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28-557 PDF 2006

ELECTRICITY PRICES AND

SALMON: FINDING A BALANCE

OVERSIGHT FIELD HEARING

BEFORE THE

SUBCOMMITTEE ON WATER AND POWER

OF THE

COMMITTEE ON RESOURCES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

Friday, July 7, 2006, in Pasco, Washington

Serial No. 109-58

Printed for the use of the Committee on Resources

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

or

Committee address: http://resourcescommittee.house.gov

(II)

COMMITTEE ON RESOURCES

RICHARD W. POMBO, California, Chairman

NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska

Jim Saxton, New Jersey

Elton Gallegly, California

John J. Duncan, Jr., Tennessee

Wayne T. Gilchrest, Maryland

Ken Calvert, California

Barbara Cubin, Wyoming

Vice Chair

George P. Radanovich, California

Walter B. Jones, Jr., North Carolina

Chris Cannon, Utah

John E. Peterson, Pennsylvania

Jim Gibbons, Nevada

Greg Walden, Oregon

Thomas G. Tancredo, Colorado

J.D. Hayworth, Arizona

Jeff Flake, Arizona

Rick Renzi, Arizona

Stevan Pearce, New Mexico

Henry Brown, Jr., South Carolina

Thelma Drake, Virginia

Luis G. Fortun ̃ o, Puerto Rico

Cathy McMorris, Washington

Bobby Jindal, Louisiana

Louie Gohmert, Texas

Marilyn N. Musgrave, Colorado

Vacancy

Dale E. Kildee, Michigan

Eni F.H. Faleomavaega, American Samoa

Neil Abercrombie, Hawaii

Solomon P. Ortiz, Texas

Frank Pallone, Jr., New Jersey

Donna M. Christensen, Virgin Islands

Ron Kind, Wisconsin

Grace F. Napolitano, California

Tom Udall, New Mexico

Rau ́l M. Grijalva, Arizona

Madeleine Z. Bordallo, Guam

Jim Costa, California

Charlie Melancon, Louisiana

Dan Boren, Oklahoma

George Miller, California

Edward J. Markey, Massachusetts

Peter A. DeFazio, Oregon

Jay Inslee, Washington

Mark Udall, Colorado

Dennis Cardoza, California

Stephanie Herseth, South Dakota

Steven J. Ding, Chief of Staff

Lisa Pittman, Chief Counsel

James H. Zoia, Democrat Staff Director

Jeffrey P. Petrich, Democrat Chief Counsel

SUBCOMMITTEE ON WATER AND POWER

GEORGE P. RADANOVICH, California, Chairman

GRACE F. NAPOLITANO, California, Ranking Democrat Member

Ken Calvert, California

Barbara Cubin, Wyoming

Greg Walden, Oregon

Thomas G. Tancredo, Colorado

J.D. Hayworth, Arizona

Stevan Pearce, New Mexico

Cathy McMorris, Washington

Vice Chair

Louie Gohmert, Texas

Vacancy

Richard W. Pombo, California, ex officio

Rau ́l M. Grijalva, Arizona

Jim Costa, California

George Miller, California

Mark Udall, Colorado

Dennis A. Cardoza, California

Vacancy

Vacancy

Nick J. Rahall II, West Virginia, ex officio

(III)

CONTENTS

Page

Hearing held on Friday, July 7, 2006 .................................................................... 1

Statement of Members:

Hastings, Hon. Doc, a Representative in Congress from the State of

Washington .................................................................................................... 5

Prepared statement of ............................................................................... 6

McMorris, Hon. Cathy, a Representative in Congress from the State

of Washington ............................................................................................... 1

Prepared statement of ............................................................................... 3

Statement of Witnesses:

Chandler, Gary, Vice President of Governmental Affairs, Association of

Washington Business, Olympia, Washington ............................................. 73

Prepared statement of ............................................................................... 74

Cooper, Scott, Director, Parish Social Ministries, Catholic Charities,

Spokane Parish, Spokane, Washington ....................................................... 14

Prepared statement of ............................................................................... 16

Durham-Aguilera, Karen, Director of Programs, Northwestern Division,

U.S. Army Corps of Engineers ..................................................................... 33

Prepared statement of ............................................................................... 34

Espinoza, Ricardo, President of the Board of Directors, Pasco School

District, Pasco, Washington ......................................................................... 11

Prepared statement of ............................................................................... 12

Flores, Terry G., Executive Director, Northwest RiverPartners, Portland,

Oregon ............................................................................................................ 44

Prepared statement of ............................................................................... 46

Hirsh, Nancy, Policy Director, Northwest Energy Coalition, Seattle,

Washington .................................................................................................... 38

Prepared statement of ............................................................................... 40

Miles, Hon. Rebecca, Commissioner, Columbia River Inter-Tribal Fish

Commission, Portland, Oregon .................................................................... 48

Prepared statement of ............................................................................... 50

Morrison, Hon. Sid, Chairman of the Board, Energy Northwest, and

Chairman of the Board, Yakima Basin Storage Alliance, Zillah,

Washington .................................................................................................... 17

Prepared statement of ............................................................................... 19

Reimann, Ron, Owner/Operator, T & R Farms, Inc., Pasco, Washington ... 8

Prepared statement of ............................................................................... 9

Voigt, Chris, Executive Director, Washington State Potato Commission,

on behalf of the Family Farm Alliance, Moses Lake, Washington ........... 67

Prepared statement of ............................................................................... 69

Wright, Stephen J., Administrator and Chief Executive Officer,

Bonneville Power Administration, U.S. Department of Energy,

Portland, Oregon ........................................................................................... 21

Prepared statement of ............................................................................... 23

Additional materials supplied:

Dawsey, Charles L., General Manager-EVP, Benton Rural Electric

Association, Statement submitted for the record ....................................... 83

(1)

OVERSIGHT HEARING ON ‘‘ELECTRICITY

PRICES AND SALMON: FINDING A BALANCE’’

Friday, July 7, 2006

U.S. House of Representatives

Subcommittee on Water and Power

Committee on Resources

Pasco, Washington

The Subcommittee met, pursuant to call, at 9:00 a.m., at the

Gjerde Multipurpose Room, Columbia Basin College, 2600 North

20th Avenue, Pasco, Washington, Hon. Cathy McMorris [Vice

Chairman of the Subcommittee] presiding.

Present: Representatives McMorris and Hastings.

STATEMENT OF THE HON. CATHY McMORRIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Miss MCMORRIS. The Subcommittee on Water and Power will

come to order. I thank everyone for coming and being a part of this

very timely and important Congressional hearing. I’d like to welcome everyone to today’s hearing.

I represent the neighboring 5th District in Eastern Washington

and serve as the Vice Chair of the House Water and Power Subcommittee, and I want to thank my colleague, Doc Hastings, for

having me in his hometown.

Before we go to the opening statements and testimony, I would

like to turn to Representative Hastings to introduce some of his

citizens who will begin the hearing with the Invocation, Presentation of the Colors, and the Pledge of Allegiance.

[Invocation, Presentation of the Colors, and the Pledge of

Allegiance.]

Miss MCMORRIS. This field hearing is about finding a balance between providing reliable and affordable electricity for our consumers, while protecting endangered salmon. As we sit here at the

confluence of the Columbia and Snake River systems, we admire

the natural beauty of our Pacific Northwest river systems.

These rivers have a major economic purpose as well. They serve

as the lifeblood of our economy, our customs, our cultures, and our

traditions. The multipurpose dams and reservoirs on the rivers not

only helped to win World War II but, to this day, provide many

benefits to those of us in the Pacific Northwest. By using and protecting our natural resources, people throughout the Northwest

have a reliable and renewable source of energy, while also being

2

able to enjoy our resources, as people have done for hundreds of

years.

Low-cost, renewable hydropower forms the backbone of our regional electricity supply. The promise of this long-term, low-cost

hydropower made the Pacific Northwest what it is today. Yet this

promise is being undermined by constant litigation, activists who

want to tear down the dams and our hydropower systems, as well

as bureaucrats 2600 miles away in Washington, D.C., who want to

balance the Federal budget on the backs of ratepayers. I think

there are other ways to balance this budget, while still providing

our customers with the energy they rely upon.

Oftentimes, the Endangered Species Act is being used as a tool

to drive up cost for our electricity consumers. No one disagrees

with protecting truly endangered species, but the ESA has been

misinterpreted and stretched to put species before people. Just ask

the hardworking farmers of Klamath Falls, Oregon, who were basically forced out of business when the Federal Government shut off

their water to protect endangered suckerfish, only to have an independent science panel later say the water shut-off may not have

been necessary.

The Federal Government has spent billions of dollars, reduced

water deliveries to communities, made electricity more expensive

and, yet, the ESA still has a 1 percent rate of success at best. In

the world I grew up in, a 1 percent rate does not meet the definition of success. We’re trying to change the way ESA is being carried out through a reasonable approach that makes this process

fair for all involved. We have passed a reform bill in the House and

are waiting for the Senate to act.

Meanwhile, the ESA is upfront and personal here in Eastern

Washington, and our farmers and electricity consumers are paying

for it. Opinions coming from a Federal judge have severely curtailed our ability to appropriately manage our hydropower and natural resources. According to the Washington Post, Judge Redden’s

2004 summer spill amounted to spending $3.85 million for each

protected Chinook salmon. That’s an expensive salmon. And, unfortunately, these costs are passed on to electricity ratepayers. Judicial activism needs to stop, and unbiased jurisprudence must take

its place.

While the ESA has had its own impact on power within our region, the Bonneville Power Administration, BPA, manages and provides much of that power. Recent Administration budget proposals

regarding secondary revenue have come dangerously close to increasing our power rates even more. This proposal has been temporarily blocked by recent legislation enacted by Congress. Representative Hastings, myself, and a bipartisan group of members

throughout the Northwest have and will continue to fight this proposal.

No one can deny that the ESA has impacted recent Bonneville

power rates. Yet many consumers don’t know how much they pay

for fish protection, why they pay, and whether they’re paying for

them at all. A May 2005 poll found that 70 percent of respondents

either didn’t know how much they paid for salmon recovery or believed that less than 5 percent of their monthly bills goes to salmon

recovery.

3

Yet, in 2004 the ESA components of BPA’s fish and wildlife program comprised approximately 23 percent of the agency’s wholesale

rates. Clearly, this disparity shows there’s a disconnect between

what consumers know or have access to versus what’s real. Consumers need and deserve open access to information on how these

figures are affecting their pocketbooks.

The Endangered Species Compliance and Transparency Act,

H.R. 4857, which I’ve introduced, would require BPA to estimate

and report the direct and indirect ESA costs to each wholesale

power customer on a monthly billing basis. Whether or not you

agree with how the ESA is being implemented is not the point. The

bill simply gives customers a right to know how much of the Federal Government’s ESA costs are being passed on to them.

In my district, Inland Power and Light already provides

customers on their monthly energy bill all the costs that are passed

on by BPA relating to the Endangered Species Act. This is the kind

of reporting we need and that every customer has a right to know.

Many customers at Inland were surprised at the costs they pay

each month.

And once they receive this information, they can make more informed decisions. They may ask whether the salmon recovery program is working or ask themselves if government can do better.

And those are the questions, exactly, why many are afraid of this

debate, but that’s the question that we’d like to have debated

today.

I hope the Federal witnesses can tell us how they measure success in salmon recovery or explain what standards and benchmarks

are being used to show progress.

I plan on using today’s hearing as a basis to ask the Government

Accountability Office to answer these questions. Our ratepayers

and endangered salmon deserve those answers so that the ESA can

be made to work for both species and people.

We are privileged to have before us today a host of ‘‘on-theground’’ experts who know what rising electricity bills mean to

them and to our economy, and I look forward to today’s hearing.

[The prepared statement of Ms. McMorris follows:]

Statement of The Honorable Cathy McMorris, Vice Chair,

Subcommittee on Water and Power

I would like to welcome everyone to today’s hearing. I represent the neighboring

5th District in Eastern Washington and serve as Vice Chair of the House Water and

Power Subcommittee. I want to thank my colleague, Doc Hastings, for having me

in his hometown.

This field hearing is about finding a balance between providing reliable and affordable electricity for our consumers, while protecting endangered salmon with a

balanced and reasonable approach. As we sit here at the confluence of the Columbia

and Snake Rivers, we admire the natural beauty of the Pacific Northwest’s river

systems. These rivers have a major economic purpose as well. They serve as the

lifeblood of our economy, our customs, our cultures and our traditions. The multipurpose dams and reservoirs on the rivers—as envisioned by President Franklin

Delano Roosevelt—not only helped win World War II, but to this day, provide many

benefits to those of us in the Pacific Northwest. By using and protecting our natural

resources, people throughout the Northwest have a reliable and reasonable source

of energy while also being able to enjoy our resources, as people have done for hundreds of years.

Low-cost, renewable hydropower forms the backbone of our regional electricity

supply. The promise of this long-term, low-cost hydropower made the Pacific Northwest what it is today. Yet this promise is being undermined by constant litigation,

4

activists who want to tear down the dams and our hydropower system, as well as

bureaucrats 2,600 miles away in Washington, DC who want to balance the federal

budget on the backs of our ratepayers. I think there are other ways to balance this

budget while still providing our constituents the energy they rely upon.

Oftentimes, the Endangered Species Act (ESA) is being used as a tool to drive up

costs for our electricity consumers. No one disagrees with protecting truly endangered species, but the ESA has been misinterpreted and stretched to put species before people at any cost. Just ask the hardworking farmers in Klamath Falls, Oregon

who were basically forced out of business when the federal government shut off

their water to protect endangered suckerfish only to have an independent science

panel later say that the water shut-off may not have been necessary.

The federal government has spent billions of dollars, reduced water deliveries to

communities, made electricity more expensive and lined the pockets of many lawyers, yet the ESA still has a 1% rate of success at best. In the world I grew up in,

a 1% rate does not meet the definition of success. We are trying to change the way

ESA is being carried out, through a reasonable approach that makes this process

fair for all involved. We have passed a reform bill in the House, and are waiting

for the Senate to act.

Meanwhile, the ESA is upfront and personal here in Eastern Washington—and

our farmers and electricity consumers are paying for it. Biological opinions coming

forth from a federal district judge have severely curtailed our ability to appropriately manage our hydropower and natural resources. As this chart shows, the

costs are outrageous. According to the Washington Post, Judge Redden’s 2004 summer spill amounted to spending $3.85 million for each protected Chinook salmon.

That’s an expensive salmon and unfortunately, those costs are passed on to electricity ratepayers. Judicial activism needs to stop, and unbiased jurisprudence must

take its place.

While the ESA has its own impact on power within our region, the Bonneville

Power Administration (BPA) manages and provides much of that power. Recent Administration budget proposals regarding secondary revenue have come dangerously

close to increasing our power rates even more. This proposal has been temporarily

blocked by recent legislation enacted by Congress. Representative Hastings, myself,

and a bipartisan group of Members throughout the Northwest have and will continue to fight this proposal.

No one can deny that the ESA has impacted recent Bonneville power rates. Yet,

many consumers don’t know how much they pay for fish protection, why they pay,

or whether they’re paying for them at all. A May 2005 poll found that 70 percent

of respondents either didn’t know how much they paid for salmon recovery or believe that less than 5 percent of their monthly bills go to salmon recovery. Yet, in

2004, the ESA components of BPA’s fish and wildlife program comprised approximately 23 percent of the agency’s wholesale rates. Clearly, this disparity shows

there is a disconnect between what consumers know—or have access to—versus

what’s real. Consumers need and deserve open access to this information, and how

these factors are affecting their pocketbooks.

My legislation gives consumers that access. The Endangered Species Compliance

and Transparency Act, H.R. 4857, requires BPA to estimate and report the direct

and indirect ESA costs to each wholesale power customer on a monthly billing basis.

Whether or not you agree with how the ESA is being implemented is not the point

here. This bill simply gives customers the right to know how much of the federal

government’s ESA costs are being passed on to them. Already in my district, Inland

Power and Light provides customers on their monthly energy bill all the costs that

are passed on by BPA relating to ESA costs. This is exactly the kind of reporting

we need, and that every customer has a right to know. Many customers of Inland

were surprised at the cost they pay each month, and many I have heard from have

questions as to where those costs are coming from and what they go towards.

Once consumers receive access to this information, they can make informed decisions. They may question whether the salmon recovery program is working or ask

themselves if their government can do better. And those questions are exactly why

many are afraid of this debate—because it leads to questions of whether the command-and-control, judicially driven ESA decisions are working.

Some of those questions will be debated today. I hope the federal witnesses can

tell us how they measure success in salmon recovery or can explain what standards

and benchmarks are being used to show progress. I plan on using today’s hearing

as a basis to ask the Government Accountability Office to help answer these

questions—our ratepayers and endangered salmon deserve those answers so that

the ESA can be made to work for both species and people.

5

We are privileged to have before us today a host of ‘‘on-the-ground’’ experts who

know what rising electricity bills mean to them and to our economy. I welcome them

and look forward to today’s hearing.

Miss MCMORRIS. At this time I’d like to turn it over to

Representative Hastings.

STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON

Mr. HASTINGS. Thank you very much. I appreciate your work on

getting this field hearing here. Cathy was a bit modest because she

serves on that committee. And while those of us in the Northwest

on a bipartisan basis work together a lot on this issue as far as

electrical rates, clearly, Cathy has a big impact in that she serves

on the committee, and that’s the reason the field hearing is here,

and I want to thank her for that.

This is an issue that affects all of us in the Northwest. And I

think it’s especially significant that the Water and Power Subcommittee decided to come here to see what the impacts are.

For more than 70 years the Federal dams on the Columbia and

Snake River systems have been the cornerstone of our region’s economic development. This clean and relatively inexpensive electricity generated by these facilities helps serve the elements of the

aerospace, aluminum, and now information technology industries

here in the Northwest.

These multipurpose dams provide the water and power needed to

run the irrigation systems that have turned this once arid basin

into one of the country’s premier centers of high value agriculture.

The dam facility and river transportation in the region must export

products to distant markets. In addition, they create new recreation opportunities and protect against flooding.

These assets come with responsibilities, both financial and environmental. Our region repays the Federal Treasury with interest

for the construction and maintenance of these facilities. Let me repeat that. You ratepayers in our region repay the Federal Treasury

with interest for the construction and maintenance of these facilities. We have consistently repaid this debt and, in fact, we are

ahead of schedule on the Federal debt repayment by nearly $1 billion. These are our dams, and the Northwest Congressional Delegation would never allow any outside region or administration to take

the benefits of this system away from us.

On the environmental side, we have made substantial investments, mainly paid for by ratepayers, all of you, to better facilitate

fish passage throughout the hydrosystem and to greatly improve

habitat. Due in part to our regional commitment of salmon recovery, we have witnessed near record salmon returns in most areas

of the Columbia and the Snake River regions.

For example, the number of spring and summer Chinook passing

over Bonneville Dam this year is the sixth strongest in the past 20

years. We are all committed to seeing healthy salmon runs and

meeting our obligations under the Endangered Species Act and our

treaty obligations with Northwest Tribes. And we can do this without the extreme step of tearing out the dams.

6

I will restate for the record, unequivocally, that those dams are

not going to go anywhere as long as I have something to say about

that in Congress. And I know I’m not alone in that regard.

Unfortunately, over the past ten years this has increasingly become a litigation-driven process. We now have an unelected and I

believe unaccountable Federal judge in Portland determined to run

the river himself with little regard for the impact of his decisions

on this side of the mountains.

In a court hearing last fall, he referred to the Northwest irrigation, transportation and power as ‘‘subsidies’’ and gave great deference to proposals set forth by interests that have an agenda to

tear out the dams. As a result of his court orders, a steady drip

of expensive fish measures of questionable value flows from his

courtroom directly onto the backs of ratepayers and river users.

One of the most obvious and egregious examples of this is the

summer spill program, where generators are bypassed during the

hottest and driest part of the summer at a cost last year of

$75 million on the theory that it aids an additional few dozen endangered Snake River fish.

The question is, is spending upwards of $3.5 million per listed

fish, while ignoring more cost-effective approaches that achieve the

same or better results, really the most efficient way to recover

salmon? It clearly, in my view, is not. But this is where we find

ourselves, routinely spending nearly a billion dollars a year on

salmon recovery in our region and, unfortunately, there is no end

in sight.

There are real consequences of this policy to those of us who pay

the household electrical bill or have to manage the overhead costs

of a small business, a farm, a school, or a hospital.

The Congresswoman’s proposal, which I support, would shine a

necessary light on the reality of the increasing costs of the Endangered Species Act. It is time to acknowledge that we have long

passed the point of diminishing returns with modifications to the

hydrosystem. If we truly want to aid salmon, let’s look at harvest

policies, and utilizing hatcheries to supplement naturally-spawning

salmon, and the ongoing unchecked predation of salmon by exploding populations of protected California sea lions and Caspian terns.

So I look forward to hearing more from all of the witnesses here

today on this important topic. It is important to all of us in the

Northwest. And I want, again, to thank you for sharing your support of the hearing today and look forward to the testimony from

the witnesses.

[The prepared statement of Mr. Hastings follows:]

Statement of The Honorable Doc Hastings, a Representative in Congress

from the State of Washington

Thank you for holding this important field hearing here in Pasco today. This is

an issue that affects all of us in the Northwest, and I think it is especially significant that the Water and Power Subcommittee decided to come here to get input

about how fish costs and electric rates are affecting our region directly from those

who are most impacted.

For more than seventy years the federal dams on the Columbia-Snake River system have been the cornerstone of our region’s economic development. The clean and

relatively inexpensive electricity generated by these facilities helped spur the development of the aerospace, aluminum, and now information technology industries

here in the Northwest. These multipurpose dams provide the water and the power

7

needed to run the irrigation systems that have turned this once arid basin into one

of the country’s premier centers of high-value agricultural production. The dams facilitate river transportation in a region that must export its products to distant markets. In addition they create new recreation opportunities and protect against flooding.

These assets come with responsibilities, both financial and environmental. Our region repays the federal treasury with interest for the construction and maintenance

of these facilities. We have consistently repaid this debt and, in fact, are ahead of

schedule on federal debt repayment by nearly one billion dollars. These are our

dams and the Northwest congressional delegation will never allow any outside region or any Administration to steal the benefits of this system from us.

On the environmental side, we have made substantial investments—mainly paid

for by ratepayers—to better facilitate fish passage throughout the hydrosystem and

to improve habitat. Due in part to our regional commitment to salmon recovery, we

have witnessed near record salmon returns in most areas of the Columbia and

Snake basins. For example, the number of spring and summer chinook passing over

the Bonneville Dam this year is the sixth strongest in the past twenty years.

We are all committed to seeing healthy salmon runs and meeting our obligations

under the Endangered Species Act and our treaty obligations with Northwest

tribes—and we can do this without the extreme step of tearing out dams. I will restate for the record, unequivocally, that those dams are never going anywhere as

long I have something to say about it.

Unfortunately, over the last ten years, this has increasingly become a litigationdriven process. We now have an unelected, and I believe unaccountable, federal

judge in Portland who appears determined to run the river himself with little regard

for the impacts of his decisions on this side of the mountains. At a court hearing

last fall, he referred to Northwest irrigation, transportation and power as ‘‘subsidies’’ and gave great deference to proposals set forth by interests that have an

agenda to tear out the dams. As a result of his court orders, a steady drip of expensive fish measures of questionable value flows from his courtroom directly onto the

backs of ratepayers and river users.

One of the most obvious and egregious examples of this is the summer spill program, where the generators are bypassed during the hottest and driest part of the

summer at a cost of seventy five million dollars or more on the theory that it aids

an additional few dozen Snake River Fall Chinook. Is spending upwards of three

and half million dollars per listed fish while ignoring more cost-effective approaches

that achieve the same or better results really the most efficient way to aid the recovery of salmon? It clearly is not. But this is where we find ourselves today: routinely spending nearly a billion dollars a year on salmon recovery in our region with

no end in sight.

There are real consequences of this policy to those of us who pay the household

electric bill, or have to manage the overhead costs of a small business, a farm, a

school or a hospital. Congresswoman McMorris’ proposal—which I support—would

shine a necessary light on the reality of the increasing costs of the Endangered Species Act placed on Northwest ratepayers and hopefully, begin to shift the region’s

focus more to accountability on ensuring every federal and ratepayer dollar spent

on salmon recovery is not squandered.

It is time to acknowledge that we have long passed the point of diminishing returns with modifications to the hydrosystem. If we truly want to aid salmon, let’s

look at harvest policies, and utilizing hatcheries to supplement naturally-spawning

salmon, and the ongoing unchecked predation of salmon by exploding populations

of protected California sea lions and Caspian terns.

I look forward to hearing more from all of the witness here today on this important topic. And thank you again for chairing this important hearing today.

Miss MCMORRIS. Thank you. I’d like to recognize our panel this

morning as quite an impressive panel that’s assembled and thank

each one of you for taking time to be here.

By way of introduction, we have Mr. Ron Reimann. He is Owner/

Operator of T & R Farms in Pasco, Washington. Mr. Ricardo

Espinoza, President of the Board, Pasco School District. Mr. Scott

Cooper, Director of Parish Social Ministry, Catholic Charities,

Spokane. The Honorable Sid Morrison, Chairman of the Executive

Board, Energy Northwest, and Chairman of the Board, Yakima

Basin Storage Alliance out of Zillah.

8

Mr. Steven Wright, Administrator of the Bonneville Power Administration, Portland, Oregon. And he’s accompanied by Bill

Maslen, Manager, Fish and Wildlife, Bonneville Power Administration. Steve is on a very tight time schedule today, so I understand

you’re going to give your testimony and then go with a round of

questions. OK? I appreciate that.

Karen Durham-Aguilera, Director of Programs, Northwestern

Division, U.S. Army Corps of Engineers. Nancy Hirsh, Policy

Director, Northwest Energy Coalition, Seattle, Washington. Terry

Flores, Director, Northwest RiverPartners, Portland, Oregon. The

Honorable Rebecca Miles, Commissioner, Columbia River InterTribal Fish Commission, Portland, Oregon. And she’s accompanied

by Mr. Ed Sheets.

Chris Voigt, Executive Director, Washington State Potato Commission and member of the Family Farm Alliance out of Moses

Lake, Washington. And Mr. Gary Chandler, Vice President of Government Affairs, Association of Washington Business.

Before we get started, I need to ask you to stand for the oath.

Please stand and raise your right hands and affirm after me.

[Witnesses sworn.]

Miss MCMORRIS. Before the witnesses testify, I would like the

members of the audience to know that we would welcome your

written testimony. There’s forms in the back where you can submit

your written comments.

Now, we’ve asked each of those on the panel to speak for five

minutes, and then we’ll open it up for questions. And I’ll ask you

just to pay attention to the clock here. Some suggest that it’s very

similar to a traffic light. Green means go. Yellow means speed up.

And red means stop. The clock is here for you to use.

At this time Mr. Reimann will start and share with us.

STATEMENT OF RON REIMANN, OWNER/OPERATOR,

T & R FARMS, INC., PASCO, WASHINGTON

Mr. REIMANN. I’d like to thank the Congressmen for bringing this

hearing here. It saves a trip to Washington, D.C. I’m an owner/

operator of a family owned diversified farm on the Snake River. We

bought our present land in ’73 and planned to put irrigation on it

in ’74. We put development on hold when a water moratorium was

put on the lower Snake River to study its uses. We also ran into

a little animal called the Kangaroo Mouse and its habitat.

In 1975 irrigation development started. Pumps, pivots, main line,

were all paid for by T & R Farms with no use of any government

money. We started water and power savings in ’79 using infrared

photography, neutron probes. We also installed a variable drive

pump at a river station, which was the first of its kind installed

on either the Snake or the Columbia River. We installed low pressure pivots at this time.

We use global positioning to fertilize, plant, and till our ground.

And this equipment gives us sub-inch accuracy and saves up to 35

percent on fuel costs. Our entire fields are treated this way. We

monitor soil moisture, soil nutrients, and plant nutrients on a biweekly and weekly basis. We use computers to control our pumping

and adjust our pressure and water use that adjusts the total every

eight minutes. We have used ethanol since 1985. We have

9

developed wildlife ponds and planted trees and bushes to enhance

the habitat. We have done this to enhance our farm environment.

We have reduced our electrical power usage 46 percent per acre

since ’79, and we have reduced our water usage 33 percent per

acre. From ’75 to 2005 our electrical power rate has increased 281

percent. 81 percent of this has come since 2001. Because of this we

are constantly looking at our power costs. And in 2006 we removed

the circle and the main line that provides water to it. In its nine

years of existence, it’s generated $1,601,700 on land that was previously cheat grass.

For tax purposes this land, under open spaces, was assessed at

$1,147 an acre. It is now reverted back to ground at an assessed

value of $8 an acre. This is money that is lost to the state and local

government.

Our other source of power, gas and diesel, has increased 356 percent and 625 percent since 1975. By comparison, our commodities

such as wheat has decreased 26 percent, potatoes have increased

only 4.5 percent. The fact that we are still here is amazing to us,

not to mention our banker. We have survived because we have become more efficient and have increased our crop yields.

The Snake River is the heart and blood of our farm. We are truly

fortunate to have a source of energy that is as efficient as hydropower. Would somebody in this room please tell me of another

source of energy we have that has no emissions, no waste, no hazardous cleanup, a renewable source that can be used for recreation,

food production, transportation, flood control, and wildlife? In this

day and age we no longer can afford to jeopardize this amazing

power source by courts and judges that know nothing of this great

natural resource.

Spilling water to flush fish down the river is senseless and environmentally unsound. We need to put some common sense into the

Endangered Species Act. We cannot continue to leave families such

as mine out of the equation. I am just as important as a fish, and

I can damn well tell you that my three-year-old granddaughter is

much more important.

You can patch a roof using $20 bills but it’s obviously too costly

and only a temporary fix. We have to approach this problem practically, not just try to buy off the problem.

The Endangered Species Act is a tool no different than a shovel.

Put to common sense use, it can produce. But in the wrong hands,

it can just as easily destroy. Let’s put our dams back to use for the

environment.

And I would like to thank you and I’d like to leave you with four

truths that after 63 years I have found to be self-evident. First,

nothing is ever as good as people say it is. Second, nothing is ever

as bad as people say it is. Third, any justice that comes out of a

courtroom, is an accident. And, fourth and last but not least, any

common sense that comes from the government is truly a miracle.

[The prepared statement of Mr. Reimann follows:]

Statement of Ron Reimann, Owner/Operator,

T & R Farms, Inc., Pasco, Washington

MY NAME IS RON REIMANN, I AM ONE OF THE OWNERS OF T&R FARMS.

