Council Meeting Minutes
Spokane, Washington
September 10-11, 2002
Contents
1. Update on fish and wildlife research plan
2. Council decision on subbasin planning master contract
language concerning Endangered Species Act prioritization
3. Council decision on comments on FCRPS Biological Opinion
implementation plans
4. Council decision on within-year project implementation
issues
5. Overview of FERC Notice of Proposed Rulemaking on Standard
Market Design
6. Council discussion on mainstem amendments
7. Report on financial condition of the Bonneville Power
Administration
8. Council decision to release for comment report on
Bonneville fish and wildlife spending
9. Presentation on the Columbia River Basin Fish Contaminant
Survey
10. Update on subbasin planning (deleted from agenda)
11. Council decision on recommendations for five remaining
provincial reviews (Lower Columbia, Estuary, Columbia Cascade, Upper
Snake, Middle Snake)
12. Council business
Decision ? Meet in Executive Session
Judi Danielson made a motion that the Council meet in executive session
at the call of the Chair to discuss matters relating to current civil
litigation. Bloch seconded the motion, which passed unanimously.
Decision ? Executive Committee to Meet
Danielson made a motion that the Council's Executive Committee meet
in executive session at the call of the Chair to discuss internal
personnel matters protectible under the statutes. Ed Bartlett seconded the
motion, which passed unanimously.
Decision ? Add to Agenda Item 4
Danielson made a motion that the Council add to the agenda, under Item
4, a decision on a funding request for the PIT Tag system, Project
1990-080-00, and find that no earlier notice for this item was possible.
Bartlett seconded the motion. In response to a question from Eric Bloch,
Chairman Larry Cassidy explained the emergency nature of the funding
request. The Council voted unanimously in favor of the motion.
1. Update on fish and wildlife research plan
Brian Allee, manager of policy and program implementation
Allee briefed the Council on progress toward a regional fish and
wildlife research plan. The Independent Scientific Review Panel (ISRP)
reviewed the staff?s draft research plan this spring and suggested
members of various Council advisory boards have a retreat to identify and
prioritize critical research uncertainties for such a plan, he said.
Allee laid out the purposes for the research plan, including the need
to provide direction and accountability for research expenditures, set
priorities for Bonneville-funded research, and give a regional context for
research funding within the context of the provincial reviews. Staff
sorted the FY 2001 research projects by category and found that of $48.9
million allocated to research, $33.9 million was directed to anadromous
fish and $17.9 million specifically to artificial propagation studies, he
reported.
The Council's 2000 fish and wildlife program provides an opportunity
to develop a 2004 research plan and to prioritize and redirect research
funds, according to Allee. He listed several research issues in which the
Council has an interest, including: mainstem flow, spill, and
barging operations; quantifying benefits of riparian protection, improved
screening, and increased seasonal water flows; increasing the emphasis on
the estuary and near-shore ocean habitats; and evaluating new approaches
to harvest.
Allee described a collaborative approach to developing a research plan
for 2004 that would include input on key uncertainties and research
priorities from the ISRP, the Independent Economic Advisory Board (IEAB),
fish and wildlife agencies, and tribes. The Independent Scientific
Advisory Board (ISAB) could review the proposed plan, which would then be
available for public review, he said. Allee noted that the Council
proposes to sponsor an annual research review conference to provide
accountability and assess the state of the science. The first conference
would be held in spring 2003, he stated.
Karier said a surprising result of the staff's analysis of the
research funding is that $48 million is being spent annually ?without a
research plan.? We need to look at ways to focus the dollars and
get to the most pressing questions, he said. Hines pointed out that zero
money was spent in 2001 to evaluate the benefits of spill. Danielson
suggested that refocusing some dollars to the marine environment would be
wise.
What pops out at me is that over 50 percent of the anadromous fish
research dollars are being spent on artificial propagation, Cassidy said.
Meanwhile, NMFS? recovery policy says we need wild fish, he pointed out.
That issue needs attention, Cassidy added.
Maybe NMFS is wrong, not us, Bartlett commented.
2. Council decision on subbasin planning master
contract language concerning Endangered Species Act prioritization
Brian Allee; and John Ogan, senior counsel; Bob Austin, Bonneville
Power Administration; Alison Squire, Intermountain Province Coordinator
Staffer Brian Allee reported on a scuffle over language in the master
contract for subbasin planning. In developing the master contract,
Bonneville determined it was critical to insert the following goal, he
said: ?Guide Bonneville's expenditures by giving priority to
strategies for ESA recovery activities as Bonneville implements the
Council's 2000 Program through subbasin plans.? The Upper
Columbia United Tribes (UCUT), the Intermountain Province Group, and some
Council members raised concerns that the language gives precedence to
funding projects for ESA-listed species over the protection, mitigation,
and enhancement obligations prescribed in the Northwest Power Act, Allee
explained.
In an effort to allay the concerns, Bonneville met with the parties and
has since proposed the following, he said: ?Guide Bonneville's
expenditures to ensure the avoidance of jeopardy and progress towards
recovery of ESA-listed populations as affected by the FCRPS, while
satisfying the requirements of the Northwest Power Act.? Allee
said staff recommends the Council approve the language and put it out for
public comment until October 4. Staff would then have an opportunity to
summarize comments before the October meeting.
Decision ? Release Proposal for Comment
Danielson moved that the Council release the Master Contract Proposal
to Implement Subbasin Planning for public comment. Karier seconded the
motion, which passed unanimously.
3. Council decision on comments on FCRPS Biological
Opinion implementation plans
Doug Marker, director, fish and wildlife division; and John Ogan
Staffer Doug Marker went over proposed Council comments regarding the
draft one- and five-year BiOp implementation plans. The comments, directed
to Bonneville, the Corps, and the Bureau of Reclamation, stress that the
agencies should continue to use the Council's provincial review process
to select off-site mitigation projects, he said. I have pointed to our
record of delivering projects that meet BiOp requirements, while
satisfying state, local, and tribal priorities as well, Marker added.
