19900425Application.pdf

SNAKE RIVER /':/? 7IDA:M~VE~'VER COMPANY
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90 .APR 25 Al\ 10 q5 BOX 7 O. B 0 I S E, IDA H 0 8 370 7
; "'¡!iliO PUBUC April 25, 1990
LIT! L;~íÈs t§OMM1SS!ON
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HYDROPOWER
Mrs. Myrna J. Walters
Secretary
Idaho Public Utilities Commission
Statehouse
Bo i se, Idaho 83720
Re: Case No. IPC- E-90-8
Appl ication of Idaho Power Company in
Regard to the.Milner Project
Dear Mrs. Walters:
Please find enclosed for filing an original and seven (7) copies of
Idaho Power Company's Application in the above entitled matter. As is set forth
in the Company's Application, it is requested that copies of all notices,
pl eadings and orders be .served upon Mr. Steven L. Herndon and the undersigned.
Thank you for your attention to thi smatter.
Sincerely,
Larry D. Ripley
Attorney
LDR:mmb
Enclosures
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APllO 95
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APR 25
LARRY D. RIPLEY
EVANS, KEANE, KOONTZ, BOYD, SIMKO & RIPLEY
c/o Idaho Power Company
1220 W. Idaho Street
P. O. Box 70
Bo; se, Idaho 83707
[phone]
STEVEN L. HERNDON
IDAHO POWER COMPANY
1220 W. Idaho Street
P. O. Box 70
Bo; se, 10 83707
[phone]
o PUBLIC
L t i: s" C' f\!. Ji:i f- r' r'-'t-..~ ,,' J Fl iil l ~ ~.:l Or'J
Attorneys for Idaho power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE RATE BASING )
OF THE MILNER HYDROELECTRIC PROJECT )OR IN THE ALTERNATIVE )
A DETERMINATION OF EXEMPT STATUS )
FOR THE MILNER HYDROELECTRIC )PROJECT ))
CASE NO. IPC-E-90-8
APPLICATION
I DAHO POWER COMPAN~, The App 1 i cant here in, app 1 i e s to the Comoi s s ion
for a Certificate of Public Convenience and Necessity for the Rate Basing of the
Milner Hydroelectric Project or in the alternative a Determination of Exempt
Status for that project.
Idaho power Company (Idaho power) is a corporation incorporated under
the laws of the State of Idaho and is duly qualified to transact business in the
States of Idaho, Oregon, Nevada and Wyoming. Idaho power is engaged in the
business of generating, purchasing, transmitting and distributing electrical
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energy, and provi des retail e 1 ectri c servi ce in the State of Idaho. Idaho
Power's principal office is situated in Boise, Idaho, and its address is 1220
West Idaho Street, Boi se, Idaho 83707.
It is requested that copies of all notices, pleadings and orders be
served on the fo 11 owi ng:
Larry D. Ripley, Esq.
Legal Department
Idaho Power Company
P.O. Box 70
Boise, 10 83707
Steven L. Herndon, Esq.
Legal Department
Idaho Power Company
P.O. Box 70
Boi se, 10 83707
THE MILNER HYDROELECTRIC PROJECT
1.
Idaho Power requests that it be issued a Certificate of Public
Convenience and Necessity for the Rate Basing of the Milner Hydroelectric
Generation Facil ities (Milner Project or Project) and for recognition of the
Mi 1 ner royal ty and debt serv ice payments made to the Twi n Fall s Canal Company and
the North Side Canal Company, Ltd. (Canal Companies) as revenue requirement
expenses. The power generat ion faci 1 it i es wi 11 uti 1 i ze the reconstructed Mi 1 ner
Dam to provide generation capacity of 58,300 kW.
11.
The Project is located in Idaho on the Snake River about 130 miles
southeast of Boi se and between the ci ties of Burl ey and Twi n Fall s. The Project
facilities extend from the existing Twin Falls Main Canal Headworks in Milner
Reservoir approximately 1.3 miles along the canal to the powerhouse site where
most of the new fac i 1 it i es are to be located.
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Milner Dam was constructed in 1905 to provide irrigation storage and
diversions. The Dam is owned jointly by the Twin Falls Canal Company, the North
Side Canal Company and the American Falls Reservoir District Number Two.
Three canals with their headworks adjacent to the Dam are fed from
Milner Reservoir. The Twin Falls Main Canal (or South Side Main Canal)
constructed in 1905 will be utilized for the Project. Its headworks is located
near the 1 eft (south) abutment of the dam and it flows west near the Snake Ri ver
for about 12 mi 1 es.
The proposed Mi 1 ner Project wi 11 use Snake Ri ver flows that presently
pass through the Milner Dam Spillway. Such flows occur during the non-irrigation
season and at times during the irrigation season when there are flows in excess
of irrigation diversions. The water will be conveyed in an enlarged Twin Falls
Canal and diverted into a forebay and an intake structure, penstock and
powerhouse. Head will be obtained through utilization of the difference in
elevation between the Twin Falls Canal and the Snake River. Other facil ities
required for the Project include modifications to the existing headworks, canal
and bri dge and a new control structure, tailrace channel, access road and
transmission line.
111.
On December 15, 1988, the Canal Compan i es were granted ali cense
under Part I of the Federal Power Act (FPA) to construct, operate, and maintain
the Milner Project to be located at the existing Milner Dam and Twin Falls Main
Cana 1 on the Snake Ri ver. The Project as 1 i censed cons i sted of the Mi 1 ner Dam
and Reservoir, modifications to 6,500 feet of the Twin Falls Main Canal to
increase its capac i ty, a control structure on the canal that woul d divert the
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additional flow into a forebay, a penstock, a powerhouse located on the Snake
River 1.6 miles downstream of the dam and containing a single generating unit
rated at 43,650 kilowatts, and a 1.4-mile-long transmission line.
Subsequently, the Canal Companies informed the Federal Energy
Regul atory Commi ss i on (FERC) that there was a seri ous concern for the structural
integrity of the 85-year-old Milner Dam and that failure of the dam during the
irrigation season could result in near total crop failure on the 440,000 acres
served by the dam. Following a meeting with Canal Companies and an inspection
of Milner Dam, the FERC's Division of Dam Safety and Inspections concluded that
there was a high risk of failure at the Milner Dam in the event of a seismic
event (earthquake). A complete dam failure could lead to partial or total crop
fa i 1 ure, since such a fa i 1 ure would prevent divers i on of water into the
irrigation canal. The Canal Companies intended to use the revenues from the sale
of e 1 ectri c power to be generated by the Project to obtain the funds necessary
to strengthen Milner Dam and upgrade its spillway. The Canal Companies contended
that, absent these revenues, funding repair of the dam would result in severe
economic hardship to many of the 7,500 Canal Companies' shareholders who depend
on irrigation water from Milner Dam for their livelihood.
IV.
A 1 though the FERC issued ali cense to the Canal Compan i es based upon
the construction of a single generating unit rated at 43,650 kilowatts to be
located on the Twi n Fall s main canal, the FERC ordered that wi th in one year of
issuance of the 1 icense, the Canal Companies were required to submit a report
evaluating the feasibility of also constructing a power plant at Milner Dam to
util ize the power potential of the flows released to the bypass reach of the
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ri ver below the dam and therefore not usable by the power plant to be located
approximately 1.6 miles downstream. If the feasibility study showed that also
developing a power plant at the dam would be economically beneficial, the Canal
Companies were required to submit a schedule and plans for also developing a
power pl ant at the dam.
v.
On May 2, 1989, the FERC issued an order adding Idaho Power as a co-
licensee for the Mi 1 ner Project. From and after that date the 1 i cense for the
Milner Project is now jointly held by Twin Falls Canal Company, North Side Canal
Company, Ltd., and Idaho Power with all conditions of the previous license being
app 1 i cab 1 e to the three 1 i censees. The 1 i cense is attached as Attachment 1.
V1.
Idaho Power and the Canal Companies prepared the analysis required
to determine the feasibil ity of increasing the capacity of the Milner Project.
Based upon that anal ys is, Idaho Power and the Canal Compani es have proposed to
the FERC that a new powerhouse be constructed near the north abutment of Mi 1 ner
Dam and that a second un i t be added to the main powerhouse 1.6 mi 1 es downstream
of the dam. The powerhouse at the dam will consist of a single-propeller turbine
whi ch wi 11 di scharge a constant 200 CFS when in operation wi th a net head of 50
feet. It will be coupled to a 1000 kVA induction generator. Maximum output will
be about 710 kW.
The turbine will be fed through a steel penstock coming off of an
intake located either on the reservoir or on the North Side Canal upstream of a
relocated control structure. Gates to allow start-up and to unwater the unit for
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maintenance will be included. Provisions for release of the 200 CFS target flow
when the plant is not bei ng operated wi 11 be provi ded in the spi 11 way.
Based upon the new anal ys is, the turbi nes located at the Main
Powerhouse 1.6 miles downstream will be vertical shaft Kaplan type directly
coup 1 ed to the generators. The 1 arge un it wi 11 have a rated output of 46,000
kilowatts (kW) at a net head of 150 feet, a discharge of 4,000 CFS and a speed
of 200 revo 1 ut ions per mi nute (RPM). The small uni t wi 11 have a rated output of
11,500 kilowatts (kW) at a net head of 157 feet, a discharge of 1,000 CFS, and
a speed of 400 revolutions per minute (RPM).
An Appl ication to amend the 1 icense to conform the 1 icense to the
above feas i bi 1 i ty anal ys is has been prepared and sent to rel evant state and
federa 1 resource agenci es for thei r revi ew and comment pri or to fi 1 i ng wi th the
FERC.
VI1.
Idaho Power and the Canal Compan i es in it i ally entered into an
agreement to explore the feas i bi 1 i ty of power generation at Mi 1 ner Dam in 1981.
The Canal Companies were guaranteed a royalty with a net present value over the
life of any development equal to approximately $5,638,000. At that time, the
Part i es were concerned about the i ntegri ty of the Dam i tse 1 f and agreed to
negotiate a common solution to the repair issue if necessary at a later date.
VII 1.
As a resul t of vari ous inspections, it has been determi ned that the
cost of necessary repairs to Milner Dam is approximately $11,700,000 and that
immediate repair is required to insure the structural integrity of the dam.
Idaho Power has agreed to provide interim financing for the rehabilitation of the
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Canal Companies' dam and the Canal Companies have agreed to repay this initial
loan wi th interest from funds obta i ned elsewhere at or near the time that the
Project and the dam are completed. Idaho Power has agreed to guaranty the
payment of complete debt serv ice on the permanent loan for the Dam through a base
royalty equal to the original present value of $5,638,000 plus 1/2 of the total
cost of repa i ri ng the dam over the term of the FERC License. Add it i ona 11 y, the
Cana 1 Compani es wi 11 recei ve an i ncent i ve royal ty whenever the annual Project
generation is in excess of an agreed upon base of 142,000 MWh.
If Idaho Power's investment in the Project is not recognized for
revenue requirement purposes by the Idaho Public Utilities Commission, the Canal
Companies may exchange the set royalty option described above for 50% of the net
benefits derived from the off system sale of the power after all costs including
a return on Idaho Power's equity investment in the Project are deducted.
IX.
Idaho Power and the Canal Companies have entered into an Agreement
Regarding the Ownership, Construction, Operation and Maintenance of The Milner
Project. The Canal Companies will maintain the ownership of the dam, and Idaho
Power will own the generation facilities. A copy of the Agreement is attached
as Attachment 2.
x.
As set forth above, the Canal Companies were required to rehabil itate
the Milner Dam and the source of funds available for that rehabilitation was to
be the revenues derived from power sales. The Canal Companies had already
received a 1 icense from FERC. Since the Project had to be constructed, Idaho
Power was presented with a unique opportunity to participate with the Canal
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Companies in the rehabil itation of the dam, thus securing the hydro power for the
benefi t of its customers. The t imi ng of the Project, however, coul d not be
deferred.
COMMITMENT ESTIMATE
1.
In addition to the information set forth above, Idaho Power
acknowledges that it is required to provide the Commission with a cost estimate
regarding the Project.
11.
Large hydroelectric projects involve design and construction which
must be customized to the particular site. As a result, preliminary estimates
conta in many unknowns for both the fi na 1 project 1 ayout and scope. Detail ed
engineering to finalize the layout and scope in order to obtain a more precise
estimate would result in extremely high front end costs on all projects. In the
event a particular project was not built, a significant expenditure would be lost
and woul d have to be wri tten off. Changes requi red as part of the envi ronmental
and regulatory review process could also result in the need to completely
redesign a project, thus radically changing the original prel iminary estimate.
111.
For most hydroelectric projects, the first major expenditure of
funds, other than for eng i neeri ng des i gn, is the purchase of the hydroe 1 ectri c
turbi nes and generators. The des i gn and acceptance of bi ds for the Mil ner
Project's turbi nes and generators has been accompli shed and Idaho Power is now
able to make a cost estimate. This estimate, which Idaho Power has termed a
"Commi tment Estimate", is the best estimate of the Project's cost after the award
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of the contracts for the turbines and generators plus an additional amount of 5%
to establish a cost ceiling for the Project. Idaho Power will commit to building
the Project for the Commitment Estimate (as it may be adjusted to account for
documented changes in esca 1 at i on rates or scopeY). I f the fi na 1 costs exceed
the "Commi tment Estimate", Idaho Power wi 11 absorb the extra costs, and wi 11
include in its Idaho rate base only the amount up to the Commitment Estimate.
IV.
The Milner Project's costs are currently projected to be $60,334,000
at completion in 1992, with a dam reconstruction cost of $11,700,000. With an
add it i ona 1 5%, Idaho Power's Commi tment Est i mate for the powerhouse is
$63,350,600. The installed turbine capacity will be 58,300 kW.
Depend i ng upon the number of water years ut i 1 i zed in the Computat ion,
the cost per kWh would range from a maximum of 52.93 mills/kWh based upon a cost
for the powerhouse of $63,350,600, 60 years of water data and a 50 year 1 evel i zed
cost; to 37.80 mi 11 s/kWh based upon a powerhouse cost of $60,334,000, 20 years
of water data and a 50 year level ized cost (or less if the Project is built for
less than Idaho Power's present Project estimate). The cost estimates are
attached as Attachment 3.
YThe Wharton 2nd Quarter 1989 Forecasted CPI and Handy-Whitman Construction Cost
Indices for the Plateau Region for Total Hydro Production were used to develop
the cost estimate. If major inflation occurs, resulting in higher cost indices,
the Committment Estimate would be adjusted to reflect these inflated cost
indices.
Examples
1.
2.
3.
of possible scope changes which could affect the project ceil ing are:
Force Majeure or acts of God impacting the construction;
Design optimization for which increased energy more than offsets the
increase in initial investment;
Foundation or site conditions significantly more expensive than
indicated by exploratory drilling.
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V.
Updated Project cost estimates wi 11 be submi tted to the Commi ssi on
as part of the Company's Quarterly Report of Construct i on Projects. The updated
cost estimate will include any scope or esca 1 at i on changes. The fi na 1 cost
report on the Project wi 11 st ill compare the actual costs to the COnlmi tment
Estimate.
THE COMPANY IN THE ALTERNATIVE REQUESTS A DETERMINATION OF EXEMPT STATUS
1.
As set forth above, the FERC has issued an order making Idaho Power
a co-l i censee for the Mi 1 ner Project.
11.
If the Commission determines that Idaho Power's investment in the
Milner Project should not be Rate Based for revenue requirement purposes, the
Commission should issue an order determining that the Milner Project should have
an exempt status.
111.
The order determining the exempt status should be issued for a period
of 20 years from the date of commercial operation to permit Idaho Power to enter
into along term sal e of the energy to another ut i 1 i ty .
IV.
Idaho Power would propose that two years prior to the expiration of
the order determining the exempt status, Idaho Power would apply for a
redetermi nat i on of the status of the exempted Mi 1 ner PL ant. The Commi ss ion,
after notice, woul d determi ne if the Order of Exemption shoul d be continued or
if a Certificate of Public Convenience and Necessity for the Rate Basing of the
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Milner Project should be issued at that time. The order determining the status
of the generating electric plant would be issued by the Commission within one
year of the date the app 1 i cat i on for redetermi nat ion is fi 1 ed.
V.
If the Commission determines in the second proceeding that a
Certificate of Publ ic Convenience and Necessity for the Rate Basing of the Milner
Project should be issued, the Commission should issue a Valuation Order for
revenue requirement purposes within three months of the order issuing a
Certificate of Public Convenience and Necessity. The value of the plant for
revenue requirement purposes in the 20th year will be based upon the then
reproduct i on cost new 1 ess depreci at ion.
VI.
Reproduction cost new less depreciation means the total investment
that would be required by Idaho Power to duplicate the Milner Project at then
current costs for all materials, supplies, labor, land and land rights,
transportation, and miscellaneous direct and indirect expenses (including
overhead, engineering and supervision costs that are normally capitalized) that
would be required; the costs that would be required to obtain all necessary
approvals and permits; and any other costs that would be appropriately applicable
to the reproduction cost of the Mi 1 ner Project 1 ess an amount represent i ng the
straight line depreciation of such Reproduction Costs of any depreciable items.
VII.
If the Commission determines that the Milner Project should not be
ratebased, the Commi ss ion's order shoul d declare that the investment, expenses,
current or accrued tax benefi ts and revenues incident to the Mi 1 ner Project wi 11
11
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not be considered for regulatory purposes in the State of Idaho including, but
not 1 imited to, revenue requirement and power supply purposes.
VIII.
In the event the Commission determines in a second proceeding that
a Certificate of Convenience & Necessity should be issued, the Commission should
not consider in a revenue requirement proceeding any profit or loss or accrued
tax benefits that were accumulated as a result of the Milner Project having
previously operated under an Order of Exemption. However, it is recognized that
the Commi ssi on coul d assume the avail abi 1 i ty of tax depreci at ion benefi ts
associated with the restated value of the plant on a prospective basis on a
straight-l ine method consistent with the book depreciation if the Project is
1 ater rate based.
WHEREFORE
Idaho Power Company respectfully requests that the Commi ssion issue
an Order authorizing the Rate Basing of the Milner Project with an upper limit
of $63,350, 700 allowed for the Company's investment in the powerhouse. Idaho
Power also requests that the Commi ss ion's Order permi t the Mi 1 ner royalty
payments to the Twin Falls Canal Company and the North Side Canal Company, Ltd.
be recogni zed as proper ratemaki ng expenses.
OR IN THE ALTERNATIVE, if the Commission determines Idaho Power's
investment in the Milner Project should not be ratebased, that the Commission
issue its order determi ni ng that the Mi 1 ner Project shoul d have an exempt status
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for Idaho Pub 1 i c Uti 1 it i es Commi ss ion regul atory purposes for a peri od of 20
years.
DATED at Boise, Idaho this 25th day of April, 1990.
1s0~4:
13
r IDAHO POWER COMA.
IPC-E-90-8
PARTIES OF RECORD
LAY D RIPLEY ESQ
IDAHO POWER COMPAN
PO BOX 10
BOISE ID 83101-0010
STEVEN L HERNDON ESQ
IDAHO POWER COMPAN
POBOX 10
BOISE ID 83101-0010
GRA E TAmER
DAVIS WRIGHT TREMAINE
1300 SW FIFTH AVE SUITE 2300
PORTLAD OR 91201
PETER J RICHADSON
DAVIS WRIGHT TREMAINE
350 N 9TH SUITE 400
BOISE ID 83102-5411
HAOLD C MILES
IDAHO CONSUMER AFFAIRS INC
316 15TH AVENUE SOUTH
NAMA ID 83651-4319
JAMS N ROETHE
PILLSBU~Y MADISON & SUTRO
PO BOX 1880
SAN FRACISCO CA 94120
R MICHAEL SOUTHCOMBE
CLEMONS COSHO & HUHREY
815 W WASHINGTON ST
BOISE ID 83102-5590
R SCOTT PASLEY
ASSISTAN GENERA COUNSEL
JR SIMPLOT COMPAN
PO BOX 21
BOISE ID 83101-0021
DAVID H HAWK DIRECTOR
ENERGY NATURA RESOURCES
JR SIMPLOT COMPANY
PO BOX 21
BOISE ID 83101-0021
1CERT/142
.
OWEN H ORNDORFF
ORNDORFF & PETERSON
1081 W RIVER ST SUITE 230
BOISE ID 83702-7035
.
INTERESTED PARTIES
RON WILLIAMS
IMHOFF & LYNCH
PO BOX 139
BOISE ID 83701-0139
MICHAEL WHEAT
26 ELM LAE
BAY CITY TX 71414
GEORGE F BELLEM
ROUTE 1 BOX 1055
PAUL ID 83341
L B MONCHER
ROUTE 1 BOX 1053
PAUL ID 83341
CLAENCE BELLEM
ROUTE 1 BOX 241
RUPERT ID 83350
JOHN GEYER
CITIZENS POWER & LIGHT
1400 KOIN CENTER
222 SW COLUMIA
PORTLAND OR 91201
..l.
BEFOR TH
IDAH PUBLIC UTTIES COMMSSION
CASE NO. IPC-E-9D-S
IDAHO POWER COANY
ATIACtlNT 1
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..
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commiss ioners: Martha o. Hesse, Chai rman;
Charles G. Stalon, Charles A. Trabandt,
Elizabeth Anne Moler and Jerry J. Langdon.
Twin Falls Canal Company
North Side Canal Company, Ltd.
Project No~ 2899-003
ORDER ISSUING LICENSE
(Major Project)
(Issued December 15, 1988)
On July 27, 1984, the Twin Falls Canal Company and the North
Side Canal Company, Ltd. (CC) filed a joint application for
license under Part I of the Federal Power Act (FPA) to construct,
opera te, and maintain the Milner Hydroelectric Project No. 2899,
to be located at the existing Milner Dam and Twin Falls Main
Canal on the Snake River in Twin Falls, Cassia, Jerome, and
Minidoka Counties, Idaho. Parts of the project would occupy
lands of the United States managed by the Bureau of Land
Management (BLM) of the Department of the Interior. The project
would consist of the Milner Dam and Reservoir, modifications to6,500 feet of the Twin Fal Is Main Canal to increase its capac i ty,a control structure on the canal that would divert the addi tional
flow into a forebay, a penstock, a powerhouse located on the
irrigation canal 1.6 mi les downstream of' the dam and containing a
single generating unit rated at 43,650 kilowatts, and a 1.4-mile-long transmission.line.
Notice of the application has been published. The Idaho
Department of Fish and Game (IDFG) and the Idaho Department of
Wa ter Resources (IDWR) became intervenors in the proceeding. The
motions to intervene and comments filed by agencies and
individuals have been fully considered in determining whether to
issue this license. The issues raised by the intervenors are
discussed below.
I. Dam Safety and National Environmental Policy Act Compliance
The Commission currently is' in the process of preparing an
environmental impact statement (EIS) assessing, inter alia, the
potential cumulative impacts of the Mi lner Project No. 2899 and
three other proposed hydroelectric projects on the environmental
resources of the Snake Ri ver Basin. A draft EIS (DEIS) was
..
Project No. 2899-003 -2-
issued in November 198;. 1 Due to new circumstances and new
information received after the DEIS was issued, a Notice of
Intent to Prepare a Supplement to the DEIS and to hold publ ic
meetings was issued on July 15, 1988; public meetings were held
in Twin Falls, Idaho, on August 19, 1988. At these meetings, CC
informed the Commission that there was a serious concern for the
structural integri ty of the 85-year-old Milner Dam and that
failure of the dam during the irrigation season could resul t in
near total crop fai lure on the 440,000 acres served by the
dam. 2
Following a meeting wi th CC and an inspection of Milner Dam,
the Commission's Division of Dam Safety and Inspections concluded
that there is a high risk of failure at the Milner Dam in the
event of a seismic event (earthquake). A complete dam failure
could lead to partial or total crop failure, since such a failure
would prevent diversion of ~ater into the irrigation canal.
CC intends to use the revenues from the sale of electric
power to be generated by the project to obtai~ the funds
necessary to strengthen Milner Dam and upgrade its spillway. CC
states that, absent these revenues, funding repair of the dam
would result in severe economic hardship to many of the j, 500 CC
shareholders who depend on irrigation waters from Milner Dam for
their livelihood. According to CC, having the shareholders bear
the total cost of repairs could cause some shareholders to lose
their farms and .would cause significant adverse impacts to a
local economy that is already suffering the effects of the
general economic problems of the farming industry.
The final EIS (FE IS) for the four projects on the Snake
River is not expeçted to be completed until late summer or early
fall of 1989. Thus, waiting for completion of the FEIS before
action on the license application for Project No. 2899 could
cause a delay of up to two years in starting the repair of Milner
Dam, during which time there would be a risk of dam failure. If
a license for the Milner Project is issued at this time, the
necessary financing and other arrangements could be made so as to
complete the dam repairs in one year or less.
1
Draft Environmental Impact Statement for the Twin Falls
(FERC No. 18), Milner (FERC No. 2899), Auger Falls (FERC No.
479ï), and Star Falls (FERC No. 5ï9;) Hydroelectric Projects
on the Mainstem Snake River, Idaho, Federal Energy
Regulatory Commission, Washington, D.C., November 198;.
2
See the attached Safety and Des ign Assessment (S&DA) for a
more detailed description of the dam safety concerns
regarding this project.
..
Project ~o. 2899-003 -3-
Council on Environmental Quality (CEQ) regulations
implementing the procedural provisions of the National
Environmental Policy Act (~EPA) state that, where emergency
ci rcums tances make it necessary to take an action with
significant environmental impacts wi thout following CEQ
regulations (e.g., without first preparing an FEIS), the agency
tak ing the action should consult wi th CEQ regarding al terna ti vearrangements. Such arrangements are to be limi ted to actions
necessary to control the immediate impacts of the emergency. 3
Pursuant to CEQ's regulations, the Commission consul ted with CEQand requested concurrence wi th a plan to proceed wi th the
i icensing of the Hi lner Project prior to completion of the FEIS
on the four projects on the Snake River. 4 Consistent wi th the
emergency provisions CEQ's regulations, the CEQ approved the
Commission's plan to license the hydroelectric facility at the
Mi lner Dam prior to completion of the FEIS. 5
II. Comprehensive Water Block
Commission staff has proposed development of a Comprehensive
Water Block (CWB) for the four projects in the Snake River Basin
included in the DEIS. As described in more detail in the Scoping
Document Supplement (Supplement) prepared for this proceeding in
October 1988, 6 the objective of the CWB is to provide target
flows at the projects when water is available in excess of
irrigation needs. The CWB represents the combined amount of
water needed to provide target flows for protection and
enhancement of environmental resources associated with the four
projects addressed in the DEIS. Under the CWB proposal, each of
the four projects, if licensed and constructed, would provide a
sub-block to the CWB; the size of the individual sub-blocks would
be di fferent for each project, due to the fact target flows would
be based on what ls needed to mitigate impacts at each specific
project. The size of the CWB would also vary from year to year
depending on the amount of flow in the river and the availability
of water in excess of irrigation needs.
3See 40 C.F.R. 1506.11 (1988).
4
Let ter from Martha o. Hesse, Chairman, Federal EnergyRegulatory Commission, October 25, 1988).
5
Let ter from A. Alan Hill, Chairman, CEQ, October 27, 1988.
6
Information regarding the Supplement was published in the
Federal Register on October 15, 1988. See 53 Fed. Reg.
42,997. Scoping meetings on the Supplement were held in
Boise and Twin Falls, Idaho, on November 2, i 988.
..
Project No. 2899-003 -4-
The eWB proposal would require the licensees for the four
projects to lease water for the eWB from the Upper Snake Water
Supply Bank (Water Bank). The State of Idaho established the
Wa ter Bank as a convenient means to allow and account for the
rental of water by those irrigators in need of additional water
from those who have excess water. Irrigators who estimate that
their water storage rights would be in excess of their require-
ments in any year may place a portion of their storage right in
the Water Bank, to be leased by others, with irrigators receiving
first priority. Any water that is not leased in any year is lost
if all of the upstream storage is refilled in the following year.
IDWR, by letter dated September 30, 1988, stated that it
appears that structured reliance on the Water Bank through the
CWB mechanism can be successful in meeting prescribed mi tiga ti ve
flows on the mainstem of the Snake River. Furthermore,
Commission staff discussions wi th IDWR staff regarding the
operation of the Water Bank revealed that: (1) water has been
available for lease from the Water Bank in all years since its
creation; (2) Idaho Power Company has leased water for power
generation from the Water Bank in every year since its creation;
(3) future water availability likely will increase due to
increased irrigation efficiencies; (4) it is highly probable that
water will be availabl& in the Water Bank in excess of irrigation
demand in the future, except in very bad water years; and (5) the
cost of water from the bank is currently very reasonable, and is
expected to remain so in the foreseeable future.
Under the CWB proposal, each licensee would be responsible
for providing project-specific target flows. Target flows to be
set for the projects would recognize the physical limi tat ions of
the river system so that they would not interfere with irrigation
operations and would. not flood low-lying areas. Flows to be
released for projèct-specific target flows would be accounted for
when the water is released from the upstream American Falls
Reservoir and measured below Milner Dam. Thus, the CWB would be
an accounting mechanism for licensees to equi tably share theresponsibili ty for mi tigative flows, since water which is
released from American Falls Reservoir would flow through all of
the four proposed projects.
As discussed below, we believe the CWB proposal is an
appropriate means to provide mi tigative flows while recognizing
the need to protect irrigation needs in the area. Accordingly,
Article 401 of the license requires CC to meet the target flows
specified by Article 407 of the license by renting water from the
Water Bank when it is available.
..
Project No. 2899-003 -5-
I I I. Envi ronmental Impacts
A. Erosion, Sedimentation, and Slope Stability
Rehabi Ii tation of Milner Dam would involve excavation of
rock materials, construction of access roads leading from the
excavations to the dam, associated staging areas, and a cofferdam
to dewater a small area in the reservoir when reconstructing thespi llway. These acti v i ties would cause minor erosion,
sedimenta tion, localized movement of loose rock materials, and
temporary increases in suspended sediment in Milner Reservoir
during placement and removal of cofferdams. In order to ensure
that impacts on soils and geologic resources are minimized,
Article 402 requires ee to include measures to minimize erosion
and sedimentation and to control slope stabili ty when submi t ting
final design specifications for rehabili tation of Milner Dam.
During project construction, local i zed erosion,
sedimenta tion, and temporary increases in turbidity and suspended
sediments would occur until disturbed land surfaces are
stabilized. Blasting for the powerhouse and tailrace excavation
and construction of the access road could cause localized
rockfall and mass movement of loose materials, and placement and
removal of cofferdams would temporari ly increase suspendedsediments and turbidi ty wi thin the Snake River.
Wi th implementation of a detailed, site-specific erosion,
sediment, and slope stability control plan that incorporates ce's
proposed mi tigation and the mi tigation measures recommended in
the DEIS, the effects on soil and geologic resources would beminor. 7 Article 402 requires ec to prepare a detailed, 8i te-
speci fic plan to çontrol erosion, sedimentation, and slope
stabili ty that includes control measures proposed by CC and
recommended in the DEIS.
B. Water Quality
1. Water Quality Certification
In a letter dated January 27, 1984, CC requested water
quality certification pursuant to Section 401 (A) (1) of the Clean
~ater Act from the Idaho Department of Health and Welfare (lDH~).
IDHW granted water quality certification for the Milner Project
on September 30, 1985. Since IDHW did not act on the
certification request within one year from the date it received
the request, water quality certification was deemed waived by
ï
See Section 4.1.1.1 of the DElS.
..
Project No. 2899-003 -6-
Order No. 464. 8 However, since we believe the three conditions
contained in the water quality certificate, which address erosion
control, spoil disposal, and storage of fuels and chemicals are
necessary, we are including them as part of Article 402 of thelicense.
2. Milner Reservoir and the Snake River below Milner
Dam
The water quality in the Upper Snake River Basin is
generally good, and is categorized as Class A by IDHW. Water
uses to be protected include domestic and industrial water
supply, irrigation, livestock watering, and salmonid fish
spawning and rearing.
In the 1960's, Milner Reservoir had poor water quality
condi tions resulting from municipal and industrial point sourcedi scharges. During periods of reduced discharges, low dissolved
oxygen concentrations (DO) in Mi Iner Reservoir resulted in major
fish kills. Substantial reductions in these point source
discharges in -the 1970's, however, have contributed to better
wa ter qual i ty condi tions in the reservoir.