WE ARE A FAMILY OWNED AND OPERATED FARM. WE ARE A DIVERSE

10

FARMING OPERATION OF APPROXIMATELY 7600 ACRES OF WHICH 4600 IS

IRRIGATED. OUR MAIN SOURCE OF WATER IS THE SNAKE RIVER.

WE BOUGHT OUR FARM IN 1973 AND PLANNED TO PUT IRRIGATION ON

IT IN 1974. WE PUT DEVELOPMENT ON HOLD WHEN A WATER MORATORIUM WAS PUT ON THE LOWER SNAKE TO STUDY ITS BEST USES. WE

ALSO RAN INTO A LITTLE ANIMAL CALLED THE KANGAROO MOUSE AND

ITS HABITAT.

1975 IRRIGATION DEVELOPMENT STARTED. PUMPS, PIVOTS AND MAINLINE WERE ALL PAID FOR BY T&R FARMS WITH NO USE OF ANY GOVERNMENT MONEY.

WE STARTED WATER AND POWER SAVING METHOD IN 1979 USING AERIAL INFRARED PHOTOGRAPHY AND NEUTRON PROBES TO MEASURE

MOISTURE CONTENT OF OUR SOIL. IN 1981 WE INSTALLED A 600HP VARIABLE DRIVE PUMP AT OUR RIVER STATION THAT WAS THE FIRST OF ITS

KIND USED ON THE SNAKE OR COLUMBIA RIVERS. WE ALSO INSTALLED

OUR FIRST LOW PRESSURE PIVOT.

WE USE GLOBAL POSITIONING TO FERTILIZE AND TO PLANT AND TILLAGE OUR GROUND. THIS EQUIPMENT GIVES U.S. SUB-INCH ACCURACY

AND SAVES UP TO 35% ON FUEL COSTS. OUR ENTIRE FIELDS ARE TREATED THIS WAY. WE MONITOR SOIL MOISTURE, SOIL NUTRIENTS AND

PLANT NUTRIENTS ON A BI-WEEKLY AND WEEKLY BASIS. WE USE COMPUTERS TO CONTROL OUR PUMPING AND ADJUST OUR PRESSURE AND

WATER USE THAT ADJUSTS EVERY 8 MINUTES. WE HAVE USED ETHANOL

SINCE 1985. WE HAVE DEVELOPED WILDLIFE PONDS AND PLANTED

TREES AND BUSHES TO ENHANCE HABITAT. WE HAVE DONE THIS TO ENHANCE OUR FARM ENVIRONMENT.

WE HAVE REDUCED OUR ELECTRICAL POWER USAGE 46% PER ACRE

SINCE 1979 AND WE HAVE REDUCE OUR WATER USAGE 33% PER ACRE.

FROM 1975 TO 2005 OUR ELECTRICAL POWER RATE HAS INCREASED

280.92%, 81.3% OF THIS INCREASE HAS COME SINCE 2001. BECAUSE OF

THIS WE ARE CONSTANTLY LOOKING AT OUR POWER COSTS AND IN 2006

WE REMOVED A CIRCLE AND THE MAINLINE THAT PROVIDES WATER TO

IT. IN ITS NINE YEARS OF EXISTENCE IT GENERATED $1,601,700 ON LAND

THAT PREVIOUSLY WAS CHEAT GRASS. FOR TAX PURPOSES THIS LAND

UNDER OPEN SPACES WAS ASSESSED AT $1147.00 AN ACRE. IT HAS NOW

REVERTED BACK TO GROUND AT AN ASSESSED VALUE OF $8.00 AN ACRE.

THIS IS MONEY THAT IS LOST TO THE STATE AND LOCAL ECONOMY

OUR ‘‘OTHER SOURCE OF POWER’’, GAS AND DIESEL HAS INCREASED

355.67% AND 624.54% RESPECTIVELY

ON THE OTHER HAND OUR COMMODITIES SUCH AS WHEAT HAS DECREASED 26%. POTATOES HAVE INCREASED 4.53% THE FACT THE WE ARE

STILL HERE IS AMAZING TO U.S. NOT TO MENTION OUR BANKER!!! WE

HAVE SURVIVED BECAUSE WE HAVE BECOME MORE EFFICIENT AND

HAVE INCREASED OUR CROP YIELDS.

THE SNAKE RIVER IS THE HEART AND BLOOD OF OUR FARM. WE ARE

TRULY FORTUNATE TO HAVE A SOURCE OF ENERGY THAT IS AS EFFICIENT AS HYDRO-POWER. WHAT OTHER SOURCE OF ENERGY DO WE HAVE

THAT HAS NO EMISSIONS, NO WASTE, NO HAZARDOUS CLEANUP. A RENEWABLE SOURCE THAT CAN BE USED FOR RECREATION, FOOD PRODUCTION, TRANSPORTATION, FLOOD CONTROL AND WILDLIFE. IN THIS DAY

AND AGE WE NO LONGER CAN AFFORD TO JEOPARDIZE THIS AMAZING

POWER SOURCE BY COURTS AND JUDGES THAT KNOW NOTHING OF THIS

GREAT NATURAL RESOURCE. SPILLING WATER TO FLUSH FISH DOWN

THE RIVER IS SENSELESS AND ENVIRONMENTALLY UNSOUND.

WE NEED TO PUT SOME COMMON SENSE INTO THE ENDANGERED SPECIES ACT. WE CANNOT CONTINUE TO LEAVE FAMILIES SUCH AS MINE

OUT OF THE EQUATION. I AM JUST AS IMPORTANT AS A FISH AND I CAN

DAMN WELL TELL YOU THAT MY THREE YEAR OLD GRANDDAUGHTER IS

MORE IMPORTANT!!!! YOU CAN PATCH A ROOF USING TWENTY DOLLAR

BILLS BUT IT OBVIOUSLY IS TOO COSTLY AND ONLY A TEMPORARY FIX.

WE HAVE TO APPROACH THIS PRACTICALLY NOT JUST TRYING TO BUY

OFF THE PROBLEM.

THE ENDANGERED SPECIES ACT IS A TOOL NO DIFFERENT THEN A

SHOVEL PUT TO COMMON SENSE USE IT CAN PRODUCE BUT IN THE

WRONG HANDS IT CAN JUST AS EASILY DESTROY. LETS PUT OUR DAMS

BACK TO USE FOR THE ENVIRONMENT.

11

Miss MCMORRIS. Mr. Espinoza now.

STATEMENT OF RICARDO ESPINOZA, PRESIDENT OF THE

BOARD, PASCO SCHOOL DISTRICT, PASCO, WASHINGTON

Mr. ESPINOZA. Good morning. I want to begin my testimony by

sincerely thanking the House Water and Power Subcommittee,

Congresswoman McMorris, and Congressman Hastings for the opportunity to testify this morning on the impacts to public education

as brought on by the salmon recovery efforts in the Northwest.

The complex issue of salmon recovery in the Northwest is one in

which sides in the debate are holding dear to their passionate arguments for their particular viewpoint. I’m not an expert on the management of the infrastructure of the Northwest electrical power

grid, but I do, like so many of my fellow citizens, know how to flip

on a light switch and operate a couple of power tools.

And I’m not an expert on salmon but I do, again, like so many

others, possess a few photos of me at home of me holding a couple

that didn’t get away.

I’m a School Board member. I’ve served eight years on the Pasco

School District’s Board of Directors, and I also serve as a member

of the Board of Directors for the Washington State School Directors

Association. I’m here today to share with you the impacts on the

future of our children’s education in light of the salmon recovery

efforts.

In the past five years, the Pasco School District has paid approxi- mately $5.7 million in electrical costs. Approximately 20 percent of

our electric bill goes toward salmon recovery, $1.1 million in five

years.

The point of my testimony could be summed up in one sentence.

The further out the school district’s dollars move away from the

classroom, the more difficult the task of educating our children becomes. $1.1 million could have paid for four or five teachers each

of the past five years. In our schools we need math coaches, reading coaches, coaches to help other teachers, newer teachers in these

particular areas.

Our new teachers need some seasoned veteran teachers. They

need them to help them to succeed. Our expected result would be

that children would receive a better education and be more prepared for adulthood.

$1.1 million could have purchased approximately 226 computers

for each of the past five years. The cost of initiating and maintaining a computer technology program in a school district is high and

ever increasing. In this age of information technology we have to

not only provide students information but the abilities to use it. It

was a surprise to me to see once we did lay out the capital for a

technology program how quickly a lot of the hardware became obsolete and we had to go out and purchase more. Or in some of our

new higher technologies bulbs will burn out at $300 a pop.

$1.1 million could have purchased approximately 2,600 math and

science textbooks for each of the past five years. The school districts across the state have and are exploring the changes of curriculum to better meet the grade level expectations. Updated research based texts and the proper instruction are key in helping

students learn.

12

These are three examples from a long list of programs and activities that many districts are not able to fund, or if they do reallocate

existing resources, they do so at the expense of other promising

interventions for all students. All day kindergarten, extended days

for learning, reducing the academic Achievement Gap, staff development, reduction of class sizes, dropout prevention, these are

some of the other areas that school districts would have addressed.

Salmon recovery is an important goal, and not many people

would argue the point. However, it is important to remember that

education dollars that stay close to the classroom are more effective

in our children’s education. Like everyone else, school districts pay

for the electricity we consume. We do need the electricity to operate

our schools, but the 20 percent on the cost used to pay for salmon

recovery, the $1.1 million over five years, those are education dollars that are very far removed from our classrooms.

Put another way, any increase in the electricity dollars going to

the recovery of schools of fish adversely affects the schools of our

children.

I hope my brief testimony helps you better understand the impact of the electrical costs and salmon recovery to the Washington

State public school system. The world we’re sending our children

into upon graduation is far different from the world we entered

when we received our high school diplomas.

Education reform in Washington State is on the right path. It

takes time and resources to meet the requirements of our legislature and our Congress and, more importantly, to prepare our students for their futures. Every dollar counts because, ultimately,

every child counts. I thank you once again.

[The prepared statement of Mr. Espinoza follows:]

Statement of Ricardo Espinoza, President, Pasco School District Board of

Directors, Member, Board of Directors for the Washington State School

Directors Association

I begin my testimony by sincerely thanking the House Water and Power Subcommittee for the opportunity to testify this morning on the impacts to public education as brought on by salmon recovery efforts in the Northwest. The celebration

of our national independence, our nations 230th birthday three days ago serves to

remind us all that we are a nation governed of the people, by the people and for

the people; your presence at Columbia Basin College today validates our democracy

in action. Thank you once again.

The complex issue of salmon recovery in the Northwest is one in which most sides

in the debate are holding dear their passionate arguments for their particular viewpoint. I am not an expert on the management of the infrastructure of the northwest

electricity power grid, but I do know how to flip on a light switch and operate a

few power tools. I am not an expert on salmon, but I do possess a few photos at

home of me with one or two that ‘‘didn’t get away’’. I am a school board member,

serving eight years on the Pasco School District Board of Directors and I also serve

as a member of the Board of Directors for the Washington State School Directors

Association. I am here today to share with you the impacts on the future of our children’s education in light of the salmon recovery efforts.

Article 9, section 1 of the Washington State Constitution reads as follows:

It is the paramount duty of the state to make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.

Our state legislature passed the Education Reform Act (HB 1209) in 1993 that

set the present course to meet this charge. Since that time education reform has

had a number of successes. The Washington Assessment of Student Learning

(WASL) is our assessment tool that informs parents, the Office of Superintendent

of Public Instruction, and Congress as to how we, local school districts are

performing. Academic achievement trend lines show that we are getting better at

13

preparing our students to meet the challenges that life will bring. Examples of these

successes: • In February 2006, Washington State was recognized by the College Board as

one of the top three states in the nation to mark the strongest increases in proportion of students taking Advanced Placement exams.1

• In May 2006 Washington State earned higher scores than the national average

in the National Assessment of Educational Progress in 4th and 8th grade.2

• Washington state students scored an all time high in math and verbal portions

in the SAT and also scored above the national average in 2005.3

• Locally, Pasco High School was recognized by Newsweek magazine as the 905th

best high school in the United States in May of 2005.4

• The Kennewick Reading program is a national model for improving education;

its goal of 90% of students in 3rd grade reading at grade level was achieved

this year.5

Education reform is working in Washington State; the evidence for this fact is broad

and deep. We should all be proud of the effort of our students, our teachers and

our administrators. Yet challenges remain before us and it is fair to say that these

challenges possess costs outside of local control that are constantly rising.

In public education our three largest challenges are (1) preparing the class of 2008

and future graduating classes to successfully pass their 10th grade WASL; preliminary results indicate that approximately 54% of this year’s sophomore class (Class

of 2008) passed the math portion of the WASL.6 The WASL passage is a Washington State mandate; (2) The federal law ‘‘No Child Left Behind’’ imposes a large

number of requirements on local school districts with many associated costs absorbed using existing resources7; (3) the federal law ‘‘Individuals with Disabilities

Education Act’’ has not been fully funded by congress and again, school districts

must use existing resources to meet the requirements of this law.7 Public education

shares expenditures similar to other public and private entities such as rising fuel

costs (Pasco school busses travel more than a million miles annually), rising health

care costs (The Pasco School District is the largest employer in Franklin County)

and of course, electricity.

In the past five school years the Pasco School District has paid approximately 5.7

million dollars in electrical costs. Twenty percent of our electric bill goes towards

salmon recovery. 1.1 million dollars in five years. As I briefly outlined, public education has mandates to meet and funding issues to resolve. The point of my testimony can be summed up in one sentence: the further out a school district’s dollars

move away from the classroom, the more difficult the task of educating our children

becomes.

1.1 million dollars could have paid for four or five teachers for the each of the

past five years. We need math coaches (teachers) and reading coaches (teachers).

Our new teachers need seasoned mentors (teachers) to help them succeed. Our expected result: children receiving a better education and being more prepared for

adulthood.

1.1 million dollars could have purchased approximately 226 computers for each of

the past five years. The cost of initiating and maintaining a computer program in

a school district is high and ever-increasing. In this age of technology we have to

not only provide students information, but the abilities to use it.

1.1 million dollars could have purchased approximately 2600 math and science

text books each of the past five years. School districts across the state have or are

exploring the changing of curriculum to better meet the grade level expectations.

Updated researched based texts and the proper instruction are key in helping students learn.

These are three examples of from a long list of programs and activities many districts are not able to fund, or if they do reallocate existing resources, they do so at

the expense of other promising interventions for students. All day kindergarten, extended days for learning, reducing the Achievement Gap, staff development, reduction of class sizes, dropout prevention and teacher pay and benefits are other areas

that school districts could address, however time does not permit me to go into an

in depth discussion on the needs of school districts to meet the mandates from our

state legislature and Congress.

Salmon recovery is an important goal, not many would argue the point; however

it is also important to remember that education dollars that stay close to the classroom are more effective in our children’s education. Like everyone else, we pay for

the electricity we consume. We do need the electricity to operate our schools but the

twenty percent on that cost used to pay for salmon recovery, the 1.1 million dollars

over five years, those are education dollars that are very far removed from our classrooms. Put another way, any increase in electricity dollars going to the recovery of

schools of fish adversely effects the schools of our children.

14

I hope my brief testimony helps you better understand the impact of electrical

costs and salmon recovery to the Washington State public school system. The world

we are sending our children into upon graduation is far different than the world

we entered when we received our high school diploma. Education reform in Washington State is on the right path; it takes time and resources to meet the requirements of our legislature and Congress and more importantly, to prepare our students for their future.

I thank you once again for this opportunity to speak to the subcommittee on this

issue today.

WORK CITED

1. http://www.k12.wa.us/Communications/pressreleases2006/APexams.aspx

2. http://www.k12.wa.us/Communications/pressreleases2006/NAEPScience.aspx

3. http://www.k12.wa.us/Communications/npressreleases2005/SAT2005.aspx

4. http://www.psd1.org/psd2/attachments/57381—4.pdf

5. http://www.tri–cityherald.com/tch/opinions/story/7917074p-7810576c.html

6. http://www.k12.wa.us/Communications/pressreleases2006/StrongGains2008Grads.aspx

7. http://www.nsba.org/site/docs/38700/38616.pdf

Miss MCMORRIS. Thank you. Mr. Cooper.

STATEMENT OF SCOTT COOPER, DIRECTOR, PARISH SOCIAL

MINISTRY, CATHOLIC CHARITIES, SPOKANE PARISH, SPOKANE, WASHINGTON, ACCOMPANIED BY BONNIE ROBERTS,

REPRESENTATIVE VOICES

Mr. COOPER. Good morning. My name is Scott Cooper, and I direct Parish Social Ministries to Catholic Charities in Spokane,

which is the largest sectarian social service provider in Eastern

Washington. I want to thank you again for this opportunity to be

here.

Part of my work involves coordinating a network of emergency

assistance providers through churches in some of the more rural

counties in Eastern Washington. And it’s in that capacity that I’m

here with you today. The bulk of the emergency assistance that our

network provides to low-income people and families in crisis is for

utility bills. These cases represent not only the majority of the

households we assist, but also the majority of our assistance budget. In other words, we’re spending more money to help more families with utility needs than with any other class of needs.

Now I’d like to give you just a snapshot of who it is we’re helping, so this is going to be a composite. We’ll call her Sally. She’s

a single mother in her late 30s. She’s got two school-age children.

She’s not on Welfare. She may be qualifying for food stamps and

medical assistance, but she’s not receiving cash grants.

She missed a month of work because of an illness or a surgery,

and she fell behind on her bills. She’s back at work. She’s got her

income again. But those bills that she missed have piled up and

are bearing down upon her.

She’s clearing after deductions about $1,000 a month, not qualifying for a housing authority voucher, so she’s paying market rate

rent of about $550 a month. So $550 every month out of the $1,000

or so that she’s earning. Her heat during the winter is supplied by

electricity, as it is often in lower income housing, and it averages

around $200 a month during the cold season. So that gives you

some sense of what her monthly budget looks like and what an

increase of any kind does to her family’s ability to provide food,

15

clothing, prescription medication, any kind of necessity, not even

counting any sort of something like a luxury like, oh, say, eating

out at McDonalds for $10.

One thing to note is that there is a network of governmental, corporate, and private assistance to help people struggling to pay their

bills, and this network is never sufficient to meet all of the legitimate needs. For a client who has exhausted all the sources of aid

but whose need continues because of medical crisis, death in the

family, instability in the job market as they move from one job to

another, these are the folks we’re calling the working poor.

It’s also common to hear from those who do not qualify for the

larger governmental sources of aid because of their slightly greater

income but, nonetheless, face disconnect notices. Again, my concern

is that all sources of aid combined are not sufficient to meet the

needs in the present moment, not considering any hypothetical increases in rates.

So with that in mind, I ask you to consider the effect on the poor

and the larger community should those rates rise. When rates rise,

incomes for low-income people through entitlement programs or

through minimum wage jobs at the low pay scale do not typically

rise in response. This is to say that increases in utility rates have

the greatest proportional impact on the budgets of low-income

households.

A single digit rate increase for a family receiving TANF, Temporary Assistance to Needy Families, can easily mean the difference between winter heat and other necessities. These, in turn,

add stressors on families which have observable results ranging

from increased incidents of domestic violence and substance abuse

to increased visits to medical providers and emergency rooms, often

uninsured.

One small private agency director I spoke to reported that two

of the last three households she had assisted with utility needs

were also dealing with domestic violence at the same time. These

situations are interwoven, perhaps not directly causing the negative social outcome, but certainly contributing to it and magnifying

it.

The Spokane Neighborhood Action Program, who is the primary

provider of government utility assistance in Spokane County, reports a 7 percent increase in requests for routine heating assistance in ’06 over ’05 and a 25 percent increase in demands for emergency heating assistance in that same year. They also report a

large number of households seeking help in the past year who

never sought assistance in the past, typically the working poor who

might have been able to manage their own utility costs in the past

years.

Our own network is small, Catholic Charities, by comparison to

some, but our resources are not going to be able to just automatically increase as the need increases in the community. That means

we’re going to be having to turn more people away with legitimate

needs. We will not have the resources necessary.

I’d like to end with a few comments on your concern of this committee to seek an equilibrium between the hydropower for a growing economy and basic human needs on one hand and the desire

16

for sustainable environmental quality, particularly with regard to

salmon runs on the other hand.

The teaching of my faith tradition is a both/and teaching. Five

years ago Catholic Bishops of the Northwest issued a pastoral letter, a teaching document, addressing this very topic. How do we

balance the diverse and sometimes competing needs? It says we’ve

got to learn a balanced analysis. Thank you very much.

[The prepared statement of Mr. Cooper follows:]

Statement of Scott Cooper, Director,

Parish Social Ministries, Catholic Charities, Spokane

Good morning. My name is Scott Cooper and I direct Parish Social Ministries for

Catholic Charities, Spokane, the largest sectarian social service provider in Eastern

Washington State. It is my privilege to be here. Thank you for this opportunity.

Part of my work involves coordinating a network of emergency assistance providers through churches in some of the more rural counties of Eastern Washington,

and it is in that capacity that I speak to you today. The bulk of the emergency assistance that our network provides to low-income people and families in crisis is for

utility bills. These cases represent not only the majority of the households we assist,

but also the majority of our assistance budget. Simply put, we are spending more

money to help more families with utility needs than with any other class of needs—

such as housing, transportation, food or prescriptions.

I have been working directly with low-income households in the Spokane area for

over ten years through three different social service organizations and I have observed firsthand the challenges confronting the poor in our communities. The first

thing to note is that there is a large network of governmental, corporate and private

assistance to help people struggling to pay utility bills. The second thing to note is

that this network is never sufficient to meet all of the legitimate needs. It is very

common to hear from clients who have exhausted all sources of aid but whose need

continues, because of a medical crisis, family turmoil, or instability in the job market. It is also common to hear from those who do not qualify for the larger, governmental sources of aid because of their slightly greater income, but who nonetheless

face disconnect notices thanks to unforeseen medical costs, a death in the family or

even rising gas costs. Again, my concern is that all sources of aid combined are not

sufficient to meet the needs in the present moment, not considering any hypothetical or actual increases in utility rates.

With that in mind, I then consider the affect on the poor and on the larger community should utility rates rise and continue to rise. Just because public utilities

find it necessary or desirable to raise the rates they charge their customers, I can

think of no instance when there has been a corresponding increase in the social security, Welfare or VA benefits the poor rely upon to meet their needs. Neither has

there been a corresponding increase in the wages paid to the working poor. This is

to say that increases in utility rates have the greatest proportional impact on the

budgets of low-income households, even if those households have comparatively

modest overall bills. A single-digit rate increase for a family receiving TANF (Temporary Assistance to Needy Families) can easily mean the difference between winter

heat and other necessities such as routine prescriptions, adequate clothing for growing children and nutritious food. These added stressors on families have observable

results, ranging from increased incidents of domestic violence and substance abuse

to increased visits to medical providers and emergency rooms. One private agency

director I spoke to reported that two of the last three households she had assisted

with utility needs were also dealing with domestic violence at the same time. These

situations and needs are interwoven, perhaps not directly causing the negative social outcome, but certainly contributing to it, reinforcing and magnifying it, making

it that much more difficult to achieve a positive outcome.

The Spokane Neighborhood Action Programs (SNAP), the primary provider of governmental utility assistance in Spokane County, reports a 7% increase in requests

for routine heating assistance in 2006 over 2005, and a 25% increase in demands

for emergency heating assistance in the same year. They also report a large number

of households seeking help in the past year who had never sought assistance from

SNAP in the past, typically the working poor who might have been able to manage

their own utility costs in past years. And for all of the resources at their disposal,

SNAP is still able to assist only 30—32% of the 34,000 Spokane County households

eligible for this program. To restate, the current resource is insufficient to the current need. Increases in utility rates will only have a deleterious effect on low-income

17

households, which in turn will impact the larger community with greater social and

family instability, increasing crime rates and greater demands on public services.

We know that one utility company in Eastern Washington will be increasing rates

by 12% in coming months, following several years of no rate increases thanks to a

long-term contract with the Bonneville Power Administration. The gentleman I

spoke to at this utility company indicated that such long-term contracts were likely

now a thing of the past and that this fact opened the door for more regular and

frequent rate increases. He also warned against attempts to shift the rate structure

from a cost basis to a market basis. The market, taken as a whole, might be able

to sustain any rate increases that would follow from a ‘‘charge what the market can

bear’’ philosophy, but low-income households would, without any doubt, be disastrously affected.

Catholic Charities’ own network is small by comparison to some. We work with

a total annual assistance budget of approximately $30,000. In a few Eastern Washington counties, we benefit from EFSP funds administered by FEMA to provide

emergency utility assistance. We then add our own private funds to that pot. In all

but a few cases, even this combination of funds is not sufficient and our contacts

in rural communities must turn genuinely needy people away for lack of resources.

I would propose to this committee that any organization seeking to support families

and a stable social structure must consider both the immediate and indirect effects

of utility costs on fixed-income and working poor households. Those households and

society as a whole will bear the costs, in wider negative consequences.

My final comments concern the balance that this committee seeks in the title of

this hearing, the equilibrium between hydropower for a growing economy and basic

human needs on one hand, and the economic and social desire for sustainable environmental quality, particularly with regard to salmon runs, on the other hand. The

teaching of my faith tradition is a both/and teaching. As much as we advocate and

work for the needs of the poor, we also hold up the sanctity of creation, and we cannot be asked to choose between the two. They are also interwoven. Five years ago,

the Catholic Bishops of the Northwest issued a pastoral letter, a teaching document,

addressing the very topic you are studying today: how do we balance the diverse—

and sometimes competing—needs of the human community and also the natural

systems upon which all life depends with the limited resources of the Columbia

River watershed? I would point you to that teaching document as one example of

a balanced analysis.

I urge this committee to seek a balance that honors both sets of concerns, that

does not set one above the other, that does not force one community—either the

poor or the environment—to pay for short term benefits to the other. Our society

is enormously creative—surely we can design solutions that safeguard both our lowincome neighbors and the natural world while continuing to provide energy resources for economic needs.

Miss MCMORRIS. Thank you very much. Mr. Morrison.

STATEMENT OF THE HON. SID MORRISON, CHAIRMAN OF THE

EXECUTIVE BOARD, ENERGY NORTHWEST AND CHAIRMAN

OF THE BOARD, YAKIMA BASIN STORAGE ALLIANCE,

ZILLAH, WASHINGTON

Mr. MORRISON. Thank you, Madam Chair and Congressman

Hastings. Thank you for using the umbrella of the Water and

Power Subcommittee as a chance to get me out and share some

thoughts.

My thesis for this hearing is based on a long-time investment involved in water issues. And I’m not here to complain about the

high cost of electricity because of our need to nurture our cultural

icon, the salmon, but to propose a solution that works for both.

What we’re doing now doesn’t work. The price of power spirals upward, and we’re not making the best investments in reaching the

goal of restoring the salmon resource. Your legislation promoting

transparency will help public understanding.

My frustration with the status quo is two-fold:

18

No. 1, The Endangered Species Act was intended by its authors

to be fine-tuned over time. But because of political pressures it remains inflexible and inaccurate, missing the target in finding the

most workable answers; and, No. 2, because of past failures of the

Executive and Legislative branches, including me, the management

of the river system is shifting to the judicial branch.

Let me just briefly give you an example of what can be done as

I think an answer that works for both salmon and for our power

and economic resources. By the way, Doc Hastings has been our

champion and, Congresswoman McMorris, we appreciate your help

in supporting Senator Cantwell. The whole Washington team has

been very good in funding the feasibility study for what we call the

Black Rock Reservoir.

As an example, think of what we can do if we think big and we

all work together. Yakima River Basin is just right next door to us,

a wonderful project back when the Bureau of Reclamation wasn’t

afraid to dream, a hundred years old. And in the last 50 years,

whether changes have occurred, when I worked the issue, I inherited one drought year out of ten. Congressman Hastings now has

the pleasure of one drought year out of four.

So we’re proposing this concept of using surplus water from the

Columbia when nobody else needs it and power to lift that water

into a reservoir that we call pump storage, and that water then is

used to satisfy irrigation demands, which then frees up the existing

Yakima River system with its five reservoirs for other interests

such as municipal and industrial water supplies and, most importantly, the restoration the salmon resource.

The fish story is that we used to have about 500,000 to 800,000

returning salmon each year coming back into the Yakima River.

Scientists have told us that it’s the tributary in the lower 48 states

that has the greatest potential for salmon recovery. Guess what?

What’s missing is water. We can vest all kinds of ratepayer and

Federal money in bringing back endangered salmon and improving

the expanding habitat, and it has some benefit, but I repeat, it

doesn’t work without water. That’s where this interbasin concept of

storage—Governor Gregoire is very enthusiastic about storage as

the State is involved, and the funding you’ve provided is really the

key to moving on with the feasibility study, which will be completed in 2008.

By the way, if you build the reservoirs large enough and perhaps

build a series of them along the Columbia, it serves as a storage

vat. It’s a logical add on to what we’ve been doing for over a hundred years in utilizing the water resource. Store excess water, release it when you need to rewater such things as the Hanford

Reach, which is very sensitive environmentally, help with irrigation downstream, generate hydropower, and that list goes on.

Let me slip on a different hat just for a second. Wouldn’t it be

better if we used surplus power to lift surplus water and hold it

until needed? One of my responsibilities with Energy Northwest,

and I now get periodically a phone call from our friend Steve

Wright at BPA saying we can’t sell the power, put the nuclear

plant on economic dispatch, which is to try to throttle it back down.

If it doesn’t do it very well, they may be running 100 percent effiVerDate 11-MAY-2000 16:28 Nov 27, 2006 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 S:\DOCS\28557.TXT HRESOUR1 PsN: HRESOUR1
19

ciency. We should be pumping water with that power during those

surplus times and using it later when needed.

Let me close by saying that increased costs of power is primarily

a result of investments we make to meet the requirements of the

Endangered Species Act. The Northwest is great for this. We are

very environmentally conscious. But, ultimately, people want to

know that their investments are targeted to do the most good.

Like the dreams of a century ago, the Federal process must be

far-sighted and effective instead of sending us an ever larger bill

every year with little to show for the investment.

The options of water storage when there is excess makes sense

both to generate electricity and to support fish recovery and production. The Federal Government should either lead this effort or

get out of the way.

[The prepared statement of Mr. Morrison follows:]

Statement of The Honorable Sid Morrison on behalf of the

Yakima Basin Storage Alliance and Energy-Northwest

MR. CHAIRMAN, and members of the Water and Power Sub-Committee: I welcome you here today to the 2/3 of the State of Washington that does not live up

to the title of the Evergreen State. The Cascade Mountain Range, a chain of volcanic fire, does a thorough job of holding the moisture-laden clouds from the Pacific

Ocean to the west of us, and Congressman Hastings and your Vice Chair, Congresswoman McMorris, do a great job of representing our very intense interest in water,

and fish, and the price of power in this dry part of the state.