We also point out that ?a confusing set of reports? is emerging on
implementation, and people are concerned about ?the bewildering array of
processes,? he said. While the agencies seem to focus on the annual
progress reports, our comments suggest it would be useful to develop a
more meaningful planning and consultation process around the
implementation plans themselves, Marker continued. We also urge the
agencies to continue to work within existing regional processes to
implement the BiOp, he added.
While the region has not been successful in getting an integrated
research, monitoring, and evaluation program going, we recommend that the
agencies work with ongoing efforts and existing state and tribal
protocols, rather than 'starting from scratch? on their own, Marker
indicated.
Are these comments going to discuss how we can get to a better working
relationship with Bonneville on our funding recommendations? Cassidy
asked. We do address that, Marker replied. We state that questions the
agencies have about appropriate funding responsibilities should be
resolved in an open dialogue with the region, he stated. We indicate that
the projects we recommend have already gone through the most exhaustive
scientific, management, and public review process in the region, Marker
said.
The Council has worked hard through the provincial reviews to make the
budgets established by Bonneville work, and that should count for
something, he went on. Adding on concerns at the back end of the process
is the wrong way to come at these issues, Marker said. The agencies should
come back to the Council forum, where we have all of the stakeholders at
the table to reach a resolution, he stated. Addressing this on a
project-by-project basis is overwhelming us ? we need a broad policy
focus on these questions, Marker added.
Hines questioned whether making the point in the Council's comments
is sufficient for dealing with the issue. We need to meet this head-on
with Bonneville, he said.
Marker went on to say the proposed comments remind the agencies that
the Council is an effective forum for working with the Congressional
delegation to secure appropriations beyond Bonneville funds.
Decision ? Approved Comments
Danielson made a motion that the Council approve the comments presented
by the staff on the draft ESA 2002 and 2002-2007 Implementation Plan for
the Federal Columbia River Power System, and direct staff to provide the
comments to Bonneville in a letter to be signed by the Chairman. John
Brogoitti seconded the motion, which passed on a unanimous vote.
4. Council decision on within-year project
implementation issues
Doug Marker; and Mark Fritsch, fish production coordinator
Coastal cutthroat status project
Marker explained that when the coastal cutthroat trout was turned down
for an ESA listing, Bonneville determined that it was not responsible for
funding a project to evaluate the status of the species. The Columbia
Basin Fish and Wildlife Authority (CBFWA) sent a letter August 28th
urging the Council to reiterate its support for the project, he said,
adding that staff agrees with that suggestion. According to a staff memo,
?the listing or non-listing status for a species should not be the sole
criterion for funding a project.?
Decision ? Reiterate Support and Funding
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council reiterate its support to Bonneville for Project
2001-026-00 Evaluate Status of Coast Cutthroat Trout in the Columbia River
Basin above Bonneville Dam, and that this project be funded as previously
recommended by the Council. Brogoitti seconded the motion, which passed on
a unanimous vote.
YKFP monitoring - approval of response to ISRP review
Decision ? Details of Project
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council acknowledges that the conditions placed on Project
1995-063-25 Yakima/Klickitat Fisheries Project Monitoring and Evaluation,
as part of the Columbia Plateau Province review, have been fully addressed
and resolved by the sponsors; the Council expects that the study design
change agreed to by the sponsor will be completed within the budget
defined during the provincial review; and if additional funds are sought
in the future, that request will need to show how the project element
priority guidance provided in the ISRP reviews was addressed. Brogoitti
seconded the motion, which passed on a unanimous vote.
Naches River high priority project letter
Marker explained the Naches Screen project, indicating that the work,
which would screen the intake for the City of Yakima's Water Treatment
Plant, needs to be done in conjunction with a Bureau of Reclamation effort
to purchase the water right at Wapatox dam and dedicate the flows into the
Naches River. Bonneville already allocated $800,000 from Action Plan funds
for this project, but a NMFS review identified an additional $324,000 in
modifications, he said. Marker added that the $4 million Wapatox effort
was originally going to be funded from the Action Plan, but Reclamation
has taken over the funding responsibility. Staff recommends the Council
redirect $324,000 from the Action Plan to the additional costs of the
intake screens, he said.
Danielson said the Fish and Wildlife Committee should pick up its
discussion in October about Bonneville's desire to use monies from
unallocated placeholder funds for the project, rather than redirect Action
Plan funds as the Council recommends.
Decision ? Redirect Funds
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council recommend to Bonneville that it redirect $324,000
of Action Plan funds that were not used for the Wapatox Project to the
Naches River Water Treatment Plan Intake Screen Project, No. 23044.
Brogoitti seconded the motion, which passed unanimously.
PIT Tag Systems (this item added to the agenda)
Marker said the Columbia River Basin PIT Tag Information Systems
project is currently under review by Bonneville, but there is an urgent
need for $140,000 to purchase items that must be in place by the 2003
migration season. Ray Entz of the Kalispel Tribe reported there is not
consensus at CBFWA about the request, but that it has been pared down
since the CBFWA consideration. CBFWA is struggling to stay within its
annual process, staffer Mark Fritsch explained. But, he said, the urgent
request is ?bare bones? and is needed to collect important
information. If this had come before CBFWA in the stripped-down form, we
would have approved it, Entz said.
Carter Stein of the Pacific States Marine Fisheries Commission
explained that the PIT tag system is currently operating with a
six-year-old computer that is no longer adequate. He laid out a timeline
for procuring a new machine and installing and testing software that
indicates it would take several months. We need this much lead-time to be
ready in February when the fish begin to show up, Stein stated.
Decision ? Reallocate Funds
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council recommend to Bonneville that it reallocate $140,760
from the unallocated placeholder to project 1990-080-00 to enable the
time-sensitive purchase of PIT Tag system components to ensure integrity
of the system for the 2003 migration year. Brogoitti seconded the motion.
Bloch moved to add an amendment to make the recommendation contingent on
CBFWA approval. Brogoitti seconded the amendment. Hines asked how the
contingency would affect Stein's timeline. ?It wouldn?t work,?
