi c Northwest Utilities Conference Committee (PNUCC), drafted legislation to solve the region’s energy problems. Senator Jackson introduced the PNUCC bill in September 

of 1977, but neither that bill, nor a less complex successor drafted a year later, managed to progress 

very far by the time the 95th Congress adjourned in late 1978.

When the 96th Congress convened in 1979, a coalition of Bonneville customers was solidly 

behind a legislative solution to the Northwest’s power crisis. Neither Bonneville nor its customers 

wanted an administrative allocation of limited power supplies, although Bonneville did propose an 

allocation scheme in October of 1979. Bonneville and its customers, however, maintained that such 

an allocation would be subjected to protracted litigation. They alleged that Congress could avoid the 

uncertainties accompanying administrative allocation by devising a legislative allocation scheme and 

equipping Bonneville with the authority to purchase power from non-federal sources on a long term 

basis. Supplying Bonneville with purchase authority was, they claimed, the key to implementing any 

legislative allocation scheme. Congress apparently agreed. The Senate passed the regional legislation on August 3, 1979; the House passed an amended bill on November 17, 1980, which the Senate 

agreed to two days later. On December 5, 1980, President Carter signed the Pacifi c Northwest Electric Power Planning and Conservation Act into law as Public Law 96-501.

Northwest Power Act — Major Provisions

After four years of deliberation, Congress devised methods for protecting the preference that existing federal law gives publicly owned utilities, while at the same time providing the benefi ts of federal 

hydropower to residential and small farm customers of private utilities. It should be noted that the 

Act passed largely because it seemed to benefi t all the interest groups that lobbied for it.

The Act directs that Bonneville should continue its traditional role of transmitting and marketing 

power, but also carry out additional responsibilities. Under the Act, Bonneville must acquire all necessary energy resources to serve utilities who choose to apply to Bonneville for wholesale power supplies. 

The Act contains checks and balances to insure that all customers of Bonneville are treated equitably.
10

Bonneville remains accountable to the people of the Pacifi c Northwest for the actions it takes to meet 

the needs of residents and industry. By creating a regional planning council consisting of two members 

from each of the four Northwest states to develop a regional plan, Congress provided a regional decision-making system. It emphasizes local control of resource development and power planning.

Here are some of the major provisions of the Act:

• The Northwest Power Planning Council was formed with representation from each of the 

states. The Act directed the Council to draw up a plan for meeting the electrical needs of the 

region at the lowest possible cost. The plan must give highest priority to cost-effective conservation, treating it as a resource preferable to all other means of responding to demand for 

electricity. Renewable sources of energy must be given next highest priority in the region’s 

power planning, to the extent that they are cost-effective ranking ahead of conventional 

thermal generating resources. Among thermal options, fuel-effi cient methods of producing 

energy, such as cogeneration, must be given priority.

• Bonneville became responsible for meeting loads of customers and managing the regional electrical system to achieve the purposes of the Act relating to fi sh, system effi ciency, and experimental projects. The plan adopted by the Council, which is amended periodically, is the basis 

for Bonneville’s actions in meeting loads of its customers. Congress exercises budget review of 

all proposed Bonneville expenditures. If Bonneville decides to acquire resources not consistent 

with the Council’s plan, specifi c Congressional approval is required prior to any commitment by 

Bonneville. Bonneville must give priority to cost-effective conservation and renewable resources 

in meeting the region’s needs. Bonneville may also purchase the generating capabilities of new 

thermal projects, but only after determination that they are required in addition to all cost-effective conservation and renewables that can be achieved or developed in time. Such projects must 

also be found reliable and compatible with the regional electric system. Bonneville must spread 

the benefi ts and the costs of resources among all of its customers through its rates.

• The supply preference and resulting price advantage to co-ops and publicly owned utilities by Federal law was protected and enhanced. Bonneville was given the responsibility of 

meeting the full future requirements of preference customers — something Bonneville was 

not previously authorized to do.

• Residential and farm customers of investor-owned utilities received rate relief. The utilities 

sell to Bonneville, at the average cost of their power, an amount of electric energy equal to 

their residential and farm loads. Bonneville sells to them, in return, enough energy at Bonneville standard rates to cover these residential and farm loads. The rate advantages cannot 

enhance company profi ts, but must be passed on directly to the customers.

• Direct service industries received new 20-year contracts for power from Bonneville, but at a 

higher price than they paid under previous contracts. In effect, they pay the cost of rate relief 

to residential and small farm customers of investor-owned utilities during the fi rst four years, 

and a substantial portion thereafter, which they agreed to do in exchange for assurances of 

long-term supplies.

• Bonneville sells electricity at a rate that refl ects the melded cost of Federal hydropower and 

more expensive thermal resources, conservation, and renewable sources of energy. The Act 
11

contains incentives, as well, to encourage conservation and renewables. Bonneville may 

credit utilities for their individual actions to implement conservation and renewables.

• The Council established a program to protect and enhance the fi sheries resources of the 

Columbia River and to mitigate damage already done to anadromous fi sh. Funding for the 

program is to come from Bonneville rate revenue.

• All planning for electric resources and fi sh protection must involve the public. State and local control of land use and water rights is protected under the Act and the decision to allow 

construction of new resources is left with utilities and state siting authorities.

• The Council must provide a method for balancing environmental protection and the energy 

needs of the region. For each new energy resource, the provisions of the National Environmental Policy Act must be complied with.

• The Council is required to seek the recommendations of the region’s tribal, state and federal 

fi sh and wildlife agencies. In addition, the Council’s measures must be consistent with the 

legal rights of the region’s tribes.

Challenges for the Future

The electricity industry in the United States is in the midst of signifi cant restructuring. This restructuring is the product of many factors, including national policy to promote a competitive electricity 

generation market and state initiatives in California, New York, New England, Wisconsin and elsewhere 

to open retail electricity markets to competition. This transformation is moving the industry away from 

the regulated monopoly structure of the past 75 years. Today we are served by individual utilities, many 

of which control everything from the power plant to the delivery of power to our homes or businesses. 

In the future, we may have a choice among power suppliers that deliver their product over transmission 

and distribution systems that are operated independently as common carriers.

There is much to be gained in this transition, as electricity consumers can benefi t from competition, but also much to lose from volatile wholesale power markets and illegal marketing activities, 

as the region learned during the energy crisis of 2000/2001. On the optimistic side, not too many 

years ago competition in the natural gas industry helped lower the cost of electricity produced by 

gas-fi red generating plants. On the negative side, a new pipeline linking the gas fi elds of northern 

Alberta with the American Midwest a couple of years ago increased competition and contributed to 

higher gas prices in the Northwest. During the energy crisis of 2000/2001, natural gas prices tripled 

in a year, and then subsided as the electricity supply rebounded. Competition among manufacturers 

and developers of combustion turbines contributed to the availability of less expensive, more effi cient 

power plants that can be built relatively quickly, and many new plants were added to the Northwest 

and West Coast power supply during the energy crisis, when stratospheric prices — well over $200 

per megawatt-hour — meant that construction debt for the plants could be paid down quickly. Generally speaking, surplus generating capacity on the West Coast, combined with increasing competition 

among wholesale suppliers, reduces the price utilities must pay for power on the open market, as long 

as supplies are adequate. Broad competition in the electricity industry can result in lower prices and 

more choices about the sources, variety and quality of their electrical service, but competition also can 

lead to price escalations, as the region learned during the energy crisis.
12

Electricity markets can be benign as long as supply and demand remain somewhat aligned. But 

as the experience of 2000/2001 made abundantly clear, competitive markets can be volatile. In a 

competitive energy marketplace, prices can explode to unheard-of levels in a matter of months when 

demand increases and the supply decreases. Coupled with rapidly increasing costs for natural gas, the 

advantages of competition can turn quickly to disadvantages.

If nothing else, the absurdly high West Coast prices for wholesale electricity in late 2000 and the 

fi rst fi ve months of 2001 showed there are risks inherent in the transition to more competitive electricity services. Merely declaring that a market should become competitive will not necessarily achieve 

the full benefi ts of competition or ensure that they will be broadly shared — particularly when the 

weather, power plant outages, regulatory rules and natural gas prices don’t cooperate.

It is entirely possible to have deregulation without true competition. Similarly, the reliability of 

our power supply could be compromised if care is not taken to ensure that competitive pressures do 

not override the incentives for reliable operation. How competition is structured is important.

It is also important to recognize the limitations of competition. Competitive markets respond to 

consumer demands, but they do not necessarily accomplish other important public policy objectives. 

The Northwest has a long tradition of energy policies that support environmental protection, energyeffi ciency, renewable resources, affordable services to rural and low-income consumers, and fi sh and 

wildlife restoration. These public policy objectives remain important and relevant. Given the enormous economic and environmental implications of energy, these public policy objectives need to be 

incorporated in the rules and structures of a competitive energy market, and not abandoned in the face 

of escalating demand and tight supplies of power.

In some respects, the transition to a competitive electricity industry is more complicated in the 

Northwest than elsewhere in the country because of the presence of the Bonneville Power Administration. Bonneville is a major factor in the region’s power industry, supplying, on average, 40 percent of 

the power sold in the region and controlling more than 70 percent of the region’s high-voltage transmission. Bonneville benefi ts from the fact that it markets most of the region’s low-cost hydropower. 

It is hampered by the fact that it has comparatively high fi xed costs, including the cost of past investments in nuclear power, as discussed earlier in this Briefi ng Book, and the majority of the costs for 

fi sh and wildlife recovery in the Columbia River Basin.

As a wholesale power supplier, Bonneville is already fully exposed to competition, and Bonneville 

struggles when market prices are above its own cost-based rates. The transition to a competitive electricity industry raises many issues for Bonneville and the region. For example, can Bonneville continue to 

meet its fi nancial and environmental obligations in the face of intense competitive pressure? When market 

prices rise and some of Bonneville’s debt obligations have been retired, how can the Northwest retain the 

economic benefi ts of its low-cost hydroelectric power when the rest of the country is paying market prices? 

And fi nally, what is the appropriate role of a federal agency in a competitive market? The question is not 

only whether Bonneville can compete in the near term, but also, should it be a competitor?

Just four years ago, or so, Bonneville was struggling in a low-cost market. During the energy crisis 

of 2000 and 2001, when wholesale market prices shot up to 10 times the usual price, and higher at 

times, federal power was the envy of every utility facing marketplace sticker shock. The drought of 

2001, which reduced Columbia River runoff to the second-lowest level in 73 years of record-keeping, 

reduced the region’s hydropower capacity by 4,000 megawatts, and Bonneville, which must purchase 
13

about 3,000 megawatts in the market in order to meet its customers’ demand, spent nearly $3 billion 

on power in a single year, 2001.

Largely because of Bonneville’s experiences in 2001, a group of Bonneville customers proposed a 

fundamental change in Bonneville’s power marketing role in the future, a proposal to limit Bonneville 

to selling only the output of the Federal Columbia River Power System, essentially ending its role in 

the marketplace and making its customers responsible for meeting their own load growth beyond their 

guaranteed share of the federal system, which Bonneville would supply. That proposal, known as 

the Joint Customer Proposal (JCP), and the Council’s comments on it, are discussed elsewhere in the 

Briefi ng Book.

The federal power system in the Pacifi c Northwest has conferred signifi cant benefi ts on the region 

for more than 50 years. The availability of inexpensive, cost-based electricity has supported strong 

economic growth and helped provide for other uses of the Columbia River, such as irrigation, fl ood 

control and navigation. The renewable and non-polluting hydropower system has helped maintain a 

high quality environment in the region. 

But while the power system has produced signifi cant benefi ts, these benefi ts came at a substantial 

cost to the fi sh and wildlife resources of the Columbia River Basin. Salmon and steelhead populations have been reduced to historic lows, and many runs are or are about to be listed under the federal 

Endangered Species Act. Resident fi sh and wildlife populations have also been affected. Native 

Americans and fi shery-dependent communities, businesses and recreationists have suffered substantial 

losses due in signifi cant part to construction and operation of the power system.

It is important that the region sustain its core industries, support conservation and renewable resources and restore salmon runs. As John Volkman comments in his book on Columbia River water 

policy, excerpted at the beginning of this document, fi sh and wildlife mitigation requires a healthy 

hydropower system capable of generating suffi cient revenues to fi nance energy and fi sh and wildlife 

conservation measures — neither fi sh and wildlife conservation nor power development can proceed 

without the other.

Ironically, four years ago when market prices were low there was concern that Bonneville might not 

be able to sell all of its power and that its funding for important public purposes like energy conservation 

and fi sh and wildlife enhancement might be diminished. Two years ago during the energy crisis, when 

Bonneville spent nearly $3 billion on power purchases in the superheated electricity market, there was 

similar concern that Bonneville might not be able to adequately fund its public-purpose investments. As 

2003 begins, there is lingering concern that Bonneville’s continuing fi nancial crisis, residual from its 

market experiences in 2001, threatens to reduce Bonneville’s public-purpose investments. 
14
15

Background on the Council’s Fish and Wildlife Planning

The Columbia River Basin Fish and Wildlife Program

The Northwest Power Act requires the Council to prepare a program to protect, mitigate and enhance fi sh and wildlife, and related spawning grounds and habitat, of the Columbia River Basin that 

have been affected by hydroelectric development, and to review the program at least every fi ve years.1 

The last review led to a revision of the fi sh and wildlife program in October 2000.

The 2000 Program marks a signifi cant departure from past versions, which consisted primarily of a 

collection of measures directing specifi c activities. The 2000 Program establishes a basinwide vision for 

fi sh and wildlife — the intended outcome of the program — along with biological objectives and action strategies that are consistent with the vision. Ultimately, the program will be implemented through 

subbasin plans developed locally in the 62 tributary subbasins of the Columbia and amended into the 

program by the Council. Those plans will be consistent with the basinwide vision and objectives in the 

program, and its underlying foundation of ecological science.

The 2000 Program addresses all of the “Four Hs” of impacts on fi sh and wildlife — hydropower, 

habitat, hatcheries and harvest:

• It recommends that resources and energy be directed away from breaching the four federal 

dams on the lower Snake River, recognizing that the federal government has decided breaching 

will not occur in the next fi ve years (coincidentally, that is the Council’s statutory planning horizon for the fi sh and wildlife program). Instead, the program recommends actions to improve 

dam-passage survival that are biologically sound and economically feasible — actions that 

benefi t the range of species in the river and fi t natural fi sh behavior patterns.

• It directs signifi cant attention to rebuilding healthy, naturally producing fi sh and wildlife 

populations by protecting and restoring habitats and the biological systems within them.

• It requires that fi sh hatcheries funded through the program operate consistent with reforms 

recommended to Congress by the Council in 1999, reforms that would shift hatchery production away from a primary focus on providing fi sh for harvest to also providing fi sh to rebuild 

naturally spawning populations.

• It promotes increased fi sh harvest, consistent with sound biological management practices, 

recognizing that harvest provides signifi cant cultural and economic benefi ts to the region. 

In preparing the 2000 Fish and Wildlife Program, the Council solicited recommendations from 

the region’s fi sh and wildlife agencies, Indian tribes, and others, as required by the Northwest Power 

Act. The agencies and tribes responded, and the Council also received proposals from other interested 

parties. In all, the Council received more than 50 recommendations totaling more than 2,000 pages. 

1 The Act considers the power plan and the fi sh and wildlife program as a single plan, and so when one is reviewed the other 

must be, also. Before the Council’s 2000 revision of the fi sh and wildlife program, the previous revision was completed in 

1995; the last power plan revision was in 1998. Having revised the fi sh and wildlife program in 2000, in 2001 the Council 

began a review and revision of the 1998 Power Plan. The next power plan is scheduled for completion in mid-2003.
16

After reviewing the recommendations, the Council prepared a draft and then conducted an extensive 

public comment period before fi nalizing the program, in December 2000.

The 2000 Program is the fi fth revision since the Council adopted its fi rst program in November 1982. 

This time, as in the series of program amendments between 1991 and 1995, the program is being revised 

in phases. Unlike past versions of the program, which were criticized by scientists for consisting primarily of a number of measures that called for specifi c actions without a clear, programwide foundation of 

scientifi c principles, this version of the program expresses goals and objectives for the entire basin based 

on a scientifi c foundation of ecological principles. In the future, the Council will amend into the program 

locally developed plans for the tributary subbasins of the Columbia River and is currently in the process 

of developing a plan for mainstem hydrosystem operations. These plans will be consistent with the goals 

and objectives for the basin and also with goals and objectives that will be developed for the 11 ecological 

provinces of the basin.2 The provinces are groups of adjacent subbasins with similar ecological features.

With the subbasin plans in place, the program will be organized in three levels: (1) a basinwide level 

that articulates objectives, principles and coordination elements that apply generally to all fi sh and wildlife projects, or to a class of projects, that are implemented throughout the basin; (2) an ecological province level that addresses the 11 unique ecological areas of the Columbia River Basin, each representing 

a particular type of terrain and corresponding biological community; and (3) a level that addresses the 

subbasins (there are more than 50), each containing a specifi c waterway and the surrounding uplands.

The Council believes this unique program structure, goal-oriented and science-based, will result in 

a more carefully focused, scientifi cally credible and publicly accountable program that will direct the 

region’s substantial fi sh and wildlife investment to the places and species where it will do the most good.

The program’s goals, objectives, scientifi c foundation and actions are structured in a “framework,” an 

organizational concept for fi sh and wildlife mitigation and recovery efforts that the Council introduced 

in the 1994-95 version of the program. The 2000 Program, organized with the framework concept, is 

intended to bring together, as closely as possible, Endangered Species Act requirements, the broader 

requirements of the Northwest Power Act and the policies of the states and Indian tribes of the Columbia River Basin into a comprehensive program that has a solid scientifi c foundation. The program also 

states explicitly what the Council is trying to accomplish, links the program to a specifi c set of objectives, describes the strategies to be employed and establishes a scientifi c basis for the program. Thus, 

the program guides decision-making and provides a reference point for evaluating success.

Through an amendment proceeding that began in January 2000, the Council restructured the program with a comprehensive, underlying framework of general scientifi c and policy principles that 

apply to the entire Columbia River Basin. The fundamental elements of the program are:

The vision, which describes what the program is trying to accomplish with regard to fi sh and wildlife and other desired benefi ts from the river;

The biological objectives, which describe the ecological conditions needed to achieve the vision; and

The implementation strategies, procedures and guidelines, which guide or describe the actions 

leading to the desired ecological conditions.

2 For planning purposes, the Council’s program also considers the North Pacifi c Ocean a separate geographic unit, but the 

area is not designated as an ecological province.
17

In other words, the vision implies biological objectives that set the strategies. In turn, strategies 

address biological objectives and fulfi ll the vision. The scientifi c foundation links the components of 

the framework, explaining why the Council believes certain kinds of management actions will result 

in particular physical habitat or ecological conditions of the basin, or why the ecological conditions 

will affect fi sh and wildlife populations or communities.

In the 2000 revision, the Council adopted the following vision for the program:

The vision for this program is a Columbia River ecosystem that sustains an abundant, productive, and diverse 

community of fi sh and wildlife, mitigating across the basin for the adverse effects to fi sh and wildlife caused by the 

development and operation of the hydrosystem and providing the benefi ts from fi sh and wildlife valued by the people of the region. This ecosystem provides abundant opportunities for tribal trust and treaty right harvest and for 

non-tribal harvest and the conditions that allow for the recovery of the fi sh and wildlife affected by the operation of the hydrosystem and listed under the Endangered Species Act. Wherever feasible, this program will be 

accomplished by protecting and restoring the natural ecological functions, habitats, and biological diversity 

of the Columbia River Basin. In those places where this is not feasible, other methods that are compatible with naturally reproducing fi sh and wildlife populations will be used. Where impacts have irrevocably 

changed the ecosystem, the program will protect and enhance the habitat and species assemblages compatible with the altered ecosystem. Actions taken under this program must be cost-effective and consistent with 

an adequate, effi cient, economical and reliable electrical power supply.