My thesis for this hearing is based on long-term interest and involvement in

water issues, and this may surprise you, I am here not to complain about the high

cost of electricity because of our need to nurture our cultural icon, the salmon, but

to propose a solution that works for both. What we are doing now doesn’t work; the

price of power spirals upward and we are not making the best investments in reaching the goal of restoring the salmon resource.

My frustration with the status quo is two-fold: (1) The Endangered Species Act

was intended by it’s authors to be fine-tuned over time, but because of political pressures, it remains inflexible and inaccurate, missing the target in finding the most

workable answers, and (2) because of past failures by the Executive and Legislative

branches (including me), the management of the River system is shifting to the Judicial branch.

Let me spend these precious moments with you describing what is happening here

in the Basin of the Columbia River, and what can be done about it. I will use the

tributary just to the northwest of this hearing as an example of the opportunity that

is ours if we will just think big.

The Yakima Basin Project was undertaken by the federal government through the

Bureau of Reclamation in the late 1800s. It was their dream to make the desert

bloom back in the days when they were bold enough to have such dreams. They saw

high mountains with year-round snow in the Cascades, and the potential for reservoirs to catch the runoff, feeding the rivers that fed irrigation canals, producing

crops that fed people around the world.

It worked. The population of the three county area involved grew from 25,000 to

over half a million, and the products produced are world famous and create a very

favorable balance of trade. But the weather has gradually changed. When I served

in Congress, we were beginning to see the shortage of dark clouds on the horizon,

resulting in one drought year out of ten. We scrambled to find additional reservoir

capacity and put in place conservation measures so water usage could be more effective, a continuing and successful effort. Minimum flow requirements and stream

management techniques were increased to protect salmon during critical times in

their life cycle.

The volume of precipitation hasn’t declined with the climate change we have incrementally seen over the past 50 years. However, freezing levels in the Cascades

have moved up, and the mountains no longer hold the snow so it will fill our existing reservoirs the three times per year that is required for a normal water year.

Congressman Hastings now inherits one drought year out of four, with a multi-billion dollar economic impact, and all too little water for salmon production on the

Yakima.

20

Now, let me tell you the fish story. The Yakima River used to host the return

of 500,000 to 800,000 salmon per year late in the 19th century. Scientists have proclaimed that the Yakima and it’s tributaries have the greatest potential for salmon

recovery of any river system ‘‘in the lower 48.’’ The Yakama Indian Nation is

increasingly being recognized for it’s expertise in the operation of supplementation

facilities (these used to be called ‘‘hatcheries’’—and the goal is to strengthen and

expand wild stocks of salmon). The recovery stage is set.

What is missing is water. We can invest all kinds of ratepayer and federal money

in bringing back the endangered salmon, improving and expanding habitat, and it

all has some benefit, but, I repeat, it doesn’t work without water.

So, how does all of this weave together to provide an answer to the high cost of

fish? A group of us have formed the Yakima Basin Storage Alliance to look for water

supply answers in our area. Our plan is called ‘‘Black Rock’’, an inter-basin pumped

storage reservoir, utilizing water pumped out of the Columbia River when it is surplus to all other needs. This reservoir water is released through the summer season

to satisfy the needs of existing irrigated acreage with a least 70 percent of courtproven legal water rights. The existing Yakima Basin Project, with it’s five high

mountain reservoirs, then can be managed for fish production and greatly reduced

other needs in the three-county Basin. The goal is a ‘‘normative’’ River as flowed

a hundred years ago, with some modifications to make it even kinder and gentler

for fish than Mother Nature provided.

Is this the way to get the best results for the investment in an endangered resource? We think so, and Congressman Hastings, backed by other House members

and our two Senators, particularly Senator Cantwell, have been heroic in finding

resources to match the state in funding a Bureau of Reclamation (BOR) Feasibility

Study that is in it’s third year and will be completed in 2008.

During this study, we found an interesting problem in the Principles and Guidelines the BOR must follow in determining the economic value of producing salmon.

They figure the increased number of salmon resulting from the Black Rock Reservoir concept, multiply it by pounds per fish, and calculate what that tonnage does

to the retail price. The problem is that northwest ratepayers paid $695 million last

year in increased power costs and water spilled to help salmon recovery, and no one

I have talked with can recall getting a fish out of the deal. Next year it could be

a billion dollars, and it seems to me that is the economic value of replacing the

salmon, in addition to the cultural and religious value to the Yakamas and other

Columbia River native Americans.

The Columbia River doesn’t suffer as much as the smaller river systems I have

just described. It’s roots are in the higher mountains of the Rockies, and it has capacity to store some water in Lake Roosevelt behind Grand Coulee Dam. However,

when we get rain instead of snow, and the tributaries of the Columbia swell with

water that can’t be managed for fish or power or the economy, everyone suffers.

Let me slip on a different hat for a moment that relates to high water and the

high price of power. The Columbia Generating Station, a nuclear plant just a few

miles up the Columbia River producing 1,150 megawatts for the Bonneville Power

Administration (BPA), gets a phone call when the river system is running high asking that we put the power plant on ‘‘economic dispatch’’. This is an expensive process throttling back a nuclear plant, built to run most efficiently for years at 100 percent power, because ‘‘we can’t sell the power’’. What it also says is that someone

can’t control the River for a broad base of benefits, or won’t.

The high cost of power that brings this Committee here today is not because it

costs more for energy production in this corner of the nation. Looking at this historically, the opposite is true. Federal leadership and planning, augmented by local public power utilities, have harnessed the water flowing to the Pacific in the Columbia

and Snake Rivers, used that energy to produce the aluminum it took to win World

War II, and to irrigate millions of acres of productive cropland. Power rates here

are the envy of much of the country, even with the expensive modifications made

to turbines, fish ladders, and collection systems to safely transport salmon both up

and down the rivers as they play out their fascinating life cycle.

The increased cost of power is primarily the result of investments we make to

meet the requirements of the Endangered Species Act. The northwest is environmentally conscious and more willing than most to protect our natural resources, but

it must be, in the long haul, efficient, and targeted to do the most good. Like the

dreams of a century ago, the federal process must be far-sighted and effective, instead of sending us an ever larger bill year after year with little to show for the

investment.

The options of water storage when there is excess makes sense, both to generate

electricity and to support fish recovery and production. The federal government

should either lead this effort or get out of the way.

21

* * * * *

Morrison is a former Member of Congress, 1981 through 1992, from the 4th District of Washington. He chairs the Boards of both the organizations listed above,

and both have a vital interest in the management of the Columbia River and it’s

tributaries.

The Yakima Basin Storage Alliance is a broadly based group interested in assuring a future for the Yakima River Basin, a 100 year-old Bureau of Reclamation

project that is suffering dramatically from climate changes that inconsistently bring

high mountain snow to feed the reservoirs that supply the water for fish, irrigation,

municipal and industrial use, and recreation.

Energy-Northwest in a Joint Operating Agency under Washington State law that

supplies electrical energy to it’s public power member utilities at cost. It operates

a nuclear power plant, wind farms, solar farm, hydro projects, and other energy activities.

Miss MCMORRIS. Very good. Next is Mr. Wright, Administrator

of BPA. We really appreciate you rearranging your schedule to be

here. What we’re going to do is have you share your written testimony and then we’re going to each ask you maybe five minutes of

questions and then we’ll let you be on your way so you can get on.

Thank you very much.

STATEMENT OF STEVE WRIGHT, ADMINISTRATOR, BONNEVILLE POWER ADMINISTRATION, PORTLAND, OREGON;

ACCOMPANIED BY BILL MASLEN, MANAGER, FISH AND

WILDLIFE, BONNEVILLE POWER ADMINISTRATION

Mr. WRIGHT. Thank you very much. It’s an honor to be here

today with the Subcommittee, and it’s a great honor to follow Sid

Morrison, who was a great Congressman from this area.

I want to focus on three points today. First, I think that we have

made tremendous progress in this region toward salmon recovery

and I would like to acknowledge that. Second, I want to summarize

the costs that are covered by BPA ratepayers supporting those efforts that are creating that success. And, third, describe some of

the implications of the ongoing litigation and where it can lead us

as we seek to address that recovery.

With respect to results, after more than 20 years of efforts we

are producing some real successes in this basin. Each of the last

four years we have seen returning Chinook in the Columbia that

exceeded the historical high year in the 60 previous years, going

back to when Bonneville Dam was built and first able to accurately

count the first Chinook.

We’ve also seen ESA listed fish in the basin, substantial increases on all of those fish between the years 2000 and 2004. In

river survival of yearling Chinook is higher than it has ever been,

at least in terms of when we’ve been able to measure it. Adult

salmon and steelhead are estimated to survive through the

hydrosystem at a rate of about 98 percent, which is equivalent to

pre-dam levels.

In 2005 juvenile survival in the Snake and upper Columbia exceeded the performance standards that were established in the

2004 biological opinion. So we’ve had some real victories here over

the course of the last years.

But I do need to say that all of these years of effort have resulted

in the low-hanging fruit having been plucked. We are increasingly

facing the problem of survival benefits in the hydrosystem being

22

harder and harder to come by, with additional investments producing less results.

Now, with respect to costs, the improvements that we’ve made

have come at a substantial cost. The Northwest Power and

Conservation Council has concluded that the total costs over the

last 20 years to fish and wildlife covered by the Bonneville Power

Administration ratepayers is about $7.8 billion, the underscore

would be $7.8 billion dollars.

Fiscal Year 2007 we estimate the costs at around $350 million

for out-of-pocket expenses and over $300 million for lost

hydrosystem costs, changes in the operation of the hydrosystem.

That’s for physical year 2007. And we see those cost extending as

far as the eye can see. This currently represents about 30 percent

of Bonneville’s wholesale power rate.

H.R. 4857, sponsored by Congresswoman McMorris, does direct

the power marketing administrations across the country to include

the ESA costs on customers’ bills. While the Administration does

not have a position at this time on the bill, the Administration does

support increased accountability, and we believe this bill would

support increased accountability, and we find many things to like

in the bill.

We would recommend the combining of ESA costs and Northwest

power costs, at least with respect to Bonneville, because there is a

tremendous overlap and we find it hard to separate those costs.

Where do we go from here? Many human activities in the basin

have created the problems that we are seeking to address today.

I think there’s general agreement across the region that we need

an ‘‘all H’’ approach, one that addresses hydro, harvest, hatcheries,

and habitat.

That District Court that was referenced earlier advised an ‘‘all

H’’ approach. To simplify, the District Court advised that to meet

the ESA requirements the Federal Columbia River Power System

must take into account all mortality, not just the mortality caused

by operation of the FCRPS. This ruling further suggests that if a

fish is not on the road to recovery, any proposed action funded, authorized, or carried out by the Federal Government, even though

it may not appreciably reduce salmon recovery or survival, must,

along with all the other activities, put the fish on the road to that

recovery.

The District Court’s ruling, if sustained by the Ninth Circuit,

would apply to all proposed actions in the region and all proposed

actions, including harvest and habitat would be further called upon

to share the burden. From where we sit, we think that this means

that in effect we are all in this together. We are all going to have

to find solutions.

The Administration supports and has worked hard to develop a

recovery plan, but we believe that this ruling has gone too far.

Having said that, though, we do believe that the ruling is appropriate with respect to its focus on a knowledge approach. The District Court has encouraged a collaborative regional process to develop an ‘‘all H’’ plan. We support this wholeheartedly and are encouraged by the substantial agreement that the Pacific Northwest

should define its own destiny. And we have good support and active

23

involvement of the States and Tribes in that ongoing collaborative

process.

Let me make one other point and then come to a conclusion here.

One of the things that has increasingly become clear to us as a result of the District Court ruling is that we are going to need to

rethink and reorder some of our fish and wildlife spending priorities. I provide an example of that in my written testimony with

respect to the Northeast Oregon hatchery.

The bottom line is that particularly with a program of this magnitude we need clearly articulated goal lines, metrics to describe

our process, and cost effectiveness standards. Again, we’re going to

have to work together as a region in order to accomplish that. At

$750 billion a year annually, salmon recovery needs to be managed

like a business.

The largest fish and wildlife restoration program in the world is

happening here in the Northwest, and I think that’s fitting given

the citizens of the Northwest feel strongly about the environment

and nature in general.

The recent District Court ruling provides both risk and opportunity for us as a region. We, Bonneville and the Federal agency,

want to be part of taking advantage of the opportunity to forge a

regional consensus that delivers salmon recovery cost effectively.

Thank you. And we’ll do your questions.

[The prepared statement of Mr. Wright follows:]

Statement of Stephen J. Wright, Administrator and Chief Executive Officer,

Bonneville Power Administration, U.S. Department of Energy

Good morning Congresswoman McMorris, Congressman Hastings. Thank you for

the opportunity to testify today. My name is Steve Wright; I am the Administrator

of the Bonneville Power Administration (BPA). I am pleased to be here today to discuss the impact of the Endangered Species Act (ESA) requirements on BPA costs

and our efforts to ensure that we are achieving real biological results for endangered

salmon and steelhead.

BPA is committed to our responsibilities to protect, mitigate and enhance fish and

wildlife affected by the Federal Columbia River Power System (FCRPS), and to provide the citizens of the Northwest with an economical and reliable power supply.

This includes a commitment to conservation of salmon, steelhead, and other listed

fish under the ESA. We believe the citizens of this region want to protect and recover these fish, and we share that goal. We also believe that Northwest citizens

understand the tremendous value of the lower-cost, clean hydropower that the Federal dams on the Columbia River and its tributaries provide to us. We continue to

seek to achieve our twin goals of supporting a healthy Northwest economy and environment.

Today, I’d like to give you an update on the very ambitious set of actions the Federal action agencies are taking for listed fish. I’ll also talk about the impact of fish

costs on BPA’s power rates. Finally, I will highlight for you the risks and opportunities that we see in the current direction of ongoing litigation, specifically the remand

of the 2004 FCRPS Biological Opinion, now before the Ninth Circuit Court of Appeals. There are far-reaching implications for that litigation. Costs are uncertain,

but they will be borne not only by BPA customers, but by a wide range of other

businesses, government, and industry in the region.

This is why we are strongly supporting the collaborative process among Federal,

State, and Tribal sovereigns established under the remand as a way to develop a

solution to this problem. We believe that a regionally developed 10-year plan of priority actions by all entities and across all life stages for ESA fish would be the best

outcome of the litigation and the best outcome for the region.

Recent Results

For over a decade, the Federal action agencies (BPA, the U.S. Army Corps of Engineers, and the Bureau of Reclamation) have been implementing an extensive program of hydro, habitat, and hatchery improvements for conservation of ESA listed

24

fish. We have achieved notable successes and urge more attention on the efforts for

recovery. The results of the last few years are very encouraging. The ultimate measure of progress, of course, is the number of adult wild and hatchery salmon and

steelhead that return to spawn each year in the Columbia and Snake Rivers. These

numbers, over the last four years, have shown the highest salmon returns for Chinook salmon in the Columbia River Basin since we began recordkeeping over 60

years ago. (See Graph 1.) Moreover, listed fish stocks in the Columbia Basin have

witnessed increased returns in the last few years. (See Graph 2.) This shows that

the fish can respond powerfully. It is also important to note that while overall salmon numbers may be improving, the situation for individual species may be less favorable. Because fish populations can vary widely from year to year, it is important

that we sustain long-term perspective on recovery.

On average, in river survival of yearling chinook salmon is higher than ever

measured. (See Graph 3.) Adult salmon and steelhead survival is estimated at about

98 percent or higher at each dam—equivalent to pre-dam survival.

The Federal action agencies recently issued their 2005 Progress Report, covering

actions to protect and recover ESA-listed Columbia Basin salmon and steelhead

(www.salmonrecovery.gov). The report described the substantial progress we made

this past year with actions that achieved real biological results and improved conditions for the fish.

Salmon must be able to pass the dams if we are to succeed in recovering salmon. This is why over $1 billion of capital over a couple of decades has been invested

in measures to improve salmon passage at Federal hydro facilities in the Columbia

Basin resulting in substantial survival improvements. In 2005 juvenile survival

rates were up for both Snake River and Upper Columbia River spring/summer chinook and steelhead, exceeding the average performance standard that NOAA Fisheries set for the action agencies in the 2004 FCRPS BiOp. (See Graph 4.) In 2004

the Federal action agencies committed to the deployment of a substantial investment in state-of-the-art juvenile fish passage systems at all eight Columbia/Snake

River Federal mainstem dams. These systems are proving very effective. Removable

spillway weirs, or ‘‘fish slides,’’ at Lower Granite and Ice Harbor dams deliver an

estimated 97-99 percent survival for young spring migrants, while spilling two to

three times less water. Juvenile survival through the recently-completed Bonneville

Dam corner collector is nearly 100 percent.

We have now picked the ‘‘low hanging fruit’’ for hydrosystem operations impacts

and we are reaching a point of diminishing returns for additional hydrosystem operations and improvements. Future improvements can be found by refining wellknown approaches. Spill, for example, may be adjusted to improve the ‘‘spread the

risk’’ strategy by scheduling spills and barge transports for juvenile fish according

to the times of year when each is most effective. The costs and benefits of targeting

spill are very large and important. The additional spill ordered on June 10, 2005,

by the District Court for the period June 20 to August 31, 2005, cost Pacific Northwest ratepayers $75 million. According to NOAA Fisheries, it is uncertain whether

the operation was beneficial or detrimental to fall chinook, and most of the fish had

passed the dams by late July.

To complement improved hydrosystem operations, the Federal action agencies also

fund a wide range of other hydro, habitat, and hatchery actions that make a real

difference for fish. The 2005 progress report documents substantial improvements

including:

• Caspian tern predation on juvenile salmonids in the Columbia River estuary

has been reduced from a range of 7 to 15 million in 1999 to about 3.6 million

in 2005 by moving these birds downstream nearer the ocean where they feed

less heavily on juvenile salmon and steelhead.

• Pikeminnow predation on juvenile salmonids has been reduced by approximately 25 percent since the program began in 1990, saving approximately 2 to

4 million juvenile salmon. Intensified effort since 2004 has yielded an increased

pikeminnow catch of over 50 percent.

• With our partners, we completed 42 voluntary water transactions around the

region, each addressing a significant opportunity to restore instream flows in

Columbia Basin tributary streams and rivers. In the third full year of operation,

the Columbia Basin Water Transactions Program delivered 530 cubic feet per

second of water to Columbia Basin streams and improved flows on nearly 900

miles of streams.

• In 2005, we installed screens at 19 barriers to restore access to over 180 miles

of stream for fish. Overall since 2000, fish passage improvement efforts in the

tributaries have resulted in fish regaining access to over 1,280 miles of stream.

• In the lower Columbia River estuary, we have acquired over 660 acres of fish

habitat since 2000. In 2005, over 300 acres were being actively restored.

25

• Safety-net hatcheries continue to reduce the extinction risk of Snake River sockeye, spring/summer Chinook, fall Chinook and steelhead, and mid- and lower

Columbia steelhead populations. In one such program, 348 Snake River sockeye

adults returned to Redfish Lake since 1999—a 20-fold increase over the total

of 16 wild fish that returned from 1990 to 1998.

We intend to build on this success. In 2004, the Corps, Reclamation and BPA committed to a 10-year plan of extensive actions to improve hydrosystem survival and

improve habitat. We also forego some power generation in addition to salmon spills

for other conservation reasons. We expect the total of these Federal agency commitments to exceed $6 billion over the next 10 years. Nevertheless, it is not how much

money we spend that is the gauge of our success—it is the biological results we have

to show for the money we have spent.

The Costs

Our success in improving conditions in freshwater and getting these fish through

the hydrosystem comes with a large cost—we must ensure that it buys us the valuable success we seek. The ESA program for listed Columbia Basin steelhead and

salmon is among the largest fish and wildlife restoration programs in the world.

Just to illustrate how massive the recovery efforts are, if the water being spilled

over dams to assist in fish passage was used instead to generate power, it would

be enough to meet the City of Seattle’s annual electric energy needs. And spill is

just one of the many measures we are taking to assist salmon recovery. BPA ratepayers pay most of those costs through their power bills.

A report from the Northwest Power and Conservation Council (Council) concludes

that over the last 20 years BPA ratepayers have experienced $7.8 billion worth of

costs attributed to fish and wildlife mitigation activities. These costs were paid as

a result of different laws including the Northwest Power Act and Endangered Species Act. In FY 2007, BPA projects almost $700 million for fish and wildlife costs.

These costs are reflected in our power rates as a cost of doing business. It is the

second largest cost category in our FY 2007-09 power rates—second only to the combined debt service costs for BPA’s one active nuclear plant, two retired nuclear

plants, and the Federal investment in the entire FCRPS. These costs represent

more than 30 percent of the rate we charge our 130 public utility customers for Federal power. It makes sense to publish and monitor the size of a cost this large.

H.R. 4857, if enacted, would direct the Administrators of the Federal Power Marketing Administrations (PMA) to include on customers’ monthly bills information

about the costs the PMA are incurring to comply with ESA. We have looked at how

we would implement this legislation were it enacted into law. We would recommend

the approach of reporting our combined ESA-related and Northwest Power Act fish

and wildlife mitigation costs assigned to power as a percentage of total power bills.

While this would be an approximation of the actual amount of cost recovered from

each individual customer, it would be more readily available and does not require

a detailed calculation for each customer.

The Administration shares the interest in accountability that prompts this legislation. Power bills result from complicated calculations and the public debate about

what affects power rates often strays from hard numbers. H.R. 4857 would take a

step toward clarifying the matter. There are many ideas in the legislation that are

feasible and many concepts that are in line with the overall Administration policy

in terms of properly reflecting the costs of regulation to the ratepayers. The Administration has no position on the legislation at this time, but there are many concepts

in the legislation which the Administration would not oppose. The Administration

is still studying the legislation as a whole and looks forward to participating in the

broader debate as it unfolds.

Where We Go From Here

Many human activities have contributed over many decades to the fish runs we

have today. In order to be successful, we will need to work together to address all

the human-caused factors that are leading to salmon declines—the so-called ‘‘four

H’s’’ of harvest, hatcheries and habitat as well as hydro.

In fact, the current rulings from the District Court on the FCRPS BiOp advise

an ‘‘all H’’ approach. Due to the ruling on the 2004 FCRPS BiOP, we are now, more

than ever, all in this together.

To simplify, the District Court advised that, to meet ESA’s requirement, the

FCRPS must take into account all mortality—not just the mortality caused by operation of the FCRPS. This ruling further suggests that, if a fish is not on the road

to recovery, any proposed action funded, authorized, or carried out by the federal

government—even though it may not appreciably reduce salmon survival or

recovery—must along with all other activities put fish on the road to recovery. The

26

District Court’s ruling implies that, if it is sustained by the Ninth Circuit, it would

apply to all proposed actions in the region and would be called upon to carry this

burden including harvest and hatcheries operations, federal assistance to port operations, as well any other distantly-related action requiring Federal approval or funding or carried out by the Federal Government.

The Administration believes this ruling goes too far. The Administration supports

and has worked hard to develop a recovery plan for salmon. We believe, however,

the ESA requirement to avoid jeopardy is just what the regulations say it is—to

analyze whether the incremental effects of a particular proposed action will appreciably reduce the likelihood of both the survival and recovery of the species—not

whether a proposed action could potentially be halted because the effect of that action in combination with everything else that affects the species must be determined

to create a path to recovery. We think the District Court’s interpretation, if sustained, could have far-reaching ramifications.

While we have appealed this issue to the Ninth Circuit, we continue to put significant efforts and hopes into the collaborative process with States and Tribes to come

up with a regional plan consistent with the District Court’s ruling. We are encouraged thus far that there is substantial agreement among those participating in the

collaborative process that we need to define our own destiny and develop a regional

approach that addresses all the H’s and their contribution to recovery.

Setting Priorities

As ESA costs and litigation pressures increase, it is critical that the region focus

on the bottom line—results for the fish. This effort needs clear objectives and priorities for meeting the objectives. To accomplish this, we must—as a region—be clearer about our ESA objectives. How many fish do we need to be satisfied we are moving toward our goals for each of the fish that are listed under ESA? What is the

mix of hatchery and natural spawning fish that is desirable in the interim and in

the long term? Where are the priority habitat areas for restoration? What are our

hydro survival performance measures?

Ultimately we are working to achieve a 10-year agreement among the States,

Tribes and Federal agencies working on the FCRPS BiOp remand collaboration on

priority actions in the Basin. The actions we agree on would be guided by our

knowledge of which populations of fish need what types of help, and what’s best for

the fish.

As we work with the remand collaboration to develop a new FCRPS BiOp, we continue to emphasize using a biological yardstick for determining our success. We seek

to have clearly defined objectives, or performance standards, in this new BiOp and

actions that the best science shows will help to achieve them. The performance

standards for juvenile survival through the hydrosystem provide a good example of

establishing clear objectives.

In addition to performance standards, the region must agree on funding priorities.

Prioritization will enable us to achieve our objectives at the least cost. It is not how

much money we spend that is the gauge of our success—it is the biological results

we have to show for the money we have spent. In the words of the Northwest Power

Act [Section 4(h)(6)(c)] the Power Council’s Fish and Wildlife Program seeks to ‘‘utilize, where equally effective alternative means of achieving the same sound biological objective exist, the alternative with the minimum economic cost....’’ Under this

approach, we use a biological yardstick, and we also keep our eye on achieving our

goals efficiently.

The implementation of the ESA needs to help set and enforce priorities. For example, recently we elected to postpone funding the Northeast Oregon Hatchery

(NEOH) because we do not currently have the means to document the contribution

to recovery that we believe the hatchery will provide. Almost 20 years in the planning, the $16.4 million NEOH construction project was deferred last month until

such time as a specific level of ESA-crediting for application to this hatchery can

be resolved. We are committed to working this out with regional stakeholders

through the remand collaboration, but we would be open to funding the project now

with assurance that it will be acknowledged properly in the legal documents to follow.

This is disappointing for the Tribes, States and BPA after working for years on

this project. We think NEOH is a good project, and we believe that the hatchery

can help rebuild listed spring chinook stocks in the Grande Ronde subbasin. But

frankly we do not believe we should spend $16.4 million when it is not clear whether the effects of the hatchery will be declared to gain or lose ground in our progress

toward achieving ESA goals. BPA currently spends $60 million per year to fund operations and maintenance at 28 fish hatcheries operated by States, Tribes and the

27

U.S. Fish and Wildlife Service. Ultimately we must examine the benefits and risks

to ESA listed fish from all of these fish hatcheries.

NEOH is one of many mitigation efforts that have evolved through the Council’s

Fish and Wildlife Program under the Northwest Power Act. The Council’s Program

guides BPA’s funding decisions. We will soon be working with the Council to fund

about $142 million of projects for the first year of the Council’s FY 2007-09 Fish

and Wildlife Program. We expect the remand process will influence our spending

decisions in this program. We also expect to balance these decisions with efforts that

continue to benefit non-listed species.

Conclusion

One of the largest regional fish and wildlife restoration efforts in the world is taking place in the Pacific Northwest. The evidence to date is that substantial progress

is being made albeit at a substantial cost. The progress we have made is encouraging, but our work is by no means complete. We are committed to taking substantial further actions to improve the chances for recovery of these inspiring fish.

Our overarching goal should be salmon recovery. And under a recovery plan approach, hydro operators and others will need to do more for the fish. We can start

by collaborating to develop clear and specific objectives for endangered fish in the

Columbia Basin. Then, to meet these objectives, we will need to develop a scientifically credible approach that addresses all the causes of salmon declines in the

Basin. It must be an approach that recognizes that we who live in this Basin are

all in this together and that we must all be part of the solution.

Thank you for your attention, and I would be happy to answer any questions.

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29

Miss MCMORRIS. Again, we really appreciate you being here. I

want to start with just asking if you would give an overview of

electricity needs for the region and what percentage BPA is able

to meet. And as we look forward, how do you see that playing out?

How are we going to meet those needs and then the potential for

not only the hydrosystem but also in what we might be able to do

with wind and solar? Just start with an overview.

30

Mr. WRIGHT. So the Bonneville system, the Energy Northwest facility produces about 40 percent of the region’s power supply. 90

percent of our system is produced by hydropower. About 60 percent

of the region’s electricity supply comes from hydropower. That compares somewhere between 10 and 15 percent at the national level.

This is a region that is heavily reliant on hydro basically because

of the Columbia and Snake River systems, much more so than

other parts of the country and other parts of the world. That

hydrosystem has created an economic advantage for this region.

Hydro is a low-cost resource relative to other potential resources,

coal, natural gas.

The fact of the matter is, though, as we go forward we have exploited the hydrosystem to its maximum potential. There is very

little left in terms of—and we do expect our economy to grow. The

forecast is we see substantial growth in our region over the course

of the next five to ten years. In fact, we expect demand to exceed

supply around 2010. So we need to develop some resources of

supply.

There are difficulties in terms of development of resources and

supply. The resistance to coal, to nuclear. Natural gas was the resource of choice, but with the extreme volatility and the tremendous price increase in the last few years it looks less attractive

than it did just back in 2001, 2002.

There is a tremendous amount of wind being developed in this

region, particularly in this area. We are going to have close to

1,000 megawatts of wind developed just since probably about 2002

through the next year or two just in this area. Just for a second,

pause for a moment and think about the size of John Day Dam.

Essentially, we’re a developing a resource about the size of John

Day Dam right here in this area of the country. That’s occurring,

in part, because it’s a windy area. It’s occurring, in part, because

of the opportunities for farmers to be able to capture the benefits

of the land. It’s also occurring, in part, because of the ability to—

hydrosystem. Wind is not a dispatchable resource where you can

control the amount, but you can with a hydrosystem.

I would say one of the concerns to begin to address this question

is we’re running out of the potential to integrate new wind with the

hydrosystem. There’s such a tremendous growth of wind in this region that we’re going to start reaching some physical limits. To the

extent that we limit the capability of the hydrosystem for other operations for whatever they may be, then there is an overlap.

Miss MCMORRIS. Would you talk about the difficulty in estimating ESA costs on the BPA system and what are some of the

challenges and how you see that playing out when you move forward?

Mr. WRIGHT. Yes. I think a couple things. First, there are certain

costs which are relatively easy to figure. We have costs associated

with ongoing direct program activities, habitat, hatcheries. We

know what the dollars are going out the door for those. We have

other costs of nearly a billion dollars has been invested in the system, actually more than a billion dollars at this point, at the dams

to try to improve juvenile and adult survival. And, of course, we

know what those are.