Temperature and DO sampling conducted by CC' s consul tant inJune to September 1983 and in August to December i 98; indicate
that Milner Reservoir does not thermally or chemically stratify
and that DO and temperature levels in the river below Milner Dam
are similar to those in Milner Reservoir. These levels met the
state water quality standards at all depths sampled in Milner
Reservoir and in the Snake River below Milner Dam.
The Environmental Protection Agency (EPA) reports that in
past years the surface waters of Milner Reservoir contained high
concentrations of heavy metals. Since 1979, EPA reports that
concentrations of zinc, cadmium, and copper in Milner Reservoir
and in the Snake River below Milner Dam have ranged from 0 to 50
micrograms per liter (ug/l), from .2 to 2 ug/l, and from 1 to 8
ug/l, respecti vely. However, these concentrations are below
levels reported by EPA that adversely affect freshwater aquatic
organisms. 9
8
52 Fed. Reg. 5446 (February 23, 1987), FERC Stats. and Regs.
III, 30,370 (effective May 11, 1987); reh'g denied, 52Fed. Reg. 13,234 (April 22, 1987), 39 FERC 61,021 (Order
No. 464-A), petitions for reconsideration dismissed, 41 FERC
61,206 (1987) (Order No. 464-B).
9
See generally Section 4.2.1 of the DEIS.
..
Project No. 2899-003 -;-
(A) Project Construction
Construction activities in Mi lner Reservoir and in the SnakeRi ver below Milner Dam would disturb sediments and other
unconsolidated deposi ts that likely contain heavy metals or other
toxic substances. Improper removal and disposal of sediments or
unconsolidated deposi ts could disperse heavy metals or other
toxic substances into the water column and would adversely affectthe aqua tic resources downstream. Al though the enti re project
area need not be tested, Article 403 requires CC to test any
sediment or unconsol ida ted materials wi thin the Snake River andHi lner Reservoi r that would be dredged or excavated in
conjunction wi th project construction for the presence of any
heavy metals or other toxic substances, so that any contaminated
materials would be identified, safely removed, and disposed of
with minimal adverse effects on water quality and aquatic
organisms.
(B) Project Operation
The proposed powerhouse would have the capaci ty to use flows
of from 900 to 4,000 cubic-feet-per-second (cfs). Typically, the
flows that pass Mi Iner Dam in the summer are low, not generally
exceeding 500 cfs, and the proposed powerhouse would not be
expected to operate from approximately mid-June through mid-September.
Operation of the proposed project would not affect the water
qual i ty in Milner Reservoir; however, CC' s proposed minimum flow
of 58 cfs in summer during the irrigation season would likely
resul t in substantial adverse impacts on water temperature and DO
wi thin the 1.6-mile-long bypassed reach. The DO and temperature
of the water releRsed from Milner Dam during summer would likely
change as it flows downstream through the bypassed reach. The
magni tude of these changes would depend on a number of factors,
wi th the major controlling factor being the rate of streamdi scharge through the bypassed reach.
A reduction in the volume of water flowing through thebypassed reach would reduce water veloci ty and depth and increase
the travel time. Consequently, the effect of solar radiation
would be intensified and water temperature would increase in
summer. Much slower veloci ties in the bypassed reach could also
contribute to the growth of the already abundant aquatic plants.
Increased plant respi ra tion and decomposi tion would cause DOreductions.
Based on the cross-sectional and longi tudinal profi les of
the ri ver channel below Milner Dam and the available data
relating discharge to DO and water temperature, a flow of 200 to
300 cfs would likely have minimal impact on water temperature and
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Project No. 2899-003 -8-
DO in the bypassed reach. Flows within this range would likely
provide sufficient water velocity and depth, and in turn reduce
the travel time through the bypassed reach, thus minimizing the
effect of solar radiation on water temperature. A target flow
established within this range would likely provide water qualitycondi tions that are sui table for maintaining a put-and-grow trout
fishery. 10 The target flows requi red by Articles 407 and 415
during project operation for the maintenance of the fish and
recreational resources, respectively, would minimize the impacts
of project operation on water temperature, DO, and sedimentation
in the bypassed reach.
The DEIS recommended that CC implement a water quali ty
moni toring plan that should include provisions for discharging
sufficient water to the bypassed reach to minimize the effects of
the proposed project on the water quali ty of the Snake River
during project operation. Water quali ty impacts would be most
cri tical during low water years and during summer months that
coincide wi th low flows, high nutrient levels, and elevated water
tempera tures. -
CC should implement a water quali ty moni toring plan alongthe bypassed reach. Therefore, Article 404 of the license
requires CC to moni tor the water quali ty of the Snake Ri ver to
determine if water temperatures and DO necessary for the survival
of a trout fishery wi thin the bypassed reach are being maintainedby the target flow released from Mi lner Dam. I f the resul ts of
the moni toring required by Articles 404 and 409 show that levels
of DO and ,temperature in the bypassed reach are not sufficient
for maintaining a put-and-grow trout fishery, Article 409requires CC to implement other fishery mi tigation.
.
C. Fishery Resources
1. Existing Environment
(A) Milner Reservoir
Milner reservoir supports both warmwater and coldwater
fisheries. The warmwater species include smallmouth bass,
largemouth bass, yellow perch, channel catfish, brown bullhead,
and black crappie. The coldwater species are rainbow trout,
cutthroat trout, brown trout, and mountain whitefish. Also,
numerous nongame species inhabi t the reservoir. The coldwater
species occur primarily at the headwaters of the reservoir. IDFG
stocks catchable rainbow trout in the headwaters of Milner
Reservoir near Burley, Idaho.
10Thi s fi shery resource is discussed in Part I I C 4, infra.
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Project No. 2899-003 -9-
Milner reservoir has a sandy substrate and is devoid of
three dimensional structure such as rocks or boulders. The sandy
substrate probably limi ts the production of aquatic invertebrates
typically fed upon by fish. Further, the lack of structure
limi ts warmwater fish production because structure is used by
warmwater fish for spawning and for cover. 11
The Idaho Fisheries Management Plan 12
warmwater fish such as smallmouth bass, and
catfish will be stocked in the reservoir to
the warmwater fishing in Milner Reservoir.
Management Plan states that the management
Reservoir include improving warmwater fish
states that
channel and blue
meet the demand for
The Fisheries
direction for Milner
habi tat.
(B) Snake River Bypassed Reach
Game fish use below Milner Dam is seasonal and depends on
flow levels. Rainbow trout, cutthroat trout, brown trout,
rainbow-cutthroat trout hybrids, mountain whi tefish, channel
catfish, largemouth and smallmouth bass, and yellow perch have
been collected in the Snake River below Milner Dam. Nongame fishsuch as Utah dace, reds ide shiners, and mot tIed sculpins
dominated the catch during the low flow period. 13
water diversions for irrigation limits trout use of the
proposed bypassed reach primarily to the non-irrigation season.
Water div~rsions from April through October for irrigation
deli veries significantly reduce the amount of water flowing
downstream of Milner Dam. These flow reductions during the
irrigation season, along with the likely changes to water
quali ty, increased water temperature and decreased DO
concentration, decreases the sui tabili ty of the downstream area
for trout.
The Fisheries Management Plan for the Snake River below
Milner Dam calls for a "yield trout fishery" with an approximate
catch rate of 0.5 fish per hour. According to the Fisheries
Management Plan, rainbow trout consisting of wild and hatchery
fish would support the yield fishery.
11
See Section 3.3.2.1.1 of the DEIS.
12
Idaho Department of Fish and Game, 1986, Fisheries
Management Plan 1986 - 1990, Boise, Idaho, 2;4 pp.
13
See Section 3.3.2.1.2 of the DEIS.
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Project ~o. 2899-003 -10-
2. Impacts
(A) Project Construction
Constructing the Milner Project and upgrading the dam would
cause short-term increases in suspended and dissolved solidswhich would ul tima tely be deposi ted in downstream areas. Thesi 1 tation could negatively affect mountain whi tefish spawning in
the bypassed reach, but would have actual little effect, due to
the fact that so few fish occur or spawn in the bypassed reach.
Sil tation from construr tion activities would have little effect
on other aqua tic resources, because the siltation would be
flushed out during the next high flow period. Further,
implementing the erosion control and sedimentation plan required
by Article 402 would limit sources of sediment. The potential
for toxic substances affecting the downstream aquatic resources
would be low because of the sediment testing and sediment removal
requirements of Article 403.
(B) Project Operation
Operating the Milner Project would increase the time period
for diverting water from the reservoi r to the Twin Falls Main
Canal. Typically, CC now diverts water during the irrigationseason from April through October. Wi th the project operating,
CC would di vert water all year and would reduce the frequency of
spillage over Milner Dam. Fish passing over Milner Dam with the
high spillage flows is probably the primary mechanism by which
trout populate the bypassed reach. Project operation would
substantially increase the number of fish diverted to the canal,
where they would enter the project intake and would be killed or
injured by the turbines or would no longer be recruited to thebypassed reach or. downstream areas.
CC proposes to mitigate for adverse project impacts by
enhancing the fish habi tat in Milner Reservoir instead of
installing a fish screen to mi tigate the turbine-induced fish
losses. The DEIS agreed wi th CC' s reservoir enhancementproposal, but expressed reservations about the probabi 1 i ty for
success. 14 In its 'motion to intervene, IDFG stated that
enhancing the habi tat in Milner Reservoir would partially
mi tigate for turbine-induced fish mortali ty.
Enhancing the warmwa ter fi sh habi ta t by providing structures
for holding and rearing habi ta t, ,or increasing spawning areas and
stocking warmwater fish in Milner Reservoir as described in the
Fishery Management Plan, would adequately mi tigate turbine-
induced fish losses. Therefore, CC should finance the
14
See Section 4.2.2.1.2 of the DEIS.
..
Project No. 2899-003 -11-
development of the Mi lner Reservoir warmwater fishery as
described in the Fisheries Management Plan. In addition, CC
should fund stocking of warmwater fish species in the reservoir
in cooperation with the IDFG. Stocking warmwater fish in the
reservoir in cooperation with the IDFG and enhancing the
reservoir habi tat would be consistent wi th the Fisheries
Management Plan. Article 405 requires CC, after consul ta tion
with IDFG, to develop, implement, and finance a warmwater fish
stocking program and a habi tat enhancement plan that is
consistent wi th the Fisheries Management Plan for MilnerReservoi r to mi tiga te the. adverse effects of the project on the
fishery resources.
CC should consul t wi th IDFG and develop a plan to moni tor
the effecti veness of the reservoir enhancement structures and the
fish stocking program. Specifically, CC should determine if
addi tional warmwater fish stocking is necessary to meet the
objecti ves of the Fisheries Management Plan for Milner Reservoir.
The moni toring would also assist in determining the length of
time the structures would remain in place and provide fish
habi tat. We conclude that a five-year moni toring program wouldprovide sufficient information to determine if the mi tigativemeasures are adequate. The monitoring also allows for correcting
those that are not working. Therefore, Article 40G requires CC
to conduct a reservoir fish habitat and fishery study for at
least five years to determine if the fish habitat enhancement
structures have remained in place and are functioning as desired
and to determine if addi tional warmwater fish need to be stocked.
3. Instream Flow
CC proposes to release 58 cfs during the irrigation season
and 150 cfs during the non-irrigation season. However, CC did
not provide a biological rationale for these flow proposals or
for the seasonal di fference in the flows. The DEIS found that 58
cfs would prevent fish movement in the bypassed reach and would
degrade fish food production by increasing channel sedimentation. 15
The proposed 58 cfs minimum flow would provide slightly improved
instream flow condi tions, because it would prevent the extreme
low flow events that occasionally occur.
Operating the project during the non-irrigation season wi th
the proposed 150 cfs minimum flow would significantly reduce the
amount of trout habitat in the 1.G-mile-long bypassed reach
according to conventional instream flow methodologies, would
severely reduce trout recrui tment and use of the bypassed reach
during the non-irrigation season, and would reduce invertebrate
15
See Section 4.2.2.1.1.3.1 of the DEIS.
~..
Project No. 2899-003 -12-
production. 16 Proposed project operation would reduce the
amount of trout habi tat and eliminate spillage over the dam much
of the time and, therefore, preclude trout movement over the dam
to the bypassed reach. Thus, the proposed non-irrigation season
minimum flow would conflict wi th the management direction of the
yield fishery, because trout recrui tment and sui table trouthabi ta t would not be maintained in the bypassed reach.
The DEIS recommended that CC maintain minimum flows of 58
cfs and 1,260 cfs in the irrigation and non-irrigation seasons,
respecti vely, to protect the downstream fishery resources. 17
The DEIS also recommended a minimum flow of 300 cfs in the
irrigation season to partially mitigate the cumulative adverse
impacts to the resident trout and other resources. 18 Since the
DEIS' 300 cfs recommendation to mi tigate cumulative impacts
superceded the 58 cfs minimum flow for fishery resource
protection, the DEIS concluded that minimum flows of 300 cfs in
the irrigation season and 1,260 cfs in the non-irrigation season
were needed. Flows derived by the Tennant Methodology, 19 the
stream resource maintenance flow study, 20 and the minimum flows
recommended in the DEIS to protect the fishery resources in the
bypassed reach during the non-irrigation season range from 720
cfs to 2,190 cfs.
Release of the above flows for fishery protection purposes
during the irrigation season would interfere wi th irrigation and
thus could have a severe impact on the farm-based economy of the
area. Furthermore, the release of the flows recommended for the
non-irrigation season would reduce generation and hence the
revenues necessary to repair Milner Dam. We believe that the
16Id.
17
See Section 4.2.2.1.2 of the DEIS.
18
See Section 5.1.2 of the DEIS.
19
D.L. Tennant, '1916, Instream flow regimes for fish,wi ldl i fe, recreation, and rela ted environmental resources,
Pages 359-373. In Orsborn, J. F., and C. H. Allman, (ed.),
Proceedings of the Specialty Conference on Instream Flow
Needs, Volume I I, American Fisheries Society, Bethesda,
Maryland.
20T. Cochnauer, 1976, Stream Flow Investigation, Project F-9-
R-l, Job I, evaluation of applicability of water surface
profile predictive modeling in reference to stream resource
maintenance flow (SRMF) determinations, Job II, stream
resource maintenance flow determinations on the Snake River,
Idaho Department of Fish and Game, Boise, Idaho, 44 pp.
..
Project No. 2899-003 -13-
need to protect irrigation usage and provide sufficient
generation outweigh the need to protect the fishery resources.
Accordingly, we will not require CC to release the flows
referenced above. However, we are requiring CC, by Article 40;,
to release a target flow of 200 cfs.
The loss of trout habi tat in the non-irrigation season is
offset somewhat by eliminating the extreme low flows that have
occurred during the irrigation season, thus allowing trout to use
the bypassed reach more consistently. A stable flow of 200 cfs
would sl ightly enhance the fishery resources by continually
maintaining a limi ted amount of habi tat that would occasionally
be eliminated by the low flow events. Therefore, 200 cfs wouldprobably maintain sufficient water quali ty to maintain a put-
and-grow trout fishery in the bypassed reach. As just indicated,
Article 407 requires CC to maintain a target flow of 200 cfs
below Milner Dam. 21
The Snake River downstream of the proposed powerhouse would
benefi t from the 200 cfs target flow. Releases from Milner Dam
would prevent -the extreme low flow periods. In addition to the
releases from Milner Dam, the incentive to operate the powerhouse
would provide water to downstream areas that would not typically
have occurred during the irrigation season. Therefore, the
fishery resources downstream of the bypassed reach would benefit
more than those in the bypassed reach.
4. Trout Fishery Enhancement
The primary source of trout to the bypassed reach is
recrui tment from upstream areas. As mentioned above, proposed
operation would reduce spill from Milner Dam and eliminate much
of thi s recrui tment. .
In order to mi tigate for the decreased recrui tment to the
downstream Snake River fishery and the loss of trout habi tat inthe Snake River in the non-irrigation season, CC should insti tute
a put-and-grow trout fishery 22 in the 1.6-mile-long bypassed
reach of the Snake River. CC should consul t wi th IDFG to
determine the sizes -and numbers of trout to stock and to
determine the area or areas in which to stock the trout. CC
should stock the trout in areas that provide easy and safe access
21
The 200 cfs target flow is not a minimum flow, and CC doesnot have to release the flow unless water is available.
22
The Idaho Fisheries Management Plan defines a put-and-grow
fishery as one where the fish are expected to survive and
grow and contribute to the fishery for a extended period oftime.
..
Project No. 2899-003 -14-
for anglers. This would provide a high value recreational
fishery in this area.
Article 408 requires CC to develop and to implement a put-
and-grow trout fishery in the 1.6-mile-long bypassed reach of the
Snake Ri ver. ~e conclude that developing this trout fishery
would mitigate the lost trout habitat in the Snake River
resul ting from reduced flows and would mi tigate the reduced fishrecrui tment to the bypassed reach. Enhancing the trout fishery
in the bypassed reach through hatchery supplementation would not
conflict wi th the management direction for this section of the
Snake River as described in the Fisheries Management Plan.
There is the possibility that the stocked fish would move
downstream wi th the current where they would no longer be
available to the anglers or where they could perish due to
insufficient habitat or poor water quality. Therefore, CC should
conduct a study to determine if the trout move downstream and if
the trout are surviving long enough, depending on water
temperature and DO concentration, to remain available to anglers.
CC should fi Ie annual reports about the survival, growth,
and movement of the trout and how the water quali ty at 200 cfs
affects their survival, growth, and movement. If it is
determined that the trout stocked in the bypassed reach are not
survi ving, are not growing sufficiently, or are moving out
immediately, then CC should consider stocking trout in other
areas of the Snake River such as the head of Milner Reservoirnear Burley, Idaho. In conjunction with this study, the results
from the water quality monitoring required by Article 404,
particularly water temperature and DO, will provide valuable
information to determine if 200 cfs provides conditions conducive
for establishing S year round trout fishery.
We conclude that a five-year moni toring program would
provide sufficient information to determine if the trout stocking
program is successful. If the resul ts indicate that the trout
stocking program i8 not successful, the monitoring allows for
changing the stocking rates, the size and species of trout
stocked, and the stocking location. Article 409 requires. CC to
conduct a five-year trout moni toring study and to file annual
reports on the resul ts of each years studies.
C. Ramping Rate
Rapid alteration of streamflows during project startup would
strand fish in the bypassed reach when submerged areas quickly
drain, because of rapid decreases in the amount of water
avai lable to maintain existing habi tat. To protect the fish and
other aqua tic resources from rapid, project-induced flow
..
Project No. 2899-003 -15-
reductions, the DElS recommended that CC limit the maximum rate
of change in the flow in the Snake River. 23
The rampi ng rate of one foot per hour recommended to protect
whi tewater boaters would also provide a measure of protection for
fish and invertebrates inhabi ting the bypassed reach. ~e bel ievetha t a one foot per hour ramping rate would adequately protect
the fishery resources of the bypassed reach during project
startup. Article 410 requires CC to implement a ramping rate of
one foot per hour and to determine if this rate would adequately
prevent stranding of fish and would protect the recreationistsusing the bypassed reach and downstream areas based on a si te
specific study. CC should consider structural measures during
the design of the powerhouse(s) to facilitate implementing theramping rate.
D. Raptor Protection
Transmission lines, particularly those in open, relatively
treeless areas wi th few perching si tes, may pose an electrocutionhazard to raptors and other large birds. 24 Collisions wi th the
lines may be an additional source of mortality. The U. S.
Department of the Interior recommends that the project
transmission line be designed and constructed to minimize these
sources of avian mortali ty. CC has agreed to use an appropriate
design to prevent electrocution of raptors. To ensure theprotection of raptors and other large birds in the project area,
Article 411 requires CC, after consul tation with the fish and
wildlife agencies, to design and construct the transmission line
according to accepted guidelines for raptor protection.
E. Revegetation of Disturbed Upland Habi tat
During construction of the proposed project, approximately
22 acres of upland shrub-grassland habitat would be
disturbed. 25 CC proposes to reseed the disturbed areas with amixture of grasses and na ti ve shrubs, but does not provide a
detailed revegetation plan. As discussed in the DEIS, CC should
develop and implement a detailed plan to revegetate disturbed
upland areas, wi th the goal of establishing high quali ty wildlifehabi ta t. 26 The plan, required by Article 412, should be
developed in consultation with the appropriate agencies, and
should contain, at a minimum, a description of plant species to .
23
See Section 4.2.2.1.2 of the DElS.
24
See Section 4.3.1.1 of the DETS.
25ld.
26
See generally Section 4.3 of the DElS.
..
Project ~o. 2899-003 -16-
be used, an implementation schedule, a description of planting
methods, fertilization and irrigation requirements, and a
mon i toring program.
F. Wildlife Habitat Enhancement Structures
To enhance the project area for wildlife, CC proposes to:( 1) construct two osprey nesting platforms in Hi lner reservo i r;
(2) develop arti ficial burrows for use by burrowing owls; and (3)
construct an unspecified number of nesting structures for
Canada
geese in the project vicini ty. CC does not, howev~r, provide
final designs, locations, and moni tor ing plans for these
enhancement measures. The proposed measures, if successfully
implemented, could enhance wildlife use of the project area.
Therefore, Article 413 requires CC to provide a detailed plan for
providing the proposed wildlife enhancement measures, including,
at a minimum: (1) the final design of the goose nesting
structures, osprey-nesting platforms, and burrowing owl burrows;
(2) the location of the enhancement features; (3) a schedule for
prov iding the enhancement fea lures; and (4) a description of a
program to monitor and maintain the enhancement features.
G. Replacement of Riparian Wetlands and Upland Habitat
Approximately 6.1 acres of riparian wetlands will be
eliminated by project development. 27 CC has identified four
si tes totalling 18.2 acres along the project canal where wetlands
could be created. Of those 18.2 acres, CC proposes to create
10.2 acres to satisfy the wildlife agencies' recommended 1.0 to
1.5 loss to replacement ratio for riparian wetlands.
Construction would also result in the permanent loss of 26.6
acres of upland shrub-grassland, including 2.0 acres of BLM's
isolated tract No ~ 23. The IDFG recommends that 26.6 acres of
upland habitat, off-site if necessary, be developed and donated
to IDFG as mitigation for upland losses. CC has agreed to
replace lost upland habi tat according to accepted IDFGguidelines.
Rather than develop another mi tiga ti ve plan using upland
habi tat, possibly at an off-site location, we believe that it
would be more beneficial to wildlife, as well as more practical,
to provide addi tional riparian habi tat in the immediate project
area. Sufficient mi tigation for both upland -and wetland losseswould be provided by adding 5.3 acres of riparian wetland habi tat
to the 18.2 acres of potential replacement habitat already
identified by CC. This total of 23.5 acres of riparian wetland
replacement habi tat would include 13.3 acres for replacing 26.6
acres of lost upland habi tat. This 1.0 for 2.0 ratio seems
2;
See Section 4.3.1.1 of the DEIS.
..
Project No. 2899-003 -17 -
reasonable considering the much greater wildlife value ofr i par ian we tlands, the wetlands compara ti ve scarci ty in the
project area, and the high priority given to the protection ofwetlands compared to upland habi ta t.
IDFG agrees with this approach for replacing upland habitat
with riparian habitat 28 CC should have little difficultyproviding the addi tional 5.3 acres by ei ther enlarging the four
si tes already identified or by developing addi tional nearby si tes
along the canals or adjacent to Milner Reservoir. Article ~ 14
requi res CC to develop and maintain 23.5 acres of riparian
wetland habi tat to replace riparian wetlands and upland habi tats
lost to project development.
H. Socio-economic Considerations
The operation of the 85-year-old Milner Dam is essential forthe diversion of Snake River flows to the three gravi ty canals
that provide water to irrigate approximately 440,000 acres of
agricul tural land in south-central Idaho. 29 1 f Milner Dam were
to fail during the yearly irrigation season, from April 1 through
October 31, area farms that rely on the continuous delivery of
water from the three canals would experience a major crop
failure, because they would not be able to develop al ternative
irrigation systems in time to save their cultivated acreage.
Based on 1982 data collected by the Census of Agriculture,
irrigated and harvested cropland in Twin Falls and Jerome
Counties in Idaho produced agricultural sales of $270 per acre.
Thus, the loss of irrigation water for 440,000 acres would result
in a $118,800,000 revenue loss for the area's farm sector. Food
processing establishments in south central Idaho, such as
Universal Frozen Foods, Ore-Ida Foods, and Amalgamated Sugar
Company, also would be adversely affected, since they would be
unlikely to locate al ternati ve economic sources of potatoes,
beans, and sugar beets. Consequently, these companies would
decrease their production and local employment. Moreover,
employment cutbacks by the area's farms and food processingestablishments would cause subsequent reductions 1n spending at
area retail trade and service establishments, wi th a commensurate
decline in their sales, employment, and profi ts.
I. Whitewater for Boaters
1. Flows
28
Personal communication, Dale Turnipseed, IDFG, Jerome,
Idaho, November 28, 1988.
29
Twin Fal Is Canal Company and North S ide Canal Company, Ltd.,
Response to DEIS, March 30, 1988.
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Project ~o. 2899-003 -18-
In the 1.6-mile-long reach of the Snake River immediately
below Ni Iner Dam, expert whi tewa ter boaters run continuous Cl~ss
V rapids during high flows that occur in early spring and late
fall. In 1986, about 200 visitor days of whitewater boatingoccurred in the Milner reach. Much of this use occurs in April
and May when the weather is relatively warm and spring runoff is
at its peak. The vast majority of boating use consists of
kayaking; however, some rafting does occur. Boaters typically
put in at a bridge located 0.5 miles downstream of Milner Dam and
take out ei ther 1.1 miles below the bridge where the Class V
rapids end, or continue 7.0 miles downstream to a take-out point
above Star Falls. Most boaters, however, choose to take out at
the first location, since the stretch of river below this point
is relatively calm, wi th only a few widely-spaced rapids.
Since the Milner reach has only become known to whi tewater
boa ters wi thin the past few years, the. minimum flow needed to
maintain the unique Class V experience has not been firmly
established, al though boaters generally prefer flows between
5,000 and 15,000 cfs. According to the BLM, at flows below í, 500
cfs, the reach is not runnable by rafts, but can be successfully
run at flows of 3,000 cfs, or perhaps below, in a kayak. 30 The
Class V experience is apparently completely changed at flows
below 3,000 cfs, because many rocks are exposed, creating a
whitewater run that can be negotlated only by kayakers skilled at
technical maneuvering. 31
Because of the short length of the Mi lner reach, the
whi tewater experience found at certain flows at the Milner
Project can be found in greater amounts on other sections of the
Snake River and other Idaho rivers. For instance, the North Fork
of the Payette River, near Boise, Idaho, provides several miles
of continuous Class V rapids. In addi tion, the 14-mile Murtaugh
reach of the Snake River, between Star Falls and Twin Falls
Reservoir, provides a day-long Class IV-to-V whitewater run which
has been compared favorably to the Colorado River. The Milner
reach does not become a unique whi tewater resource until very
high flows occur (generally 10,000 cfs or above). The large
volume of water at these high flows, concentrated in the narrow
30
Personal communication, Jeff Jarvis, Outdoor Recreation
Planner, BLM, Boise, Idaho, December 1, 1988; letter from
Todd Graeff, Director, Idaho Department of Parks and
Recreation, Boise, Idaho, October 10, 1985~
31
Letter from Delmar D. Vail, State Director, BLM, Boise,
Idaho, January 20, 1987; personal communication, J err
Jarvis, Outdoor Recreation Planner, BLM, Boise, Idaho,
December 1, 1988.
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Project No. 2899-003 -19-
gorge below Milner Dam, creates Class V waves that are
internationally known among expert kayakers.
The DEIS recommended that bypass flows between 5,000 and
15,000 cfs, when available, be released on as many as 10 weekend
days during May and June for whi tewater boaters. 32 Such flows
would provide opportuni ties for expert kayakers to run the 1.6-
mile-long Class V rapids below Milner Dam. Based on comments
recei ved on the DEIS from the IDWR and CC, and information
gathered by the staff during a project site visit and public
meetings held in August 1988, we agree that providing these flows
at times when such flows are not made available by normal
regulation of the storage and release patterns governing flows at
Mi lner Dam would not be feasible.
Between April and October all water at Milner Dam
appropriated for use by CC is diverted for irrigation. Providing
flows between 5,000 and 15,000 cfs in May and June would require
the entire irrigation system for the North Side Canal Company and
Twin Falls Canal Company to be readjusted after each flow
release. Thi s would adversely affect wa ter delivery to crops in
the area. However, when flows exceed system requirements by the
magni tude that would allow customary boating use below Milner
Dam, such flows could be maintained when available to allow
boaters to continue using this unique resource.
Table 1 below shows the occurrence of various whi tewater
flows both wi th 'and without project operation based on IDWR 56-
year flow record for the Milner reach. Assuming that the minimum
flow needed to boat the Milner reach is approximately 2,000 cfs,
whi tewater boating opportuni ties at Milner occur approximately 96
days per year during the boating season. However, project
operation would reduee these opportuni ties by 60 percent, leaving
approximately 38 days a year for whitewater boating.
Table 1. Average percent of Occurrence of Flows Below
Milner Dam for March, April, May, June, October, and
November, wi th average number of days at flow orgreater.
Flow
at least
6-monthpercentage Number
of days
Withproject
6-month projectpercentage
Wi thproject
number
of days
32
See Section 4.5.1.2 of the DEIS.
..
Project No.2899-003 -20-
(cfs)of occurrence per year of occurrence per year
15,000 2.9 5.3 0.5 0.9
14,000 4. ;8.6 0.8 o . 9
13, 000 5. 1 9.3 1. 3 2.4
12,000 6.5 11.9 1. 9 3.5
11, 000 8.4 15.4 2.9 5.3
10, 000 9.5 1; .4 4. ï 8.6
9, 000 10.6 19.4 5. 1 9.3
8, 000 12.9 23.6 6.5 11.9
7, 000 17. a 31.1 8.4 15.4
6, 000 21.0 38.4 9.5 17 .4
5, 000 24. a 43.9 10.6 19.4
4, 000 33.6 61. 5 12.9 23.6
3,000 38.4 iO.3 17. a 31.1
2, 000 52.8 96.6 21. a 38.4
Al though .project operation would have an adverse effect on
the total continuum of whi tewater boating opportuni ties offered
at Milner, from low flow technical kayaking to high flow Class V
boating, it is important to note the impacts that projectoperation would have on the unique high flows (10, 000 cfs and
above) . Flows of 10, 000 cfs and above occur on the average about1 Î. 4 days. Wi th project operation, the occurrence of these flows
would be reduced by almost half (49 percent), leaving about 8.6
days for boating at high flows. This represents a loss toboaters of approximately eight days (8.8 days).
Since these rare high flows are what make the Milner reachimportant to whi tewa ter boaters, these flows should be preserved.This could be accomplished by requiring CC to. stop operating the
project on eight days when flows at 10,000 cfs or above are
available. To ensure that these flows are available
when boaters use the reach, they should be released during April
and May for eight hours during daylight hours. Flows below
10,000 cfs, however, would be reduced during project operation.To help roi tigate these impacts, when flow conditions availablemake it impossible for CC to meet thei r obI igation of providing
eight days of flows of 10,000 cfs or more, they should release
flows between 4, 000 and 10, 000 cfs until their obligation is met.
This would reduce project impacts on mid-range flows and ensure
that whi tewater flows would be available during years when high
flows do not occur.
Article 415 requires CC, upon starting project operation,
and in consultation with the appropriate agencies and whitewater
boaters, to stop operating the project for eight hours on eight
days in April and May when flows of 10,000 cfs or above occur.
..
Project ~o. 2899-003 -21-
Article 415 also requires CC to release flo~s between 4,000 and
10,000 cfs, when available, to meet its eight-day obligation when
eight days of flows of 10,000 cfs or above do not occur during
Apr i 1 and May.
Ceasing project operation at the above-mentioned times would
resul t in a yearly loss to irrigators of $8,400 in revenues
generated by the project. To determine whether a better
arrangement of flow could be provided to more closely match
whi tewater boater needs and to reduce the impact on project
generation, Article 418 requires CC to conduct a study in
consultation with the Idaho Whitewater Association (IWA), the
National Park Service (NPS), BLM, the U.S. Bureau of Reclamation
(BR), IDWR, and the Idaho Department of Parks and Recreation
(IDPR). Since boaters may not spend an entire day on the river,
it is possible that higher whi tewater flows could be maintained
in the bypassed reach for less than eight hours according to
boaters needs as long as CC meet their obligation for providing
the equivalent of eight eight-hour days of project shutdown at
fl~ws of 10,000 cfs or above.