Primary strategies in the 2000 Program

Here is a brief summary of the primary, basinwide strategies in the 2000 Program:

Habitat

Identify the current condition and biological potential of the habitat, and then protect or restore 

it to the extent described in the biological objectives. 

Artifi cial production

Artifi cial production can be used, under the proper conditions, to (1) complement habitat improvements by supplementing native fi sh populations up to the sustainable carrying capacity of the 

habitat with fi sh that are as similar as possible, in genetics and behavior, to wild native fi sh, and 

(2) replace lost salmon and steelhead in blocked areas.

Harvest

Assure that subbasin plans are consistent with harvest management practices and increase 

opportunities for harvest wherever feasible.

Hydrosystem passage and operations

Provide conditions within the hydrosystem for adult and juvenile fi sh that most closely approximate the natural physical and biological conditions, provide adequate levels of survival 

to support fi sh population recovery based in subbasin plans, support expression of life history 

diversity, and assure that fl ow and spill operations are optimized to produce the greatest biological benefi ts with the least adverse effects on resident fi sh while assuring an adequate, effi cient, 

economical, and reliable power supply. The program called for development of a mainstem 

coordination plan similar to the subbasin plans. The mainstem plan is discussed later in this 

section of the Briefi ng Book.
18

Wildlife:

Complete the current mitigation program for construction and inundation losses and include wildlife mitigation for all operational losses as an integrated part of habitat protection and restoration.

Ocean conditions:

Identify the effects of ocean conditions on anadromous fi sh and use this information to evaluate 

and adjust inland actions.

Research, monitoring and evaluation:

(1) Identify and resolve key uncertainties for the program; (2) monitor, evaluate, and apply results; and (3) make information from this program readily available. 

Mainstem Coordination Plan

In the Hydrosystem Strategies section of the 2000 Program, the Council established the following 

strategy: Establish and maintain a plan to assure coordination of mainstem operations and improvements. Because the mainstem plan would propose specifi c operating guidelines for the mainstem dams 

of the Federal Columbia River Power System, the Council decided to conduct a separate rulemaking 

to amend a mainstem plan into the program once it was amended with basinwide goals, objectives and 

strategies. In March 2001, the Council wrote to the region’s fi sh and wildlife agencies and Indian tribes 

requesting their recommendations for the mainstem coordination plan. These were received in June and 

posted on the Council’s website. The Council invited public comments on the recommendations and 

then proceeded to prepare draft amendments for public review in late 2002. Public hearings were conducted on the draft mainstem amendments in late 2002 and early 2003. Here are the key elements of the 

draft mainstem coordination plan:

Juvenile and adult fi sh passage:

• Accept juvenile fi sh transportation as a transitional strategy and endorse the “spread-the-risk” 

strategy.

• Continue to study fi sh transportation and evaluate survival benefi ts from McNary and delayed mortality.

• Support ongoing tests of surface bypass systems.

• Improve overall effectiveness of adult fi sh passage.

Spill:

• Spill is an effective inriver passage route.

• Accept specifi c survival rates in the 2000 Biop for inriver passage at each dam. Adopt these 

as interim rates for non-listed species.

• Manage according to the most biologically effective level at each dam.

• Evaluate costs and effectiveness of spillway passage at each dam.

• Consult with agencies, tribes and ISAB to determine optimal passage strategy, including the 

most biologically effective level of spill at the lowest cost, for each dam.
19

Water management:

• Balance the needs of anadromous species with those of resident fi sh species, and the needs of 

migrating fi sh with those of spawning and rearing fi sh.

• Council does not support the spring and summer fl ow targets in the NOAA Fisheries 2000 

Biological Opinion due to lack of evidence that they are related to survival within the range 

of the agency’s control, given reservoir and other hydrosystem constraints.

• Protect habitat conditions for salmon spawning and rearing in the Hanford Reach area, on an 

equal basis as managing water to support the migration of Endangered Species Act-listed species.

River operations:

• The Council’s preferred alternative attempts to balance upriver and downriver dam operations to benefi t species basinwide by slightly reducing spring fl ows to allow greater hydrosystem fl exibility during winter months and lengthening the period of summer fl ow augmentation and providing for a more even release of water from storage reservoirs.

 Spring river operations:

-- Refi ll upriver storage reservoirs by the end of June (95-percent confi dence).

-- Disagree with fl ow targets in the NOAA Fisheries Biop.

-- Eliminate Biop target of reservoir refi ll to within one-half foot of the upper fl ood control rule 

curve by April 10.

-- Impacts at McNary:

- 5,147 cfs (-2.24 percent) in April

- 2836 cfs (-1 percent) in May

- 1,089 cfs (-0.39 percent) in June

-- Impacts at Lower Granite:

- 316 cfs (-0.35 percent) in April

- 205 cfs (-0.19 percent) in May

- 199 cfs (-0.20 percent) in June.

 Summer river operations:

-- The Biop calls for drafting Hungry Horse and Libby reservoirs up to 20 feet in July and August; the Council’s proposal is to limit drawdowns to 10 feet (except in drought years) and 

release the water over three months — July through September. Thus, the Council would 

release less water over a longer period of time.

-- Flow reductions at McNary in July and August of about 10 percent, and an increase of about 

20 percent in September, compared to Biop fl ows.

-- Fill Lake Roosevelt to elevation 1,290 feet (full pool) by the end of June, and then draft 

evenly to elevation 1,283 feet by the end of August. Hold at 1,283 from September through 

December to maximize water retention times in the reservoir and protect kokanee access and 

spawning in the tributaries and shoreline.
20

Adequate, effi cient, economical and reliable power supply

• The draft mainstem amendments include a paper analyzing the effects of the proposed fi sh 

and wildlife operations on the adequacy, effi ciency, economics and reliability of the regional 

power supply. The Council also sought public comments on the paper.

Coordinating with other entities

Under the Northwest Power Act, the Council’s fi sh and wildlife program is not intended to address 

all fi sh and wildlife problems in the basin from all sources. But the Council adopted the vision, objectives, strategies and scientifi c foundation with the belief that they will complement and help support 

other fi sh and wildlife recovery actions in the region. 

This program recognizes that others besides the Council are developing plans and taking actions to 

address these issues. In particular, the four Northwest states and the Columbia Basin’s 13 Indian tribes 

each have fi sh and wildlife initiatives under way. Many of these parties already are working on subbasin 

and watershed planning initiatives, and are also addressing Endangered Species Act concerns. 

Throughout the basin, NOAA Fisheries and the U.S. Fish and Wildlife Service are administering 

the Endangered Species Act, which requires information gathering, planning, and mitigation actions. 

In addition, the Environmental Protection Agency, in cooperation with the states and tribes, is taking 

actions to achieve compliance with the Clean Water Act. (As used elsewhere in this program, “applicable federal laws” includes both the Endangered Species Act and the Clean Water Act.)

This framework is not intended to pre-empt the legal authorities of any of these parties, but it does provide an opportunity for each of these regional participants to coordinate information gathering, planning, 

and implementation of recovery actions on a voluntary basis. That is, the Council’s program is designed 

to link to, and accommodate, the needs of other programs in the basin that affect fi sh and wildlife. This 

includes meeting the needs of the Endangered Species Act by describing the kinds of ecological change 

needed to improve the survival and productivity of the diverse fi sh and wildlife populations in the basin.

Measures implementing this program are funded by the Bonneville Power Administration through 

revenues collected from electricity ratepayers. Although Bonneville has fi sh and wildlife responsibilities 

under both the Endangered Species Act and the Northwest Power Act, in many cases, both responsibilities 

can be met in the same set of actions. Therefore, in recommending projects for funding under this program, the Council will address both sets of responsibilities wherever feasible. Again, knowledge of the 

plans and activities of other regional participants will be essential for the Council to be able to assure that 

the projects it recommends for funding are coordinated with, and do not duplicate, the actions of others.

Implementation during a period of transition

In the future, the program will be implemented primarily through subbasin plans, which will be 

consistent with the programwide goals, objectives and scientifi c foundation. While those plans are 

under development, the Council has provided for ongoing project review and funding.

A subbasin assessment and planning process will complete the program at the subbasin level and 

provide the implementation plans out of which fi sh and wildlife projects are proposed for Bonneville 

funding to implement the program.
21

The subbasin assessment is a technical exercise designed to identify the biological potential of each 

subbasin and the opportunities for restoration. Based on this, fi sh and wildlife managers, land managers, private landowners, and other people responsible for fi sh and wildlife and habitat conditions in the 

respective subbasins can develop subbasin plans consisting of goals, objectives, strategies, and proposed 

actions that are consistent with the objectives and criteria in the program.

Depending on the extent and quality of past assessment and planning work, the planning process in a 

particular subbasin could range from a relatively quick and straightforward review and updating of existing plans to a fundamental and extensive development process. Using the program amendment procedures in the Northwest Power Act, the Council intends to review subbasin plans and adopt agreed-upon 

plans into the program.

Meanwhile, the Council will continue to make annual recommendations to Bonneville regarding 

funding of projects to implement the program. The Council relies on the recommendations of the Independent Scientifi c Review Panel (ISRP) and the region’s fi sh and wildlife managers as the basis for its 

funding recommendations. The Council and the ISRP also have a responsibility for reviewing other fi sh 

and wildlife projects proposed for funding by federal agencies and reimbursed by Bonneville.

The 2000 Program describes a rolling project review process in which one-third of the program and 

fi sh and wildlife projects funded by Bonneville are reviewed each year in some depth by the fi sh and 

wildlife managers, the ISRP and the Council. An important criterion for a funding recommendation is 

consistency with the vision, objectives and strategies in the revised program and in the relevant subbasin 

plan, when adopted. In the rolling project review, the priorities for actions at the basin, province, and 

subbasin level will be refl ected as budget priorities for implementation of specifi c projects.

The program includes procedures for monitoring and evaluating the biological benefi ts gained by 

actions taken under the program. The evaluation process feeds information back into the program planning and project review process, with adaptive management mechanisms for revising program objectives 

or actions if what has been adopted proves unsuccessful.

Because the 2000 Program has a signifi cantly different structure and implementation procedure than 

past versions of the program, the Council wanted to make a provision for projects initially funded under 

previous versions of the program to continue — as long as they are approved by the ISRP. Thus, unless 

expressly modifi ed by the provisions of the program, existing projects will continue to be in effect.

Most of the existing projects in the program are specifi c items for implementation at specifi c locations. 

As part of the subbasin planning process described above, these measures will be reviewed, together with 

proposals for new measures, for inclusion in subbasin plans. When a subbasin plan is adopted, it will 

include both the new measures for that subbasin and the existing measures that will be continuing. At that 

time, the measures currently in the program for that subbasin will be replaced by the subbasin plan.

Protected Areas

In August 1988, the Council amended the fi sh and wildlife program with criteria that designate some 

44,000 miles of Northwest streams as “protected areas” because of their importance as critical fi sh and 

wildlife habitat. The protected-areas criteria were adopted into the 2000 Program without changes.

The protected-areas amendment was a major step in the Council’s efforts to protect and enhance 

fi sh and wildlife populations from the impacts of hydropower. By designating areas as protected 
22

against future hydroelectric development, the Council protects fi sh and wildlife habitat. Designation 

as a protected area does not prohibit hydropower development, but it serves as a signal and justifi cation for proceeding with caution because of the potential impacts on intact, important fi sh and wildlife 

habitat. While the Council does not license hydroelectric projects, the Federal Energy Regulatory 

Commission, which grants licenses to nonfederal hydropower projects, and the Bonneville Power 

Administration, which can acquire and transmit electricity from FERC-licensed projects, are required 

to take the Council’s fi sh and wildlife program into account when making decisions.

The Council sees protected-areas designation as playing a positive role in the effi cient development 

of environmentally benign hydropower. New hydropower development in the region’s most critical 

fi sh and wildlife habitat is likely to generate divisive, time-consuming and costly controversy. By 

identifying this habitat as “protected,” the Council hopes to point developers to less sensitive areas, 

where the time and cost of development will be lower. Ratepayers should benefi t from both more 

productive fi sh and wildlife investments and from reduced hydropower development costs.

The Council periodically designates new protected areas and removes the designation from other 

areas, based on analysis and public comment. The Council last amended the protected-areas rule in 

June 1992.
23

Background on the Council’s Power Planning

The Northwest Conservation and Electric Power Plan

The Northwest Power Act directs the Council to prepare a plan to assure the Pacifi c Northwest 

Region an adequate, effi cient, economical and reliable power supply. The Council adopted its fi rst 

power plan in the mid-1980s and has revised it several times since then.

When the Draft Fourth Northwest Conservation and Electric Power Plan was completed in March 

1996, the region had just embarked on an effort to develop consensus on how the electricity industry of the 

Northwest should be restructured to accommodate increasing competition. That effort, the Comprehensive Review of the Northwest Energy System, was convened by the governors of Idaho, Montana, Oregon 

and Washington. The governors appointed a steering committee to conduct the review and charged them 

to “develop, through a public process, recommendations for changes in the institutional structure of the 

region’s electric utility industry. These changes should be designed to protect the region’s natural resources 

and distribute equitably the costs and benefi ts of a more competitive marketplace, while at the same time 

assuring the region of an adequate, effi cient, economical and reliable power system.” 

In December 1996, the committee reported its fi ndings to the four Governors at a meeting in Spokane. 

Among the committee’s recommendations:

• To retain the long-term benefi ts of low-cost federal hydropower in the Northwest, the proposal envisions Northwest utilities and other power suppliers contracting for most of the 

output of hydropower system at cost on a long-term basis. Others could purchase on shorterterm contracts with an option fee to retain the right to continue to subscribe for power at cost. 

Also proposed are mechanisms to ensure that fi sh recovery needs are met while limiting the 

costs to which the subscribers are responsible. 

• To ensure that electricity customers can choose among various providers, regulators and local 

utility boards and commissions should be prepared to offer open access to electricity for all 

customers by 2001.

• To promote environmental quality, utilities and state regulatory commissions voluntarily 

should commit to dedicate 3 percent of the revenues from the sale of electricity services in 

the region every year for the next 10 years to sustain investments in energy conservation, 

renewable resources and low-income weatherization.

• To encourage competition in electricity supply and maintain reliable electrical service, an 

independent transmission grid operator should be created with broad membership, including 

Bonneville and the region’s other major transmission owners. This entity, regulated by the 

Federal Energy Regulatory Commission, would ensure all users have fair access to transmission services and would operate the region’s high-voltage transmission systems for both 

effi ciency and reliability.

To support the Comprehensive Review process, the draft power plan was intended as a reference 

tool on changes in the industry. Public comment on the draft power plan was left open for a year with 

the goal of revising the plan when the conclusions of the Comprehensive Review, as well as other 

public comment, could be taken into account. In July 1998, the Council issued an addendum to the 
24

draft plan refl ecting the recommendations of the Comprehensive Review. The addendum, in combination with the original draft power plan, constitute the Fourth Northwest Power Plan.

The power plan focuses primarily on issues raised by the transition to competitive electricity markets 

and highlights, where possible, important considerations and principles in that transition. The Comprehensive Review dealt with many of the same issues. In general, the recommendations from the Review 

are supported by the analysis of the power plan or, where they are not, the recommendations refl ect 

legitimate policy choices on the part of the Review’s Steering Committee. In many instances, however, 

the recommendations from the Review were specifi c in intent but, of necessity, lacking in detail. For 

example, one recommendation was that provisions for recovering stranded investments be made as part 

of opening retail electricity markets to competition. However, the recommendation provided little guidance regarding how stranded investment recovery might be structured and why. The addendum built on 

the analysis in the draft power plan to suggest important considerations in recovering stranded investments. The same is true with respect to several of the recommendations for competition and consumer 

access, and provisions for conservation and renewable resources. 

The revised plan also describes potential new roles for the Council that are based on recommendations from the Comprehensive Review. After the conclusion of the Comprehensive Review, the governors of Idaho, Montana, Oregon and Washington created the Northwest Energy Review Transition Board 

to oversee implementation of the steering committee’s recommendations. The Transition Board was 

made up of the four governors’ representatives who served on the steering committee.

During the transition to a more competitive electricity market, the Council was asked to help the 

region ensure that the benefi ts of competition are shared by all electricity consumers, and that public 

purposes, such as energy-effi ciency improvements, development of renewable resources and services to 

low-income customers, continue to be provided. 

Summary of key issues and recommendations in the Fourth Northwest Power Plan

The 1998 Power Plan explores key issues that must be addressed in the region as the electricity 

industry becomes more competitive. Many of these issues were addressed by the Northwest Energy 

Review Transition Board. For example, the Transition Board created a public process, including work 

groups, to address two signifi cant questions: how can the Bonneville Power Administration survive 

competition when its power rates are at or above market prices; and how can the region maintain an 

effi cient and reliable transmission system. The wholesale energy market has changed dramatically 

since 1998, of course, and the Council’s more recent analysis of the West Coast power market, and the 

reasons for the dramatic spikes in the price of electricity, are addressed elsewhere in the briefi ng book.

Most of the issues in the power plan relate to the region’s ability to facilitate effective competition in 

electricity markets while sustaining the commitment to improving effi ciency of electricity use, encouraging renewable resources and providing electricity services to low-income customers. Utilities and 

their regulators are working to promote competition, protect consumers, maintain reliability, improve effi ciency and develop renewable resources at the same time the entire industry is being restructured. The 

analysis presented in the draft power plan and the recommendations from the Comprehensive Review 

point out some important directions the region can take to ensure an effective and equitable competitive 

retail electricity market and maintain the Northwest’s commitment to conservation, renewable resources 

and low-income energy services. Nonetheless, these directions frequently mean dramatic changes for 

the institutions involved, and they are not without their tensions and, in some instances, contradictions.
25

Here is a review of key issues addressed in the power plan:

Competition and Consumer Choice: Separation of Distribution and Energy Marketing

The Comprehensive Review Steering Committee noted that effective separation of utilities’ distribution and energy marketing functions is necessary if a truly competitive retail market is to 

be established. The alternative is the potential for self-dealing and preferential treatment of the 

incumbent utilities’ energy marketing activities. 

Recommendations in the plan:

1. If effective separation is to be achieved, policy-makers will have to provide for either increased regulatory oversight to guard against abuses or require actual separation. 

2. Achieving effective separation without actual separation poses potential confl icts for the 

boards and commissions of publicly owned utilities. On the one hand, they are responsible 

for facilitating a competitive retail electricity market. On the other, they are responsible for 

seeing that their energy marketing activities can recover their costs. Policy-makers should 

give careful consideration to how those confl icts can best be avoided or managed. 

3. Competition in energy services means the potential for losses. Investors clearly accept the risks 

of competition. There are, however, no clear willing “bearers of risk” if publicly owned utilities engage in competitive activities. Policy-makers will need to address the question of who 

bears the risk associated with competitive activities undertaken by publicly owned utilities. 

Pricing

The Comprehensive Review Steering Committee recommended that the unbundling of electricity 

prices and recovery of transition costs (e.g., stranded investment recovery and public purpose 

funding) be carried out in a competitively neutral fashion. 

Recommendations in the plan:

1. Effi cient competitive markets require marginal cost pricing — products and services priced 

at the cost of producing the marginal or last unit. 

2. “Unbundling” of prices requires, at a minimum, separating the costs of distribution from 

the cost of the energy commodity. This is essential if consumers are to be able to accurately 

compare one competitor’s product with another’s. 