31

We also have a set of costs associated with hydrosystem operation where we’ve changed the operation to spill to increase flow.

That increases costs. Although there is debate about that, about

how those costs should be calculated, and you’ll see it in some of

the testimony from some of the other witnesses today. The cost of

that varies with the market. If energy is lost, then when market

prices are low, the cost is relatively low. And when the prices are

high, the costs are much higher. One of the challenges for us is

that is based on what the market would be.

Another challenge for us is that many of these activities support

more than one of our requirements in the law. Northwest Power

addresses a different set of fish and wildlife mitigation responsibility than the Endangered Species Act. But when you make a

modification for a dam and it improves juvenile survival, it helps

both ESA listed fish and non ESA listed fish. So you’re struggling

with the question of how do you calculate those costs of the ESA

with Northwest Power, which is why we recommend to you the fact

we meld those together because we’re not confident that we can

separate those costs in a meaningful way.

Miss MCMORRIS. I have just one last question. Some have talked

about calculating the irrigation costs as a part of the customer bill.

I just wanted to ask you to comment on that if that is possible.

Mr. WRIGHT. Well, I would say, first of all, that there are estimates out there. Both Bonneville and Northwest Power have done

estimates of the lost power generation associated with irrigation.

So we have those estimates. And we could come up with those estimates similar to the way we addressed fish and wildlife costs. So

I would not say that’s an impossible task, that we could if you so

desire.

Miss MCMORRIS. Good. Thank you.

Mr. HASTINGS. Steve, thanks for being here. I just have a couple

of questions. I know that you are looking at long-term power contracts with your customers. I want to run through that process. Are

there contractual methods going to the process of capping the overall fish costs to ratepayers or maybe reducing the likelihood of any

increases in fish costs contractually as you look at that?

Mr. WRIGHT. So I would say, no, that we do not have those. The

long-term contracts implement statutory requirements that we

have, and then there are some requirements for fish and wildlife

both under the Endangered Species Act and Northwest Power Act.

And as we issue these contracts where the customers would be

committed to taking the power and paying for it and paying for it

would be based on whatever our cost is, and that cost would based

on our current statutory requirements.

Mr. HASTINGS. And those statutory requirements would mandate

you can’t put anything in the contract that would change that; isn’t

that correct?

Mr. WRIGHT. Certainly that would be my reading.

Mr. HASTINGS. Any gray area at all.

Mr. WRIGHT. Not that I’m aware of.

Mr. HASTINGS. The independent scientific review panel recently

looked at the Power Planning Council’s fish program proposals for

2007 through 2009 and found many of them to be without any

scientific method or merit. Do you have—Do we have adequate

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protections to ensure that fish and wildlife spending by the Council

is not only cost efficient but complimentary to our overall efforts

as well based on this.

Mr. WRIGHT. So I believe that we do have a reasonable system

for making judgments about what projects we will proceed with.

First of all, the law does require that the Council approve the program. The law also requires that they take the advice of the scientific review panel. Where they are in the process, it’s my understanding the ISRP has provided recommendations but the Council

has not reached its conclusions yet. We expect that they would take

into account the data from that SRP.

Beyond that, the Council provides guidance to us with respect to

what programs we would proceed with. We tend to get—because we

think they represent four states. And certainly the way the law

was set up and for Bonneville to be a part of the region to show

you this. But at the end of the day, we do have a decision that we

need to make because we’re Federal and we can’t turn over the decisionmaking authority to a state body. So we also will be looking

at the recommendations that the Council makes in light of ISRP

information coming to a conclusion.

Mr. HASTINGS. When you’re trying to make long-term decisions

and you have at least an independent review board that has said,

boy, there’s something that doesn’t have scientific merit and, yet,

decisions are based on that, it causes one to—especially with past

history—it causes one to at least pause. That’s why they have the

cross checking, I guess, of these studies.

One last question that I have, Sid mentioned that you occasionally call him and ask him to cut back on the power. Would you just

elaborate on that so I can better understand why that comes

about?

Mr. WRIGHT. We do try to operate the system to create actual

value for ratepayers. The best way to do that is to try to avoid spill.

The hydrosystem—Remember that we have a system that sits on

the side of a very steep hill, produces a lot of water coming down.

We can only store 30 percent of the average annual runoff of the

Columbia, whereas, just by way of example, they can store 300 percent in Missouri.

When water shows up here, we have a limited amount of ability

to store it and use it. So there are times when like earlier this

summer we had that—we had a pretty good snowpack this year

and then incredibly high temperatures in June. And you get a lot

of runoff at that point. And the goal is to try to maximize energy

production because that’s the lowest cost resource, while meeting

our fish and wildlife responsibilities. So at those points it makes

sense sometimes to scale back and use some of your thermal resources, nuclear, coal, whatever it might be, in order to be able to

get the maximum amount out of the hydrosystem.

Mr. HASTINGS. As I understood Sid to say, it’s kind of hard to do

that, so I just made that observation. Just out of curiosity, was one

of those times during the summer spill last year.

Mr. WRIGHT. I can’t answer that question for the record. I can’t

recall.

Mr. HASTINGS. Just wondering. You know I’m very critical of the

summer spill for what it accomplished. And if that happened, that

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could cause some problems with the nuclear plant and it shows

how silly the whole idea of summer spill is. Anyway, thank you,

Steve. My time’s up. Thank you very much for your testimony and

for being here. And of course your full statement will appear in the

record.

Mr. WRIGHT. Thank you very much. And I will instruct Bill

Maslen to answer any further questions.

Miss MCMORRIS. OK. We’ll continue down the panel. Ms.

Durham-Aguilera.

STATEMENT OF KAREN DURHAM-AGUILERA, DIRECTOR OF

PROGRAMS, NORTHWESTERN DIVISION, U.S. ARMY CORPS

OF ENGINEERS

Ms. DURHAM-AGUILERA. Aguilera like the singer. Miss McMorris,

Mr. Hastings, I’m very pleased to be here today. I’m going to try

to define my remarks with what’s of concern here today. And that’s

the role of the hydropower system, its affect on power rates, its affect on people and the environment.

The U.S. Army Corps of Engineers has several responsibilities.

We have a responsibility to operate the system for multipurposes,

and that’s flood control, irrigation, navigation, hydropower, recreation, and water supply. So we operate for the benefits of people.

We also are charged to do that in a cost-effective way.

We also have a responsibility to operate the needs of salmon for

the benefits of the environment. Significant investments have been

made and we’re seeing significant improvements. Adult salmon and

steelhead passage and survival through the system is now about

the same rate as the—River. Juvenile passage in the Snake River

is—as when there were just four dams on the lower Columbia and

Snake River. We continue to ensure that we keep these gains we

worked so hard to get.

So our focus on the recent passage and on improved juvenile passage is using a combination of bypass systems, spills, and the barge

transport. So that also means a responsibility to be able to adjust,

adjust to the needs of fish. Sometimes we cut back on power to provide spills. Sometimes we release stored water that we’d rather

keep for recreation.

In 2005 we came under a preliminary injunction to provide additional summer spill. In our 2006 operation we were able to do a

spread the risk approach. There was a combination of about 50 percent in river and about 50 percent in transport for juveniles.

So what’s our focus now? It’s surface passage. If you’ve been out

to Lower Granite, you’ve seen the spillway. We also are currently

working on the design and construction now to have another RSW

in place in Lower Monumental by next spring. And we have plans

for these along the river. These are good for fish. They use about

a third to one-fifth of the water in a traditional spill and costs 15

to 20 million apiece. That cost is quickly recovered by the energy

savings.

The Army Corps of Engineers is engaged in other nonhydro activities. We continue working with NOAA Fisheries, the State, the

Tribes, especially in Oregon and Washington, to address the sea

lions of Bonneville. This year we installed something called sleds

at entrances to fish ladders and they keep the sea lions out. They

34

work pretty well. One persistent sea lion was able to get through

until it got too fat.

What’s our future focus? It’s the regional partners working together in that ‘‘all H’’ approach, habitat, hatchery, harvest, and hydropower. The U.S. Army Corps of Engineers will continue to do

our part and work with you, work with our tribal state, and other

Federal partners, to find the best solutions for the regions. I’ll be

happy to take questions when you’re ready.

[The prepared statement of Ms. Durham-Aguilera follows:]

Statement of Karen Durham-Aguilera, Director of Programs, Northwestern

Division, U.S. Army Corps of Engineers, Department of the Army

Members of Congress and distinguished guests, I am pleased to provide this statement addressing U.S. Army Corps of Engineers (Corps) activities to protect and restore Columbia River Basin salmon and steelhead stocks listed under the Endangered Species Act. The Corps appreciates the support of Congress and the Northwest delegation for salmon activities. The federal agencies continue to have good

news to report on these ongoing efforts.

The Corps and Bureau of Reclamation operate the Federal Columbia River Power

System (FCRPS) dams in concert with Bonneville Power Administration (BPA)

which markets power produced at the dams. Congress authorized the dams in the

system for multiple purposes; we operate to provide these purposes along with our

operation for protection of fish.

The hydropower system, while a critical part of our efforts, is just one part of the

salmon life-cycle. The federal agencies, tribes, states, and local interests are also

making habitat improvements, better managing hatcheries and harvest and continuing predator control efforts. We have made much progress in hydro improvements, and we realize that further gains at the dams for adult and juvenile fish survival will be measured in small increments. We continue to look for hydropower system improvements that make biological and economic sense. We note that further

investing in improvements to the other H’s—habitat, hatchery, and harvest—could

bring bigger dividends.

The Corps works in partnership with the other federal agencies in the region, and

with a variety of technical and policy input from tribes, states, and others; salmon

protection and recovery is very much a regional effort. Currently, in response to a

court order, we are also engaged with Bureau of Reclamation, BPA, National Oceanic and Atmospheric Administration (NOAA) Fisheries Service, seven tribes and

four states in an intensive collaboration effort. Our goal is to design a plan for the

next ten years or so for a federal approach to salmon protection and recovery in the

Columbia River Basin.

Adult Fish Passage and Survival at the dams

Adult fish ladders at the dams provide good passage survival for adult fish returning up river to spawning areas. All of the eight Corps lower Columbia and Snake

river dams have at least one adult fish ladder. Over the years we have made many

improvements to the adult passage facilities, such as providing better ‘‘attraction’’

flows and current efforts to reduce stress to adult fish that are sampled for research.

Through research we now know that adult survival on a per project basis is about

98 percent for each ‘‘evolutionarily significant unit,’’ or ESU, of listed salmon and

steelhead migrating past the dams. In its 2004 biological opinion on FCRPS operations NOAA Fisheries compared these survival results to a rate of mortality that

might occur if the reservoirs and dams were not present and concluded that ‘‘adult

survival through the FCRPS is similar to survival under unimpounded conditions

in the Snake and Columbia Rivers.’’

In recent years, technology for monitoring adult passage has improved, allowing

us to better monitor adult passage patterns, timing and other fish behavior at the

dams. For example, we now have adult Passive Integrated Transponder, or PIT,

monitoring capability at Bonneville, McNary, Ice Harbor and Lower Granite dams.

As a result of these improvements, we are able to make operational adjustments at

several dams to better optimize conditions for adult migration.

While the news on adult passage is very good, we need to continue to focus on

a few aspects of adult passage and research. Continued progress means maintaining

certain features such as auxiliary water supply systems for the fishways. Continued

funding for operation and maintenance of fish facilities along with the BPA shared

costs will be essential to further progress of salmon protection and recovery.

35

One concern we are addressing is ‘‘fallback,’’ where adult fish travel back through

the dam after exiting the ladder above the dam. We know that fish can ‘‘fall back’’

over spillways, through juvenile passage systems, or through turbines at the dams.

The rates of fallback vary among species, individual dams, and with operating conditions. This is normal behavior for fish moving through the Columbia River, that

is, fish move up and down various reaches before returning to natal streams or

hatchery of origin. However, it is important that we minimize any adverse effects

of downstream adult fish passage at the dams. For example, fallback at the spillways may cause injury and delay, resulting in reduced number of adults to spawning areas. The Corps looks for operational strategies that avoid fallback, such as

prioritizing power production at the Second Powerhouse at Bonneville Dam before

using the First Powerhouse where there is increased fallback through the spillway.

Pinnipeds

Sea lion predation is another concern for adult fish migrating past Bonneville

Dam in the spring.

Since the early 2000’s, the Corps has observed a spring migration of sea lions to

the area below Bonneville Dam, nearly 140 miles from the Columbia River estuary.

Generally arriving in mid- to late-February, the predominantly male California sea

lions feed on adult salmon, steelhead and other anadromous fish returning upriver

to spawn. The sea lions return to Southern California for mating season in late May

and June. The amount of fish eaten by sea lions (and other pinnipeds, namely, Stellar sea lions and harbor seals) increased from 0.4 percent (1,010 fish) of the total

spring salmon run in 2002 to 3.4 percent in 2005 (2,920 fish). Corps staff observations estimated that some 50 to 60 fish were eaten per day by the sea lions near

the dam in 2005. Preliminary data for 2006 indicate about 2.5 percent of the spring

salmon run, or around 2,700 fish, were consumed by the sea lions. The estimated

number of pinnipeds for 2003, 2004 and 2005 was 111, 105 and 87, respectively. The

2006 estimate is 85. The average number observed on a given day was 21 in 2005

and 27 in 2006.

In cooperation with NOAA Fisheries and the Oregon and Washington fish and

wildlife departments, we use a variety of harassment techniques—above-water pyrotechnics, underwater acoustics and others—to discourage the sea lions.

In 2004, for the first time, a sea lion went into a fish ladder at Bonneville Dam.

In 2005, several sea lions entered the ladders and one of them, named C404, showed

up in the fish counting windows. To address this problem we installed Sea Lion Exclusion Devices, or SLEDs, in the ladder entrances. The Corps worked with other

regional state and federal agencies to design, install and test the SLEDs for use in

early 2006. The SLEDs consist of individual gates at the entrances to the dam

fishways meant to exclude pinnipeds but allow fish passage. For the most part the

SLEDs have proved effective, although C404 managed to get past them at the beginning of the season.

Each gate is between 10 and 15 feet wide and 30 to 36 feet tall, and weighs over

10,000 pounds. They can be installed at the beginning of the sea lion ‘‘season’’ and

removed when the sea lions go back to California.

We will continue to work with our federal and state partners to address the sea

lion issue.

Juvenile Fish Passage

The bulk of investment in fish passage at the eight lower Columbia and Snake

river dams over the past several decades has been for improved juvenile fish passage, mostly aimed at avoiding passage through the powerhouse turbines. There are

three primary non-turbine juvenile passage routes at the dams: screened juvenile

bypass systems; spill passage; and transport, where fish are collected at the bypass

systems for transport by barge or truck from one of the four ‘‘collector’’ dams (Lower

Granite, Little Goose, Lower Monumental and McNary).

The Corps installed screened juvenile bypass systems at seven of the eight dams

during the 1980s and early 1990s. Following extensive biological evaluations, many

of these facilities have undergone significant improvements. In the mid-1990s we

began to implement spill to improve juvenile passage through the lower Snake and

Columbia river dams. The combination of screened bypass systems and spill greatly

improved juvenile survival past the dams for most populations.

NOAA Fisheries data (see bar chart) indicates that survival for spring and summer Chinook traveling in-river has improved to the point that it is now comparable

to that of the 1960s when there were only four dams in the lower Columbia and

Snake rivers. Survival through the hydro system in recent years ranges from 30 to

60 percent depending on water conditions and other factors. In-river migrants pass

36

the dams by means of the juvenile bypass systems, or through the dam spillways

or turbines.

At the four collector dams, juvenile salmon and steelhead collected in the bypass

systems can be transferred into specially designed barges and trucks for transport

past the remaining dams, to a release point downstream of Bonneville Dam. The

survival rate for transported fish is about 98 percent to point of release, although

ongoing research is attempting to determine any delayed effects after the fish are

released downstream from Bonneville Dam and whether these effects can be minimized. The Corps has operated a juvenile fish transportation program since the

1970s, to reduce the number of dams and reservoirs juvenile fish must negotiate in

their migration to the ocean.

Surface bypass systems and Removable Spillway Weirs (RSWs)

Recent efforts to further improve in-river survival for juvenile fish have focused

on surface oriented passage. Most juvenile salmon tend to stay in the upper 10 to

20 feet of the water column as they migrate downstream to the ocean. When approaching the dams, juvenile fish need to dive to depths of 50 to 60 feet to find passage routes such as a spillway opening or a juvenile bypass channel. For several

years, engineers and biologists have been pursuing new technologies that would provide more surface-oriented, less stressful, passage routes for juvenile fish.

One of the new surface passage technologies is a removable spillway weir (RSW),

or ‘‘fish slide,’’ that fits inside a dam spillway and allows juvenile fish to pass near

the water surface under lower accelerations and lower pressures. It has the potential to improve juvenile fish survival, save money (through decreasing spill, allowing

more power generation), and improve water quality (by reducing gas supersaturation). As water is spilled over the weir, juvenile salmon and steelhead are carried

over a raised spillway crest, similar to a waterslide. In tests of an RSW installed

at Lower Granite Dam on the Snake River, juvenile fish that used the slide survived

at similar or better rates than through a conventional spillway—about 94 to 98 percent survival depending on test conditions—and had reduced delay above the dam

so that they were less susceptible to predators. While the slide attracted about the

same number of fish, only about one-fifth as much water was spilled. A fish slide

installed at Ice Harbor Dam in early 2005 delivered good test results that year with

97-99 percent survival. Lower Monumental Dam will have an RSW by 2007 and Little Goose Dam is scheduled for RSW installation by 2009. We also expect to have

a prototype weir at McNary dam by 2009.

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At Bonneville Dam on the lower Columbia River, a Corner Collector has been constructed at the Second Powerhouse to provide another type of surface passage. The

ice and trash chute at the powerhouse was modified for safer passage, and a 2,800-

foot long transport channel and 500-foot long outfall channel were constructed.

Tests in 2004 and 2005 indicate a survival rate of nearly 100 percent for spring Chinook, steelhead and fall Chinook through the Corner Collector, and a 94-99 percent

survival rate, depending on the species, through all passage routes combined at this

dam. At The Dalles Dam, a spill wall was completed in 2004, designed to move juvenile fish more quickly and safely downstream once they passed through the spillway

with a two to four percent survival improvement. Surface passage systems and improvements are planned for all four of the lower Columbia River dams within the

next several years.

Spill and Transport

Besides making improvements at the dams, we provide operations to aid juvenile

migration, such as spill, transport, flow augmentation (release of water from upstream storage dams) and cold water releases (to moderate temperatures in the

river). When spill for fish is provided, water is routed through spillway openings

rather than through turbines to generate power, or rather than being used for other

purposes. Under biological opinions from NOAA Fisheries, the Corps has provided

spill and juvenile fish transportation in a combination designed and modified to provide an optimum mix for getting the best return of adult fish.

A complicating factor in operating for improved fish survival is that studies show

various salmon species respond differently to different strategies. For example, the

timing of fish migration and species of fish may make a difference as to whether

the fish would fare better traveling in-river or in a transport barge. And there is

more information available for some stocks of fish than for others.

Spring Spill

Each year the Corps provides spring spill for fish at all eight lower Columbia and

Snake river dams beginning in early April. In 2006, as an adaptive management

action based on data from transport operations research, the Corps proposed to

maximize transportation of juvenile fish in late spring to improve adult return numbers. This would require curtailing spill at the collector projects. However, a court

order for 2006 operations directed full spring spill be provided. We are continuing

research to gather more information on this issue.

Summer Spill

Prior to 2005, the Corps did not spill at the four transport collector projects in

summer, so that we could maximize transport of juvenile Snake River fall Chinook.

In 2005, in response to a court order, the Corps provided additional summer spill

and less transport of fish. The Corps used the opportunity to do additional research

on fish passage survival including performance of the removable spillway weirs at

Lower Granite and Ice Harbor dams. Results, as summarized in an ‘‘after action report,’’ indicate that ‘‘juvenile fish left in the river during the spill operation showed

high rates of survival at the dams through the Snake River and McNary dams with

survival ranging from 86 percent to 96 percent based on the results from the radio

tracking studies.’’

The best available scientific information now indicates summer transport ‘‘neither

helps nor harms’’ Snake River fall Chinook. Our current program for summer operations is to achieve a goal of optimum adult returns through two objectives: 1) manage spill and powerhouse operations at all eight dams for optimum juvenile fish survival past the dams and 2) spill and bypass collection at the collector projects to

achieve a ‘‘spread-the-risk’’ distribution of about 50 percent transported juvenile fish

and 50 percent in-river migrants.

Avian Predation: Caspian Terns and Cormorants

Caspian terns and cormorants consume large numbers of juvenile salmon and are

a major cause of mortality of ESA-listed fish. The program to redistribute Caspian

terns from Rice Island in the Columbia River Estuary to East Sand Island nearer

to the ocean has yielded good results. The intent of the redistribution was to shift

the terns’ diets away from mostly salmon and toward a wider variety of fish. Caspian tern predation on juvenile salmonids in the Columbia River estuary has been

reduced from a range of 7 to15 million in 1999 to about 3.6 million in 2005 by moving these birds downstream nearer the ocean where they feed less heavily on juvenile salmon and steelhead. A Tern Management Final Environmental Impact Statement jointly prepared by several agencies recommends that two-thirds of the Caspian terns be further redistributed across alternate sites in Oregon and California.

38

The agencies are now considering management actions to address a greatly increased population of double-crested cormorants in the Columbia River estuary. The

population increased from around 100 birds in 1989 to about 12,500 breeding pairs

in 2005 nesting on East Sand Island. Although salmonids make up only about 5 percent of their diet, the cormorants consumed an estimated 6.4 million of these juvenile fish in 2005.

Funding of Corps fish programs

The Corps implements a total annual program of about $140 million for capital

improvements for fish passage and operation and maintenance of fish facilities.

Construction of fish facilities and improvements to these facilities, and associated

analysis and overhead, is funded by Congressional appropriations in the Columbia

River Fish Mitigation (CRFM) project. BPA reimburses the U.S. Treasury for the

‘‘power share’’ of the expenses using ratepayer funds. For Columbia River Basin

salmon and steelhead capital expenditures, this averages about 80 percent of the

total. The power share of operations for fish and maintenance of fish facilities is direct-funded by BPA; Congressional appropriations provide the 20 percent matching

funds. In 2006, $33 million was direct funded for this purpose. In 2006, the Corps

was appropriated about $11 million for this purpose.

The CRFM project was initiated in 1988 to focus efforts on improving fish passage

systems at the eight lower Columbia and Snake river dams, as part of the continuing mitigation for construction of the dams. Many successful improvements to

dam fish passage have been made since, and many more are being studied and implemented. The estimate to complete this project is approximately $1.6 billion; by

the end of FY05 about $1 billion had been spent.

The Corps has completed numerous individual projects under CRFM. These include major improvements to the juvenile fish bypass systems at seven dams such

as extended length bypass screens; juvenile fish monitoring capability at Bonneville,

John Day and Ice Harbor dams; Removable Spillway Weir surface passage at Lower

Granite and Ice Harbor dams; Bonneville Dam Second Powerhouse Corner Collector

for juvenile fish passage; adult Passive Integrated Transponder (PIT) tag detection

facilities at several dams; and spillway flow deflectors at most dams. Considerable

research on fish passage has also been completed, as well as evaluation of long term

configuration and operation options such as the Lower Snake River Juvenile Salmon

Migration Study which looked at breaching the four lower Snake River dams. About $40 million annually is expended for operation and maintenance of juvenile

and adult passage systems, and operation of the Juvenile Fish Transportation Program. Operation and maintenance is critical for providing reliable adult and juvenile passage.

Summary

Thank you for the opportunity to provide an update on the progress we have

made for fish survival and recovery in recent years. The dams in the Columbia

River Basin provide many benefits to the region, including flood control, navigation

and power, but there are trade-offs. As the Federal stewards of these benefits, we

recognize our tremendous responsibility to continue to work with the region to find

a way forward that is good for the fish and for people. We believe the current lifecycle approach to salmon protection and recovery, with a region-wide effort to address habitat, hatcheries, harvest and hydropower impacts, is the best approach for

bringing these fish back to sustainability. The Corps will continue to do its part,

and work with you, the relevant Federal agencies and entities, and with the region

to find the best balance and provide the best results.

Miss MCMORRIS. Very good. Thank you for being here. Ms.

Hirsh.

STATEMENT OF NANCY HIRSH, POLICY DIRECTOR,

NORTHWEST ENERGY COALITION, SEATTLE, WASHINGTON

Ms. HIRSH. Good morning. Thank you for the opportunity to testify before you today. The Energy Coalition is an alliance of more

than 100 consumer, environmental, faith-based and low-income

groups, unions, and electric and gas utilities from the four Northwest states and British Columbia, all working toward a clean and

affordable energy future.

[Discussion held off the record.]

39

Ms. HIRSH. The Columbia River houses and helps make the

Northwest what it is today, providing low-cost hydroelectricity, a

river highway for transporting goods, irrigation, and recreational

opportunities. This share of natural resources deserves a better

balance between hydroelectric operations and salmon recovery than

we have to date. More, not less, should be done to balance the

scales.

We can achieve salmon recovery without losing our competitive

edge in the electricity industry. We can and should achieve this

balance because we are all stewards of the Columbia River system.

It’s important to make clear that Federal taxpayer and electricity

ratepayer investments in salmon recovery are not made in a vacuum. These dollars are put to work helping to sustain and rebuild

a very important asset in the Northwest economy.

Sport fishing is a multi-billion dollar industry in the region and

currently supports about 36,000 family wage jobs. Commercial fishing contributes about $84 million a year to economically strapped

coastal communities. Smart investments in salmon recovery simply

makes economic sense for the entire region.

Too often balancing salmon and low-cost energy is portrayed to

the public as a tradeoff. The perception is that we cannot have our

cake and eat it too. Yet the Northwest need not make that difficult

choice. The rate increases resulting from the energy crisis were not

in any way due to increased fish and wildlife investments.

According to the General Accounting Office, BPA’s recent rate

hikes were the result of its commitment to provide more power

than it could generate during the West Coast energy crisis and

drought of 2001. BPA should be commended for the aggressive

steps the agency has taken to get us out of the red.

Though the effects of 2001 are still lingering, BPA’s rates have

come back down. This is good news and a credit to our ability to

balance salmon and energy that even with increased salmon recovery measures like spill, BPA has still been able to keep electricity

rates affordable and competitive.

BPA’s proposed rates for the Fiscal Year ’07 and ’09 rate period

will be around $28 a megawatt hour. I should note that wholesale

market prices are about $45 a megawatt hour. And, clearly, the

Northwest still enjoys among the lowest electricity rates in the

country, even with salmon recovery efforts. Our electricity raises

the envy of other parts of the U.S., and that’s something to be

proud of.

Would we be able to lower rates if not for salmon recovery operations? Without a doubt. We could also eliminate the residential

exchange program for customers that invest in our utilities, or

eliminate all sales to the aluminum industry. Those cost savings

would certainly lower rates faster.

But these are not choices within our power to make, nor are they

choices that would aid the Northwest economy as a whole. As the

coalition endures low-income community and consumer organizations as members, we are very aware of the sensitivity to rising

energy costs and the effects on the general and on financially constrained low and fixed income families in particular.

This region has an abundance of resources such as energy efficiency, wind, and biomass that can help keep rates low, while at

40

the same time provide more flexibility for salmon recovery. Energy

efficiency and conservation reduces consumers’ bills immediately,

and everyone’s does over time. Both energy efficiency and new renewable resources protect consumers against the volatility of fossil

fuels, recurring water shortages, and any future costs related to

carbon dioxide emissions.

These low-cost resources can meet the low growth we have in the

region, thereby, reducing pressure on the Columbia River

hydrosystem to generate more power.

Finally, I’d like to say a quick word about H.R. 4857. Our coalition has testified on this bill before, so I’ll be especially brief. In

general, the Energy Coalition believes the transparency of BPA’s

cost is a laudable goal. More access to information is always the

right goal, but there must be full and honest accounting to inform

the public properly. We do not believe that 4857 would ensure that

fair accounting. The most open aspect of this legislation is that it

would modify the inclusion of indirect costs.

BPA does not own the river. It shares the river with all other

users like the Tribes and sport and commercial fishermen.

In conclusion, the Northwest has reasonable electricity rates.

Would we like to lower them more? Who wouldn’t? But what we

don’t have is a healthy sustained wild salmon. We need to do more

to achieve balance. I hope that the region will approach the question of balance and low-cost energy, the question of balance between low-cost energy and salmon recovery with a broader perspective. We can have a win-win solution by effectively balancing affordable electricity bills and salmon recovery. Thank you very

much.

[The prepared statement of Ms. Hirsh follows:]

Statement of Nancy Hirsh, Policy Director, NW Energy Coalition

Mr. Chairman and distinguished members of the subcommittee, thank you for the

opportunity to testify before you today. My name is Nancy Hirsh and I am the policy

director of the NW Energy Coalition. The NW Energy Coalition is an alliance of

more than one hundred consumer, environmental, faith-based and low-income

groups, unions and progressive utilities from the four Northwest states and British

Columbia, working toward a clean and affordable energy future. I am testifying

today on an issue that goes to the very identity of the Pacific Northwest: affordable

electricity and wild salmon.

The Pacific Northwest has been blessed with something that no other region can

call its own: the Federal Columbia River Power System. This system of 31 dams

throughout the Columbia River Basin has helped make the Pacific Northwest what

it is today, providing low cost hydroelectricity, a river highway for transporting

goods, irrigation, recreational opportunities, and more. Since the construction of the

very first federal dam on the Columbia, we as a region have attempted to balance

the benefits of that system. It is a ‘‘multiple use’’ system and inherent in that definition is managing trade-offs on both benefits and impacts.

But the bounty of the federal system does not come to us for free. No one would

argue that the construction and operation of dams along the Columbia and Snake

rivers hasn’t had a profound effect on our cherished wild salmon and steelhead

runs. My testimony today asserts that we can and should find a better balance between hydroelectric operations and salmon recovery than we have to date. But unlike many on today’s panel, I believe it is on the salmon side where more, not less,

should be done to balance the scales. I also believe we can achieve salmon recovery

without losing our competitive edge in the electricity industry. This is our obligation, and our burden, as stewards of the Federal Columbia River Power System

(FCRPS).

