BONNEVILLE POWER 

ADMINISTRATION 

Obligations to Fish and 

Wildlife in the Pacific 

Northwest 

Statement of Jim Wells, Director, Natural Resources and Environment 

Team 

United States General Accounting Office

GAO Testimony

Before the Committee on Indian Affairs, 

U.S. Senate 

For Release on Delivery 

Expected at 

2:00 pm 

June 4, 2003 

GAO-03-844T 
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In accordance with the Pacific Northwest Electric Power Planning and 

Conservation Act of 1980, Bonneville must ensure an adequate, efficient, 

economical, and reliable power supply for the Pacific Northwest while also 

protecting, mitigating and enhancing fish and wildlife. Under other laws and 

presidential directives, Bonneville is also required to consult with Indian 

tribes and fulfill trust responsibilities for fish and wildlife. Finally, 

Bonneville must comply with the Endangered Species Act as it pertains to 

fish and wildlife that have been listed as either endangered or threatened. 

Between fiscal years 1997 and 2001, Bonneville spent over $1.1 billion to 

support fish and wildlife programs, primarily salmon and steelhead. These 

expenditures funded fish and wildlife projects undertaken by Bonneville, 

other federal agencies, Indian tribes, private and state entities. Bonneville 

has also funded related operations, maintenance, and capital costs for the 

Army Corps of Engineers, the Bureau of Reclamation, and the Fish and 

Wildlife Service. Additionally, Bonneville estimates that spilling water from 

dams to enhance fish survival has resulted in over $2.2 billion in foregone 

revenue or increased power purchases. 

Bonneville is currently in a financial crisis. Cash reserves have fallen and 

Bonneville estimates an increased risk that it will miss future Treasury debt 

payments. To avoid defaulting on Treasury debt and to cover its costs, 

Bonneville has increased its power rates by more than 40 percent since fiscal 

year 2001, and is considering further increases. 

Recent Bonneville actions appear to have caused financial difficulties for 

some fish and wildlife programs. Representatives of the Northwest Power 

Planning Council and some Indian tribes have pointed out that a change in 

Bonneville’s budgeting approach resulted in the loss of around $40 million in 

fish and wildlife funding for fiscal year 2003. Bonneville described the 

change as necessary to improve management controls over fish and wildlife 

program funding. Bonneville has also placed on hold plans to acquire land 

to be used as habitat for fish and wildlife. 

Bonneville’s two roles, as supplier of economical and reliable power and as 

protector of fish and wildlife, inherently conflict. Bonneville spills water to 

benefit fish and directly funds fish and wildlife projects. These actions 

reduce power revenue and increase costs. On the other hand, demands on 

Bonneville to supply greater amounts of power put pressure on fish and 

wildlife, through more intensive use of generating facilities at the expense of 

spilling water, and reduced revenues available for funding fish and wildlife 

programs as has occurred during the current crisis. Given Bonneville’s dual 

roles, conflicts are inevitable and will likely become more intense if growing 

power demands bump up against increased efforts to mitigate damage to fish 

and wildlife. 

The Bonneville Power 

Administration produces a large 

portion of the Pacific Northwest’s 

electric power, largely from 

hydroelectric projects in the 

Federal Columbia River Power 

System. Bonneville also has 

obligations to protect, mitigate, and 

enhance fish and wildlife 

populations affected by these 

hydroelectric projects. In the past 

several years, Bonneville has 

experienced financial difficulties, 

in part because of rising costs of 

providing power, lower-thanprojected revenue from selling 

surplus power, and drought 

conditions. Bonneville’s financial 

situation may adversely affect fish 

and wildlife. Stakeholders have 

expressed concern that Bonneville 

has effectively reduced spending 

on fish and wildlife programs. 

This testimony addresses (1) 

Bonneville’s statutory and other 

obligations to support fish and 

wildlife programs, (2) Bonneville’s 

historical spending and other 

efforts in support of fish and 

wildlife, (3) Bonneville’s current 

financial condition, (4) Bonneville’s 

recent actions that affect fish and 

wildlife programs, and (5) 

challenges Bonneville faces in 

supplying electricity to the region 

while simultaneously protecting, 

mitigating and enhancing fish and 

wildlife. 

www.gao.gov/cgi-bin/getrpt?GAO-03-844T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Jim Wells at 

(202) 512-3841 or wellsj@gao.gov. 

Highlights of GAO-03-844T, a report to the 

Senate Committee on Indian Affairs 

June 4, 2003 

BONNEVILLE POWER ADMINISTRATION 

Obligations to Fish and Wildlife in the 

Pacific Northwest 
1

Mr. Chairman and Members of the Committee: 

We are pleased to be here today to discuss the Bonneville Power Administration’s roles 

in providing power and protecting fish and wildlife in the Northwest. As you know, 

Bonneville provides a large fraction of the Pacific Northwest’s electric power, produced 

largely from hydroelectric projects in the Federal Columbia River Power System. 

Bonneville also has obligations to protect, mitigate, and enhance fish and wildlife 

populations affected by these hydroelectric projects. Through its revenues from power 

sales, Bonneville provides the majority of fish and wildlife program money in the region. 