Stein responded, explaining how long the CBFWA deliberations have taken so
far. The purpose of my amendment is to stay true to the process we
typically follow, which is to act in accordance with a consensus
recommendation from CBFWA, Bloch said.
Cassidy said that while he respects the CBFWA process, this is an
emergency, and the request has gone to CBFWA twice, without success. The
Bloch amendment failed seven to one, with Bloch voting aye. Brogoitti
called for the original question, and the motion passed unanimously.
5. Overview of FERC Notice of Proposed Rulemaking on
Standard Market Design
Wally Gibson, manager, system analysis and generation
Staffer Wally Gibson briefed the Council on the Federal Energy
Regulatory Commission's (FERC's) proposed rulemaking on a Standard
Market Design (SMD). The genesis of FERC's restructuring activities was
the Energy Policy Act of 1992, after which Orders 888 and 889 emerged in
1996, he said. Those orders aimed to open transmission to
non-discriminatory access to assure a competitive wholesale generation
market, Gibson explained. Bonneville went along voluntarily with the FERC
orders, separating its operation into a transmission and a power
component, he added. The orders also directed the use of the
Internet-based OASIS system as a single information source for all market
participants, and put in place a reciprocity provision, under which public
entities must open their transmission systems if they want
non-discriminatory service from an investor-owned utility (IOU), Gibson
said.
Order 2000 in December 1999 encouraged voluntary efforts to form
Regional Transmission Organizations (RTOs), which would put operation of
transmission into the hands of a centralized organization, he continued.
The new order described the required functions and characteristics of an
RTO, but still allowed for significant differences in market designs, as
well as FERC evaluations on a case-by-case basis, Gibson said.
The proposed SMD rule would standardize the markets and eliminate
remaining ?undue discrimination,? he explained. ?FERC has been hard
pressed? to find discrimination in the West ? most allegations have
come from the East, Gibson acknowledged. The rule requires IOUs to be part
of an Independent Transmission Provider, which could be an RTO, he said.
The effect of the proposed SMD rule on jurisdiction for ?bundled
retail sales? is a very significant issue for states, Gibson pointed
out. The rule would require vertically integrated utilities without retail
access to take service for bundled retail sales under the SMD tariff, he
said. In other words, retail customers would be treated like wholesale
customers and would not receive preference for transmission, Gibson
explained. Previously, FERC did not assert jurisdiction over bundled
retail sales, only over unbundled sales, he said. This is a big departure
from Order 888, which had special conditions for a utility's ?native
load,? Gibson stated. Unlike the RTO, the SMD would be mandatory, he
indicated.
The Power Committee has spent quite a bit of time on this issue, and we
are working on comments to submit to FERC, Karier reported. ?My level of
anxiety is getting higher and higher,? he acknowledged. Jurisdiction is
no small matter ? FERC's oversight of the market ?has been abysmal,?
and under this proposal, FERC would be taking jurisdiction for things that
were previously up to the states, Karier pointed out. It is a threat to
the low rates in the Northwest and poses a risk, he said. We need to
review this carefully, get input from the region's experts, and speak
with one regional voice, Karier indicated.
Gibson said comments on the SMD proposal are due to FERC by December
15. By July of next year, FERC wants utilities to file changes to their
Order 888 tariffs ? the first step would be to bring all retail service
under the 888 tariffs, he explained. It's a fast schedule, Gibson added.
6. Council discussion on mainstem amendments
John Shurts, general counsel; Doug Marker; John Fazio, senior power
systems analyst, and Bruce Suzumoto, manager special projects
Staffer John Shurts reprised the mainstem amendment process from 2001,
when the Council called for mainstem-related recommendations for its fish
and wildlife program. The recommendations we received ?before that door
closed? have a special legal status ? the Council is to draw from
those recommendations for the amendments to its program, he explained.
The staff began drafting the mainstem amendments using the 2000
Biological Opinion (BiOp) operations for listed species as a starting
point and then adding the new recommendations, Shurts continued. On July
5, ?we froze? the staff draft while the states added their proposals,
he said. We now have Montana and Idaho proposals, a Washington scenario,
and we received a set of recommendations from Oregon, Shurts stated.
Staffer John Fazio is analyzing the proposals for their impacts to the
power system, Shurts said, adding that only the Oregon recommendations
remain to be modeled.
Shurts said he had gotten calls recently from people asking about the
status of recommendations other than the states? recent submissions. I
want to be clear that we will be considering and drawing from all of the
recommendations received from various entities for the draft amendments
? ?we aren?t ignoring any,? he stated. What we?re displaying
here from the states ?isn?t the universe? of what we?ll be drawing
from as we get to a draft set of recommendations, Shurts reiterated.
Fazio presented the results of his preliminary analysis for the
Montana, Idaho, and Washington proposals. He explained the proposed
Montana operation as follows: from October to April, the system
would continue to provide flows for chum salmon and continue to fill to
flood control elevations by April 10 (he conducted a sensitivity analysis
that took out the flood control constraint). From April to June, the
Montana proposal removes the BiOp flow objectives, limits bypass spill at
dams to 115 percent of the gas supersaturation level, fills reservoirs (95
percent confidence level) by the end of June, and revises flows for
sturgeon in May and June. From July to September, the proposal removes the
flow objectives, limits bypass spill to the 115 percent gas level,
releases flow augmentation water at Libby and Hungry Horse at level
outflows, and releases flow augmentation water at Grand Coulee and
Dworshak evenly over the period. The Montana proposal also changes the
draft limits for flow augmentation at these four dams, allowing for deeper
drafts in dry years.
Fazio pointed out that Washington's recommendation for operations at
Grand Coulee and Idaho's recommendation for operations at Dworshak could
be integrated with the Montana proposal. Montana and Idaho take basically
the same approach to flow augmentation, he explained. They call for
controlling the release of water directly, as opposed to using a
downstream flow objective, Fazio said. Water is still released for flow
augmentation, but the proposals from both states affect the timing in the
summer months.