Summary

• Salmon are a linchpin of the Pacific Northwest economy

41

1Testimony of Liz Hamilton, Executive Director, Northwest Sportfishing Industry Association,

before the U.S. House of Representatives, Subcommittee on Water and Power, Field Hearing,

Clarkston, WA, June 6, 2005. 2 Independent Economic Analysis Board, Economic Effect from Columbia River Basin Anadromous Salmonid Fish Production, January 2005. (Document IEAB 2005-1) 3Declaration of Roger Schiewe of BPA, in National Wildlife Fed’n, et al, v. NMFS, et al.,

spreadsheet entitled ‘‘River Ops, Genesys,’’ November, 2005.

• Energy vs. salmon is a false and unnecessary choice

• Clean energy investments can help us achieve both

• Higher-than-normal BPA rates are not the fault of salmon recovery

• The Energy Coalition supports BPA cost transparency, but H.R. 4857 is the

wrong approach

I. The Economic Importance of Salmon Recovery

We all know the economic significance of affordable electricity rates for everyday

consumers, businesses, and others. But a ‘‘working river,’’ as the Columbia is often

called, does more than just provide affordable energy. I’d like to focus briefly on

something that is not as well known and less well understood: the economic significance of salmon recovery.

According to the Northwest Sportfishing Industry Association, sportfishing alone

is a multi-billion dollar industry and currently supports about 36,000 family wage

jobs in the Pacific Northwest. 1 Stretching far beyond tackle and fishing license

sales, recreational fishing involves both direct spending on rods, reels, boats, tackle,

etc., and significant indirect spending, such as travel expenses in and around river

and coastal communities. This economic input ripples through local communities,

helping to foster jobs, economic stability and growth.

Commercial fishing is another important economic outgrowth of salmon recovery.

According to the independent economic arm of the Northwest Power and Conservation Council, commercial fishing contributes about $84 million per year in personal

income alone to economically strapped ocean communities in the Northwest. 2 And

all this comes at a time when fishing opportunities are severely constrained by low

salmon returns. These benefits will multiply exponentially when, and if, salmon are

recovered to self-sustaining, harvestable populations.

That’s why the NW Energy Coalition strongly believes that smart investments in

salmon recovery simply make economic sense for the Pacific Northwest.

II. The False Choice Between Salmon and Low-Cost Energy

Too often, balancing salmon and low-cost energy is portrayed to the public as a

dichotomy. The perception is that we cannot have our cake and eat it too. However,

the Pacific Northwest need not make that difficult choice. We can have both salmon

and low-cost energy, and we hope everyone in the room today agrees with that

point.

In fact, taking a step back and looking at this issue from a national perspective,

one can make a strong argument that the scales are currently heavily tipped in

favor of low-cost energy. If true balance is to be achieved, perhaps it’s time to do

more, not less, for our imperiled salmon populations.

The fact of the matter is that the Pacific Northwest currently enjoys among the

lowest electricity rates in the country, thanks in large part to the benefits of the

FCRPS. The Bonneville Power Administration’s (BPA) wholesale preference rates

are currently 59 percent below the market rates that BPA has assumed for FY 2006

in the current BPA rate case. On average, Bonneville would be 41 percent below

the lower market rates it projects during the rate period. 3 BPA just established firm

wholesale power rates at $27.50 per megawatthour for FY07-09 rate period. Market

based wholesale firm power contracts are $45-55 per megawatthour.

It is critical to point out that these comparisons include all of the current fish and

wildlife costs and impacts on BPA power operations. Clearly, our energy rates are

higher now than in the past, and the Coalition supports BPA’s efforts to find cost

savings that do not jeopardize the long-term stability of the agency. We hope our

rates will remain under market rates. But even with fish and wildlife costs included, BPA power is significantly below market rates, and is, in truth, the envy

of other parts of the country. That’s something to be proud of. Business leaders and

farmers from California or New York, where energy prices are through the roof,

might wonder what all the fuss is about.

We have reasonable electricity prices. What we do not have is healthy, selfsustaining wild salmon, and we have a long way to go before reaching that goal.

42

4 Northwest Power and Conservation Council, The Fifth Northwest Electric Power and

Conservation Plan, May 2005. (Council Doc. 2005-7) 5 Id.

6 United States Government Accountability Office, Report to the Subcommittee on Energy and

Water Development, Committee on Appropriations, House of Representatives, Bonneville Power

Administration: Better Management of BPA’s Obligation to Provide Power Is Needed to Control

Future Costs, July 2004. (GAO-04-694) 7 Id.

8 Id.

9 Bonneville Power Administration, News Release: BPA mid-year forecast shows higher

revenues; Agency regaining financial strength, May 1, 2006.

III. Clean Energy Can Help Bridge the Gap

I share the concerns about rising energy costs and their effects on our region’s

economy in general and on financially constrained low- and moderate-income families in particular. Fortunately, I believe that there is a solution that can help keep

rates low while at the same time providing more flexibility for salmon recovery: investments in cost-effective energy efficiency and non-hydro renewable power.

Investments in energy conservation programs may increase rates slightly, but

would reduce consumers’ actual bills immediately and everyone’s bills over time.

The Northwest Power and Conservation Council’s Fifth Power and Conservation

Plan identifies 2,500 average megawatts of energy conservation potential in the region at an average cost of 2.4 cents per kWh. 4 The Council also says that if the

region does not capture these energy savings, we will lose $2.4 billion in economic

benefit over the next 20 years. 5

Likewise, renewable energy not only protects consumers against the easily seen

volatility of fossil-fuel resources and inevitably recurring water shortages, but also

against the coming penalties/fees on carbon dioxide emissions. To protect consumers

from the financial impacts of these uncertainties, BPA needs to facilitate and support renewable energy opportunities.

The NW Energy Coalition thanks BPA for proposing to meet the Council’s energy

efficiency targets, but we believe BPA’s energy efficiency goals should be higher and

remain concerned about whether the needed investments will be made. This is an

opportunity that the region cannot afford to pass up.

IV. Higher Than Normal Electricity Rates Aren’t Due to Salmon Recovery

Again, looking at this issue from a broad perspective, it becomes abundantly clear

that higher than normal electricity rates in the Northwest are not in any way due

to increased fish and wildlife investments. Obviously, salmon recovery has an impact on rates, but not nearly to an extent that is beyond the burden we must bear

to maintain the benefits of the FCPRS in the Pacific Northwest.

In a report to the House Appropriations Subcommittee on Energy and Water, the

U.S. Government Accountability Office (GAO) found that the major cause of BPA’s

recent cost increases was the agency’s ‘‘open-ended obligation to be the net provider

of wholesale power to the region’’ at a time when the 2001 west coast energy crisis

and a serious drought was about to hit. 6 This obligation, along with significantly

increased customer demand, ‘‘led to BPA’s overcommitment to provide power to its

customers in the current rate period—from Fiscal Years 2002 to 2006—and consequently, to BPA’s cost increases as it purchased large amounts of power at average prices much higher than the costs of the federal power system.’’ 7 As a result,

BPA spent approximately $900 million in Fiscal Year (FY) 2002 and $760 million

in FY 2003, necessitating a rate increase of more than 40 percent for the majority

of BPA’s customers. 8

The effects of 2001 are still lingering, though BPA should be commended for the

steps the agency has taken to get us out of the red. The agency’s mid-year forecast

this year shows revenues about $250 million over the start of the year projections,

bringing BPA close to breaking even for the mistakes of the past. 9

Would we be able to make up more ground faster if not for salmon recovery obligations? Without a doubt. We could also eliminate the residential exchange program

for customers of investor-owned utilities or eliminate all sales to the aluminum industry. Those cost savings would certainly lower rates faster. But these are not

choices within our power to make, nor are they choices that would aid the Pacific

Northwest economy as a whole.

The point is that we are moving in the right direction. It is good news, and a

credit to our ability to balance salmon and energy, that even with increased salmon

recovery measures like ‘‘spill,’’ BPA has still been able to keep electricity rates

affordable and competitive. In fact, in 2005, only eight days after the end of the

43

10 Bonneville Power Administration, News Release: BPA announces wholesale power rate

decrease, September 8, 2005. 11Testimony of Sara Patton, Executive Director, NW Energy Coalition, before the U.S. House

of Representatives, Committee on Resources, Regarding H.R. 4857, the Endangered Species

Compliance and Transparency Act of 2006, March 16, 2006.

court-ordered summer spill period, BPA announced that it would be reducing its

2006 wholesale power rates by nearly 2 percent. 10

Despite all the rhetoric and political jockeying, salmon recovery obligations are

not the most significant driver of BPA’s fiscal health. These obligations, which we

are required to meet by federal law, represent just a small fraction of BPA’s overall

$3.3 billion budget.

Nevertheless, I take rising electricity costs seriously, and I am not here today to

argue that all is fine and dandy in the world of Northwest energy. Higher-than-normal electricity and natural gas rates have a real impact on consumers, particularly

on low-income families. The NW Energy Coalition has long supported increased investments in low-income weatherization and we thank BPA for increasing its commitment to this program to $5 million. We urge you to support the full $5.1 billion

annual authorization in the Energy Policy Act of 2005 for the Low Income Home

Energy Assistance Program for 2007 and 2008.

V. H.R. 4857 is Not the Answer

Finally, I’d like to say a word about H.R. 4857, the Endangered Species Compliance and Transparency Act of 2006. Sara Patton, executive director of the Coalition,

appeared before the Committee on Resources in March of this year to outline our

concerns with this legislation. 11 I will briefly restate portions of her testimony here.

In general, the Energy Coalition believes that transparency of BPA’s costs is a

laudable goal, but there must be a full and honest accounting to inform the public

properly. H.R. 4857 raises a number of concerns because we do not believe it would

ensure that fair accounting for the following reasons:

• The bill is unnecessary: the information is already readily available from BPA,

and utilities are free to inform their customers if they wish.

• BPA’s fish and wildlife funding is required by a number of federal laws and

treaties; separating out Endangered Species Act (ESA) costs would be difficult

or impossible.

• Proposals to include foregone revenue in these costs imply that BPA can claim

savings for violating federal laws, and that BPA owns the Columbia and Snake

Rivers.

• Meaningful economic transparency should address both costs and benefits.

H.R. 4857 only examines perceived costs.

• The definition of the firm customers’ share of BPA’s ESA costs can be interpreted in different ways, leading to starkly different conclusions. If not done

correctly, such accounting fosters more confusion than transparency.

I’d like to focus specifically on one aspect of this legislation: the requirement that

BPA and other Power Marketing Agencies include ‘‘foregone generation’’ as indirect

costs in their Endangered Species Act-compliance calculation (Section 2’’).

‘‘Foregone revenue’’ in this context refers to the cost of foregone generation; that

is, the money BPA speculates it could have made if it did not have to operate the

river to assist salmon migration. Requiring that BPA consider as a ‘‘cost’’ the revenues or profits that a business or agency could have made if it had violated federal

laws, regulations, or court orders is a curious accounting concept, to say the least,

and H.R. 4857 would set a dangerous precedent by codifying it in federal law.

BPA already readily reports its foregone revenue due to fish and wildlife obligations. Unfortunately, doing so grossly distorts the actual monetary contribution BPA

expends on salmon recovery, amounting to over 50 percent of the agency’s fish and

wildlife investments (if foregone revenue can properly be deemed an investment).

BPA does not, however, report any of the other various revenues that the agency

foregoes, such as those associated with meeting other legal constraints on power

generation like providing irrigation water, flood control, maintaining minimum flow

depths for river transportation, limiting rapid variations (‘‘ramping’’—which can

damage streambeds and banks) in flow rates, or recreation. All of these other federally mandated purposes limit the FCRPS’s ability to generate electricity and reduce

BPA’s potential revenue. Hence, to be consistent, BPA would need to count them

as ‘‘costs’’ as well.

In fact, it is difficult to draw a clear line between what does and does not constitute ‘‘foregone revenue,’’ if one looks beyond the uses of Columbia Basin water.

For example, BPA currently makes annual payments totaling hundreds of millions

of dollars for failed nuclear plants that were never constructed. Using BPA’s logic,

44

shouldn’t these payments be considered ‘‘foregone revenue’’ because every penny

spent is a penny that cannot be applied to a reduction in rates?

The truth is that BPA does not ‘‘own’’ the water used for spilling salmon past the

dams. BPA shares the river with all other uses, including fish and wildlife. BPA is

not entitled to all of the possible revenue it can squeeze out of the river, only its

share. Including foregone revenue in the calculation would open a Pandora’s box

that would be better left closed. The NW Energy Coalition recommends that Sec.

2(c) be deleted from the bill.

VI. Conclusion

In conclusion, I hope that the Pacific Northwest as a region will take a step back

and start approaching the question of balance between low-cost energy and salmon

recovery from a broader perspective. We are blessed in this region as the sole beneficiaries of the FCRPS. As the stewards of this federal system, we have a moral and

legal obligation to keep healthy, wild salmon in our rivers for future generations of

Northwest families, and for the nation as a whole. Salmon recovery is a part of that

responsibility, but it is also a tremendous benefit. Salmon recovery obligations do

not now, and will not in the future, pose a threat to affordable electricity.

Miss MCMORRIS. Thank you. Ms. Flores.

STATEMENT OF TERRY FLORES, DIRECTOR,

NORTHWEST RIVERPARTNERS, PORTLAND, OREGON

Ms. FLORES. Good morning. I’m Terry Flores, Executive Director

of Northwest RiverPartners, and I want to thank both of you for

the opportunity to come and comment today. I’m going to talk a little bit about RiverPartners and our efforts to work collaboratively

on a new biological opinion. And then I do want to describe for you

why we so strongly support the legislation, H.R. 4857.

So, first, RiverPartners is a nonprofit association. We represent

a broad coalition in the Pacific Northwest that includes agricultural

interests, utilities, both public and private, industries, and ports.

This hearing today couldn’t be more relevant to my members and

our mission. We want to find solutions that will preserve the multiple uses of the Columbia and Snake Rivers for regional businesses and families, while also promoting efficient, cost-effective

salmon protection and recovery.

RiverPartners’ mission is fourfold. It is about finding salmon solutions that are, one, achieved via collaboration and not controversy; two, are based in sound science not advocacy science;

three, are cost effective with demonstrable benefits for fish and are

focused on salmon protection and recovery and not salmon rhetoric.

To accomplish this mission, we do not need to bankrupt the region, nor do we need to remove dams as some on the fringes continue to suggest. We do need, however, to ensure that a comprehensive approach is taken to salmon recovery, one that includes

all aspects of the salmon’s life cycle and addresses habitat, harvest,

hatcheries, and hydro. You’ve already heard this morning from a

couple of witnesses that the hydrosystem is reaching its limitations.

To that end, RiverPartners is working very hard to bring people

together to reach reasonable, timely, and workable solutions. We’re

currently involved in the effort to develop a new biological opinion,

working through a regional coalition. That coalition includes the

states of Washington, Montana, and three up-river Tribes, the

Spokanes, the Colvilles, and the Kootenai Tribe in Idaho.

45

The Coalition’s fundamental goal is to remove this enormous

cloud that’s hanging over the region right now with continuing litigation and in essence having a Federal judge opine how to run the

hydrosystem and what’s best for fish. Our goal is to try and see

that new biological opinion gets to them and works with the salmon and the economy.

You’ve already heard this morning quite a bit on the cost associated with salmon recovery. I want to tell you that RiverPartners’

prime concern is how those dollars are being spent and will be

spent. Frankly, recognizing that we’re going to be making significant investments in salmon recovery, we want to make sure that

dollars are well spent. We want accountability, and we want demonstrable results in terms of fish benefits.

You’ve also already heard this morning that the majority of Bonneville’s costs are related to river operations, specifically providing

for fisheries down to the migration period. You’ve heard that those

costs—summer spill is an example of that. $75 million was spent.

And if you read the Federal agency’s after action report, there were

not a lot of fish. So summer spills clearly are bad policy, very expensive, didn’t provide a lot of benefits for the fish.

But I do want to mention that there are some very good examples of how well dollars are being invested. For example, the fish

line at Lower Granite and Ice Harbor Dam. They’re expensive but

they’re very effective. They’re delivering an estimated 97 to 99 percent survival for spring migrating and spilling water two to three

times less.

A new corner collector device at Bonneville Dam passed 7.6 million fish at a fraction of the cost of spilling water. The reality is

the region has invested hundreds of billions of dollars in salmon recovery, and I think we are beginning to see some very solid results.

You’ve heard from Steve Wright that adult salmon in steelhead

survival is 98 percent or higher at each one of the dams. That’s a

result of having made improvements. And despite earlier reports

that salmon returns would be low this year, returns are actually

looking pretty good.

So, clearly, the costs associated with salmon protection are great

and the stakes for fish and the economy are high. We think it’s important and fair for Northwest businesses and utility customers to

understand the situation. That’s why we strongly support

H.R. 4857. Utilities and their customers should have an opportunity to know and understand the ongoing investment that they’re

making recovering salmon and steelhead. The fact of the matter is

that people in the Northwest care deeply about these resources,

and I believe they would appreciate knowing that they’re making

a substantial contribution, they’re doing their part to protect these

species.

We also support H.R. 4857 because more information and knowledge about the ESA will lead to better informed utilities, their customers, and the general public. And, ultimately, what we hope is

better accountability for costs and how they’re being incurred.

Congresswoman McMorris had already mentioned in her comments that people are very unaware in the Northwest what they’re

spending. That information actually came from a poll

RiverPartners conducted in May of 2005, where we found over 70

46

percent of the respondents were not aware or thought they spent

5 percent or less on ESA and salmon costs. The reality is, depending on the serving utility, it’s more on the order of 15 or 20 percent.

So, in closing, we support the legislation. We think it’s good public policy. Our hope is that such knowledge will help spark greater

ownership and accountability over the investments that are being

made. We believe in the region that for true collaboration the region does have the opportunity to invest dollars more wisely and

hopefully develop a new biological opinion that will work for the

fish and the economy.

[The prepared statement of Ms. Flores follows:]

Statement of Terry G. Flores, Executive Director,

Northwest RiverPartners

Congressman Hastings and Congresswoman McMorris, members of the Committee, my name is Terry Flores, and on behalf of Northwest RiverPartners I thank

you for the opportunity to testify today in favor of H.R. 4857. Northwest

RiverPartners is a non-profit association that represents a broad coalition of river

users in the Pacific Northwest including agricultural interests, utilities, industries,

and ports. Our 100-plus members are dramatically affected by current efforts in the

region to recover listed endangered salmon and steelhead, through power rates and

changes to river operations.

This hearing today couldn’t be more relevant to my members and our mission. We

are committed to finding and achieving an appropriate balance between the region’s

economy and salmon recovery efforts. We want to find solutions that will preserve

the multiple uses of the Columbia and Snake Rivers for regional businesses and

families, while also promoting efficient, cost-effective salmon and steelhead protection and recovery. During the on-going public debate about salmon recovery, little

attention has been paid to the tremendous economic force of the Columbia and

Snake rivers and the quality of life that they provide, which oftentimes is taken for

granted.

Northwest RiverPartners Mission

RiverPartners’ mission is fourfold. It is finding salmon solutions that are: 1)

achieved via collaboration not controversy; 2) based in sound science not advocacy

science; 3) cost-effective with demonstrable benefits for fish; and, 4) focused on salmon protection and recovery, not salmon rhetoric. To accomplish this mission, we do

not need to bankrupt the region, nor do we need to remove dams as some on the

fringes continue to suggest.

We do need to ensure that a comprehensive approach is taken to salmon recovery,

one that includes all aspects of the salmon’s lifecycle. You can’t fix one link in a

chain while others are broken and expect the chain to hold together. Significant efforts also must be undertaken in the habitat, harvest and hatchery arenas. It will

take sincere collaboration and a willingness to explore these issues seriously, in addition to making further improvements in hydrosystem operations, for the salmon

to be on a solid path to recovery.

To that end, RiverPartners is working hard to bring people together to reach reasonable, timely and workable solutions. Currently, we are very involved in the effort

to develop a new Biological Opinion (BiOp) on federal hydrosystem operations, working closely with a ‘‘Regional Coalition’’ that includes the states of Washington, Montana, and upriver tribes: the Spokanes, the Colvilles and the Kootenai Tribe of

Idaho.

The Coalition’s common goal is to help ensure development of a new BiOp that

is: based in sound science and uses science to resolve issues of key uncertainty, provides real benefits to listed salmon and steelhead as quickly as possible, maintains

the viability of the federal hydrosystem, and withstands legal challenge. A very tall

order.

However, we believe that through collaboration such as ours, with a respectful

sharing of information and ideas, there is great opportunity for this new BiOp effort

to be successful. It is critical that it be successful. Otherwise, the huge cloud of uncertainty that hangs over the region will continue. There will be continued litigation

and a federal Judge deciding how to run the hydrosystem and what’s best for the

fish. Such uncertainty is bad for the economy and bad for the fish. Attorneys and

consultants may benefit and it may serve as a valuable fundraising tool for some

organizations, but clearly the salmon will not be saved in a courtroom.

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Fish and Wildlife Costs and Benefits

On the costs associated with salmon recovery, RiverPartners’ prime concern is

about how dollars are currently being spent, and will be spent. For example, over

$750 million annually is being invested by Bonneville Power’s customers, about 25

percent of BPA’s wholesale power costs. We want to ensure that what is being spent

is well-spent. We are about accountability. We need demonstrable results in terms

of fish benefits for dollars spent. We are about helping listed fish, not propping up

various economic development projects, paying agencies’ overheads or doing research projects because they make someone feel good.

If we are to truly solve the problem long-term, we must ensure that our dollars

are being invested in those measures that will provide real benefits. Currently, the

majority of BPA’s fish costs are related to river operations, specifically providing additional flows and spills for fish during the downstream migration period, resulting

in lost energy to the region.

We have learned that those costs can be huge, with uncertain benefits for the fish.

For example, based on the federal agencies’ October 31, 2005 ‘‘After Action Report’’

last year’s summer spill program, ordered by Judge Redden, ran from June 20 to

August 31st cost regional energy customers and businesses nearly $75 million dollars. Yet, according to the report: ‘‘a considerable portion of the 2005 run...had already passed the Snake River dams by June 20’’, and ‘‘nearly all of the Snake River

Fall Chinook fish passed (the Snake River dams) by July 31’’.

Summer spill clearly is a good example of a bad policy: it was very expensive and

did little or nothing to help endangered fish. It also did nothing to advance the region’s understanding or the science to help resolve the debate over the best way to

aid fish in their downstream migration—transportation vs. spill. RiverPartners, together with the Regional Coalition, supports implementing a comprehensive, multiyear (and no doubt very expensive study) to determine whether listed species are

better off being transported or spilled, what species, and when. It is our understanding that such a study will be pursued.

That said, there are a number of examples where dollars are being invested to

very good effect. For example, ‘‘fish slides’’ at Lower Granite and Ice Harbor dams,

while expensive, are proving very effective, delivering an estimated 97-99 percent

survival for spring migrants while spilling two to three times less water. A new ‘‘corner collector’’ device passed 7.6 million hatchery fish from the Spring Creek Hatchery this year at a fraction of the cost of spilling water. The collector, in conjunction

with the screened bypass system at the dam, passed fish with a survival rate of over

99 percent. It is examples like these that are leading to these good results: • Adult salmon and steelhead survival is 98 percent or higher at each dam as a

result of improvements made to passage facilities over the last several years; • Despite earlier reports that salmon returns would be low this year, adult returns for all species were impressive. In fact, returns were near the 10-year average which includes years of record and near record high returns from 2000

through 2004.

H.R. 4857—Providing Valuable Information

Clearly, the costs associated with salmon protection are great and the stakes for

fish and the economy are high. RiverPartners believes it is important and fair for

Northwest businesses and utility customers to understand the situation. That is

why we strongly support H.R. 4857. Utilities and their customers should have the

opportunity to know and understand the ongoing investment they are making in recovering listed salmon and steelhead. People in the Northwest care deeply about

their natural resources, particularly their fish and wildlife. They would appreciate

knowing that they are making a substantial contribution, are doing their part to

protect and recover these valued resources.

We also support H.R. 4857 because more information and knowledge about the

ESA will lead to better informed utilities, customers and the general public and, ultimately, we hope, better accountability for costs and how they are incurred. Knowledge is power—power to make better decisions and put dollars where they will do

the most to benefit the fish. We need to shine a light on the investment being made

in salmon recovery. Some respond that fish and wildlife costs should not be singled

out. We believe ESA costs warrant special mention because they are of great magnitude, are subject to great volatility, and, again, people in the Northwest deserve

to know they are making a significant investment in recovering salmon stocks.

Further, this legislation is needed. Northwest RiverPartners, in a public opinion

survey conducted in May 2005 in Washington, Oregon and Idaho, learned that nearly 60 percent of respondents were not even aware that ESA compliance costs were

included in their power rates. Of those who were aware, over 40 percent believed

that less than 5 percent of their bills went to such compliance. The reality is,

48

depending on the serving utility, 15 to 20 percent or more of consumers’ retail bills

go toward ESA compliance, specifically for listed salmon and steelhead.

Conclusion

Northwest RiverPartners supports H.R. 4857 because it is good public policy. The

costs regional electricity customers are investing in salmon recovery are significant

and they deserve to be aware of that. Our hope is that such knowledge will help

spark greater ownership and regional discussion over what investments are being

made and whether they are the ones that will provide the greatest benefits to resources of concern. It is irrelevant whether people believe the ‘‘right’’ amount is

being spent in the region of fish and wildlife and ESA compliance. The point of

H.R. 4857 is to provide knowledge and information. Those making the investment

deserve no less.

Thank you very much for the opportunity to comment today.

Miss MCMORRIS. Thank you. Ms. Miles.

STATEMENT OF HON. REBECCA MILES, COMMISSIONER,

COLUMBIA RIVER INTER-TRIBAL FISH COMMISSION,

PORTLAND, OREGON; ACCOMPANIED BY ED SHEETS

Ms. MILES. Good morning, Congressman Hastings and Congresswoman McMorris. My name’s Rebecca Miles. I’m Chairman of the

Nez Perce Tribe. And I’m here representing the Columbia River

Inter-Tribal Fish Commission, otherwise known as CRITFC. And

the Confederated Tribes of the Warm Springs Reservation is also

here today. We thank you for this opportunity to provide testimony.

CRITFC consists of the four Tribes of the Treaty Reserved Fishing Rights on the Columbia River, Yakama Nation, Confederated

Tribes of the Umatilla Indian Reservation, Confederated Tribes of

the Warm Springs Reservation, and the Nez Perce Tribe.

We have had a seat at the Columbia River table for over 10,000

years. Salmon was so fundamental to our society that when sovereign tribes would not negotiate a treaty in 1855, our tribal forefathers explicitly reserved, and the government agreed to assure,

our right to take fish caught on our ancestral homeland, which

stretches across one-third of the entire Columbia Basin in Washington, Idaho, and Oregon.

We’ve kept our word by feeding back portions of our homeland

to the United States and have always fully expected the government to honor their word. We all share a goal for a healthy environment and access to affordable electricity. It’s important that we

develop a fundamental strategy between the relationship of electricity costs and the Federal obligation to restore healthy salmon

runs under treaties as well as under the ESA and the Northwest

Power Act.

I have tempered optimism. Since I last spoke with this Subcommittee, our Tribes along with the Northwest States and Federal

agencies have been involved in a collaborative effort to construct a

salmon recovery plan for the Columbia River Basin. It’s our goal

to deliver a plan that can win regional support and be put into

practice immediately with hallmarks I think you would support,

certainty and accountability.

In our view, the element most crucial to success or failure and

lacking from the previous salmon plan is sufficient funding. I

appeal to you to work with the collaboration partners to ensure

that all the needed ingredients for a successful salmon plan are

realized.

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Anxiety stirred by State and Federal expenditures for fishery

mitigation and protection, including implementation of ESA, is responsible for power rate increases. Blaming salmon recovery for the

cost of heating our homes is unfair. These statements are biased

by overlooking many factors that contribute to the cost of electricity.

We feel divisiveness, making us wonder if the region’s relying on

biased information will cast out any chance that salmon will have

a place in the culture, economy, and future of the Basin.

In the past we’ve had to publicly discredit the millions of dollars

spent to save a single endangered fish. We have fuel to use by not

relying on such misinformation that perpetuates any anxiety. We

need to take care of this. There are other major causes of BPA rate

increases over the past 25 years which have already been mentioned. For instance, overcommitments to utilities. Not surprisingly, these factors don’t get much publicity. Based on BPA’s own

estimate, their 2001 decision to overcommit to utilities and direct

service industries added $3.9 billion in costs over the current fiveyear rate period. In every year BPA paid $828 million in annual costs associated with nuclear power. $250 million goes to operate the Columbia generating station. $275 million to pay the debt on that plant. And

$325 million to repay the debt on two nuclear plants that were

never completed and don’t produce a spark of electricity.

Add this to the general hydropower system various subsidies and

power commissions we rate payers can see what constitutes about

90 percent of our bill. We have reviewed H.R. 4857 Transparency

Act of 2006. We support Transparency and agree that our fellow

consumers have a right to know. However, as written in legislation,

it has shortcomings. If we truly embrace Transparency, this legislation must be—We should be informed of all the costs contained in

our power bill. If we truly embrace honesty, then we need to be out

here finishing those that are legitimately tied to ESA efforts.

The BPA fish and wildlife is required by a number of Federal

statutes and treaties and not just ESA. The Northwest Power Act

alone requires that we mitigate, protect, and enhance the fish and

wildlife impacted by the Federal hydrosystem. This includes funding of valuable projects for nonresident fish and wildlife that provide recreational and commercial opportunities in all four states.

Some projects have multiple benefits so they share ESA benefits.

They comment on ESA related costs would require more administrative effort, and even these costs should be shown on our monthly

utility bills.

Foregone revenues, as used by BPA, would be fiction. No entity,

public or private, should be able to convert potential revenue to a

cost if they were allowed to violate Federal laws. Can our farmers

and loggers claim foregone revenues every time they forgot a necessary worker safety or complied with pesticide laws?

I see my red light is on. I have provided actual written testimony. But in closing, I ask you to consider salmon recovery as an

investment and not just a cost. If we were to fully implement a

plan recommended by a work group of the region’s fish and wildlife, we’d inject approximately $2 billion in Eastern Washington

and Oregon, Idaho, and Western Montana over the next ten years.

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1Treaty with the Yakama Tribe, June 9, 1855, 12 Stat. 951; Treaty with the Tribes of Middle

Oregon, June 25, 1855, 12 Stat. 963; Treaty with the Umatilla Tribe, June 9, 1855, 12 Stat.

945; Treaty with the Nez Perce Tribe, June 11, 1855, 12 Stat. 957.

This funding supports jobs in rural communities by implementing

on the ground efforts.