Over the past 20 years, demand for electric power in the region has grown and 

Bonneville’s involvement in and expenditures on fish and wildlife programs have 

increased. 

In the past several years, Bonneville has faced increasing financial difficulty, in part 

because of drought conditions, rising costs of providing power, and lower-than-projected 

revenue from selling surplus power. This financial situation has implications for fish and 

wildlife. For example, during the drought of 2001, Bonneville determined that in order to 

maintain an adequate and reliable power supply during the declared power emergency, 

available water would be used to generate electricity rather than spilled (released) over 

the dams to aid juvenile fish passage. Significantly reducing the amount of water spilled 

over the dams can affect the survival rates of some juvenile populations of migrating fish, 

which in turn ultimately reduces the number of adults returning to spawn in the future. 

In addition, a number of stakeholders have expressed concern that some Bonneville 

actions have effectively reduced spending on fish and wildlife programs. 

In this context, you asked us to (1) discuss Bonneville’s statutory and other obligations 

to support fish and wildlife programs, (2) describe Bonneville’s historical spending and 

other efforts in support of fish and wildlife protection and enhancement, (3) evaluate 

Bonneville’s current financial condition, (4) discuss some of Bonneville’s recent 

management actions that affect fish and wildlife programs, and (5) discuss challenges 

Bonneville faces in supplying electricity to the region while simultaneously protecting, 
2

mitigating, and enhancing fish and wildlife. To meet these objectives, we relied on 

information in our previous report on salmon and steelhead recovery efforts1

, 

interviewed officials at Bonneville, and interviewed stakeholders in Bonneville's fish and 

wildlife programs, including the Northwest Electric Power and Conservation Planning 

Council (Power Planning Council)2

 and the Columbia River Intertribal Fish Commission.3 

At the request of Chairman Hobson and Ranking Member Visclosky of House 

Appropriations, Subcommittee on Energy and Water Development, we are also currently 

in the process of reviewing Bonneville's financial situation. This statement includes the 

preliminary findings of this effort as well. 

In summary, we found that: 

• In accordance with the Pacific Northwest Electric Power Planning and Conservation 

Act (Northwest Power Act) of 1980, Bonneville is required to ensure an adequate, 

efficient, economical, and reliable power supply for the Pacific Northwest and also to 

protect, mitigate, and enhance fish and wildlife affected by operation of the Federal 

Columbia River Power System. Under the provisions of various treaties, laws, court 

cases, and presidential directives, Bonneville is required to consult with Indian tribes 

and to fulfill trust responsibilities for fish and wildlife. Under various laws, 

Bonneville also funds fish and wildlife mitigation costs incurred by the Army Corps of 

Engineers and the Bureau of Reclamation. These costs may arise as a result of 

compliance with biological opinions issued by the National Oceanographic and 

Atmospheric Administration (NOAA) Fisheries (formerly the National Marine 

 

1

 U.S. General Accounting Office, Columbia Basin Salmon And Steelhead: Federal Agencies’ Recovery 

Responsibilities, Expenditures and Actions, GAO-02-612 (Washington, D.C.: July 2002). 

 

2

 The Power Planning Council was authorized by the Pacific Northwest Electric Power Planning and 

Conservation Power Act of 1980 (Northwest Power Act). It consists of representatives of the states of 

Idaho, Montana, Oregon, and Washington and is funded by Bonneville. The Northwest Power Act directs 

the Power Planning Council to develop 1) a plan to guarantee adequate and reliable energy for the Pacific 

Northwest and 2) a program to protect and rebuild populations affected by hydropower development in 

the Columbia River Basin. 

3

 The Columbia River Intertribal Fish Commission is the coordinating agency for fishery management 

policies of the four Columbia River treaty tribes, (the Confederated Tribes of the Warm Springs 

Reservation of Oregon, the Confederated Tribes and Bands of the Yakama Indian Nation, the Confederated 

Tribes of the Umatilla Indian Reservation, and the Nez Perce Tribe). 
3

Fisheries Service) and the Fish and Wildlife Service or as mitigation measures 

recommended in the Columbia River Fish and Wildlife Program adopted by the 

Power Planning Council. In addition, a number of fish populations in the region have 

been listed as either threatened or endangered under the Endangered Species Act. 

With these listings, Bonneville and other federal agencies became responsible for 

ensuring that operation of the Federal Columbia River Power System does not 

jeopardize the continued existence of these populations. 

• From fiscal years 1997 through 2001, Bonneville spent over $1.1 billion in support of 

fish and wildlife programs—primarily to benefit salmon and steelhead. Some of these 

expenditures have funded fish and wildlife efforts, including those undertaken by 

Bonneville, other federal agencies, Indian tribes, and the four northwest states 

(Idaho, Montana, Oregon, and Washington). Bonneville has also funded operations 

and maintenance and capital costs for the Army Corps of Engineers, Bureau of 

Reclamation, and the Fish and Wildlife Service for projects such as fish bypass 

facilities at dams and fish hatcheries. In addition, Bonneville estimates that from 

fiscal years 1997 through 2001, spilling water from dams and augmenting flows to 

enhance fish survival resulted in over $2.2 billion in forgone revenues or increased 

power purchases. 