3. Finding a competitively neutral means to charge for stranded investments or fund public 

purposes, such as conservation, renewable resources or low-income energy services, means 

that, to the greatest extent possible, these charges should affect all suppliers equally and not 

affect the marginal price of the electricity product being purchased. This suggests a charge 

that is based on some measure of historical use, not one that is based on the current level of 

use, such as an additional per kilowatt-hour charge. 

Market Information

The Comprehensive Review Steering Committee noted that information about the market is critical 

if the market is to be both fair and effi cient. The steering committee made specifi c recommendations 

regarding information to be provided on customer bills. 
26

Recommendations in the plan:

1. In addition to unbundled prices and billing information, consumers need to be provided 

information that allows them to compare the characteristics of the products and services 

being offered by competitors before they are expected to choose suppliers. 

2. Energy service marketers need to have access to information about the demand characteristics of customers so they can tailor services to the needs of particular types of customers. 

That information is currently held by the incumbent utility. To avoid market power issues, 

that information must be available on a comparable basis to competitors. 

3. During the transition to competition, aggregate information on trends in energy consumption, average prices paid by different classes of consumers, and the composition 

of demand will be necessary to judge the effectiveness of competition, the degree of 

cost shifting occurring and whether public policy goals are being met. This information 

is unlikely to be readily available in a competitive environment unless the states establish reporting requirements and charge some entity with the responsibility for gathering 

such information. 

Accountability and Administration

The Comprehensive Review Steering Committee recommendations include a number of new 

public responsibilities — provision of consumer information services, monitoring and enforcing competitive conditions, development and evaluation of pilot programs, ensuring reasonably 

consistent market conditions and consumer protection laws and their enforcement, registration 

and licensing of energy service providers, development of a consumer complaint and arbitration 

process, and creating and administering a universal service fund. 

Recommendation in the plan:

1. If these functions are to be carried out, responsibility needs to be assigned and the 

activities supported. Provision should be made for many of these services to be funded 

through a competitively neutral distribution system charge, as has been proposed for 

other public purposes. 

Stranded Investment and “Windfall Profi ts”

Utilities with higher-cost resources could experience stranded investment during the transition 

to competition — fi xed costs that cannot be recovered at market prices. Conversely, utilities 

with low-cost supplies could experience “windfall profi ts” from being able to charge market 

prices. The steering committee noted that an opportunity for recovery of stranded investments 

from the historical customer base is an appropriate transition mechanism. 

Recommendations in the plan:

1. Just as stranded investment recovery is appropriate, so is the sharing of windfall profi ts with 

the historical customer base. This is the other side of stranded investment recovery. 

2. Stranded investment or windfall profi ts should be determined on the basis of the utility’s 

entire generating system, not individual resources. 

3. Recovery or distribution should follow principles of competitive neutrality. 
27

4. Stranded investment recovery should include incentives for minimizing stranded costs. 

5. Stranded investment recovery should be time-limited. 

Conservation and Renewable Resources

Aligning Responsibility for Conservation with Business Interests

The Comprehensive Review Steering Committee recommended that local utilities be responsible for collecting and using most of the public purpose funding for conservation and low-income weatherization. 

Issues:

1. If utilities continue to link distribution and energy marketing, or the conservation responsibility is assigned to the energy marketing function, the primary business interest will 

be in maintaining and increasing electricity sales. If conservation services prove to be an 

effective marketing tool, restricting access to public purpose conservation funding to the 

incumbent utility will put competing suppliers at a disadvantage. If not, the utility will 

have an incentive not to encourage effi ciency improvements that reduce sales or even to 

use the conservation funding to promote electricity uses that increase electricity sales. 

2. If the distribution function is separated out, the distribution utility will have no great 

incentive to continue conservation efforts (other than where they can reduce distribution 

system costs), but neither will it confl ict with conservation in the ways the energy marketing function might. 

Recommendations in the plan:

1. In assigning responsibility for conservation in a restructured, competitive retail electricity 

market, policy-makers should consider how that responsibility will align with the business 

interests of the different utility functions and try to minimize confl icts. 

2 How unbundled rates are structured will affect the incentives for a utility to carryout 

conservation efforts. If a distribution utility’s fi xed costs are predominantly collected 

in a per kilowatt-hour charge, the utility will face a disincentive to pursue energy 

conservation. If the conservation signifi cantly reduces peak demands, and the utility’s 

fi xed costs are recovered in a demand-based charge, the utility will face a disincentive 

to pursue conservation. 

Aligning Responsibility for Renewable Resource Development with Business Interests

The Comprehensive Review Steering Committee recommended that public purpose funding for 

renewable resource development be administered by a regional non-profi t entity, but gave local 

utilities the right to choose to use those funds for their own renewable resource development. 

Issue:

1. The energy marketing staff at local utilities frequently have the knowledge and expertise for 

renewable resource development, but in a competitive environment they may be averse to 

the risk that the public purpose funding will not be suffi cient to cover the above-market costs 

of renewable resources, potentially creating stranded investments. 
28

Recommendations in the plan:

1. Local utilities undertaking renewable resource development should consider mechanisms 

such as power purchase contract provisions, production incentives and fi nancing incentives 

that limit their risk exposure and promote competition. 

2. Renewable resource development and marketing should not be a responsibility of the distribution function, except where such development is used to reduce distribution system costs. 

Mixing the distribution and energy marketing function regarding renewable resource development would defeat the intent of separation of those functions. 

Consistency with the Competitive Market

The Comprehensive Review Steering Committee expressed a preference for relying on market 

forces wherever possible to achieve the region’s goals for developing conservation and renewable resources. This implies that, to the greatest extent possible, the restructuring of the electricity industry should be done in ways that complement or encourage the development of competitive markets for energy-effi ciency services and renewable resources. 

Recommendations in the plan:

1. Access to Information

• As in the case of energy marketers, energy service providers should have access to information regarding consumer electricity use. This information is necessary to effectively target 

energy-effi ciency services. To deny energy-effi ciency service providers this information puts 

them at a competitive disadvantage. 

• Consumers also need adequate information about suppliers. This is particularly so in the case 

of so-called green marketing — where consumers are offered the opportunity to purchase 

power from renewable resources. 

• If, as was recommended by the steering committee, opportunities to purchase “green power” 

are offered to consumers before open access is established generally, there need to be minimum criteria for what constitutes a green power product, including a minimum average 

content of energy from new renewable resources. 

• After open access, consumers should be provided with consistent information about the 

product they are being offered before they choose a supplier, and after they choose, they 

should be kept informed about what is actually produced. 

2. Leveraging Consumer Investment in Conservation

• The Comprehensive Review Steering Committee recommended that the investments in 

energy effi ciency by “large consumers” should be credited against the public purpose 

funding requirements for local conservation. If the intent is to foster a market for energyeffi ciency services, then this crediting of consumer investment should be interpreted as 

liberally as possible, consistent with being able to ensure that legitimate effi ciency investments are actually made. In that way, utilities will be encouraged to foster the marketing 

of energy-effi ciency services to consumers, as opposed to simply making utility purchases 

of conservation. 
29

3. Broadening Access to Public Purpose Funding

• As open access occurs, it will be important that all qualifi ed entities have the opportunity 

to compete for the use of the public purpose funding for conservation and renewables. This 

will promote a competitive market for these services. 

4. Consumer-directed Renewable Resource Incentives

• Using the public purpose renewable resource development funding in the form of a consumer-directed credit against the cost of power purchases from qualifi ed renewable resource 

producers is a market-oriented approach to encouraging renewable resource development. 

Establishing Implementation Objectives

The recommendations of the Comprehensive Review Steering Committee appear to focus 

on ensuring that funds are collected to sustain development of conservation and renewables. 

They do not provide much guidance on how the money should be directed, other than in very 

broad categories. 

Recommendations in the plan:

1. Implementing rules to guide the use of public purpose funding should be established. Policy 

criteria that should be considered include: 

2. Using public purpose funding to encourage development of cost-effective conservation that 

is the least likely to be developed by the market alone; 

3. Establishing cost-effectiveness criteria that refl ect the public rather than utility nature of the 

funding. Such criteria should take into account environmental benefi ts and other non-electrical and non-energy benefi ts of a conservation investment; and give priority to low cost and 

“lost-opportunity” resources [Lost opportunity resources are those that can only be effectively developed at a particular point in time; for example, building energy-effi ciency measures 

that can only be implemented at the time of construction or major renovation.] to maximize 

the effectiveness of public investment. 

Regional Action and Coordination

The recommendations of the Comprehensive Review Steering Committee generally give preference to local implementation of conservation and renewable resources. There are, however, 

several areas where regional activities are recommended and others where regional coordination 

of local activities would be desirable:

• Responsibility and Support of Oversight and Reporting

The steering committee recommended establishment of a “regional technical forum” to track 

progress on conservation and renewables, and provide feedback for improving effectiveness 

of these efforts. This is an important function to ensure accountability. To accomplish these 

functions, this body will have to be given adequate support and authority by the states and/or 

local utilities. 
30

• Adjusting Targets to Refl ect Changing Market Conditions

The steering committee recommended that regional conservation and renewable resource 

goals should be reviewed at least every fi ve years, taking into account changes in market 

conditions. Provisions should be made in state legislation and/or local regulations to permit 

adjustments to regional goals, and the function of reviewing these goals, should be given 

adequate support and authority. 

• Conservation Market Transformation 

The steering committee recommended that conservation market transformation be undertaken 

through a regional non-profi t entity. Such an entity, the Northwest Energy Effi ciency Alliance, 

has been established with voluntary funding from Bonneville and investor-owned utilities. State 

legislation establishing public purpose funding should ensure continued funding. In addition, the 

makeup of the board of directors should be revised to refl ect the public nature of the funding. 

• Renewable Resource Market Transformation

The steering committee recommended that renewable resource development intended to transform the market for renewable resources be administered by a regional non-profi t, but gave 

“fi rst right of refusal” to local utilities. The limited amount of available funding and the characteristics of the most promising renewable resources suggest that regional coordination of 

such development is required if there is to be any substantial effect. State legislation establishing public purpose funding for renewable resources should require regional coordination and 

adequate support for that function. 

The Northwest Energy Effi ciency Alliance was not constituted to address renewable resource 

issues. Either its mission and makeup should be altered or a different entity should be charged 

with this responsibility. 

• Renewable Resources Research, Development and Demonstration

The steering committee recommended a minimum level of funding for renewable resource 

research, development and demonstration to be administered by a regional entity. The limited 

amount of funding and the economies of scale of such activities clearly support regional administration. State legislation establishing public purpose funding for renewable resources should 

require regional administration and stable support for that function. 

Because of the public nature of the funding, the products of that research, development and demonstration should be publicly available. 

• Distributed Generation Research, Development and Demonstration 

The steering committee recommended that public purpose funds for distributed generation research, development and demonstration be administered by a regional entity. However, the localized nature of distributed generation opportunities requires a coordinated regional/local approach. 

The kinds of technologies eligible for this funding should be identifi ed by the regional entity. 

Specifi c projects should be designed and implemented locally. State legislation establishing public 

purpose funding for distributed generation research, development and demonstration should require regional administration, local implementation and stable fi nancial support for these efforts.
31

Conservation Acquisition Status

The Northwest has a long history of acquiring conservation as a resource. Since the early 1980s, 

the region has acquired roughly 1,500 average megawatts of conservation, more than enough power, if 

converted to electricity, to supply the city of Seattle. In its Fourth Northwest Power Plan, the Council identifi ed 1,550 average megawatts of energy savings that remain cost-effective to acquire for the 

region. The rate of acquisition has varied signifi cantly over this period from a low of about 30 average megawatts per year in the mid 1980s to 130 average megawatts in 1993 and 150 megawatts in the 

energy crisis year of 2001. 

The composition of this conservation has also varied over time. Initial efforts in the early 1980s 

saw more than 80 percent of the conservation acquired in the residential sector. In the late 1990s, 

almost two-thirds of the conservation comes from commercial and industrial sectors.

Since 1998, when the Fourth Power Plan was completed, utilities in the region have continued 

to acquire conservation, although at a reduced pace compared to that recommended by the Council. 

Most utilities dramatically scaled down their conservation program efforts in response to increases 

in real or perceived competition. Conservation acquisition levels in 1999 approached the historically 

low levels of the mid 1980s. However, unlike the 1980s, electric loads in the last part of the 1990s 

continued to grow at a healthy rate, indicating an increased need for conservation. 

The fi gure below shows conservation achievements between 1978 and 2001, including a projection 

for 2002 — 68 megawatts.

Sustaining conservation investments in a more competitive environment 

The National Energy Policy Act of 1992, which permits open competition at the wholesale level, and 

the reduced cost of natural gas-fi red generation technologies have left some utilities concerned about 

their ability to remain cost competitive. Some utilities have asserted that continued investments in con-
32

servation are not sustainable in a competitive market. They argue that because their likely competitors 

need not invest in conservation, the price they can charge for power will be lower. While energy conservation costs less than other alternatives, it can increase utility rates slightly. Conservation programs cost 

money and reduce the sales of electricity. Therefore, the cost per kilowatt-hour can go up. 

The Council, working with Bonneville and other utilities, regulators and others, developed 

alternative approaches to acquiring conservation that would reduce costs to utilities and potentially 

mitigate some conservation rate impacts. These approaches are known collectively as “market 

transformation ventures.”

Market transformation is a strategic effort by utilities and other entities to induce lasting structural 

or behavioral changes in the market that result in increases in the adoption and penetration of energy 

effi cient technologies and practices. Because the market for energy-using products such as motors 

and refrigerators does not match the service territory of individual utilities, it is necessary for utilities 

to act collectively to leverage change. In the Northwest, Bonneville and the region’s utilities have 

historically cooperated on some of the nation’s most successful market transformation programs, the 

Super GOOD CENTS/Northwest Energy Code programs and Manufactured Housing Acquisition 

Program (MAP). Although most of the major public and private utilities in the region have indicated 

a preference for pursuing market transformation programs where they make economic sense, few have 

been willing to allocate staff to develop these programs. Moreover, with increasing utility concerns 

about competition, there may be less willingness to continue such collaboration in the future.

The Northwest Energy Effi ciency Alliance

Perhaps the most visible, broadest-ranging market-transformation effort is being undertaken by the 

Alliance. The Alliance is a non-profi t association of electric utilities, state governments, public interest groups and industry representatives committed to bringing affordable, energy-effi cient products and 

services to the marketplace. The Council played a major role in founding the Alliance in 1996, and several Council staff members now sit on the Alliance board of directors. The Alliance executive director, 

Margaret Gardner, is a former Council employee. At any one time, the Alliance implements around 30 

market transformation projects. The projects are quite diverse and cover many different market sectors: 

residential, commercial, industrial and agricultural. Some of the priority market segments the Alliance 

has identifi ed include lighting, appliances, commercial buildings, industrial motors and motor systems.

There are different ways to achieve effi cient use of electricity. The Alliance relies on a method 

called market transformation, which encourages the marketplace to adopt energy-effi cient products 

and services as the norm. Alliance projects work to remove barriers that prevent a targeted product or 

service from being naturally accepted and offered by a market and educate consumers and businesses 

about why they should choose these higher effi ciency products and services.

Because the Alliance is a regional organization, it can follow markets across utility service territories and state boundaries to achieve the biggest impact. Projects work within established market 

chains and focus on strategic leverage points to bring about lasting increases in the market share for 

higher effi ciency products and services.

At any one time, the Alliance implements around 30 market transformation projects. The projects 

are quite diverse and cover many different market sectors: residential, commercial, industrial and 

agricultural. Some of the priority market segments the Alliance has identifi ed include lighting, appliances, commercial buildings, industrial motors and motor systems.
33

The Alliance has three primary avenues for developing projects: 

• An open process for unsolicited proposals through its web site.

• Alliance-developed proposals in priority markets. These projects are designed by Alliance 

staff and contracted through a Requests for Proposals process. RFPs for these projects are 

posted on the Alliance web site and announced through the Alliance listserve.

• Review of current projects in the Alliance portfolio. The Alliance Board systematically 

reviews current projects to ensure that the goals are being met. This process can result in 

changes to a project, contract extensions or ending contracts.

There are six key criteria from the Alliance’s strategic plan used to evaluate projects and determine 

whether projects will be accepted. These criteria include:

• Financial Return (cost-effectiveness). Overall cost-effectiveness is typically measured by 

comparing the total regional cost per kilowatt hour saved in the project with the cost per 

kilowatt hour of the marginal electricity producing resource (in most cases, combined-cycle, 

gas-fi red turbines) it would displace.

• Long-term Market Impact. Projects should work to create a lasting acceptance in the marketplace for energy-effi cient products and services. Potential initiatives will be reviewed in 

terms of their likely sustainability in the market after intervention has diminished or stopped.

• Electricity Savings. The Alliance project portfolio seeks sizeable cost-effective electricity 

savings. These savings could include some short-term projects that may achieve lesser kilowatt-hour savings, but have a high likelihood of success and some long-term projects where 

the savings potential may be higher although the risk may be greater.

• Geographic Balance. The Alliance project portfolio will return long-term savings and benefi ts 

equitably across the region, considering the geographic distribution of electricity consumption.

• Customer Class Reach. The Alliance project portfolio will touch all customer classes including residential, commercial, industrial and agricultural sectors.

• Private Sector Co-Investment. A portion of Alliance project funding is matched with private 

sector investments and/or projects that have revenue generating opportunities. This criteria is 

desirable, but not required.

For more information about the Alliance, its staff and the projects it funds, visit the website at 

www.nwalliance.org.

Council recommendations to Bonneville regarding conservation acquisition 2002 – 2006

Bonneville is augmenting its power supplies by 3,000 average megawatts (aMW) to meet expected 

loads during the 2002 – 2006 rate period. It intends to accomplish this primarily through market purchases of power but recognizes that the acquisition of cost-effective conservation must also be part of 

the mix. The key question is how Bonneville can acquire cost-effective conservation during this period 

in ways that are compatible with the circumstances it faces.
34

To explore this question, the Council released an issue paper in December 1999 entitled Bonneville Conservation Acquisition 2002 – 2006. The paper reviewed the reasons for the conservation mandates of the 

Northwest Power Act and the experience of the last almost 20 years in implementing conservation, leading 

to the current situation. It also estimated the amount of conservation that is cost-effective for Bonneville 

to acquire on a long-term basis. These estimates take into account the changes in expected value of power 

since the 1998 Plan’s estimates were developed. The analysis indicates that the approximate development 

schedule of the cost-effective conservation potential for loads expected to be served by Bonneville would 

amount to approximately 30 aMW per year at a total cost of approximately $60 million per year. However, 

the cost to Bonneville should be signifi cantly less because of customer and end-user contributions.

The paper went on to describe three possible approaches to acquiring conservation for the 2002 

– 2006 period. One is the traditional, long-term approach in which conservation investments are 

valued over their useful life. This approach has proven effective in the past but exposes Bonneville to 

the risk that it will not receive the full benefi t of its investments if customers take load off at the end 

of the contract period. A second approach is intended to have effects for Bonneville that are as much 

as possible like a relatively short-term purchase of power on the market. This approach removes 

most risk from Bonneville but seems unlikely to produce additional conservation that would not have 

occurred in response to market forces. Finally, a “middle ground” approach was described in which 

Bonneville is willing to pay for conservation savings as long as and to the extent that a customer 

keeps load on Bonneville. Bonneville would endeavor to limit what it pays to have minimal impact 

on its net revenue requirement. This approach limits Bonneville’s risk while permitting development 

of longer payback, but still cost-effective conservation.