To protect downstream recreationists from sudden increases
in water level and streamflow, water levels in the project
bypassed reach should not increase by more than one fobt per hour
when providing releases for whi tewater boating. In addi tion, a
warning system must be implemented in order to alert
recreationists of hazardous si tuation created by increases in
flow. A ramping rate and a warning system would allow fishermen
and other recreationists below the dam to have enough time to
leave the area before water levels and velQci ties become unsafe.
Article 410 requires CC to file for Commission approval a plan
for implementing ramping rates that would ensure the protection
of fish resources and downstream recreationists. Article 416
requires CC to file a plan for Commission approval to warn
recreationists of increases in water level and streamflow
downstream of the dam.
2. Communication Network for Whi tewater Boaters
In their March 30, 1988 response to the DEIS, CC proposed to
dev~lop a communication network that would quickly inform
recreationists of anticipated flow condi tionS below Milner Dam.
Under existing condi tions, high flows occur rarely and are
unpredictable for boaters. A communication network would
partially mi tigate for the loss of whi tewater boating days caused
by project operation by giving boaters more opportunity to plan
boating trips to coincide wi th desirable flows. Article 418
requires CC, after consultation with BR, IDWR, IDPR, BLM, ~PS,
and IWA, to file for Commission approval a plan to provide a
communication network to inform whi tewater boaters of availablewhitewater flows.
..
Project No. 2899-003 -22-
J. Fishing Access to the Bypassed Reach
We bel ieve that CC should study the feasibility of stocking
the project bypassed reach with trout to provide new
opportuni ties for fishing at the project site. A program toinform the public of fishing opportunities at the project si te
would be needed since presently the Milner reach receives minimal
fishing use. Also, access to be provided at the powerhouse and
at the bridge below Milner Dam could attract addi tional fishing
use to the project bypassed reach. To ensure that anglers are
adequately informed of fishing opportuni ties in the bypassed
reach, Article 408 requires CC to file for Commission approval a
plan that includes notification of anglers of fishing
opportuni ties.
K. Recreation Facili ties
CC ini tially proposed to construct the following recreational
facili ties: (1) a parking area to accommodate 10 vehicles at the
powerhouse; (2) kayaker access at the powerhouse; and (3) a boat
dock near the existing boat dock at the BLM's Bicentennial Si te
on Milner Reservoir. In their March 30, 1988 filing, however, CC
proposed for consideration additional facili ties. These include:
(1) an interpretive center with associated picnic facilities at
Qr near Milner Dam, or an alternate location; (2) an additional
water ski dock or docks in Milner Reservoir near Milner Dam; (3)
further development of public facili ties at the BLM Wildlife
Habi ta t Management area; or (4) other better sui ted publicfaci li ties selected as a resul t of the consultation process.
Since the co~struction of the project would provide an
opportuni ty to enhance recreation near Milner Dam, someaddi tional facili ties should be provided to allow access for
whi tewater boaters and fishermen. Other facili ties mentioned
above, however, may not be needed at this time.
Article 419 requires CC to file for Commission approval a
recrea tion plan prepared in consul ta tion with the IDPR, BLM, ~PS,
and IWA, that includes, but is not limited to: (1) provisions
for a kayaker put-in area at the bridge below Milner Dam and a
take-out area below the powerhouse wi th parking facili ties; (2)
tailwater fishing facili ties; (3) design drawings of the proposedfaci I i ties; (4) a construction schedule for the facili ties; (5) a
plan for moni toring recreational use in the project area to
determine if addi tional recreational facili ties will be needed in
the future; and (6) documentation of agency consul tation.
Article 419 also requires that CC, in designing these facilities,consider providing the whi tewater take-out area below the f ina!
Class V rapid below the powerhouse area and away from tailwater
..
Project No. 2899-003 -23-
fishing facilities. This would avoid boater interference with
fishermen and allow boaters to run an additional Class V rapid.
L. Visual Resource Mitigation
Milner Dam and its associated proposed facili ties are
visible to visitors to the dam site interpretive area as well as
froID water users on the river and reservoi r. The proposed dam
and canal modifications would blend with the existing landscape.
The power generating facili ties would be located in an area
out of view of Milner Dam and in a visually natural settingwi thin the canyon. The naturalness of the canyon 'walls is a
great asset that should be maintained throughout the installation
and operation of the proposed project. The proposed access road
to the powerhouse si te would cross steep canyon side slopes and
its construction would entail earth and rock cuts and fills that
would create a linear element in the natural appearing landscape.
The proposed penstock would cross over the canyon rim and drop
nearly vertical to the powerhouse at the river's edge. This
large pipe, wIth its smooth surfaces, would reflect light and
contrast in color, texture, and line, wi th the existing natural
appearing landscape. The proposed powerhouse, substation,
transmission line, gantry crane, and tailrace would also contrast
wi th the natural appearing landscape because of their geometric
forms. In particular, the transmission line from the powerhouse
to the forebay would create a linear element contrasting wi th thecanyon walls.
CC should study the feasibility of placing the transmission
line either underground or in a conduit attached to the penstock
from the powerhouse to the forebay area. Therefore, to ensure
that the proposed. fa£ili ties are designed to minimize visual
impacts, Article 420 requires CC to submi t final construction
plans and specifications prior to the commencement of anyproject-related land-disturbing acti vi ties.
M. Cui tural Resources
Three historic si tes listed or considered eligible for
inclusion in the National Register of Historic Places are located
within or near the impact areas of the project. The listed site
is Mi Iner Dam. The el igi ble sites are the South Side Main Canal
and Milner Townsi te. Six archeological si tes have also been
identified in the project vicinity. Based on a review of the
archeological report for the project, and a site visit to the
project area, the Idaho State Historic Preservation Officer
(SHPO) has stated that the sites either are not eligible for
inclusion in the National Register or lie outside the area of
..
Project No. 2899-003 -24-
potential impacts. 33 Project construction and rehabilitation
of the Dam would require modifications to the dam and the canal.
No construction or rehabili tation work would occur in the area of
the Towns i te.
CC has filed a cui tural resources management plan, prepared
in cooperation with the SHPO, to mitigate the project's effects
on the dam and the canal and to ensure that the townsi te would
not be affected by construction or rehabili tation work. The plan
proposes to document in photographs, drawings, and in a report,
according to the standards of the Historic American Engineering
Record (HAER), the portions of the dam and the canal that would
be al tered by the project. The plan proposes to fence portions
of the townsite and to prohibit construction activities in the
vicinity of the townsite to ensure that no impacts to this site
would occur. 34
The SHPO reviewed the plan and stated the following: (1) the
plan minimizes impacts to the dam and the canal and ensures that
the townsite ~ould not be impacted; (2) rehabilitation work would
not affect the original historical fabric of the dam; (3) this
work would not significantly affect the appearance of the dam;
and (4) the plan satisfies the historic preservation requirementsfor consul tation wi th the Advisory Council on Historic
Preservation, as required by the National Historic Preservation
Act. 35
The U. S. Department of the Interior (Interior) also reviewed
the cuI tural resources management plan and the cultural resources
documentation contained in the application for license, and
generally concurs wi th the plan and the findings of the SHPO.
Interior recommends eertain revisions to the plan and the
cuI tural resources documentation to ensure that the plan is
implemented in a satisfactory manner and that the documentation
is complete. Speci fically, Interior recommends these actions:
33
Letters from Dr. Thomas Green, State Archeologist, Idaho
State Historical Society, Boise, Idaho, May 17, 1984; and
John A. Rosholt, Attorney for Twin Falls Canal Company and
North S ide Canal Company, Ltd., Nelson, ~osholt, Robertson,
Tolman & Tucker, Twin Falls, Idaho, February 11, 1986.
34
Let tel' from John A. Roshol t, Attorney for Twin Falls Canal
Company and North Side Canal Company, Ltd., Nelson, Rosholt,
Robertson, Tolman & Tucker, Twin Falls, Idaho, February 11,
1986.
35
Letter from Dr. Merle W. Wells, State Historic Preservation
Officer, Idaho SLate Historical Society, Boise, Idaho,
February 4, 1986.
..
Project No. 2899-003 -25-
(1) completing documentation of the dam, canal, and townsite in
accordance with National Register eligibility criteria before
determining the specific HAER documentation or avoidance
procedures that should be implemented, to ensure that
documentation and procedures are directed at the significant
historical attributes of these sites; (2) surveying the to~nsiteto precisely determine the boundaries of the si te, to ensure that
the site is not impacted; (3) avoiding the use of fencing at the
townsi te so as not to draw the attention of artifact collectors
or vandals; and (4) providing further documentation on one
archeolog ical site (1 0-TF-641) to clearly establ ish that the site
is not eligible for inclusion in the National Register. 36
To ensure that the dam, canal, and towns i te are documentedand protected in an adequate manner and that the cul tural
resources documentation of si te 10-TF-461 is complete, CC shouldconsul t wi th the SHPO, and also the HAER in the case of the darn
and canal, to determine the speci fic procedures that should be
implemented, and should implement the plan wi th Interior's
recommended revisions before beginning land-disturbing or land-clearing acti ýi ties that would impact these si tes. The
documentation should be filed in a report or in separate reports,
if the documentation or avoidance procedures are undertaken at
different times, and filed with the Commission for approval. The
reports must contain a letter from the SHPO accepting the
documentation and procedures for avoiding impacts. In the case
of the darn and the canal, letters from the HAER accepting the
documentation must also be included. No rehabilitation work orother construction work at the dam or canal or wi thin the
vicini ty of the townsi te and the archeological si te may commence
until CC are notified by the Commission that the filing has been
approved. Article 421 requires implementation of the revisedplan.
The project has the potential to impact archeological and
historic sites not previously identified at the project. Buried
si tes may be encountered during construction. Also, project
facilities may be relocated or added to the project at some
future date in areas not previously inventoried for sites. Any
such archeological or historic si tes should be afforded
protection in accordance wi th the National Historic Preservation
Act. Article 422 requires the implementation of cui tural
resources protection measures to avoid or minimize impacts to any
such sites that may be impacted by the project. Article 421
36
Letters from Bruce Blanchard, Director, EnvironmentalRev iew, Department of the Inter ior, Washington, D. C. ,
December lî, 1985; and Helene Dunbar, Acting Chief,Interagency Archeological Serv ices, Nat i onal Park Service,San Franc isco, Cal i fornia, February 4, 1986.
..
Project No. 2899-003 -26-
requires CC to finalize and implement its cultural resources
management plan in a manner acceptable to the Advisory Council on
Historic Preservation.
N. Cumula ti ve Impacts
Cumulati ve impacts of the four proposed projects, including
the Milner Project No. 2899, will be fully assessed in the
Supplement and FEIS to take into consideration any changes that
occur between the DEIS and the FEIS in configuration, operation,and mi t iga ti ve measures associated wi th the other three projects.
Standard Articles 15 and 17 of the license 37 reserve sufficient
authori ty for the Commi ss ion to order reasonable modi fica tions of
the project structures and operations to take into account
recommendations made in accordance wi th the NEPA process.
iv. Recommendations of Federal and State Fish and WildlifeAgencies
Section 10(j) of the FPA, as amended by the Electric
Consumers Protection Act of 1986 (ECPA), Pub. L. No. 99-495,
requires the Commission to include license conditions, based on
recommendations of federal and state fish and wildlife agencies,
for the protection, mitigation, and enhancement of fish and
wildlife. The concerns raised by the federal and state fish andwi ldli fe agencies have been fully addressed in the DElS, and the
condi tions contained in this license are consistent wi th the
recommendations 'made by those agencies.
V. Comprehensive Plans
Section 10(a)(2)(A) of the FPA, as amended by ECPA, requires
the Commission to .consider the extent to which a project is
consistent wi th federal or state comprehènsive plans (where theyex i st) for improving, developing, or conserving a waterway or
waterways affected by the project. The Commission's interpreta-
tion of "comprehensive plan" under Section 10(a)(2)(A) 38 was
revised all rehearing by order issued April 27, 1988. 39 On
rehearing, the Commission instructed the Director, Office of
Hydropower Licensing, to request the state and federal agencies
to file plans they believe meet the revised guidelines.
37See Ordering Paragraph (D) hereof.
38
Order No. 481, 52 Fed. Reg. 39,905 (October 26, 1987), III
FERC Stats. & Regs. 30,773 (1987).
39Order No. 481-A, 43 FERC 61,120 (April 27, 1988).
..
Project ~o. 2899-003 -2; -
The Commission reviewed five plans that address various
aspects of waterway management in relation to the proposed
project. 40 With one exception, the proposed project, as
conditioned herein, is consistent with those plans.
The Idaho State Water Plan (ISWP) is a Section 10(a)(2)(A)
comprehensi ve plan. In its September 25, 1985 motion to
intervene in this proceeding, IDWR indicated that the ISWP
specifies that the use of water by hydroelectric projects must be
subordinated to future upstream depletionary uses and requested
that such a provision be included in any license issued for
Project No. 2899. IDWR did not, however, provide any information
regarding the timing and extent of those future depletionary uses
or how such uses would affect the operation of Project No. 2899.
As we explained in Horseshoe Bend Hydroelectric Company, 41
in determining whether, and under what conditions, a license
should issue, we are required by the comprehensive planning
provision of Section 10(a) (1) of the FPA, 16 U.S.C.803 (a) ( 1 ), to consider and balance all aspects of the publ ic
interest, including the need to protect environmental and
irrigation interests and the need for the power to be produced by
the project. In so doing, we prescribe condi tions that we
believe will provide the appropriate level of energy generation
and protection for the environment and irrigation and will not
issue a license if the condi tions we deem necessary to protect
environmental and other resources would render a projectfinancially infeasible.
Inclusion in the license of the unsupported open-ended water
subordination clause requested by IDWR would in essence vest in
IDWR, rather than the Commission, ultimate control over the
operation and conti need viabili ty of the project. In other
words, the subordination clause, which would reserve to IDWR the
right to permi t unlimi ted diversion upstream of the project,
could nullify the balance struck by us under the comprehensiveplanning provisions of Section 10 (a) ( 1) of the FPA in issuing the
license. Consequently, inclusion of the open-ended water
subordination clause in the license as requested by IDWR would
interfere with the ~xercise of our comprehensive planning
40
Idaho Statewide Comprehensive Outdoor Recreation Plan, 1983,
IDPR; Idaho State Water Plan, 1986, IDWR; Idaho Fisheries
Management Plan, 1986, IDFG; and Northwest Conservation and
Electric Power Plan, 1986; and Columbia River Basin Fish and
Wildlife Program, 1987.
4142 FERC 61,072 (1988), appeal pending sub nom. Idaho
Power Company v. FERC, No. 88-1078 (D.C. Cir. filed
Feb. 3, 1988).
..
Project No. 2899-003 -28-
responsibilities under Section 10(a) (1) of the FPA and thus would
be inconsistent wi th the scheme of regulation established by the
FPA, which vests in the Commission the exclusive authority to
determine whether, and under what condi tions, a license should
issue. 42
In light of the above, we will not add the requested open-
ended subordination clause to the license for Project No. 2899.
However, as we explained in Horseshoe Bend, should IDWR in the
future determine that it would be desirable for CC to reduce
their use of water for generation to accomodate a specific future
upstream water use, IDWR can peti tion the Commission to have us
exercise our reserved authority under Standard Article 12 of the
license to require such a reduction. We will provide CC wi th
notice of the request and an opportuni ty to respond and will act
on the request after considering all supporting documents and
information submi t ted by IDWR and CC.
The proposed project is otherwise consistent with the iSWP.
The ISWP provides for a zero minimum flow below Milner Dam. The
license as condi tioned herein is consistent with the zero minimum
flow provision of the iSWP, since the license would not require
that minimum flows be provided below Milner Dam. Instead, it
requires CC to provide any addi tional water needed to meet the
environmentally-desirable target flows by leasing water that is
in excess of irrigation requirements from the Water Bank, but
only if avai lable, and in accordance wi th the rules of the WaterBank operation. .
The Columbia River Basin Fish and Wildlife Program
(Program), developed by the Northwest Power Planning Council
(Council) to protect, mi tigate, and enhance fish and wildliferesources associated- wi th the development and operation of
hydroelectric projects wi thin the Columbia River Basin is a
Section 10(a) (2) (A) comprehensive plan. 43 Responsible federal
agencies are required to provide equi table treatment for fish and
wildlife resources, consistent wi th the other purposes for which
hydropower is developed and to take into account to the fullest
extent practicable the Program.
The Program directs agencies to consult wi th federal and
state fish and wildlife agencies, appropriate Indian Tribes, and
the Council during the study, design, construction, and operation
of any hydroelectric development in the Basin. At the time the
applica tion for Project No. 2988. was filed, the Commission's
42
See
152
43
See
First Iowa Hydro-Electric Coop. v. FPC, 328 u.S.
(1946).
43 FERC 61,120 (1988).
..
Project No. 2899-003 -29-
regulations required applicants to ini tiate prefiling
consultation with the appropriate federal and state fish and
wildlife agencies and the Tribes and provided these groups with
postfiling opportunities to review and to comment on the
applica lion. This consul tation process has occurred.
The Program states that authorization of new hydroelectric
projects should include condi tions of development that wouldmi tiga te the impacts of the project on fish and wildli feresources. The relevant federal and state fish and wildlife
agencies have reviewed and commented on the application. In
addi tion, this license provides for mi tiga ti ve measures to
protect and enhance fish and wildlife resources and is thereforeconsistent wi th Section 1200 of the Program. Further, Article
423 of this license reserves to the Commission the authori ty to
require future al terations in project structures and operation in
order to take into account to the fullest extent practicable the
applicable provisions of the Program.
VI. Project Economics and Need for Power
Commission studies show that the proposed project, operating
under its proposed mi tigation requirements, would produce
approximately 144,300 MWh of energy annually at a levelized cost
of about 61.5 mills/kWh. When compared to the levelized cost of
alternative energy in the region of about 85 mills/kWh, the
leveli zed net annual benefits of the project power would be
approximately $3.4 million. CC's levelized revenues under the
terms of their power sales contract are expected to be about
$452,000 annually, which would be a significant contribution to
their projected financing obligation for the Milner Damrehabili tation.
The project is financially feasible, because CC have
executed a contract for the sale of the project power which
obligates the power purchaser to pay the total costs plus two
mi 1 Is/kWh for the project generation, to be escalated by 20percent every fi ve years.
As discussed in the attached S&DA, a need for power could
exist in the region any time from the early 1990s to late 1990s,
and that the Hi lner Project could be useful in meeting a small
part of that need for power.
VII. Summary of Findings
The design of this project is consistent wi th the
engineering standards governing dam safety. The project will be
safe if constructed, operated, and maintained in accordance wi th
the requirements of this license. Analysis of related issues is
provided in the S&DA attached to this order.
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Project No. 2899-003 -30-
As discussed previously and in the attached S&DA, the 200crs target flow required by Article 40ï would: (1) not
jeopardize the feasibility of the project development; (2)
provide flows below Milner Dam without sacrificing irrigationwa ter requi remen ts; and (3) reduce CC' s annual power revenues,
which will be used to help offset the cost of the Milner Dam
rehabilitation, by only $13,300 (less than four percent). Thus,
the requirement to lease water in excess of irrigation
requirements to meet mi tiga tion flow requirements is reasonable,
because water is projected to be avai lable for purchase from the
~ater Bank at a reasonable price that would not eliminate the
economic benefi ts of the project or jeopardize CC' s abili ty to
secure financing for the project. Addi tionally, the target flow
may be necessary for the maintenance of a marginal cold-water
fi shery in the river reach below Mi lner Dam.
Based on our independent analysi s, we conclude that the
Milner Project No. 2899 as conditioned herein would not conflictwi th any planned or authorized development and would be best
adapted to comprehensive development of the waterway for the
benef icial publ ic uses speci fied in Sections 4 (e) and 10 (a) ( 1) of
the FPA.
The Commission orders:
(A) This i icense is issued to the Twin Falls Canal Company
and the North Side Canal Company, Ltd. (licensees), for a period
of 50 years, effective the first day of the month in which this
order is issued, to construct, operate, and maintain the Milner
Hydroelectric Project No. 2899. This license is subject to the
terms and condi tions of the FPA, which is incorporated byreference as part. of- this license, and subject to the regulations
the Commission issues under the provisions of the FPA.
(B) The project consists of:
( 1) All lands, to the extent of the licensees' interes ts in
those lands, enclose~ by the project boundary shown by Exhibi t G:
Exhi bi t G-FERC No.2899-Showing
General Map 1 13
Project Boundary Map 2 14
Project Boundary Map 3 15
Project Boundary Map 4 16
..
Project No. 2899-003 -31-
Project Boundary Map 5 17
( 2 ) Project works cons i sting of: (a) the exis ting Mi lner
Darn, constructed wi th a trapezoidal-shaped rockfill section at
elevation 4,138 feet, the north embankment with a crest length of
480 feet, the middle embankment wi th a crest length of 404 feet,
and the south embankment with a crest length of 462 feet,
proposed 15-foot-wide rockfill berms on the downstream slope of
the darn, eleven 12-foot-high, 30-foot-wide radial gates proposed
for the southern island, and an ungated emergency spillway on the
northern island; (b) the exi sting 1,1 OO-acre reservoir wi th a
gross storage capacity of 26,000 acre-feet at an elevation of
4,130.05 feet; (c) a canal control structure, consisting of six
manually-operated gates, 12-feet-wide by 15-feet-high, and one
hydraulically operated bascule gate, 24-feet-long by 11-feet-
high; (d) new ~toplog slots, replacing the existing headworks;
(e) a 6, 500-foot-long, earth and riprap-lined excavated rock
canal, modified to increase the canal capaci ty from 3,200 cfs to
7,000 cfs; (f) an existing bridge on the Twin Falls Main Canal,
raised to an elevation of 4,137.5 feet and lengthened by 60 feet;
(g) a new concrete wasteway, providing a water passageway through
the right canal embankment of the Twin Falls Main Canal, having a
39-foot-long, 10. 5-foot-high, hydraulically operated bascule
ga te; (h) a fore bay , having a maximum capaci ty of 4,000 cfs; (i)
an intake structure at the end of the forebay, consisting ofsteel trashracks and a 14-foot-wide, 17 -foot-high, cable-
operated, fixed-wheel gate; (j) a 17 -foot-diameter, 385-foot-
long steel penstock; (k) an 89-foot-long, 56-foot-wide, 83-foot-
deep, semi-outdoor, reinforced concrete powerhouse, containing a
single generating unit with a rated capacity of 43.65 megawatts,
operating under a head of 151.6 feet; (1) a 170-foot-long
tailrace; (m) a 2.30Q-foot-long access road; (n) a 1.4-mile-
long, 138-kilovol t transmission line, tying into the existing
Milner substation; (0) 600 feet of river bottom excavation; and
(p) appurtenant facilities.
The project works generally described above are more
speci fically shown ,and described by those portions of Exhibi ts A
and F recommended for approval in the S&DA.
(3) All of the structures, fixtures, equipment, or
facili ties used to operate or maintain the project and located
wi thin the project boundary, all portable property that may be
employed in connection with the project and located within or
outside the project boundary, and all riparian or other rights
that are necessary or appropriate in the operation or maintenance
of the project.
(e) The Exhibit G described above and those sections of
Exhibits A and F recommended for approval in the S&DA areapproved and made part of the 1 icense.
..
Project ~o. 2899-003 -32-
(D) Th i s license is subject to the articles set forth in
Form L-2 (October 19î5), entitled "Terms and Conditions of
License for Unconstructed Major Project Affecting Lands of theVni ted States, ,. except Article 20, and the following addi tionalarticles:
Article 201. The licensees shall pay the United States the
following annual charges, effective the first day of the
month in which this license is issued.
(a) For the purpose of reimbursing the Uni ted States for
the cost of administration of Part I of the FPA, a reasonable
amount, as determined in accordance wi th the provisions of the
Commi ss ion's regulations in effect from time to time. The
authorized installed capaci ty for that purpose is 58,200
horsepower.
(b) For the purpose of recompensing the United States for
the use, occupancy, and enjoyment of its lands, other than for
transmission tine right-of-way, a reasonable amount, as
determined in accordance wi th the provisions of the Commission's
regula tions in effect from time to time.
(c) For the purpose of recompensing the Uni ted States for
the use, occupancy, and enjoyment of its lands for transmission
line right-of-way, a reasonable amount, as determined in
accordance wi ththe provisions of the Commission's regulations in
effect from time to time.
Article 202. Pursuant to Section 10(d) of the FPA, after
the first 20 years of operation of the project under license, a
specified reasonaQle. rate of return upon the net investment in
the project shall be used for determining surplus earnings of the
project for the establishment and maintenance of amortizationreserves. One-half of the project surplus earnings, if any,
accumulated after the first 20 years of operations under the
license, in excess of the speci fied rate of return per annum on
the net investment, shall be set aside in a project amortization
reserve account at ~he end of each fiscal year. To the extent
that there is a deficiency of project earnings below the
specified rate of return per annum for any fiscal year after the
first 20 years of operation under the license, the amount of that
deficiency shall be deducted from the amount of any surplus
earnings subsequently accumulated, until absorbed. One-half of
the remaini ng surplus earnings, if any, cumulatively computed,
shall be set aside in the project amortization reserve account.
The amounts establ ished in the project amortization reserve
account shall be main tained un L i 1 further order of the
Commi ss ion.
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Project No. 2899-003 -33-
The annual speci f ied reasonable rate of return shall be the
sum of the annual weigh ted costs of long-term debt, preferred
stock, and common equity, as defined below. The annual weighted
cos t for each component of the reasonable rate of return is the
product of its capi tal ratio and cost rate. The annual capi tal
ratio for each component of the rate of return shall be
calculated based on an average of 13 monthly balances of amounts
properly includable in the licensees' long-term debt and
proprietary capi tal accounts as 1 isted in the Commission's
Cni form System of Accounts. The cost rates for long-term debt
and preferred stock shall be their respective weighted average
cos ts for the year, and the cos t of common equi ty shall be the
interest rate on 10-year government bonds (reported as theTreasury Department's 10-year cons tant ma turi ty series) computed
on the monthly average for the year in question plus four
percentage points (400 basis points).
Article 203. The licensees shall clear and keep clear to
an adequate width all lands along open condui ts and shall dispose
of all temporåry structures, unused timber, brush, refuse, or
other material unnecessary for the purposes of the project which
resul t from maintenance, operation, or al teration of the project
works. In addi tion, all trees along the periphery of project
reservoirs that may die during operations of the project shall be
removed. All clearing of lands and disposal of unnecessary
rna terial shall be done wi th due diligence to the satisfaction of
the authorized representative of the Commission and in accordance
wi th appropriate federal, state, and local statutes andregulations.
Article 301. The licensees shall begin construction of theproject works wi thin. two years from the issuance date of thelicense and shall complete construction of the project wi thinfour years from the issuance date of the license.
Article 302. To ensure completion' of construction of the
dam safety modifications during the 1989 construction season, the
licensees shall file a plan and schedule for the design and
construction of the' dam safety modifications wi thin 30 days from
the issuance date of the license. The plan shall includespeci f ic i terns for acti vi ties that are necessary before beginningconstruction acti vi ties.
Article 303. wi thin 90 days after completion of
construction, the licensees shall file for the Commission's
approval, revised Exhibits A, F, and G, to describe and show the
project as-built, including all facilities determined by the
Commission to be necessary and convenient for transmi tting all of
the project power to the interconnected system.
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Project No. 2899-003 -34-
Article 304. Before the start of construction, thei icensees shall review and approve the design of contractor-
designed cofferdams and deep excavations and shall ensure that
construction of the cofferdams and deep excavations is consistent
with the approved design. At least 30 days before startingconstruction of the cofferdam, the licensees shall submi t to the
Commission's Regional Director and to the Director, Division of
Dam Safety and Inspections, one copy of the approved cofferdam
construction drawings and specifications and a copy of thelet ter (s) of approval.
Article 305. The licensees shall retain a board of two or
more qualified, independent, engineering consultants to reviewthe des ign, speci fica tions, and construction of the project for
safety and adequacy. The names and qualifications of the board
members shall be submi tted for approval to the Director, Division
of Dam Safety and Inspections, wi th a copy to the Commission's
Regional Director. Among other things, the board shall assess
the following: the geology of the project si te and surroundings,
the design, specifications, and construction of the reinforcement
berms, canal embankments, spillway, powerhouse, electrical and
mechanical equipment, and emergency power supply;ins trumenta tion; and construction procedures and progress.
Before each meeting, allowing sufficient time for review, the
licensees shall furnish to the board, wi th a copy to the Regional
Director and two copies to the Director, Division of Dam Safety
and Inspections " the following: documentation showing details
and analyses of design and construction features to be discussed;
significant events in design and construction that have occurred
since the last board of consultants' meeting; drawings; questions
to be asked; a list of items for discussion; an agenda; and a
statement showing. the specific level of review to be performed by
the board. Wi thin 30 days after each board of consultants
meeting, the licensees shall submi t to the Commission copies of
the board's report, including the board's recommendations and the
licensee's plans for addressing the recommendations.
Article 306. At least 60 days before the start of
construction of each major component of the project, such as the
dam rehabili tation, spillway reconstruction, all necessary
transmission facili ties, powerhouse, and water conveyance
structures, the licensees shall submi t for that component, one
copy to the Commission's Regional Director and two copies to the
Director, Di vision of Dam Safety and Inspections, of the final
design report, contract drawings and specifications. The
Director, Division of Dam Safety and Inspections, may require
changes in the plans and specifications to assure a safe andadequate project.
Article 307. The licensees shall develop procedures for the
repair of the earthfill sections of Milner Dam in the event there
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Project ~o. 2899-003 -35-
is excessive leakage. The licensees shall include procedures for
the follo~ing items: inspection; reservoir drawdown; cofferdam
construction; earth embankment repair methods j and other
pertinent items. The repair procedure shall be reviewed and
approved by the board of consul tants required in Article 305.
Wi thin one year of issuance of the license, the licensees shall
submi t one copy to the Commission's Regional Director and two
copies to the Director, Division of Dam Safety and Inspections,
of a report detailing the procedures. The Director, Division of
Dam Safety and Inspections, may require changes in the procedures
to assure a safe and adequate project.
Article 308. Wi thin one year of issuance of this license,
the I icensees shall submi t a report evaluating the feasi bili ty of
constructing a power plant at Milner Dam to utilize the power
potential of the flows released to the bypass reach of the river
below the dam and therefore not usable by the proposed powerplant to be located approximately 1.6 miles downstream. If the
feasibility study shows that developing a power plant at the dam
would be económically beneficial, the licensees shall submi t a
schedule and plans for developing a power plant at the dam in
accordance wi th Article 301.
Article 401. The licensees shall acquire at the earliest
possible date each year, by rental on an annual basis from the
Upper Snake Water Supply Bank, stored water, to the extent that
it is available in excess of irrigation demand, to be released as
necessary to meet the target flows specified in Article 407. The
licensees may, and are encouraged to, formulate an agreement with
any and all of the licensees for projects which, in the future,
are licensed to be constructed and operated on the Snake River
below American Falls' Dam and which have similar requirements to
meet recommended flows from short-term water acquisition.
Article 402. The licensees, after consultation wi th the
Soil Conservation Service, the Bureau of Land Management, and the
Idaho Department of Fish and Game, and at least 90 days before
beginning any project-related land-clearing, land-disturbing, orspoi l-producing acti vi ties, except for acti vi ties speci f ically
required for safety modifications to Milner Dam, shall prepare
and fi Ie for Commission approval a plan to control erosion, slope
stability, and to minimize the quantity of sediment resulting
from project construction and operation. The Commission reservesthe authori ty to requi re changes to the plan.
The plan shall be based on actual-site geological, soil, and
groundwa ter condi tions and final project design, and shallinclude the following: (1) a description of the actual-si te
condi tions; (2) cofferdams, perimeter control measures, measures
to divert runoff around disturbed land surfaces and to collect
and filter runoff, provisions for energy dissipation, riprap,
..
Project ~o. 2899-003 -36-
measures to stabilize rock cuts, and permanent drainage foraccess roads; (3) detai led descr iptions, functional design
drawings, and specific topographic locations of all control
measures; (4) specific details of the revegetation plan,
including species composition, planting or seeding rates,
fertilizer, and mulch; (5) provisions to dispose of spoil
materials above the high water mark and store fuels and chemicals
used in construction away from the river and reservoir; (6) aspeci f ic implementation schedule and details of monitoring and
maintenance programs for project construction and operation; and
(í) a schedule for periodic review of the plan and for making any
necessary revisions to the plan.