• Bonneville is currently in a financial crisis. Cash reserves have fallen and Bonneville 

has estimated an increased risk that it will miss future Treasury debt payments. 

Specifically, for the fiscal year 2002-2006 rate period, Bonneville estimates that its 

costs will be about $5.3 billion higher than for the previous five-year rate period and 

revenues will be about $1.4 billion less than projected in June 2001. To avoid 

defaulting on Treasury debt and to cover its costs as required by law, Bonneville has 

increased its rates for power by over 40 percent since fiscal year 2001 and is 

considering further increases. In addition, Bonneville has plans to reduce costs and 

hopes that favorable water and price conditions will enable it to increase revenues 

from power sales. 
4

• Some recent management actions by Bonneville appear to have adversely affected 

fish and wildlife programs enhancement efforts. Specifically, Power Planning 

Council staff and representatives of some Indian tribes have pointed out that a 

change in Bonneville’s approach to budgeting for fish and wildlife expenditures, 

adopted in October 2002, caused the loss of around $40 million in planned fish and 

wildlife funding for 2003. Stakeholders have also observed that the budgeting change 

was not well understood by program managers and that funding was lost when 

expenditures incurred in fiscal year 2002 were counted by Bonneville against fiscal 

year 2003 fund levels. Bonneville staff described the change as necessary to improve 

management controls over the funding of fish and wildlife programs but 

acknowledged that the change in budgeting was abrupt and not well understood by 

many of those affected by the change. Bonneville has also placed on hold its plans to 

acquire land to be used as habitat for fish and wildlife and is working with the Power 

Planning Council and constituents on how to prioritize purchases in the future. 

• Bonneville’s dual roles—as supplier of economical and reliable power and as 

protector of fish and wildlife—inherently conflict. Supporting fish and wildlife 

efforts, either by spilling water that could otherwise be used to generate electricity, 

or by directly funding other fish and wildlife programs, can only be achieved by 

raising Bonneville’s power rates. On the other hand, demands on Bonneville to 

supply greater amounts of power will put pressure on fish and wildlife, either through 

more intensive use of generating facilities at the expense of spilling water, or through 

reduced revenues available for funding fish and wildlife programs as has occurred 

during the current crisis. Bonneville’s management problem is more severe in 

drought years—lower water availability causes both higher electricity prices and 

natural stresses on fish populations—and will only increase as growing populations 

and demand for power bump up against increased efforts to mitigate fish and wildlife. 

BACKGROUND

The Columbia River Basin is North America’s fourth largest, draining about 258,000 

square miles and extending predominantly through the states of Washington, Oregon, 
5

Idaho, and Montana and into Canada. The basin contains over 250 reservoirs and about 

150 hydroelectric projects, including dams on the Columbia River and its primary 

tributary, the Snake River. The Columbia River Basin also provides habitat for many 

species of fish and wildlife, including a number of threatened and endangered species. 

The development of the reservoirs and hydroelectric projects in the basin has posed 

hazards for some of the species in the basin, especially anadromous fish, such as salmon 

and steelhead. Such fish are born in freshwater streams, where they live for 1 to 2 years 

before migrating down river to the ocean to mature. After 2 to 5 years, the fish migrate 

back to the freshwater streams to spawn a new generation. To migrate past a dam, 

juvenile fish must either go through its turbines, go over the spillway, use other installed 

bypass systems, or be transported around the dams in trucks or barges. Each alternative 

has risks and increases the mortality rate of juvenile fish. To return upstream to spawn, 

adult fish must find and use fish ladders provided at each of the dams. 

Bonneville is responsible for marketing the power that the 31 federal dams in the Federal 

Columbia River Power System produce. Depending upon the annual amount of water 

available to the system, Bonneville provides about 45 percent of the electric power used 

in the Pacific Northwest each year. In addition, Bonneville’s transmission system 

accounts for about 75 percent of the region’s high-voltage grid, and includes major 

transmission links with other regions. Through its revenues from power sales, 

Bonneville provides the majority of fish and wildlife program money in the region. These 

programs fund a variety of activities including tribal fish hatcheries, fish screens at 

irrigation diversions, habitat improvement projects, watershed restoration, land 

acquisition, and various research studies. 

Bonneville sets its power rates high enough to cover its internal costs, the costs of fish 

and wildlife programs, and to repay its debt, including its revolving Treasury debt and 

any other appropriated funds used to build and operate the power system. 
6

BONNEVILLE HAS NUMEROUS FISH AND WILDLIFE RESPONSIBILITIES 

In addition to its responsibility for providing transmission services and marketing the 

electric power generated by the dams in the Federal Columbia River Power System, 

Bonneville is obligated by the Northwest Power Act of 1980 to protect, mitigate, and 

enhance fish and wildlife populations affected by these hydroelectric projects. In 

addition to this mandate, significant declines in historical returns of salmon and 

steelhead to the Columbia River Basin have resulted in the listing of 12 populations as 

threatened or endangered under the Endangered Species Act. With these listings, 

Bonneville and other federal agencies became responsible for ensuring that operation of 

the Federal Columbia River Power System does not jeopardize the continued existence 

of these 12 populations. The table below identifies, and provides a brief explanation of, 

some of the laws defining Bonneville’s responsibilities. 

