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Reports & papers

Fish and wildlife recovery in the Pacific Northwest: Breaking

the Deadlock

A draft analysis by the Northwest Power Planning Council staff

October 1997

Witt Anderson, Rick Applegate, Aldo Benedetti, Lorri Bodi, Ken Casavant, Ralph

Cavanagh, Steve Crow, Donna Darm, John Etchart, Mike Field, Roy Hemmingway, Jim

Litchfield, Bob Lohn, Rob Lothrop, Alan Stay, Al Wright

Assisted by: John Fazio, Roy Fox, Luanna Grow,

Andre L’Heureux, Duane Mecham,

Pete Swartz, John Shurts, and John Volkman

See also: Appendix B

I. Prologue

II. Status of Fish and Wildlife Recovery Efforts

III. Institutional Goals for Fish and Wildlife Recovery

IV. Elements of a Fish and Wildlife Plan: Strategies and Actions

A. Goals for Fish and Wildlife Recovery

B. Biological Objectives of Fish and Wildlife Recovery

C. Scientific Foundation for Fish and Wildlife Recovery

V. Governance, Decision Making, and Dispute Resolution

VI. Implementation of Fish and Energy Decisions

A. Timing of Near­Term Decisions on Fish and Energy

B. Summary of Economic Analysis

C. BPA Cost Recovery

D. Operations and Capital Improvements at Mainstem Dams

Appendix A: Energy and Fish Decision Timeline

Appendix B: Potential BPA Economic Impacts from Changing River Operations

I. Prologue

This report concludes a six­month inquiry into approaches for fish and wildlife recovery

and related financial issues in the Columbia River Basin. Cyrus Noe initially persuaded a

representative core group to meet, and Ralph Cavanagh and Luanna Grow assisted their

discussions. The co­authors represented only themselves during this process, but their

diverse perspectives capture much of the spectrum of debate over the future of fish and

wildlife recovery efforts in the Basin. Our joint objective is to help frame the region’s
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most pressing fish/power debates and to open new directions for resolving them. Our

intended audience includes all who care about the Columbia, and we hope that our

report will be of particular use to the leadership of the federal administration and the

Pacific Northwest states and tribes.

We address issues surrounding the federal dams of the Columbia River System, artificial

fish production, harvest and habitat. By necessity our efforts centered on anadromous

fish in light of the recent Endangered Species filings. However, any solution will need to

address resident fish and wildlife issues.

Our report is intended to assist the tribal, state and federal sovereigns by identifying

new ways to balance critical environmental and economic interests in the future of the

Columbia River ecosystem. We have concluded that it must be the sovereigns working

together in consultation with the various entities that have an interest in the basin that

must craft a lasting framework addressing the fish and wildlife and other issues in the

basin. The region’s failure to execute and integrate crucial fish and power decisions

threatens all these interests today. As long as approaches to fish and wildlife recovery

remain unsettled, BPA’s financial stability and marketplace prospects will remain in

question. Yet, fish and wildlife recovery are themselves benefited by a financially healthy

BPA, which can fully meet its obligations to fish and wildlife and the challenges of

increasingly competitive electricity markets.

Our report is designed to help publicly accountable decisionmakers find the solutions

that the region so urgently needs. We recognize that any successful recovery plan must

reflect deliberations by the sovereigns, and we offer joint suggestions for their use in

designing and conducting a successful effort. We recommend a streamlined, deadlinedriven and intensely facilitated effort by state, tribal and federal entities together to

devise a fish and wildlife plan that vests coordination responsibilities for recovery in a

single entity; improved coordination among the Army Corps of Engineers, the

Bonneville Power Administration, and the Bureau of Reclamation; and creation of a new

mechanism for ensuring that BPA can meet its financial obligations to all Northwest

stakeholders at the lowest feasible cost.