Finally, the paper made some draft recommendations, proposing to endorse the “middle ground” approach and the overall conservation target and making some specifi c implementation recommendations.

A panel of experts met with the Council to discuss the paper, and the Council also took extensive 

written public comment. The recommendations that follow are based on the analysis in the issue 

paper, public comment on that paper and consultations that staff has held with Bonneville and other 

interests. These recommendations are intended to guide Bonneville in conservation acquisition as 

part of their power augmentation effort. 

The Council recommended that Bonneville use the “middle ground” approach described in the paper. 

The pertinent features of this approach are:

• Bonneville should strive to acquire conservation for as little as it can while still meeting its 

goal. It should not employ an explicit rate-impact test. Doing so could, in some circumstances, disadvantage Bonneville in negotiating what it will pay for conservation and, in 

other circumstances, could result in very cost-effective conservation going undeveloped.

• What it is willing to pay for conservation savings should be based on the market value of the 

saving produced. Because market prices exhibit much more seasonal and daily variation than 

in the past, the time at which savings are produced should be refl ected in the value. Similarly, where there are variations in value due to geographic location, those values should also 

be taken into account and captured by the Power Business Line if possible.

• Bonneville should be willing to acquire conservation that would produce savings beyond the 

2002 - 2006 period. However, if customers choose not to contract with Bonneville beyond 
35

that period, they accept the responsibility for any costs not yet recovered or savings yet to be 

delivered to Bonneville. 

• The conservation acquisition is intended to reduce the necessity for market purchases of 

power. Therefore, it will be necessary for customers that purchase other than load-based 

products from Bonneville (e.g. a block purchase) to commit to reducing their purchase from 

Bonneville in the amount of the saving to be produced by Bonneville-funded conservation. 

The conservation target proposed in the issue paper was determined by allocating the regional 

resource potential on the basis of the percentage of loads estimated to be served by Bonneville in the 

2002 – 2006 period. Comment was received to the effect that the allocation overlooked the pre-subscription loads served by Bonneville and did not include the full responsibility for IOU residential and 

small farm loads. Inclusion of these factors would tend to increase the amount allocated to Bonneville. At the same time, Direct Service Industry loads were inappropriately included in determining 

the allocation when the regional conservation potential does not include an estimate of conservation 

potential in the DSIs. These recommendations reallocate the regional target to Bonneville according 

to the revised load estimates and estimating a separate target for the DSIs.

The issue paper also recommended that the savings produced as a result of the Conservation and 

Renewables Discount, Bonneville’s “share” of the savings produced by the activities of the Northwest 

Energy Effi ciency Alliance (NEAA) and the savings produced by Bonneville-funded low-income 

weatherization be counted toward the regional target. The Council believes this is appropriate. However, the Council also believes it is important to provide a clear, unambiguous target for power augmentation and to avoid pressures that might distort the missions of these other activities. Consequently, these recommendations provide estimates of the amount of savings that will be produced by these 

activities and reduce the augmentation target levels by those amounts. The targets are as presented in 

the table below. These targets are based on then-current estimates of Bonneville’s subscription loads. 

The targets will be revised as necessary when subscription is complete. 

Bonneville “Share” of regional Non-DSI potential 2002 – 20063 166 average megawatts

Target for savings produced by activities under Conservation and 

Renewables Discount; Northwest Energy Effi ciency Alliance, and lowincome weatherization 2002 – 20064

80 average megawatts

Bonneville Non-DSI augmentation target 2002 – 2006 86 average megawatts

Bonneville DSI augmentation target 2002 – 2006 Under development

Bonneville total augmentation target 2002 – 2006 86 average megawatts 

3

 Based on estimate that Bonneville will serve 38 percent of the region’s non-DSI load. 4

 NEAA contribution based on Bonneville share of savings from current NEEA activities, not including the Microelectronics 

or Effi cient Building Practices initiatives or initiatives for which savings have not been estimated. Low-income weatherization 

contribution estimated at 1 average megawatt per year. Conservation & Renewables Discount contribution estimated assuming 

half the discount goes for conservation projects that produce savings at the cost of $2 million per megawatt.

The Council recommended that the target be considered a minimum, not a maximum. Staff has 

identifi ed conservation that could be cost-effective to implement earlier than was specifi ed in the 

Power Plan. Bonneville should acquire conservation it can identify that is cost-effective.
36

The issue paper proposed considering modifi cations to the Conservation and Renewable Discount 

(C&R Discount) so that it could serve as the basis of the augmentation effort. Information being produced by the Regional Technical Forum for the C&R Discount will be helpful in the augmentation effort. However, the Council recommends that the C&R Discount not be modifi ed. It was designed with 

a different purpose in mind and would require extensive modifi cation to be the basis for the acquisition 

activity. Because it is part of the rate case, signifi cant changes would delay the rate case.

The issue paper proposed that a competitive bid process that includes the possible participation of 

third parties be used for the augmentation process. The paper was not, however, clear about what that 

meant. The Council recognizes that for some more or less standard conservation measures or programs, 

primarily affecting the residential and small commercial sectors, a “standard offer” approach (i.e., “If 

you do X we will pay you Y”) may be more effi cient. The Council recommends that the standard offer 

approach be used where appropriate. The Council continues to believe that for industrial and large commercial, where the bulk of the potential lies, a more fl exible approach is required. The Council recommends that Bonneville solicit interest from customers and third parties and work with those parties to 

negotiate mutually acceptable terms (quantity, price, timing, etc.). Bonneville’s utility customers should 

have fi rst right of refusal but should not have the ability to block access of consumers to Bonneville-supported conservation services.

While not addressed explicitly by the issue paper, comments were received to the effect that progress 

toward achieving the conservation target should be carefully monitored so that corrective action can be 

taken on a timely basis if necessary. The Council requested that Bonneville report to the Council regarding the progress made in acquiring conservation as part of the power augmentation effort on at least a 

biannual basis. Reporting should include documented savings from the C&R Discount, the Alliance and 

low-income weatherization. For the C&R Discount, only those savings documented through use of Regional Technical Forum evaluation protocols and/or deemed measure savings should be counted. To the 

extent the overall conservation target is not achieved, the Council expects that Bonneville will undertake 

additional efforts to meet the overall target. 

The issue paper proposed that the Transmission Business Line cooperate in funding conservation 

activities where transmission system savings would result. The Council encourages the Transmission 

Business Line to invest in conservation and demand management where such investment can reduce 

transmission investment requirements. However, to preserve the separation of Bonneville’s transmission and power marketing functions, conservation/demand management activities of those functions 

should not be combined. 

Renewable resources were not addressed in the issue paper. The Act requires that resources being 

acquired by Bonneville be cost-effective. The Council’s current plan does not identify any cost-effective renewables. If a developer or sponsor offers to sell power from renewable resources to Bonneville at a competitive rate, Bonneville can and should acquire that power. The Council supports renewables demonstration and “green-power” marketing efforts to stimulate renewables development. The 

C&R Discount is a vehicle that is appropriate for funding such activities.
37

Current Council Issues

Fish and Wildlife Issues

Amending the Columbia River Basin Fish and Wildlife Program

In October 2000, the Council completed a major revision of its program, the largest regional effort 

to protect and enhance fi sh and wildlife in the nation. Through the program, the Council directs about 

$140 million in electricity ratepayer funds per year to mitigate the impact of hydropower dams. As 

discussed in Section II of this Briefi ng Book, the 2000 Program, the fi rst revision since 1995, established a basinwide vision for fi sh and wildlife recovery — the intended outcome of the program 

— along with biological objectives and action strategies that are consistent with the vision. Ultimately, the program will be implemented through plans that will be developed locally during the next 

three years in the 62 tributary subbasins of the Columbia and amended into the program. Those plans 

will be consistent with the basinwide vision and objectives and the program’s underlying foundation 

of ecological science.

The program committed the Council to undertake a separate amendment phase for recommendations regarding mainstem dam operations. That amendment process began in 2001 and is planned for 

completion by the spring of 2003.

Province-level review of projects; subbasin planning

In the past, the Council conducted an annual review of new and ongoing projects for funding from 

throughout the entire Columbia River Basin. In 2001, the Council began to focus its annual reviews 

on much smaller areas of the basin, called ecological provinces. The program organizes the Columbia 

Basin into 11 ecological provinces. Within those provinces there are groups of adjacent subbasins 

with similar climates and geology; in all there are 62 tributary subbasins of the Columbia River. Each 

year, project proposals for three to four provinces will be reviewed and recommended for funding for 

a period of three years. Each year, a different group of provinces is targeted for project review, and 

the Council moves through the entire basin once every three years.

The Council’s review is based on how projects relate to the identifi ed needs of each watershed, 

which will eventually be explained in subbasin plans. In the future, the Council will review and 

adopt subbasin plans into the fi sh and wildlife program to guide the selection and funding of projects. 

Recognizing that the planning process involves the participation of local stakeholders who will play a 

lead role in developing subbasin plans, and that this takes time to accomplish, the Council has provided a transitional period so ongoing projects continue to be reviewed and funded. 

Until formal subbasin plans are created, interim plans called “subbasin summaries” are used to 

guide project solicitation, review and selection. Summaries are a compilation of all the existing 

information about a subbasin, including past and ongoing fi sh and wildlife activities, and current 

management plans, objectives and policies. Much of the summary information will help to fulfi ll the 

inventory component of subbasin plans. These summaries include as much information as is possible 

to compile until the more comprehensive plans are completed. Eventually, the summaries will be 

replaced by subbasin plans.
38

Why Subbasin Planning?

The goal of subbasin planning is to achieve a comprehensive, integrated and scientifi cally sound 

fi sh and wildlife program for the Columbia River Basin. The Council believes that by working with 

local stakeholders, fi sh and wildlife managers, tribes, government agencies and citizens to connect 

their efforts at the subbasin level we can achieve a greater degree of cohesiveness and coordination 

between the many projects, develop projects that directly relate to the specifi c needs of a particular 

subbasin, and more effectively review those projects for their effectiveness and scientifi c merit. 

The program also intends to address, as much as possible, Endangered Species Act requirements, 

the Clean Water Act, the broader requirements of the Northwest Power Act and the policies of the 

states and Indian tribes of the Columbia River Basin. It is designed to link to, and accommodate, 

the needs of other programs in the basin that affect fi sh and wildlife. The subbasin planning process 

provides an opportunity for regional participants to share knowledge, collaborate on planning and 

implementation issues when possible, and overall, foster greater support of, and direction for, efforts 

with similar goals.

What is a Subbasin Plan?

Subbasin plans, once completed, will not only incorporate all the existing information about the subbasins, but also scientifi c data that will help assess the needs of a particular subbasin and identify gaps in 

what is currently being done. The plans will be consistent with the fi sh and wildlife program goals and 

objectives for the basin, and also with goals and objectives that will be developed for the 11 provinces. 

With the subbasin plans in place, the program will be organized on three levels: 1) a basinwide 

level that articulates objectives, principles and coordination elements that apply generally to all fi sh 

and wildlife projects that are implemented throughout the basin; 2) an ecological province level that 

addresses the 11 unique ecological areas of the Columbia River Basin; and 3) a level that addresses 

the individual subbasins, each containing a specifi c waterway and the surrounding uplands.

The required elements of a subbasin plan are:

• Assessment: A subbasin assessment is a technical analysis to determine the biological potential of each subbasin and the opportunities for restoration;

• Inventory: An inventory of existing projects and past accomplishments;

• Management Plan: A one to 15-year management plan that includes a projected budget.

Extensive public involvement is also a critical component to developing subbasin plans. The 

Council hopes to involve a wide range of constituents to review the information and reach consensus 

on the elements of subbasin plans.

Getting There From Here...

The Council, in partnership with the Columbia Basin Fish and Wildlife Authority, is convening 

stakeholders to gather information and inform people about this new process. In each province, workshops will be conducted where project sponsors present existing assessment-type information. Subsequent workshops will be held to document existing fi sh and wildlife goals, policies and plans, as well 

as existing activities. 
39

Innovative and high-priority project solicitations

Innovative projects

In 1999, the Independent Scientifi c Review Panel (ISRP) recommended that the Council establish a 

special funding category to encourage innovative projects for the Council’s fi sh and wildlife program. 

The purpose of innovative projects is to explore new methods and technologies and new applications 

for existing methods and technologies designed to directly benefi t fi sh and wildlife. An innovative 

project is one that relies primarily on a method or technology that (1) has not previously been used 

in a fi sh and wildlife project in the Pacifi c Northwest, or (2) although used in other projects, has not 

previously been used in an application of this kind. Bonneville and the Council agreed on a budget 

of up to $2 million annually for innovative projects and specifi ed that the maximum amount of money 

available for each project would be $400,000. In fi scal years 2001 and 2002, the Council conducted 

solicitations and recommended innovative projects to Bonneville within the funding limit. Bonneville funded some projects but not others, citing fi nancial concerns or suggesting that in some cases the 

projects should be addressed through provincial reviews for multiple-year funding.

Annual report of the fi sh and wildlife program

In July 1999, the Governors of Idaho, Montana, Oregon and Washington asked the Council to 

prepare an annual report that provides an ongoing accounting and assessment of the Bonneville Power 

Administration’s fi sh and wildlife expenditures. Additionally, in their letter the Governors requested 

that the fi rst report summarize, to the extent possible, historical documentation on past expenditures 

and program successes and failures, and that the Council devise a method of assessing the impact of 

funding decisions on the basin’s fi sh and wildlife.

The Council completed the fi rst report in January 2001 and presented it to the Governors. In the 

report, the Council documented that since 1978, Bonneville’s fi sh and wildlife expenditures totaled 

$3.48 billion. Of this total, approximately 39 percent was attributed to hydropower operations generally intended to support migrating fi sh. These costs were calculated based on changes in electricity 

generation caused by altering water fl ows or implementing increased spill at the dams. The direct 

program, for which the Council provides more oversight, constitutes approximately 23 percent of 

the total Bonneville expenditures. For the time period covered in the fi rst report, most of the direct 

program expenditures were dedicated to habitat (42 percent) with signifi cant amounts allocated to 

artifi cial production (32 percent) and mainstem passage (23 percent). Most of this money is directed 

toward anadromous fi sh (76 percent), especially salmon and steelhead, with the remainder benefi ting 

resident fi sh (12 percent) and wildlife (12 percent).

The inaugural report also noted the confusing state of fi sh and wildlife data collection and reporting in the basin. The Council committed to work with Bonneville and others in the region to improve 

data collection and reporting in order to make results more accessible not only to specialists but also 

to the public at large.

The Council completed the second annual report in October 2002. In the course of one fi scal year, 

Bonneville’s total expenditures nearly doubled as the result of power purchase costs during the energy 

crisis of 2000/2001 attributed to fi sh and wildlife mitigation measures. As of the end of Fiscal Year 

2001, the grand total of Bonneville’s fi sh and wildlife expenditures since 1978 totaled $6.01 billion. 
40

Here is the breakdown:

• $2.17 billion for power purchases to meet load requirements in response to required river 

operations that reduce hydropower generation.

• $1.27 billion in forgone revenues. This is the calculated value of hydropower that could not be 

sold because of required river operations to improve fi sh survival, such as water spills at the dams.

• $1.02 billion to implement the Northwest Power Planning Council’s Columbia River Basin 

Fish and Wildlife Program. These expenditures are for on-the-ground efforts such as habitat 

improvements, habitat purchases, research, fi sh production, and so on. The Council is working to integrate offsite mitigation objectives of the 2000 Biological Opinions on hydropower 

operations into the fi sh and wildlife program. More information about the Council’s program, including details of projects that are being implemented through the program, is available at the Council’s website, www.nwcouncil.org.

• $957.7 million for fi xed expenses, primarily debt service on federal bonds issued to pay for 

capital investments at the dams.

• $582.9 million to reimburse the Federal Treasury for the power share of other federal agency 

efforts, primarily those of the U.S. Army Corps of Engineers, to improve fi sh and wildlife 

survival apart from the Council’s program. Primarily, this is for fi sh passage improvements 

at federal dams and federal hatcheries.

In addition, Bonneville funded a number of “High Priority” projects designed to provide on-theground, immediate biological benefi ts to ESA-listed anadromous fi sh as well as a number of “Action 

Plan” projects designed to benefi t stocks affected by the declaration of a power emergency in 2001. 

As of August 2002, $7.4 million had been contracted for the Action Plan projects and $10.3 million 

had been contracted for the High Priority projects.

Power Issues

Future of the Bonneville Power Administration

Bonneville’s existing power-sales contracts were signed in 2001 for fi ve years, but the agency’s 

role in regional power sales after 2006 is unclear. In response to this uncertainty, a group of public 

and private electric utilities in the Northwest developed a proposal to allocate the output of the federal 

system in the future. The Joint Customer Proposal would assign shares of the output to each utility 

that wants to participate and end Bonneville’s involvement in the wholesale electricity market on the 

West Coast for those participating utilities.

Currently, Bonneville is required to supply all of the electricity demand placed on it by its public 

utility customers, even if the federal power system cannot produce enough electricity. In that event, 

Bonneville has to buy power on the wholesale market. The utilities’ proposal would end that requirement by making those customers that opt for a share, or “slice,” of the federal system responsible for 

meeting their own demand for power that is in excess of their share. Customers that do not sign up 

for a slice of the system would continue to receive all their power from Bonneville but would have to 

pay their share of the cost of any new resources Bonneville buys on their behalf.
41

Last summer, Bonneville and the Council initiated a public process in response to the Joint Customer Proposal, inviting others to offer their proposals, as well, for the future of Bonneville.

There are three important reasons for thinking about the future of Bonneville at this time:

• Direct-service industrial customers, primarily aluminum smelters, have fi ve-year commitments from Bonneville to supply power. These industries want certainty about their power 

supply after 2006 in order to make investment decisions about their plants.

• Some publicly owned utilities and investor-owned utilities have been meeting to settle a lawsuit fi led by the public utilities regarding the Residential Exchange Settlement Agreement. 

That agreement, embodied in the Northwest Power Act of 1980, allowed the investor-owned 

utilities to sign 10-year subscription contracts with Bonneville for federal power. It is important that this settlement fi t into Bonneville’s long-term future.

• Some utilities and independent power producers wish to make decisions soon regarding investments in existing and new power plants, which could require capital funding. This capital is needed to ensure that the region has the necessary power supply to support a healthy 

economy. However, capital often can be diffi cult to secure without clear evidence of future 

customers and the ability to reach them. Therefore, these entities would also like an understanding of Bonneville’s role in the region after 2006.

After reviewing the Joint Customer Proposal and others that were submitted, the Council developed its own recommendations and submitted them to Bonneville in December 2002. The Council’s 

recommendations incorporate elements of the Joint Customer Proposal and the Public Interest Proposal, which was submitted by citizen groups that support energy conservation, renewable resources 

and fi sh and wildlife recovery.

Here is what the Council recommended:

Power sales contracts

• 20-year contracts would (1) demonstrate regional commitment to the federal power system, and 

(2) shield Bonneville from periodic load losses and gains when customers leave or come back.

• Slice-of-the system contracts (1) ensure clear responsibility for meeting electricity load 

growth, (2) lessen Bonneville’s impacts on the power market and (3) also reduce Bonneville’s fi nancial risk by reducing its market exposure. However, the Council wants to make 

sure that adequate steps are taken to assure the ability of slice customers to handle risks of 

the variable hydropower system and the volatile power market.

• Bonneville should continue to offer its traditional, full-requirements contracts to customers 

that want them, but also should be clear that the customers will pay the cost of new resources 

if Bonneville has to buy power on their behalf. This means, essentially, a tiered rate structure. This would improve decisionmaking about whether and when to build conservation and 

renewable resources.