Table 1: Legislation Defining Bonneville’s Responsibilities for Fish and Wildlife 

Bonneville Project Act 

 (1937) 

Creates the Bonneville Power Administration and authorizes it to market power 

produced by the Bonneville Project and to construct transmission lines to 

transmit electric energy. Requires Bonneville to set its rates to recover the cost 

of producing and transmitting electric energy from the Federal Columbia River 

Power System, including the amortization of the capital investment. These rates 

must be based on the cost allocations among the project’s purposes that 

Congress authorized—typically power, navigation, flood control, and irrigation. 

Endangered Species Act 

 (1973) 

Directs the National Marine Fisheries Service and the United States Fish and 

Wildlife Service to return endangered and threatened species to the point where 

they no longer need special protection measures by protecting threatened or 

endangered species and the ecosystems upon which they depend. 

Transmission System Act 

 (1974) 

Designates Bonneville as the marketing agent of all electric power generated by 

federal plants constructed by the Army Corps of Engineers or the Bureau of 

Reclamation in the Pacific Northwest, except for power required for the operation 

of such projects and the power from Bureau of Reclamation’s Green Springs 

project. Authorizes Bonneville to operate and maintain the federal transmission 

system within the Pacific Northwest and to construct appropriate additions and 

improvements. Establishes the Bonneville Fund within the United States 

Treasury, a revolving fund that consists of all of Bonneville’s receipts and 

proceeds, and from which Bonneville’s administrator may make expenditures 

determined to be necessary or appropriate. 

Pacific Northwest Electric 

Power Planning and 

Conservation Act 

 (1980) 

Authorizes the formation of the Pacific Northwest Electric Power and 

Conservation Planning Council (Council) and directs it to develop a program to 

protect, mitigate, and enhance the fish and wildlife of the Columbia River Basin. 

Requires Bonneville’s administrator to use Bonneville’s funding authorities to 

protect, mitigate, and enhance fish and wildlife affected by the development and 

operation of the Federal Columbia River Power System and to do so in a manner 

consistent with the Council’s program while ensuring the Pacific Northwest an 

adequate, efficient, economical, and reliable power supply. Limits Bonneville’s 
7

share of mitigation costs to those necessary to deal with adverse effects caused 

by the development and operation of the dams’ electric power facilities only. 

Requires federal agencies responsible for managing, operating, or regulating 

hydroelectric facilities in the Columbia River Basin to provide equitable treatment 

for fish and wildlife with the other purposes for which these facilities are operated 

and managed. These agencies must, at every relevant stage of their decisionmaking process, also consider, to the fullest extent practicable, the Council’s fish 

and wildlife program. 

Source: GAO review of legislation. 

In addition to the laws summarized above, Bonneville must comply with other 

environmental laws and also has a trust responsibility with the 13 federally recognized 

tribes in the Columbia River Basin. In an April 29, 1994 Memorandum to the Heads of 

Executive Departments and Agencies, then President Clinton made trust responsibilities 

and tribal relations the responsibility of all federal departments. To fulfill this 

responsibility, Bonneville developed a formal tribal policy, which provides a framework 

for a government-to-government relationship with the 13 tribes. This framework 

includes a commitment to fulfill its obligations under the terms of treaties, as well as 

other applicable laws and regulations. Various treaties and court cases guarantee the 

rights of the tribes to fish at their usual and accustomed fishing locations and to take 50 

percent of the annual harvestable surplus of salmon. The table below identifies, and 

provides an explanation of, some key environmental laws and treaties. 

Table 2: Other Laws, Treaty Obligations, and Court Cases Affecting Bonneville’s Responsibilities for Fish 

and Wildlife 

Clean Water Act 

 (1972) 

Authorizes the Environmental Protection Agency (EPA) to establish water quality 

standards and to issue permits for the discharge of pollutants from a point source 

to navigable waters. Authorizes EPA to approve total maximum daily loads 

established by states and tribes. These standards are determined by the 

maximum amount of a pollutant that a water body can receive and still meet 

water quality standards for specified uses, including fish and wildlife. 

Columbia River Treaty 

 (1961) 

Defines the relationship between the United States and Canada concerning the 

operation of Columbia River dams and reservoirs. 

National Environmental 

Policy Act 

 (1969) 

Procedural act requiring federal agencies to examine the impacts of proposed 

federal actions that may significantly affect the environment. 

Magnuson-Stevens Fishery 

Conservation and 

Management Act 

(1976) 

Requires federal agencies, in consultation with the National Marine Fisheries 

Service (NMFS), to promote the protection of essential fish habitat. NMFS shall 

provide conservation recommendations for any federal or state activity that may 

adversely affect essential fish habitat. 