Another work product is a timeline for integrating near­term decisions on key fish,

wildlife and energy issues. The report also draws upon and summarizes preliminary

analyses of BPA’s competitive prospects under different fish recovery scenarios

(Appendix B). We emerge from that exercise with renewed optimism about BPA’s longterm capacity to prosper under a wide range of recovery scenarios, although

complacency about costs or inefficiency is unwarranted. We recommend that the

Northwest Power Planning Council convene a regional discussion and peer review of

this preliminary analysis (Appendix B).

II. Status of Fish and Wildlife Recovery Efforts
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II. Status of Fish and Wildlife Recovery Efforts

Most Columbia River salmon

* stocks continue to decline despite, by some

estimates, a $3 billion investment in salmon recovery measures over the past 15

years. Other fish and wildlife resources that depend on the Columbia River are or

may be adversely affected by the operation of the Columbia River federal power

system.

There are currently three governmental recovery plans proposed to address the

serious decline of Columbia Basin fish runs. These are the 4­state Northwest

Power Planning Council’s Columbia Basin Fish and Wildlife Program (1994); the

National Marine Fisheries Service’s proposed Recovery Plan for Snake River

Salmon (1995); and the Yakama, Warm Springs, Umatilla, and Nez Perce tribes’

Spirit of the Salmon (1996).

To propose serious options for long term fish recovery, this report draws upon the

three salmon recovery plans, as well as the National Academy of Sciences,

National Research Council report Upstream; the National Marine Fisheries

Service’s (NMFS) Snake River Recovery Team’s Final Recommendations to NMFS;

the Independent Scientific Group report, Return to the River; and the sometimes

overlooked salmon success stories in the Columbia Basin. Although the report is

not specifically directed at protection of resident fish, it recognizes that salmon

measures and resident fish measures must be integrated so that neither is

sacrificed in planning for long term recovery and maintenance.

This report recognizes that there are economic benefits to be gained from a long

term plan for fish recovery, including improved predictability and accountability

for fish measures paid for by the users of the Federal Columbia River Power

System.

Despite all the problems associated with fish recovery, there have been some

success stories, most notably the Hanford Reach Fall Chinook.

III. Institutional Goals for Fish and Wildlife Recovery

Equitable and timely allocation of the burden of fish and wildlife conservation

measures among all entities that receive benefit from the system.

Preservation of tribal legal rights, secured by treaty, law, and executive order.

Recognition of federal, state and tribal water rights.

Compliance with applicable tribal, state and federal laws and regulations for

protection and restoration of natural resources, including the Endangered Species

Act and the Northwest Power Act, providing funds for implementation, and

resolving differences.

Compliance with international treaties with Canada for fish and power.

Preservation of affordable and reliable power from the Federal Columbia River

Power System (FCRPS).

Achieving the fundamental purposes (power, flood control, navigation, recreation,

irrigation and fish and wildlife) for which the FCRPS was authorized by Congress.

Addressing economic, social, and political constraints, including mitigation for
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economic and social impacts of fish and wildlife recovery measures on existing

river users.

Obtaining and providing adequate funds to implement the fish and wildlife plan

developed by the Process (as described in Section V. below, Governance).

IV. Elements of a Fish and Wildlife Plan: Strategies

and Actions

This section presents some options for breaking the current gridlock over fish recovery.

Ultimately, these and other options should be incorporated into a joint

federal/state/tribal recovery plan that provides predictability for the power system and

predictability of fish recovery.

A joint recovery plan should not just be a list of all possible measures, but should

incorporate decisions on priorities, tradeoffs and integration of measures into a

coherent strategy. It should include the following elements:

Goals and objectives

A credible scientific rationale

Specific measures, linked to these goals and objectives

A logical order for selecting measures, and dispute resolution

A predictable decision path with a timeline, criteria, and funding/investment

priorities

We were unable to make progress on substantive fish and wildlife measures. At the

same time, we recognize the urgency of resolving these issues. The governance

process we have suggested in Section V. below, with the commitment of policy

leaders at the highest level, is the appropriate way to resolve these matters.