• The Council acknowledges the settlement reached among the public and investor-owned utilities over how to share the federal power supply for the benefi t of residential and small-farm 

customers. The agreement reached by the parties is an equity issue. The Council analyzed 
42

the benefi ts to the customers of investor-owned utilities, compared to benefi ts those customers enjoy through the existing settlement, which runs through 2011, and found the benefi ts in 

the settlement agreement comparable to the current benefi ts.

Direct-service industries 

• The Council supports some level of Bonneville service to these industries, which primarily 

are aluminum companies, but at a level that is less than the current 1,440 megawatts. The 

Council believes the limit should be 600 megawatts, and that all smelters should have the 

opportunity to contract for a portion of it. The Council recommends that the DSI load be 

interruptible, and that compensation should be provided for aluminum workers when the 

smelter load is interrupted. The Council does not favor 20-year power contracts for the DSIs. 

Instead, the decision to operate should be left to individual companies based on power prices 

and the world aluminum market.

Energy conservation

• Any proposal to change Bonneville’s future role must include a realistic approach to accomplishing the goal in the Northwest Power Act that Bonneville acquire all cost-effective conservation to meet future demand for power.

• If a customer agrees to acquire conservation but does not acquire it, the load that would have 

been reduced through the conservation would become Bonneville’s obligation to serve.

• The Council supports many elements of the Joint Customer Proposal and the Public Interest 

Proposal, such as (1) relying on the Council’s planning process for identifying conservation 

potential, (2) increased and stabilized funding for conservation; (3) use of proven conservation delivery mechanisms; (4) stabilized and increased funding for conservation; and (5) a 

reinforced Regional Technical Forum to identify and analyze conservation techniques. 

• The Council supports a redesigned, improved conservation discount program to support local 

conservation efforts. Such a discount should be granted upon demonstration of progress in 

acquiring conservation.

• While there must be a backstop in place in case utilities do not acquire conservation, it is preferable to work with utilities to identify opportunities and costs to minimize the need for a backstop. 

• Broaden the range of conservation activities to include those that are best undertaken regionally.

• Encourage Bonneville to support and provide incentives for conservation implementation as 

broadly as possible under its authorities, given that customers could decide to revert to bring 

load back to Bonneville in the future, and this would increase power demand on Bonneville. 

The Council supports Bonneville providing a credit against power bills in recognition of 

progress in conservation acquisition, but utilities should not be allowed to go longer than fi ve 

years without showing some progress.

Renewable resources

• The Council supports some level of investment in above-market cost renewable resources in 

the future provided support by analysis that there are benefi ts to the region by doing so, but 

does not support meeting all of the region’s future load growth with these resources.
43

• The amount of regional renewable resource development in the future should be established 

through the Council’s planning process and should address the ability of renewable resources 

to mitigate risks, such as environmental risks and fuel price risks.

• The Council supports the implementation framework negotiated by the Joint Customers and 

environmental groups and encourages the parties to seek fl exible solutions for renewable 

resource developments.

Fish and wildlife

• The Council supports the position of the Joint Customer Proposal, which assumes no impact 

on the Council’s Columbia River Basin Fish and Wildlife Program. The program is funded 

by Bonneville.

Analyses of western power market prices and Northwest power system reliability

In late 1999, the Council initiated a study of the adequacy of the Northwest’s power supply. This 

study was motivated by the observation that while the region had enjoyed several years of robust 

economic growth and, consequently growth in the demand for electricity, there had been very little in 

the way of new generation development. At the same time, efforts to improve the effi ciency of electricity use in the region had been reduced dramatically because of the uncertainty of utility restructuring. This raised the concern that under conditions of high stress, the system might not be able to fully 

meet the region’s power needs to serve load and to maintain the reserves essential to a reliable system. 

Conditions of high stress involve combinations of high weather-driven loads, poor hydropower conditions, and forced outages of thermal and hydropower generating units. 

The Council completed its initial study in March 2001. The study concluded that there was an increasing possibility of power supply problems for several winters into the future, reaching a probability of 24 

percent by the winter of 2003. The study estimated the Northwest would need the equivalent of 3,000 

megawatts of new capacity to reduce the probability of shortages to the utility industry-accepted standard 

of 5 percent. The Council recommended the new capacity include both generation and economic load 

management, i.e., reductions or shifts in consumer loads that make economic sense for the consumer and 

the power system. According to the study, it was unlikely that market prices would be suffi cient to stimulate the development of suffi cient new generation in that time frame. This meant that in the near-term, an 

even higher priority needed to be placed on developing economic load management opportunities.

During the summer of 2000, events relating to the power system captured the attention of the industry and the public. Temperatures soared, and demand for power soared as well. Simultaneously, 

a drought reduced the hydropower supply, and the energy crisis in California worsened. These factors contributed to power shortages and higher prices throughout the West Coast. Average prices for 

wholesale power jumped up to levels 10 times normal, and higher, and stayed there for almost a year 

— through May of 2001. Many utilities were forced to raise rates to cover purchases of high-priced 

wholesale power. Bonneville, for example, raised rates 46 percent.

The high wholesale prices that plagued the West Coast from the summer of 2000 through the 

spring of 2001 were symptomatic of an overall tightening of the power supply, exacerbated by a 

number of factors. Some of these were physical and economic. Others were related to the relative 

immaturity of the competitive electricity market and the uncertainties involved in the transition from a 

regulated market structure. 
44

The physical and economic factors included:

• Unusually high weather-driven demands throughout the West;

• An unusual pattern of hydropower generation because of the drought; 

• A high level of planned and forced outages of thermal generating units, and

• High natural gas prices.

Factors related to market immaturity and transitional uncertainties included:

• The lack of a demand-side price response in the market;

• Inadequate utilization of risk-mitigation strategies, and 

• Factors related to the design and operation of the California electricity market.

Why there was an energy crisis in 2000 and 2001

Between 1995 and 1999, Western Systems Coordinating Council peak loads increased by nearly 

12,000 megawatts — about 10 percent. The increase would have been greater if 1999 hadn’t been a 

relatively mild weather year. Generating capacity available during peak load months did not increase 

to keep pace with peak load growth. While peak loads increased by 12,000 megawatts from 1995 to 

1999, generating capacity only increased by only 4,600 megawatts. 

Efforts to improve the effi ciency of electricity use, i.e., conservation, fell off considerably in recent 

years. This is largely the result of the uncertainty created by the restructuring of the electricity industry. Utilities, the primary vehicles for conservation development, generally reduced their efforts 

because of concerns about creating potentially stranded investment if retail access resulted in the loss 

of customers. There were also concerns about the need to raise rates to cover conservation costs and 

the revenues lost as a result of conservation. 

When demand for power grows faster than new resources can be added, reserve margins shrink. 

This implies more effi cient utilization of existing capacity and was an anticipated benefi t of moving to 

a competitive generation market. However, when it proceeds to the point of putting reliability at risk 

and destabilizing prices, it is a problem.

The Council’s initial report on the growing supply/demand problem, issued in March 2000, included 

recommendations for addressing the problem, including:

• Utilities should investigate risk mitigation mechanisms, such as longer-term contracts for 

supply, futures contracts, fi nancial hedging mechanisms, and so on, in order to limit exposure 

to high prices.

• Utilities should evaluate the need and options for further encouraging generation development in a competitive wholesale power market. When the region is not experiencing an energy crisis that drives up the cost of power, market prices may not be high enough to support 

development of new power plants, particularly merchant plants. The Council plans to pursue 

the issue in the Fifth Northwest Power Plan.
45

• Utilities should accelerate efforts to develop the demand side of the market. Price-responsive 

demand — reducing loads during periods of high prices or shifting the loads to periods of the 

day when prices are lower — can help mitigate price spikes and potentially avert reliability 

problems. The Council believes market-like mechanisms, in which the consumer receives a 

signifi cant part of the benefi t, would be most effective. Pilot programs were initiated in the 

region in 2001, and they appeared to be successful although limited in scope.

• California should correct the incentives in its market structure that contributed to excessive 

prices and volatility.

• At least until the wholesale power market matures, data for monitoring and evaluating the 

performance of the market should be available on a timely basis.

• Electricity emergency processes and procedures need to be in place. Necessary elements include 

an inventory of the actions that could be taken during a regionwide emergency, the criteria for taking these actions, clear defi nition of roles and responsibilities, and a communications plan to inform the public. During the energy crisis of 2000/2001, emergency processes were developed by 

the Pacifi c Northwest Utilities Conference Committee, the Northwest Power Pool, Bonneville, the 

Council, the Northwest states and region’s utilities. These remain ready to implement if needed.

In 2002, the Council continued its reliability analyses and issued a report in January 2003 that 

anticipates a near-zero loss-of-load probability in the Northwest through 2005, but new additions 

of power resources in 2006 and beyond. The Council’s AURORA model, which simulates the West 

Coast power market, predicts essentially fl at spot market prices for power for the three years of 2003 

through 2005. Beginning in 2007, the model shows price spikes in August because demand has continued to increase while resources have essentially been static.

AURORA is an economic model and predicts when it will be economical to add new resources. 

The model anticipates that it will be more economical for the region to accept high prices in summer 

— up to four times the average price in August — during the next several years than to build new 

resources to meet peak demands, resources that would not operate most of the year. The August peaks 

occur because of high demand for power in the Southwest, which drives up spot-market costs Westwide. The model suggests that by 2008, the price peaks will be high enough and long enough to push 

prices to the point that it makes economic sense to build new plants.

However, the region’s utilities and ratepayers have experience with crash construction programs in response to high prices during power supply emergencies, and the public tolerance for sudden rate increases 

is low. As well, many utilities would not be content to operate with a high loss-of-load probability. So the 

Council plans to investigate mechanisms in the Fifth Northwest Power Plan to augment the power supply 

economically over time, as opposed to waiting for last-minute price signals to trigger market-driven construction. These mechanisms would include contracting options and demand-side responses. 

Standard Market Design and RTO West

The Federal Energy Regulatory Commission is moving ahead with the deregulation of the nation’s 

electricity industry with a plan to standardize the sale and transmission of electricity across the nation to ensure fair competition and monitor wholesale markets to protect ratepayers from the kind of 

manipulation and price spikes that occurred in California in 2000 and 2001.
46

FERC’s plan is called Standard Market Design, and it represents the third major policy change promulgated by the federal agency since the National Energy Policy Act of 1992 authorized the deregulation of the nation’s electricity industry. The others were Order 888 in 1996, and Order 2000 in 1999. 

Order 888 required open access to high-voltage transmission lines, and Order 2000 set the groundwork for regional organizations to manage the transmission lines.

With the current order, FERC has a vision of a standard design for wholesale electricity markets 

that would ensure stability and cost reduction through new rules and incentives. Judging by the lively 

debate it attracted among the nation’s state energy regulatory agencies, including those in the Northwest, Standard Market Design is anything but a sure thing.

FERC intends its Standard Market Design to (1) create genuine wholesale competition, including a 

market-monitoring function to protect consumers; (2) improve the effi ciency of transmission; (3) send 

the right price signals to encourage much-needed investments in transmission facilities and generating 

plants; and (4) generally give wholesale power customers more choices.

At the same time, Northwest utilities, state regulatory commissions, the Bonneville Power Administration and other interested parties have been working to design a Northwest transmission organization — it is called RTO West — in response to FERC’s Order 2000. Northwest state regulatory 

agencies are split over Standard Market Design, with Oregon and Montana generally supporting it and 

Idaho and Washington generally opposing it. All of the states support the ongoing effort to develop 

RTO West as an alternative to Standard Market Design.

In 2002, the Council offered the following comments to FERC on Standard Market Design:

• It is seriously fl awed and not appropriate for the Northwest.

• It could cause Northwest loads to lose their transmission rights.

• It is incompatible with the region’s hydropower-based power system.

• It would increase market uncertainty.

• While there is not regional consensus in support of RTO West, it does embody carefully 

crafted regional compromises.

• FERC should allow the Northwest to continue developing its own solutions.

• FERC must be cautious with new market designs — proceed slowly, collaboratively.

Regional Technical Forum

In 1996, Congressional appropriations language charged Bonneville and the Council with forming 

a Regional Technical Forum (RTF) on conservation evaluation and verifi cation. Membership in the 

RTF includes individuals with technical expertise in conservation program planning, implementation 

of conservation programs and evaluation of program results. The services of the RTF are available to 

all electric utilities in the Northwest. The RTF’s primary task is to develop standards and protocols 

for verifi cation and evaluation of energy savings. There are four specifi c tasks:

• Track regional progress toward conservation and renewable resource goals.
47

• Provide feedback and suggestions for improving conservation and renewable resource development programs in the region.

• Conduct periodic reviews of the region’s progress.

• Communicate recommendations to appropriate decision-makers.

Congress called on the RTF to develop standards and protocols by which utilities could assess the 

effectiveness of what was then anticipated to be independent conservation activities. In addition to 

the tasks above, Bonneville was looking for an entity like the RTF to establish and update a recommended list of “standard” conservation measures with their estimated savings and regional value, 

evaluation protocols for individual projects not on the list, and a means of tracking accomplishments 

for its Conservation and Renewables Discount.

The RTF produced its draft list of measures, programs, estimated savings and regional power 

values in July 2000. Protocols for estimating savings and value for measures and programs not on 

the list were completed in August 2000. A web-based tracking system also was completed in August 

2000. Later in the fall, the RTF made its recommendations to Bonneville regarding the discount. 

These included screening criteria, a list of eligible measures and activities, verifi cation protocols for 

energy savings, conservation program standards, quality control criteria and a process for modifying 

qualifying measures and activities on the list of approved measures.

The list of measures includes more than 1,000 electrical uses in areas such as lighting, appliances, 

water heating, room and central air conditioning, weatherization and motors.

The RTF is an ongoing activity that includes assistance by the Council’s power planning staff.
48
49

 Legal Issues

What Kind of Legal Creature is the Council?

The Northwest Power Act specifi es that the Council is not a federal agency. The Council is also 

not a state agency in the usual meaning of the word, because it acts on behalf of more than one state. 

So what is it?

The Council is one of a small group of hybrid organizations known as interstate compact agencies. 

These multi-state organizations are created by an agreement among the participating states with the 

consent of Congress. The Council was authorized by Congress in December 1980, and came into being when each of the legislatures of the participating states passed a law agreeing to participate in the 

Council, subject to the conditions in the Northwest Power Act. 

Interstate compact agencies are usually created to deal with issues or to manage resources that 

involve more than a single state. The Constitution gives most of the authority over matters between 

states to the federal government exclusively. In the Northwest Power Act, however, Congress gave 

back to the Northwest states some of this federal authority. In other words, although the Council is 

not a federal agency, it exercises certain powers granted to it by the federal government.

In particular, the Council has authority to adopt plans and programs that guide the actions of federal agencies. The Bonneville Power Administration is required to ensure that its actions are “consistent” with these plans and programs. Other federal agencies are required to take the Council’s fi sh 

and wildlife program into account “at each relevant stage of decision-making processes to the fullest 

extent practicable.” The Council also must make recommendations on Bonneville’s annual expenditure of fi sh and wildlife funds, based on advice of an independent scientifi c panel. These are unique 

authorities. The Northwest Power Act is one of only a few instances in which Congress has granted 

states signifi cant power over federal agencies.

Federal laws applicable to the Council

State agencies are governed by state law. Federal agencies are governed by federal law. For interstate compact agencies, there is no general body of governing law.

When Congress created the Council, it solved this problem by making a number of laws regulating 

federal agencies applicable to the Council. In Section 4(a)(4) of the Northwest Power Act, the open 

meetings law applicable to the Federal Energy Regulatory Commission, and federal laws applicable to 

Bonneville relating to contracts, confl icts of interest, fi nancial disclosure, advisory committees, disclosure of information, judicial review, and “related matters” are made generally applicable to the Council. 

However, Congress recognized that not all of these laws would fi t the Council exactly and therefore 

gave the Council yet another unique authority, the power to adapt federal laws to fi t its own circumstances. The Northwest Power Act says that the specifi ed federal laws “shall apply to the Council to the 

extent appropriate.” The legislative history of the Act explains that the Council is to determine when 

it is and is not “appropriate” to follow the federal law, and explains that the Council has discretion to 

depart from the requirements of federal law where it has good reason to do so.
50

For the most part, the applicable federal laws have proved to be workable, and the Council has followed them as written. However, various administrative details have been modifi ed to fi t the Council. 

For example, fi nancial disclosure forms are fi led with the Council’s General Counsel, not with the 

U.S. Department of Energy. When the Council has departed from the federal laws, it has usually 

made written fi ndings explaining why the law as written was inappropriate, and how the adaptation 

was more appropriate.

There are a few rules regarding fi nancial disclosure and ethics laws that apply to the Council. First, 

Council members and staff are required to fi le fi nancial disclosure forms, some parts of which are public 

records and some parts of which are confi dential. Second, Council members and staff may not participate in particular Council matters that will have a direct and predictable effect on their own fi nancial 

interests, including, among others, those of their spouses and dependent children. Participation will be 

permitted in the case of de minimis holdings and/or if the individual is granted a waiver. The Council 

has always observed a blanket prohibition on holding a fi nancial interest in some fi rms, primarily energy 

companies and fi sh and wildlife concerns doing business in the western United States. Third, Council 

members and staff generally cannot accept anything of more than nominal fi nancial value from people 

whose interests stand to be affected by Council actions. The Council’s legal division has always advised 

that political activity is not disallowed, provided a member is not a candidate for partisan offi ce and does 

not use the Council position for political purposes. In addition, the legal division seeks guidance from 

other federal laws and regulations as issues arise. The legal division is available for advice on any questions that may arise with Council members and staff. 

State laws applicable to the Council

While federal laws govern most of what the Council does as a body, some state laws are still applicable to individual Council members and Council staff. In particular, Council members are offi cers 

of their respective states, and, if paid by their states, are state employees subject to the various state 

laws and regulations that apply to state offi cers and employees, including requirements governing 

how much time must be devoted to Council activities, state salary schedules, and the like. These state 

laws apply to Council members so long as they do not confl ict with the federal laws that are made applicable under Section 4(a)(4).

The two Oregon Council members are Oregon state employees, and the eastern Washington Council 

member and the eastern Washington staff members of the Council are all employees of Eastern Washington University. All of the other Council members and staff are employees of the Council. The Council 

sets the salaries, benefi ts, employment conditions, and the retirement plans for the central offi ce staff. In 

questions of labor laws and workers compensation, the Council follows the applicable laws of each state 

as applied to non-profi t and governmental organizations.

In some instances, state and federal laws applicable to Council members may overlap or have confl icting requirements. Only rarely has such overlap resulted in a public debate. In 1988, for example, 

an Oregon member who was leaving the Council was offered employment with a public utility. Under 

the federal confl ict of interest law, the member was allowed to take the job. Under Oregon confl ict of 

interest law, the member was not allowed to take the job. The Council took the position that the federal 

law preempted state law on this point. A protective lawsuit was fi led by the utility based on threats of 

prosecution by the Oregon Attorney General. However, nothing further came of the matter, and the suit 

eventually was withdrawn.
51

Liability and indemnifi cation

As of 1988, the attorneys general of each of the Northwest states had confi rmed in writing that 

Council members from their state were considered state employees for liability purposes, and that 

each state was obligated to defend Council members and pay judgments rendered against them in the 

same manner as with other state employees. Thus, it is unlikely that any Council member would be 

subject to personal liability for an offi cial action taken while a Council member.

The Council has also entered into an indemnifi cation agreement with each of its members, promising to 

defend claims and pay judgments. The indemnifi cation appears in Chapter 19 of the Council’s bylaws. 