Pacific Salmon Treaty 

 (1985) 

Treaty signed by the United States and Canada in 1985 governing the harvest of 

certain salmon stocks in the fisheries of the Northwest states (including Alaska)
8

and Canada. 

U.S. v. Oregon, U.S. v. 

Washington 

(1969 and 1974) 

Court decisions affirming the right of certain Indian tribes to 50 percent of the 

harvestable surplus of salmon. 

Treaties between individual 

Indian tribes and the United 

States 

Establish federal agency responsibilities for trust assets, hatchery and harvest 

issues, and tribal water rights. 

Source: GAO review of legislation, treaties, and court cases. 

BONNEVILLE’S SPENDING AND OTHER EFFORTS TO PROTECT FISH AND 

WILDLIFE ARE CONSIDERABLE BUT EFFECTS ARE DIFFICULT TO ISOLATE

In total, Bonneville estimates it has spent over $1.1 billion (in 2001 dollars) from 1997-

2001 on fish and wildlife efforts. Of this total, Bonneville spent over $460 million on 

direct programs and funding for fish and wildlife related activities of other agencies and 

entities. The bulk of Bonneville’s expenditures for fish and wildlife are spent on the 12 

populations of salmon and steelhead currently listed as endangered or threatened under 

the Endangered Species Act. 4 Bonneville’s direct spending on projects as well as their 

funding of other agencies and entities in support of fish and wildlife programs for 1997-

2001 are shown in table 3 below. 

 

4

 GAO recently completed a review of these expenditures for 11 federal agencies—U.S. General Accounting 

Office, Columbia Basin Salmon And Steelhead: Federal Agencies’ Recovery Responsibilities, 

Expenditures and Actions, GAO-02-612 (Washington, D.C.: July 2002). This report dealt only with salmon 

and steelhead programs, but Bonneville staff told us that this represents the bulk of Bonneville’s support 

for fish and wildlife programs. Therefore, the data provided in this testimony are indicative, but not a 

complete accounting, of Bonneville’s recent financial commitments to fish and wildlife protection, 

mitigation, and enhancement. 
9

Table 3: Bonneville’s Expenditures and Funding Provided to Others (in thousands of 2001 dollars) 

Source: GAO presentation of data provided by Bonneville Power Administration. 

In addition to the expenditures shown above, Bonneville (1) reimburses the Treasury for 

the hydroelectric share of Army Corps of Engineers, Bureau of Reclamation, and the Fish 

and Wildlife Service operation and maintenance and other non-capital expenditures for 

fish and wildlife, and (2) funds the hydroelectric share of capital investment costs of the 

Army Corps of Engineers and Bureau of Reclamation fish and wildlife projects. Such 

projects include fish bypass facilities at dams and fish hatcheries. Bonneville estimates 

that its operation and maintenance reimbursements between fiscal year 1997 and 2001 

were $215.1 million and its funding of capital investment for the same time period totaled 

$453.9 million. 

Bonneville also estimates that spilling water and augmenting flows to assist fish 

migration has led to over $2.2 billion in forgone revenues and purchases of replacement 

power. Bonneville’s estimates of these costs are included in the table below. GAO did 

not audit these figures. 

Group 1997 1998 1999 2000 2001 Total

Bonneville $5,533 $4,913 $5,608 $4,507 $5,444 $26,005

Federal 

Agencies $12,740 $9,082 $9,150 $9,675 $16,543 $57,247

States $16,249 $22,137 $21,286 $17,873 $20,011 $103,361

Tribes $22,054 $21,465 $17,438 $18,126 $22,344 $95,622

Power 

Council $375 $686 $1,784 $686 $353 $3,883

Others $23,554 $37,527 $38,165 $32,758 $44,855 $176,858

 Total $80,505 $95,810 $93,429 $83,625 $109,550 $462,976
10

Table 4: Bonneville’s Estimated Power Purchases and Forgone Revenues (in millions of 2001 dollars) 

Source: Bonneville Power Administration 

There are some indications that Bonneville’s actions in conjunction with other agencies’ 

have increased fish survival. 

 

• Bonneville worked with the Army Corps of Engineers and Bureau of Reclamation 

to increase fish passage survival at dams, on average, by 5 percent or more at each 

dam. 

• Predator control throughout the Federal Columbia River Power System and the 

estuary saved approximately 7 to 12 million juvenile salmon and steelhead per 

year, an approximate 5 to 10 percent increase in juvenile fish survival. 

• In-river survival of juveniles through the Federal Columbia River Power System is 

now higher than ever measured. 