The licensees shall include in the filing documentation of
consul tation wi th the agencies, copies of agency comments or
recommendations on the plan, and specific descriptions of how all
of the agency comments and recommendations are accommodated by
the plan. The I icensees shall allow a reasonable time frame, in
no case less than 30 days, for agencies to comment and make
recommendations prior to filing the plan.
No project-related land-dis turbing, land-c lear ing, or spoi 1-
producing acti v i ties shall begin until the licensees are notified
tha t the plan complies wi th the requirements of this article,except for acti vi ties speci fically required for safetymodifications to Milner Dam. The licensees shall submit with the
plans and speci fications required by Article 306 for safetymodi fica tions to Milner dam, measures to minimize erosion,sedimentation, and control slope stabili ty.
Article 403. The licensees, after consultation wi th the
Env ironmental Protection Agency, the Idaho Department of Health
and Welfare, the u.s. Fish and Wildlife Service, and the Idaho
Department of Fish and Game, and at least 90 days before
commencing any project related land-clearing, land-disturbing, orspoil-producing acti vi ties wi thin the Snake River and Milner
reservoir, shall file for Commission approval, a moni toring plan
to conduct tests for heavy metals and other toxic substances in
any sediments or other unconsolidated deposits in the Snake River
and in Milner reservoir that would be removed or otherwise
disturbed by dredging, constructing, or operating project
facili ties and to safely remove and dispose of any sediment and
unconsolidated deposi ts containing heavy metals or toxic
substances. The plan also should include an implementation
schedule for the moni toring and comments of the consul ted
agencies on the monitoring plan and implementation schedule. The
filing shall include documentation of agency consultation and any
agency comments and recommendati ons on the plan. The Commission
reserves the right to require changes to the plan. The licensees
shall not commence any lanù-clearing or land-disturbing
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Project No. 2899-003 -3ï-
activities within the Snake River and Milner reservoir ,until the
Commission approves the plan.
Article 404. The licensees, after consultation with theEnvironmental Protection Agency, the Idaho Department of Heal th
and Welfare, the u.S. Fish and Wildlife Service, and the Idaho
Department of Fish and Game, and at least 90 days before
beginning project operation, shall file for Commission approval,
a water quali ty moni toring plan that would characterize levels of
dissolved oxygen (DO) and water temperature in the bypassed reach
from immediately below Milner dam to immediately above the
powerhouse discharge during project operation. The plan shall
describe in detail the methods and shall identify the time
periods and locations for collecting water temperature and DO
data, and shall include a schedule for providing the data to theconsulted agencies and to the Commission. Further, the plan
shall include a provision to determine if water temperature and
DO necessary for the survival of a trout fishery wi thin the
bypassed reach are being maintained by the target flow required
by Article 401. The filing shall include documentation of agency
consul tation and agency comments on the plan. The Commission
reserves the right to require changes to the plan. The licensees
shall not begin project operation until the Commission approves
the plan.
Article 405. The licensees, after consultation wi th the
Idaho Department of Fish and Game, shall develop, implement, and
finance a warmwater fish stocking and habi tat enhancement plan
consistent wi th the Idaho Fisheries Management Plan 1986-1990 for
Milner reservoir. The plan shall include the species of
warmwater fish, numbers and sizes to be stocked, a description of
speci fic enhancement- structures, and a map showing the proposed
locations of these structures in the reservoir. The licensees
shall file the plan wi th the Commission for approval at least 90
days before beginning commercial operation. The licensees shall
give the Idaho Department of Fish and Game at least 30 days tocomment on the stocking and habi ta t enhancement program plan.
The filing shall include documentation of agency consul tation and
any agency comments' and recommendations. The Commission reserves
the right to require modifications to the plan. The licensees
shall not commence commercial operation until the Commissionapproves the plan.
Article 406. The licensees t after consultation wi th theIdaho Department of Fish and Game, shall develop a moni taring
plan to determine if the habi tat enhancement structures placed in~lilner reservoir have remained in place and are functioning as
desi red and to determine if addi tional warmwater fish need to be
stucked in Milner reservoir i required by Article 405, to meet the
Fisher ies Management Plan goal. The licensees shal 1 conduct the
monitoring plan for at least five years. The monitoring plan
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Project No. 2899-003 -38-
shall include a schedule for fi i ing the resul ts of the moni toring
and the comments of the Idaho Department of Fish and Game on the
resul ts and shall include recommendations for incorporating
addi tional enhancement measures or stocking addi tional warmwa ter
fish if needed. The licensees shall file the plan with the
Commission for approval at least 90 days before beginning
commercial operation. The filing shall include documentation of
agency consultation and any agency comments and recommendations.
The Commission reserves the right to require modifications to the
plan. The licensees shall not commence commercial operation
unti I the Commission approves the plan.
Article 407. The licensees shall discharge from Milner Dam
a target flow of 200 cubic feet per second as measured at the
Milner gage located in the bypass reach. The target flow may be
temporarily reduced if required by operating emergencies beyond
the control of the licensees or for short periods upon mutual
agreement between the licensees and the Idaho Department of Fish
and Game. Further, the target flow may be reduced if necessary
during any periods where sufficient water is not available
through lease from the Upper Snake Water Supply Bank in
accordance wi th Article 401, or from water surplus to irrigationneeds.
Article 408. The licensees, after consultation with the
Idaho Department of Fish and Game, shall develop a plan to stock
trout in the 1.6-mile-long bypassed reach of the Snake River.The plan must include the following: (1) stocking location (s) ;
(2) the number, species, and size of trout to be stocked each
year; (3) the estimated annual cost of implementing the program;
(4) a communication network to inform anglers of the stocking
dates and locations;-and (5) the comments of the Idaho Department
of Fish and Game on the program. The licensees shall file the
plan with the Commission for approval at least 90 days prior to
commencing commercial operation. The Commiss ion reserves the
right to require modifications to the plan. The licensees shall
not commence commercial operation until the Commission approves
the plan.
Article 409. The licensees, after consultation with the
Idaho Department of Fish and Game, shall file a study plan for
Commission approval, at least 90 days prior to commencing
commercial operations, to determine if the put-and-grow trout
fishery in the bypassed reach, required by Article 408, is
successful. The plan shall include provisions for filing annual
reports by December 31 of each year on the put-and-grow troutstocking program. The annual report shall include information on
the growth, movement, and survi val of the trout planted in thebypassed reach, water temperature and DO data col lected pursuant
to Article 404, and an evaluation of the effects of water
temperature and DO on the stocking program and the comments of
..
Project No. 2899-003 -39-
the Idaho Department of Fish and Game on the results. The
licensees shall give the Idaho Department of Fish and Game at
least 30 days to comment on the resul ts of the stocking program
prior to filing the annual report. The licensees shall conduct
the monitoring program for at least five years and file a final
comprehensive report on the success of the stocking program and
any recommendations for changing the stocking program, including
at a minimum stocking new locations or changing the stocking
rate. The Commission reserves the right to require modifications
to the trout program based on the moni toring resul ts. The
licensees shall not begin commercial operation until the
Commission approves the plan.
I f the results of the annual moni toring or after the fi ve-
year study period show that changes to the stocking program are
needed, the licensees also shall file for Commission approval aschedule for implementing the changes to the program along wi th
the comments of the Idaho Department of Fish and Game on the
recommended changes. The Commission reserves the right to
require modifïcations to the recommendations for changing the
stocking program.
Article 410. The licensees shall limit the maximum rate of
change in river elevation (ramping rate) to one foot per hour or
less for the protection of aquatic resources and downstream
recreationists. Further, the licensees, after consultation with
the Idaho Department of Fish and Oame and the Idaho Department of
Parks and Recreation, shall conduct a ramping rate study a£ter
the project is operational. The study shall determine if the one
foot per hour rate of change in the Snake Ri ver' s elevation
provides adequate protection for the aquatic resources in the
bypassed reach during project startup and to protect downstreamrecrea tionists when increasing and decreasing flows. The
licensees shall file the results of the study along with any
recommendations for changing the ramping rate for Commissionapproval wi thin one year after the project \ i s operational.
Agency comments on the study and any proposed changes to the
ramping rate shall be included with the filing. The Commission
reserves the right to require modifications to the proposedramping rate.
Article 411. The licensees shall design and construct the
transmission line in accordance wi th guidelines set forth in
"Suggested Practices for Raptor Protection on Power Lines--the .
State of the Art in 1981," by Raptor Research Foundation, Inc.
The licensees after consultation with the u.S. Fish and Wildlife
Service, the Idaho Department of Fish and Game, and the Bureau of
Land ~janagement in adopting these guidelines shall develop and
implement a design that will provide adequate separation of
energ i zed conductors, groundw ires, and other me tal hardware Jadequa te insula ti on, and any other measures necessary to protec t
..
Project So. 2899-003 -40-
raptors from electrocution hazards. ~i thin 90 days after
completion of construction of the transmission line, the
licensees shall file as-built drawings of the transmission line
design wi th the Commission.
Article 412. The licensees, after consultation with the
u.s. Fish and ~ildlife Service, the Idaho Department of Fish and
Game, the Bureau of Land Management, and the Soil Conservation
Service, and at least 90 days prior to commencing any land-disturbing, land-clearing, or spoil-producing acti vi ties not
specifically required ~or safety modifications to Milner Dam,
shall file for Commission approval a plan to revegetate alldi s turbed areas wi th na ti ve plant species beneficial to wi ldli fe.The plan shall include at a minimum: (1) a description of the
plant species to be used, an indication of each species habitat
value and food value, and planting densi ties; (2) plantingmethods; (3) ferti i i za tion and irrigation requirements; (4) a
monitoring program to evaluate the effectiveness of the
plantings; (5) a description of procedures to be followed if
moni toring reveals that the revegetation is not successful; and
(6) an _implementation schedule that provides for the revegetationas soon as practicable after completion at a particular si te and
the fil ing of periodic moni toring reports. Agency comments shall
be included on the filing. The Commission reserves the right to
require changes to the plan. The licensees shall not begin anyland-clearing or land-disturbing acti vi ties not specifically
required for safety modifications to Milner Dam until the plan is
approved by the Commission.
Article 413. The licensees, after consultation wi th the
u.s. Fish and Wildlife Service, the Idaho Department of Fish and
Game, and the Bureau' of Land Management, and at least 90 days
before beginning any project-related land-clearing or land-
disturbing activi ties not specifically required for safety
modi fications to Milner Dam, shall file for Commission approval a
plan for constructing, maintaining, and moni toring osprey nesting
pIa t forms, Canada goose-nesting structures, and arti ficial
burrows for burrowing owls (wildlife enhancement features) in the
project area. The ~lan shall include at a minimum: (1) the final
designs for the wildlife enhancement features; (2) the number and
location of the wildlife enhancement features; (3) a schedule for
providing the wildlife enhancement features; (4) and a program
for maintenance and moni toring. Agency comments on the adequacy
of the plan shall be included in the filing. The Commission
reserves the right to require changes to the plan. The licensees
shall not commence any land-clearing or land-disturbing
activities not specifically required for safety modifications to
~lilner Dam, until the plan is approved by the Commission.
Article 414. The) icensees J after consul tation wi th the
u.s. Fish and Wildlife Service, the Idaho Department of Fish and
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Project ~o. 2899-003 -41-
Game, the Bureau of Land Management, and the Environmental
Pro tee ti on Agency, and at least 90 days before beginning anyproject related land-disturbing or land-clearing activi ties not
specifically required for safety modifications to Milner Dam,
shall file for Commission approval a plan for developing at least23.5 acres of riparian wetland habi tat to mi tigate for the loss
of 6.8 acres of riparian wetlands and 26.6 acres of upland
habitat. The plan shall include, but shall not be limited to:
( 1) maps showing the location of all replacement habi ta t, site
boundaries, size of each site, and physical and habitat features;
(2) a description of planting methods, fertilization and
irrigation requirements, and a planting schedule; (3) a
description of the soil and substrate condi tions at the
replacement si tes; (4) a moni toring program that includes goalsand cr iter ia for successful establ ishment of wetland vegetation,
sampling procedures, and reporting requirements; (5) procedures
to implement if moni toring reveals that establishment of
vegeta tion is not successful; (6) an implementation schedule thatprovides for habi ta t replacement as soon as practicable; and (ï)
a description 'of the program for the long-term ownership,
management, and maintenance of the replacement habi ta t. Agency
comments shall be included in the filing. The Commission
reserves the right to require changes to the plan. The licensees
shall not commence any land-clearing or land-disturbingacti vi ties not speci fically required for safety modifications to
Milner Dam until the plan is approved by the Commission.
Article 415. The licensees, for a total period of eight
days for eight daylight hours each day (64 daylight hours)
between April 1 and May 31, shall not operate the main
powerhouse, to be located 1.6 miles downstream of Milner dam,
when inflow to Milner reservoir, less irrigation wi thdrawals from
Mi lner Reservoir, is 10,000 cubic feet per second (cfs) or more.
When projections of available flows indicate that the flows in
April and May will not reach 10,000 cfs, the licensees shall
shut down the main powerhouse for eight daylight hours per day
for up to eight days, when inflow to Milner reservoir, lessi rr iga ti on wi thdrawals from Mi lner reservoir is between 4,000 and
10,000 cfs. The licensees do not have to shut down the project
in the April-Nay period if the flows do not exceed 4,000 cfs in
the period. The timing of the 64-daylight-hour project shutdown
to meet the above obligation may be modified by the Commission,based on the resul ts of the whi tewater boating study required by
Article 418.
Article 416. The licensees, after consultation with the
Bureau of Land Management, the National Park Service, the Idaho
Departmen t of Parks and Recreation, and the Idaho Whi tewa terAssocia ti on, and 90 days before starting project operation,
shall file for Commission approval, a plan to warn downstream
recreatiunists of increases in flow downstream of the dam fOl'
.
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Projecl ~o. 2899-003 -42-
whi tewater boating. The plan, at a minimum shall include
provi~ions for a warning system (e. g., lights, alarms, warning
sign~) to alert downstream recreationists of increases in water
level and streamflow. Documentation of agency consultation shall
be included in the fil ing. The Commission reserves the right torequi re changes to the plan.
Article 417. The licensees, after consul tation wi th the
Bureau of Reclamation, Bureau of Land Management, the National
Park Service, the Idaho Department of Water Resources, the IdahoDepartmènt of Parks and Recreation, and the Idaho Whi tewa leI'
Association, and 90 days before starting project operation, shall
file for Commission approval, a plan for a communication networkto inform whi tewater boaters of available whi tewater flows. The
plan shall include documentation of agency consul ta tion. The
Commission reserves the right to require changes to the plan.
Article 418. The licensees, after consultation with the
Bureau of Land Management, the National Park Service, the Bureau
of Reclamation, the Idaho Department of Parks and Recreation, the
Idaho Department of Water Resources, and the Idaho Whi tewater
Association, shall conduct a study to determine whether flows
required by Article 415 could be modified to more closely match
whitewater boater needs and reduce the effects of whitewater
releases on project economics. Wi thin six months from the
issuance date of this license, the licensees shall file for
Commission approval a plan for conducting the whi tewater boating
study. The licensees shall conduct the study as approved by the
Commission and, wi thin 90 days before the start of project
operation, the licensee shall file with the Commission, results
of the study. Study results must include: (1) an analysis of
the range of whi tewater flows necessary to maintain the Class V
whi tewater experience preferred by boaters running the Milner
reach; (2) the time of day and week when boaters put in and take
out of the Milner reach; (3) the average number of runs boaters
make in a gi yen day; (4) a proposed schedule for releasing flows
for whitewater boating that describes the range of flows to be
prov ided, the duration of the flows, and time of day and week
these flows will be provided; (5) a discussion of recommendations
prov ided by the consul ted agencies and enti ties; and (6)
documenta tion of consul tation wi th the above-named enti ties. The
Commission reserves the right to require changes to the plan.
Article 419. The licensees, after consultation wi th the
Bureau of Land Management, the National Park Service, the Idaho
Department of Parks and Recreation, and the Idaho Whitewater
Association, and 90 days before starting any project-relatedland-clearing, land-di s turbing, or spoi I-producing act i v it ies
(except rehabilitation of Milner Dam), shall file for Commissionapproval a recreation plan that inc ludes, but is not I imi ted to:
(1) provisions for a whitewater boater put-in area at the bridge
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Project No. 2899-003 -43-
below Milner Dam and a take-out area below the project powerhouse
with parking facilities; (2) provisions for a tailwater fishing
area below the powerhouse; (3) final design drawings showing the
type and location of the proposed facilities; (4) a construction
schedule for proposed recreational facili ties; (5) a plan for
moni toring recreational use in the project area to determine the
for additional recreational facilities in the future; and (6)
documentation of agency consultation. In the plan, the licensees
shall also consider the feasibility of (1) providing the
whi tewa ter take-out area below the final Class V rapid below the
powerhouse area and (2) locating the take-out area in a location
where it does not interfere with tailwater fishing facilities.
The Commission reserves the right to require changes to the plan.
Article 420. The licensees, at least 90 days before the
start of any land-clearing, land-disturbing, or spoil-producing
acti vi ties for each segment of the project, shall file for
Commission approval, either separately or in combination, the
following plans to blend all project features and project related
areas of land -disturbance with the surrounding landscape:
1. detailed si te-grading and revegetation design plans foreach soil, gravel, or rock borrow site, and spoil disposal si te;
2. a design for eliminating the visual impact of the
transmission line from the powerhouse to the forebay area;
3. detailed design drawings which describe the planned
vegetation clearing, the specific tower or pole locations and
design, and the specifications for the materials to be used ineach transmission line facili ty;
.
4. des igns, alignments, profiles, construction limits,
planned vegetation clearing, proposed surfacing, and the
construction specifications for all access roads, parking lots,
construction laydown areas, canals, and surface or buried
penstock routes, including the required rights-of-way; and
5. detailed design drawings which describe the planned
archi tectural features, colors, surface textures, site grading,
and landscape plantings for each structure.
The licensee shall include with the filing documentation of
consul tation with Bureau of Land Management (BLM) and. copies of
BLM comments and recommendations.. The Commission may require
changes to the plans. No land-clearing, land-disturbing, orspoil-producing acti vi ties shall begin until the licensees are
noti fied that the above plans comply with the requirements of
this article.
:,';,',;."'. .t"..9!.;"_.
:. "'-ii.. "', ...-.....~-p.... .. -, .. .-:. . ...'.... ,;.";, i,"'~. ".= ;,.~..a-,. ~.. , ".--
..
Project No. 2899-003 -44-
Article 421. The licensees, after consultation wi th the
Idaho State Historic Preservation Officer (SHPO), the Advisorv
Council on Historic Preservation (Council), and the Historic.
American Engineering Record (HAER) of the Department of the
Interior, shall finalize and implement the cui tural resources
management plan as filed by letter dated February 11, 1986, and
shall include the revisions recommended by the National Park
Service by letter dated February 4, 1986. Wi thin one year from
the date of this license, the licensees shall file for Commission
approval a report containing the HAER documentation of Nilner Dam
and the South Side Canal, the procedures for avoiding impacts to
Milner Townsi te, and the documentation of archeological si te 10-TF-461. The documentation and avoidance procedures at these
sites may be filed in separate reports as the items are
completed. The reports must contain letters from the SHPO, the
Counci I, and in the case of the dam and the canal, also from the
HAER, accepting the documentation. No rehabili tation work or
land-disturbing or land-clearing work may begin at the historic
or archeological si tes addressed in the report until the
licensees are -notified that the filing or filings have beenapproved. The licensees shall make funds available in a
reasonable amount for implementation of the plan. If the
licensees, the SHPO, the Counci 1, and the HAER cannot agree on
the amount of money to be spent for implementation of the plan,
the Commission reserves the right to require the licensees to
conduct the necessary work at the licensees' own expense.
Article 422. The licensees, before starting any land-clearing or land-disturbing acti vi ties wi thin the project
boundaries, other than those specifically authorized in this
license, shall consult with the Idaho State Historic Preservation
Officer (SHPO), snaIl conduct a cui tural resources survey of the
area that will be impacted, and shall file for Commission
approval a cui tural resources management plan, prepared by a
quali fied cultural resources spec ialist. If the licensees
discover any previously unidentified archeological or historic
sites during the course of construction or developing project
works or other facili ties at the project, the licensees shallstop al i land-clearing and land-disturbing acti vi ties in the
vicinity of the sites, shall consult with the SHPO, and shall
file for Commission approval a new cui tural resources managementplan, prepared by a qual i fied cuI tural resources specialist.
Either management plan shall include the following: (1) a
description of each discovered site, indicating whether it is
listed or eligible to be listed on the National Register of
Historic Places; (2) a description of the potential effect on
each di scovered si te; (3) proposed measures for avo iding or
mi ligating effects; (4) documentation of the nature and extent of
consultation; (5) a schedule for mitigating effects and
conducling addi tional studies, and (6) a copy of a letter from
. .
Project ~o. 2899-003 -45-
the SHPO accepting the plan. The Commission may require changes
to the plan.
The licensees shall not begin land-clearing or land-disturbing acti vi ties, other than those specifically authorized
in this license, or resume such activities in the vicinity of a
si te discovered during construction, until informed by the
Commission that the requirements of this article have beenfulfilled.
Article 423. The Commission, upon its own motion or upon
the recommendation of federal or state fish and wildlife agenciesor affected Indian Tribes, reserves the authori ty to orderal terations of project structures and operations to take into
account to the fullest extent practicable at each stage of the
decision-making process the Columbia River Basin Fish and
~ildli fe Program developed and amended in accordance wi th the
Pacific Northwest Electric Power Planning and Conservation Act.
Article 424. (a) In accordance wi th the provisions of this
article, the licensees shall have the authori ty to grant
permission for certain types of use and occupancy of project
lands and waters and to convey certain interests in project lands
and waters for certain types of use and occupancy, wi thout prior
Commission approval. The licensees may exercise the authori ty
only if the proposed use and occupancy is consistent wi th the
purposes of protecting and enhancing the scenic, recreational,
and other environmental values of the project. For thosepurposes, the licensees also shall have continuing responsibili ty
to supervise and control the use and occupancies for which they
grants permission and to moni tor the use of and to ensure
compliance wi th the covenants of the instrument of conveyance for
any interests that they convey under this article. If a
permitted use and occupancy violates any condition of this
article or any other condi tion imposed by the licensees for the
pro tee tion and enhancement of the project's scenic, recreational,
or other environmental values or if a covenant of a conveyance
made under the authori ty of this article is violated, the
licensees shall take any lawful action necessary to correct the
viola tion. For a permi tted use or occupancy, that action
includes, if necessary, cancelling the permission to use and
occupy the project lands and waters and requiring the removal ofany noncomplying structures and faci Ii ties.
(b) The types of use and occupancy of project lands andwater for which the licensees may grant permission wi thout prior
Commission approval are these: (1) landscape plantings; (2) non-
commercial piers, landings, boat docks, or simi lar structures and
facilities that can accommodate no more than 10 watercraft at a
time and where the facility is intended to serve single-famil~
dwellings; and (3) embankments, bulkheads, retaining walls, or
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Project ~o. 2899-003 -46-
similar structures for erosion control to protect the existing
shoreline. To the extent feasible and desirable to protect and
enhance the project's scenic, recreational, and otherenv i ronmental values, the 1 icensees shall require mul tiple use
and occupancy of facilities for access to project lands orwaters. The licensees also shall ensure to the satisfaction of
the Commission's authorized representative that the use and
occupancies for which they grant permission are maintained in
good repair and comply wi th applicable state and local heal th andsafety requirements. Before granting permission for const.ruction
of bulkheads or retaining walls, the licensees shall do the
following: ( 1) inspect the site of the proposed construction,
(2) consider whether the planting of vegetation or the use of
riprap would be adequate to control erosion at the site, and (3)
determine that the proposed construction is needed and would not
change the basic contour of the reservoir shoreline. To
implement this paragraph (b), the licensees, among other things,
may establish a program for issuing permi ts for the specified
types of use and occupancy of project lands and waters that may
be subject to -the payment of a reasonable fee to cover the
licensees' costs of administering the permi t program. The
Commission reserves the right to require the licensees to file a
description of their standards, guidelines, and procedures for
implementing this paragraph (b) and to require modification of
those standards, guidel ines, or procedures.
(c) The licensees may convey easements or rights-of-wayacross or leases of project lands for these purposes: ( 1 )
replacement, expansion, realignment, or maintenance of bridges
and roads for which all necessary state and federal approvals
have been obtained; (2) storm drains and water mains; (3) sewers
that do not dischRrge into project waters; (4) minor accessroads; (5) telephone, gas, and electric utili ty distribution
1 ines; (6) nonproject overhead electric transmission lines thatdo not require erection of support structures wi thin the project
boundary; (Î) submarine, overhead, or underground major telephone
distribution cables or major electric distribution lines (69-kV
or less); and (8) water intake or pumping facilities that do not
extract more than 1 million gallons per day from a project
reservoi r. No later than January 31 of each year, the 1 ic.ensees
shall file three copies of a report that briefly describes for
each conveyance made under this paragraph (c) during the prior
calendar year the type of interest conveyed, the location of the
lands subject to the conveyance, and the nature of the use for
which the interest was conveyed.
(d), The licensees may convey fee ti tIe to, easements or
rights-of-way across, or leases of project lands for the
following: (1) construction of new bridges or roads for which
all necessary state and federal approvals have been obtained; (2)
sewer Or effluent lines that discharge into project waters, for
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Project No. 2899-003 -4 i-
which all necessary federal and state water quality certification
or permi ts have been obtained; (3) other pipelines that cross
project lands or waters but do not discharge into project waters;
(4) nonproject overhead electric transmission lines requiring
erection of support structures wi thin the project boundary for
which all necessary federal and state approvals have been
obtained; (5) private or public marinas that can accommodate nomore than 10 watercraft at a time and are located at leas t one-
half mile from any other private or public marina; (6)
recreational development consistent with an approved exhibit R oran approved report on recreational resources of an exhi bi t E; and
(7) other uses, if these conditions exist: (i) the amount of
land conveyed for a particular use is 5 acres or less; (ii) all
of the land conveyed is located at least 75 feet, measured
horizontally, from the edge of the project reservoir at normal
maximum surface elevation; and (i i i) no more than 50 total acres
of project lands for each project development are conveyed under
this clause (d) (7) in any calendar year. At least 45 days before
conveying any interest in project lands under this paragraph (d),
the licensees'shall submit a letter to the Director, Office of
Hydropower Licensing, stating the licensees' intent to convey the
interest and briefly describing the type of interest and the
location of the lands to be conveyed (a marked exhibi t G or K mapmay be used), the nature of the proposed use, the identi ty of any
federal or state agency official consul ted, and any federal or
state approvals required for the proposed use. Unless the
Director, wi thin 45 days from the filing date, requires the
licensee to file an application for prior approval, the licensees
may convey the intended interest at the end of that period.
(e) The following addi tional conditions apply to any
intended conveyance under paragraph (c) or (d) of this article:
(1) Before conveying the interest, the licensees shall
consult with appropriate federal and state fish and wildlife or
recreational agencies and wi th the State Historic PreservationOfficer.
(2) Before conveying the interest, the licensees shall
determine that the proposed use of'the lands to be conveyed is
not inconsistent with any approved exhibit R or an approved
report on recreational resources of an exhibi t E or if the
project does not have an approved exhibit R or an approved report
on recreational resources, that the lands to be conveyed do not
have recreational value.
(3) The instrument of conveyance shall include covenants
running wi th the land adequate to ensure the following: (i) the
use of the lands conveyed shal 1 not endanger heal th i crea te anuisance, or otherwise be incompatible wi th overall project
recreational use; and (li) the grantee shall take all reasonable
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Project Ko. 2899-003 -48-
precautions to ensure that the construction, operation, and
maintenance of structures or facili ties on the conveyed lands
occur in a manner that protects the scenic, recreational, and
environmental values of the project.
(4) The Commission reserves the right to require the
licensees to take reasonable remedial action to correct any
viola tion of the terms and condi tions of this article for the
protection and enhancement of the project's scenic, recreational,and other environmental values.
(f) The conveyance of an interest in project lands under
this article does not in itself change the project boundaries.
The project boundaries may be changed to exclude land conveyed
under this article only upon approval of revised Exhibi t G or K
drawings (project boundary maps) reflecting exclusion of that
land. Lands conveyed under this article shall be excluded from
the project only on a determination that the lands are not
necessary for project purposes, such as operation and
maintenance, flowage, recreation, public access, protection of
environmental resources, and shoreline èontrol, including the
preservation of shoreline aesthetic values. Absent extraordinary
circumstances, proposals to exclude lands conveyed under this
article from the project shall be consolidated for consideration
when revised exhibi t G or K drawings are filed for approval for
other purposes.
(g) The authori ty granted to the licensees under this
article shall not apply to any part of the public lands and
reservations of the Uni ted States included wi thin th~ project
boundary.
(E) The licensees shall serve copies of any Commission
filing required by this order on any entity specified in this
order to be consul ted on matters related to that filing. Proof
of service on these enti ties must accompany the filing wi th the
Commission.
(F) Wi thin 60' days of the issuance of this order, th~
licensees shall submi t the following information for each county
in which federal lands, utilized by the project, are included:
(1) the number of nontransmission line acres of U.S. lands; and
(2) the number of transmission line right-of-way acres of u.s.lands.
(G) This order is final unless an application for rehearing
is filed wi thin 30 days from the date of its issuance, asprovided in Section 313 of the FPA. The filing of anappl ica t i on
for rehearing does not operate as a stay of the effective date of
its issuance or of any other date speci fied in this order, except
as specifically ordered by the Commission. The licensees'
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Project No. 2899-003 -49-
failure to file an application for rehearing shall constitute
acceptance of this license.
By thè Commission. Commissioner Moler concurred with a separatesta tement attached.(SEAL)
Lois D. Cashell,Secretary.
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Project No. 2899-003 -1-
SAFETY A~D DESIGS ASSESSMENT
MILNER HYDROELECTRIC PROJECT
FERC NO. 2899-001, ID
Project Design
Milner Dam is located at a si te on the Snake River where the
river divides into three channels, separated by two islands.
Before the dam was buil t, the north channel carried the main flo~
of the river, the south channel carried water only during extreme
flood events, and the middle channel was dry, except during
periods of high water. Milner reservoir provides water to three
canals, the Twin Falls, North Side ~iain, and Milner Gooding
Canals, and to three pumping stations, Milner Low Lift, A and B
Irrigation, and North Side Pumping Company. Cumulatively, the
canals and the pumping plants serve approximately 500,000 acres.
Construction of Milner Dam started in 1903 and was completed
in 1905. The ~am has three embankments (north, middle, and
south); each embankment is constructed wi th a trapezoidal shaped
rock fill section wi th a vertical wood cutoff wall in the center
of each embankment. The rockfill sections consist primarily of
angular boulder and cobble-size blocks of olivine basalt rock.
The cutoff walls were damaged during construction, and when the
builder first tried to fill the reservoir, the dam leaked; on the
upstream side of the embankments, nonplastic sandy silt was
sluiced into the rockfill to stop the leakage. Each embankment
was built wi th a horizontal-to-vertical downstream slope of 1.5
to 1 (1.5: 1) and an upstream slope of 4: 1. The north embankment
has a crest length of 280 feet and a crest elevation of 4,138
feet; 44 the middle embankment has a crest length of 404 feet
and a crest elevation of 4,138 feet; and the south embankment has
acres t length of 462 feet and a crest elevation of 4,138 feet.
Presently, flows are released from the dam by a gated
spillway located on the southern island. The spillway is aconcrete structure, 487 feet long, wi th a crest èlevation of
4,122.5 feet and with 99 wood slide gates, each 4 feet wide by 12
feet high, which are individually lifted by a hydraulicmechanism. An ungated emergency spillway wi th a concrete-core
cutoff wall is located on the north island; the emergency
spillway is 290 feet long and has a crest elevation of 4,134
feet. The dam has no operable low-level outlet or reservoirdrain.
44 All elevations are relative to mean sea level.
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Project ~o. 2899-003 -2-
Flows from Milner Lake to Twin Falls Main Canal are
control led by a concrete structure wi th seven manually opera ted
radial gates. The headworks is located on the south abutment.
The applicants propose to construct rockfill berms on the
downstream slopes of the three existing dam embankments. The top
of each berm would be 15 feet wide and 10 feet below the crest of
the existing embankments, and the downstream slope of each berm
would be 3.;5:1.