To illustrate the difference between the Montana proposal and the BiOp,
Fazio showed a plot of flows at McNary under both cases. For much of the
year, the difference is very slight, he pointed out. One of the effects,
however, is that by stretching out the period for flow augmentation, the
Montana proposal would reduce the flow in July and August and increase the
flow in September, Fazio explained. The flow from August 1 to 15 would be
13 percent below the BiOp, and from August 16 to 31, it would be 6 percent
less, he said. In September, the flow would increase to 19 percent above
the BiOp, Fazio indicated, adding that whether this is significant from a
biological point of view, ?I don?t know.?
In dry years, the Montana proposal would decrease flows in July and
early August and increase flows in late August and September
compared to the BiOp, Fazio continued. He compared the natural summer
flows at Libby with BiOp flows and the Montana proposal, noting that
natural flows decline from July to September, with some variation in July
and little in August and September. Under the BiOp, there is greater
variation in flows during August, which is not good for the bull trout at
Libby, Fazio said. The Montana proposal aims for a flatter or gradually
decreasing flow during the first half of August, he said.
The natural summer flow pattern out of Hungry Horse is similar to Libby's
steady decline, but under the BiOp, there is a lot of variation up and
down, Fazio said. The Montana proposal flattens that out, he stated. The
Montana proposal also changes the pattern for reservoir elevations at
Libby and Hungry Horse compared to the BiOp, Fazio said. At Libby, the
elevation would be higher from July through October relative to the BiOp,
about the same from November to early April, and lower in May and June. At
Hungry Horse, elevations would be higher than the BiOp in every month. Not
as much water is provided for flow augmentation, he indicated.
The Montana proposal would result in a net energy gain of 3,800
megawatt-months (MW-months) and additional power revenues of about $56
million, Fazio said. We used a price of $27 per megawatt-hour (MWh) for
the calculation, with August and winter peak prices of $36 to $37 per MWh,
he explained.
The main emphasis with the Montana proposal is the change in flow
augmentation, not the power impacts, Shurts added.
Fazio's analysis also showed the impacts of the gas cap limit
associated with the Montana proposal. According to a table in the
analysis, there is a $56 million benefit attributable to the gas cap limit
of 115 percent. Jim Kempton noted that the gas cap is a state prerogative
and does not derive from a Council action. Fazio said that for the four
federal projects in the analysis, the states have in the past granted
waivers on the gas cap.
In a sensitivity analysis, Fazio removed the BiOp's April fill
requirement, which results in an energy gain in January through March and
a decrease from April through May. Without the April fill requirement, the
system would gain 1,060 MW-months, with a benefit of $7.2 million in
revenues, he reported. The tradeoff is that there would be an 11 percent
spring flow reduction at McNary in dry years, he added.
Fazio described the Idaho proposal as follows: from October to
April, continue to provide flows for chum salmon and fill to flood control
elevations by April 10. From April to June, limit the flow objective at
Lower Granite to 85,000 cubic feet per second (cfs) and fill reservoirs by
the end of June. From July to September, keep BiOp flow objectives, Libby
and Hungry Horse integrated rule curve operation, Grand Coulee water
retention times, and set new elevation targets at Dworshak. The elevation
targets mean stretching the time period for flow augmentation from August
to the end of September, he said.
Idaho is not taking a position on the Montana branch of the river,
Kempton pointed out. Fazio clarified that the Libby, Hungry Horse, and
Grand Coulee operations were ?placeholders,? not specifications from
the Idaho proposal.
Natural flows at Dworshak gradually decrease in volume from July to
September, Fazio continued. Under the BiOp operations, we get a lot of
variation, and Dworshak doesn?t end up at elevation 1,520 feet in many
years, he said. The Idaho proposal eliminates a lot of the variation,
Fazio pointed out. The effect on flows at Lower Granite is a 2 to 7
percent decrease from July to the end of August and an 18 percent increase
in September, he said. The Idaho proposal holds the elevations at Dworshak
higher from June to August and lower in September through May compared to
the BiOp, Fazio stated. The proposal results in an overall increase to the
volume of flow augmentation from July to September, he said. The net
energy gain is 70 MW-months (Snake only), which converts to a $2.5 million
revenue benefit, Fazio reported.
The Washington scenario, which came from a recommendation by the
Spokane and Colville tribes, gives high priority to target elevations at
Grand Coulee, Fazio said. With an elevation of 1,288 feet from June
through December, the amount of flow augmentation from Grand Coulee from
July to September is zero, he pointed out. Under the Washington scenario,
flows at McNary would vary from the BiOp throughout the year, Fazio said.
There would be a large decrease in flows in August and a spike in flows in
January and March, he explained. As for the elevation at Grand Coulee,
from June to September, the elevation would be higher than in the BiOp,
Fazio said.
The focus of the Washington scenario is on water and nutrient retention
time at Grand Coulee, he said. According to Shurts, the Spokane Tribe
indicated that at a minimum, 40 days retention time is needed for the
resident fish. The scenario increases retention time in July, August, and
September over what the BiOp provides, Fazio explained.
The Spokane and Colville tribes think they can be more flexible from
June through December, Tom Karier said. They think they could drop from
1,288 to 1,283 feet, he said. These tribes also want a study of the
benefits that result from the flow targets at McNary, Karier added.
Judi Danielson pointed out that habitat for burbot, a resident fish, is
an issue to consider in the mainstem amendments. This is new to us, but we
could do an analysis, Fazio responded. Kempton pointed out that the matrix
Shurts prepared to compare elements in the proposals indicates 427,000
acre-feet is available in spring from the Upper Snake. That may or may not
be the case ? it depends on the availability, Kempton stated.
Karier asked John Hines whether the operations laid out in Montana's
proposal mean there is no longer interest in working with the National
Marine Fisheries Service (NMFS) to test various options on flow and spill
in the mainstem. There is new science that questions the benefits of
spring flow augmentation, and there is good science on the detrimental
effects those flows have on resident fish, Hines responded. We are trying
to strike a balance between recovering salmon and not doing harm to fish
that live in the reservoirs, he said.