In conclusion, Mr. Hastings and Miss McMorris, the Columbia

River is capable of multiple purposes and the natural path of the

water of the river cannot be claimed by a single interest. Even the

Power Act calls for equitable treatment. Today what we need for

salmon and what rural communities need and economies need in

terms of energy costs is the same thing, certainty, the salmon resource and with it tribal rights reserved under the treaty with the

United States will probably secure a place on the list of considerations reviewed by the Congress and Federal agencies in determining the appropriate action and unnecessary costs to be borne by

all of us ratepayers and taxpayers.

We look forward to working with you and your staff to find the

appropriate regional and national support balance, certainty, and,

ultimately, success to our region. Thank you very much.

[The prepared statement of Ms. Miles follows:]

Statement of The Honorable Rebecca Miles on behalf of the

Columbia River Inter-Tribal Fish Commission

I am Rebecca Miles, Chairman of the Nez Perce Tribal Executive Committee and

a commissioner on the Columbia River Inter-Tribal Fish Commission. Thank you for

allowing me an opportunity to offer testimony on behalf of the Commission.

The Columbia River Inter-Tribal Fish Commission (CRITFC) was formed by resolution of the Nez Perce Tribe, the Confederated Tribes of the Umatilla Indian Reservation, the Confederated Tribes of the Warm Springs Reservation of Oregon and

the Confederated Tribes and Bands of the Yakama Nation. The Commission’s primary mission is to provide coordination and technical assistance to the member

tribes to ensure that outstanding treaty fishing rights issues are resolved in a way

that guarantees the continuation and restoration of our tribal fisheries into

perpetuity.

The Tribes have had a seat at the Columbia River Basin’s table for over 10,000

years. Salmon was so fundamental to our society that in 1855 when our four sovereign tribes and the United States collaborated and negotiated treaties 1, our tribal

forefathers explicitly reserved—and the U.S. agreed to assure—our right to fish in

perpetuity within our ancestral homelands as well as to ‘‘take fish at all usual and

accustomed places’’. We kept our word by ceding vast portions of our homelands to

the U.S., and we fully expect the U.S. to honor their word. On the Columbia River

and its many tributaries, our peoples have exercised this right since time immemorial. It was the expectation of our treaty negotiators then that the tribes would always have access to abundant runs of salmon; it is our expectation now that you

will honor that commitment and take the steps necessary to protect our trust resource. This reserved right has not been diminished by time and its full exercise

has been upheld and affirmed in several U.S. Supreme Court decisions.

It is important for members of this subcommittee as well as the region to understand how the four Columbia Basin treaty tribes feel about the relationship between

our shared goal of maintaining access to affordable electricity and the federal obligation to restore salmon to healthy sustainable runs under our treaties, as well as

under the Endangered Species Act (ESA) and the Pacific Northwest Electric Power

Planning and Conservation Act—Northwest Power Act for short.

The ancestral homelands of our Commission tribes cover roughly one-third of the

entire Columbia Basin in Washington, Oregon and Idaho. Along with the northwest

states and federal agencies, we have been involved in an intensive collaborative effort to construct a salmon recovery plan for the Columbia River basin. It is our goal

to deliver a plan to the region with hallmarks I feel you would support—certainty

and accountability. We feel we have an opportunity to deliver a plan that can win

regional support and be put into practice immediately. In our view, the element

most crucial to success or failure, and lacking from the previous salmon plan, is sufVerDate 11-MAY-2000 16:28 Nov 27, 2006 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6621 S:\DOCS\28557.TXT HRESOUR1 PsN: HRESOUR1
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ficient funding. I appeal to you to work with our tribes and collaboration partners

to ensure that all the needed ingredients for a successful salmon plan are realized.

As a region, we remain concerned over power rates and safeguarding a healthy

environment. Often, salmon and economy are divisive words. One of the first steps

to overcome this divisiveness is to squelch the fear that Endangered Species Act

costs are the primary reason for electrical rate increases. Claims such as those

found in your press release about the costs per fish are based on a long-discredited

analysis and serves to weaken relations and pit salmon recovery against the

economy.

The causes of Bonneville Power Administration (BPA) rate increases over the past

25 years are primarily from nuclear costs and over-commitments to utilities and aluminum smelters. For example: • BPA’s 2001 decision to over-commit to utilities and aluminum smelters added

$3.9 billion in costs based on BPA’s own estimate. • BPA’s annual payments for nuclear plants average $828 million a year.

By comparison, BPA funds the Northwest Power and Conservation Council’s

(NPCC) Fish and Wildlife Program and FCRPS Biological Opinion on the average

of $143 million dollars annually—roughly 5% of its total expenditures.

The region must consider salmon and ESA costs in another way: an economic investment in rural communities. Full implementation of subbasin plans as recommended by a workgroup of the Columbia Basin Fish and Wildlife Authority (comprised of the basin’s state, federal and tribal fish and wildlife co-managers) would

inject approximately $2 billion in Eastern Washington, Eastern Oregon, Idaho, and

Western Montana. If this work is implemented over the next ten years, the annual

funding would support more than 5,000 jobs (assuming $40,000 per job).

This economic infusion could be realized and BPA rates would still be 29% to 38%

below market rates. Over the past ten years BPA rates have averaged 27 percent

below market, so the region could still increase investments in salmon recovery and

still be further below market rates than the last ten years.

The pie could get bigger, and sweeter, at the same time. This could be achieved

by the BPA building adequate salmon costs into their next rate case. Under the current rate case, costs were assumed to be an average of $186 million. For the next

rate case, covering the years of 2007 through 2009, the costs should ramp up to an

average of $240 million per year. The effect of including these costs on the hydroelectric power rates is minimal: for the average household that gets all of its power

from BPA, building these costs in the power rate would mean an increase of about

one dollar per month. BPA only provides about forty percent of the power in the

Pacific Northwest, so most homes would see smaller monthly increases in power

costs.

We also want to make you aware that irrespective of power rate increases or decreases, Eastern Washington is at risk of losing existing resources. Last week a different committee of the U.S. House of Representatives approved a spending bill that

would reduce the Pacific Coastal Salmon Recovery fund by $45 million. Much of that

loss will be felt right here in the mid-Columbia.

As well, a proposal by the NPCC would transfer $7 million per year for salmon

restoration and mitigation OUT of Eastern Washington and redirect them to Montana and Idaho for resident fish projects (see map on page 9).

H.R. 4857 the Endangered Species Compliance and Transparency Act of

2006

We have read the text of H.R. 4857, the Endangered Species Compliance and

Transparency Act of 2006. We do not dispute a need for transparency and reliable

consumer information however no one should be unfairly singled out in this analysis. To aid the consumer on their overall power bill they must have a better understanding of all costs that constitutes their bill, including the cost to the consumer

of implementing this legislation.

We cannot support this legislation as written for the following reasons:

1. BPA’s fish and wildlife funding is not exclusively for ESA compliance. BPA’s

fish and wildlife obligation is also required by a number of federal laws and

treaties among which ESA is only one. The Northwest Power Act called for a

program to mitigate, protect and enhance the fish and wildlife resources affected by the federal dams. There are many non-ESA costs within BPA’s fish

and wildlife funding making it difficult and costly to determine costs attributed

exclusively to ESA. All non-ESA costs must be deducted such as wildlife, resident fish, and administration for example. On-the-ground projects with multiple benefits would also require that any costs attributed to ESA be separated.

2. H.R. 4857 relies on the BPA’s claiming of so-called ‘‘foregone revenues’’. Calculating costs in this manner implies that BPA can claim savings for violating

52

federal laws. No other business or government agency calculates the revenues

or profits that it could have made if it had violated Federal laws, regulations,

or court orders as a part of foregone revenue and costs. The legislation should

not put such a requirement into law. If lost revenues are used to analyze a

power bill, consumers should also be told of lost revenues due to other public

benefits: irrigation, flood control, transportation and recreation.

3. The economic analysis required by H.R. 4857 does not address any associated

benefits. In order to make a more fair assessment of costs, any analysis would

be strengthened by including economic opportunities created by a salmon economy plus investments in on-the-ground salmon restoration work. We must not

underestimate the economic importance of salmon.

4. This legislation is likely to focus national attention on the fact that BPA’s rates

are currently about 60 percent below market rates.

We would support greater ratepayer understanding of all costs that constitute

their utility bills, in effect true and full transparency which would include, for example, nuclear debt. Every year BPA customers pay $828 million in annual costs associated with nuclear power. $250 million goes to operate the Columbia Generating

Station, $275 million to repay the debt on that plant, and $325 million to repay the

debt on two nuclear plants that were never completed. Add to this amount the debt

owed on the hydropower system, various subsidies and power provisions and a customer will see what constitutes 95% of their bill.

Also, if foregone revenue was a valid concept, consider the hydropower revenue

losses caused by irrigation. In the NPCC’s 4th Annual Report to the northwest Governors on the Fish and Wildlife Program, they stated irrigation is the largest nonpower user of Columbia and Snake River water accounting for net water withdrawals of about 14.4 million acre-feet of water annually. According to their analysis, this volume of water, were it left in the river and used to generate hydropower

instead of being withdrawn for irrigation, would yield about 625 average megawatts

of electricity (that is, averaged across all 12 months). At BPA’s rates, this additional

power would be worth $170 million per year or $1.7 billion dollars over 10 years.

A recent analysis by the NPPC calculated that at average market rates, the foregone revenue would be closer to $250 million per year. At the market prices for the

summer of 2005, the lost revenue associated with irrigation withdrawals was over

$380 million. BPA does not count irrigation as a cost or foregone revenue. It is interesting that we don’t debate irrigation as decreasing revenues or raising electrical

rates or classifying it as foregone revenue. Instead, we accept agriculture as a mainstay to the region’s livelihood and so should we also accept salmon.

The Northwest Power Act requires equitable treatment between the purposes for

which the dams are operated. The natural capital of water in the river cannot be

claimed by a single interest. The Tribes have asked for river operations that provide

for the natural needs of the fish. Yet, the legitimate use of spill for smolt survival

is met with disdain and is characterized as lost revenues. In addition, BPA’s

purchase of electricity to meet their legal obligation to provide sufficient flows for

salmon migration and habitat is also mislabeled as a cost in their fish and wildlife

budget.

The early settlers took a cue from the Tribes in recognizing the economic wealth

contained in the salmon. Salmon, like timber and agriculture, provided an economic

foothold in this region. We are accustomed to understanding the timber and farming

communities’ contribution to the economy and the imprint their rich family heritage

and culture has given to this region—it is rightly so. And, just as passionately and

determined, we should also defend the historic salmon economy and its legacy that

stretches even deeper in history.

A study done by the Northwest Power Planning Council in the mid-80’s found

that the hydropower system is directly responsible for the loss of between five and

eleven million salmon per year from the historic high of sixteen million. These losses

are borne by communities and cultures in our region and beyond. We must not ignore these costs to the system. It is unfair when, at the same time, water that is

needed to ensure the safe passage of salmon to the ocean is being charged as a cost

against the ESA.

The Columbia River was built to support multiple purposes. What we need for

salmon, and what rural economies need in terms of energy costs is the same thing,

certainty. The salmon resource, and with it, tribal rights reserved under treaties

with the United States must have a secure place on the list of considerations reviewed by the Congress and federal agencies in determining the appropriate costs

to be borne by ratepayers and taxpayers.

We look forward to working with you and your staffs to find the appropriate

sources of regional and national support to bring balance, certainty and ultimately

success to our region. We need a commitment from the Congressional Delegation to

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support an aggressive effort to rebuild salmon runs to sustainable, harvestable levels. The U.S. must fulfill the commitments entered into by treaties with our tribes.

Tribes have the longest history of collaboration in the region beginning long before

our ancestors negotiated treaties in 1855. Today, we are working along side our

neighbors in the watersheds to restore salmon habitat, we share in the harvest with

non-Indian commercial and recreational fisherman, and we share in the hope that

we can overcome the divisiveness and strained relations by working through common understanding. And, we will continue to work with you to secure the resources

necessary to get the job done.

Thank you for this opportunity to offer this testimony. A more detailed technical

analysis is attached.

Technical Recommendations and Concerns of the Columbia River

Inter-Tribal Fish Commission for the Field Hearing on

‘‘Electricity Costs and Salmon: Finding the Balance’’

Friday, July 7, 2006

I. A STRONG FEDERAL COMMITMENT TO SALMON RECOVERY IS

NEEDED

• We need a commitment from the Congressional Delegation that they will support an aggressive effort to rebuild salmon runs to sustainable, harvestable levels. The Federal government must fulfill its commitments in the Treaties signed

with our tribes.

• Rebuilding salmon runs will provide thousands of jobs in eastern Washington

and Oregon and in Idaho.

• Federal agencies should work with the fish and wildlife managers to develop

a science-based plan that will protect and recover listed salmon species and rebuild salmon runs to sustainable, harvestable levels.

• The federal agencies should work with the fish and wildlife managers to develop

a detailed workplan to implement these efforts. The plan should include:

Æ An aggressive schedule,

Æ A detailed budget,

Æ An allocation of implementation responsibility, and

Æ Funding commitments.

• We want to work with the Congressional delegation to secure federal appropriations wherever possible.

II. TRIBAL EFFORTS ARE SUCCEEDING IN REBUILDING SALMON,

MORE ARE NEEDED

The tribes’ vision and their actions have been simple: ‘‘Put the salmon back in

the rivers and protect the watersheds where they live.’’ The following are a sample

of tribal successes in carrying out this vision.

In the Clearwater River of Idaho, the Nez Perce Tribe has resurrected Coho salmon runs that went extinct in the 1970s. The tribe’s efforts returned more than 1,100

Coho to the Clearwater River. The tribe also has taken the lead in restoring and

protecting salmon habitat. It implemented its plan against great opposition and produced results in less than eight years. Coho are back in the river.

In the Methow River of Washington, the Yakama Nation, helped save thousands

of spring chinook from destruction by federal and state agencies. The Yakama Nation led an effort to allow hatchery-reared spring chinook to spawn in the Methow

River rather than be killed due to mismanagement over genetics. The tribe and others blocked the hatchery entrance, thereby allowing the nearly 2,000 adult salmon

to spawn in the river. As a result, spring chinook redds (nests) increased in less

than three years—from 15 redds in 1995, to 36 redds in 1999, to 368 redds in 2000,

to 4,400 redds in 2001. Additionally, the tribe worked with local irrigators to help

conserve water critical to spring chinook spawning and rearing. Spring chinook are

back in the river.

In the Hood River of Oregon, the Warm Springs Tribe has led efforts to restore

habitat and supplement wild steelhead and spring chinook through appropriate

hatchery technology. The tribe is operating the low-tech, yet highly successful Hood

River salmon acclimation and release facilities. The facility is designed to increase

survival of spring chinook and steelhead juveniles and boost the naturally spawning

population. Prior to 2001, the average size of the spring chinook run was 200 fish.

But it jumped to 1,100 fish in 2001 and to 1,600 fish this year. The winter steelhead

run also has increased dramatically on the Hood River. Last year—2000-2001—it

reached about 2,250 fish, up significantly from the average run size since 1991 of

700 fish, and this year it climbed to 2,500 fish, making it the highest winter

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steelhead run on record since the tribe started counting it during the 1991-’92 season. Steelhead and spring chinook are back in the river.

In the Umatilla River of Oregon, the Umatilla Tribe has spearheaded one of the

most successful models of salmon restoration. Since 1984, the tribe has worked with

irrigators, state agencies, environmental groups, and local citizens to rebuild salmon

runs from an average of 1,500 annually to as many as 30,000 fall and spring chinook, Coho, and steelhead annually. Working with local communities, water has

been restored to the river, habitat has been improved, and hatchery technology is

supplementing wild salmon populations. Today, once-extinct spring chinook salmon

are returning to spawn. As much as 20 percent of the reintroduced spring chinook

are naturally spawning. Spring and fall chinook, Coho, and steelhead are back in

the river.

The Tribes have helped achieve significant accomplishments. Ocean harvest that

intercepts Columbia River chinook has been reduced nearly 50 percent since the

1999 Pacific Salmon Treaty agreement. The tribes played a pivotal role in reaching

this agreement. The tribes have led the region’s efforts to protect fish habitat on

federal lands and restore habitat in cooperation with local landowners on private

and tribal lands. They also have been in the forefront of efforts to require annual

flow and spill over Columbia and Snake River hydroelectric dams, the most effective

way of passing fish in the river. Today the tribes and other citizens of the Pacific

Northwest are benefiting from the hard work.

A. MORE FISH AND WILDLIFE EFFORTS ARE NEEDED

1. The current funding problem

The NPCC and BPA are currently making decisions on fish and wildlife projects

for 2007-2009. The fish and wildlife managers developed detailed recommendations

for projects that are needed during this period. BPA’s proposed funding level will

require significant cuts in ongoing projects that affect listed species. The proposed

funding levels and cuts are shown in the following table. These cuts will impact ongoing projects and significantly limit new projects.

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The map on page 9 shows the reallocation proposed for FY 2007-2009 compared

to the average for the Council’s recommendation in FY 2004-2006. All of the areas

that will lose funding have listed salmon and/or steelhead. Based on this reallocation, the funding available to implement projects under the Council Program and

the FCRPS remand will be cut significantly. The reallocation will transfer $7 million

per year away from projects in eastern Washington and Oregon.

2. BPA can fully fund salmon recovery

Fish and wildlife managers have developed several estimates of fish and wildlife

costs. The first was prepared by CBFWA in 1998 as part of the Multi-Year Implementation Plan. This effort developed costs for implementing all of the elements of

the Council Program and FCRPS Biological Opinion. The annual costs at the time

were $200 to $225 million—this would be approximately $275 million today, adjusted for inflation.

In 2003, CBFWA and the NPCC conducted the Provincial Review to determine

the costs of implementing projects that had been approved by the fish and wildlife

managers, the Council, and the Independent Science Review Panel. The Provincial

Review identified BPA revenue requirements (capital, reimbursable costs, and direct

program) of $310 million per year for FY 2003 through FY 2006 ($329 million adjusted for inflation).

CRITFC, the Oregon NPCC office, and the Yakama Nation also developed estimates of the costs of implementing the 2000 FCRPS Biological Opinion and NPCC

Program in January of 2001. This estimate was based on more aggressive habitat

restoration activities to implement the ‘‘Aggressive Non-Breach Alternative’’ in the

Biological Opinion and had an annual cost of $356 million (approximately $400 million adjusted for inflation to 2005 dollars). This figure assumed that all of the costs

would be expensed; if CRITFC had assumed that some of the costs would be capitalized, the estimate would be similar to the recent CBFWA costs.

The following figure has been adjusted for inflation and shows that BPA has

never provided funding at the levels recommended by the fish and wildlife

managers.

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3. 2007-2009 Biological Opinion and Program cost estimates

The CBFWA formed a workgroup comprised of federal, state, and tribal fish and

wildlife managers to prepare detailed estimates of the costs of implementing the

subbasin plans and other Program measures.

The subbasin plans were the produce of a multi-year, $13 million effort involving

fish and wildlife managers, local stakeholders, and other interested parties. This effort developed plans for all of the subbasins in the Columbia River Basin. These

plans assessed the current conditions in each watershed, the desired population levels, and the key limiting factors. The plans also included specific strategies and

management plans to achieve the biological objectives for each subbasin. Each plan

addressed the requirements of the Council’s program. (See the Columbia River

Basin Fish and Wildlife Program, pages 39 to 43.) The NPCC formed technical and

policy level groups to oversee the development of the subbasin plans and the plans

were reviewed by the Independent Science Advisory Board.

The CBFWA workgroup coordinated the efforts of the Columbia Basin fish and

wildlife managers in the development of detailed budgets to implement the subbasin

plans. The CBFWA workgroup effort was based on the detailed analysis of the fish

and wildlife managers of the production and habitat costs associated with implementing the NPCC Fish and Wildlife Program and the FCRPS Biological Opinion.

The workgroup compiled the cost estimates for 30 subbasins into province level

costs; where costs were not available for a subbasin, the workgroup extrapolated

costs from similar subbasins based on land area.

The workgroup incorporated the production and habitat costs into the other costs

estimates that had been developed by the NPCC and BPA to develop an overall

budget for the Integrated Fish and Wildlife Program. The CBFWA workgroup circulated its draft report in beginning in January of 2005 to the fish and wildlife managers, the Council, Bonneville, utilities, and others. The workgroup incorporated all

of the comments it received and the review process improved the quality of the analysis. The workgroup specifically requested comments on whether there were any

better assumptions or costs for the report. We did not receive any analysis from

Bonneville or its utility customers that provided alternative costs for implementing

the subbasin plans and other elements in the Program and Biological Opinion.

The CBFWA workgroup report is the most detailed estimate of the costs of implementing the NPCC Fish and Wildlife Program and the FCRPS Biological Opinions

available. In fact, it is the most detailed estimate ever produced on this issue. The

Yakama Nation provided this report to BPA staff several times, including in our

April 29, 2005 comments on the PFR and attached the CBFWA workgroup report.

The CBFWA workgroup found that implementing the habitat and production activities and other measures in the NPCC’s Program had a total cost of $1.5 billion

and the cost of wildlife mitigation was $300 million over the next ten years. Based

on this work, CBFWA wrote to BPA and the NPCC on March 16, 2005 to support

adequate funding for fish and wildlife in the next rate case. The letter states:

While CBFWA Members are continuing to review the detailed costs, the

analysis completed to date provides a strong basis for increasing the funding

for BPA’s Integrated Program in the next rate case period to at least $240

million per year. This figure assumes that BPA would use its borrowing authority for new production facilities and the acquisition of land and water

to protect habitat. It also does not include a comprehensive assessment of

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costs for mainstem measures beyond those contemplated in the Updated Proposed Action or the NPCC Program. Additional mainstem measures are necessary to protect, recover, and restore anadromous fish impacted by the federal hydrosystem...

Based on our work to date, it is clear that the current spending levels

are inadequate to protect, mitigate, and enhance fish and wildlife under the

Northwest Power Act. Our analysis shows that at the current spending levels, it would take over 100 years to implement all the measures contemplated in the NPCC Program.

A key issue was the pace of implementation for the habitat and production activities. The workgroup developed realistic recommendations for implementation that

would increase funding for implementation over the next four years. This would provide time to build the necessary staffing, programs, and other infrastructure for implementing the strategies in the NPCC Program.

The workgroup recommended that FY 2006 funding should be $186 million—this

is the level originally assumed in the 2002 Rate Case; we also understand that it

is the approximate planning target being used by the BPA fish and wildlife division.

We further recommended that funding should ramp up to $200 million in FY 2007,

$225 million in FY 2008, and $240 million in FY 2009. The figure below shows this

ramp up.

This funding level would put the region on a path to implement the subbasin

plans in about ten years. This pace of implementation would have much lower biological risk to listed species and offers some hope of progress on restoring the treaty

fisheries of the Columbia Basin Indian tribes.

These recommendations would minimize biological risk to species in the Columbia

River Basin; BPA should implement actions to provide the habitat conditions that

these species need to survive as soon as possible. Many of the ESUs listed under

the ESA have growth rates (lambdas) that are less than 1.0—that means these populations are not replacing themselves and will continue to decline toward extinction.

This pace of implementation will also have the lowest long-term costs because expenses associated with acquiring or leasing land and water to protect and enhance

habitat will increase significantly faster than inflation, especially the acquisition of

land in riparian areas to protect habitat.

Therefore, we conclude that a ten-year implementation schedule for the subbasin

plans has the lowest biological risk and the lowest long-term costs. We also note

that implementation of the subbasin plans represents a small portion of the habitat

protection and enhancements needs in the Basin. The CBFWA workgroup did a

course grain analysis of the total habitat work needed to protect and enhance all

of the habitat in the Basin and found that this effort would be significantly larger

than the work identified in the subbasin plans. Completing the subbasin plans as

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quickly as possible will provide a good start to the long-term habitat work that is

likely to be needed to meet our goals.

BPA has not incorporated these estimates in setting its budget for the Integrated

Program. At the current pace of implementation, it would take 40 to 80 years to

implement the Council Program and FCRPS Biological Opinion. BPA’s estimate is

not based on the costs of implementing the subbasin plans or meeting the goals and

objectives of the Columbia River Basin Fish and Wildlife Program. The Bonneville

budget uses unrealistic assumptions about inflation, and the funding needed to implement the Program and Biological Opinion.

4. Costs could be higher

The CBFWA workgroup identified a number of uncertainties that could increase

Bonneville’s total system costs.

The remand of the current Biological Opinions will result in significant changes

in required fish and wildlife activities, and will likely increase costs or affect revenues. We expect that other river operation, habitat, and monitoring and evaluation

activities will be identified in the remand process.

NOAA Fisheries is developing recovery plans for salmon and steelhead listed

under the Endangered Species Act. The recovery plans are likely to include more

actions than are currently identified in the subbasin plans and therefore the costs

of implementation are likely to be higher. We base this judgment on the fact that

the subbasin plans were developed by fish and wildlife managers and stakeholders

in each of the watersheds through a consensus process. In some cases, local landowners objected to some of the habitat and water quality actions identified by the

fishery managers; as a result, measures that will be needed to recover listed species

were not included in the final subbasin plans.

The CBFWA workgroup cost analysis assumed that other branches of the Federal

government would provide contributions. For example, the costs for implementing

plans in several subbasins (notably those in the Intermountain Province) assume

funding from the federal land management agencies that may or may not be forthcoming. If additional Federal appropriations are not available, the region will need

to address how to accomplish this work.

The prospect of shifting the cost of the Mitchell Act hatcheries to BPA is a substantial uncertainty, considering Congress’s previous interest in this issue and increasing pressures on the federal budget.

Given this analysis, the Tribes are concerned that the BPA proposal for the Integrated Fish and Wildlife Program is not adequate to implement the Council Program and the Biological Opinions. Failure to make adequate progress could increase

the risk of extinction for listed species and makes it unlikely that the region will

achieve the fish and wildlife rebuilding goals in the Council’s Program.

All of these uncertainties point to the likelihood of increasing costs for Bonneville

to meet its fish and wildlife responsibilities during the FY 2007 through FY 2009

rate period. The Initial Proposal does not adequately address these uncertainties.

III. H.R. 4857 IS UNNECESSARY

A. Substantial Information Is Already Available About BPA Costs

BPA’s Power Function Review, 7i Rate Proceedings, and other publicly available

reports document BPA costs and projected revenues. H.R. 4857 is not needed for

this purpose.

In 2006, BPA rates are 59 percent below the market rate for electricity—based

on the assumptions that BPA has used in its current rate case. Based on BPA’s assumptions for future market rates, it will be 41 percent below market through 2009.

The causes of BPA’s rate increase over the past 25 years are primarily from nuclear

costs and over-commitments to utilities and aluminum smelters. These factors don’t

get much public attention. For instance, BPA’s 2001 decision to over-commit to utilities added $3.9 billion in costs based on BPA’s own estimate. BPA’s annual payments for nuclear plants average $828 million a year. Of this payment, approximately $450 million per year is for nuclear power plants that were never completed

and never produced electricity.

In addition, BPA subsidizes (in cash payments) Investor Owned Utilities of the

Pacific Northwest $324 million per year. BPA’s subsidy to customers of investorowned utilities is $300 million per year. BPA’s subsidy to Direct Service Industries

over the next three fiscal years is projected by BPA to be approximately $59 million

per year. Finally, the ‘‘cost’’ to BPA of water withdrawn for irrigation uses in the

Columbia Basin is $250 million per year. Each of BPA’s customer classes has and

will strenuously argue that these costs either are or are not required by one or more

federal laws depending on whether the class is benefited or impacted. See e.g. Dept.

of Water and Power of the City of Los Angeles v. BPA, 759 F.2d 684 (9th Cir. 1985);

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Aluminum Co. of Amer. v. BPA, 903 F.2d 585 (9th Cir. 1989); Assoc. of Public Agency Customers v. BPA, 126 F.3d 1158 (9th Cir. 1997); Central Lincoln Peoples’ Utility

District v. Johnson, 735 F.2d 1101 (9th Cir. 1984); Washington Utilities and Transportation Commission v. FERC, 26 F.3d 935 (9th Cir. 1994).

B. Categorizing BPA’s Fish and Wildlife Costs is Unnecessary and

Impractical

BPA’s investments in rebuilding fish and wildlife populations is required by a

number of federal laws and treaties, including the Endangered Species Act, the

Northwest Power Act, the Fish and Wildlife Coordination Act, the Clean Water Act

and United States treaties with Indian Tribes and Canada. It is not possible to categorize which of the costs are related solely to the ESA since most fish and wildlife

projects are undertaken to implement multiple federal authorities. For example, the

rebuilding goals of the Columbia River Basin Fish and Wildlife Program are much

higher than ESA recovery goals and will likely require all of the ESA related activities plus additional efforts to meet the Northwest Power Act related goal.

Moreover, most projects undertaken with BPA fish and wildlife funding support

receive funding support from multiple entities including other federal agencies’ appropriated funds, as well as state, local, tribal, and private funding sources. These

funds are authorized by a myriad of authorities reflecting local and regional interests for many projects that provide multiple benefits, such as simultaneously increasing irrigation efficiency, reducing water consumption, reducing pumping costs,

and increasing streamflows for salmon. These types of win-win projects enjoy sponsorship of the tribes in the Grande Ronde, Umatilla, Yakima, Walla Walla, John

Day river basins. The art of assembling local support and funding from diverse

sources is already fraught with delay and bureaucracy. We don’t need more red tape

challenges!

C. BPA’s Approach to Estimating its Foregone Revenue and Replacement

Power Cost is not consistent with the Northwest Power Act

BPA states that its combined net costs include over $300 million for hydro system

operations for fish and wildlife. BPA counts the revenue foregone from operating the

FCRPS to meet the requirements of the Endangered Species Act, the Northwest

Power Act, the Clean Water Act, and other laws and regulations as a part of these

costs.

Section 16 U.S.C. 839b(h)(6)(E) requires the Northwest Power and Conservation

Council (NPPC) to include measures in the Program that:

(i) provide for improved survival of such fish at hydroelectric facilities located in

the Columbia River system; and

(ii) provide flows of sufficient quality and quantity between such facilities to improve production, migration, and survival of such fish as necessary to meet

sound biological objectives.

The current NPCC Program includes these measures.

In addition, the FCRPS Biological Opinion requires specific flow and spill operation to ensure that the operation of the FCRPS does not jeopardize the continued

existence of listed species under the ESA.

It is important to note that the flow targets in the Program and Biological Opinion are constrained by the current configuration of the hydroelectric system. Average spring flows in the Columbia before the dams were 450,000 cubic feet per second. The current target is roughly 200,000 cubic feet per second—less than half the

historical average. Unfortunately, the federal agencies have not been successful in

meeting the Columbia and Snake River flow targets 53 percent of the time between

1995 and 2005.