The applicants would replace the existing gated spillway
with a new spillway that would have 11 radial gates, each 12 feet
high and 30 feet wide. One gate would have a hinged gate flap at
its crest to provide for passing floating debris. The crest
elevation would remain at 4122.5 feet. The spillway outlet
channel which would be lined wi th concrete to prevent erosion,
would have a capaci ty of 58,000 cubic feet per second (cfs) at areservoir elevation of 4,133.5 feet.
The Twin -Falls Main Canal has a maximum design hydraulic
capaci ty of 3,200 cfs. The applicants propose to do the
following: increase the canal capaci ty; modify the headworks;
build a wasteway; and build a new control structure. Theappl icants would increase the canal's capaci ty to j, 000 cfs,
raise the right embankment of. the canal near Milner Dam to
eleva tion 4,137.5 feet to provide four feet of freeboard and
widen the crest 'to 20 feet. The applicants would modify the
existing canal headworks structure to install stoplogs for
dewatering the canal and forebay area when needed. The
applicants would build a wasteway for sluicing ice from the canal
and for removing flows in the canal if there is a powerplant load
rejection. The concrete wasteway would control flows wi th one
hydraulically operated bascule gate designed to pass the maximum
powerhouse flow of 4,000 cfs and would return flows to the Snake
Ri ver. To control irr igation releases to the canal, the
applicants would build a new control structure, approximately1 ,600 feet downstream from the wasteway. The concrete structure
would have six manually operated radial gates, each 12-foot-wide
by 15-foot-high and one hydraulically operated bascule gate, 24-
feet- long by 11-feet-high.
The applicants would build a forebay to convey flows from
the canal to the project intake and a concrete intake structure
to convey flows to the penstock.' A cable-operated, fixed-wheelgate, 14-foot-wide by 17 -foot-high, would permi t closing the
penstock for emergency shut down or maintenance of the penstock
and turbine. The penstock would be a 1; -foot-diameter steel
pipe, approximately 385 feet long.
The powerhouse would be a semi -outdoor, reinforced-concrete
structure, approximately 89-feet-long by 56-feet-wide, housing
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Project No. 2899-003
3-3-
one generating unit, rated at 43.65 megawatts (MW). The
powerhouse would be located near the bot tom of the Snake RiverCanyon. The genera tor would be connected to a Kaplan turbine,ra ted at 59,650 horsepower under a net head of 151.6 feet and a
di scharge of 4,000 cfs. Flows from the powerhouse would be
returned to the Snake River through a 170-foot-long tailrace
channel. The tailrace would have a 46-foot-wide base wi th sideslopes of 0.25: 1.
Project Safety
The hazard potential of a dam is the potential for loss of
human 1 i fe or property damage that would result from failure of
the dam.
Starting at Milner Dam, the Snake River flows into the Snake
Ri ver Gorge, a narrow, practically inaccessible, steep-walled
canyon. Development downstream of Milner Dam, includes four
hydroelectric projects, two golf courses and a sewage treatment
plant. The four hydroelectric projects do not have full time
operators, and the sewage treatment plant is located 25 miles
downs tream of the dam. The poor aCcess and ruggedness of the
canyon limi t recreational use of the Snake River below Mi lner
Dam. Fai lure of the project, therefore, would result in minimaldownstream impacts.
Milner Dam -was inspected by the Portland Regional Office onOctober 13, 1988. The inspector determined that even though it
poses only a minimal threat to downstream life and property,
failure of Milner Dam would have the potential to cause
catastrophic damage to the economy of the area, "the Magic Valley
of Idaho". Appro~imately 500,000 acres of farm land is dependent
upon irrigation water diverted at Milner Dam, and the economy of
the Magic Valley depends on the agricultural production of the
500,000 acres of farmland.
Because the Regional Office rates Milner Dam as having a
significant hazard potential, the dam should be modified to make
it safe against failure under earthquake loading and under one-
half probable maximum flood (PMF) loading (58,000 cfs)
condi tions.
Each of the three dam embankments, discussed earlier,
consists of a large, trapezoidal' rockfill section with a zone of
hydraulic-fill earth material, placed directly against the
ups tream face, as the water barrier. Each embankment has a
vertical wooden core in the center of the rockfill section. The
wooden cores were damaged during construction and are assumed to
be an ineffective barrier to seepage. Because there is no filter
between the rockfill and the upstream earthen barrier, the
upstream hydraulic-fill material, when disturbed, can be washed
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Project ~o. 2899-003
4-4-
into and through the rockfill (piping leak or piping failure).
Engineer ing studies performed by the consultant for the appl icant
show that the upstream hydraulic-fill material is comprised of
very loose to loose nonplastic sandy silts and silty sands that
are susceptible to liquefaction (complete loss of strength) under
seismic loading condi tions. The slumping of the upstream fill
could open a path for water from the reservoir to pass through
the earthen barrier and to enter the rockfill in the embankments.
Analysis, by the applicants' consul tant, of flows through the
rockfill sections of the embankments, shows that a large leak
could release enough water to destablize the downstream slopes of
the rockfi 11 zones. If this happens, progressi ve raveling of the
downstream face could breech an embankment.
According to the appl icants' records, since 1905, Milner Dam
has experienced 10 piping leaks, the first occurring in 1905 wi th
the initial filling of the reservoir and the last in March 1983.
All of the piping leaks were repaired soon after they occurred
with little disruption to irrigation service. To reduce the
needed time ta begin leak repairs, the applicants currently
stockpile earthen repair material on both banks of the river.
To stabilize the slopes if an earthquake causes a piping
failure, the applicants' consultant proposes to construct a
rockfill berm on the downstream slope of each embankment. The
berms would increase the downstream slope of the embankment from1.5: 1 to 3.75: 1;, the major portion of the berms would consist of
rock averaging 24 inches in size, while the lower portion would
be faced wi th rock averaging 48 inches in size or larger. This
repair approach would still require the applicants to maintain
stockpiles of material to repair any leaks which could develop in
the earthfill section.
Since the license would auth'orize major modifications of a
dam wi th a signi ficant hazard potential, the staff recommends the
inclusion of special license Article 305 requiring the licensees
to retain a board of consultants to review the design and
cons truction of the project for safety and adequacy.
Because the water diverted by Mi lner Dam is cri tical to the
wellbeing of the Magic Valley, the staff recommends the inclusion
of special license Article 30ï, requiring the licensees, inconsul tation wi th the board of consul tants, to develop a detailed
manual of procedures for repairing Milner Dam if there isexcess i ve leakage.
Based on an inspection of the project and on discussions
wi th the applicants, the staff finds the project to be
satisfactorily maintained. The staff found minor seepage areas
on the north, middle, and south embankments. These areas will
continue to be monitored in the future. The staff had trouble
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Project ~o. 2899-003
5-5-
inspecting the toe of the dam because it is covered wi thvegetation. The Director of the Portland Regional Office will
di rect the licensees, if a license is issued, to remove the
vegeta tion that interferes wi th the Commission's dam safety
inspection programs.
To improve winter operations, the applicants propose to
replace the existing spillway. The 99 wooden gates of the
spillway now have to be raised individually. The process is
slow, because the applicants have only two hoisting mechanisms.
The 11 new gates would greatly improve operation and would reducethe time needed to adjust the spillage under flood condi tions.
The new spillway would be designed to pass an inflow design flood
(IDF) of 58,000 cfs; the IDF represents a spillway capaci ty of
one-half of the PMF. An IDF that is less than the full PMF is
acceptable because the failure of Milner Dam would not threaten
downstream life.
The proposed project would be safe and adequate if
constructed and/or rehabilated according to sound engineering
practice, and the requirements of a license.
Primary Transmission Facili ties
The primary transmission line segment would include the 1.4-mi Ie-long 138-ki lovol t (kV) transmission i ine connecting the
project generator to the interconnected transmission system at
the Milner substation 138-kV bus and its support facilities.
Wa ter Resource Planning
As stated earlier, the applicants propose to use the
existing Twin Falls main irrigation canal to convey water left
over from irrigation requirements to the proposed power
facilities, 1.6 miles downstream of the existing Milner Dam. Any
flows used for generation in the proposed powerhouse thus would
bypass the 1.6 mi les of river channel below Mi lner Dam.
The proposed powerhouse would have the capaci ty to use flows
of from 900 to 4,000 cfs. Typically, the flows that pass Milner
Dam in the summer are low, not generally exceeding 500 cfs, and
the proposed powerhouse would not be expected to operate from
about mid-June through mid-September.
The staff, on page 5-3 of its Snake River Draft
Environmental Impact Statement (DEIS) for the Twin Falls, Milner,
Auger Falls, and Star Falls projects, recommended that any
license issued for the Milner Project require a minimum bypass
flow in the 1.6 mile reach below Milner Dam. The public,
irrigators, the' applicant, and the Idaho Department of ~ater
Resources (ID\o'R) apprised the staff that requiring the licenseei:
..
Project No. 2899-003
6-6-
to maintain minimum flows below Milner Dam would be inconsistent
wi th state requirements. All of the reservoir storage available
above Milner Dam is committed and the minimum flow specified by
Idaho State ~ater Plan (~ater Plan) for the river immediately
below Nilner Dam is zero cfs. Because the applicants, the
Northside and Twin Falls Canal Companies, are only service
companies, which distribute the irrigation water to their
shareholders, who hold the water rights, requiring them to
maintain a minimum flow below Milner Dam other than zero would
require that they release water that Idaho water law hasappropriated to others.
After issuing the DEIS, the staff evaluated the feasibility
of requiring any licensees of the proposed Snake River projects
to rent or lease water on a short-term basis from upstream water
rights holders in order to provide flows in the bypass reaches of
the projects. Such flows could reduce impacts of the projects
and/or improve conditions by providing flows that are greater
than those that now exist. The staff uses the term Comprehensive
Water Block (CWB) to refer to the volume of water that a licensee
would have to rent to supplement the available river flow in
order to meet the recommended target flows.
The staff identi fied the Upper Snake ~ater Supply Bank
(~ater Bank) as a possible source for acquiring flows forenvironmental mi tigation and enhancement purposes. The state
established the ,Water Bank as a convenient means to allow and
account for the rental of water by those irrigators in need of
additional water from those who have excess water. Irrigators
who estimate that their water storage rights would be in excess
of their requirements in any year may place a portion of their
storage right in theWater Bank, to be leased by others, with
irrigators receiving first priority. Any water that is not
leased in any year is lost if all of the upstream storage is
refilled in the following year.
In a letter filed with the Commission on September 30, 1988,
ID~R commented on the staff's proposal, stating: "Not
wi thstanding the applicant's increased costs in obtaining the
water, it appears that structured reliance on the Water Bank
through the Comprehensive Water Block mechanism can be successful
in meeting prescribed mitigative flows on the mainstem of the
Snake River."
The staff discussed the operation of the Water Bank with
Alan Robertson, Supervisor, Hydrology Section, IDWR. It is the
staff's understanding from those discussions that water has been
avai lable for lease from the Water Bank in all years since its
creation and that, because of increased irrigation efficiencies,future water avai labi I i ty likely wi 1 1 increase. Idaho Power
Company (IPC) has leased wa ter for power genera tion from the
..
;
Project No. 2899-003 -1-
~ater Bank in every year since its creation. It is highly
probable that in the future, water will be available in the ~ater
Bank in excess of irrigation demand, except in very bad wateryears.
It is the staff's opinion that the short-term leasing or
rental of water that is in excess of the irrigation demand each
year for purposes such as environmental mi tigation and
enhancement, would be in the public interest, would not commi t
water storage to a non-agricultural use, and therefore would not
violate the intent for which the ~ater Bank was created or the
purposes for which the upstream storage projects were authorized.
The staff evaluated numerous scenarios for requiring in any
license issued that mi tiga tion and enhancement flows should be
provided in the bypass reach below Milner Dam. In addition, the
staff, recognizing that it might be economically beneficial to
develop the hydropower potential of the target flows that may be
recommended to be released at Milner Dam, performed
reconnaissancé-Ievel economic analyses of the benefi ts ofdeveloping a powerhouse at Milner Dam, in addition to. the
powerhouse proposed by the applicants to be located 1.6 milesdownstream. The preliminary studies showed that depending on the
magni tude of target flows specified in a license for the Milner
Project, it may be economically beneficial to construct a power
plant at the dam. The staff, therefore, recommends the inclusion
of special license Article 308, requiring the licensees to study
the feasibility of constructing such a power plant, and if it is
found to be feasible and economically beneficial, to submi t a
plan for constructing the power plant. The staff's economic
analyses are discussed in the Economic Evaluation section of thisassessment.
Section 10(a) (2) (A) of the Federal Power Act (FPA) requires
the Commission to consider the extent to which a project is
consistent with federal or state comprehensive plans for
improv ing, developing, or conserv ing a waterway or waterwaysaffected by the project.
The staff reviewed the Northwest Power Planning Council's
Northwes t Conservation and Electric Power Plan (Power Plan) to
determine if the project 1s consistent wi th the Power Plan. The
Council's Power Plan envisions meeting the growing regional
energy requirements in the most economical manner withenv i ronmentally acceptable resources. The Power Plan cons iders
any environmentally acceptable resource that is less expensive
than co~l-fueled steam electric generation as an acceptable
resource for development before the development of coal-fueled
power plants (the Council's planned marginal resource).
..
Project ~o. 2899-003
8-8-
The staff developed Ii fe-cycle costs of energy from theCounci I' s planned generic coal plant, assumed to be needed in the
year 2002, for determining if proposed hydroelectric projects
are, consistent in the long term wi th the Power Plan, as required
under Section 10(a)(2)(A) of the FPA. The staff assumed that new
coal plant generating resources would be required wi thin theregion by the year 2002, based on the need for addi tionalgenerating resources projected for the inv~stor-owned utili ties
in the Pacific Northwest Region, as discussed in the Need for
Power section of this assessment.
The staff found that the life-cycle levelized cost of the
proposed project is less, as of its projected on-line date, than
the levelized life-cycle cost of the least cost or marginal long
term alternative, included in the Power Plan. Therefore, the
project as proposed is not inconsistent wi th the Council's PowerPlan, and is economically beneficial wi thin the long-term
objecti ves of the Power Plan.
The staff reviewed the Water Plan and found that the
proposed project, both including and excluding the staff's target
flow recommendations, would be consistent with the Water Plan,
which requi res a minimum flow below Mi lner dam of zero cfs. The
staff's recommendation for including target flow condi tions inany license issued is consistent wi th the Water Plan. The staff
is not recommending that minimum flows be provided below Milner
dam, but rather that the licensees should provide any additional
water needed to -meet the target flows by leasing water that is in
excess of irrigation requirements from the Water Bank, but 'only
if avai lable, and in accordance with the rules of the Water Bankoperation.
The staff reviewed the Idaho Fisheries Management Plan, the
Idaho Outdoor Recreation Plan, the Idaho Water Quality Standards,
and the Department of the Interior's Monument Proposed Resource
Management Plan and found that the plans do not affect theproposed project's development or operation wi th respect to
irrigation, flood control, or navigation.
A review of the Commission's Planning Status Report for the
Upper Snake River Basin and the Hydroelectric Si te Data Base show
that there are no proposed or existing projects that wouldconfl ict wi th the proposed project.
Economic Evaluation
A proposed project is economically beneficial so long -as its
levelized cost is less than the long-term levelized cost of
alternative energy to any utility in the region that can beserved by the project.
...
Project No. 2899-003
9-9-
The staff calculates the 50-year projected levelized
al ternative energy cost in the region in 1992 to be about 85mills per kilowatthour (kWh). This is the levelized unit cost of
energy from coal-fueled steam electric plants assumed to be
needed in the year 2002, and the value of displaced fuel
consumption in existing coal-fueled steam plants until that time.
The staff assumed that new coal plant generating resources would
be required wi thin the region by the year 2002, based upon theprojected need for addi tional generating resources, by the
investor-owned utili ties in the Paci fic ~orthwest Region, as
discussed in the Need for Power section of this assessment.
The appl icants entered into a contract wi th IPC for the
development of power facili ties at the Milner si te. Under the
terms of the contract, IPC would receive the total project power
production and would pay the total project costs plus two
mills/kwh (escalating 25 percent every 5 years) for all energyproduced. The applicants would use the escalating energy
payment, which is equivalent to 3.13 mills/kwh when levelized
over 50 years,. to help offset the costs of repairing the dam, as
described in the Dam Safety section of this assessment.
The staff evaluated the economics of the 44-MW project the
applicant proposes to construct under various target flow
condi tions, assumed to be required in the bypass reach of theri ver between Milner Dam and the proposed powerhouse, to be
loca ted 1.6 mi les downs tream, as shown in Table 1.
Table 1. Summary of the generation, levelized net annual
benefits, rate of return on investment (ROI), and
levelized annual revenue to the licensee for the
projectt as proposed to be constructed by the licensee
and to be operated under various mitigation/enhancementbypass-flow scenarios.
Average Levelized Levelized
Bypass generation annual annual
flows (GWh)benefi ts ROI revenues
58 cfs year round 154 $4,233,000 18.6%$482,400
58 cfs summer,
150 cfs winter 151 $3,995,000 18.2%$473,400
200 cfs year round 147 $3,665,000 17.6%$460,100
300 cfs year round 143 $3,305,000 1; .0%S44í,400
300 cfs summer,
..
Project No. 2899-003
10-10-
720 cfs winter 134 $2,522,000 15.6%$419,400
The staff performed reconnaissance level feasibility studies
evaluating the economic benefits of installing small units at the
base of Milner Dam to utilize the flows that would be released at
the dam. The potential power facilities to be located at Milner
Dam were sized as shown in Table 2.
..
Project ~o. 2899-003
11-11-
Table 2. Milner Dam hydraulic capaci ty for various environmental
mi tigation/enhancement bypass flows.
Bypass flow Uni t hydraulic capaci t~'
58 cfs year round 50-150 cfs uni t
58 cfs summer,150 cfs winter 50-150 cfs uni t
200 cfs year round 200-600 cfs unit
300 cfs year round 300-900 cfs unit
300 cfs summer,720 cfs winter 300-900 cfs unit
The staff evaluated the economic benefi ts of developing
capaci ty at Milner Dam to utilize the bypass flows as shown inTable 3.
Table 3. Summary of the generation, levelized net annual
benefits, ROl, and levelized annual revenue to the
licensee for generating capaci ty installed at MilnerDam, for various mi tiga tion/enhancement bypass flows.
Average Levelized Levelized
Bypass generation annual annual
flows . (GWh)Capaci ty benefits ROl revenues
58 crs 3.8 1 MW ( $46,200)9.5%$11,700
58-150 cfs 4.4 1 MW $5,000 11.2%$13,700
200 cfs 11.3 3 MW $304,000 16.4%$35,400
300 cfs 13.5 4 MW $304,000 15.2%$42,200
300-720 cfs 16.2 4 foW $525,500 18.2%$50,700
Since the reconnaissance-level feasibility studies show that
the addi tion of capaci ty at Milner Dam may be economically
beneficial compared to the alternative cost of energy in the
region, any license issued should include Article 308, requiring
that the licensees study the feasibility of installing generating
capacity at the darn, and, if the installation is feasible,
..
Project ~o. 2899-003
12-12-
requiring the licensees to submi t a plan for developing the
capac i tJ" .
The staff evaluated the economic benefi ts of developing the
combination of the propòsed project powerhouse, and a power plant
at the dam as shown in Table 4.
Table 4. Summary of levelized annual benefi ts of combined
development of a powerhouse at Milner Dam as well as
the power plant proposed to be developed downs tream,
for various mi tigation/enhancement bypass flows.
Levelized Levelized
Bypass Combined Gen.annual annual
flows capaci ty (GWh)benefi ts revenues
58 cfs 44 MW 1/154 $4,233,000 $482,400
58-150 cfs 45 MW 155 $4,238,000 $48ï,400
200 cfs 4 ï MW 158 $3,969,000 $494,500
300 cfs 48 MW 156 $3,609,000 $49ï,700
300-720 cfs 48 MW 150 $3,048,000 $469,500
1/ This scenario is the same as the proposed scenario with a
downstream powerhouse only, since installing a unit at the
dam would not be economically beneficial under this bypassflow.
The staff evaluated the amounts and levelized costs of water
that the applicants would need to lease from the Water Bank to
meet the recommended mi tigation/enhancement bypass flows as shownin Table 5.
The current cost of water from the Water Bank is $2.50 per
acre-foot per year. In its studies, the staff used a cost of
$4.32 per acre-foot, which is the levelized cost of water over 50
years, assuming that the cost of water would escalate at 5percent annually.
Table 5. Amounts and levelized costs of the CWB needed to be
leased from the Water Bank to meet variousmi tigation/enhancement bypass flows.
..
Project ~o. 2899-003
13-13-
Bypass Storage required Levelized
flows (acre-feet)average annual cost
58 cfs 3,586 $15,500
58-150 cfs 3,586 $15,500
200 cfs 11,246 $48,600
300 cfs 22,729 $98,200
300-720 cfs 22,729 $98,200
The staff evaluated the net annual benefits of the project
including the 'projected cost the CWB water for various
mi tigation/enhancement bypass flows, as shown in Table 6.
Table 6. Summary of the levelized net annual benefits or the
project, and combined project (including a power plant
at the dam) for various mi tigation/enhancement bypass
flow requirements including the levelized annual cost
of the CWB.
Proposed Combinedprojectproject
Bypass lev.annual lev. annual
flows benefi ts benefi ts
58 cfs year round $4,217,500 $4,217,500
58 cfs summer,
150 crs winter $3,979,500 $4,222,500
200 cfs year round $3,616,400 $3,920,400
300 cfs year round $ 3,206,800 $3,510,800
300 cfs summer,
720 cfs winter $2,423,800 $2,949,800
In order to preserve the high-flow-condi tion kayaking
opportuni ties that occur in the April-May period in the bypass
..
Project No. 2899-003
14-14-
reach of the river below Milner Dam, the environmental staff
recommends requiring the main powerhouse to be shut down during
daylight hours in the April-May period, for the equivalent of
eight full-load hours of operation (4000 cfs) for eight days, in
accordance with proposed license Article 413. A shutdown of the
main power plant during the spring would reduce the project
genera tion by 42,000 kWh for each hour of shutdown. The total
reduction in project generation for the equivalent of 64 hours of
full-load shut down is 2,688,000 kWh. At the regional levelized
energy value of 85 mills/kWh, the shutdown would reduce theproject benefi ts by approximately $228,000 annually. The
shutdown would reduce the project generation and therefore the
revenues that the licensees would receive under the power
purchase contract wi th IPC. The levelized value of the lost
revenues to the licensees over the license period would beapproximately $8,400 annually.
The net annual benefi ts of the project including the
projected cost of the spring bypass flow for kayaking under andfor the other 'various mi tiga tion/enhancement bypass flows, and
the revenues to be received by the licensees are shown inTable; .
Table 7. Summary of the licensees' levelized annual revenues,
and the level ized net annual benefi ts of the project as
proposed, and the combined project (including a powerplant 'at the dam) for various water quality and fisherymi tigation/enhancement bypass flow requirements,
including the levelized annual cost of the CWB, and the
cost of plant shutdown for kayaking mi tigation.
,Proposed Proposed Combined Combinedprojectprojectprojectproject
Bypass lev.annual licensee lev.annual licensee
flows benefi ts revenues benefi ts revenues
58 cfs year round $3,989,500 $474,000 53,989,500 $474,000
58 crs summer,
150 cfs winter $3,751,500 $465,000 $3,994,500 $479,000
200 cfs year round $3,388,400 $451,700 $3,692,400 $486,100
300 cfs year round $2,978,800 $439,000 $3,282,800 $489,300
300 crs summer,
;20 crs winter $2,195,800 $411,000 $2,721,800 $461,100
..
Project ~o. 2899-003
15-15-
The benefits and revenues for the combined project
development scenario, as shown in on Table 7., is the same as for
the proposed project, wi th a downstream powerhouse only, because
installing a uni t at the dam would not be economically beneficialunder a 58-cfs bypass flow.
The levelized net annual benefi ts and revenues of the
project to the licensees and ¡PC under the purchase power
contract between the two wi th the mi tigation/enhancement
provisions discussed herein are summarized in Table 8 (without
the generating uni tat the dam) and Table 9 (wi th the generating
unit at the dam).
Table 8. Summary of levelized net annual benefits and revenues
to the licensees and ¡PC wi th mi tigation/enhancement
provisions without a generating unit at the dam.
Total Project Benefi ts
or Revenues as proposed Project ToLicensees
To
¡PC
58 cfs Summer ~
150 cfs Winter $3,979,500 $473,400 $3,506,100
Loss of Benefi ts or
Revenues for Proposals
200 cfs Bypass Flow 330,000 13,300 316,700
~ater Bank Purchase 33,100 0 33,100
8-day Kayaking Flows 228,000 8,400 219,600
Total Mi tigation Costs 591,100 21,700 569,400
Total Project Benefi ts
or Revenues as t-i tiga ted $3,388,400 $451,700 $2,936,700
..
Project ~o. 2899-003
16-16-
Table 9. Summary of levelized net annual benefi ts and revenues
to the licensees and IPC wi th mi tigation/enhancement
provisions with a generating unit at the dam.
Total Project Benefi ts
or Revenues as proposed Project ToLicensees
To
¡PC
58 cfs Summer,
150 cfs Winter $3,979,500 $473,400 $3,506,100
Loss of Benefi ts or
Revenues for Proposals
200 cfs Bypass Flow 26,000 (21,100)47,100
Water Bank Purchase 33, 100 0 33,100
8-day Kayaking Flows 228,000 8,400 219,600
Total Mi tigation Costs 287,100 (12,700)299,900
Total Project Benefi ts
or Revenues as Mitigated $3,692,400 $486,100 $3,206,300
Because the economic studies for the proposed project, for
all cases evaluated, show that the project power costs less thanthe levelized al ternati ve regional cost of power, the project is
economically beneficial. Because the applicants have entered
into a contract to sell all of the project power to ¡PC, the
proposed project is financially feasible.
The applicants stated that the primary purpose of proposing
this project is to provide revenues to aid in paying for the dam
rehabi 1 i tali on, previously di scussed in the Project Safetysection of this assessment. In 1984, the cost of rehabilitating
Milner Dam was projected to be approximately $7 million. The
staff estimates the minimum long-term annual carrying charges of
..
Project No. 2899-003
1 i-17-
financing the work to be approximately $ïOO,OOO. The annualre,'enues that the appl ican t would receive from IPC under the
power purchase contract are projected to range from about
$411,000 to about $~89, 000 for the various bypass-flo~ scenarios
evaluated, so that the applicants would be required to provide
from about $200,000 up to about $300,000 of the annual debt
service from irrigation revenues.
1"eed for Power
The ~orthwest Power Planning Counci I' s (~PPC) August 1988
draft update of its 1986 Northwest Power Plan (Update) shows
regional resource deficits in the NPPC area in about 1992 and
2000 wi th medium-high and medium-low load growth scenarios,
respectively. A medium load growth scenario, developed
cooperatively with the Bonneville Power Administration (BPA) andi included in the Update but not in the Update resource portfolios,
could produce deficits about 1996. All three of these forecastsare considered to be equally probable in the probabili ty
distribution of load uncertainty assumed for development of the
Update power plan. The high load projection could produce
deficits by 1991, and under the low load scenario deficits wouldnot occur before 2010. The probabili ty distribution assumes a i6
percent probability that load will equal ~r exceed the medium-lowload growth scenario.
The 1988 projections of the Pacific Nprthwest Utili ties
Conference Committee (PNUCC) project that regional resource
deficits would occur in about 1994-1995 under medium load growthassumptions.
NPPC, BPA, AND PNUCC all acknowledge that resource defici ts
could occur on the investor-owned utili ty (IOU) systems in the
NPPC area before occurring in the NPPC area as a whole. The
PNUCC shows iou defici ts occurring as early as 1992-1993 under
medium load growth assumptions and currently planned power
purchases from BPA. The NPPC Update states that there has been
li ttle evidence to ~ate that the NPPC area is moving toward
coordinated resource development (the primary theme upon whichthe plan is formulated). Public utili ties in the area are saidto percei ve the BPA future as being uncertain and to seek a
higher degree of independence from BPA. This same perception of
an uncertain future has di scouraged IOU's from placing any
significant amounts of load on the BPA system. Many of NPPC's
area high load growth areas are served by iou' 8 that have fewer
resources to meet their power requirements than the publiclyowned systems. The absence of area wide coordinated planning
cou ld cause resource def ic its on the iou sys terns as early as 1989
and a need for addl tional generating resources on the IOC systems
as early as 1993, under a medium-high load scenario.
..
Project No. 2899-003
18-18-
Based on these predictions, a need for power could exist in
the NPPC area any time from the ear- I y 1990' s to late i 990' s, and
hydro resources coming on-line in the early 1990' s could be
u~eful in meeting a smal I part of that need for power. NPPC has
also identified 630 average ~lW of new hydro power potential that
adheres to development constraints imposed by the federal streamprotecti on pr-ogram and the NPPC protected areas program. The
proposed project could provide a small portion of this hydro
requi r-ement.
Alternatives to the Proposed Project
Because the applicants are not electric utilities, theavailable options are to construct or not construct the project.
If the license is not issued, the project would not be
constructed, and the power that would have been developed from a
renewable resource would be lost and eventually would have to beprav ided using nonrenewable fuels.
If the lfcense, is not issued, the applicants will notrecei ve power generation revenues, and would therefore have to
provide the total costs for the Milner Dam rehabilitation from
irrigation revenues.
Exhibits
The following sections of Exhibit A and Exhibi t F drawings,
filed July 2 Î, 1988, conform to the Commission' 8 rules and
regula tions and should be approved and made a part of the
1 icense:
Exhibi t A - Section III Turbine and Generator, Section iv
Electrical Transmission, and Section V Accessory
Equipment.
Exhibit F -
Exhi bi t FERC No.Title
F-1 2899-1 Key and General Plansand Canal Sections
F-2 2899-2 Canal and Forebay
Embankment Sections
F-3 2899-3 Headworks and Wasteway
Plans, Sections &
Detai Is
F-4 2899-4 Control Structure
Plan and Sections
.
Project 1\0.2899-003
F-5 2899-5
F-6 2899-6
Sections
F-7 2899-7
F-8 2899-8
F-10 2899-10
F-ll 2899-11
F-12 2899-12
19-19-
.
Intake Structure
Plan and Section
Powerhouse and Vicini ty
Plan, Profile and Sections
Powerhouse Plans
Powerhouse Sections
Milner Dam Rehabi Ii ta tionPlan
New Spillway
Plan and Section
Dam Embankment Sections
..
Form L-2
(Revised October, 1975)
FEDERA ENERGY -REGULATUKï ~UMMi~~iUN
TERMS AND CONDITIONS OF LICENSE FOR
UNCONSTRUCTED ~~JOR PROJECT
AFFECTING LADS OF THE UNITED STATES
Article 1. The entire project, as described in this
order of the Commission, shall be subject to all of theprovisions, terms, and conditions of the license.
Article 2. No substantial change shall be made in
the maps, plans, specifications, and statements described
and designated aa exhibits and approved by the Commission
in its order as a part of the license until such change
shall have been approved by the Commission: Provided,
however, That if the Licensee or the Commission deems
it necessary or desirable that said approved exhibits,
or any of them, be changed, there shall be submitted
to the Commission for approval a revised, or additional
exhibi t or exhibits covering the proposed changes which,
upon approval by the Commssion, shall become a part of
the license and shall supersede, in whole or in part, such
exhibit or exhibits theretofore made a part of the license
as may be specified by the Commssion..~.
Article 3. The project works shall be constructed
in substantial conformity with the approved exhibits
referred to in Article 2 herein or' aa chanqed in accord-
ance with the provisions of said article. Except when
emergency shall require for the protection of navigation,
life, health, or property, there shall not be made without
prior approval of the Commission any aubstantial alteration
or addition not in conformi ty wi th the approved plans to any
dam or other project works under the license or any sub-
stantial use of project lands and waters not authorized
herein; and any emergency alteration, addition, or use
so made shall thereafter be subject to such modification
and chanqe as the Commission may direct. Minor changes in proje~t
works, or in uses of project lands and waters, or divergence
from such approved exhibits may be made if such changes will
not result in a decrease in efficiency, in a material increase in
cost, in an adverse environmental impact, or in impairment of
the general scheme of development; but any of such minor changes
made without the prior approval of the Commission, which in its
judgment have produced or will produce any of such results,
shall be subject to such alteration as the Commission maydirect.
..