The region lacks agreement on how or whether to implement a number of specific

fish and wildlife measures. The implementation of the following measures will

require further policy deliberations and timely decision, based on the best

available scientific data:

Strategies to improve mainstem survival, including spill, bypass, transportation,

flows, drawdown, reservoir rule curves and upstream passage

Strategies to restore habitat and increase natural production

Strategies to appropriately implement artificial production

Strategies to minimize the impacts of hydropower actions on resident fish and

wildlife

Strategies to integrate fish and wildlife with other uses of the system

Strategies that provide for harvest, consistent with Indian rights

Strategies to address ocean and estuary conditions, including obtaining

information about key aspects of the estuary and near­ocean environment so that

new strategies can be considered that could lead to enhanced survival

Monitoring, evaluation and adaptive management
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In the following sections, we describe and recommend goals, objectives and scientific

principles for fish and wildlife issues.

A. Goals for Fish and Wildlife Recovery

Restore biologically diverse naturally spawning fish populations that support

sustainable fisheries and preserve and protect wildlife populations. Achieve this

goal by improving the Columbia River ecosystem, by protecting core populations

and their habitat, and through other measures that are compatible with natural

production and genetic diversity of fish populations.

Restore populations to levels sufficient to withstand a reasonable harvest, the

impacts of continuing human activities, and a range of climatic and ocean

conditions.

B. Biological Objectives of Fish and Wildlife Recovery

In order to halt the decline in fish populations and restore healthy, naturally producing

populations of fish, it is essential that the recovery objectives identified below be defined

in as specific a manner as possible.

Implement actions sufficient to halt the declining trend in fish populations above

Bonneville dam.

Restore healthy, naturally reproducing populations of fish in each subregion

accessible to the fish.

Increase adult fish returns above Bonneville dam.

Identify and set in place protection and restoration of habitat.

Establish criteria for determining priority stocks, taking into account the

importance of maintaining metapopulation structure (includes genetic diversity),

meeting treaty fishing obligations, meeting tribal fishing rights, and providing

reasonable non­treaty fishing opportunities as allowed by law.

Integrate artificial production methods consistent with the maintenance of genetic

diversity and protection of natural population.

Consider the impact of fish recovery measures on wildlife resources and integrate

measures that provide benefit and protection for both.

Identify potential actions to restore stocks.

Determine the benefits of actions.

Prioritize potential actions.

C. Scientific Foundation for Fish and Wildlife Recovery

Restoration of Columbia Basin fish must address all aspects of the ecosystem and

fish lifecycle.

Restoration of Columbia Basin fish requires a network of diverse, high quality, and

interconnected habitats, which are maintained by natural processes in freshwater,

the estuary, and the ocean.
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Restoration of Columbia Basin fish requires preservation of life history diversity,

genetic diversity, and metapopulation organization, because these are used by fish

populations to cope with environmental and climatic variation.

It is important to re­establish the nutrient cycle provided by decaying fish

carcasses, which effectively cycle nutrients from the ocean to freshwater.

Restoration of fish and wildlife resources depends on managing human impacts to

achieve suitable ecosystem conditions. Technology and research should be used in

concert with achievement of natural ecosystem conditions, not to replace natural

functions.

Salmon can be used as an "indicator" species to define desired environmental

conditions in basins accessible to anadromous fish.

Governance, Decision Making, and Dispute Resolution

Key Principles:

Improved governance is needed to overcome fragmentation and contradictory decisions

on Columbia River fish and wildlife issues and on fish and wildlife­related power system

decisions.

This proposal calls for the integration of existing federal, state and tribal governance

processes and the development of a unified fish and wildlife recovery plan. We believe

the "Three Sovereigns" process (hereafter the "Process") initiated in June 1997 is the

appropriate place to address these issues.