While these results are promising, the available data are not sufficient to fully isolate the 

effects of overall fish and wildlife programs on fish populations generally, because of a 

number of confounding factors, including changing weather and ocean conditions and 

the length of time it takes for project benefits to materialize. For example, if ocean 

temperatures rise, adult fish may be unable to find and consume enough food to fortify 

themselves for spawning and, therefore, die before they can return. At other times, 

abnormally high or low water in the spawning streams, can mean that adults face dried 

up or washed out spawning beds. In low water years, flows may also be insufficient to 

transport juvenile salmon and steelhead to the ocean in time to make the transition to 

salt water, so they die in the streams. Given such variable conditions, federal efforts to 

enhance water flows or improve passage are difficult to assess. Moreover, project 

Cost Category 1997 1998 1999 2000 2001 Total

Purchase 

Power costs $0.0 $5.7 $49.7 $66.1 $1,389.0 $1,510.5

Foregone 

Revenues $115.5 $123.3 $206.4 $197.1 $115.9 $758.2

 Total $115.5 $129.0 $256.1 $263.2 $1,504.9 $2,268.7
11

benefits may take several years to materialize. For example, during the declared power 

emergency brought on by the drought of 2001, barges and trucks were used to transport 

juvenile fish past the dams. However, it will be 2 to 5 years before these juveniles return 

as adults and uncontrollable factors like ocean temperatures will also affect how many 

will eventually make it back. In the end, it will be difficult to isolate the success of the 

transportation program from the impacts of uncontrollable factors. 

The figures below show the fluctuation in adult salmon and steelhead returns to the 

Columbia River Basin for the past 25 years as counted at two dams. Bonneville Dam is 

the first dam adult fish must pass on their way up the Columbia River, and Lower Granite 

Dam is the last dam they must pass on the Snake River before they can migrate into 

Idaho. 

Figure 1: Returning salmon and steelhead at Bonneville Dam (1977-2001) 

Source: GAO analysis of data from the Fish Passage Center.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

197719801983

198619891992

19951998

2001

Salmon

Steelhead
12

Figure 2: Returning adult salmon and steelhead at Lower Granite Dam (1977-2001) 

Source: GAO analysis of data from the Fish Passage Center. 

As figures 1 and 2 indicate, fish populations can vary widely from year to year. While 

2001 was the best year since 1977 for salmon and steelhead overall, there is no clear 

long-term trend over the entire period. Moreover, it is important to point out that while 

overall salmon numbers may be improving, the situation for individual species remains 

far less favorable. Further, all of the 12 populations of salmon and steelhead initially 

listed as either threatened or endangered remain so despite the efforts and spending 

described above.

BONNEVILLE IS FACING A FINANCIAL CRISIS

In recent years, Bonneville’s financial position has deteriorated significantly. For 

example, Bonneville’s cash reserves totaled $811 million at the end of fiscal year 2000 but 

had fallen to $188 million by the end of fiscal year 2002. In addition, for the fiscal year 

2002-2006 rate period, Bonneville recently estimated that its costs will be about $5.3 

billion higher than in the previous five-year rate period. A large part ($3.9 billion) of the 

estimated higher costs came from purchases of power to meet demand over and above 

what the Federal Columbia River Power System can produce. To meet this additional 

0

50,000

100,000

150,000

200,000

250,000

300,000

197719801983

19861989199219951998

2001

Salmon

Steelhead
13

demand, Bonneville took a number of steps, including purchasing power in long-term 

contracts at prices above current market prices and above the $22/MWh rates it initially 

set for the fiscal year 2002-2006 rate period. In addition, Bonneville estimated that its 

revenues will be about $1.4 billion less than were projected in 2001. A large part of the 

decreased revenue estimates are the result of lower than projected market prices. These 

lower than projected prices caused Bonneville to revise its expected surplus power 

revenues downward by over $700 million. Drought conditions in 2001 and low water 

conditions in 2002 also contributed to Bonneville’s reduction in estimated revenues. In 

early 2003, Bonneville announced that it estimated a greater than 50 percent chance of 

missing a payment on its outstanding debt to the Treasury this fiscal year. 

In response to the financial crisis, Bonneville has increased its rates for power by over 40 

percent over fiscal year 2001 levels and is considering further increases if necessary to 

increase the likelihood it will be able to make its Treasury payments. In addition, 

Bonneville plans to reduce costs or expenditures and hopes that favorable water and 

price conditions will enable it to increase revenues from power sales. Bonneville is also 

seeking to (1) refinance some of its debt, (2) renegotiate some long-term power 

contracts, and (3) reach agreement on the reduction and/or deferral of financial benefits 

to certain customers. Bonneville is also involved in a regional dialogue with its power 

customers, the Power Planning Council, and other stakeholders to try to avoid similar 

problems in the future. 

RECENT ACTIONS BY BONNEVILLE MAY HAVE REDUCED TOTAL SPENDING ON 

FISH AND WILDLIFE

Bonneville has recently undertaken several actions that are viewed by members of the 

fish and wildlife community as reducing the amount of funding available to support fish 

and wildlife protection and recovery efforts. These actions include changes in approach 

to contract management and the planning and budgeting system that have resulted in 

some work completed in fiscal year 2002 being paid for with fiscal year 2003 funds. 
14

Starting in fiscal year 2003, Bonneville eliminated the automatic carryover of funding for 

fish and wildlife programs that had previously been provided under contract 

management. Under the previous methods, if the funds were not spent in the year 

approved, they were generally carried over and were available to be spent in the 

following year. As a result, Bonneville officials stated that they did not have current and 

reliable information on the cost of work performed each year. With the switch to the 

new planning and budgeting system, Bonneville has requested that contractors inform 

Bonneville by a certain date in the new fiscal year how much they are owed for work 

actually performed in the last fiscal year. Bonneville uses the information to establish an 

account that sets aside monies from that fiscal year to pay bills as they come in during 

the next year. If contractors do not provide Bonneville with this information then bills 

that come in for work done in the previous fiscal year must be paid for with monies from 

the next fiscal year. 