No other business or government agency calculates the revenues or profits that

it could have made if it had violated Federal laws, regulations, or court orders as

a part of foregone revenue and ‘‘costs’’. The legislation should not put such a requirement into law.

D. BPA’s approach is not consistent for other federally authorized purposes

Given BPA’s practice of reporting foregone revenue for fish and wildlife protection,

it is interesting that BPA does not report the foregone revenue associated with

meeting other legal constraints on power generation such as providing irrigation

water, flood control, transportation, or recreation. All of these other federallymandated actions limit the ability to generate electricity and reduce BPA’s potential

revenue. Hence, to be consistent, BPA would need to count them as ‘‘costs’’ as well.

For example, the NPCC has calculated that the 14.4 million acre-feet withdrawn

for irrigation could generate an additional 625 average megawatts if the water remained in the river—aboutfive percent of the total output of the BPA system. At

BPA’s rates, this additional power would be worth $170 million per year or

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$1.7 billion dollars over 10 years. A recent analysis by the NPPC calculated that

at average market rates, the foregone revenue would be $250 million per year. At

the market prices for the summer of 2005, the lost revenue associated with irrigation withdrawals was over $380 million. BPA does not count these ‘‘costs.’’

Columbia Basin Indian tribes have requested on numerous occasions that BPA

stop its practice of singling out the costs of meeting one of the purposes of the

dams—fish and wildlife—in reporting foregone revenue. It is not appropriate for

BPA to report the costs of operating the FCRPS to meet Federal laws and regulations. If BPA believes it is required to report these costs, then it should calculate

the costs of each of the other purposes of the dams and report all of them on a consistent basis.

E. BPA’s calculation of foregone revenue is flawed

In the BPA handouts for its Power Function Review, BPA calculated that the average ‘‘cost’’ of river operations for fish and wildlife was $357 million per year. This

number was calculated using a base case where BPA eliminated all operations for

fish and wildlife. This assumption is legally flawed. We are also concerned that BPA

does not count the credits that it receives for these operations. Since BPA started

taking these credits in 1994, it has reduced its U.S. Treasury repayments by more

than $1 billion, yet BPA does not offset the ‘‘costs’’ with these credits.

Finally, calculation of these costs is complicated and controversial. BPA did not

share its methodology in calculating the operations ‘‘costs’’ cited above. In a Memorandum of Agreement signed in 1996, BPA committed to working with the tribes

to develop a consensus methodology for reporting river operations and calculating

foregone revenues and power purchases; this work is still incomplete.

F. Foregone Salmon

The NPCC found that 5 to 11 million of the salmon lost each year (compared to

the predevelopment period) were attributable to damage caused by the hydroelectric

system. Based on this estimate, the Columbia Basin Indian tribes and others have

‘‘foregone’’ 340 to 750 million salmon and steelhead since the dams were built.

Salmon and steelhead are invaluable to tribal culture and religion—the tribes

would not put a price on this loss. Non-tribal economists, on the other hand, would

value the annual losses in the hundreds of millions of dollars and the cumulative

losses in the trillions of dollars.

IV. THE CAUSES OF BPA RATE INCREASES

BPA customers are concerned that BPA’s rates have increased over the years;

much of the utility concern has focused on fish and wildlife costs. This section analyzes the history of BPA rates, the major causes of rate the increases, and the relative costs of various categories.

A. BPA Rate History

BPA rates declined, adjusted for inflation, between 1937 and 1975 as new federal

dams were build in the Columbia basin. In October, 1980, BPA implemented an 88

percent rate increase, primarily to address the costs of three nuclear plants being

build by what was then called the Washington Public Power Supply System

(WPPSS).

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2What Led to the Current BPA Financial Crisis? A BPA Report to the Region, April 2003.

The BPA webpage provides yearly rate information beginning in 1996. The figure

below shows that between 1996 and the rates proposed for 2009, BPA rates will

have increased by 25 percent in nominal dollars—about 1.8 percent per year.

When BPA’s rates are adjusted for inflation, the analysis shows that they have

actually declined by 9 percent over this period.

Causes of BPA’s Rate Increases

Even adjusting for inflation, the rates show a significant increase from 2001 to

2003. The primary cause of this increase was the cost of serving additional load that

BPA committed to in 2001. In addition, BPA used optimistic assumptions about how

much revenue it would receive from selling surplus electricity and underestimated

a number of costs it would face.

The figure below shows the major categories that increased BPA’s rates. In 2001,

BPA decided that it would serve the entire load that its customers wanted to place

on the agency. BPA committed to serve 3,400 average megawatts more power than

it had available. It assumed that it could purchase additional power at market

rates, which were then about $30 per megawatt-hour. The manipulation of the California energy market by Enron and other energy providers increased market rates.

BPA reported that it paid an average of $185 per megawatt-hour to serve the additional load. The total cost of the over-commitment was $3.9 billion 2.

BPA had also overestimated it revenue from surplus sales of electricity; a more

realistic estimate prepared for BPA’s Financial Choices process reduced BPA revenues by $710 million. BPA entered into a settlement with investor-owned utilities

that set the amount of subsidy for the residential and small-farm customers of these

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utilities; the settlement added $370 million to BPA’s costs. BPA had also used optimistic assumptions about its own administration and operating costs; in the 2003

Financial Choices process, BPA estimated that these costs would be approximately

$220 million higher than it originally had assumed. BPA also underestimated the

costs of operating the Columbia Generating Station (the one nuclear plant that is

operating) by $194 million and the Corps of Engineers and Bureau of Reclamation

costs for operating the federal dams by $155 million. During the Financial Choices

process, the integrated fish and wildlife program was below budget by $18 million.

BPA Future Costs

This section summarizes the major categories for BPA proposed costs for 2007-

2007.

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Nuclear Costs

Of the $828 million in annual costs for 2007-2009, $250 million goes to operate

the Columbia Generating Station, $275 million to repay the debt on that plant, and

$325 million to repay the debt on two nuclear plants that were never completed.

V. BPA CAN AFFORD ADDITIONAL FISH AND WILDLIFE INVESTMENTS

BPA can afford salmon recovery and still provide great benefits to Northwest ratepayers. Fish and wildlife managers are working with federal agencies to develop a

new FCRPS Biological Opinion that complies with the Endangered Species Act.

That effort should produce a science-based plan to protect and recover salmon and

steelhead and must include actions that are reasonably likely to occur.

In July, BPA will make final decisions on setting its rates for 2007 through 2009.

Its current proposal includes fish and wildlife funding levels that would force immediate cuts in ongoing fish and wildlife programs and delay full implementation of

the subbasin plans. The remand process has assumed these ongoing projects are in

the baseline and will likely result in additional habitat, hatchery, hydro, and harvest actions that will increase implementation costs.

BPA has asserted that it can adjust its rates to accommodate decisions that come

out of the biological opinion remand. The treaty tribes have provided extensive evidence in the BPA rate case that BPA’s proposal does not allow it to increase its

costs and also assure repayment of its debt to the Treasury. In the past, when BPA

has faced missing a Treasury payment it has deferred salmon recovery actions.

A. BPA’s Current rates

Bonneville rates are currently 59 percent below the market rates that Bonneville

has assumed for FY 2006. BPA’s current rates are 48 percent below the new

resource rate that it has proposed.

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Averaged over the past ten years, BPA rates have been 27 percent below market

rates and 49 percent below the costs of new resources.

B. BPA Rates 2007-2009

In the current rate case, BPA has assumed that market rates will decline by approximately 27 percent between 2006 and 2009. BPA’s assumption about a reduction

in market costs makes BPA’s proposed rates for 2007 through 2009 slightly closer

to market rates. Using BPA’s assumptions, its rates would be 41 percent below market rates on average over the next rate period.

C. The Impact of Salmon Recovery on BPA Rates

This section describes the potential impacts of two alternatives for salmon recovery on BPA’s rates. It is important to note that these costs will not necessarily cause

a rate increase. For example, in 2005, BPA projected that additional spill at several

dams to protect salmon would increase rates; however, BPA actually decreased its

rates by 1.6 percent that year because of other factors.

The assumptions for the additional fish and wildlife costs are summarized here

and detailed later in this paper.

Low Case: This scenario is based on the costs of implementing the subbasin plans

developed for the NPCC and the FCRPS Biological Opinion. The costs were prepared by a workgroup convened by the CBFWA. This case also assumes that the

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river operations ordered by the District Court as part of the FCRPS Biological Opinion Remand for 2006 would continue through 2009; this would reduce BPA’s revenue from the sale of electricity. The scenario assumes total added costs would be

$93 million in 2007, $114 million in 2008, and $127 million in 2009.

High Case: The high case assumes the integrated fish and wildlife costs above

plus $70 million per year to cover the added costs if BPA does not use its borrowing

authority for land and water acquisitions to improve habitat. The high case also assumes the river operations recommended by the plaintiffs in the FCRPS Biological

Opinion litigation. The high scenario assumes total added costs would be $376 million in 2007, $363 million in 2008, and $362 million in 2009.

D. BPA would be significantly below market rates

If these additional fish and wildlife costs are added to BPA’s rates, BPA would

be 37 percent below market rates on average over the next rate period in the low

case and 29 percent below market rates in the high case.

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3 BPA uses a rule of thumb that each $59 million dollars equals about $0.001 per megawatthour.

The figure below compares the percent that BPA would be below market prices,

on average, under its proposed fish and wildlife funding level and the low and high

fish and wildlife funding scenarios described above.

Given that BPA’s rates are significantly below market rates and lower than most

other parts of the country, it appears that BPA can incorporate the costs to fully

implement the NPCC Program and the Biological Opinion and still benefit the

Northwest economy.

E. Rate Impacts would be small

The potential rate impacts for residential customers would range from zero to

$1.90 per month in the low case and zero to $6.22 per month in the high case.

Under a settlement agreement, customers served by investor-owned utilities

would not pay any of the potential increase. As a result, all of the additional fish

and wildlife cost must be allocated to a smaller group of customers and the impacts

are more significant than the allocation in the 2002 rate case.

Based on our analysis, we found that the high case described above would result

in a potential rate impact of $0.00622 per kilowatt hour. 3 For an average customer

of a utility that purchases all of its electricity from BPA, this could result in an increase of $6.22 per month—an increase of approximately 9 percent.

BPA serves approximately 40 percent of the region’s power, so the impact on most

ratepayers would be less. We analyzed three other cases: a utility that purchase 70

percent of its power from BPA, a utility that purchase 30 percent of its power from

BPA )for example, Seattle City Light, Tacoma City Light) and investor-owned utilities. In the high case, the average customer of a utility that purchases 70 percent

of its power from BPA could pay an additional $4.35 per month—a 6.5 percent increase. A customer served by a utility that purchases 30 percent of its power from

BPA could pay $1.87 per month—a 2.8 percent increase.

In the low case, we assumed that BPA used its borrowing authority to finance

some of the land and water acquisitions in the habitat measures under the Integrated Fish and Wildlife Program and that the Court-ordered river operation for FY

2006 would also be implemented during the rate period. In the low case, the average

consumer that is served by a utility that purchases all of its power from BPA could

pay an additional $1.90 per month—a 2.9 percent increase. If the utility purchased

70 percent from Bonneville, the monthly impact could be $1.33—a 2 percent increase. Consumers served by a utility that purchases 30 percent of its power from

BPA could pay an additional $0.57 per month—a 0.9 percent increase.

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Miss MCMORRIS. Thank you. Mr. Voigt.

STATEMENT OF CHRIS VOIGT, EXECUTIVE DIRECTOR,

WASHINGTON STATE POTATO COMMISSION AND MEMBER,

FAMILY FARM ALLIANCE, MOSES LAKE, WASHINGTON

Mr. VOIGT. Thank you, Congresswoman McMorris and Congressman Hastings, thank you for the opportunity. I appreciate it. I’ve

got about 20 minutes of testimony I’m going to cram into 5 minutes, so please look over the written testimony I’ve provided.

I have to start with a personal story. I’m going to flash back to

my 8th grade year sitting in my counselor’s office. I was meeting

with Mrs. Stuart. And we had a thing called a computer. And the

idea was you filled out this punch card and fed it into the computer

and the punch card would survey your likes and dislikes and so

forth and it would spit out what career opportunities might be of

interest to you in the future.

First on the list was professional athlete for me. And because of

bad genetics and I rode the bench in 8th grade basketball, I didn’t

think that was very realistic. Second on the list was fish and wildlife biologist, and I thought that was appropriate that that was on

my list because I remember the previous year before in the fall sitting in a coastal stream in the Northwest and I saw my first salmon in the wild and it was a beautiful experience. And actually at

some point I stopped fishing just to watch the salmon go from the

deep pool that I was fishing into the shallow ripples. I thought it

was an incredible experience and I wanted to share it.

Third on my career list was an agriculturist, and that’s the reason today I’m wearing a coat and tie, and I don’t usually have an

opportunity to do that. I stumbled across something from my past,

my FFA jacket. When I wore this—This is from 1982/83 and I don’t

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dare and try to put it on because I know I won’t fit in it anymore.

But when I wore that jacket in my senior year in high school in

1982, there was a sense of pride.

I was excited about being involved in agricultural. What was before me? I saw so many opportunities, and I was very excited about

the opportunities of agricultural in the U.S. And namely to serve

not only food to our domestic needs but also feed those around the

world.

Last night I was in my closet and I looked at that jacket, I don’t

know, maybe I was naive back then, because now I look at those

initials, FFA, and maybe today there should be a question mark behind it. Is there a future for agricultural in America? Are we heading down a food policy that we’re going to be outsourcing all of our

food now in this country? How dangerous is that?

I want to talk specifically about the potato industry and how the

management of the Columbia River has affected that. Typically

now people aren’t eating more French Fries, unfortunately. But we

do experience population growth, and every four to five years

there’s a need for a new potato processing plant somewhere in the

U.S.

In the last four or five years, if you look back, we have not received a facility here in Washington State, nor have we received

any of those facilities here in the Northwest. Actually, quite contrarily, we’ve actually lost a few processing facilities that have been

taken offline and shut down and those jobs have been lost.

Plants are opening up in other locations in the world. The two

newest places are in Canada. They shut down plants here in the

U.S. And moved them into Canada. And the reason for that is because our processors are essentially blacklisted in the Pacific

Northwest for any new development of potato processing plants

here because of unreliable water supplies. We are one court case

away, one litigation away from shutting down everything. And a

processor is not going to invest any additional infrastructure

dollars into new equipment, expansion, or new plants if there’s an

unreliable source of water. So it greatly affects us in the potato

industry.

Food processing and potatoes are a big deal to Washington State.

We grow potatoes on about 165,000 acres in both of your districts.

We employ thousands of people here in the Northwest, about

75,000 people are employed in food processing jobs. The average

pay is $32,000 a year plus benefits.

The economic impact of the potato industry here in the Columbia

Basin is about $3 billion. It’s very important. And these $3 billion

are being invested in small communities, much smaller than even

here in the Tri-Cities. We’re talking Warden, Othello, Connell.

These are the only economic opportunities for these rural communities. It’s important that we provide that.

I don’t want my testimony to focus on jobs for—because, remember, my career choice was never—also on that list was a fish and

wildlife biologist. And I think that a compromise, a common ground

that can solve all of our problems, meet our economic needs as well

as meet the needs of preserving a species and additional water

storage.

69

I think The Honorable Sid Morrison was correct. We need to look

at creating more storage so that we can utilize the river, not only

for biological fish, but also for economic activities. We’re also looking at a declining aquifer, the Odessa Subarea. Surface water is

going to be an important aspect. If that area goes dry, that’s a $600

million loss to the Columbia Basin.

So on behalf of the Potato Commission and on behalf of the Family Farm Alliance we are greatly in support of H.R. 4857. We feel

it creates a tremendous dialog, including opportunities for us to collaborate with more people, to educate the public, to get them engaged in the process of finding a true balance.

We actually hope that we can take this one step farther and

apply it another agency, and that’s the Bureau of Reclamation. Because the Bureau of Reclamation also lists ESA costs to their customers.

But thank you for this time, and I would entertain any

questions.

[The prepared statement of Mr. Voigt follows:]

Statement of Chris Voigt, Executive Director, Washington State Potato

Commission, on behalf of the Family Farm Alliance

Mr. Chairman, Members of the Committee, on behalf of the Family Farm Alliance

and its member organization, the Washington State Potato Commission (WSPC). I

thank you for the opportunity to testify before the Subcommittee today. I serve on

the Advisory Committee of the Family Farm Alliance (Alliance), and today I am

here to convey the message of agricultural water users from throughout the West.

The Alliance advocates for family farmers, ranchers, irrigation districts, and allied

industries in seventeen Western states. The Alliance is focused on one mission—To

ensure the availability of reliable, affordable irrigation water supplies to Western

farmers and ranchers

We appreciate the effort made by you, Representative McMorris, and the other

members of the subcommittee to hear our concerns today. We particularly appreciate the effort that you and the committee staff have made to hear our concerns,

here in the Western States. This is an important and timely hearing on a matter

that has a deep concern for family farmers and other agricultural interests in the

Pacific Northwest—the requirements and costs under the Endangered Species Act

for salmon recovery.

This subcommittee has paid close attention to the Columbia and Snake River systems, and, in particular, the effect of proposals and requirements for salmon recovery on irrigated agriculture, navigation and energy production. We are directly impacted by the salmon recovery requirements for the Columbia. We appreciate the

balanced view taken by the Committee of the need to consider not only salmon recovery but also the multiple uses and multiple needs of a working river system.

Our Interests in the Columbia River

The Washington State Potato Commission is a quasi-state agency dedicated to

protecting the interest of potato growers in Washington State. The WSPC membership includes approximately 350 potato growers throughout Washington. Potato

growers in Washington operate on an estimated 165,000 acres of farm land, primarily located in three growing regions: the Skagit Valley, Yakima Valley and the

Columbia Basin. Washington State ranks second in the nation in potato production,

and potatoes alternate with wheat as Washington’s second largest agricultural crop.

Thousands of jobs in Washington rely on potato planting, harvesting, packing, processing and transportation. In fact, economists estimate the annual economic impact

of Washington potato production, packing and processing at approximately $3 billion, making potatoes one of the most important value-added agriculture commodities in the State. Eight percent, or roughly one out of ten jobs in the region, stems

from potato production. As water users in the Columbia River Basin, WSPC and its

members have a direct, substantial and daily interest in BPA’s programs and operation of the Columbia irrigation and hydro electric power systems. With BPA power

rates just now coming off historic highs, we have little room for rate increases or

inefficient use of salmon recovery funds. Our members compete globally. A rate difference of 1-2% is important to us, and very often means whether a business stays

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in business, goes off-shore, or goes out of business. The region has, in many ways,

lost its electricity price advantage. We cannot afford rate increases and in fact need

a rate decrease now that the unprecedented rate effects of the West Coast price

spike of 2001 are receding. Because of the nature of our business, and agriculture

in general, we are very concerned about BPA costs and the efficient use of salmon

recovery measures and funds.

Value Added Processing Threatened

Food processing is vital to the economic growth and stability of the Northwest.

A recent study by Advanced Research Technologies found that food processing annually contributes $20.7 billion to the Northwest economy. When the multiplier effects

are added, processors add $42.5 billion in economic value to the region’s economy.

Processors directly create 75,000 jobs with an average wage of $32,000 per year plus

benefits.

The long, grinding and frustrating saga of implementing the Endangered Species

Act on the Upper Snake and Columbia Rivers is beginning to seriously impact the

desire of key food processors to maintain operations in this region. Washington,

Idaho and Oregon are three of the most productive and desirable growing regions

in the world. However, in recent years, processors have been relocating plants and

moving operations to other regions to mitigate the potential risk of being unable to

continue to source adequate raw product supplies in the region due to curtailment

in water supplies. This trend is being exacerbated by the rising cost of power, which

was once a huge economic incentive to Northwest processors but is no longer a competitive advantage.

Potato processors are building and buying plants in Canada, China, Europe and

Australia. This movement is fueled by a number of issues, including market location, currency exchange and government incentives. However, in the past five years,

we are now seeing the fear of inadequate water supplies and the rapidly escalating

cost of power, both of which are being driven artificially by the ESA, beginning to

erode the Northwest’s competitive advantages in the world marketplace.

The danger of losing the food processing industry to the world marketplace is real.

It will not happen quickly and the industry does not want to move out of the region.

However, the subtle, grinding effect of the uncertainty of the ESA will take its toll

over the long run. As processors make decisions about where to spend capital dollars

to upgrade plants and equipment or to add new lines and processes, they are currently investing outside the region. This trend, if not reversed, will slowly but surely

move the industry to the locations where the most current, productive and efficient

plants are located. That has always been the Northwest, but now, the trend is

changing and the newest and most productive plants are no longer in our region.

We support the House Resources Committee’s efforts to bring rationality to this

process. The bill sponsored by Rep. McMorris is an incremental step in the right

direction. It is good public policy and sends a message to all parties that there will

be transparency and accountability in the process.

Transparency of ESA Costs and Requirements

The Family Farm Alliance and the Washington State Potato Commission strongly

support H.R. 4857, the Endangered Species Compliance and Transparency Act of

2006. This much-needed legislation would provide a basic level of public disclosure

of the costs incurred under the Endangered Species Act by the Bonneville Power Administration to administer and fund most salmon recovery programs along the Columbia River and the basin which it drains. We view the requirements contained

in this bill as an appropriate public ‘‘right to know’’ provision that harms no one,

yet provides information to the public on the measures used under the Endangered

Species Act to enhance and advance the recovery of listed species.

In our view, it is common sense to disclose the amount of costs incurred under

the ESA for salmon recovery. We believe that H.R. 4857 would provide valuable information to the public regarding the costs incurred by the Bonneville Power Administration in compliance with the Endangered Species Act. Rates paid to Bonneville Power Administration by our members and other customers of Bonneville are

investments of the public in the federal hydro system. Over the past decade, the

public has invested, through payment of BPA rates, an estimated $8 billion dollars

in salmon recovery efforts, including the costs of lost power generation. It is important for the public to understand the nature of those expenditures and the results

of the use of those expenditures. It does not make sense to us to shield disclosure

of ESA related costs from the public which pays those costs through BPA rates.

Endangered Species Act compliance costs are not ordinary operational costs

associated with the operation of the federal facilities. They arise because of a later

listing of species under the Endangered Species Act, and the requirement that

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additional measures be taken to provide for conservation and recovery of listed species. These are not routine costs. The activities funded by these costs result from

a separate statute and a separate federal obligation to conserve species listed under

the ESA. Further, the costs are extraordinarily high by any measure. For BPA, it

is reported that the costs of salmon recovery, at over $600 million per year, exceeds

all other costs of operating the agency. No other species recovery effort in the country matches the costs associated with the recovery of the salmon in the Pacific

Northwest.

We support salmon recovery. Our concern is not with the effort to restore salmon

runs, it is with the efficient and effective use of salmon recovery funds. For this reason, we believe a disclosure to the public of the costs associated with ESA compliance and recovery measures that apply to Bonneville is both fair and appropriate.

The disclosure requirements of this legislation would assist the public in knowing

the amount of repair expenditures going to salmon recovery efforts, and, we hope,

would assist in understanding how efficient are those measures.

H.R. 4857 applies to power marketing administrations, which provides a forum

to better educate power customers on direct and indirect costs resulting from compliance with the Endangered Species Act of 1973. Many of the members of the Family Farm Alliance are also customers of another agency—the federal Bureau of Reclamation (Reclamation)—which is the largest water wholesaler in the country. Reclamation provides municipal and industrial water to more that 31 million people

and irrigation water for 10 million acres that produce 60 percent of the nation’s

vegetables and 25 percent of its fruit and nuts.

The environmental revolution of the last 30 years imposed new requirements for

environmental assessment, protection, and enhancement on virtually everything the

Bureau of Reclamation does. These new requirements increase project costs and further constrain the availability of water for human uses. Over the years, ESA requirements have significantly altered the operations of federal dams and reservoirs,

which have serious ramifications for agricultural water users dependent upon those

facilities.

As is the case in the power arena, under law, those costs are passed on by the

federal government to water consumers who receive federal water. For example,

water contractors served by California’s Central Valley Project (CVP) pay ESA costs

accrued to both water and power; the power portion of the CVP water contractors

costs are assessed as Project Use Energy (PUE) used to deliver CVP Water. In a

given year, between 20% and 30% of the total power generated by the CVP are used

for PUE.

There are many examples of direct and indirect costs to water users associated

with ESA implementation. Direct costs are defined as ‘‘federal agency obligations related to study-related costs, capital, operation, maintenance and replacement costs

and staffing costs.’’ Indirect power costs are defined as ‘‘foregone generation and replacement power costs, including the net costs of any transmission.’’

Water users in California pay some direct environmental costs through rates that

are identified in financial statements as ‘‘water marketing’’ and ‘‘storage operations

and maintenance’’. It is also possible that some direct environmental costs are hidden in financial statements under terms like ‘‘other direct expenses’’. The core problem is that environmental costs are not separately identified as specific line-items.

As a result, water users have no idea of the specific dollars that they spend on endangered species and other environmental causes.

It is clear that ESA-related costs are not the only ‘‘environmental costs’’. There

are concerns among some water users that additional costs beyond the ESA may

also be included in rates, such as those associated with the National Environmental

Policy Act (NEPA) and, in California, the Central Valley Project Improvement Act

(CVPIA).

Indirect costs associated with ESA and other environmental regulations—such as

lost opportunity costs—are sometimes difficult to quantify. There may be environmental programs within Reclamation’s Denver Office that are included in the indirect cost allocations that are added to water rates. Other indirect costs may represent a greater impact to water users and their communities. As Rep. McMorris

has noted, in the Sacramento, Colorado, Platte and Missouri river basins, the federal government had to modify its hydropower generation services and flow requirements to account for ESA mandates. This resulted in lost federal hydropower generation and has led to an average of $96 million per year in ESA costs that is

passed on to consumers. It also leads to increased uncertainty for family farmers

and ranchers, whose need for a certain water supply can form the foundation for

other financial decisions.

While the Family Farm Alliance and Washington State potato industry enthusiastically endorsed H.R. 4857, our discussion regarding this bill suggested that,

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perhaps, it was not enough. Water users from several western states have asked

that Congress consider expanding the last part of the bill to require the Secretary

of Interior to conduct a project-by-project breakdown of ESA, NEPA and other environmental costs for Bureau of Reclamation projects, as well as the power marketing

administrations. This very simple addition would produce very useful information

for Reclamation’s customers, many of whom are members of the Family Farm Alliance.

We offer some initial thoughts on potential solutions to improve the transparency

of environmental costs that water users bear:

1. Investigate the possibility of using a more detailed description of existing rate

components to specifically identify environmental costs. For some water customers, separately breaking out and categorizing existing rate components

would certainly be useful and increase the transparency of the environmental

costs that are currently buried in several components of the water user rates.

A good first step might be to identify the specific types of environmental costs

(including ESA, NEPA, etc) that might be buried in water rates. Note that in

many states, State environmental regulations can add still more environmental

costs. CEQA, which is the State of California’s equivalent to the Federal NEPA

legislation, is a good example of these potentially redundant expenditures. Existing Reclamation rate book schedules could be adjusted to provide specific

line-item detail regarding the specific costs that are incurred due to ESA or

other environmental compliance issues. This would let contractors know what

their environmental compliance bill is without creating a new environmental

rate component. This proposal may not necessarily be applicable West-wide,

and should be considered only after the concept is reviewed by federal water

customers and Reclamation officials at the regional level.

2. Review Reclamation’s Denver Office to investigate ways to make indirect costs

more transparent. Beyond the environmental cost component indirect costs, it

would be helpful to improve visibility on indirect costs in general. To get an

accurate picture of the total environmental expenditures, it is absolutely necessary to include Reclamation’s indirect expenses at both the Regional Office

and Denver Office level.

3. Establish a ‘‘non-geographic’’ division that would be for the specific purpose of

reporting all environmental costs. The current method for reporting costs in

some areas of Reclamation is to segregate different geographical regions/facilities into divisions on financial statements. In the interest of full disclosure to

the ratepayers, the environmental costs should be grouped into a single section

of the financial statements, and the cost of each environmental activity should

be segregated into a specific line-item.

The Family Farm Alliance believes that, for both electricity and water customers

to make an informed decision about ESA costs, the first step is to provide transparency in consumer costs. The Endangered Species Compliance and Transparency

Act of 2006 is a bill that will take an important first step in this direction. It can

be strengthened and improved even more effectively by expanding the bill to apply

to Bureau of Reclamation water projects.

The Region Should Consider Other Measures To Achieve Balance

The Potato Commission, as well as other constituents of the Family Farm Alliance, strongly support balanced natural resource policy, efficient use of federal resources and rate payer funds, and the most cost-effective environmental policies

that may be available. We are interested in working more directly with both the

Bonneville Power Administration and the Bureau of Reclamation on water conservation as it would assist in salmon recovery and in the Columbia River Basin generally. An issue that may soon develop is the recharging of the Odessa aquifer in

Central Washington. We are working on developing a plan for revamping water

management in the Odessa Aquifer area. Part of this potential solution may well

evolve a buy back by the Bonneville Power Administration of water and power

usage and a significant reduction in aquifer demand. Our hope is that both irrigation and power use could be significantly reduced through a cooperative program

with Bonneville Power Administration and the Bureau of Reclamation to assist in

the recharging of the Odessa Aquifer.

We are in the early stages of considering these proposals, and are not yet in the

position to seek support either at Bonneville or in this committee. However, as the

committee considers the multiple uses of the Columbia River system and the ESA

obligations, and other obligations as they apply to the federal Columbia River power

system, we would ask that consideration of an Odessa Aquifer recharging program

be put into consideration at the appropriate time.

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Mr. Chairman, we are well aware that Congress has a tough job to find a balance

between conservation, power production, efficient salmon recovery and the public interest in salmon recovery and cost disclosure. We stand ready to assist the Committee, and the House, in seeking to find that balance.

Thank you for the opportunity to testify. I welcome any questions the Committee

may have.

Miss MCMORRIS. Thank you. Mr. Chandler.

STATEMENT OF GARY CHANDLER, VICE PRESIDENT OF

GOVERNMENTAL AFFAIRS, ASSOCIATION OF WASHINGTON

BUSINESS, OLYMPIA, WASHINGTON

Mr. CHANDLER. Thank you, Congresswoman McMorris and Congressman Hastings, for bringing the Subcommittee to Eastern

Washington. It’s a lot more easier to get to than going back to the

other side of the country. I want to thank you also for giving me

the opportunity to talk this morning on the impact of rising electricity rates that impact our economy.