Existing statutory mandates and treaty and other tribal rights should remain in full

force and effect. No authorities should be increased or diminished by participation in

the Process. It is anticipated that this governance structure will enhance the ability of

the governing entities to meet existing mandates and obligations and to deal with any

conflicts in mandate that may arise.

The existing Power Council public involvement system should be employed and Council

staffing should be used as appropriate. The three sovereigns should commit, at the

highest levels, to exercise their discretion to carry out the plan established by the

Process. The primary purpose of the Process is to develop a unified plan that includes

mechanisms for dispute resolution and addresses all river­related activities that affect

fish and wildlife.

By March 1998, the sovereigns should identify a single entity, which might include an

existing institution, to oversee and coordinate implementation of the plan. They should

also develop adequate dispute resolution mechanisms for planning and implementation
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disputes. In the interim, dispute resolution should begin with informal efforts such as

mediation, and proceed as necessary to more formal mechanisms, which could include

arbitration or judicial resolution.

The Process should be open to the public and should provide full opportunities for all

interests to be heard and to participate.

The Process should utilize best available scientific information and independent

scientific and economic analyses. Comprehensive monitoring and evaluation should be

used to ensure that actions are producing desired results and that appropriate midcourse corrections can be made.

Additional governance reforms can be developed as this effort proceeds.

The Process should integrate fish and fish related power matters. The Process should

appropriately sequence fish wildlife and related power system decisions so that

decisions in one arena will not inappropriately foreclose decisions in another. The

Process should address power system matters that may have an impact on the fish and

wildlife plan and its implementation and should further address power system matters

that may have the effect of foreclosing actions deemed necessary for fish and wildlife.

VI. Implementation of Fish and Energy Decisions

A. Timing of Near­Term Decisions on Energy and Fish

Much has been accomplished over the past two years to move the Northwest towards a

competitive, deregulated electric supply system, and Bonneville Power Administration

has been under special scrutiny in that regard. The effort began as the Comprehensive

Review of the Northwest energy system – a year­long effort initiated by the Governors of

the four Northwest states. The recommendations from that Review are being dealt with

in a linear fashion on single, mostly compartmentalized issues, such as subscription or

transmission separation.

There is an urgent need for the region to come together on both the structure of a

comprehensive package and a coordinated schedule of events. Appendix A is a graphic

attempt to pull the pieces together in a relatively quick timeline, ending in August of

1998. This graphic depiction assumes no national legislative initiatives until 1999. The

sequencing of events is critical, since many issues must be resolved first due to their

relationship to resolution of the remaining issues.

Cost Issues

First, the region must achieve resolution of four major Bonneville issues surrounding
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costs. In this graph all four are shown to have initial results by April of 1998.

The Cost Control review team, led by the Council’s Power Four Committee, is working

now to get a preliminary estimate of how low BPA’s expenses can be by the year 2001.

This preliminary estimate is due by April of 1998. While the review will continue beyond

that point to design of a long­term cost control mechanism, this initial estimate is

essential to generating a Subscription pricing scheme.

The discussions relating to extension of the 1996­2001 Fish Budget Memorandum of

Agreement must be on the same timeline as the cost control discussions. Again, the

Subscription pricing effort may not move forward without resolution of this issue.

One of the most difficult issues is the determination of the magnitude and form of BPA’s

cost recovery. This too should be on the same schedule to allow for an understanding of

how pricing for subscription and revenue requirements for transmission will be affected.

(See Section VI.C. below for our proposal).

Also, the rules governing transmission separation and use of transmission revenues

should be clarified to determine whether those revenues would be available as needed to

fund fish and wildlife recovery.

In the mean time, progress can continue on both subscription and transmission

separation, but the major issues cannot be resolved until the issues identified above are

completed. Then a preliminary fixed price offering for potential subscribers can be

determined by Bonneville. This should be accomplished in a few months. This will in

turn lead to some indication of the contingent level of interest from the customers.

Subsequently, the form and governance of the BPA transmission system can be

determined.