Would your approach with specifying reservoir levels allow for testing
of different operations? Karier asked. If we implement these levels, that
would be a test in itself, Hines responded. Karier questioned such a
limited test. If you were to approach the issue with an experimental
model, you would intentionally vary the operations to pick an optimum
level, he said. There are studies that show diminishing returns for spill
when gas supersaturation is above 120 percent, Hines said. We?d support
ongoing research, he added.
The Idaho proposal does not harm the BiOp operations, Kempton stated.
He indicated that NMFS has now suggested drafting the reservoir at
Dworshak below the 1,520-foot level. There is not a scientific basis for
that recommendation, Kempton said. ?Let's not be the blind following
the blind,? he stated.
Shurts summarized questions raised by the state proposals. There is a
proposed shift in summer flow augmentation water: what is the
biological effect? There is a proposed change that would decrease
the spill operation: what is the biological effect? If you
take away the April 10 flood control elevation, is there a significant
biological effect? While the staff can provide some information on
the biological tradeoffs, you will get more systematic information back
when the draft mainstem amendments go out for review, Shurts said.
Staffer Bruce Suzumoto indicated that staff would need more resources
and information to do a thorough biological analysis. While we will have a
significant contribution on the biological effects from commenters, I
would ask our staff to do an enormous amount of work on this too, Hines
said. It may mean contracting for some of the analysis, he added.
It's essential that we get guidance from the staff to assimilate and
organize the information on biological effects, Ed Bartlett agreed. The
staff should do the analysis it can do, then let us know what else needs
to be done, he suggested. Karier said he thought the findings would come
down to what the Council heard from the [Dr. Al] Giorgi report:
there is a lot of uncertainty and a lot remains to be known.
Eric Bloch said he would support releasing the draft and using the
comment period to elicit information from others. I?m not troubled by
the limitations of the staff ? the comment period is an opportunity for
the Council to hear from others in the region ?who are willing and eager
to work with us,? he stated. There is common ground out there, and we
can get at it, Bloch said, adding that it would have ?a palliative
effect? for the region to help out. We could put out a draft and make it
explicit that we need ?a robust dialogue? about the biological impacts
of what is being proposed, he stated.
We need to have staff do as much of that work as possible, but we need
to get something out for comment, John Brogoitti stated. If we get clear
about the biological questions that are of concern, we could specifically
ask for input on them, Hines suggested.
All of the pieces of the draft ?have been floating around the region
for months? ? let's get the draft out and start the input period,
Danielson said. Fazio said he could complete an analysis of the Oregon
recommendations within a week, and Shurts said he could have a new draft
of the amendments prepared in a week or so. Karier offered language for
the draft that supports the Habitat Conservation Plan (HCP) for the
mid-Columbia projects.
Chairman Larry Cassidy suggested the Council consider a special meeting
at the end of September or early October in Portland to review and release
the draft. He said he would send an e-mail to members with some possible
dates before scheduling a meeting.
?Haste makes waste,? Terry Courtney of the Warm Springs Tribes
cautioned. Maybe your time to complete this hasn?t come yet, he
suggested. Courtney urged the Council to consider global warming in its
amendments, and he said the dollar value of spill is little compared to
the value the tribes place on salmon.
7. Report on financial condition of the Bonneville
Power Administration
Mark Walker, director, public affairs division; and Doug Marker
Staffer Mark Walker briefed the Council on Bonneville's ailing
financial condition, noting that the two most important numbers to keep
sight of are the agency's projected net revenues and its cash reserves.
In FY 2001, Bonneville lost $216.8 million, instead of coming out $123.3
million ahead for the year, as it forecast in the 2000 rate case, he
explained. The agency ?began the year in bad shape,? Walker added.
Bonneville currently forecasts it will end 2002 with another loss and have
just $187 million in financial reserves, he reported. In the rate case,
Bonneville projected reserves of over $1 billion at the end of 2002,
Walker added.
One of the financial tools Bonneville has available is to refinance
Energy Northwest (formerly WPPSS) debt, he continued. So it has been
taking advantage of the current low interest rates and refinancing debt,
which is decreasing its annual expenses, Walker explained. Without the
refinancing savings, the agency's 2002 loss ? now projected at $7
million ? would have been closer to $330 million, he said. The
refinancing ?is masking? the severity of the operating loss, Walker
pointed out.
Bonneville is looking at a $1 billion loss over the rate period, from
2002 to 2006, he said. The worst year looks like it will be 2003, and the
situation will get marginally better in 2004 and 2005, Walker said.
In the rate case, Bonneville gave itself three financial tools to deal
with financial uncertainty, he said. One of these, the load-based
cost-recovery adjustment clause (CRAC), triggered last year, bumping rates
up 46 percent in October, Walker explained. The level of increase was
backed off in April and will come down a little more this October, he
said. But in October, another tool, the financial-based CRAC, will
trigger, and rates are likely to go up 5 to 6 percent, Walker stated.
There is also a safety-net CRAC available to assure Bonneville does not
miss a Treasury payment, he added.
The agency is holding public meetings on its financial situation and
?taking the region's temperature? about invoking the safety-net
CRAC, Walker said. There is a much more involved process to trigger the
safety net, he said, adding that it takes a mini-rate-case process to do
so.
There is a lot of talk about Bonneville cutting its costs, which are
running much higher than the estimates from the Bonneville Cost Review,
Walker said. The power marketing function, for example, was projected to
be quite small, but that has turned out ?radically different? ?
Bonneville has a very active marketing operation, he pointed out.
The Cost Review projected that operating Columbia Generating Station
(WNP-2) would cost about 19 mills per kilowatt-hour, but in reality those
costs are running 28-29 mills, Walker said. In addition, spending on Corps
of Engineers and Bureau of Reclamation projects is up, and a Cost Review
recommendation to cut the Council from eight to four members and reduce
its budget by 27 percent has not occurred, he stated.