Contractors and others told us that this change was made with little advance notice or 

training and without a clear understanding on their part of its ramifications on fiscal year 

2003 funding. As a result, funding for fiscal 2003 planned projects is being reduced by 

the amount needed to pay for work completed in fiscal year 2002, which they failed to 

notify Bonneville was completed. In addition, they note that if a project is approved but 

no work is done on it in a given fiscal year it now runs the risk of having to go back 

through the formal funding approval process, potentially causing delays. 

Stakeholders told us of several concerns they have about Bonneville’s funding of fish and 

wildlife programs: 

• According to Power Planning Council officials: 

• Bonneville’s budgeting change caused a reduction in fish and wildlife 

funding. In a February 2003 letter to the Bonneville Administrator, Power 

Planning Council staff stated that over $40 million in fish and wildlife 

obligations that had been carried over from the 1997 - 2001 rate period 

were no longer available. The Power Planning Council says that its fish 
15

and wildlife program has had to absorb the $40 million in previous 

obligations in its 2003 budget. 

• In December 2001, Bonneville told the Power Planning Council that it 

estimated an annual average of $150 million for the 2002 - 2006 rate period 

to fund the Power Planning Council’s fish and wildlife program and actions 

required by the biological opinion for the Federal Columbia River Power 

System. Bonneville reduced this figure to $139 million. Furthermore, in 

March 2003 Bonneville notified the Power Planning Council that this figure 

may be reduced further and asked the Power Planning Council if further 

reductions would be feasible. 

• Although Bonneville had agreed to provide $36 million in capital funding to 

be used to purchase land or easements to protect fish and wildlife, 

Bonneville notified the Power Planning Council that all land or easement 

purchases had been placed on hold due to Bonneville’s financial condition. 

Bonneville further indicated that capitalizing land or easement purchases 

may not be appropriate, a contention the Power Planning Council disputes. 

While the Power Planning Council has agreed to Bonneville’s decision to 

place fiscal year 2003 land purchases on hold, it has also notified 

Bonneville that this issue must be resolved before the Power Planning 

Council can evaluate future program requirements. 

• According to representatives of the Columbia River Intertribal Fish Commission: 

• Bonneville cancelled funding for the acquisition of approximately 2,500 

acres along Squaw Creek in Oregon. Habitat enhancement in the Squaw 

Creek area is administered by the Confederated Tribes of the Umatilla 

Indian Reservation. 

• The Columbia Basin Fish and Wildlife Authority, is slated to lose half of its 

funding. The Columbia Basin Fish and Wildlife Authority coordinates the 

work of the 13 tribes and 7 fish and wildlife agencies in the Columbia River 

Basin, administers aspects of the provincial review process, coordinates 

project reviews and research, and acts as a funding vehicle for projects 

involving multiple agencies. This organization is important to the tribal 
16

community because it assists tribes in coordinating with each other as well 

as with outside fish and wildlife agencies. 

• According to representatives of the Yakama tribe: 

• The tribe lost between $6 and $8 million in fish and wildlife funding due 

Bonneville’s change in the new planning and budgeting system. 

• A deal the tribe had reached to get conservation easements, remove dams 

impassable to fish, and upgrade irrigation systems to reopen several 

steelhead spawning streams fell through when the funds allocated for these 

projects became unavailable after the budgeting change. 

Bonneville described the changes in their budgeting and accounting of fish and wildlife 

program funds as follows: 

• Overall, Bonneville’s yearly direct program expenditures have increased 

since 1996 from $68.5 million in expense spending to $138 million in 2002. 

Those direct program expenditures – now totaling $139 million a year 

through FY 2006 – have been the principal source of funding support for 

tribal fish and wildlife programs and the implementation of projects that 

address Bonneville’s mitigation obligations and recovery objectives. In 

the Fall of 2002, Bonneville changed the planning and budgeting process 

that is used with regional entities for these fish and wildlife expenditures 

from an obligations to an accrual-based planning and budgeting process. 

As required under Generally Accepted Accounting Principles (GAAP), 

Bonneville records expenditures on an accrual basis. In an effort to more 

closely align the budgeting process with accrual based accounting, 

Bonneville moved from an agency obligation budgeting method to agency 

budgeting based on accruals in the mid-1990s. However, due to processes 

documented in the original Fish Funding Memorandum of Agreement, the 

regional planning and budget process for fish and wildlife funding 

remained on an obligations basis. Due to Bonneville’s dire financial 

circumstances, the planning and budgeting process was changed to more 
17

closely correlate with accrual accounting, and the agency’s planning 

method. 