Major System Changes

In a parallel process, the region must move to resolve the issue of major system

configuration changes – such as dam breaching or drawdowns. While the actions may

not take place immediately, the timeline assumes that the federal government will make

such a decision late in 1998. Without resolution of these major questions, the

subscription process suffers under a large shadow of uncertainty, and no final

subscription contracts will likely be signed. In contrast, the Biological Opinion for the

Columbia Basin dams commits the federal government to a decision on the method of

long term salmon recovery in 1999.

One thing the schedule does not show is the time lag between the National Marine

Fisheries Service’s decision on dam modification/transportation and actual

implementation and funding. If the decision is made in 1998 or 1999, several years will
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pass before those actions will be part of BPA’s costs (under current financing

mechanisms). In the mean­ time, the region needs to maximize the current fish recovery

measures with dams in place and assess the results of all on­going recovery efforts. The

region needs to debate: (1) the biological and economic benefits of dam modifications;

(2) the appropriate role of fish transportation in salmon recovery; (3) the use of flow

augmentation with and without dam modification; and (4) the biological and economic

costs and effects of dam modification on other multi­purpose uses, including

commercial navigation and power.

Possible Legislation

Assuming success on a regional restructuring package by late 1998, elements of a 1999

legislative initiative may include any or all of the following:

Congressional authorization and appropriations for altering system configuration.

Mechanism for paying for altering system configuration.

Allowances for expanded FERC oversight of Bonneville’s transmission system.

Changes in form and governance of Bonneville’s transmission system.

Changes to allow for some form of transition costs on Bonneville’s transmission system.

Removal of any barriers to allow Bonneville to join a transmission IGO or ISO.

Removal of any barriers to allow for completion of a Subscription process.

Changes to allow for some form of transition cost to be applied to former Bonneville

customers who do not subscribe.

B. Summary of Economic Analysis

To assist with our understanding of how Bonneville Power Administration’s financial

health will be affected by various river operation scenarios, we asked the Northwest

Power Planning Council staff to perform some comparative analysis. The analysis was

performed at the "reconnaissance" level and provides comparisons in general terms, not

at a definitive level. A summary of this cost analysis in included as Appendix B.

The studies were designed to look at the effects of a variety of river operation/drawdown

scenarios on Bonneville’s revenue from power sales. Then each scenario was examined

to see (1) how Bonneville’s subscription rate would compare to a defined "market" rate,

and (2) Bonneville’s exposure to shortfalls.
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The base case scenario assumes current fish operations. The comparison studies

demonstrated the effects of various operations and drawdowns on hydroelectric

production, flow targets, and reservoir levels. There is no attempt to editorialize on the

merits of drawdown or any of the options. Since all the major fish plans call for studying

some form of drawdown in the near future, it became the surrogate for any major

impact to Bonneville’s costs and power production capability. It should be noted that

anything causing a major impact on Bonneville’s financial picture (large capital cost,

major loss of generation) would have the same result.

The exercise is useful on several counts. For example in the "current operation"

scenario, assuming twenty years of relatively low wholesale power prices (averaging 1.6

cents per kWh in 1996 dollars) and some escalation of fish and wildlife related expenses,

BPA faces potential shortfalls of about $400 million in present value 2001 dollars over

the period 2002 ­ 2012, with large potential benefits flowing to the region after this

time. The annual shortfall under these assumed conditions would be less than $50

million per year if spread over the decade beginning in 2002, and thereafter the BPA

system has the potential to generate large economic benefits. The annual impacts range

from a loss of $140 million in the early years to a gain of $115 million in the later years.

The analysis also shows that relatively small movements in wholesale markets can

substantially change the net revenues of the BPA system, and that under many plausible

scenarios no appreciable problem will emerge.

BPA’s ability to fund major dam modifications is affected by both the market price of

power and its obligation to pay nuclear plant debt. If the dam modification schedule is

adjusted to take nuclear debt schedule into account, as in Case 8, funding impacts are

reduced.