Bonneville has financial tools available to deal with the situation,
Walker said. The agency is looking to cut expenses by as much as $100
million a year; it can invoke the CRACs to raise rates; it can refinance
debt; and it has an emergency line of credit with the Treasury of $250
million, he continued.
Walker said Bonneville has been paying down its Treasury debt so it can
borrow more to make investments in transmission. Congress allows
Bonneville to borrow $3.75 billion, and the borrowing authority operates
like a revolving fund, he explained. Without the prepayments, Bonneville
would be running up against its borrowing limit, Walker pointed out.
Is increased borrowing authority the answer to the problem? Karier
asked. The Treasury borrowing is for capital projects, so it may not help
in the current situation, Walker responded. Bonneville's primary problem
is maneuvering around its cash-flow situation, with cash reserves as low
as they have been in years, he said. There is concern that with the
volatility in the power markets, the risk is greater than ever before,
Walker stated. Bonneville is obligated to make large debt-service payments
early in the fiscal year, so it has a low cash position that goes on for
several months, he explained.
Cassidy said he heard the estimated loss over the rate period is now
projected at $1.5 billion. ?It's not rocket science ? you cut costs
or raise revenues,? he commented. Steve Wright told me one of Bonneville's
difficulties in selling power to California and Arizona this year ?
where prices have been two to three times what they are in the Northwest
? is that the transmission ?was jammed up,? and they couldn?t move
the power down south, Cassidy said.
Bloch asked whether Bonneville has money available through the
4(h)(10)(C) credits. Walker said $325 million was used last year from that
contingency fund, adding, ?there is no big pot of money for Bonneville
to dip into.?
Karier asked if Bonneville's commitment for $186 million in fish and
wildlife direct program funds still stands. When Wright came to the Yakima
meeting, he threw on the table a challenge to find $200 million in fish
and wildlife savings, Walker replied. The rate case assumptions for costs
in many areas were lower than the current spending levels, but fish costs
have stayed within budget, he pointed out. If Bonneville needs to manage
its cash flow in early 2003, its best defense is knowing its actual costs
versus the forecast costs for the fish and wildlife direct program, Walker
said. Bonneville hasn?t sought reductions from the Council's fish and
wildlife program since the actual costs are lower than forecast ? we are
working with them to true up the actual costs, he added.
With regard to cuts in fish and wildlife funding, the Council will work
with Bonneville, but having Bonneville make ?ad hoc cuts? via our
funding recommendations is not the way to do business, Hines stated. They
need to come to us with major policy issues and try to get a resolution,
he added.
?John has hit the nail on the head,? Bloch agreed. I?d be
more receptive to direct engagement on the fish and wildlife savings than
to this ?Chinese water torture process? that is currently going on, he
said. We need to take a direct approach, rather than go through this issue
project-by-project as a means to decrease or slow spending, Bloch added.
Walker asked whether the Council wants to submit comments on how
Bonneville should solve its problem. Bartlett said the Council should
submit formal comments. We should be more engaged across the board with
Bonneville's cost cutting, Karier advised. We don?t want Bonneville to
miss a Treasury payment, which could put the region's cost-based rates
at risk, he said.
Decision ? Staff Directed to Prepare Comments
Cassidy directed staff to draft comments to send to Bonneville.
8. Council decision to release for comment report on
Bonneville fish and wildlife spending
Tom Karier, Washington Council Member; John Fazio; John Harrison,
information officer; and Roger Schiewe, Bonneville Power Administration.
Karier announced that staff has a draft report ready on Bonneville's
2001 expenditures to implement the Council's fish and wildlife program.
This is the second annual report, he said, noting that in July 1999, the
governors asked the Council to begin reporting annually on the
expenditures. The inaugural report was issued in January 2001, Karier
said.
A major finding in the latest report is that the fish-related hydro
costs last year ?were extraordinary,? Karier said. The costs were $1.5
billion, primarily because of unusually high power prices and the meltdown
in California, he added.
Roger Schiewe of Bonneville elaborated on the agency's process for
estimating the cost of Federal Columbia River Power System (FCRPS)
operations for fish. Bonneville's process was devised to meet the
obligations of the 1996 Memorandum of Agreement (MOA) on fish costs and
Section 4(h)(10)(C) of the Northwest Power Act, he said. The MOA required
the identification of total costs, and the Power Act provision requires a
breakdown of the costs into additional power purchases and foregone
revenues, Schiewe explained. That is because 4(h)(10)(C) allows us to take
credit on the power purchases only, he added.
Schiewe explained the steps in the process as follows: 1)
identify the energy production of the hydro system with and without fish
measures, using the HYDSIM monthly computer model; 2) compare the monthly
energy production from each study with the firm load carrying capability
of the system without fish measures to quantify the system surplus and
deficits for each condition; 3) apply the actual Dow Jones mid-Columbia
month average spot-market energy prices to the surplus and deficits; and
4) net the surplus and deficits of the two studies to get the additional
power purchases and foregone revenues.
He described the inputs (natural streamflows, reservoir elevations,
project spill, and firm load) to HYDSIM for the with-and-without-fish
cases, as well as the outputs (project outflows, reservoir elevations,
project spill, project generation, and surplus/deficit) from the model.
Energy production is higher without the fish measures, Schiewe said,
showing a month-by-month comparison of hydro generation between the two
cases. We came up with the deficits in generation and applied the mid-C
prices, he explained. According to the graph, 2001 prices ranged from a
September low of $24 per MWh to a December high of $508. The net effect
summed up to $1.5 billion, Schiewe stated.
Bonneville has contracts to provide more energy than the system
generates and has to go into the market for those purchases, Bloch pointed
out. How do you assign the costs between those purchases and the purchases
to make up for lost generation due to the fish measures? he asked. We can?t,
Schiewe responded. In the calculation, we use a surrogate for load, he
said. This analysis is not related to our contracts ? it relates to what
we had a right to generate to meet firm load, Schiewe said.