- 2 -
Upon the completion of the proj ect, or at such other
time as the Commission may ¿irect, the Licensee shall submit
to the Commission for approval revised exhibits insofar as
necessary to show any divergence from or variations in the
project area and project boundary as finally located or in
the project works as actually constructed when compared with
the area and boundary shown and the works described in the
license or in the exhibits approved by the Commission, together
with a statement in writing setting forth the reasons which
in the opinion of the Licensee necessitated or justified
variation in or divergence from the approved exhibits. Such
revised exhibits shall, if and when approved by the Commission,
be made a part of the license under the provisions of Article
2 hereof.
Article 4. The construction, operation, and main-
tenance of the project and any work incidental to addi-
tions or alterations shall be subject to the inspection
and supervision of the Regional Engineer, of the
Commission, in the region wherein the project is located,
or of such other officer or agent as the Commssion may
designate, who shall be the authorized representative of the
Commission for such purposes. The Licensee shall cooperate
fully with said representative and shall furnish him a
detailed program of inspection by the Licensee that will
provide for an adequate and qualified inspection force
for construction of the project and for any subsequent
alterations to the project. Construction of the project
works or any feature or alteration thereof shall not be
initiated until the program of inspection for the project
works or any such feature thereof has been approved by ,
said representative. The Licensee shall also furnish
to said representative such further informtion as he may
require concerning the construction, operation, and
maintenance of the project, and of any alteration thereof,
and shall notify him of the date upon which work will
begin, as far in advance thereof as said representative
may reasonably specify, and shall notify him promptly
in writing of any suspension of work for a period of
more than one week, and of its resumption and completion.
The Licensee shall, allow said representative and other
officers or employees of the United States, showing proper
credentials, free and unrestricted access to, through, and
across the project lands and project works in the performance
of their official duties. The Licensee shall comply with
such rules and regulations of general or special applicability
as the Commission may prescribe from time to time for the
protection of life, health, or property.
..
- 3 -
Article S. The Licensee, within five years from the date
of issuance of the license, shall acquire title in fee or the
right to use in perpetuity all lands, other than lands of the
Cnited States, necessary or appropriate for the construction,
maintenance, and operation of the project. The Licensee or itssuccessors and assigns shall, during the period of the license,
retain the possession of all project property covered by the
license as issued or aa later amended, includinq the project
area, the project works, and all franchises, easements, water
rights, and rights of occupancy and use; and none of such
properties shall be voluntarily sold, leased, transferred,
abandoned, or otherwise disposed of without the prior written
approval of the Commission, except that the Licensee may lease
or otherwise dispose of interests in project lands or property
without specific written approval of the Commssion pursuant
to the then current regulations of the Commission. The
provisions of this article are not intended to prevent the
abandonment or the retirement from service of structures,
equipment, or other project works in connection with replace-
ments thereof when they become obsolete, inadequate, or
inefficient for further service due to wear and tear; and
mortgage or trust deeds or judicial sales made thereunder,
or tax sales, shall not be deemed voluntary transfers within
the meaninq of this article.
Article 6. In the event the projeet is taken over
by the United States upon the termination of the license
as provided in Section 14 of the Federal Power Act, or is
transferred to a new licensee or to a non-power licensee
under the provisions of Section 15 of said Act, the Licensee,
its successors and assiqns shall be responsible for, and shall
make qood any defect of title to, or of riqht of occupancy
and use in, any of such projeet property that is necessary
or appropriate or valuable and serviceable in the maintenance
and operation of the project, and shall pay and discharqe, or
shall assume responsibility for payment and discharqe of, all
liens or encumrances upon the project or project property
created by the Licensee or created or incurred after the
issuance of the license: Provided, That the provisions of
this article are not intended to require the Licensee, for ,~N.~~ - .
the purpose of transferrinq the project to the United States
or to a new licensee, to acquire any different title to, or
riqht of oecupancy and use in, any of such project property
than was necessary to acquire for its own purposes as the
Licensee.
..
- 4 -
Article 7. The actual legitimate original cost of
the prõject, and of any addition thereto or betterment
thereof, shall be determined by the Corrmission in accordance
with the Federal Power Act and the Corrmission' s Rules andRegulations thereunder.
Article 9. The Licensee shall install and thereafter
maintain gages and stream-gaging stations for the purpose
of determining the stage and flow of the stream or streams
on which the project is located, the amount of water held
in and withdrawn from storage, and the effective head on
the turbines: shall provide for the required reading of
such gages and for the adequate rating of such stations:
and shall install and maintain standard meters adequate for
the determination of the amount of electric energy generated
by t , project works. . Th. numer, character, and locationof '-.. :Jes, meters, or other-'measUrinq devices, and the
method of operation thereof, shall at all times be sa tis-
factory to the Commission or its authorized representative.
The Commission reserves the riqht, after notice and oppor-
tunity for hearing, to require such alterations in thenumer, character, and location of gages, meters, or
other measuring devices, and the method of operation thereof,
as are necessary to secure adequate determinations. The
installation of gaqes, the rating of said stream or streams,
and the determination of the flow thereof, shall be under the
supervision of, or in cooperation with, the District Engineer
of the United States Geological Survey having charge Qf
stream-gaging operations in the region of the projeot, and
the License. shall advance to the United States Geological
Survey the amount of funds estimated to be necessary for such
supervision, or cooperation for such periods as may be mutuallyagreed upon. The Licensee shall keep accurate and suffieient
records of the foregoing determinations to the satisfaction
of the Commission, and shall make return of such records
annually at such time and in such form as the Commission
may prescribe.
Article 9. The Licensee shall, after notice and
opportunity for. hearing, install additional capacity or make
other changes in the proj ect as directed by the Commission,
to the extent that it is economically sound and in the
public interest to do so.
..- 5 -
Article 10. The Licensee shall, after notice and
opportuni ty for hear ing, coord ina te the operation of the
project, electrically and hydraulically, with such other
projects or power systems and in such manner as the
Co~mission may direct in the interest of power and other
beneficial public uses of water resources, and on such
conditions concerning the equitable sharing of benefits
by the Licensee as the Commission may order.
Article 11. Whenever the Licensee is directlybenefited by the construction work of another licensee,
a permittee, or the United States on a storage reservoir
or other headwater improvement, the Licensee shall reimburse
the owner of the headwater improvement for such part of the
annual charges for interest, maintenance, and depreciation
thereof as the Commission shall determine to be equitable,
and shall pay to the United States the cost of makinq such
determination as fixed by the Commission. For benefits
provided by a storaqe reservoir or other headwater improve-
ment of the United States, the Licensee shall pay to the
Commission the amounts for which it is billed from time
to time for such headwater benefits and for the cost of
making the determinations pursuant to the then current
regulations of the Commission under the Federal Power Act.
.'l'l~...'
Article 12. The operations of the Licensee, so far as
they affect the use, storage and discharge from storage of
waters affected by the license, shall at all times be
controlled by such reasonable rules and regulations as
the Commssion may prescribe for the protection of life,
heal th, and property, and in the interest of the fullest
practicable conservation and utilization of such waters
for power purposes and for other beneficial public uses,
including recreational purposes, and the Licensee shall
release water from the project reservoir at such rate incubic feet per second, or such vol ure in acre- feet per
specified period of time, as the Commission may prescribe
for the purposes hereinbefore mentioned.
~J''''.''..~.-:'-~~'''''.
Article 13. On the application of any person,
association, corporation, Federal agency, State or
municipality, the Licensee shall permit such reasonable
use of its reservoir or other project properties, including
works, lands and water rights, or parts thereof, as may.
be ordered by the Commission, after notice and opportun~ ty
..
- 6 -
for hearing, in the interests of comprehensive development
of the waterway or waterways involved and the conservation
and utilization of the water resources of the region for
water supply or for the purposes of steam-electric,
irrigation, industrial, municipal or similar uses. The
Licensee shall receive reasonable compensation for use
of its reservoir or other project properties or parts
thereof for such purposes, to include at least full
reimbursement for any damages or expenses which the
joint use causes the Licensee to incur. Any such
compensation ahall be fixed by the Commission either
by approval of an agreement between the Licensee and
the party or parties benefiting or after notice and
opportuni ty for hearing. Applications shall contain
information in sufficient detail to afford a full
understanding of the proposed use, including satisfactory
evidence that the applicant possesses necessary water
rights pursuant to applicable State law, or a showing
of cause why such evidence cannot concurrently be submitted,
and a statement as to the relationship of the proposed
use to any State or municipal plans or orders which may
have been adopted with respect to the use of such waters.
Article 14. In the construction or maintenance of the
project works, the Licensee shall place and maintain suitable
structures and devices to reduce to a reasonable degree the
liability of contact between its transmission linei and
telegraph, telephone and other signal wires or power trans-
mission lines constructed prior to its transmission lines
and not owned by the Licensee, and shall also place and
maintain suitable structurei and devices to reduce to a
reasonable degree the liability of any structures or wires
falling or obstructing traffic or endangering life. None
of the provisions of this article are intended to relieve
the Licensee from any responsibility or requirement which
may be imposed by any other lawful authority for avoidingor eliminating inductive interference.
Article LS. The Licensee shall, for the conservation
and development of fish and wildlife resourcei, construct,maintain, and operate, or arrange for the construction,
maintenance, and operation of such reasonable facilities,
and comply with such reasonable modifications of the
project structures and operation, as may be ordered by
the Commission upon its own motion or upon the recommendation
of the Secretary of the Interior or the fish and wildlife
agency or agencies of any State in which the project or
a part thereof is located, after notice and opportuni ty
for hearing.
..
7 -
Article 16. Whenever the United States shall desire,
in connection with the project, to construct fish and
wildlife facili ties or to improve the existing fish and
wildlife facilities at its own expense, the Licensee shall
permi t the United States or its designated agency to use,
free of cost, such of the Licensee's lands and interests in
lands, reservoirs, waterways and project works as may be
reasonably required tc complete such facilities or such
improvements thereof. In addi tion, after notice and
opportuni ty for hearing, the Licensee shall modify the
project operation as may be reasonably prescribed by the
Commission in order to permit the maintenance and operation
of the fish and wildlife facilities constructed or improved
by the United States under the provisions of this article.
This article shall not be interpreted to place any obligation
on the United States to construct or improve fish and wild-
life facilities or to relieve the Licensee of any obligation
un4er this license.
Article 17. The Licensee shall construct, maintain,
and operate, or shall arrange for the construction, main-
tenance, and operation of such reasonable recreational
facilities, including modifications thereto, such as
access roads, wharves, launching ramps, beaches, picnic
and camping areas, sanitary facilities, and utilities,
giving consideration to the needs of the physically
handicapped, and shall comply with such reasonable modi-
fications of the project, as may be prescribed here-
after by the Commission during the term of this license
upon its own motion or upon the recommendation of the
Secretary of the Interior or other interested Federal
or State agencies, after notice and opportunity for hearing.
Article 18. So far as is consistent with proper
operation of the project, the Licensee shall allow
the public free access, to a reasonable extent, to
project waters and adjacent proje~t lands owned by the
Licensee for the purpose of full public utilization of
such lands and waters for navigation and for outdoor
recreational purposes, including fishing and hunting:
Provided, That the Licensee may reserve from public
access such portions of the project waters, adjacent
lands, and project facilities as may be necessary for
the protection of life, health, and property.
.- 8 -.
Article 19. In the construction, maintenance, or
operation of the proj ect, the Licensee shall be respons ible
for, and shall take reasonable measures to prevent, soil
erosion on lands adjacent to streams or other waters,
stream sedimentation, and any form of water or air pollution.
The Commission, upon request or upon its own motion, may
order the Licensee to take such measures as the Commission
finds to be necessary for these purposes, after notice
and opportunity for hearing.
Article 20. The Licensee shall consult with the
appropriate State and Federal agencies and, within one
year of the date of issuance of this license, shall sub-
mit for Commission approval a plan for clearing the reser-
voir area. Further, the Licensee shall clear and keep clear
to an adequate width lands along open conduits and shall
dispose of all temporary structures, unused timber, brush,
refuse, or other material unnecessary for the purposes of theproj ect which results from the clearing of lands or from the
maintenance or al tera tion of the proj ect works. In addition,
all trees along the periphery of project reservoirs which may
die during operations of the project shall be removed. Upon
approval of the clearing plan all clearing of the lands and
disposal of the unnecessary material shall be done with due
diligence and to the satisfaction of the authorized represen-
tative of the Commission and in accordance with appropriate
Federal, State, and local statutes and regulations.
Article 21. Timber on lands of the United States cut,
used, or destroyed in the construction and maintenance of
the project works, or in the clearing of said lands, shall
be paid for i and the resulting slash and debris disposed
of, in accordance with the requirements of the agency ofthe United States having jurisdiction over said lands.
Payment for merchantable timber shall be at current stump-
age rates, and payment for young growth timber below
merchantable size shall be at current damage appraisalval ues. However, the agency of the United States having
jurisdiction may sell or dispose of the merchantable
timber to others than the Licensee: Provided, That timber
so sold or disposed of shall be cut and removed from the
area prior to, or without undue interference with, clearing
operations of the Licensee and in coordination with theLicensee i s project construction schedules. Such sale or
disposal to others shall not relieve the Licensee of
responsibili ty for the clearing and disposal of alls lash and debris from projeet lands.
..
- 9 -
Article 22. The Licensee shall do everything rea-
sonably wi thin its power, and shall require its employees,
contractors, and employees of contractors to do every-
thing reasonably wi thin their power, both independently
and upon the request of officers of the agency concerned,
to prevent, to make advance preparations for suppression of,
and to suppress fires on the lands to be occupied or used
under the license. The Licensee shall be liable for and shall
pay the costs incurred by the United States in suppressing
fires caused from the construction, operation, or main-
tenance of the project works or of the works appurtenant
or accessory thereto under the 1 icense. .";;_'. _:.
Article 23. The Licensee shall interpose no ob-
jection to, and shall in no way prevent, the use by the
agency of the United States having jurisdiction over the
lands of the United States affected, or by persons or
corporations occupying lands of the United States under
permit, of water for fire suppression from any stream,
condui t, or body of water, natural or artificial, used
by the Licensee in the operation of the project works
covered by the license, or the use by said parties of
water for sanitary and domestic purposes from any
stream, conduit, or body of water, natural or artificial,
used by the Licensee in the operation of the project
works covered by the license.
Article 24. The Licensee shall be liable for injury to,
or destruction of, any building" bridges, road., trails,
lands, or other property of the United States, occasioned
by the construction, maintenance, or operation of the
project works or of the works appurtenant or accessory
thereto under the license. Arrangements to meet such
liability, either by compensation for such injury or
destruction, or by reconstruction or repair of damaged
property, or otherwise, shall be made with the appropriate
department or agency of the United States.
Article 25. The Licensee shall allow any agency of
the United States, without charge, to construct or permit
to be conatructed on, through, and across those project
lands which are lands of the United States such conduits,
chutes, ditches, railroads, roads, trails, telephone and
power lines, and other routes or means of transportation
and communication as are not inconsistent with the enjoyment
..- 10 -
of said lands by the Licensee for the purposes of the license.
This license shall not be construed as conferring upon
the Licensee any right of use, occupancy, or enjoyment
of the lands of the United States other than for the
construction, operation, and maintenance of the project
as stated in the license.
Article 26. In the construction and maintenance of
the project, the location and standards of roads and
trails on lands of the United States and other uses
of lands of the Uni ted States, including the location
and condition of quarries, borrow pi~., and spoil dis-
posal areas, shall be subject to the approval of the
department or agency of the United States having supervisionover the lands invol ved.
Article 27. The Licensee shall make provision, or
shall bear the reasonable coat, aa determined by the
agency of the United States affected, of making provision
for avoiding inductive interference between any project
transmission line or other project facility constructed,
operated, or maintained under the license, and any radio
installation, telephone line, or other communication
facility installed or constructed before or after con-
struction of such project ~ransmission line or other
project facility and owned, operated, or used by such
agency of the United States in administering the lands
under its jurisdiction.
Article 28. The Licensee shall make use of the Commission i s
guidelines and other recognized guidelines for treatment of
transmission line rights-of-way, and shall clear such portions
of transmi~sion line rights-of-way across lands of the United
States as are designated by the officer of the United States
in charge of the lands; shall keep the areas so designated
clear of new growth, all refuse, and inflammable material
to the satisfaction of such officer; shall trim all branches
of trees in contact with or liable to contact the trans-
mission lineaLahall cut and remove all dead or leaning
trees which might fall in contact with the transmission
lines; and shall take such other precautions against
fire aa may be required by such officer. No fires for
the burning of waste material shall be set except with
the prior written consent of the officer of the United
States in charge of the lands as to time and place.
..- 11 -
Article 29. The Licensee shall cooperate with the
United States in the disposal by the United States, under
the Act of July 31, 1947, 61 Stat. 681, as amended (30 U.S.C.
sec. 601, et ses.), of mineral and vegetative materials from
lands of tnë Uni ted States occupied by the proj ect or any
part thereof: Provided, That such disposal has been
authorized by the Commission and that it does not
unreasonably interfere with the occupancy of such lands
by the Licensee for the purposes of the license: Provided
further, That in the event of disagreement, any question of
unreasonable interference shall be determined by the
Commission after notice and opportunity for hearing.
Article 30. If the Licensee shall cause or suffer
essential project property to be removed or destroyedor to become unti t tor use, without adequate replacement,
or shall abandon or discontinue good faith operation of
the project or refuse or neglect to comply with the
terms of the license and the lawful orders of the
Co~mission mailed to the record address of the Licensee
or its agent, the Commission will deem it to be the
intent of the Licensee to surrender the license. The
Commission, after notice and opportunity for hearing,
may require the Licensee to remove any or all structures,
equipment and power lines within the project boundary
and to take any such other action necessary to restore
the project waters, lands, and facilities remaining
within the project boundary to a condition satisfactory
to the United States agency having jurisdiction over
its lands or the Commission i s authorized representative,
as appropriate, or to provide for the continued operation
and maintenance of nonpower facilities and fulfill such
other obligations under the license as the Commission
may prescribe. In addition, the Commission in its
discretion, after notice and opportunity for hearing,
may also agree to the surrender of the license when the
Commission, for the reasons recited herein, deems it to
be the intent of the Licensee to surrender the license.
Article 31. The right ot the Licensee and of its
successors and assigns to use or occupy waters over
which the United States has jurisdiction, or lands of
the United States under the license, for the purpose
of maintaining the project works or otherwise, shall
absolutely cease at the end of the license period,
unless the Licensee has obtained a new license pursuant
to the then existing laws and regulations, or an annual
license under the terms and condi tions of this license.
..
- 12 -
Article 32. The terms and conditions expressly
set forth in the license shall not be construed as
impair ing any terms and condi tions of the Federal Power
Act which are not expressly set forth herein.
. .
Twin Falls Canal Company Project No. 2899-003
North S ide Canal Company, Ltd.
(Issued December 15, 1988)
MOLER, Commissioner, concurring:
I support the Commission i s expedited action issuing the
license in this proceeding. I do so principally because of the
need to act quickly so that the applicants will be able to obtain
the funds necessary to strengthen the dam.
I am aware that there are important water law issues
embodied in this case. The order is consistent with the
Commission i s prior actions interpreting its statutory respon-
sibili ties under Section 10 (a) (1) of the FPA 1/, however, it
represents the first time I have participated in a case
involving this particular matter of statutory interpretation.
Ordinarily I would have asked to delay this case until I had alengthier opportunity to review the legal issues presented. In
this case, however, the public safety issue argues against adelay.
I wòuld note that the United states Court of Appeals for
the Ninth Circuit is "eurrently considering a case involving theCommission's interpretation of section 10 (a) (1). 11
i await the results of that litigation with interest. I do
not want my participation in this case to indicate that I have
come to any definitive legal conclusion on the matter.
~ Jd~" f'~ A
Vizabet~ Ai:me Mõî 9Commissioner
1/ See,~, Horseshoe Bend Hydroelectric Company, 42 FERC , 61,071.
11 State of Calif. ex. rel. Water Resources Control Board v.
lE (9th Cir. No. 87-7538).
...
."
BEFORE TH
IDAHO PULIC UTIES COMSSION
CASE NO. IPC-E-9Q-a
IDAH POWER COPANY
ATTACH 2
TO
APPCATION
/¡r~ '.¡.. ~ "',',.''.;~"
l .eoP'l.
AGREEMENT REGARDING THE OWNERSHIP, CONSTRUCTION,
OPERATION AND MAINTENANCE
OF
THE MILNER HYDROELECTRIC PROJECT (FERC NO. 2899)
BY AND BETWEEN
THE TWIN FALLS CANAL COMPANY,
NORTHSIDE CANAL COMPANY, LIMITED
AND
IDAHO POWER COMPANY
(J...~
TABLE OF CONTENTSSubject Page
Recitals................................................................. 1
ARTICLE I
DEFINITIONS
Additional Generation Facilities...............................
Definitions.... ........ ..................... .....................4
4
4
4
4
4
4
5
5
5
5
5
5
5
5
6
6
6
6
6
6
6
7
7
7
7
7
7
7
7
8
8
8
8
8
8
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agreement No.1...............................................
American Falls Reservoir District No.2....... ................
Annua 1 Mi t i gat i on Expense Budget...............................
Annual Mi ti gati on Expenses.....................................
Authori zed Representati ves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bypa.ss Flows...................................................
C.ana 1 Campan i es . . . . ... . . . . . . . . . . e.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cana 1 Company Annual Mit i gat i on Expenses.......................
Cana 1 Company Capi tal i zed
Mitigation Cost Advances....................................
Canal Company Construction Advances............................
Capi tal i zed Construction Advance Interest......................
Capi ta 1 i zed Construction Debt Interest.........................
Capitalized Mitigation Cost Budget.............................
Capitalized Mitigation Costs...................................
Comm:rc~ a 1 Operation...........................................
Cammi 551 on. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .
Construct i on Budget............................................
Construct i on Contractor........................................
Construction Debt..............................................
Construct i on Management Agreement..............................
Construct; on Manager...........................................
Costs ofConstructi on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt Service Charge............................................
Design Engineer................................................
Equ i pment Supp 1 i er. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated Completion Date......................................
February 7, 1989 Agreement.....................................
Guar-anty....... .................................................
Incentive Royalty..............................................
Incentive Royalty Calculation Period...........................
Lender e_ . . . . . e . . . . . . . e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leased Mi t i gat i on Water..............".........................
Leased Mi t i gat i on Water Costs..................................
-i -
'"..
License.......... ..... ............. ........... ... .................
L i-cense V.ear....... -. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . .
Mi 1 ne.r Dam................ -. . . . . . . . . .. .. . . . . . . . . . .. .... .. .. .. . .
Milner Dam Rehabilitation Project.............................Mi 1 ner Gage.................................... eo . . . . . . . . . . . . . . .
Net Benefi ts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Side Canal Company......................................
Or i gin-a 1 Term................... .-. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part i e s . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
Post Project Comp 1 et i on Date Interest.........................
Power Company eo................................................
Power Plant.....................................................
Pre-L i cense Advances..........................................
Project............................................... ._.......
Proj ect Campl et i on Date.......................................
Prudent Ut il i ty Pract ices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Re-newa 1 Term..................................................
R-oya 1 ty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short Term Borrowi ng Cost.....................................
Target Fl aws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technical Service Agreement...................................Iota 1 Flows......................................-...... _. . . . . . .
Twin Falls Canal Company......... ........... ..................
Uncontrol 1 abl e Forces.........................................
Water Perm; t. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE II
REPRESENTATIONS
2.1
2.2
2.3
2.4
2.5
General Representati ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Representat ions of the Power Company..........................
Representat ions of the Canal Compan i es. . . . . . . . . . . . . . . . . . . . . . . .
Representat ions of the North Si de Canal Company...............
Representations of the Twin Falls Canal Company...............
ARTICLE III
LICENSE
3.1
3.2
3.3
3.4
3.5
3.6
L ;-cense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -. .
Comp 1 i ance with the Li cense. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .
Pre- License Advances...........................................
License Responsibil ities.............................. ..~.....
Renewal of Li cense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
Fa i 1 ure to Renew License.......................................
- i i -
8
9
9
9
9
9
9
10
10
10
10
10
10
10
11
11
11
11
11
11
12
.12
12
12
12
13
14
15
16
17
19
19
20
20
21
22
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
..
ARTICLE iv
THE PROJECT
Ownership of the Project.......................................
Ownership of Milner Dam.......................................
Construct i on and Ownershi p of Power PL ant. . . . . . . . . . . . . . . .. . . . .
Acquisition of the Project; Estimated Project Completion
Date; Project Completion Date...............................
Milner Dam Rehabilitation Project; Construction
Budget ; Canal Company Construction Advances.................
Capitalized Mitigation Costs;
Capitalized Mitigation Cost Budget..........................
Annual Mitigation Expenses; Annual Mitigation
Expense Budget..............................................
Royal ty and I ncent i ve Royal ty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
Leased Mi tigati on Water.......................................
Additional Generation Facilities..............................
Opt i on of Canal Compani es - Deregul ated
Sa l.e .of Energy....... *. . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . .
Termi nat i on of Deregul ated Sale of Energy.....................
Insuran.ce.. . . . . . . . . . . . . . . . ... . .. . . . . . . . . . ... . .. e.. ... . ...... ..... ...
Liabilities of Canal Companies in Event
Project Comp 1 et i on Date does not Occur;
Canal Company Opti on. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .. . .
ARTICLE V
PAYMENT OBLIGATIONS
Royalty...........................................................
Cana 1 Company Opt i on to Defer
Commencement of Raya lty . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . .. . . .
I ncent i veRoya 1 ty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre - License Advances..........................................
Cana 1 Company Construction Advances; Capi tal i zed
Const ruct i on Advance Interest...............................
Canal Company Capitalized Mitigation Cost
Advance.s. . .. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . ... . . . . . . . . . . . . . . . .
Canal Company Annual Mitigation Expenses......................
Leased Mi t i gat i on Water Costs.................................
Construct i on Debt; Guaranty...................................
Guarantee by Company of Debt
Service Charge..............................................
Use of Proceeds of Royalty and Incentive Royalty
to pay certain Canal Company Obligations....................
- iii-
22
22
23
24
25
26
27
27
28
28
29
29
30
30
31
32
32
34
34
35
35
36
36
38
38
. -~
6.1
6.2
6.3
6.4
7.1
7.2
7.3
7.4
7.5
8.1
8.2
9.1
9.2
9.3
..
ARTICLE VI
AUTHORIZED REPRESENTATIVES
Authori zed Representat i ves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Respons i bi 1 it i es of Authori zed Representatives................
Procedures of Authori zed Representatives......................
Oi sputa Resol ut ion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII
SPECIAL COVENANTS
Construction Records Required to be Maintained................
Books and Records Related to Annual Mitigation
Expenses and Leased Mi t i gat i on Water Costs..................
Comp 1 i ance wi th Laws, Rul es and Regu 1 at ions. . . . . . . . . . . . . . . . . . .
Corporate Exi stence of Power Company;
Mergers and Consoli dat ions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Approva 1 s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII I
ASSIGNMENT
Condition of Assignments by Power Company.....................
Assignments or Dissolution by Canal Companies.................
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Events of Default Defined; Uncontrollable Forces..............
Remedies for Defaults.........................................
No Additional Waiver Implied by One Waiver....................
-iv-
39
39
42
43
43
44
45
45
46
47
47
48
50
52
10.1
10.2
10.3
11. 1
11.2
11.3
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
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52
52
53
53
54
54
54
55
55
56
56
56
57
57
57
Schedul e I
Signatures. . . . . . . . . . .. .. .. . . .. . . .. .. .. .. . . ... .. . . .. . . . ... .. .. .. e._.... . . . . 57
Schedule II
Exhi bit I
ARTICLE X
LIABILITIES AND DAMAGES
Liabilities.... ................................................
Damage to the Mi 1 ner Dam......................................
No Ownership Interest by Virtue ofArt i c 1 e V Payments................................ ... . . . . . . . .
ARTICLE XI
TERM
Ori.ginal Term.................................................
Renewal Term............ e._......................................
Payments duri ng Renewal Terms.................................
ARTICLE XII
MISCELLANEOUS
Arbitration......... ....................... e._....................
App 1 i cab 1 e Laws...............................................
Notices and Computation of Time...............................
Additional Documents............................. ."............
Ent ire Agreement...............................................
Supp 1 ements and Amendments....................................
Severabi 1 i ty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Execut ion ; n Counterparts.....................................
Captions and Headings.........................................
Pre-L i cense Advance pursuant to
Section 3.4 hereof....................................
Sample calculation of Royalty pursuant
to Sect ion 5.1 hereof.................................
Summary of Terms-Milner Dam Rehabilitation
Project Long-Term Debt Offeri ng. . . . .. . . . . . . . . . . . . . .. . .
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61
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AGREEMENT REGARDING THE OWNERSHIP, CONSTRUCTION,
OPERATION AND MAINTENANCE
OF
THE MILNER HYDROELECTRIC PROJECT (FERC NO. 2899)
BY AND BETWEEN
THE TWIN' FALLS CANAL COMPANY,
NORTH SIDE CANAL COMPANY, LIMITED
AND
IDAHO POWER COMPANY
THIS AGREEMENT, entered into this 22~day of January, 1990, between the
Twin Falls Canal Company, a corporation domiciled in and authorized to do business
in the State of Idaho, with its principal office therein located in Twin Falls,
Idaho, the North Side Canal Company, Limited, a Corporation domiciled in and
authorized to do business in the State of Idaho, with its principal office therein
located in Jerome, Idaho, and the Idaho Power Company, a corporation domiciled in
and authorized to do business in the State of Idaho, with its principal office
therein located in Boise, Idaho,
WIT N E SSE T H:
WHEREAS, the Canal Companies, together with the American Falls Reservoir
Di stri ct No.2, are the owners of the Mi 1 ner Dam and, pursuant to agreement dated
October 6, 1981, with the Canal Companies, the American Falls Reservoir District
No.2 has waived any claim which it may have in the development of a power resource
at the Milner Dam and in connection with such development the Canal Companies have
agreed to hold the American Falls Reservoir District No.2 harmless for rehabili-
tation, replacement or any other costs that are incurred as a direct result of any
requ i rements of the Commi ss i on over and above the normal safety requ i rements or other
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requirements to maintain the Milner Dam as irrigation facilities; and
WHEREAS, pursuant to agreement dated April 15, 1971, between the North Side
Can al Company and the Twi n Fall s Canal Company it was agreed that if a power site
at Milner Dam be developed using only a point of diversion on the south side of the
Snake River, the Twin Falls Canal Company's share in the development of the power
site would be 7/11ths and the share of the North Side Canal Company would be 4/11ths;
and
WHEREAS, the Canal Compan i es and the Power Company entered into Agreement
No.1, dated as of April 23, 1981, as later amended by February 24, 1983 Letter
Agreement, Agreement of December 20, 1983 and Agreement of March 21, 1988, relating
to the Parties participating in the construction of the Project, pursuant to which
Agreement No. 1 the Canal Compan i es, wi th the ass i stance of the Power Company as
provided in Agreement No.1, obtained the License to construct and operate the
Project issued by the Commission on December 15,1988, no application for a rehearing
havi ng been fi 1 ed by the Can a 1 Compani es; and
WHEREAS, under date of February 7, 1989, the Parties entered into the
February 7, 1989 Agreement amending Agreement No.1 setting forth a common solution
to the requirements of the License with respect to the Milner Dam Rehabilitation
Project, thereby permitting the Parties to proceed to the design and construction
phase of the Project, restating certain of the provisions of Agreement No.1,
providing for the Power Company to become a joint or co-l icensee with the Canal
Companies as to the Project under the License, and to provide the basis for the
relationship between the Parties as joint or co-licensees for the ownership,
construction, operation and maintenance of the Project under the terms and conditions
of the License; and
WHEREAS, under date of February 28, 1989, the Parties filed an application
wi th the Commi ss i on for the addi t i on of the Power Company as a co-l i censee under the
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Li cense to effectuate the contractual arrangements between the Parties, wh i ch
application was approved by the Commission by Order issued May 2, 1989, which Order
was accepted by the Canal Companies on June 13, 1989, and pursuant thereto, the Power
Company is a co - 1 i censee wi th the Canal Compan i es under the License wi th respect to
the Project; and
WHEREAS, the Power Company and the Can a 1 Compan i es des i re to enter into
a defi nit i ve agreement whereby the Parties, havi ng recei ved the License from the
Commission with respect to the Project, shall proceed with the engineering,
financing, construction, ownership, operation and maintenance of the Milner Dam
Rehabilitation Project and the Power Plant, including the coordination of the
construction of the Power Plant with the Milner Dam Rehabilitation Project, and
whereby the Part i es wi 11 set forth the ownersh i p interests and c 1 ari fy the
responsibilities of the Parties in the Project; and
WHEREAS, the Parties wish to recognize and provide for the construction
of Additional Generation Facil ities as part of the Project in accordance with the
terms and cond it ions of the License or otherwi se; and
WHEREAS, the Parties wish to recognize and to provide for the mechanism
whereby the Canal Compani es may exerci se options to share in the Net Benefi ts of any
sa 1 e of e 1 ectri c energy by the Project if the Power Pl ant is not placed in the rate
base of the Power Company; and
WHEREAS, the Part i es wi sh to deli neate the respons i bi 1 it i es of the Canal
Companies for the payment of Pre-License Advances and Annual Mitigation Expenses;
NOW, THEREFORE, in consideration of the mutual and âependent stipulations
and covenants herein contained, it is agreed by and among the Parties hereto, as
follows:
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ARTICLE I
DEFINITIONS
The following words and phrases shall have the following meanings, unless
the context c 1 earl y i nd i cates to the contrary:
"Additional Generation Facilities" shall mean any facilities for the
generation of electric energy added to the Project pursuant to Section 308 of the
License, or otherwise, during the Original Term of this Agreement.