C. BPA Cost Recovery

1. Cost Recovery, Cost Control, and Fish Budgets

Whatever fish recovery plan is chosen, marketplace uncertainties put BPA at some risk

of failing to recover all its costs (which include fish costs, nuclear plant debt, and

interest and amoritization payments to the U.S. Treasury). Appendix B to this report

presents both extreme and more likely projections of the potential costs that might not

be recoverable from projections of BPA’s likely market revenues. The size of potential

shortfalls appears to be manageable under many recovery scenarios and market

conditions. Additional flexibility might be possible by meshing part of the schedule for

possible dam modifications with the schedule for nuclear debt retirement.

BPA’s first step should be to control or reduce its costs where possible. However, there

are limits to the savings that can be captured through cost­cutting, given BPA’s

substantial fixed costs and fish and wildlife obligations.
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A cost recovery mechanism should be designed to put significant pressure on BPA

management to control and reduce costs in order to meet market conditions. To ensure

that these pressures do not inappropriately restrict legitimate fish and wildlife

expenditures, and to provide reasonable levels of certainty for the recovery effort, we

propose a five­year budget for fish and wildlife expenditures, combined with a ten year

capital budget to assure funding of BPA’s present and future fish and wildlife

obligations. The budget process should invite federal, state, tribal and other public

involvement, in order to seek the broadest possible base of regional support. Every two

years, the budget should be extended for an additional two years, so that a rolling fiveyear period of predictable expenditure levels can be maintained. Congress would, of

course, retain the ability to modify the budget if necessary.

Once this process has established a fish and wildlife budget it becomes a hard constraint

on BPA’s operations and would be submitted as part of the annual federal budget

process ­­ even if this means that BPA budgeted costs exceed projected revenues.

Through the proposed mechanism, if actual financial performance triggers the need,

cost recovery methods would be implemented.

2. Cost Recovery Recommendations

a. Key Elements

We consider it likely that Congress will act to protect the U.S. Treasury from BPA costs

that exceed its revenues, if the region does not do so first. An alternative to

Congressional action is for BPA and its customers to negotiate mutually acceptable

contractual commitments that are consistent with fisheries interests. In either case, the

following principles should guide a BPA cost recovery mechanism:

BPA should be provided incentives to operate efficiently

BPA’s actual financial performance, with prudent budgeting of future

expenditures, should be used to trigger cost recovery actions

BPA’s financial obligations, including those associated with the fish and wildlife

budget described above, should be included in multi­year budgets

BPA’s power subscribers should be provided a reasonable degree of predictability

for future costs

A negotiated cost recovery approach, as we recommend, must have an objective and

clearly defined trigger, as well as collection and allocation mechanisms once the trigger

events occur.

b. Trigger Mechanism
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We suggest that the trigger for cost recovery be based on BPA’s actual financial

conditions that are objectively measurable. There are a number of mechanisms that

could achieve these principles.

Some have proposed that the trigger be based on BPA’s level of financial reserves (cash

on hand). If these reserves dropped to a specified low level, a charge would trigger on all

BPA customers that would rebuild reserves to an appropriate level.

Another alternative trigger mechanism would focus on BPA repayment of US Treasury

debt. Generally, BPA’s financial obligations to Treasury are met after all other

obligations. For this reason the proposed cost recovery methodology would focus on

BPA’s repayment of its Treasury obligations. Current statutory authority exists for the

Administrator to reschedule Treasury payments if power marketing conditions

(weather, extra­regional markets, etc.) cause insufficient revenues in the BPA fund at

the end of a fiscal year. The proposed cost recovery methodology would be triggered by

actual shortfalls in BPA’s payment of its Treasury obligations. The shortfalls could cause

the amount that is not paid on schedule to be refinanced at market based interest rates

and to be scheduled for repayment through the revenues collected from a cost recovery

mechanism.