For the fi rst several years of its existence, the Council was able to obtain an insurance policy to 

cover such claims. However, as a result of the Washington Public Power Supply System (WPPSS) 

nuclear power plant bond default, the premiums for this type of insurance increased enormously, and 

the available policies contained exclusions removing coverage for decisions relating to nuclear plants 

and other power planning decisions. For these reasons, the Council chose to adopt an indemnifi cation 

agreement rather than to continue to purchase this type of insurance.

The Council continues to maintain a normal commercial liability policy, which covers such matters as personal injuries on Council premises. This policy also covers Council members and staff 

while driving rental cars on Council business. It is therefore not necessary for Council members 

to purchase the optional additional insurance offered by rental car companies when renting cars on 

Council business.

Procedures for Amending the Council’s Power Plan and Fish and Wildlife Program

In developing the power plan and the fi sh and wildlife program, the Northwest Power Act directs 

the Council to observe certain procedures unique to the Power Act, the informal rulemaking procedures of the federal Administrative Procedure Act (APA) and any other procedures the Council may 

adopt. The Council must hold public hearings in each of the member states before adopting the plan 

or program or substantial, non-technical amendments to either. The Council must review the plan at 

least every fi ve years. 

Power plan amendments

For purposes of power plan amendments, the federal APA requires public notice of proposed 

amendments or a description of the subjects and issues involved, and a statement of how the public 

may participate in the process. The public must be given an opportunity to submit written material. 

Once the period for public comment has closed, people outside the Council may be foreclosed 

from communicating with the staff and Council members on the subject of the rulemaking. In some 

rulemakings the Council has allowed limited, additional public comment up to the time of decision, 

although the Council must have enough time to analyze all comments before taking fi nal action. 

An agency must give a concise general statement of the basis and purpose of the rules it adopts. 

The Council, following an approach approved by the courts, has satisfi ed this requirement by publishing a Response to Comments, which briefl y summarizes the major comments received and explains 

how the Council has dealt with them. 
52

Fish and wildlife program amendments

The fi sh and wildlife program is published separately from the power plan, although it is legally an 

element of the plan. But the Act sets out specifi c procedural requirements for developing and amending the fi sh and wildlife program that make it quite distinct from the power plan. 

In amending the fi sh and wildlife program, the Act requires the Council to request from the region’s fi sh and wildlife agencies and appropriate Indian tribes recommendations for measures for fi sh 

and wildlife affected by hydropower in the Columbia and its tributaries. Section 4(h)(2) of the Act 

provides that recommendations must be solicited prior to the development or review of the power 

plan, or any major revision to the plan. Others may also make such recommendations. Once the 

Council has received these recommendations, along with supporting documentation, it must make 

them available for comment. Typically, the Council also issues its own draft fi sh and wildlife amendments, which refl ect the Council’s attempt to fi t the recommendations into a systemwide context, and 

invites public comment. The Council must act on the recommendations within one year. The Council 

may reject a recommendation only for certain reasons spelled out in Section 4(h)(7) of the Act. If the 

Council rejects a recommendation, it must give its reasons in writing. 

The role of the fi sh and wildlife agencies and Indian tribes is particularly important. Not only must 

the Council solicit their recommendations for fi sh and wildlife measures, but if there are confl icting 

recommendations, the Council must consult with the tribes and agencies and give “due weight” to 

“their recommendations, expertise and legal rights and responsibilities” in resolving the inconsistency. 

In determining which recommendations to accept, moreover, the Council must determine whether 

a proposed measure would: (1) “complement the existing and future activities” of the agencies and 

tribes, and (2) be consistent with the tribes’ legal rights. In 1994, the federal appeals court said, in 

dicta, that the Council must give a “high degree of deference” to the fi sh and wildlife agencies and 

tribes. The 1994 court opinion also said that the program must include sound biological objectives to 

structure the program and guide Council decisions.

Because the fi sh and wildlife program must be based on recommendations submitted to the Council, and because the Council must make fi ndings on any recommendations it rejects, program amendment processes are organized around the recommendations. Most of the comments the Council 

receives are directed to recommendations, and most of the Council’s responses to comments are made 

in fi ndings. 

Petitions for rulemaking

The APA also requires administrative agencies to give interested persons the right to petition for 

the issuance, amendment or repeal of an administrative rule, such as changes in the power plan or fi sh 

and wildlife program. The Council has adopted a policy for how it will treat such petitions. A petition 

must set forth the substance or text of a proposed amendment or identify the provision to be repealed; 

explain the interest of the petitioner; and set forth the facts, reasons and new information that support the petitioner’s request. The Council will conduct such study as it deems appropriate and within 

120 days of receipt of the petition, grant or deny it. If an amendment process results from the petition 

process, the Council has committed to completing the process within seven months from the decision 

to begin the amendment process.
53

Council Interpretations of the Northwest Power Act

Section 6(c)

In November 1986, the Northwest Power Planning Council and the Bonneville Power Administration 

each issued complementary policy statements on the implementation of Section 6(c) of the Northwest 

Power Act. Section 6(c) requires Bonneville to submit certain proposals related to major resources to 

a public review process to determine whether they are consistent with the Council’s Northwest Power 

Plan. The Council then has the right to make its own determination regarding consistency. If either 

Bonneville or the Council fi nds a resource inconsistent with the power plan, the resource can be acquired 

only after congressional action. The Act identifi es as “major” resources those over 50 megawatts with 

more than fi ve years’ duration.

The purpose of review under Section 6(c) is to ensure that a major resource is needed and is costeffective before the Northwest invests a great deal of money in it. The process speaks directly to the 

balance of power between state and federal interests. The Northwest Power Act established Bonneville’s 

authority to acquire resources, but it also gave the states, through the Council, the right to review those 

acquisitions before committing ratepayers to large expenditures.

In March 1993, the Council and Bonneville completed a fi ve-year review of their respective 6(c) policies. The region had had little experience under Section 6(c) in the years since the adoption of the original policies, and therefore, little was changed. The revised policies were expanded, however, to cover 

all the Bonneville proposals made subject to review under the terms of the Act. In early 1998, in light 

of the restructuring occurring in the utility industry, the Council and Bonneville decided to postpone for 

fi ve years further review of their 6(c) policies.

Section 5(d)

Bonneville was authorized under Section 5(d) of the Act to sign power sales contracts on special 

terms with existing direct service industrial customers (DSIs) for an amount of power that each customer 

was receiving under its earlier contract. The DSIs are customers that had industrial fi rm power contracts 

with Bonneville in 1975. The Act expressly precluded sales to new direct service industrial customers, 

but did permit Bonneville to sell additional power to existing DSIs, provided Bonneville and the Council 

made certain fi ndings. 

In late 1989, Bonneville tentatively agreed to sell additional power to an existing DSI customer 

without the review called for under Section 5(d), provided the customer could arrange an assignment 

of unused contract demand from another existing direct service customer. Bonneville took the position 

that Section 5(d) review was not required so long as the total amount of power it sold to the DSIs did not 

exceed the aggregate amount to which all the DSIs were entitled when the Act was passed. Public comment brought this proposed transaction to the Council’s attention.

The Council has adopted an interpretation of Section 5(d) that requires review whenever a proposed sale 

to an individual DSI would result in that DSI receiving more power than it received under its initial entitlement. The Council’s interpretation does not call for review if an existing DSI assigns its power sales contract to a successor in interest for use at the same location for purposes similar to those established under the 

original contract. Except for transfers of the sort just described, an amendment or assignment of a contract 

that results in the delivery of additional power to an existing DSI is a sale subject to Section 5(d) review. 
54

Litigation

Seattle Master Builders Association, et al. v. Northwest Power Planning Council

On April 10, 1986, the United States Court of Appeals for the Ninth Circuit decided this challenge 

to the Council’s model conservation standards (MCS) brought by several construction-related organizations. The petitioners had advanced two principal lines of argument. First, with respect to the Council’s 

model conservation standards, petitioners challenged the cost effectiveness of the measures to make new 

residential buildings more energy effi cient, and the methodologies used by the Council to determine cost 

effectiveness. Petitioners also argued that the Council should have prepared an environmental impact 

statement regarding promulgation of the standards.

Second, petitioners challenged the constitutionality of the Council, citing the appointments clause 

of the U.S. Constitution, which requires offi cers of the United States to be appointed by the executive 

branch of government. Council members are offi cers of an interstate compact agency appointed by the 

governors of the four Northwest states and not by the President. 

The Bonneville Power Administration intervened in the case and ultimately argued that the Council’s 

adoption of the MCS did not violate the constitution. Bonneville said that the Council’s model conservation standards did not impose a legal obligation on anyone, and therefore adoption of the standards was 

not the sort of exercise of signifi cant authority over a federal agency that might require Council members to be appointed by the executive branch. 

In earlier communications, however, regarding what posture the Department of Justice should 

adopt, the Department of Energy had taken a more aggressive position. The Secretary of Energy, Don 

Hodel, wrote to Justice in early 1985 and urged that if the Council were, indeed, anything more than 

advisory, and if it could, in fact, signifi cantly limit Bonneville’s actions, it ought to be found unconstitutional and replaced by a federal council. John Dingell, the Chairman of the House Energy and 

Commerce Committee, one of the committees that drafted the Northwest Power Act, wrote a strong 

letter in opposition to Energy’s request. Mr. Dingell fully supported the view that the Council was 

intended to be more than an advisory body, with functions that are more signifi cant than the Secretary 

of Energy had contended. He also concluded that the Council was properly formed and was operating 

according to the expectations of Congress. 

In a two-to-one decision, the Ninth Circuit ruled for the Council on all the issues. With respect to 

the model conservation standards, the court held that the Council had adopted a proper approach to 

determining the cost effectiveness of conservation measures; that the methodology the Council used 

for determining conservation value was within the Council’s discretion; and that the Council was not 

obliged to prepare an environmental impact statement on the standards, pursuant to the laws of the states 

that are members of the interstate compact. On the constitutional question, the court noted that the functions of the Council and Bonneville “directly overlap,” and held that the Council “violates neither the 

compact nor appointments clauses of the United States Constitution. The Act established an innovative 

system of cooperative federalism under which the states, within limits provided by the Act, can represent 

their shared interests in maintenance and development of a power supply in the Pacifi c Northwest and in 

related environmental concerns.”

The Master Builders petitioned the Ninth Circuit for rehearing en banc (before a larger panel of judges 

in the circuit) on the ground that the panel overlooked material laws and facts. The United States also 
55

petitioned for rehearing or for rehearing en banc, arguing that the court decided constitutional questions not 

presented by the case. The Ninth Circuit denied both petitions. The Master Builders’ subsequent petition 

for certiorari was denied by the Supreme Court of the United States.

Northwest Conservation Act Coalition, et al. v. Northwest Power Planning Council

The Coalition and the Natural Resources Defense Council fi led a petition for review in the Ninth 

Circuit challenging the model conservation standards amended in 1986, in an effort to make the 

requirements of the amended standards more rigorous. In particular, petitioners alleged that the 

Council’s standards for conservation in new commercial buildings ought to be more stringent; that 

a surcharge is necessary if the standards governing the energy effi ciency of buildings that convert to 

electric space heat are to be effective; and that the Council’s amended standards ought to contain standards for utility-fi nanced incentives to conserve electricity in existing residences. Upon petitioners’ 

request, the Council entered rulemaking to amend the standards in the respects summarized above. 

Petitioners then dismissed their suit in the Ninth Circuit.

Cascade Natural Gas Corp. v. Evans

In 1983, six regional natural gas companies brought suit challenging the Council’s plan, arguing, 

among other things, that the Council had unfairly ignored natural gas as a conservation resource. 

The case was settled before trial and the Council agreed to modify the plan to make clear that the 

model conservation standards apply only to electrically heated homes. The Council also said that it 

would consider modifying the plan if signifi cant fuel switching from natural gas to electricity were 

demonstrated. The terms of this settlement expired on April 27, 1988.

CASE, The Utility Reform Project and Michael Rose v. Northwest Power Planning Council

In May of 1986, CASE (Citizens For an Adequate Supply of Energy), The Utility Reform Project and 

Michael Rose fi led suit in the Ninth Circuit, challenging certain portions of the 1986 model conservation standards. Petitioners also asked the Council to enter rulemaking to address the matters raised in the 

Ninth Circuit. In response to these two actions, the Council: Clarifi ed that its then current MCS rulemaking addressed model standards for new residential and commercial buildings at federal agency facilities; 

committed to assess the conservation potential of existing buildings and other electricity uses at federal 

agency facilities as part of the next major plan revision; and extended the period for comment and consultation on MCS for federal agency customers beyond the deadline for the then current MCS rulemaking. The Council also agreed to defer action on the CASE petition to enter rulemaking to develop model 

conservation standards for the direct service industries, pending further analysis of increased interruptibility of the direct service industries, which the Council agreed to conduct before calling for Bonneville 

acquisition of new resources or before the next major revision of the Power Plan, whichever is fi rst. As a 

result of these actions by the Council, the petitioners agreed to settle the case.

Northwest Resource Information Center, Inc., et al v. Northwest Power Planning Council; 

Confederated Tribes and Bands of the Yakima Indian Nation v. Northwest Power Planning 

Council (the “Phase Two” cases)

To act as quickly as possible to improve conditions for salmon and steelhead, which were then 

proposed for listing under the Endangered Species Act, beginning in August 1991 the Council began 

a multi-phase rulemaking on salmon and steelhead measures. In January 1992, the Council published 
56

its notice of fi nal action on measures dealing with increased fl ows and drawdown of the lower Snake 

River. Three petitions were subsequently fi led challenging the measures, one by the Northwest Resource Information Center, Trout Unlimited, the Oregon Natural Resources Council, Idaho Steelhead 

and Salmon Unlimited, and The Wilderness Society, represented by the Sierra Club Legal Defense 

Fund; a second petition was fi led by the Yakama Tribe; and a third was fi led by a group of aluminum 

companies and other industrial customers of the Bonneville Power Administration. After the petitions had been fi led, 15 to 20 additional parties intervened, including Oregon Trout, the United States 

government, a number of utilities and the State of Idaho.

On September 9, 1994, the Court ruled that the Council had not adequately explained its reasons 

for rejecting amendment recommendations because the Council’s fi ndings on the recommendations 

were put in a separate document, rather than in the fi sh and wildlife program itself. The Court also 

held that the Council’s fi ndings in an early phase of the amendment process were voided by fi ndings 

in a later phase. While the Court’s holdings were limited to these procedural matters, the opinion offered extensive interpretations (called “dicta” because they are not strictly binding) of the Northwest 

Power Act. Some of the dicta told the Council that it should give a “high degree of deference” to the 

fi sh and wildlife agencies’ and Indian tribes’ recommendations and expertise, and that the Council’s 

discretion to reject these recommendations is narrow. The Court remanded the Strategy for Salmon for 

the Council to develop new fi ndings.

A.H. Canada v. Northwest Power Planning Council

In 1994, Mr. Alfred H. Canada, a retired power engineer, sued the Council in federal District Court. 

Mr. Canada sought to overturn the Council’s denial of a petition for rulemaking he had earlier fi led. 

The rulemaking would have considered replacing the plan’s call for conservation with an equivalent 

amount of solar photovoltaics. The District Court dismissed, reaffi rming the established rule that suits 

challenging fi nal actions of the Council are to be brought in the Ninth Circuit Court of Appeals.

Nez Perce and other tribes v. Northwest Power Planning Council

In 1997, four Indian tribes challenged the Council’s recommendations pursuant to Section 

4(h)(10)(D) of the Northwest Power Act regarding the Bonneville Power Administration’s fi sh and 

wildlife expenditures. The petitioners and the Council agreed to withdraw the case in 2000 and asked 

the Ninth Circuit Court of Appeals to dismiss it.
57

Administrative Issues

Finance and Administration

Council funding

Expenses of the Council necessary for carrying out its functions and responsibilities under the 

Northwest Power Act are paid from funds received from the Bonneville Power Administration. Funds 

are advanced to the central offi ce from Bonneville on a request basis. Each state, in turn, requests 

funds to be advanced from the central Council offi ce to the state to cover the operating expenses of 

the state Council offi ces and personnel.

Costs associated with the operation of the Council’s central offi ce in Portland are paid from the 

central offi ce budget. Expenses for each state Council offi ce are paid from each state Council budget 

by the state agency which provides accounting/payroll services to each state Council offi ce. In some 

instances, state expenses are paid directly from the central offi ce accounting and payroll systems.

Budgets

The Council is required to develop annual (state and central offi ce) budgets for transmittal to the 

Bonneville Power Administration and which are included in Bonneville’s budget submittal to the Department of Energy, Offi ce of Management and Budget, and Congress.

The Council’s budget is limited to an amount equal to 0.02 mills multiplied by the kilowatt hours 

of fi rm power forecast to be sold by the Bonneville Administrator during the year to be funded. In 

most years, this limitation represents approximately $2 million. However, based on an annual showing 

by the Council that such limitation will not permit the Council to carry out its functions and responsibilities under the Act, the Administrator may raise such limit to any amount not in excess of 0.10 

mills. In most years, this maximum limitation represents approximately $10 million.

The Council’s annual budget process occurs between the months of March and June. Each state 

Council offi ce develops its budget (usually on a biennial basis) which is approved through the state 

legislative process and then integrated with the Council’s central offi ce budget.

The Council’s draft budget is distributed for a 30 to 60-day public review and comment period during 

which time consultations are held with interested parties regarding the Council’s proposed funding requirements. Following fi nal revision and adoption by the Council, the budget is transmitted to Bonneville.

In 1997 the Council agreed (with Bonneville) to plan to make budget cuts totaling approximately 

$5.4 million over four years — fi scal years 1998 through 2001. At that time, it was anticipated that the 

Council’s role would diminish in power planning and fi sh and wildlife program development. Much 

of the Council’s budget cuts in 1997 were based on these predictions.

Instead, the Council’s role and workload have increased substantially. Electricity industry restructuring is far from being fully implemented, and as a result the Council continues to be heavily involved in regional power resource planning, hydrosystem operations analysis, energy system 

reliability/adequacy and conservation resource issues. In addition, the Council has increased accountability for fi sh and wildlife spending, implemented a new project selection process including site re-
58

view at the province level by the Independent Scientifi c Review Panel, is guiding the development of 

subbasin plans throughout the region, and is amending its fi sh and wildlife program. In short, we have 

an enhanced role and new responsibilities in the region for fi sh and wildlife restoration.

Accordingly, the 2003 budget and the proposed 2004 budget refl ect increased contracting needs in 

the Power Division during its development of the Fifth Northwest Power Plan in Fiscal Year 2003 and 

illustrate the Council’s efforts to contain costs by absorbing infl ationary increases over the next two 

years. The Council’s Fiscal Year 2003 revised budget of $8,493,000 is $154,000 higher (1.8 percent) 

than the 2002 budget of $8,339,000. The proposed Fiscal Year 2004 budget of $8,499,000 is $6,000 

higher (0.08 percent) than the revised Fiscal Year 2003 budget.

Audits

The U.S. General Accounting Offi ce (GAO) is the government entity authorized to audit the Council’s fi scal and program operations. However, the Council, through an agreement with Bonneville, 

engages an independent accounting fi rm to conduct annual fi nancial audits of the Council’s operations. A copy of each audit is forwarded to the Portland offi ce of the General Accounting Offi ce and 

to other interested parties, as well as being included in the Council’s Annual Report to Congress. In 

addition, state audit agencies audit each state Council offi ce’s fi scal operations in the course of their 

regular state agency audit schedules. In 1996, the GAO conducted an extensive audit of the Council’s 

business policies and practices. That audit resulted in a very positive fi nding by the GAO.