Decision ? Release Draft Report
Danielson made a motion that the Council release for 30 days of public
comment, beginning September 16, 2002, the draft second annual report on
Bonneville's fish and wildlife expenditures, dropping the last sentence
on page one that asked Bonneville to provide an accounting of power
purchases related to river operations and power purchases in 2001. Karier
seconded the motion, which passed unanimously.
9. Presentation on the Columbia River Basin Fish
Contaminant Survey
Paul Lumley, CRITFC; Pat Cirone; Environmental Protection Agency;
Lynn Hatcher, Yakama Nation; and Rick George, Umatilla Tribe
Pat Cirone of the Environmental Protection Agency (EPA) described a
recently completed contaminant survey of fish in the Columbia River Basin.
EPA worked with the Columbia River treaty tribes to collect fish in the
basin and determine if there are chemical contaminants present, she said.
The bottom line is, we looked for chemicals and found them at levels that
pose a risk, Cirone stated.
The tribes helped select the 26 sites at which fish were collected for
the study, she said, noting that the geographic area for the study was
large. Cirone said the study looked at species that were selected by the
tribes, including both anadromous fish ? Pacific lamprey, smelt, coho,
chinook salmon, and steelhead ? and resident fish ? suckers, mountain
whitefish, rainbow trout, white sturgeon, and walleye.
Unlike the general public, Native Americans eat the whole body of the
fish, so we tested the eggs, fillet, and body, she explained. Cirone said
the fish tissues were tested for 132 chemicals, and 92 were detected,
including pesticides, inorganics, dioxins, chlorinated dioxins, and
semivolatiles. ?The results were not a surprise,? she said. Cirone
noted that chemical concentrations were higher for resident fish that
spend their entire life in the river than for ocean-going anadromous
species.
Hines asked if there were signs of toxic effects on the fish
themselves. With the levels of toxicity we found, I?d say there are
stress effects in the fish, Cirone replied.
EPA gauges the risk posed by the chemical pollutants by the toxicity of
the substance and the exposure, she explained. According to surveys,
Columbia River treaty tribes eat three to 10 times the amount of fish
consumed by the general population, Cirone reported. In conducting a risk
assessment, EPA looks at the potential for developing non-cancer health
effects, such as nervous system, developmental, and immunological
problems, as well as for increased cancer risk, she said. ?For adults,
hazard indices and cancer risks were lowest for the general public at the
average ingestion rate and highest for the Columbia River Inter-Tribal
Fish Commission's (CRITFC) member tribes at the high ingestion rate,?
according to the study results. Hazard indices were lowest for salmon,
steelhead, smelt, and rainbow trout, and highest for mountain whitefish
and white sturgeon, the study states.
EPA's executive summary indicates the study was not designed to
evaluate the health of past or future generations of people who eat fish
from the Columbia River Basin, rates of disease in tribal communities, or
risk for a specific tribe or individual. But Cirone said the results
indicate the need to continue to look at where the chemicals are coming
from.
The tribes need to address this issue on their own, Lynn Hatcher of the
Yakama Indian Nation told the Council. There are strong religious and
cultural values associated with eating fish, and we still need to evaluate
the full health implications, he stated. The Power Council should get
involved, and Bonneville needs to fund studies to determine where the
chemicals are coming from, Hatcher said, noting the recent reports of PCBs
found on Bradford Island in the Columbia River. Bonneville and Corps
actions have had direct impacts on the toxins in the river, he said.
Karier agreed more study is needed, but said EPA and the Washington
Department of Ecology might be more appropriate to address the issues. We
don?t expect the Council or Bonneville to take a leadership role, but we
want them to participate, according to Paul Lumley of CRITFC. Bonneville
questions whether it has a role or responsibility, but the tribes and EPA
can make a convincing case it does, he said.
I would register a note of concern about what the Council can do, Bloch
said. We are already struggling with our mission, and I have a concern
about ?mission creep,? he stated. Our role here is limited ? I?m a
little worried about leaving you with the expectation that the Council has
a huge role here, Bloch added.
10. Update on subbasin planning (deleted from agenda)
Doug Marker, Brian Allee, Peter Paquet, manager, wildlife and
resident fish; and Lynn Palensky, subbasin planning coordinator;
comments from Intermountain Province Group
11. Council decision on recommendations for five
remaining provincial reviews (Lower Columbia, Estuary, Columbia Cascade,
Upper Snake, Middle Snake)
John Ogan; and Mark Fritsch
The process for selecting projects in the Lower Columbia, Estuary,
Columbia Cascade, Upper Snake, and Middle Snake provinces began over a
year ago, according to staffer John Ogan, who briefed the Council on Fish
and Wildlife Committee recommendations for funding nearly $15 million in
projects for FY 2003 through 2005. More projects were rated as high
priority by CBFWA and fundable by the ISRP than would fit into the
province budgets, and the project sponsors and agencies met repeatedly to
bring together a list of recommendations that fit into the available
dollars, he explained.
Ogan said ?a programmatic issue? arose in the provincial reviews
that relates to Bonneville's responsibility to fund projects in blocked
areas above non-federal hydropower projects. This is not a new issue, he
stated. In its 1995 fish and wildlife program amendments, the Council
asked Bonneville, Reclamation, fish and wildlife managers, and other
project owners to get together and resolve it. That has not happened, Ogan
said. Since the issue is unresolved, Bonneville said it should not be
obliged to fund projects above the non-federal projects, but staff
recommends against that course, he continued. It puts too much of the
burden on only one group of the responsible parties, Ogan pointed out.
Staff recommends raising the issue again with subbasin planning groups to
develop a proposal for resolving the issue, he stated.
Ogan explained budget options for the Lower Columbia and Estuary
provinces. Staff recommends a $6.9 million budget, even though it will
require some augmentation each year from the ?unallocated placeholder?
funds, he said.
The ISRP and IEAB reviews turned up concerns with the Select Area
Fishery Evaluation (SAFE) project, which aims to create terminal fishing
sites for commercial harvest in Youngs Bay and other locations in Oregon
and Washington, Ogan reported. Cassidy has asked that a review of that
project be speeded up, he said.