"Agreement" shall mean this "Agreement Regarding the Ownership,
Construction, Operation and Maintenance of the Milner Hydroelectric Project (FERC
No. 2899) by and between the Twin Falls Canal Company, North Side Canal Company,
L i mi ted, and Idaho Power Company," as the same may be supplemented or amended.
"Agreement No.1" shall mean the "Agreement No.1 General Understanding"
between the Canal Compan i es and the Power Company, dated as of Apri 1 23, 1981, as
amended by February 24, 1983 Letter Agreement, Agreement of December 20, 1983 and
Agreement of March 21,1988, and as supplemented by the February 7,1989 Agreement.
"American Falls Reservoir District No.2" shall mean the American Falls
Reservoir District No.2, an irrigation district organized and existing under the
provisions of Title 43, Idaho Code, as amended, and its successors and assigns.
"Annual Mitigation Expense Budget" shall mean the budget to be prepared
annually pursuant to the provisions of Section 4.7 hereof providing for Annual
Mitigation Expenses, including any additional annual expenses required under the
License as added to the Annual Mi t i gat i on Expense Budget by the Authori zed
Representatives from time to time.
"Annual Mitigation Expenses" shall mean the annual charges incurred by the
Parties under the License required by Articles 404, 405, 406, 408, 409, 410, 412,
413, 414, 416, 417 and 419 of the License or as may be required by future Commission
orders and which are not capital ized as part of the Capitalized Mitigation Costs.
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Leased Mitigation Water Costs shall not be calculated as a part of Annual Mitigation
Expenses.
"Authorized Representatives" shall mean collectively, the Authorized
Representatives appointed by each of the Parties pursuant to the provisions of
Art i cl e VI hereof.
"Bypass Flows" shall mean the flows in the Snake River immediately
downstream of the Milner Dam as measured at the present site of the Milner gage.
"Canal Companies" shall mean collectively, the North Side Canal Company
and the Twin Falls Canal Company.
"Canal Company Annual Mitigation Expenses" shall mean the share of the
Annual Mitigation Expenses incurred each year and assigned to the Canal Companies
pursuant to the provisions of Section 4.7 hereof to be paid by the Canal Companies
pursuant to Sect ion 5.7 hereof.
"Canal Company Capital ized Mitigation Cost Advances" shall mean the
advances made to the Canal Companies by the Power Company from time to time pursuant
to the provisions of Section 4.6 hereof, to be repaid by the Canal Companies to the
Power Company under Sect i on 5.6 hereof to pay Capi ta 1 i zed Mi t i gat i on Costs.
"Canal Company Construction Advances" shall mean the advances made to the
Canal Companies by the Power Company from time to time pursuant to the provisions
of Sect ion 4.5 hereof, to be repaid by the Canal Compan i es under Sect ion 5.5 hereof,
to pay the Costs of Construction of the Milner Dam Rehabilitation Project.
"Capitalized Construction Advance Interest" shall mean interest on the
Cana 1 Company Construct i on Advances pri or to the date the Construction Debt is
incurred or the Project Completion Date, which ever is earlier, calculated at the
effect i ve Short Term Borrowi ng Cost of the Power Company.
"Capital ized Construction Debt Interest" shall mean, if Construction Debt
is incurred prior to the Project Completion Date, the interest capital ized as part
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of the Construct i on Debt between the date the Construction Debt is incurred and the
Estimated Completion Date. The Capitalized Construction Debt Interest shall be the
responsibility of the Canal Companies.
"Capitalized Mitigation Cost Budget" shall mean the Capitalized Mitigation
Cost Budget to be prepared pursuant to the provisions of Section 4.6 hereof providing
for the Capitalized Mitigation Costs, including any additional costs as added to the
Capital ized Mitigation Cost Budget by the Authorized Representatives from time to
time.
"Capital ized Mitigation Costs" shall mean the costs of the Project required
under Articles 402, 403, 404, 405, 406, 407, 408, 409, 410, 411, 412, 413, 414,416,
417, 418, 419, 420, 421 and 422 of the License, which are capital ized and not
expensed, all as approved by the Authori zed Representat i ves, as provi ded for under
Section 6.2(a)(14) hereof.
"Commercial Operation" shall mean 12:01 A.M. on the date when, pursuant
to Prudent Ut i 1 i ty Pract ices, the Power PL ant's 1 argest un i t located approxi mate 1 y
1.5 miles downstream of Milner Dam is installed, tested and ready to deliver
continuous electrical energy, irrespective of the availability of water.
"Commission" shall mean the Federal Energy Regulatory Commission and its
successors and assigns.
"Constructi on Budget" shall mean the Constructi on Budget prepared pursuant
to the provisions of Section 4.5 hereof for the Costs of Construction of the Milner
Dam Rehabi 1 i tat i on Project.
"Construction Contractor" shall mean the entity or entities author~zed by
the Authori zed Representatives to be employed for the construction of the Mi 1 ner Dam
Rehabi 1 i tat i on Project.
"Constructi on Debt" shall mean the debt of the Canal Compani es from the
Lender secured by the Guaranty to repay the Canal Company Construction Advances and
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Capitalized Construction Advance Interest and shall include the Capitalized
Construct i on Debt Interest.
"Construction Management Agreement" shall mean the Letter Agreement between
the Canal Companies and the Power Company, dated as of October 6, 1989, providing
for the Power Company to act as Construct i on Manager.
"Construction Manager" shall mean the entity employed by the Canal
Companies in accordance with the provisions of Section 4.4(c) to oversee and manage
the construct i on of the Mi 1 ner Dam Rehabi 1 i tati on Project.
"Costs of Construct i on " shall mean all costs, except Pre 1 i cense Advances,
properly attributable to the design and construction of the Milner Dam Rehabil itation
Project and all expenses preliminary and incidental thereto incurred by, or on behalf
of the Canal Companies in connection therewith, including all engineering, fiscal
and legal expenses for which funds are advanced by the Power Company as Canal Company
Construct i on Advances.
"Debt Servi ce Charge" shall mean the pri nci pal of and interest due on the
Construction Debt, pursuant to the provisions of Section 5.9 hereof.
"Design Engineer" shall mean Morrison-Knudsen Engineers, Inc., heretofore
employed pursuant to the Technical Service ,Agreement for the design of the Milner
Dam Rehabi 1 i tat i on Project.
"Equipment Supplier" shall mean the entity or entities selected by the
Authorized Representatives to supply the spillway gates or other equipment as part
of the Milner Dam Rehabilitation Project.
"Estimated Completion Date" shall mean the date, as determined ,by the
Authorized Representatives from time to time in accordance with the provisions of
Section 6.2(a)(18) hereof, which is estimated to be the Project Completion Date.
"February 7, 1989 Agreement" shall mean the supplement to Agreement No.1
between the Canal Compani es and the Power Company, dated February 7, 1989, as
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ratified by the Boards of Directors of the Canal Companies on February 8, 1989 and
by the Board of Directors of the Power Company on March 9, 1989.
"Guaranty" shall mean the guarantee by the Power Company of the payment
of the Debt Servi ce Charge to the Lender pursuant to the provi s ions of Sect i on 5.9
hereof, which shall be unconditional pursuant to the terms of Section 5.10 hereof.
"Incentive Royalty" shall mean the annual incentive royalty payments to
be paid to the Canal Companies as their respective interests appear, by the Power
Company pursuant to the provi s ions of Sect i on 5.3 hereof for annual gene rat i on of
electric energy at the Project in excess of 142,000 MWh.
"Incentive Royalty Calculation Period" shall mean initially the period
commencing on the first day of the calendar month next succeeding the Project
Completion Date and ending on the last day of the 12th calendar month succeeding the
commencement of the initial Incentive Royalty Period, and thereafter each succeeding
12 month period during the Original Term of the Agreement.
"Lender" shall mean the entity secured by the Guaranty, lending funds
represented by the Construct i on Debt as con temp 1 ated inSect ion 5.9 hereof.
"Leased Mitigation Water" means water purchased by the Power Company on
behalf of the Parties, pursuant to the requirements of Section 401 of the License
in order to meet the Target Flows.
"Leased Mitigation Water Costs" shall mean the costs incurred pursuant to
Section 4.9 hereof for the purchase of Leased Mitigation Water required to be
purchased by the Parties under the terms and conditions of Section 401 of the
License.
"Li cense" sha 11 mean the Li cense for Project No. 2899 issued by the
Commission on December 15, 1988, and expiring on November 30, 2038, as supplemented
by Order issued May 2, 1989, approving the transfer of the License to the Power
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..
Company as a co-l icensee, and by Order issued August 4, 1989, amending Section 201
hereof, and any other supplement, amendment, cont i nuance or renewal thereof
authorizing the Parties to construct the Project, to operate and maintain the Power
PL ant and to undertake the Mi 1 ner Dam Rehabi 1 i tat i on Project.
"License Year" shall mean a twelve-month period calculated by reference
to December 1, 1988, during the License Term.
"Milner Dam" shall mean the existing diversion structure located on the
Snake River, together with all related facilities, including but not limited to,
appurtenant spill ways , canal s, headworks and facil it i es . owned and operated for
irrigation purposes by the Canal Companies and the American Falls Reservoir District
No.2, as rehabilitated by the Milner Dam Rehabilitation Project.
"Mi 1 ner Dam Rehabi 1 i tat i on Project" shall mean the program to be undertaken
by the Parties to reconstruct, rehabilitate and improve the Milner Dam, all in
accordance with the provisions of the License and this Agreement.
"Milner Gage" shall mean the existing USGS gage below Milner Dam, to be
used to measure the Bypass Flows.
"Net Benefits" shall, for purposes of (i) the provisions of Section 3.5
hereof, and (i i) the opt i on granted the Canal Compan i es inSect ion 4.11 hereof, mean
the annual residual remaining after deduction of all costs associated with the sale
of electric energy generated by the Power Plant, including; but not limited to,
transmission expenses, energy firming and shaping expenses (if required), operation
and ma i ntenance expenses, taxes, envi ronmenta 1 mi t i gat i on expenses, debt servi ce and
a return on equity investment to the Power Company consistent with the debt co~ponent
of capitalization utilized in financing the Power Plant, from Project revenues.
"North Side Canal Company" shall mean the North Side Canal Company,
Limited, a corporation organized and existing under the laws of the State of Idaho,
and its successors and assigns.
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"Original Term" shall mean the duration of this Agreement as specified in
Article XI hereof, ending concurrently with the expiration of the initial term of
the License on November 30, 2038.
"Parties" shall mean collectively, the Canal Companies and the Power
Company.
"Post Project Completion Date Interest" shall mean interest on the Canal
Company Construction Advances and the Capital ized Construction Advance Interest from
the Project Completion Date to the date on which the Construction Debt is incurred,
calculated at the Short Term Borrowing Cost of the Power Company.
"Power Company" shall mean the Idaho Power Company, a corporation organized
and existing under the laws of the State of Idaho, and its successors and assigns.
"Power Plant" shall mean the hydroelectric generating facility, together
with all related facilities required under the License, consisting initially of a
46 MW power facility located downstream of the Milner Dam on the Twin Falls canal,
to be constructed, operated and maintained by the Power Company as its part of the
Project, including, without limitation, any Additional Generation Facilities, the
penstocks, intake structure, and forebay but not the canal or i rri gat i on water
control structures, in accordance with the License and this Agreement, or otherwise.
"Pre-License Advances" shall mean those advances,made by the Power'Company
on behalf of the Canal Companies as set forth in Section 3.3 hereof, to pay certain
expenses, inc 1 udi ng the Dam Safety Study as contemplated in Agreement No.1, incurred
by or on behalf of the Parties prior to the issuance of the License on December 15,
1988, a portion of which is to be repaid to the Power Company by the Canal Companies
pursuant to the provisions of Section 5.4 hereof.
"Project" shall mean collectively, the Power Plant and the Milner Dam
Rehabilitation Project, including but not limited to, all facilities associated with
Commi ss i on Project No. 2899, and all related structures and works together wi th all
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necessary appurtenances related thereto, inc 1 udi ng, but not 1 i mi ted to the canal
enlargement, construction of the penstocks, construction of new or additional control
gates, construction of all related transmission facilities and construction of all
recreational, fish and wildlife facilities required by the License.
"Project Completion Date" shall mean the date, as determined by the
Authorized Representatives in accordance with the provisions of Section 6.2(a)(18)
hereof, on which the Power Plant is deemed to be in Commercial Operation.
"Prudent Util ity Practices" shall mean any of the practices, methods and
acts engaged in or approved by a significant proportion of the electrical utility
industry, or any practices, methods and acts which, in the exercise of reasonable
judgment in light of the facts known at the time, could have been expected to
accompl ish the desired result at the lowest reasonable cost consistent with
reliability, safety and expedition, and the requirements of governmental agencies
having jurisdiction. Prudent Utility Practices are not intended to be limited to
the optimum practice, method, or act to the excl usion of all others, but rather to
be a range of possible practices, methoqs or acts.
"Renewal Term" shall mean any term following the Original Term of this
Agreement.
"Royalty" shall mean the annual royalty payments required to be made by
the Power Company to or on behalf of the Canal Companies as their respective
interests appear, pursuant to the provi s ions of Sect ion 5.1 hereof.
"Short Term Borrowi ng Cost " shall mean the actual short term borrowi ng
costs or temporary cash investment rate, as app 1 i cab 1 e, of the Power Compan,y, for
the time peri od inquest i on, as cert i fi ed by the Power Company to the Authori zed
Representatives from time to time.
"Target Flows" means the target flow in the bypass reach of the Snake River
downstream of the Milner Dam required to be maintained pursuant to the provisions
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of Section 407 of t~icense, measured as required b~e commissiO~~
Service Agreement" shall mean the Technical Service Agreement between the Parties
and Morrison-Knudsen Engineers, Inc., dated as of March 16, 1989, providing for the
design of the Milner Dam Rehabilitation Project.
"Total Flows" shall mean the flows in the Snake Ri ver downstream of all
Power PL ant un i ts .
"Twin Falls Canal Company" shall mean the Twin Falls Canal Company, a
corporat i on organ i zed and exi st i ng under the 1 aws of the State of Idaho, and its
successors and assigns.
"Uncontrollable Forces" shall mean any cause beyond the control of the
Party affected and which by the exercise of reasonable diligence the Party is unable
to avoid and shall include, but not be'limited to, an act of God, fire, flood,
explosion, strike, sabotage, and act of the public enemy, civil or military
authority, including court orders, injunctions, and orders of government agencies
with proper jurisdiction prohibiting acts necessary to performance hereunder or
permi tt i ng any such act subject to unreasonable conditions, insurrection or ri ot,
an act of the elements, fa il ure of equ i pment, or i nab il ity to obtain or sh i p
materials or equipment because of the effect of similar causes on suppliers or
carriers.
"Water Permit" shall mean Permit No. 01-7011 issued by the Idaho Department
of Water Resources providing for the appropriation of public waters of the State of
Idaho for use at the Power Pl ant as now or herei nafter in effect.
ARTICLE II
REPRESENT.ATIONS
Section 2.1 General Representations. The Canal Companies and the Power Company
represent and warrant one to the other that:
(a) This Agreement is an agreement entered into by the Parties in order to carry
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out the reconstruct i on, rehabi 1 i tat i on and improvement of the Mil ner Dam through
the construction of the Mi 1 ner Dam Rehabi 1 i tat i on Project and the construction
and operat i on of the Power Pl ant, as contemplated in the License.
(b) In consideration of the transfer to the Power Company of an interest in the
License as co- 1 i censee and the deli very of water to the Power PL ant for the
purposes of generat i on of e 1 ectri c energy, the Power Company shall construct,
operate, ma i nta in and own the Power PL ant, and shall make the payments requi red
to be made to or on behalf of the Canal Companies in Article V hereof. In
cons i derat i on of the advances made on behalf of the Canal Compan i es by the Power
Company, the Canal Compan i es sha 11 make the payments to the Power Company
required to be made in Article V hereof.
(c) The primary uses of the water and canal facil ities constituting the Milner Dam
shall be i rri gati on and stock watering p~rposes and the Project shall not be
operated in such manner as to interfere with, deprive, terminate or reduce the
traditional irrigation and stock watering demands of the Canal Companies 1 imited
by the number of outstandi ng shares of record as of Apri 1 23, 1981.
(d) The canals and related facilities constituting the Milner Dam are now and shall
continue to be for all times under the sole ownership~ maintenance and control
of the Canal Companies and the American Falls Reservoir District No.2, and by
th is Agreement it is understood among the Parties that the Power Company is not
assuming any of the obl igations, duties or 1 iabil ities of the Canal Companies
or the American Falls Reservoir District No.2 relating to the operation of the
canals and related water facilities constituting the Milner Dam.
Sect; on 2.2. Representati ons of the Power Company. The Power Company represents
and warrants as. follows:
(a) It is a corporation duly incorporated under the laws of, and is in good
standi ng, in the State of Idaho, has power under the 1 aws of Idaho and ; ts
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Art i cl es of Incorporat i on and By-Laws to enter into thi s Agreement and by proper
corporate action has been duly authorized to execute and del iver this Agreement.
(b) Except as specified in paragraph (c) below, no additional or further approval,
consent or authorization of any governmental unit, publ ic agency or authority
is requ i red to be obta i ned by the Power Company in connect i on wi th the execut ion
of this Agreement and the carrying out by it of its various undertakings and
obligations provided for or contemplated herein.
(c) As a regul ated ut i 1 i ty, the authori ty of the Power Company to undertake the
transactions contempl ated by this Agreement, to carry out its obl igations
hereunder including, but not limited to, operation and maintenance of the Power
Plant, the payment of the Royalty and the Incentive Royalty and the Guaranty,
as contemplated herein, is subject to the obtaining by the Power Company of
vari ous regul atory approvals, authori zat ions and permi ts of and by 1 oca 1, state
and federal regulatory agencies having jurisdiction thereof, and all such
approvals, authorizations and permits shall be duly and timely obtained by the
Power Company.
(d) There is no action, suit, proceeding or investigation at law or in equity before
or by any court, pub 1 i c board or body, pend i ng or, to the best of the knowl edge
and information of the Power Company, threatened against or affecting the Power
Company, or, to the best of the knowl edge and i nformat i on of the Power Company,
any basis for such action, suit, proceeding or investigation, wherein an
unfavorable decision, ruling or finding which would adversely affect the
validity or enforceability of this Agreement.
(e) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, conflict .with or result in a breach of
any of the terms, conditions or provisions of any corporate restriction of any
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__I.r ..
agreement or instruments or of any order, ruling or regulation of any court or
administrative agency, whether state or federal, to which the Power Company is
now a party or by wh i ch it is bound, const i tute a default under any of the
foregoing, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of the
Power Company under the terms of any instrument or agreement.
(f) The Power Company will take such action consistent with the requirements of this
Agreement as shall be necessary under the Guaranty with respect to the
Construction Debt of the Canal Companies contemplated to be incurred by the
Cana 1 Compan i es to repay the Canal Company Construct i on Advances and the
Capital ized Construction Advance Interest under the provisions of Section 5.10
hereof.
(g) The Power Company wi 11 supply the Canal Compani es and the Authorized
Representatives of the Canal Companies from time to time such information as
shall be reasonably requested by the Canal Companies, so as to enable the Canal
Companies to make. an informed decision with respect to the option granted to
the Canal Compan i es inSect ion 4.11 hereof wi th respect to the Royalty and
Incentive Royalty in the event that the Project is not included in the rate base
of the Power Company.
Sect ion 2.3. Representati ons of the Canal Compa"; es . The Canal Compan i es represent
and warrant as fo 11 ows :
(a) The Canal Companies will hold the Power Company harmless with respect to any
claims of the American Falls Reservoir District No.2 as the owner .of an
interest in the Mil ner Dam wi th respect to any actions taken by the Power
Company under th is Agreement or in contemp 1 at i on of th is Agreement wi th respect
to the Mil ner Dam and the Mil ner Dam Rehabi 1 i tat i on Project.
(b) The Canal Companies will use their best efforts to make water available to the
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Power Company at the Power PL ant to the maximum extent reasonably possi bl e after
meeting all of the Canal Companies' traditional irrigation and stock water
demands, 1 imited by the number of outstanding shares of record as of April 23,
1981. The water right at Milner for power generation shall be considered senior
to other power projects on the Canal Compan i es' systems.
(c) The Canal Companies will be solely responsible for furnishing the water to be
used in the Power Pl ant pursuant to the water permit for the generation of
electric energy and to that end will jointly exert their best efforts with the
Power Company to secure all water necessary to satisfactorily protect the
Parties in the use of the water needed for the generation of electric energy
a t the Power Pl ant as part of the Proj ect.
(d) The Canal Companies shall be solely responsible for all costs and expenditures
of the Canal Companies in conducting their ordinary business affairs,
particularly if related to this Agreement, the Milner Dam or the Milner Dam
Rehabil itation Project and including any subsequent agreements or activities
wh i ch the Part i es hereto may enter into or engage in.
Section 2.4. Representations of the North Side Canal Company. The North Side Canal
Company represents and warrants as fo 11 ows :
(a) It is a corporation duly incorporated under the laws of, and is in good
standing, in the State of Idaho, has power under the laws of Idaho and its
Articles of Incorporation and By-Laws to enter into this Agreement and by proper
corporate action has been duly authorized to execute and del iver this Agreement.
(b) No additional or further approval, consent or authorization of any governmental
unit, publ ic agency or authority is required to be obtained by the North Side
Canal Company in connection with the execution of this Agreement and the
carrying out by it of its various undertakings and obl igations provided for or
contemp 1 ated herei n.
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(c) There is no action, suit, proceeding or investigation at law or in equity before
or by any court, pub 1 i c board or body, pend i ng or, to the best of the knowl edge
and information of the North Side Canal Company, threatened against or affecting
the North Side Canal Company, or, to the best of the knowledge and information
of the North Side Canal Company, any basis for such action, suit, proceeding
or investigation, wherein an unfavorable decision, ruling or finding which would
adversely affect the validity or enforceability of this Agreement.
(d) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement, confl ict with or result in a breach of
any of the terms, conditions or provisions of any corporate restriction of any
agreement or instruments or of any order, rul i ng or regul at i on of any court or
administrative agency, whether state or federal, to which the North Side Canal
Company is now a party or by which it is bound, or constitute a default under
any of the foregoi ng, or resul tin the creat i on or i mpos it i on of any 1 i en,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of the North Side Canal Company under the terms of any instrument or
agreement.
Section 2.5. Representations of the Twin Falls Canal Companx. The Twin Falls Canal
Company represents and warrants as fo 11 ows:
(a) It is a corporation duly incorporated under the laws of, and is in good
standing, in the State of Idaho, has power under the 1 aws of Idaho and its
Articles of Incorporation and By-Laws to enter into this Agreement and by, proper
corporate action has been duly authorized to execute and deliver this Agreement.
(b) No additional or further approval, consent or authorization of any governmentai
unit, publ ic agency or authority is required to be obtained by the Twin Falls
Canal Company in connect i on wi th the execution of th is Agreement and the
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carrying out by it of its various undertakings and obl igations provided for or
contemplated herein.
(c) There is no action, suit, proceeding or investigation at law or in equity before
or by any court, publ ic board or body, pending or, to the best of the knowledge
and information of the Twin Falls Canal Company, threatened against or affecting
the Twin Falls Canal Company, or, to the best of .the knowledge and information
of the Twin Falls Canal Company, any basis for such action, suit, proceeding
or investigation, wherein an unfavorable decision, rul ing or finding which would
adversely affect the validity or enforceability of this Agreement.
(d) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the
terms and cond it ions of th is Agreement, confl i ct wi th or resul tin a breach of
any of the terms, conditions or provisions of any corporate restriction of any
agreement or instruments or of any order, rul i ng or regul at i on of any court or
administrative agency, whether state or federal, to which the Twin Falls Canal
Company is now a party or by wh i ch it is bound, or const i tute a default under
any of the foregoing, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of the Twi n Fall s Canal Company under the terms of any instrument or
agreement.
ARTICLE III
LICENSE
Section 3.1. License. The License for Project No. 2899 was issued December 15,
1988, by the Commission to the Canal Companies and was supplemented by Commission
Order issued May 2, 1989, adding the Power Company as a co-l icensee. The License
expires on November 30, 2038. The License is conditioned upon commencement of
construction of the Project within two years from December 1, 1988, and upon
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comp 1 et i on of the Project with i n four years from December 1, 1988. Separate
commencement and comp 1 et i on dates are prescri bed in the License wi th respect to the
Mi 1 ner Dam Rehabi 1 i tat i on Project.
Section 3.2. Compliance with the license. The Parties recognize that as co-
licensees under the License, they are jointly and severally liable to fulfill all
statutory and regulatory obligations under the License regardless of their varying
interests in Project property and their contractual obl igations to each other
regarding the Project, as set forth herein. So long as the License shall be in full
force and effect the Parties shall operate or cause the Project to be operated in
good fa i th pursuant to the terms of the License and shall not fail to comply at all
times with the terms and provisions of the License. Recognizing the ownership
interests and allocation of responsibilities set forth in this Agreement, the Power
Company agrees to hold the Canal Companies harmless for each and every failure of
the Power Company to conform to or otherwise comply with the provisions of the
License with respect to the construction, operation and maintenance of the Power
PL ant. The Canal Companies agree to hold the- Power Company harmless for each and
every failure of the Canal Companies to comply with the terms of the License in
connection with the construction, operation, maintenance and ownership of the Milner
Dam and the Mi 1 ner Dam Rehabi 1 i tat i on Project.
Section 3.3. Pre-license Advances. Pursuant to the provisions of Agreement No.1,
the Power Company incurred Pre- Li cense Advances. Under the terms of Agreement No. 1
the Canal Companies were obl igated to repay 50% of the Pre-License Advances exceeding
$200,000, plus interest at 10% per annum from the date of each advance, with the
total liability of the Canal Companies to repay Pre-license Advances, including
interest, not to exceed $800,000. Notwithstanding anything in Agreement No.1 to
the contrary, the Parties hereby agree that the amount of Pre-License Advances,
including interest to date, required to be reimbursed to the Power Company by the
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Canal Companies is $570,967.00. This amount includes one-half of a $341,935.00
request for reimbursement from the Canal Compani es the full amount of whi ch is
payab 1 e to the Canal Compan i es upon the sign i ng of th is Agreement and subject to post
payment aud it by the Power Company. The Canal Compan i es shall repay thei r allocated
share of the Pre- License Advances, determi ned in accordance wi th the respective Canal
Company interests set forth inSect ion 4.2 hereof, in accordance wi th the provi s ions
of Sect ion 5.4 hereof.
Section 3.4. License Responsibilities. Recognizing the respective ownership
interests of the Part i es in the Project and the Agreement wi th respect to the Project
conta i ned herei n, it is agreed and understood that, except for the respons i bi 1 it i es
of the Canal Companies with respect to (i) the construction, ownership, maintenance
and operation of Milner Dam, and the Milner Dam Rehabilitation Project, (ii) Canal
Company Annual Mitigation Expenses, as set forth in Section 5.7 hereof, (iii) Canal
Company Capi ta 1 i zed Mi t i gat i on Cost Advances as set forth inSect ion 5.6 hereof, and
(iv) leased Mitigation Water Costs as set forth in Section 5.8 hereof, the Power
Company shall have res pons i bi 1 i ty for all operat i ona 1 expenses under the License and
for complying with the terms and conditions of the License, including, but not
1 i mi ted to, charges imposed by the Commi ss i on for the use of federal 1 ands wi th i n
the Project boundaries and for the power benefits obtained from upstream federal
projects, subject to any different allocation of responsibilities by the Authorized
Representatives consistent with the terms of the License and this Agreement.
Section 3.5. Renewal of License. Under Section 15(b)(I) of the Federal Power Act
in force on date of the execution of this Agreement, the Parties as co-li~ensees
under the License must notify the Commission, at least five years before the
expiration of the License, whether the Parties intend to file an application for a
new or renewal License. Under Section 15(c)(I) of the Federal Power Act in force
on the date of the execution of this Agreement, each appl ication for a new or renewal
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License shall be filed with the Commission at least twenty-four (24) months before
the expiration of the term of the existing License. Recognizing the above stated
provisions of the Federal Power Act, the Parties mutually agree jointly to engage
in any and all activities that are reasonably necessary to comply with the above
requirements of the Federal Power Act as now or hereinafter in effect in order to
renew the License under the terms and conditions required by the Commission or its
successors, as those terms and conditions exist or may be changed from time to time
during the term of the License. Not less than six years prior to the expiration of
the Original Term of this Agreement, the Parties agree to enter into good faith
negotiations for the purpose of setting forth the terms and conditions under which
the Proj ect wi 11 be owned and operated duri ng any renewal, extens i on or 1 i cense
peri od granted to the Parties duri ng the renewal, extens i on or 1 i cense peri od by the
Commission or its successors, and the obligations of the Parties, one to the others,
including the payment of a reasonable royalty to the Canal Companies for the
continued availability of the Milner Dam and water made available by the Canal
Companies through the Milner Dam to the Power Company for the generation of electric
energy at the Power PL ant. I n the event the part i es cannot reach agreement on new
terms, then the amount wh i ch wi 11 be paid to the Canal Compan i es annua 11 y duri ng the
Renewal Term for all purposes including but not limited to royalties, rentals, or
fa 11 i ng water charges wi 11 be one hal f of the Net Benefi ts.
Sect ion 3.6 Fa i 1 ure to Renew License If, upon the exp i rat i on of the License on
November 30, 2038, the Commi ss i on fails to issue a renewal or extensi on 1i cense to
the Parties, the Parties shall make all reasonable efforts to have the Commission
require as a condition to the granting of a license to a party other than the
Parties, that (i) any new licensee shall pay the net investment of the Parties in
the Project and such other damages which are then permitted by law, plus reasonable
severance damages of the Part i es, and (i i ) any new 1 i censee shall assume a 11
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obligations and contracts of the Parties with respect to the Power Plant. In the
absence of an agreement between the Part i es, any severance damages shall be shared
between the Power Company and the Canal Compan i es as the i r respect i ve interests then
appear.
ARTICLE IV
THE PROJECT
Section 4.1. Ownership of the Project. The ownership interests of the Parties in
the Project shall be as set forth in this Article iv.
Section 4.2. Ownership of Milner Dam. The Canal Companies shall at all times
during the term of this Agreement and of the License maintain the ownership and
operation of Milner Dam, as contemplated in the October 6, 1981, agreement with
American Falls Reservoir District No.2, for all purposes of this Agreement. For
purposes of the obl igations of the Canal Companies to make payments under Article
V hereof or otherwi se under th is Agreement, in accordance wi th the agreement dated
April 15, 1977, between the Twin Falls Canal Company and the North Side Canal
Company, inasmuch as the poi nt of di vers i on for the Power Pl ant is to be on the south
side of the Snake River, the ownership interests of the Canal Companies in the Milner
Dam and the several obl igations of each under this Agreement shall be assumed to be
4/11ths in the North Side Canal Company and 7/11ths in the Twin Falls Canal Company.
The Canal Companies shall at all times during the term of the License and this
Agreement remain respons i b 1 e for all ope rat ion, maintenance and replacement costs
of the Mi 1 ner Dam and payment of the expenses thereóf, i rrespect i ve of any ob 1 i gat ion
of the American Falls Reservoir District No.2 to the Canal Companies in connection
therewith.