Council organization

The Act provides that the Council shall determine its organization and prescribe its practices and 

procedures for carrying out its functions and responsibilities under the Act.

State offi ces

Council members organize and staff their state offi ces based on the level of support they determine 

necessary. This typically includes technical assistants and/or policy analysts in the areas of power 

planning, fi sh and wildlife, and public information and public involvement. Administrative support is 

also provided.

Council members may also use outside contractors or the technical services of state agencies to 

conduct special studies and analyses regarding issues stemming from the power plan and the fi sh and 

wildlife program as they impact their respective states.

Where state staff are employees of the state, state laws, rules and regulations are applicable. There 

are some exceptions where state support for Council members is administered (payroll, travel and offi ce expenses) by the central offi ce.

Central offi ce

The central offi ce provides overall support to the Council in the areas of power planning, fi sh and 

wildlife, public affairs, legal matters, and fi nance and administration.

Staffi ng levels for the central offi ce are established by the Council in its budget. All personnel 

actions are authorized by the executive director after consultation/approval by the Council chairman. 
59

Staff compensation plans and benefi t programs are established by the Council based on recommendations by outside consultants, and are subject to periodic reviews by the consultant with the Council.

Travel rules and expense reimbursement policies for central staff are set by the Council.

Contracts to assist the Council in carrying out its responsibilities are awarded on a competitive 

basis. Contracts over $25,000 require approval by the full Council.

The central offi ce also provides computing and information systems support to the state offi ces 

augmented by occasional assistance from state agencies and local vendors.

Council name change

In January 2003, the Council offi cially changed its name to the Northwest Power and Conservation 

Council to emphasize the conservation aspect of its energy and fi sh and wildlife responsibilities.

In the Northwest Power Act, the legal name of the agency is “Pacifi c Northwest Electric Power 

Planning and Conservation Council.” While “conservation” in the Power Act specifi cally refers to energy conservation, the concept of conserving natural resources is embodied in the Council’s Columbia 

River Basin Fish and Wildlife Program in terms of enhancing, or conserving, fi sh and wildlife of the 

Basin that have been affected by hydropower dams. 

The timing and implementation of the name change is under development at this time.
60
61

Glossary of Terms used in the Fourth Northwest Power Plan

administrative costs

Certain overhead costs related to conservation or generating resources, such as project management 

and accounting costs incurred by utility or contractor staff.

alternating current (AC)

An electric current in which the electrons fl ow in alternate directions. In North American electrical 

grids, this reversal of fl ow is governed at 60 cycles per second (Hertz). With some exceptions (see 

“direct current”), commercial electric generation, transmission and distribution systems operate on 

alternating current.

anadromous fi sh

Fish that hatch in freshwater, migrate to the ocean, mature there, and return to freshwater to spawn. 

For example, salmon or steelhead trout.

available technology

In the power plan, the term “available technology” refers to equipment or facilities for generating and 

conservation resources, including electrical appliances, that are currently available and are expected 

to be generally available in the marketplace during the 20-year planning period.

average cost pricing

A concept used in pricing electricity. The average cost price is derived by dividing the total cost of 

production by the total number of units sold in the same period to obtain an average unit cost. This 

unit cost is then directly applied as a price.

average megawatt or average annual megawatt 

Equivalent to the energy produced by the continuous operation of one megawatt of capacity over a period of one year. (Equivalent to 8.76 gigawatt-hours, 8,760 megawatt-hours or 8,760,000 kilowatt-hours.)

avoided cost

An investment guideline, describing the value of conservation and generation resource investments in 

terms of the cost of more expensive resources that would otherwise have to be acquired.

base loaded resources

Base loaded electricity generating resources are those that generally are operated continually except 

for maintenance and unscheduled outages.

billing credit

Under the Northwest Power Act, a payment by Bonneville to a customer (in cash or offsets against billings) for actions taken by that customer to reduce Bonneville’s obligations to acquire new resources.
62

Bonneville Power Administration (Bonneville) 

A federal agency that markets the power produced by Federal Base System resources and resources 

acquired under the provisions of the Northwest Power Act of 1980. Bonneville sells power to public 

and private utilities, direct service industrial customers and various public agencies. The Northwest 

Power Act charges Bonneville with other duties, including pursuing conservation, acquiring suffi cient 

resources to meet its contract obligations, funding certain fi sh and wildlife recovery efforts and implementing the Council’s plan.

Btu (British thermal unit)

The amount of heat energy necessary to raise the temperature of one pound of water one degree Fahrenheit (3,413 Btus are equal to one kilowatt-hour).

Buy-back program

A conservation program that, in effect, purchases electrical energy in the form of conservation measures 

installed by a consumer. The consumer is paid a certain amount per kilowatt-hour of energy saved.

callback

A power sale contract provision that gives the seller the right to stop delivery of power to the buyer 

when it is needed to meet other specifi ed obligations of the seller.

capacity

The maximum power that a machine or system can produce or carry under specifi ed conditions. The 

capacity of generating equipment is generally expressed in kilowatts or megawatts. In terms of transmission lines, capacity refers to the maximum load a line is capable of carrying under specifi ed conditions.

climate zone

As part of its model conservation standards, the Council has established climate zones for the region 

based on the number of heating degree days, as follows: Zone 1: 4,000 to 6,000 heating degree days 

(the mild maritime climate west of the Cascades and other temperate areas); Zone 2: 6,000 to 8,000 

heating degree days (the somewhat harsher eastern parts of the region); and Zone 3: more than 8,000 

heating degree days (western Montana and higher elevations throughout the region).

coal gasifi cation

The process of converting coal to a synthetic gaseous fuel.

cogeneration

The sequential production of electricity and useful thermal energy. This is frequently accomplished by 

the recovery of reject heat from an electric generating plant for use in industrial processes, space or 

water heating applications. Conversely, cogeneration can be accomplished by using reject heat from 

industrial processes to power an electricity generator.

combined-cycle power plant

The combination of a gas turbine and a steam turbine in an electric generation plant. The waste heat 

from the gas turbine provides the heat energy for the steam turbine.
63

combustion turbine

A turbine engine generator, often fi red by natural gas or fuel oil, used to generate electricity. The turbine generator is turned by combustion gases rather than heat-created steam.

conductor

Wire or cable for transferring electric power.

conservation

According to the Northwest Power Act, any reduction in electric power consumption as a result of 

increases in the effi ciency of energy use, production or distribution.

construction lead time

The length of time between a decision to construct a resource and when the resource is expected to 

deliver power to the grid. Generally defi ned for purposes of this plan as the interval between detailed 

engineering and equipment order to completion of start-up testing.

cost-effective

According to the Northwest Power Act, a cost-effective measure or resource must be forecast to be 

reliable and available within the time it is needed, and to meet or reduce electrical power demand of 

consumers at an estimated incremental system cost no greater than that of the least-costly, similarly 

reliable and available alternative or combination of alternatives. 

cost of debt 

The amount paid to the holders of debt (bonds and other securities) for use of their money. Generally 

expressed as an annual percentage in the power plan.

cost of equity

Earnings expected by a shareholder on an investment in a company. Generally expressed as an annual 

percentage in this plan.

critical period 

The sequence of low water conditions during which the regional hydropower system’s least amount 

of energy can be generated (see “critical water”) while drafting storage reservoirs from full to empty. 

Under the Pacifi c Northwest Coordination Agreement, critical period is based on the lowest multimonth streamfl ow observed since 1928. Based on analysis of streamfl ows at The Dalles Dam, this is 

also the lowest streamfl ow since recordkeeping began in 1879.

critical water

The sequence of streamfl ows in the critical period under which the hydropower system will generate 

about 12,500 average megawatts. In an average year, the Northwest hydropower system will produce 

about 16,600 average megawatts.

curtailment

An externally imposed reduction of energy consumption due to a shortage of resources.
64

debt

Investment funds raised through the sale of securities having fi xed rates of interest.

debt/equity ratio

The ratio of debt fi nancing to equity fi nancing used for capital investment.

demand forecast

An estimate of the level of energy that is likely to be needed at some time in the future. The Council’s 

demand forecast contains a range of estimated consumption based on various assumptions about demographics and the state of the economy.

direct application renewable resource

Technologies that use renewable energy sources to perform a task without converting the energy into electricity. These sources and their functions may include wood for space heat, solar for space heat and drying, 

geothermal space and water heating, and wind machines used for mechanical drive (such as pumping).

direct current (DC)

An electrical current in which the electrons fl ow continuously in one direction. Direct current is used 

in specialized applications in commercial electric generation, transmission and distribution systems.

direct service industry

An industrial customer that buys power directly from the Bonneville Power Administration. Most 

direct service industries are aluminum smelting plants.

discount rate

The rate used in a formula to convert future costs or benefi ts to their present value.

dispatch

Operating control of an integrated electrical system involving operations such as control of the operation of high-voltage lines, substations or other equipment.

distribution

The transfer of electricity from the transmission network to the consumer. Distribution systems generally include the equipment to transfer power from the substation to the customer’s meter.

drawdown

Release of water from a reservoir for purposes of power generation, fl ood control, irrigation or other 

water management activity.

economic feasibility

The Northwest Power Act requires all conservation measures to be “economically feasible” for consumers. The Act does not defi ne this concept. In this plan, the Council considers a program or measure to be 

economically feasible if the measure or program results in the minimum life-cycle costs to the consumer, 

taking into account fi nancial assistance made available pursuant to other provisions of the Act.
65

end use

A term referring to the fi nal use of energy. In the aggregate, it is used the same as “energy demand.” 

In a more detailed use, it often refers to the specifi c energy services (for example, space heating), or 

the type of energy-consuming equipment (for example, motors).

energy

That which does, or is capable of doing, work. Energy is measured in terms of the work it is capable of doing. Electrical energy is commonly measured in kilowatt-hours, or in average megawatts 

(8,760,000 kilowatt-hours).

Energy Northwest

The utility formerly known as the Washington Public Power Supply System (WPPSS) is a municipal 

corporation and joint operation agency in Washington comprising representatives of public utility 

districts and municipal utilities. Based on power purchase contracts of its members or other utilities, 

WPPSS has the power to acquire, construct and operate facilities for the generation or transmission of 

electric power.

energy services

The actual service energy is used to provide (for example, space heat, refrigeration, transportation).

equity

Investment funds raised through the sale of shares of company ownership.

equivalent availability

The ratio of the maximum amount of energy a generating unit can produce in a fi xed period of time, 

after adjustment for expected maintenance and forced outage, to the maximum energy it could produce if it ran continuously over the fi xed time period. This represents an upper limit for a long-run 

(annual or longer) capacity factor for a generating unit. For example, a unit with an equivalent availability of 70 percent and a capacity of 500 megawatts could be relied on to produce 350 average 

megawatts of energy over the long term, if required.

externality

Any costs or benefi ts of goods or services that are not accounted for in the price of the goods or 

services. Specifi cally, the term given to the effects of pollution and other environmental effects from 

power plants or conservation measures.

Federal Base System

The system includes the Federal Columbia River Power System hydroelectric projects, resources 

acquired by the Bonneville Power Administration under long-term contracts prior to the Northwest 

Power Act, and resources acquired to replace reductions in the capability of existing resources subsequent to the Act.
66

Federal Energy Regulatory Commission (FERC) 

A federal agency that regulates interstate aspects of electric power and natural gas industries. It has 

jurisdiction over licensing of hydropower projects and setting rates for electricity sold between states. 

FERC was formerly the Federal Power Commission.

fi rm capacity

That portion of a customer’s capacity requirements for which service is assured by the utility provider.

fi rm energy

That portion of a customer’s energy load for which service is assured by the utility provider. That portion for which service is not assured is referred to as “interruptible.”

fi rm energy load carrying capability (FELCC)

The amount of fi rm energy that can be produced from a hydropower system based on the system’s 

lowest recorded sequence of streamfl ows and the maximum amount of reservoir storage currently 

available to the system.

fi rm surplus

Firm energy in excess of the fi rm load.

fuel cycle

The series of steps required to produce electricity from power plants. The fuel cycle includes mining 

or otherwise acquiring the raw fuel source, processing and cleaning the fuel, transporting, generating, 

waste management and plant decommissioning.

generation

The act or process of producing electricity from other forms of energy.

geothermal

Useful energy derived from the natural heat of the earth as manifested by hot rocks, hot water, hot 

brines or steam.

head

The vertical height of water in a reservoir above the turbine.

heat engines

Devices that convert thermal energy to mechanical energy. Examples include steam turbines, gas 

turbines internal combustion engines and Stirling engines.

heat rate

The amount of input (fuel) energy required by a power plant to produce one kilowatt-hour of electrical output. Expressed as Btu/kWh.
67

heating degree days

A measure of the amount of heat needed in a building over a fi xed period of time, usually a year. 

Heating degree days per day are calculated by subtracting from a fi xed temperature the average 

temperature over the day. Historically, the fi xed temperature has been set at 65 degrees Fahrenheit, 

the outdoor temperature below which heat was typically needed. As an example, a day with an average temperature of 45 degrees Fahrenheit would have 20 heating degree days, assuming a base of 65 

degrees Fahrenheit. 

hydroelectric power (hydropower)

The generation of electricity using falling water to turn turbo-electric generators.

independent power producer (IPP)

An independent power producer is a power production facility that is not part of a regulated utility. 

Power production facilities that qualify under PURPA (see “qualifying facility”) are considered independent power producers, together with other independent power production facilities, such as independently owned coal-fi red generating plants.

infi ltration control

Conservation measures, such as caulking. better windows and weatherstripping, which reduce the 

amount of cold air entering or warm air escaping from a building.

insolation

The rate of energy from the sun falling on the earth’s surface, typically measured in watts per-square 

meter.

integrated resource planning See “least-cost planning.”

interruptible power

Power that, by contract, can be interrupted in the event of a power defi ciency.

intertie

A transmission line or system of lines permitting a fl ow of electricity between major power systems.

investor-owned utility

A utility that is organized under state law as a corporation to provide electric power service and earn a 

profi t for its stockholders.

ISAAC

A computer model used by the Council to simulate system operation, decisions to option and build resources, and the associated costs of providing power across a large number of possible load forecasts. 

ISAAC accounts for the effects of uncertainty on the load forecast variations in hydropower availability for analyzing various resource strategies. The Council uses the model to help choose the best mix 

of resources and to establish the power plan Action Plan.
68

kilowatt (kW)

The electrical unit of power that equals 1,000 watts.

kilowatt-hour (kWh)

A basic unit of electrical energy that equals one kilowatt of power applied for one hour.

lead time 

The length of time it takes to move a resource from concept to completion.

least-cost planning

Least-cost planning or, as it is often called, “integrated resource planning,” is a name given to the 

power planning strategy and philosophy adopted by the Council. This strategy recognizes load uncertainty, embodies an emphasis on risk management, and reviews all available and reliable resources to 

meet current and future loads. The term “least-cost” refers to all costs, including capital, labor, fuel, 

maintenance, decommissioning, known environmental impacts and diffi cult-to-quantify ramifi cations 

of selecting one resource over another.

levelized life-cycle cost

The present value of a resource’s cost (including capital, fi nancing and operating costs) converted into a 

stream of equal annual payments. This stream of payments can be converted to a unit cost of energy by 

dividing them by the number of kilowatt-hours produced or saved by the resource in associated years. 

By levelizing costs, resources with different lifetimes and generating capabilities can be compared.

life-cycle costs See “levelized life-cycle cost.”

load

The amount of electric power required at a given point on a system.

load forecast

An estimate of the level of energy that must be generated to meet a need. This differs from a demand 

forecast in that transmission and distribution losses from the generator to the customer are included.

load path

One future scenario for electric load growth, as opposed to a range that accommodates multiple forecasts of future load growth.

lost-opportunity resources

Resources that, because of physical or institutional characteristics, may lose their cost-effectiveness 

unless actions are taken to develop these resources or to hold them for future use.

major resource

According to the Northwest Power Act, a resource with a planned capability greater than 50 average 

megawatts and, if acquired by Bonneville, acquired for more than fi ve years.
69

manufactured home

A structure, such as a mobile home, that is transportable in one or more sections, and that is built on a 

permanent chassis and designed to be used as a dwelling, with or without a permanent foundation, when 

connected to the required utilities. These homes must comply with the Manufactured Home Construction and Safety Standards issued by the U.S. Department of Housing and Urban Development.

This does not include other categories of homes whose components are manufactured, such as modular, 

sectional, panelized and pre-cut homes. These homes must comply with state and local building codes.

marginal cost

The cost of producing the last unit of energy (the long-run incremental cost of production). In the 

plan, “regional marginal cost” means the long-run cost of additional consumption to the region due to 

additional resources being required. It does not include consideration of such additional costs to any 

specifi c utility due to its purchases from Bonneville at average cost.

measure

In the power plan, a measure refers to either an individual conservation measure or action or a combination of actions.

megawatt (MW)

The electrical unit of power that equals one million watts or one thousand kilowatts.

mill

A tenth of a cent. The cost of electricity is often given in mills per kilowatt-hour.

model conservation standards 

Any energy-effi ciency program or standard adopted by the Council, including, but not limited to: 1) 

new and existing structures; 2) utility. customer and governmental programs; and 3) other consumer 

actions for achieving conservation. The most well-known are the energy-effi cient building standards 

developed by the Council for new electrically heated buildings.

Monte Carlo simulation

The mathematical simulation of uncertain events having known probability characteristics by random 

sampling from a known probability distribution function.

municipal solid waste (MSW) 

Refuse offering the potential for energy recovery. Technically, residential, commercial and institutional discards. Also included in the defi nition of municipal solid waste for purposes of this plan are 

non-hazardous processable byproducts from manufacturing activities. Not included are combustible 

byproducts of the lumber, wood products, paper and allied products industries. These are considered 

separately as mill residue.
70

net billed plants

Refers to the 30 percent share of the Trojan Nuclear Plant, all of Washington Public Power Supply 

System’s nuclear project 1 (WNP-1) and WNP-2, and 70 percent of WNP-3.

net billing

A fi nancial arrangement that allowed Bonneville to underwrite the costs of electric generating projects. Utilities that owned shares in thermal projects, and paid a share of their costs, assigned to Bonneville all or part of the generating capability of these resources. Bonneville, in turn, credited and 

continues to credit the wholesale power bills of these utilities to cover the costs of their shares in the 

thermal resources. Bonneville then sells the output of the thermal plants, averaging the higher costs 

of the thermal power with lower-cost hydropower.

nominal dollars

Dollars that include the effects of infl ation. These are dollars that, at the time they are spent, have no 

adjustments made for the amount of infl ation that has affected their value over time.

non-fi rm energy

Energy produced by the hydropower system that is available with water conditions better than critical and after reservoir refi ll is assured. It is available in varying amounts depending upon season and 

weather conditions.

non-utility generator

A generic term for non-utility power plant owners and operators. Non-utility generators include 

qualifying facilities, small power producers and independent power producers.

option

As used in the power plan, a project that has been sited, licensed and designed, but not yet constructed. 

Options are held in inventory until new resources are clearly needed.

overnight cost

Total of all direct and indirect project construction costs, including engineering, overhead costs, fees and 

contingency. Exclusive of costs attributable to interest and escalation incurred during construction.

Pacifi c Northwest (the region) 

According to the Northwest Power Act, the area consisting of Oregon, Washington, Idaho and Montana west of the Continental Divide, and those portions of Nevada, Utah and Wyoming that are within 

the Columbia River Basin. It also includes any contiguous areas not more than 75 miles from the 

above areas that are part of the service area of a rural electric cooperative served by Bonneville on the 

effective date of the Act and whose distribution system serves both within and outside of the region.