There are rumors there is little benefit to commercial fishermen from
this project, and the budget has grown to $1.6 million annually, Cassidy
explained. Would it be funded for another year or are we considering
whether to fund it at all? Bloch asked.
?I don?t want to spend another dime until we see those benefits,?
Cassidy stated. The point of the program is to put money into commercial
fishermen's pockets, ?not to keep bureaucrats at work,? he said.
Brogoitti reintroduced an Oregon Department of Fish and Wildlife
project for funding, subject to ISRP review. The project relates to bull
trout in the Willamette River, he explained. The ISRP supported the
project in the past, but the sponsor added new work that the ISRP did not
support, staffer Karl Weist explained. The sponsor has since brought the
budget down from $157,000 to $67,000, he said.
?Your timing is poor,? but we have to be responsive, Cassidy said.
How about considering it under the unallocated reserve in October? he
asked. ?I?m holding my nose on this one? since the Lower Columbia
and the Estuary provinces are already over budget, Danielson stated.
Ogan said projects recommended for the Columbia Cascade province total
$4 million. He explained that two projects approved by the fish and
wildlife managers were called into question by the ISRP: a Yakama
Nation coho reintroduction study and the Colvilles? Salmon Creek
project. The ISRP questioned two objectives in the Yakama proposal, and
the sponsor subsequently agreed to eliminate the funding request for those
items, Ogan said. As for the Colvilles? project, the ISRP was very
critical and rated it as ?do not fund,? he noted. Staff recommends
some funds for continuing administration and that future decisions on
funding be made as NEPA work on the project proceeds, Ogan explained.
Staff presented $2.4 million in projects for the Middle Snake province.
Ogan pointed out that sponsors in the province proposed four new projects
to use the budget that remained after ongoing projects were funded. Of the
four, Bonneville questioned whether any of them were within the scope of
its responsibilities under the Act, since they are in areas above
non-federal projects or are affected by dam operations outside the FCRPS.
Despite Bonneville's position, staff recommended approving the projects,
pointing out that Bonneville did not follow up on the Council's 1995
request that parties in the region reach an agreement on that issue.
Danielson pointed out that the budget is $197 ?to the good? in that
province.
Decisions - Funding
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council recommend to Bonneville that it fund for Fiscal
Years 2003 through 2005 the fish and wildlife projects for the Estuary and
Lower Columbia provinces as provided in the memoranda and tables presented
by staff, with two modifications: holding out project 199306000
SAFE, pending a cost-benefit analysis, and coordination of lamprey
research. Brogoitti seconded the motion. Cassidy recused himself from the
vote on project 31024, Shillapoo Wildlife area. The motion passed
unanimously.
Danielson made a motion that, as recommended by the Fish and Wildlife
Committee, the Council recommend to Bonneville that it fund for Fiscal
Years 2003 through 2005 the fish and wildlife projects for the Columbia
Cascade province, eliminating Objective 1, task f and Objective 3, task a
of Project 199604000 Evaluate Coho Reintroduction in Mid-Columbia, as
provided in the memoranda and tables presented by staff. Brogoitti
seconded the motion, which passed unanimously.
Danielson made a motion that the Council recommend to Bonneville that
it fund for Fiscal Years 2003 through 2005 the fish and wildlife projects
for the Middle Snake province as provided in the memoranda and tables
presented by staff and at budget levels recommended by the Fish and
Wildlife Committee. Brogoitti seconded the motion, which passed
unanimously.
Danielson made a motion that the Council recommend to Bonneville that
it fund for Fiscal Years 2003 through 2005 the fish and wildlife projects
for the Upper Snake province as provided in the memoranda and tables
presented by staff and at budget levels recommended by the Fish and
Wildlife Committee. Brogoitti seconded the motion, which passed
unanimously.
12. Council business:
Approval of minutes
Danielson made a motion that the Council approve for the signature of
the vice-chair the minutes for its August 13-14, 2002 meeting. Brogoitti
seconded the motion, which was unanimously approved.
Artificial Production Review and Evaluation contract approval
Danielson made a motion that the Council authorize staff to negotiate a
contract with Henderson Land Services in an amount not to exceed $82,000
($75,000 labor and $7,000 travel and expenses) to provide project
management services for the Council's artificial production review and
evaluation (APRE) and NOAA Fisheries? Hatchery Genetic Management Plan
(HGMP) processes. Staffer Bruce Suzumoto said the contract period goes
until June 2003. Cassidy expressed reservations about the contract. When
someone works for us, then leaves, and we turn around and hire them as a
consultant, it doesn?t feel right, he stated. The motion passed
unanimously.
Approval of IEAB task proposal
Danielson made a motion that the Council give conditional approval for
the IEAB to act as a peer review panel for an economic analysis of
protecting or developing significant fish and wildlife habitat within the
Portland metropolitan area, the conditions being that IEAB's proposal is
accepted by the Portland Metro Council. Karier seconded the motion. The
motion passed unanimously.
Approval of sole-source contract with Platts for POWERdat and
GASdata data services
Danielson made a motion that the Council approve a sole-source contract
with Platts RDI for its POWRdat and GASdat data services in the amount of
$33,100 for one year. Bloch seconded the motion. Staffer Dick Watson said
the services are needed for preparing the Council's fifth power plan.
Karier said the Power Committee unanimously supports the contract. The
Council voted unanimously to pass the motion.
I?ve also asked the power staff to look at the RAND study that was
recently released, Karier said. The study addresses the costs of replacing
the power that would be lost if the Snake River dams were removed, and he
said he asked the staff to apply its expertise to looking at the analysis
RAND has done and report back.
Other
Staffer Steve Crow offered a draft 2003 meeting schedule. After several
suggestions, Crow said he would poll the members and redraft a schedule to
be discussed in October.
Public comment on Draft Demand Forecast Issue Paper (Council
document 2002-11)
No one signed up to comment.
The meeting adjourned at 3:43 p.m.
Approved October 17, 2002
s/s Judi Danielson
Vice-Chairman
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