A third approach combines elements of both of these, but differs by distinguishing

between short term, non­recurring shortfalls between BPA revenues and costs, and

projected chronic, long­term shortfalls of a large magnitude. Under this approach,

BPA’s probability of Treasury repayment would serve as the basis for the cost recovery

trigger. BPA and the region would set a threshold level of repayment. Cost recovery

would be prospective based on projected revenues and costs and whether these

projections reduced BPA’s repayment probabilities to unacceptable levels.

So long as the repayment probability exceeds the threshold, no prospective cost recovery

would be authorized. In this case, if BPA actual revenues, after cost review and

management, fell short, a retrospective cost recovery charge based on either reserves or

Treasury rescheduling could be used.

However, if BPA projects a repayment probability below the threshold, and especially if

shortfalls are projected to be substantial and recurring, BPA would be authorized to levy

a cost recovery charge.

c. Cost Predictability

In order to address customer need for predictability, we also propose that exposure to

cost recovery be capped in each year at a pre­specified amount. If shortfalls exceeded

this amount they could be dealt with by either smoothing the charges and expenditures

or by deferring planned payments to Treasury.
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Cost reviews would be used to ensure BPA’s fiscal prudence. BPA’s actual or budgeted

expenses would be compared with actual or expected revenues. Where cost recovery was

forward looking, any overcharges could be applied for future credit or rebated to the

customers.

The structure and magnitude of the cost recovery charge should be determined in

advance through BPA rate­setting procedures, approved by the Federal Energy

Regulatory Commission, and updated periodically in the same way. The charge can and

should be structured to avoid distorting competitive generation markets and would be

imposed if the triggering events occur:

d. Collection mechanisms

Should the triggering events occur, the resulting shortfalls could be recovered using any

of the following alternative collection mechanisms. A combination of these might also be

desirable, and these mechanisms should be further developed and refined before

application.

Limited amount collectible on the transmission system

Limited amount collectible by direct charges to historic customers

Limited amount collectible from current customers

To the extent necessary, statutory authority for retail utilities to pass on these

costs

Federal taxpayer contributions

D. Operations and Capital Improvements at Mainstem Dams

At the non­federal hydroelectric dams on the Columbia and its tributaries, the entity

operating a dam depends on the revenues produced at the dam to pay for its own costs.

Thus, there is a strong financial incentive at the non­federal dams to carry out fish and

wildlife mitigation quickly, innovatively, and effectively and with a minimal impact on

revenues. The same incentive is present for decisions about how the projects should be

operated for energy production, and for maintenance of and upgrades to the generating

systems at those projects.

In contrast, at the federal dams in the Columbia River Basin, the Corps of Engineers and

the Bureau of Reclamation are charged with operating and improving the dams but have

no direct financial stake in the outcome of their activities. Historically, both agencies

have been funded by Congressional appropriations and do not have their funding linked

directly to their performance.
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On the other hand, the Bonneville Power Administration is a self­funding agency and

depends primarily on the revenues produced by the federal dams to achieve its statutory

mission. Although the success of Bonneville depends, among other things, on achieving

prompt, effective, and least­cost fish and wildlife mitigation at those dams and on

maintaining and improving the generating capabilities at those projects, it has no

authority to carry out such activities directly.

For the long term, legislation would be needed to realign authorities and incentives at

the federal dams. Absent legislation, it appears that substantial improvements can be

made administratively. Those improvements should be coordinated through the Process

and should include:

Agreements between BPA and the operating agencies for direct funding by BPA of

operations and maintenance of the dams. BPA and the Bureau have already

entered into such an agreement.

Agreements between BPA and the operating agencies for direct funding by BPA of

capital improvements (including both fish and wildlife mitigation and generating

facilities) within the limits of BPA’s current borrowing authority.

Establishment of a joint management authority among the three agencies to

oversee implementation of fish and wildlife mitigation and power­related

operations.

Creation of multi­year implementation plans for each dam with clear schedules,

benchmarks, cost estimates, and measurable results.

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