Pacifi c Northwest Coordination Agreement 

An agreement between federal and nonfederal owners of hydropower generation on the Columbia 

River system. It governs the seasonal release of stored water to obtain the maximum usable energy 

subject to other uses.
71

Pacifi c Northwest Utilities Conference Committee (PNUCC) 

Formed by Pacifi c Northwest utilities to coordinate policy on regional power supply issues, PNUCC 

lacks contractual authority, but it does play a major role in regional power planning through its policy, 

steering, fi sh and wildlife, and lawyers committees, and the Technical Coordination Group. PNUCC 

publishes the Northwest Regional Forecast containing information on regional loads and resources.

peak capacity

The maximum capacity of a system to meet loads.

peak demand

The highest demand for power during a stated period of time.

penetration rate

One annual share of a potential market for conservation that is realized, as in “7 percent of the region’s homes have been weatherized this year.”

photovoltaic

Direct conversion of sunlight to electric energy through the effects of solar radiation on semi-conductor materials.

post-operational capital replacement costs 

The cost of major equipment replacements occurring during the operating life of a project. In practice, 

these costs generally are capitalized (i.e., fi nanced by debt or equity). For resource cost-effectiveness 

analyses, these costs are frequently treated as expenses.

preference

Priority access to federal power by public bodies and cooperatives.

present value

The worth of future returns or costs in terms of their current value. To obtain a present value, an 

interest rate is used to discount these future returns and costs.

public utility commissions

State agencies that regulate, among others, investor-owned utilities operating in the state with a protected monopoly to supply power in assigned service territories.

Public Utility Regulatory Policies Act of 1978 (PURPA) 

Federal legislation that requires utilities to purchase electricity from qualifi ed independent power 

producers at a price that refl ects what the utilities would have to pay for the construction of new generating resources (see “avoided cost”). The Act was designed to encourage the development of smallscale cogeneration and renewable resources.
72

qualifying facility (QF) 

Qualifying facility is a power production facility that qualifi es for special treatment under a 1978 federal law—Public Utility Regulatory Policies Act (PURPA). PURPA requires a utility to buy the power 

produced by the qualifying facility at a price equal to that which the utility would otherwise pay if it 

were to build its own power plant or buy the power from another source. A qualifying facility must 

generate its power using cogeneration, biomass. waste, geothermal energy, or renewable resources, 

such as solar and wind, and, depending on the energy source and the time at which the facility is constructed, its size may be limited to 80 megawatts or smaller. PURPA prohibits utilities from owning 

majority interest in qualifying facilities.

quantifi able environmental costs and benefi ts 

Environmental costs and benefi ts capable of being expressed in numeric terms (for example, in 

dollars, deaths, reductions in crop yields).

quartile

The direct service industries load is divided into four quartiles. The top quartile is the portion of that 

load most susceptible to interruption.

R-value

A measure of a material’s resistance to heat fl ow. The higher the R-value, the higher the insulating value.

real dollars

Dollars that do not include the effects of infl ation. They represent constant purchasing power.

region 

See “Pacifi c Northwest.”

reliability

The ability of the power system to provide customers uninterrupted electric service. Includes 

generation, transmission and distribution reliability. The plan deals only with generation reliability. 

renewable resource

Under the Northwest Power Act, a resource that uses solar, wind, water (hydro), geothermal, 

biomass or similar sources of energy, and that either is used for electric power generation or for 

reducing the electric power requirements of a customer.

reserve capacity

Generating capacity available to meet unanticipated demands for power, or to generate power in the 

event of outages in normal generating capacity. This includes delays in operations of new scheduled 

generation. Forced outage reserves apply to those reserves intended to replace power lost by accident 

or breakdown of equipment. Load growth reserves are those reserves intended for use as a cushion to 

meet unanticipated load growth.
73

resource

Under the Northwest Power Act, electric power, including the actual or planned electric capability of 

generating facilities, or actual or planned load reduction resulting from direct application of a renewable resource by a consumer, or from a conservation measure.

retrofi t

To modify an existing generating plant, structure or process. The modifi cations are done to improve 

energy effi ciency, reduce environmental impacts or to otherwise improve the facility.

sectors

The economy is divided into four sectors for energy planning. These are the residential, commercial 

(e.g., retail stores, offi ce and institutional buildings), industrial and irrigation sectors.

simple payback

The time required before savings from a particular investment offset costs. For example, an investment 

costing $100 and resulting in a savings of $25 each year would be said to have a simple payback of four 

years. Simple paybacks do not account for future cost escalation, nor other investment opportunities.

siting agencies 

State agencies with the authority for issuing permits to locate generating plants of defi ned types and 

sizes to utilities at specifi c locations.

siting and licensing

The process of preparing a power plant and associated services, such as transmission lines, for construction and operation. Steps include locating a site, developing the design, conducting a feasibility 

study, preliminary engineering, meeting applicable regulatory requirements, and obtaining the necessary licenses and permits for construction of the facilities.

space conditioning

Controlling the conditions inside a building in order to maintain human comfort and other desired environmental conditions through heating, cooling. humidifi cation, dehumidifi cation and air quality modifi cations.

sunk cost

A cost already incurred and therefore not considered in making a current investment decision.

supply curve

A traditional economic tool used to depict the amount of a product available across a range of prices.

surcharge

Under the Northwest Power Act, an additional sum added to the usual wholesale power rate charged 

to a utility customer of Bonneville to recover costs incurred by Bonneville due to the failure of that 

customer (or of a state or local government served by that customer) to achieve conservation savings 

comparable to those achievable under the Council’s model conservation standards. Surcharges can 

range from 10 to 50 percent of a customer’s bill.
74

System Analysis Model (SAM) 

A computer model used by the Council to determine resource cost-effectiveness. SAM performs a detailed simulation of the Northwest generating system to estimate the cost associated with a specifi c set 

of loads and resources. It incorporates uncertainty associated with hydropower, thermal availability, 

resource arrival and load fl uctuation due to economic cycles.

system cost

According to the Northwest Power Act, all direct costs of a measure or resource over its effective life. 

It includes, if applicable, distribution and transmission costs, waste disposal costs, end-of-cycle costs, 

fuel costs (including projected increases) and quantifi able environmental measures. The Council is 

also required to take into account projected resource operations based on appropriate historical experience with similar measures or resources.

thermal resource

A facility that produces electricity by using a heat engine to power an electric generator. The heat may 

be supplied by burning coal, oil, natural gas, biomass or other fuel, by nuclear fi ssion, or by solar or 

geothermal sources.

tipping fee

The fee assessed for disposal of waste. This fee is used when estimating the cost of producing electricity from municipal solid waste.

transformer

A device for transferring energy from one circuit to another in an alternating-current system. Its most 

frequent use in power systems is for changing voltage levels.

transmission

The act or process of long-distance transport of electric energy, generally accomplished by elevating 

the electric current to high voltages. In the Pacifi c Northwest, Bonneville operates a majority of the 

high-voltage, long-distance transmission lines.

U-value

The measure of a material’s ability to conduct heat, numerically equal to 1 divided by the R-value of 

the material.

water budget

A means of increasing survival of downstream migrating juvenile fi sh by increasing fl ows during 

spring and early summer migrations. The water budget was proposed by the Council and is overseen 

by it in conjunction with the U.S. Army Corps of Engineers, the fi shery agencies and Indian tribes, the 

Bonneville Power Administration and the Bureau of Reclamation

watt

The electrical unit of power or rate of energy transfer. One horsepower is equivalent to approximately 

746 watts.
75

Glossary of Fish and Wildlife Terms

acclimation pond

Concrete or earthen pond or a temporary structure used for rearing and imprinting juvenile fi sh in the 

water of a particular stream before their release into that stream.

adaptive management

A scientifi c policy that seeks to improve management of biological resources, particularly in areas 

of scientifi c uncertainty, by viewing program actions as vehicles for learning. Projects arc designed 

and implemented as experiments so that even if they fail, they provide useful information for future 

actions. Monitoring and evaluation are emphasized so that the interaction of different elements of the 

system are better understood.

adult equivalent population

The number of fi sh that would have returned to the mouth of the Columbia River in the absence of 

any prior harvest.

anadromous fi sh

Fish that hatch in freshwater, migrate to the ocean, mature there and return to freshwater to spawn. 

For example, salmon or steelhead.

biodiversity

The variety of and variability in living organisms, with respect to genetics, life history, behavior and 

other fundamental characteristics.

captive brood stock 

Fish raised and spawned in captivity.

carrying capacity

The number of individuals of one species that the resources of a habitat can support.

Coordinated Information System

Still under development, this system is designed to allow interested parties to access technical 

information about Columbia River salmon and steelhead.

defl ector screens/diversion screens

Wire mesh screens placed at the point where water is diverted from a stream or river. The screens 

keep fi sh from entering the diversion channel or pipe.

demography

The study of characteristics of human populations, especially size, density, growth, distribution, 

migration and vital statistics, and the effect of these on social and economic conditions.
76

drawdown

The release of water from a reservoir for power generation, fl ood control, irrigation or other water 

management activity.

economies of scale

Reductions in the average cost of a product that result from increased production.

ecosystem

The biological community considered together with the land and water that make up its environment.

embeddedness

The degree to which dirt is mixed in with spawning gravel.

escapement

The number of salmon and steelhead that return to a specifi ed point of measurement after all natural 

mortality and harvest have occurred. Spawning escapement consists of those fi sh that survive to spawn.

evolutionary biology

The study of the processes by which living organisms have acquired distinguishing characteristics.

extinction

The natural or human-induced process by which a species, subspecies or population ceases to exist.

fi sh fl ows

Artifi cially increased fl ows in the river system called for in the fi sh and wildlife program to quickly 

move the young fi sh down the river during their spring migration period. (See “water budget.”)

fi sh passage effi ciency

The percentage of the total number of fi sh that pass a dam without passing through the turbine units.

fl ows

The rate at which water passes a given point in a stream or river, usually expressed in cubic-feet per 

second (cfs).

fl ow augmentation

Increased fl ow from release of water from storage dams.

gametes

The sexual reproductive cells, eggs and sperm.

gas supersaturation

The overabundance of gases in turbulent water, such as at the base of a dam spillway. Can cause a 

fatal condition in fi sh similar to the bends.
77

genetic conservation refuge

Reserve area whose goal is to protect genetic diversity and natural evolutionary processes within and 

among natural populations, while allowing varying degrees of exploitation and modifi cation.

genetic diversity

All of the genetic variation within a species. Genetic diversity includes both genetic differences among 

individuals in a breeding population and genetic differences among different breeding populations.

genetic integrity

The ability of a breeding population or group of breeding populations to remain adapted to its natural 

environment.

genotype

The complement of genes in an individual.

glides

Stream areas with velocities generally less than one cubic foot per second and with a smooth surface. 

Water depth generally is less than two feet.

harvest controls

Regulations established for commercial and sport fi sheries to ensure that the correct proportion of the 

different stocks escape to spawn.

impoundment 

A body of water formed behind a dam.

imprinting

The physiological and behavioral process by which migratory fi sh assimilate environmental cues to 

aid their return to their stream of origin as adults.

mainstem

The main channel of the river in a river basin, as opposed to the streams and smaller rivers that feed 

into it. In the fi sh and wildlife program, mainstem refers to the Columbia and Snake rivers.

minimum operating pool

The lowest water level of an impoundment at which navigation locks can still operate.

mixed-stock fi shery

A harvest management technique by which different species, strains, races or stocks are harvested together.

morphology

A study of the form and structure of animals and plants.
78

naturally spawning populations

Populations of fi sh that have completed their entire life cycle in the natural environment and may be 

the progeny of wild, hatchery or mixed parentage.

naturalization

The process by which introduced fi sh successfully establish a naturally spawning population.

outfall

The mouth or outlet of a river, stream, lake, drain or sewer.

PIT tags

PIT tags are used for identifying individual salmon for monitoring and research purposes. This miniaturized tag consists of an integrated microchip that is programmed to include specifi c fi sh information. 

The tag is inserted into the body cavity of the fi sh and decoded at selected monitoring sites.

plume

The area of the Pacifi c Ocean that is infl uenced by discharge from the Columbia River, up to 500 

miles beyond the mouth of the river.

population

A group of organisms belonging to the same species that occupy a well-defi ned locality and exhibit 

reproductive continuity from generation to generation.

population vulnerability analysis

A systematic process for estimating species, location and time-specifi c criteria for persistence of a 

population.

redd

A spawning nest made in the gravel bed of a river by salmon or steelhead.

reproductive isolating mechanisms 

Mechanisms that retain genetic diversity among populations. The primary reproductive isolating 

mechanism for anadromous fi sh is accuracy of homing, which can be reduced by improper hatchery 

operations. Stock transfers also reduce reproductive isolation.

resident fi sh

Fish that spend their entire life cycle in freshwater. For program purposes, resident fi sh includes 

land-locked anadromous fi sh (e.g., white sturgeon, kokanee and coho), as well as traditionally defi ned 

resident fi sh species.

riffl e

A shallow extending across the bed of a stream over which water fl ows swiftly so that the surface of 

the water is broken in waves.
79

riparian habitat

Habitat along the banks of streams, lakes or rivers.

rule curves

Graphic guides to the use of storage water. They are developed to defi ne certain operating rights, entitlements, obligations and limitations for each reservoir.

sinuosity

The amount of bending, winding and curving in a stream or river.

smolt

A juvenile salmon or steelhead migrating to the ocean and undergoing physiological changes (smoltifi cation) to adapt its body from a freshwater to a saltwater existence.

spill

Releasing water through the spillway rather than through the turbine units.

spillway crest elevation

The point at which the reservoir behind a dam is level with the top of the dam’s spillway.

stream morphology

The study of the form and structure of streams.

supplementation

The release of hatchery fry and juvenile fi sh in the natural environment to quickly increase or establish naturally spawning fi sh populations.

tailrace

The canal or channel that carries water away from the dam.

velocity

The speed of water fl owing in a watercourse, such as a river.

velocity barrier

A physical structure, such as a barrier dam or fl oating weir, built in the tailrace of a hydroelectric 

powerhouse, which blocks the tailrace from further adult salmon or steelhead migration to prevent 

physical injury or migration delay.

water budget

A means of increasing survival of downstream migrating juvenile fi sh by increasing Columbia and 

Snake river fl ows during the spring migration period. The water budget was developed by the Council, which oversees its use in conjunction with the fi sh and wildlife agencies and Indian tribes, the 

U.S. Army Corps of Engineers, the Bonneville Power Administration and the Bureau of Reclamation.
80

watershed

The area that drains into a stream or river.

weak stock

Listed in the Integrated System Plan’s list of stocks of high or highest concern; listed in the American Fisheries Society report as at high or moderate risk of extinction; or stocks the National Marine 

Fisheries Service has listed. “Weak stock” is an evolving concept; the Council does not purport to 

establish a fi xed defi nition. Nor does the Council imply that any particular change in management is 

required because of this defi nition.

wild populations

Fish that have maintained successful natural reproduction with little or no supplementation from 

hatcheries.
81

Director’s Offi ce

Steve Crow, Executive Director

Judi Hertz, Executive Assistant

Legal Division

John Shurts, General Counsel

Bill Hannaford, Senior Counsel

John Ogan, Senior Counsel

Judi Hertz, Legal Assistant

Administrative Division

Jim Tanner, Director, Finance & Admin.

Denise Bennett, Purchasing Agent/Spt Svcs 

Bud Decker, Assistant Systems Mgr.

Beata Hartman, Admin Support Assistant 

Kierstan Myers, Subbasin Contracting Assistant

Sharon Ossmann, Business Manager

Cindi Schulke, Assistant Business Manager

Kenny Stachovich, Technical Support Analyst

Tamara Fleming, Receptionist/Accounts Payable

Public Affairs Division

Mark Walker, Director

John Harrison, Information Offi cer

Stephen Sasser, Art Director/Web Site Mgr

Eric Schrepel, Technical and Web Data Specialist

Carol Winkel, Communications Specialist

Kris Jenkins, Special Projects Assistant 

Fish and Wildlife Division

Doug Marker, Director

Cari Adamek, Project Management Assistant - 

APRE

Patty O’Toole, Program Implementation Manager

Mark Fritsch, Fish Production Coordinator

Erik Merrill, ISRP/ISAB Coordinator

Lynn Palensky, Subbasin Planning Coordinator

Peter Paquet, Manager, Wildlife and Resident Fish

Bruce Suzumoto, Manager, Special Projects

Steve Waste, Manager, Program Analysis 

and Evaluation

Kendra Phillips, Administrative Assistant

Power Planning Division

Dick Watson, Director

Ken Corum, Senior Economist, Economic Analysis 

Tom Eckman, Conservation Resources Mgr

John Fazio, Senior Power Systems Analyst 

Wally Gibson, Manager, System Analysis & 

Generation

Charlie Grist, Senior Analyst

Jeff King, Senior Resource Analyst

Terry Morlan, Manager, Economic Analysis

Michael Schilmoeller, Senior Power Systems Analyst

Ret Beadnall, Administrative Assistant

Directory

Staff Directory
82
83

Northwest Power Planning Council

Central Office

851 S.W. Sixth Avenue, Suite 1100

Portland, OR 97204-1348

503-222-5161

800-452-5161 regional toll-free

FAX# 503-820-2370

Steve Crow – Executive Director

Judi Hertz – Executive Assistant

Idaho (Bin #801)

Member: Jim Kempton

Northwest Power Planning Council

450 W. State (UPS only)

P.O. Box 83720

Boise, ID 83720-0062

208-334-6970

FAX# 208-334-2112

Chair: Judi Danielson

Karen Dunn – Officer Manager/Administrator

Shirley Lindstrom – Power Coordinator

Tom Dayley — Fish and Wildlife/Subbasin Planning Coordinator (phone: 

208-334-2189)

Joann Hunt – Administrative Assistant/Fish and Wildlife Policy Analyst

Montana: (Bin #803)

Member: John D. Hines

Northwest Power Planning Council

Capitol Station

1301 Lockey (UPS)

Helena, MT 59620-0805

406-444-3952

FAX# 406-444-4339

Member: Ed Bartlett

Kerry Berg - Policy Analyst

John Bushnell - Economist

Pam Tyree – Administrative Secretary

Oregon

Member: Melinda Eden 

Northwest Power Planning Council

P.O. Box 645

Milton-Freewater, OR 97862

541-938-5333

FAX# 541-938-5329

Member: Gene Derfler (Bin #804)

Northwest Power Planning Council

851 SW Sixth Avenue, Suite 1020

Portland, OR 97204 

503-229-5171 

FAX: 503-229-5173

Leann Bleakney - Energy Policy Analyst

Karl Weist – Fish and Wildlife Policy Analyst

Ché Mortimer – Office Manager

Washington

Larry Cassidy (Bin #812)

Flo-Rite Products

P.O. Box 2187

Vancouver, WA 98668

360-693-6951 FAX# 360-699-4093 (Vancouver)

Jo-Ann Black-Burrell, Administrative Assistant

Tony Grover, WA Subbasin Planning Contract Manager

Olympia Office: 1111 Washington Street SE, 5th Floor

Mail Stop 43200

Olympia, WA 98501-1091

Vacant, Policy Analyst (Bin #802)

360-902-2302

360-902-2306

FAX# 360-902-2319

Vice Chair: Tom Karier (Bin #806)

Northwest Power Planning Council

W. 705 First Avenue, MS-1

Spokane, WA 99201-3909

509-623-4386

FAX# 509-623-4380

Mary Dorsey, Administrative Assistant 509-623-4386

Stacy Horton – Biologist (Bin #805)

W. 705 First Ave. Spokane, WA 99201-3909

509-327-3775 (Monday) 509-623-4376 (Tuesday-Friday)

FAX#509-623-4380