AWB is the oldest and the largest business organization in the

State. Our 6,000 members provide over 600,000 jobs to people who

live in the State of Washington.

I’d like to first take a personal note, if I may. When people talk

about the subject, we usually talk in statistics. I’m as guilty as

anyone. Because the impact is so significant and the potential impact is devastating, statistics seem the best way to make the case.

But remember that there is a real person behind every one of those

statistics. Each data point is a human being with a family and a

home and a right to work for a decent future.

But now the future seems in doubt because of the money we’re

spending on the fish. Now let me be clear, we all have a responsibility to protect the environment, but there must be, as you said

at the beginning of this, Congresswoman McMorris, about this.

This morning I’d like to talk about the money that’s being spent

on salmon programs, why do I see power costs as so important, and

take a look at some of the consequences.

First, the money. The Bonneville Power Administration has

spent $5 billion on fish programs over the last nine years. That’s

an impressive number. But to the figures in perspective, let’s look

at it as how much is $5 billion?

For $5 billion Habitat for Humanity could build 100,000 homes

for poor people. $5 billion is enough to provide health insurance for

100,000 low-income families in Washington State for the last nine

years. $5 billion is enough to provide 11,000 Washington residents

with a $50,000 a year job over the last nine years.

BPA has spent much of that money on fish programs over the

last nine years. Those costs get factored into what BPA charges for

electricity. Higher costs mean higher prices.

I’d like to talk about why higher energy costs are so important.

Generally speaking, some would say Washington State is not the

greatest place to do business. We have the highest unemployment

insurance cost in the nation. We have the fourth highest workers

comp benefits in the country. Our regulatory costs are high and our

employers pay the lion’s share of the taxes in the state.

But historically our low power rates have made up for that. We

used to have a real advantage over other states because of our low

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cost of hydropower. But that advantage is slipping away. Now for

the employers who must deal with all the other possibilities, rising

energy costs can be the straw that breaks the camel’s back.

Salmon programs strike a part of our State’s economy because

they target hydropower. For example, in 1999 our electricity rates

for residential and industrial property were the lowest in the nation. Our commercial rates were the same. In 2003 that advantage

had disappeared. Our industrial rates are higher than 18 other

states, and our commercial rates were higher than 12 other states.

We have seen our power costs jump by 50 percent over the last

8 years. We’re already seeing the impact on rising electricity costs

in Washington State. Farmers are taking land out of production because they can’t afford to irrigate. Some are getting out of the business all together, and others are selling the family farms. Oh, gracious.

Our thriving aluminum industry is now on the end stage of—In

1998 we had seven aluminum plants operating in the State of

Washington. Now there are only two. We’ve lost 6,000 aluminum

jobs since 1998, jobs that paid an average of $80,000 a year in

wages and benefits.

Will our wood products and our paper industries be the next ones

to die? Amazingly, things could be worse. U.S. District Court Judge

James Ridden seems intent on removing four Snake River dams to

protect the salmon. He keeps rejecting the Federal Government’s

management plans because they don’t talk about breaching the

dam.

In fact, Redden once complained that the agencies ‘‘have failed

to demonstrate a willingness to put the needs of salmon first.’’ If

Judge Redden gets his wish, our economy will be devastated. According to the Corps of Engineers, breaching the dam will cost the

State economy $300 million a year for the next 100 years. Electricity bill for Northwest ratepayers could jump $300 million.

Transportation costs would rise $40 million. We’d lose 37,000 acres

of prime irrigated farmland. 2300 people would lose their jobs. And

personal income would be cut by $278 million a year.

All of us have a responsibility to protect the environment. Washington employers have and we’ll continue to do our part. Our strategy must be guided by common sense and take into account the impacts on people as well as animals. The key, again, is balance.

Thank you.

[The prepared statement of Mr. Chandler follows:]

Statement of Gary Chandler, Vice President of Governmental Affairs,

Association of Washington Business, Olympia, Washington

Good morning, my name is Gary Chandler. I’m Vice President of Governmental

Affairs for the Association of Washington Business.

AWB is the oldest and largest business organization in the state. Our 6,000 members provide jobs for 600,000 people in Washington State.

Thank you for this opportunity to speak about the impact that rising electricity

rates have on our economy.

First, I’d like to make a personal note, if I might. When people talk about this

subject, we usually talk in statistics. I’m as guilty of this as anyone. Because the

impact is so significant and the potential impact is devastating, statistics seem to

be the best way to make the case:

But we need to remember that there are real people behind each of those statistics. Each ‘‘data point’’ is a human being with a family and a home and the right

to work for a decent future.

75

But now, that future seems in doubt because of all the money we’re spending on

fish.

Now, let me be very clear. We all have a responsibility to protect the environment—but there must be a balance.

This morning, Id like to talk about the money that’s being spent on salmon programs; why rising power costs are so important; and take a look at some of the consequences.

First, the money.

The Bonneville Power Administration has spent $5 billion on fish programs over

the last nine years. That’s an impressive number. But to put that figure in perspective, let’s look at it another way. How much is $5 billion?

• For $5 billion, Habitat for Humanity could build 100,000 homes for poor people. • $5 billion is enough to have provided health insurance for 100,000 low-income

families in Washington State for the last nine years. • Or, $5 billion is enough to have provided 11,000 Washington residents with a

$50,000 a year job over the last nine years.

BPA has spent that much money on fish programs over the last nine years. Those

costs get factored into what BPA charges for electricity. Higher costs mean higher

prices.

I’d like to talk about why higher energy costs are so important.

Generally speaking, Washington State is not the greatest place to do business.

• We have the highest unemployment insurance costs in the nation. • We have the 4th highest workers comp benefits in the country. • Our regulatory costs are high, and employers pay the lion’s share of the taxes

in the state.

But historically, our low power rates have made up for that. We used to have a

real advantage over other states because of our low cost hydropower. But that advantage is slipping away.

Now, for employers who must deal with all the other costs of doing business in

Washington, rising energy costs can be the straw that breaks the camel’s back.

Salmon programs strike at the very heart of our state’s economy because they target hydropower—the main reason for our competitive advantage.

For example:

• In 1999, our electricity rates for residential and industrial customers were the

lowest in the nation. Our commercial rates were second lowest. • By 2003, that advantage had disappeared. Our industrial rates were higher

than 18 other states had our commercial rates were higher than 12 other states.

Here in Eastern Washington, irrigators have seen their power costs jump by 50

percent over the last few years. That’s a bigger increase than the last 20 years combined.

We’re already seeing the impact of rising electricity costs in Washington State.

• Farmers are taking land out of production because they can’t afford to irrigate

it. Some are getting out of the business altogether or selling their family farms

to corporations.

• Our once-thriving aluminum industry is now on the endangered species list. In

1998 we had seven aluminum plants operating in Washington—now there are

only two. We’ve lost 6,000 aluminum jobs since 1998—jobs that paid an average

of $80,000 a year in wages and benefits.

• Will our wood products and paper industries be the next to die?

Amazingly, things could get even worse.

U.S. District Court Judge James Redden seems intent on removing four Snake

River dams to protect the salmon. He keeps rejecting the federal government’s management plans because they don’t talk about breaching the dams.

In fact, Redden once complained that the agencies—quote—have failed to demonstrate a willingness to put the needs of salmon first—unquote.

If Judge Redden gets his wish, our economy will be devastated.

According to the Corps of Engineers, breaching the dams would cost the state

economy $300 million a year for the next one hundred years.

• Electricity bills for Northwest ratepayers would jump by $300 million;

• Transportation costs would rise by $40 million;

• We’d lose 37,000 acres of prime irrigated farmland;

• 2,300 people would lose their jobs;

• And personal income would be cut by $278 million a year.

All of us have a responsibility to help protect the environment. Washington’s employers stand ready to do their part.

But our strategy must be guided by common sense and take into account the

impacts on people, as well as salmon.

76

The key is balance.

Thank you.

Miss MCMORRIS. Thank you. And once again, thank you, everyone, for being here today and taking the time to be here. Each of

you has offered excellent testimony, and it all helps in our efforts

to address this issue.

At this time I think we’re just going to go back and forth for a

while. I was going to start with a question to the Corps of Engineers and BPA. If you would just talk about how you measure the

effectiveness of the Corps mandated spills versus barging the fish

for predator control. Which has been more effective over the past

two summers of mandated spills?

Ms. DURHAM-AGUILERA. I’ll go first. Thank you.

[Discussion held off the record.]

Ms. DURHAM-AGUILERA. OK. Thank you. I’ll take the first attempt to address and then turn it over to BPA. It’s really a combination of all three. We monitor the passages. We monitor the

transport. But, you know, one of the things that we’re trying to

drive for in the region is we still have a consistent criteria. And

what we really try to get to is a criteria that measures juvenile survival, and this is formed by adult returns.

So regarding the spill that happened in 2005, the summer spill

we keep talking about, until we get the adult returns, which won’t

happen until 2008 and 2009, we won’t be able to tell how effective

they are. We know pretty well what the survival rates are, whether

it’s transport or spill. We need to know the adult returns to really

know the effectiveness.

As far as the prediction of by the numbers, it has been effective

with the various techniques that we use. Also the increase had

dropped to around 2700. But there’s a lot more that can be done,

you know, as far as the sea lion issue. The States of Oregon and

Washington are engaged in trying to get some relief under the Marine Mammals Protection Act. So they’re looking to streamline that

both under the Act. The Corps of Engineers would support either

solution in order to make some more headway.

Mr. MASLEN. I’m Bill Maslen, Bonneville. I’d just like to add that

we’re also looking to develop returns around the effectiveness of

transportation. Furthermore, attempting to design more comprehensive transport studies to take into account the fact that over

half of the returns, the adult returns from those juvenile fall Chinook are fish that overwintered in the system and now migrated

the following spring. So if any cases weren’t even present, it was

just the lower half of the location when the spill occurred.

Similarly, in the case of predator control, over the last 15 years

we found the Northern Pikeminnow Management Program to be

highly effective. That is not just a BPA assessment, that is in fact

research that’s performed by Oregon Department of Fish and Wildlife and USGS.

As a result of our initiatives on modifying summer spill, we increased the reward associated and have seen a consistent increase

in the rate of removal of those predators by about 50 percent. That

will not translate into a 50 percent reduction degradation mortality

for most fish, but it moves us up into an annual exploitation rate

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from the low teens to the upper teens, which is substantial. Currently we’re estimating over 25 percent reduction of predation mortality.

Miss MCMORRIS. To the two of you again, when it comes to measuring the success of saving salmon, how do you believe that will

be defined over the next ten years and what role will customers

and others play in defining success.

Ms. DURHAM-AGUILERA. That’s one of the things we’re trying to

do as far as collaboration. It takes everything to be able to figure

that out. Success, again, it depends on how you’re going to define

it. There’s recovery. We all want to hear numbers with recovery.

We’re talking in terms of ten years only because that’s about as far

as we can predict action. But we really believe recovery is going to

take more than ten years. So we have to go back again to a competent agreement with a consistent criteria.

Mr. MASLEN. I agree that both collaboration as well as focus on

recovery, necessarily a long-term and sustainable effort. It’s only

taken European man about 150 years to create the situation that

we have before us, which includes the depressed wild populations

of salmon and steelhead. It will take decades of focus,

prioritization, comprehensive approach to costs, all of the human

predations, and a sustained effort or initiative over time that increases the connectivity of those actions to really enhance and will

take that more holistic approach. That’s all.

Miss MCMORRIS. How much money has been spent on litigation

since the first biological opinion was challenged.

Ms. DURHAM-AGUILERA. That’s hard to estimate. Again, we do

our best.

Mr. HASTINGS. First, let me thank all of you for your testimony.

And as I think the people here that are listening and certainly the

two of us up here can see, that there are different opinions on what

the solutions are. And that’s, I guess, what America is all about is

to try to figure out the best way so that everybody can have their

way, so to speak.

Let me ask Ms. Durham-Aguilera a question here first because

there’s an issue that came to my attention yesterday, it came to the

parties, that would potentially be affected only a couple of days ago

regarding drawing down the McNary Pool. I understand that

you’ve reached agreement with the local irrigators regarding the

proposed drawdown of McNary Pool. And it’s my understanding

that this agreement will keep the elevation at 336.8 feet; is that

correct?

Ms. DURHAM-AGUILERA. Yes. That’s correct. We did reach an

agreement. We’re trying to get around 337.

Mr. HASTINGS. Good. I appreciate your working with the

irrigators. I mean, clearly this was one of those issues that came

up very quickly that would have had a devastating impact in a

very hot time of the year. So I appreciate your response to the

Corps.

I want to talk to you about your comments. You mentioned

there’s times that you could use that surplus power and use the example of potentially filling other reservoirs, Black Rock being one

of the most obvious. Do you know if that takes any legislation at

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all, or can that be done wholly within the purview of BPA and with

the utilities working with them? I just wonder if you’d look at that.

Mr. MORRISON. I don’t really know the answer to that. There’s

a myriad of overlapping regulations and requirements. I have to

believe that people of good faith could work through that. But

sometimes, you know, legislation is needed to sort of clear a path.

For instance, thinking of back in the ’60s I chaired a group that

put together a one-stop shopping approach for the siting of power

plants. And we may need to do something like that with this idea

of pump and storage so we’ve got storage batteries along the Columbia River system that could be used for the release of water for

fish and certainly for power generation and for refilling McNary

Pool. You can go right down that list.

I don’t know specifically the answer but just say, usually legislation helps where there is a number of different bureaucracies.

Mr. HASTINGS. That would be something to pursue. Since you

brought up Black Rock and since the proposal of the Black Rock

Project is to take water from the Columbia River, I think it’s worth

noting that the whole Columbia Basin Project, we’re only irrigating

about half of that, only takes 3 percent of the flow behind Grand

Coulee Dam to irrigate that 500,000 acres. And then.

One percent is returned at various points. So when we hear a lot

of discussion about there’s not enough water, that statistic, in my

mind, kind of applies on the face.

The proposal for Blackhawk is strong tension in the water after

you have the full supplement of five rivers downstream. So I think

that’s a point worth making, and I appreciate you bringing up the

issue.

Ms. Flores, I want to ask you a question. You talked about working trying to get a biological opinion and so forth. My question to

you is a hypothetical one. If it appears where Judge Redden is

going with his interpretation of ESA as it pertains to our area here,

what impact do you think that would have on other biological opinions or similar opinions throughout the country and if it is subsequently upheld becomes in fact the law of the land?

Ms. FLORES. The simple answer would be morbid because I assume what you’re speaking to is baseline issue and ESA consultation and how they take into account the baseline issue. And the

fact of the matter is if the Ninth Circuit rules on that, it could potentially open up a lot of agreements that had been reached in a

region, whether it’s licensing, whether it’s the Fish and Timber

Agreement for the State of Washington. And such a ruling could

potentially open up those issues and it could have an enormous impact.

Mr. HASTINGS. What it probably points out more than anything

else is the need to amend the Endangered Species Act. And I might

add, because it was mentioned several times in the testimony here,

the House has passed a version and I want it to still be taken up

in the Senate.

But the main part of that is it focuses on recovery. And I don’t

think there’s anybody here that I heard said that we ought to let

the salmon go extinct. In fact, I hear just the opposite. We find

ways we want to make sure that the salmon is part of our culture

here. And it seems to me that we would have a policy on a national

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level focusing on recovery that would go a long way. And the way

that’s being interpreted now, at least from your point of view, it

would have nationwide devastating implications. Thank you very

much.

Miss MCMORRIS. I want each of you to comment just briefly on

just the uncertainty related to our energy costs. And each of you

have, in your testimony, commented on it. But as we move forward

there’s increased concern about energy costs in this country in general. For those of us in the Pacific Northwest, we focus a lot on this

Columbia Snake River system, electricity costs, and we’re seeing

where these costs have a tremendous impact on our economy. I

hear from the farmers, I hear from the businesses, low income. Everyone is impacted by rising energy costs.

And one of the challenges before us because of the continued

court battles and the uncertainty that court decisions have caused

for those of us in this region is that the impact of this uncertainty

on our electricity costs in this region.

And I just wanted each one of you just to comment from your

perspective moving forward what that impact would be on your

particular—from your particular perspective. And I know that

there’s efforts underway to work in a collaborative fashion, so those

of us from this region the best way to move forward.

But in the meantime the court decisions and the uncertainties

that these court decisions cause and the impact that they could

have, I just want each one of you just to comment briefly on what

you think the impact will be. And, Gary, I was going to ask you

to start.

Mr. CHANDLER. I was afraid you were going to start with me

first. There’s several things that I think we can give you to look

at. First of all, our association is a big supporter of looking at alternative sources, and I think some of that technology is here, some

of it is away still being developed. One of the things we’re faced

with right now on our energy costs, as I said in our testimony, I

would venture to say that the majority of our membership is very,

very nervous right now for energy costs going up.

And a lot of our larger businesses are not looking here to expand

or to build new facilities, they’re just struggling to hang on and

looking at closing and moving elsewhere because of the uncertainty

of energy costs.

We’ve got big movement going on in wind power right now. But

I want to remind everybody wind power is great when the wind

blows, but as soon as the wind quits blowing, you just can’t shut

the plant down and send everybody home. You have to have something there when the wind power is not being generated. But we

think we need to move forward with that.

I think there’s coal, but everybody has problems around coal because of the emissions. There is technology looking at converting

coal and liquefying it. And you know my previous thoughts, Congresswoman McMorris, on water. I still think we’re missing the

boat. We have a lot of water, but we utilize it and we misutilize

it and we flush a lot of it down without containing it in storages.

I still believe one of the things that Congress should be looking

at is reinvigorating the Corps of Engineers and looking at building

more storage so we can have that storage for use for power. We

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could have the storage for expansion of agricultural. We know we

have a lot of areas that we have deep wells and we need to get

them off of those deep wells and we need water for that. So storage

to me would be a real key, as well as storage is good for recreation

and for the salmon. So I think any of those things.

Miss MCMORRIS. Very good. And I’m going to have to ask you to

be brief in your comments.

Mr. VOIGT. Thank you, Congresswoman. Regarding potato industry and costs, our worst thing to do is increase costs. I know I still

missed testimony. I know his about rate increases has been over

close to 280 percent increase. Electricity is secondary to the actual

supply of water. If we don’t have water, we don’t get the electricity.

Ms. MILES. On behalf of the CRITFC Tribes, we are a supporter

of alternative energy. We have been a collaborative partner. We

have pushed the Federal agencies to work with us without going

to the last resort. And that has been, I think, commendable on the

Tribes’ behalf because we have borne the conservation burden, and

all we’re asking is that conservation burden be applied to all parties so that we can jointly live the lifestyles that I hear some of the

people talking about on the panel today. Thank you.

Ms. FLORES. My answer to that would be, I think, the same as

Chandler’s, that pointed out that businesses here in the Northwest

are just hanging on. The fact of the matter is many of them have

gone out of business. Energy has been a traditional advantage in

the Northwest. That’s still true today. We have businesses that

have to overcome other higher costs like transportation, so electricity is key to their competitiveness.

And I’m going to say we’re at a point where there’s not a lot of

room for electricity prices to go up without having a significant and

negative impact on the region and its economy.

Ms. HIRSH. There are a number of things that affect electric

rates. And even if rates go up, bills can go down. And I’d like to

see an increased focus on more aggressive energy efficiency implementation and conservation efforts throughout the region to help

bring bills down.

And there’s a number of issues around the country that are driving electric rates up all over, so the Northwest is not unique in that

problem—facing that problem. But we are blessed with tremendous

opportunity to improve the efficiency and reduce consumers’ bills

and keep businesses more competitive. The Northwest Power and

Conservation Council estimates $2.4 billion in lost economic development opportunity, and I don’t think that’s an economic impact

we can bear.

Ms. DURHAM-AGUILERA. Well, thank you. I’ll speak from the

viewpoint as the engineer. We’re charged to operate the system for

the purposes of the people and for the environment. That’s why we

spent so much time on water control plants because we’re also responsible to let people know what we’re doing so they have a predictable and reliable plan. Without that, people can’t make wise investments. So we have certain operation, we have a certain plan

for the economy to make smart business and investment decisions.

So that leads to cost and efficiencies and loss of energy.

And then the second point is kind of a broader view. One of the

things I worry about is that we don’t have a true long-term

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investment plan so we will not in the future continue to see the

value on this.

Mr. MASLEN. I’ll narrow my comments to fish and wildlife. We

believe that the key to success is an ‘‘all H’’ approach. We have to

take that comprehensive and holistic approach. BPA can only cover

costs to some point. So where there’s uncertainty, it makes it difficult to design and sustain programs that can be implemented over

time. So we have all four H’s. We have costs in all four H’s. As

pressures are brought to bear on one of those H’s, there can be

pressures in the alternative direction on the other. And that makes

it hard to implement a successful program in the long term.

Mr. MORRISON. I think the energy future is a timing issue. We

have water. We have wind. In order to supply water for both power

and fish, we have to solve this problem, as Steve Wright mentioned

that we only have storage capacity for 30 percent on the Lower Columbia River. The other 70 percent we’re sending out to the Pacific

Ocean.

So to me when the wind blows, store the water. When you need

the water, let it come out of reservoirs along the Columbia River

system.

Mr. COOPER. I would just say that from the perspective of my colleagues nationally, you’re going to be hearing a lot more from us

in terms of increased demands on a whole range of indirectly related but still connected needs that will occur in the lives of lowincome people around the country.

As pressure is applied on a utility budget for a low-income household, they’re going to make choices, some good, some bad, as they

seek to pay that bill or to offset that increase. So you’re going to

see increased demands for not just energy assistance but housing,

there’s going to be an increase in illness as people are not able to

afford health care, prescription costs are going to see an increase

in charity costs right off to the health care system, you’re going to

see an increase in demands for shelters, increase in family instability, crime rates, all of those kinds of things.

Mr. ESPINOZA. In Pasco with growing populations, we build more

schools, and we end up with higher electric fees. And, again, I

guess I want to say that there’s a lot of pressure to add accountability into what public education does, not just here in Washington State but nationally with No Child Left Behind and the individual DIEA law. But in Washington state, just to help you understand our intensity and what we’re doing in our classrooms, is

the WASL, Washington Academic Student Learning. Thank you. A

little bit of pressure. The Washington Assessment of Student

Learning.

It became a graduation requirement for sophomores this year,

and preliminary results show that only 54 percent of the students

statewide passed. But there’s a number of other subgroups of students that last year 70 percent or more did not pass the math portion. So the emphasis on keeping educational dollars in our classrooms is something that I guess I just need to let you know that.

It’s a very strong thing.

Mr. REIMANN. I wish Steve Wright was still here because when

I was listening to him talk I couldn’t help but think of a quote from

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Ronald Reagan and it was the most terrifying words in the English

is, I’m here from the government and I’m here to help.

What’s happening to us with the power rates is after the last

round we decided to sell our farming operation. The problem is

mortgage companies, because of the uncertainty of the power rates,

aren’t willing to loan on this type of operation anymore. So it’s very

difficult to go out there and market your property.

I have a granddaughter that’s half Russian. She speaks Russian

fluently. We just came back last fall from Russia and went back to

the place where my grandfather came in 1880. And believe it or

not, I never thought I would ever say this, is that the opportunity

for farmers like myself and my son and my granddaughter look

greater in Russia than they do here today.

Mr. HASTINGS. We’ve come to the end, gone over a little bit, so

this will be the last question. I want to thank all of you. I apologize

if I didn’t ask all of you a question today. But I do have a couple

I do want to ask. Ms. Miles, I want to ask you your position on the

use of hatchery fish and if we can supplement the salmon populations.

Ms. MILES. What was the question?

Mr. HASTINGS. The question is, what is your position, CRITFC or

individually, what is your position on using hatcheries to supplement salmon populations?

Ms. MILES. Our view on our hatcheries is that we do need hatcheries to support an eventually natural sustainable run. Currently,

that cannot happen without hatcheries in our supplementation programs. I understand the controversy over supplementation, but at

the same time the CRITFC Tribes, who I believe are the strongest

fish managers in the region, understand that hatchery supplementation programs do have to support eventually to get a—the goal

is to get a harvestable, sustainable salmon run, which we just can’t

do at this time.

Mr. HASTINGS. Can I expand that to say that you support the

four H’s then?

Ms. MILES. In the four-H approach, all four H’s need to be addressed equitably and how those gaps are achieved need to be

achieved equitably, which under a confidential process under the

collaboration process we’re working toward, but these need to be

addressed. It would be very good if the public understood how each

H affects the actual run and how that affects each part of the gap

and how could you then be responsible and accountable for filling

the gap. And that’s kind of where we’re at.

Mr. HASTINGS. Can I assume that when you come out with your

proposal and your reform, you will address that?

Ms. MILES. In our view the Tribes have—we have always addressed our H, which is harvest. We have always been asked to address that. And when I mentioned conservation burden, we have

wholeheartedly had to take on the conservation burden. And in

that ‘‘all H’’ approach, we ask that conservation be applied equitably. I’m not saying we’re opposed to the four-H approach, but it’s

how you view that four-H approach and how you view each gap in

that approach.

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Mr. HASTINGS. I wanted to ask about hatcheries because I don’t

think there’s been enough, frankly, work or study on hatcheries.

But I appreciate your answers.

The final question that I have is to Mr. Reimann. There’s been

a lot of discussion here today regarding Judge Redden and the potential that comes out of that, and I know that you’ve been very

active and are effective as part of the Columbia Snake River

Irrigators Association. I understand there is an attempt to move

this to another court. Would you elaborate on that?

Mr. REIMANN. Well, we’ve tried a lot of measures with Judge

Redden. One of them was to have him removed from the case, and

so far there’s been no luck with that. It’s just another attempt.

Whether we get there or not, we can remain hopeful. But, you

know, I think it was Al Gore who brought him out of retirement

to do just this, and he’s done a wonderful job of stuffing us. Maybe

he’ll go back into retirement.

Mr. HASTINGS. Well, OK. I see that my time is just about up.

And once again, I want to thank my colleague from Kettle Falls for

pushing to have this meeting out here. I thought the testimony was

very good, and I appreciate all of your coming and your presence

here. And all the people in the audience that sat through this, we

certainly appreciate your presence here too. Thank you.

Miss MCMORRIS. Very good. We do need to conclude the hearing

today. There will be a number of questions that we will submit to

you in writing. We would ask that you would answer those so that

they could be a part of the official record.

I want to also thank everyone for being here today, for testifying,

for taking time to be here. We all have a goal as we’re here today

of protecting salmon as well as our economy. The question is, how

are we going to do that and whether we’re going to do it together?

And I think these kind of hearings are a positive step in pulling

people together to make that happen.

I look forward to working with you and my colleagues so that we

can come up with a win-win situation. Thank you very much.

That’s the conclusion.

[Whereupon, at 11:10 a.m., the Subcommittee was adjourned.]

[A statement submitted for the record by Charles L. Dawsey,

General Manager-EVP, Benton Rural Electric Association, follows:]

Statement submitted for the record by Charles L. Dawsey, General

Manager-EVP, Benton Rural Electric Association

Thank your for the opportunity to share thoughts and comments regarding dams

and Northwest power issues. My name is Charles Dawsey, and I am the General

Manager of the Benton Rural Electric Association—the consumer owned electric

utility serving over 15,000 meters in Benton and Yakama counties. Currently our

utility receives all of its wholesale power from the Bonneville Power Administration

pursuant to the terms and conditions of a BPA Full Requirements Power Sales Contract. Wholesale power costs from BPA are still over 60% higher than they were

prior to 2001. In general, this means that end use electrical consumers have faced

increases in retail rates well over 30% during the past five years. I would suggest

that anyone involved in the electric utility industry, myself included, should be

ashamed of these significant energy cost increases in a region where hydroelectric

energy is so abundantly available.

I applaud and appreciate Congresswoman McMorris’ effort to legislatively secure

transparency regarding the costs of fish and wildlife programs that northwest

electric consumers are paying as part of their power bill. It is critical that

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consumers know what these program costs are, as well as the benefits that are

being achieved.

In 1984 and 1985, the BPA Federal Base System of generation on the Columbia

River was able to produce 9,750 aMW of energy during a critical water year. Today,

the same Federal Base system can produce only of 7,079, aMW of energy during a

critical water year, a reduction due in a large part to the implementation of the requirements of various Biological Opinions and resulting fish and wildlife programs.

In short, the region has lost about 2,671 aMWs of generating capability during critical water, which is the equivalent of the amount of energy needed to supply two

cities the size of Seattle. In today’s energy market this 2,671 aMWs of energy has

a wholesale value of $1.1 Billion.

For the most part, the Northwest has been able to accommodate the loss of this

generation capability through a number of mechanisms, including the loss of aluminum production, the installation of high cost combustion turbine generation, and

a slowing of northwest economy. However, as the Northwest economy picks up speed

and energy demand grows, we will be facing some difficult challenges to meet the

future energy needs of this region.

The Benton Rural Electric Association supports the development of renewable

generation both directly through our subscription ownership in the Coffin Butte

Landfill Generation Project which utilizes methane gas from the landfill to produce

electricity, to our indirect support of member-owned renewable distributed generation projects. We realize that many of these renewable energy projects provide economic development opportunities to landowners and equipment vendors, and, if privately owned, can add to the local tax base of our counties.

However, these renewable energy projects, including wind generation, rely heavily

on financial subsidies, and equally important rely on existing conventional generation to provide backup, firming, shaping and other ancillary services to make them

a viable energy alternative. To this end, BPA has used the flexibility of the

federally-owned hydroelectric projects to provide these services at relatively no cost

to the renewable projects. The BPA Administrator has announced that the Agency

is incapable of providing any additional ancillary services to intermittent generation

projects. Any new renewable projects will need to rely on firming services from a

resource other than the BPA Federal Base System. This will require the development of new conventional resources to ensure that the shaping and backup services

for new renewable resources are available. In short, this boils down to more rate

increases to the end use electrical consumer.

In conclusion, while we support renewable resource development, we recognize

that these resources will not replace the need for base load generation to meet a

growing economy. In fact, quite the opposite is true, since renewable resource development will place additional burden on conventional base load capacity. We urge all

decision makers that will face tough decisions regarding future energy resources, to

at lease reconsider the opportunity to capture some of the 2,671 aMW of lost hydroelectric generation on the Federal Base System. This generation has no additional

capital or operating costs associated with its production. It is without a doubt the

most cost-effective renewable resource that is available to us today.

In closing, I want to thank Congresswoman McMorris and Congressman Hastings

for scheduling this hearing, and for their constant vigil in protecting and securing

the benefits of the Bonneville Power Administration for ratepayers of the Northwest.

Thank you for your attention.

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