• Due to difficult financial circumstances, Bonneville accelerated a change 

from an obligations to an accrual based planning and budgeting process 

for the fish and wildlife program. This approach to planning correlates 

more closely with the agency’s planning method and provides greater 

accuracy in fiscal year expenditure forecasts. In addition, Bonneville has 

initiated changes in contract management to provide Bonneville managers 

with accurate and current information to facilitate administration of 

Bonneville’s fish and wildlife program on an accrual basis. 

• In December 2002, as Bonneville’s financial concerns deepened, the 

Administrator asked the Power Planning Council to take appropriate 

steps to assure that spending for the fish and wildlife program did not 

exceed the budgeted level of $139 million in expense accruals for fiscal 

year 2003. 

• Bonneville acknowledges that these changes affected the planned 

expenditures for fiscal year 2003. However, the 2003 funding level of $139 

million is consistent with the funding commitment made in a December 

2001 letter to the Power Planning Council and is a 40 percent increase in 

program support from the previous rate period. In that letter, Bonneville 

supported a planning assumption of $150 million in expense for fish and 

wildlife; this was expected to result in an actual expense accrual of $139 

million. 

• While Bonneville has spent well over $100 million on wildlife habitat since 

1989, only one agreement has been capitalized. The Montana Trust 

resolved and indemnified Bonneville for all losses resulting from the 

construction of Libby and Hungry Horse dams and was funded with a onetime commitment of $12 million. 

• Bonneville instituted a temporary hold on land acquisitions until the 

Power Planning Council could make recommendations on how to 

prioritize 2003 expenditures. Upon review of the forecasted expenditures 
18

for 2003, the Power Planning Council recommended the deferral of land 

acquisitions for the remainder of fiscal year 2003 to allow consideration 

of a change to Bonneville’s capitalization policy for fiscal year 2004. This 

allowed other projects to move forward within the $139 million budget. 

Bonneville is currently working with the Power Planning Council and 

constituents to develop a method for capitalizing land acquisitions that is 

consistent with GAAP accounting standards and Bonneville’s limited 

borrowing authority. 

BONNEVILLE’S CHALLENGES STEM FROM ITS DUAL AND CONFLICTING ROLES 

AND RESPONSIBILITIES

Bonneville’s dual roles—as supplier of economical and reliable power and as protector 

of fish and wildlife—are inherently in conflict. Bonneville’s stakeholders include both 

consumers of electricity and proponents of fish and wildlife protection, and both groups 

apply pressure on Bonneville to deliver more of what they want. However, providing 

more support for fish and wildlife comes at the cost of less electricity and higher rates. 

Similarly, providing more electricity can put greater pressure on fish and wildlife, either 

through more intensive use of generating facilities at the expense of spilling water, or 

through reduced revenues available for funding fish and wildlife programs as has 

occurred during the current crisis. 

Further, Bonneville operates in a changing environment with regard to demand for its 

electricity and with regard to the treatment of fish and wildlife required by law and treaty 

agreements. For example, demand for electricity has generally grown throughout 

Bonneville’s existence and it has responded up until now by increasing its generating 

capacity or buying electricity from other sources to meet the needs of its electricity 

customers. As Bonneville has continued to provide electricity beyond the capacity of 

federal hydroelectric facilities, it has encountered higher costs. In addition, over the past 

two decades, Bonneville’s spending and actions in support of fish and wildlife have 

grown considerably with the enactment of various environmental laws and with 
19

increased regulations put in place to protect the environment. Most recently, a ruling in 

federal court has determined as inadequate the biological opinion developed by the 

National Marine Fisheries Service (now NOAA Fisheries) to direct the protection of 

endangered fish species in the Columbia River Basin. The judge has remanded the 

biological opinion to NOAA Fisheries and suggested that greater certainty will be 

required for specific mitigation measures before NOAA Fisheries can rely upon them for 

protecting listed endangered species. The consequences of this ruling on river and dam 

operations is uncertain as is any subsequent impact on the amount and timing of power 

Bonneville has to sell and on fish and wildlife. 

----- 

In closing Mr. Chairman, while the future is uncertain, one thing is very clear—

Bonneville and its numerous stakeholders are faced with some potentially painful 

decisions in the coming years. The outcomes of these decisions will affect the health 

and viability of fish and wildlife populations and the way of life of Northwest residents 

who benefit from electric power. Given the competing priorities that involve making 

trade-offs, we continue to support public oversight of the decisions being made and will 

continue to pursue our ongoing work relating to your request that we study Bonneville’s 

obligations to support fish and wildlife programs. 

Mr. Chairman, that concludes our prepared statement. We would be happy to answer 

any questions that you or Members of the Committee may have. 

For further information, please contact Jim Wells at (202) 512-3841. Individuals making 

key contributions to this testimony include, Jill Berman, Jonathan Dent, Samantha Gross, 

Cynthia Norris, Frank Rusco, and Barbara Timmerman. 

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