Sect; on 4.3. Construction and Ownershi p of Power PL ant
(a) The Power Company shall construct and own the Power PL ant pursuant to and in
comp 1 i ance wi th the requi rements of the License. The Power Company shall be
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solely responsible for the design, engineering and construction cost of the
Power Plant. The Power Company shall at all times during the term of the
License and the Agreement remain financially responsible for the construction,
ma i ntenance, operation and repair and replacement costs of the Power Pl ant for
the generation of electric energy at the Project.
(b) The Power Company shall be solely responsible for the design, engineering and
construction of the Power Plant subject only to a duty to coordinate its
act i vi ties in good faith wi th the Authori zed Representatives or thei r des i gnee.
The Power Company agrees to coordinate in good faith the design, engineering
and construct i on of the Power Pl ant wi th the des i gn, engi neeri ng and
construct i on of the Mi 1 ner Dam Rehabi 1 i tat i on Project through the Authori zed
Representat i ves or thei r des i gnee.
(c) As a part of the Power Plant Construction, the Power Company shall be solely
responsible for the design, engineering and construction of necessary
modifications to the existing Twin Falls Canal from the reservoir downstream
to and including the new control structure downstream of the Power Plant
forebay, but the Power Company shall obtain the approval of the Authori zed
Representatives for the design, construction, operation and maintenance of the
facilities in this area of the Project. Construction of necessary modifications
to the existing Twin Falls canal will not change the ownership or
responsibilities for the operation and maintenance of the Twin Falls canal, as
so modified, by the Canal Companies for irrigation purposes as part of the
traditional operation of Milner Dam.
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Section 4.4. Acquisition of the Project; Estimated Project Completion Date;
Proj ect Comp 1 et i on Date.
(a) If requested by the Power Company, the Canal Companies will exert their best
efforts to negotiate for and acqui re and se'l to the Power Company all real
property, or interests there in, not otherwi se acqu i red by the Power Company and
necessary for the construction, operation and maintenance of the Power Plant,
including" but not limited tol the powerhouse and the related penstocks. Al'
costs of the Cana' Compani es for such negot i at ions and acqui s i ti ons, as approved
by the Power Company shall be reimbursed to the Cana' Compani es.
(b) The Power Company, subject to the approval of the Authori zed Representat i ves,
shall as agent for the Canal Companies, cause all plans and specifications for
the construct i on of the Mi 1 ner Dam Rehabi' i tat i on Project to be prepared by the
-
Design Engineer and shall enter into all contracts with the Construction
Contractor and the Equipment Suppl ier necessary for the completion of the Milner
Dam Rehabi 1 i tat i on Project . All costs incurred by the Power Company pursuant
to this subsection (b) shall be considered to be Canal Company Construction
Advances.
(c) The Canal Companies have pursuant to the Construction Management Agreement,
des i gnated the Power Company to act as Construct i on Manager of the Mi 1 ner Dam
Rehabilitation Project. The Construction Manager and the Canal Companies have
entered into the Construct i on Management Agreement de' i neat i ng the dut i es,
responsibilities and liabilities of the Construction Manager and the Canal
Companies. A'l costs related to the management of construction of the.Milner
Dam Rehabi 1 itat i on Project and the Construct i on Manager shall constitute a
port i on of the Cost of Construct i on and sha'l be paid by the Power Company as
a part of the Cost of Construction to be reimbursed by the Canal Companies as
part of the Canal Company Construction Advances.
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(d) The Power Company, shall obtain the approval of the Authorized Representatives
with respect to any portion of the construction of the Power PL ant or the Mi 1 ner
Dam Rehabilitation Project which shall require any disturbance of or use of the
canals or other property interests of the Canal Companies or the American Falls
Reservoi r Di stri ct No. 2 appurtenant to the Mi 1 ner Dam.
(e) The Authorized Representatives shall establ ish the Estimated Completion Date
and shall determi ne the Project Comp 1 et i on Date. The Authori zed Representatives
shall approve a fi na 1 accounting of the Costs of Construction and of the
Capi ta 1 i zed Construct i on Advance Interest based on the records of account
requ i red to be ma i nta i ned by the Power Company pursuant to the provi s ions of
Section 7.1.
(f) To the extent necessary to resolve any operation arrangements which shall become
necessary in order to ensure the efficient coordination of the operation of the
Mil ner Dam and the Power PL ant, the Parties sha 11 hereafter enter into an
operating agreement which shall govern those operating arrangements, a copy of
wh i ch operating agreement shall be fi 1 ed wi th the Authori zed Representatives.
Sect ion 4.5. Mil ner Dam Rehabi 1 i tat i on Project; Construct i on Budget ; Canal Company
Construction Advances.
(a) Wi th in 90 days after the execut i on of th is Agreement the Authori zed
Representatives shall cause the initial Construction Budget setting forth the
Costs of Construction of the Milner Dam Rehabilitation Project to be prepared
and supp 1 i ed to the Part i es. Upon the request of ei ther the Power Company or
the Canal Compan i es the Authori zed Representat i ves may approve the amendment
"
of the Construction Budget from time to time in order to provide for the
comp 1 et i on of the Mil ner Dam Rehabil i tat i on Project in accordance wi th the
requ i rements of the Li cense or otherwi se. The Power Company sha 11 pay the Costs
of Construction of the Milner Dam Rehabilitation Project as incurred, which
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costs shall be the basis for calculating the Costs of Construction paid by the
Power Company and the Canal Company Construction Advances thereby made by the
Power Company to the Canal Compan i es for purposes of Sect ion 5.5 hereof.
(b) The Canal Company Construction Advances shall bear Capitalized Construction
Advance Interest from the middle of the month within which each advance is made
to the date the Construction Debt is incurred or the Project Comp 1 et i on Date,
whichever is earl ier. If the Construction Debt has not been incurred on the
Project Completion Date, the Canal Company Construction Advances and the
Capitalized Construction Advance Interest shall bear Post Project Completion
Date Interest from the Project Completion Date to the date the Construction Debt
is incurred. The Canal Companies shall reimburse the Power Company for the
Costs of Construction by payi ng the Canal Company Construct i on Advances, the
Capitalized Construction Advance Interest, and the Post Project Completion Date
Interest in accordance with the provisions of Section 5.5 hereof.
(c) The Authorized Representatives, or their designated agent, shall be responsible
for designing, engineering and managing the construction of the Milner Dam
Rehabilitation Project, including selecting the Construction Contractor and each
Equ i pment Supp 1 i er.
Section 4.6. Capitalized Mitigation Costs; Capitalized Mitigation Cost Budget.
(a) The Power Company shall pay the Capitalized Mitigation Costs as incurred which
costs shall be the basi s for determining the payment by the Canal Companies for
the Capi tal i zed Mi t i gat i on Cost Advances. The Power Company shall prepare the
Capital ized Mitigation Cost Budget for review by the Authorized Representatives
of the Capital i zed Mit igat i on Costs requi red under the Li cense. The Capital ized
Mitigation Cost Budget, as initially approved by the Authorized Representatives,
may be amended from time to time upon approval by the Authorized Representatives
at the request of the Power Company or the Canal Companies in order to conform
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to the requ i rements of the License or otherwi se.
(b) The Canal Companies shall pay 50% of the Capitalized Mitigation Costs pursuant
to Section 5.6 hereof, exclusive of those Capitalized Mitigation Costs
associated with Articles 411, 412, 413, 414 and 419 of the License in force on
the date of execut i on of th is Agreement.
Section 4.7. Annual Mitigation Expenses; Annual Mitigation Expense Budget.
(a) The Power Company shall pay the Annual Mitigation Expenses as incurred which
costs shall be the basis for determining the Annual Mitigation Expense payment
by the Canal Companies. Not less than 30 days prior to the Estimated Project
Completion Date the Power Company shall prepare and supply to the Authorized
Representatives for their review and approval the Annual Mitigation Expense
Budget for the first year of operation of the Project. Annual Mitigation
Expense Budgets for succeeding years shall be prepared and submitted to the
Authorized Representatives for review in accordance with procedures establ ished
by the Authorized Representatives under Section 6.2(b)(2) hereof. The Annual
Mitigation Expense Budget for any year, as initially approved by the Authorized
Representatives, may be amended from time to time upon approval by the
Authorized Representatives at the request of the Power Company or the Canal
Companies in order to conform to the requirements of the License or otherwise.
(b) The Canal Companies shall pay 50% of the Annual Mitigation Expenses pursuant
to Sect ion 5.7 hereof.
Section 4.8. Royalty and Incentive Royalty. In consideration of the use of the
fa 11 i ng water made ava i 1 ab 1 e at the Power Pl ant by the Canal Compani es pursuant to
th is Agreement, the Power Company ~grees to pay the Royalty and the I ncent i ve Royalty
to the Canal Companies in the amounts and at the times as contemplated in Sections
5.1 and 5.3 hereof during the Original Term of this Agreement.
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Section 4.9. Leased Mitigation Water.
(a) The Authorized Representatives shall from time to time in order to remain in
compliance with the requirements of Section 401 of the License, approve the
Power Company's purchase of Leased Mitigation Water.The Authori zed
Representatives shall from time to time adopt and revise procedures for
measuri ng the Bypass Flows, the Target Flows and the Total Flows.
(b) The Canal Companies shall reimburse the Power Company for Leased Mitigation
Water Costs pursuant to Section 5.8. The amount to be reimbursed shall be
calculated as follows:
When Total Flows Are
Percentage Obl igation to
Canal Companies to Reimburse
Leased Mi t i gat i on Water Costs
Below 249 cfs
Between 250 and 299 cfs
Between 300 and 399 cfs
Over 400 cfs
50%
37.5%
25%
0%
(but not exceeding 100 cfs)
(but not exceeding 75 cfs)
(but not exceeding 50 cfs)
Section 4.10. Additional Generation Facil ities. If Additional Generation Faci 1 ities
are constructed or acqui red by the Power Company as part of the Project subject to
the License, the Power Company shall construct, own, maintain and operate the
Additional Generation Facilities in accordance with the provisions of the License
and th is Agreement. The generated output of the Add it i ona 1 Generat ion F aci 1 it i es
shall be included in calculating the Incentive Royalty pursuant to Section 5.3 hereof
and the calculation of Net Benefits pursuant to Section 3.5 or Section 4.11 hereof,
if applicable. The Power Company agrees to hold the Canal Companies harmless in
connection with the acquisition, construction and operation of the Additional
Generation Facilities and will construct and operate the Additional Generation
Facil ities in such manner so as not to adversely affect the ownership or operation
of the Mi 1 ner Dam and wi 11 re i mburse the Canal Compan i es for any costs or damages
associated with the construction of the Additional Generation Facilities, insofar
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as such construction may affect or require the use of any facility included as part
of the Mi i ner Dam or any port i on of the cana i s or other property interests of the
Canal Companies.
Section 4.11. Option of Canal Companies - Deregulated Sale of Energy. If the Power
Company delivers a notice to the Canal Companies in writing prior to the Project
Completion Date that the generated output of the Project is not to be placed in the
regulated rate base of the Power Company, but is to be sold to a third party on a
deregulated basis, the Canal Companies may elect an option to receive 50% of the
Net Benefits of the sale of the generated output of the Project, in which event the
Power Company shall have no obligation to pay the Royalty or the Incentive Royalty
contemplated in Sections 5.1 and 5.3 hereof, provided however, the obligation of the
Power Company to pay the Debt Servi ce Charge pursuant to the Guaranty inSect ion 5.9
hereof shall rem a in in effect wi th respect to the Construct ion. Debt. The Canal
Companies shall, not less than ninety (90) days subsequent to the receipt of the
not ice from the Power Company provi ded for above, deli ver a not ice to the, Power
Company in writing if they wish to exercise the option contained in this Section 4.11
hereof wi th respect to Net Benefi ts.
Section 4.12. Termination of Deregulated Sale of Energy. In the event, after the
exercise of the option contained in Section 4.11 hereof to receive 50% of the Net
Benefi ts of the sal e of the generated output of the Project, the Power Company
notifies the Canal Companies in writing of its intention to terminate the sale of
the generated output of the Project to a third party on a deregul ated basi s and to
pOl ace the Project in the i~egul ated rate base of the Po',.e¡~ Company) upon such
termination the amount of the Royalty and the Incentive Royalty paid by the Power
Company to the Canal Companies shall in no event in any year be less than what would
have been the Royalty and the Incentive Royalty paid in such year calculated under
the provisions of Sections 5.1 and 5.3 hereof, as shown in Schedule l as contemplated
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therein, provided, however, the provisions of Section 5.2 hereof which permit
deferred install ments shall not be appl i cabl e.
Sect ion 4.13. Insurance. At a 11 times fo 11 owi ng the start of construct i on and pri or
to the acceptance of the Power Pl ant for operat i on by the Power Company on the
Project Completion Date the Power Company shall procure and maintain in effect
adequate 1 i abi 1 i ty and property damage insurance in connection wi th the construction
of the Milner Dam Rehabilitation Project and the Power Plant with each of the Canal
Compan i es and the Power Company as named insureds. The Authori zed Representatives
sha 11 allocate to the Construction Budget an ali quot portion of the premi ums for such
insurance coverage properly assignabl e to the Mi 1 ner Dam Rehabi 1 itation Project.
Section 4.14. Liabilities of Canal Companies in Event Project Completion Date
does not Occur; Can a 1 Company Opt ion.
(a) If the Project Completion Date does not occur for any reason, including, without
1 i mi tat ion, abandonment of the Li cense or failure of the Power Company to
complete construction of the Power Plant, the Parties shall enter into good
fa i th negot i at ions for the purpose of setting forth the terms and condi t ions
under wh i ch the Canal Compan i es wi 11 be obl i gated to repay the Canal Company
Construction Advances and Capital ized Construction Advance Interest at a term
of not 1 ess than 25 years wi th interest at not more than 10% per annum.
(b) The Canal Companies shall have no obligation to reimburse the Power Company for
Pre-License Advances in the event the Project Completion Date does not occur
as contemplated in subsection (a), except to the extent of the 1 i abi 1 i ty of the
Canal Companies based on an assignment of responsibil ity to the Canal Co~panies
for failure of the Project Comp 1 et i on Date to occur pursuant to a submi ss i on
to arbitration by the Parties under Section 12.1 hereof, or otherwise. Any
obligation of the Canal Companies to pay Pre-License Advances in the event the
Project Completion Date does not occur, as determined in the preceding sentence,
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shall be paid in equal annual installments of principal, plus interest at ten
percent (10%) per annum over a peri od equal i ng what wou1 d have otherwi se been
the remaining portion of the Original Term of this Agreement.
(c) In the event the Power Company is unable to complete construction of the Power
Plant, the Canal Companies shall have a right of first refusal to take over the
respons i bil ity under the Li cense to complete the construct i on of the Power PL ant
under such terms and conditions as the Parties then agree to.
ARTICLE V
PAYMENT OBLIGATIONS
Section 5.1. Royalty. Commencing on the first business day of the calendar month
next succeeding the calendar month during which the Project Completion Date occurs
and annually thereafter, the Power Company will pay the Royalty to the Canal
Companies during the Original Term of the Agreement. The aggregate amount of the
Royalty will equal the net present value of $5,638,000, plus one-half of the Costs
of Construction of the Milner Dam Rehabilitation Project, including (i) the
Capi tal i zed Construction Advance Interest and (i i) the Capi ta 1 i zed Construct i on Debt
Interest. The Royalty is to be calculated by the Power Company and approved by the
Authorized Representatives as of the Project Completion Date using a discount rate
of ten percent (10%) per annum. The Royalty wi 11 be app 1 i ed fi rst, to repayment of
any Post Project Completion Date Interest, as contemplated in Section 5.9(b) hereof,
and second, to repayment of the pri nc i pal and interest on the Construct i on Debt, as
contemp 1 ated inSect ion 5.11 hereof. The payment of the Royalty shall be subject
to the prov is ions of Sect ion 5.2 and Sect ion 5.9 hereof. Schedu1 e l attached, hereto
sets forth a sample cal cul at i on of the Royalty under certain assumptions, the
principles of which Schedule l shall govern the actual calculation of the Royalty
pursuant to the provisions of this Section 5.1.
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Section 5.2. Canal Company Option to Defer Commencement of Royalty. After the
Project Completion Date and for a period of 90 days after the Power Company certifies
the final balance of all Canal Company Construction Advances and Capitalized
Construction Advance Interest, the Canal Companies, by written notice to the Power
Company, may exercise an option, subject to the net present value limitation of the
ca 1 cu 1 at i on of the Royalty as set forth inSect ion 5.1 hereof, to have the port ion
of the Royalty remaining, if any, after payments due with respect to the Construction
Debt and Post Project Completion Date Interest, if any, have been made or duly
provided for, paid to the Canal Companies in equal annual or other mutually agreed
upon deferred installments during the last thirty (30) years of the Original Term
of this Agreement. The Authorized Representatives shall utilize the principles
contained in Schedule l in calculating the portion of the Royalty to be paid in
deferred installments should the Canal Companies exercise the option contained in
this Section 5.2.
Section 5.3. Incentive Royalty.
(a) Commencing in the first Incentive Royalty Calculation Period and in each
Incentive Royalty Calculation Period thereafter, in addition to the payment of
the Royal ty pursuant to Sect ion 5.1 hereof, the Power Company shall pay the
Incentive Royalty to the Canal Companies during the Original Term of the
Agreement based on the generation of the Power Plant during each Incentive
Royalty Calculation Period. The Incentive Royalty shall be based upon the
generation of electric energy at the Power Plant during each Incentive Royalty
Ca 1 cul at i on Peri od in excess of 142,000 MWh, as determi ned by the Aut~ori zed
Representatives pursuant to Section 6.2(b)(5) hereof. The Incentive Royalty,
if any, due in each Incentive Royalty Calculation Period shall be paid as
follows: (i) commencing no later than the 25th day of the calendar month next
succeeding the calendar month of each Incentive Royalty Calculation Period
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during which the generation of electric energy at the Project for that Incentive
Royalty Calculation Period exceeds 142,000 MWh, and (ii) on the 25th day of each
succeedi ng calendar month, until the Incenti ve Royalty for the current Incentive
Royalty Calculation Period has been paid. Except as provided in subsection (b),
the Incentive Royalty shall be based upon the following generation of electric
energy at the Project in excess of 142,000 MWh in each Incentive Royalty
Calculation Period as determined by the Authorized Representatives:
1.5 mi 11 s per kWh for generation of e 1 ectri c energy at the Project from
142,000 MWh and to and including 191,999 MWh;
2.0 mi 11 s per kWh for generation of e 1 ectri c energy at the Project from
192,000 MWh and to and including 216,999 MWh; and
2.5 mills per kWh for generation of electric energy at the Project in
excess of 216,999 MWh.
(b) Beginning in the Incentive Royalty Calculation Period commencing in License Year
twenty-one (21) and every five years thereafter during the Original Term of this
Agreement, the Incentive Royalty millage rate set forth in subsection (a) shall
be increased by thirty percent (30%), calculated as follows:
License Years
142,000MWH to
191,999 MWH
1.500 Mills
1.950
2.535
3.296
4.284
5.569
7.240
1-20
21-25
26-30
31-35
36-40
41-45
46-50
.. 200,000 MWH
to 216, 999 MWH
2.000 Mills
2.600
3.380
4.394
5.712
7.426
9.654
217,000 MWH
and Over MWH
2.500 Mills
3.250
4.225
5.493
7.140
9.282
12.067
Section 5.4. Pre-license Advances. Pre-License Advances calculated to be due to
the Power Company by the Canal Companies in accordance with the provisions of Section
3.3 hereof shall be repaid by the Canal Companies in accordance with the provisions
of this Section 5.4. The obligation of each Canal Company to repay Pre-License
Advances, including interest, which shall be several and not joint according to the
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ownersh i P interests set forth inSect ion 4.2, is as set forth inSect ion 3.3 hereto,
and is payable in equal annual installments of principal and interest over the
remainder of the Original Term of this Agreement commencing on the first business
day of the calendar month occurring next succeeding the Project Completion Date,
accordi ng to a schedul e of the i nsta 11 ments to be approved by the Authori zed
Representatives pursuant to Section 6.2(b)(6) hereof. Unpaid Pre-License Advances
shall bear interest at the rate of 10% per annum from the Project Completion Date
until paid. Anything herein to the contrary notwithstanding, each Canal Company
shall be entitled to prepay any of the installments, in any amount, at any time
wi thout a prepayment penalty.
Section 5.5. Canal Company Construction Advances; Capital ized Construction
Advance Interest.
(a) Canal Company Construction Advances and the Capitalized Construction Advance
Interest calculated to be due to the Power Company by the Canal Companies in
accordance with the provisions of Section 4.5 and Section 5.9(a) hereof, and
Post Project Completion Date Interest, if any, calculated to be due to the Power
Company pursuant to the provisions of Section 4.5 and Section !.9(d) hereof,
shall be repaid by the Canal Companies in accordance with. the provisions of this
Sect ion 5.5. Cana 1 Company Construct i on Advances made by the Power Company,
together with the Capitalized Construction Advance Interest thereon calculated
as provided in Section 4.5(b) hereof, shall be due and payable by the Canal
Compan i es from the proceeds of the Construct i on Debt, as provi ded i ri Sect i on
5.9 hereof. Post Project Completion Date Interest calculated as provided in
Section 4.5 hereof shall be due and payable by the Canal Companies from the
proceeds of the Royalty, as provided in Section 5.1 hereof.
(b) Attached hereto as Schedul e II is the 1 atest itemi zat i on of the Costs of
Construction advanced by the Power Company prior to the date of execution of
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the Agreement, together with the appl icable Short Term Borrowing Cost of the
Power Company, as app 1 i cab 1 e.
Sect ion 5.6. Canal Company Capi ta 1 i zed Mi t i gat i on Cost Advances. Cana 1 Company
Capitalized Mitigation Cost Advances calculated to be due to the Power Company by
the Canal Companies in accordance with the provisions of Section 4.6, shall be repaid
by the Canal Companies in accordance with the provisions of this Section. The
obligation of each Canal Company to repay Canal Company Capitalized Mitigation Cost
Advances, whi ch shall be several and not joi nt accordi ng to the ownershi p interests
set forth in Section 4.2, shall be payable in equal annual installments of principal
and interest over the remainder of the Original Term of this Agreement commencing
on the first business day of February next succeeding the Project Completion Date,
according to a schedule of installments to be approved by the Authorized
Representatives pursuant to Section 6.2(b)(8) hereof. Unpaid Canal Company
Capital ized Mitigation Cost Advances shall bear interest at the rate of 10% per annum
from the mi ddl e of the month duri ng wh i ch each advance is made as cert i fi ed by the
Power Company from time to time to the Authorized Representatives, until paid.
Anything herein to the contrary notwithstanding, each Canal Company shall be entitled
to prepay any of the installments in any amount at any time without a prepayment
penalty.
Section 5.7. Canal Company Annual Mitigation Expenses. Canal Company Annual
Mitigation Expenses calculated to be due to the Power Company by the Canal Companies
in accordance with the provisions of Section 4.7 hereof, shall be paid by the Canal
Companies in accordance with the provisions of this Section. Commencing on the
Project Completion Date Canal Company Annual Mitigation Expenses shall be payable
by the Canal Companies in each calendar year on the date, or dates, established from
time to time by the Authorized Representatives. The obligation of each Canal Company
to pay Canal Company Annual Mitigation Expenses shall be several and not joint
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according to the ownership interests set forth in Section 4.2.
Section 5.8. Leased Mitigation Water Costs. Leased Mitigation Water, if water is
available to the Parties in accordance with the requirements of Section 401 of the
License, shall be acquired and paid for by the Power Company as Leased Mitigation
Water Costs. The portion of Leased Mitigation Water Costs due to be reimbursed to
the Power Company by the Canal Companies pursuant to the provisions of Section 4.9
shall be paid by the Canal Companies in accordance with the provisions of this
Section 5.8. The obligation of each Canal Company to reimburse the Power Company
for Leased Mitigation Water Costs shall be several and not joint according to the
ownership interests set forth in Section 4.2 hereof. Payments for Leased Mitigation
Water Costs shall be due and payable by the Canal Companies annually in accordance
wi th procedures to be estab 1 i shed for that purpose by the Authori zed Representatives.
Section 5.9. Construction Debt; Guaranty.
(a) The Canal Companies agree to incur the Construction Debt from the Lender secured
by the Guaranty after such time as the Cost of Construction has been reviewed
and cert i fi ed by the Authori zed Representat i ves in accordance wi th the
provisions of Section 6.2(a)(17) hereof in order to provide funds to repay the
Canal Company Construction Advances and the Capital ized Construction Advance
Interest to the Power Company.
(b) The Parties agree to soli ci t proposal s for the Construction Debt. The
solicitation will be made using a term sheet format similar to that attached
in Exh i bi t 1, or as amended if approved by the Parties. Timi ng for the
solicitation will be within one year prior to or after the Estimated Completion
Date to obtain the most favorable terms and conditions, or as otherwise agreed
to by the Part i es. The Power Company shall revi ew and approve the fi nal term
sheet to be used for the sol icitation, which approval, if the sol icitation term
sheet is in substantially the form attached hereto as Exhibit 1, shall not be
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unreasonably withheld.
(c) The Power Company shall have the right to approve the terms and conditions of
the Construction Debt secured by the Guaranty, which approval shall not be
unreasonably withheld. The Power Company may withhold its approval of the terms
and conditions of the Construction Debt if the term of the Construction Debt
is for a period of less than twenty (20) years or if the terms and conditions
of the Construction Debt are otherwi se fi nanci ally di sadvantageous to the Power
Company, as specifically set forth in writing to the Authorized Representatives.
(d) If the Construction Debt is incurred prior to the Project Completion Date,
Capitalized Construction Debt Interest shall be included as part of the
Construct i on Debt from the date the Construction Debt is incurred to the
Estimated Project Completion Date. If the Project Completion Date occurs prior
to the incurring of the Construction Debt, Post Project Completion Date Interest
shall be paid by the Canal Companies to the Power Company pursuant to the
provi s ions of Sect ion 5.5 hereof from the proceeds of the Royal ty for the peri od
from the Project Completion Date to the date of incurring the Construction Debt.
(e) The obl igation of each of the Canal Companies to repay the Construction Debt
shall be several and not joint according to the ownership interests set forth
in Section 4.2. Anything in this Agreement to the contrary not withstanding,
the Royalty and the Incentive Royalty due from the Power Company under Section
5.1 and 5.3 hereof, or Net Benefi ts due from the Power Company under Secti on 5.2
hereof, shall be fi rst used to reimburse the Power Company for payment of the
Debt Service Charge or any other costs associated with the Construction, Debt,
wi th the rem a in i ng balance, if any, of the Royalty and Incentive Royalty or Net
Benefits being credited by the Power Company to the Canal Companies in
accordance with the provisions of Section 5.11 or paid to the Canal Companies,
all pursuant to procedures estab 1 i shed by the Authori zed Representatives in
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accordance wi th the provi si ons hereof.
(f) The Parties shall use their best efforts to ensure that the annual Debt Service
Charge or any other costs associ ated wi th the Construction Debt are 1 ess than
the annual Royalty and Incentive Royalty or Net Benefits; however, if the
proceeds of the Royalty and Incentive Royalty or Net Benefits are calculated
to be 1 ess than requi red to reimburse the Power Company for payments of the
Debt Servi ce Charge pursuant to the Guaranty, the Canal Compani es shall
reimburse the Power Company for any payments of the Debt Service Charge in
excess of the proceeds of the Royalty and Incentive Royalty or Net Benefi ts in
any year, plus interest at the rate of ten percent (10%) per annum from the date
upon which such payments of the Debt Service Charge in excess of proceeds to
the Canal Companies herein are made by the Power Company to the date
reimbursement is made by the Canal Companies to the Power Company.
Section 5.10. Guarantee by Company of Debt Service Charge. The Power Company shall,
upon approving the terms and conditions of the Construction Debt, unconditionally
guarantee payment of the Debt Service Charge directly to the Lender on the dates and
in the amount determined in accordance with the provisions of Section 5.9 hereof
pursuant to a separate guaranty agreement.
Section 5.11. Use of Proceeds of Royalty and Incentive Royalty to pay certain
Cana 1 Company Ob 1 i gat ions. The Royalty and the I ncent i ve Royalty or Net Benefi ts
payable in any year, to the extent remaining after satisfying the annual obligations
of the Canal Compan i es under Sect ion 5.9 wi th respect to the Post Project Comp 1 et ion
Date Interest, if any, or the Construction Debt, shall be credited agai~st the
obligation of the Canal Companies to pay the Pre-License Advances, the Canal Company
Capitalized Mitigation Cost Advances, the Canal Company Annual Mitigation Expenses
or the Leased Mi t i gat i on Water Costs, or any combi nat i on thereof.
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ARTICLE VI
AUTHORIZED REPRESENTATIVES
Section 6.1. Authorized Representatives. As a means of securing effective
cooperation and of deal ing on a prompt and orderly basis with various administrative,
technical, financial, construction and operation subjects which might arise in
connect i on wi th performance under th is Agreement and further, recogn i zing the need
to coord i nate the construct i on of the Power PL ant wi th the construction of the Mil ner
Dam Rehabil itation Project, the Power Company and each of the Canal Companies shall
name an Authorized Representative. Each Authorized Representative shall be given
authority by the Party or Parties by whom he is designated to act on their behalf
with respect to those matters herein provided to be responsibilities of the
Authorized Representatives. The Parties shall promptly notify each other in writing
of the desi gnati on of thei r Authori zed Representative or any subsequent changes in
such designation. The Parties shall each have the power to appoint one or more
alternate Authori zed Representat i ves to act on speci fi ed occas ions wi th respect to
specific matters, as for example, legal, engineering or financial.
Section 6.2. Responsibilities of Authorized Representatives.
(a) The responsibil ities of the Authorized Representatives prior to the Project
Completion Date shall be to:
(1) Establish and revise from time to time general policies to be followed in
the administration of this Agreement prior to the Project Completion Date,
including, without limitation, the construction of the Milner Dam
Rehabilitation Project, and, to the extent such policies are relev.ant to
the subject matter of this Agreement, the construction of the Power Plant;
(2) Establish and revise from time to time general policies and practices to
be followed in the coordination of the construction of the Power Plant with
the constructi on of the Mi 1 ner Dam Rehabi 1 i tati on Project;
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(3) Approve the plans and specifications with respect to the design and
construct i on of the Mi 1 ner Dam Rehabi 1 i tat i on Project pursuant to Sect i on
4.4 hereof, inc 1 ud i ng, the necessary interface wi th the canal system of
the Canal Compan i es con temp 1 ated inSect ion 4.4 hereof;
(4) Approve, and from time to time amend and revise as necessary, the
Construction Budget pursuant to Section 4.5 hereof;
(5) Approve payment of the Costs of Construct i on;
(6) Revi ew and approve the determi nat i on of Capi ta 1 i zed Construction Advance
I nterest pursuant to Section 4.5 (b) hereof and the determi nat i on of
Capitalized Construction Debt Interest pursuant to Section 5.9(b) hereof;
(7) Whenever necessary, assign amounts between Costs of Construction and costs
attributable to the Power Plant;
(8) Approve the award of the Construction Contract and each contract with an
Equi pment Suppl i er with respect to the Mi 1 ner Dam Rehabi 1 i tation Project;
(9) Approve progress payments and the final payment to the Design Engineer and
the Construction Manager;
(10) Approve progress payments and the final payment to the Construction
Contractor;
(11) Approve progress payments and the final payment to the Equipment Suppl ier;
(12) Approve resolution of claims as the result of contracts with the Design
Engineer, Construction Contractor or Equipment Suppl ier;
(13) Approve change orders and extra work orders to contracts of the Design
Engineer, Construction Contractor or Equipment Supplier.
(14) Approve, and from time to time amend and revise as necessary, the
Capital ized Mitigation Cost Budget pursuant to Section 4.6 hereof and
payment of the Cap ita 1 i zed Mi t i gat i on Costs;
(15) Approve the initial Annual Mitigation Expense Budget pursuant to Section
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4.7 hereof;
(16) Allocate insurance costs to the Milner Dam Rehabil itation Project pursuant
to Section 4.13 hereof;
(17) Review the calculation of the Cost(s) of Construction and the Capitalized
Construction Advance Interest for purposes of Section 5.9 hereof;
(18) Establ ish from time to time the Estimated Completion Date and determine
the Project Completion Date, based upon the recommendation of the Power
Company;
(19) Do such other things as are specifically assigned to the Authorized
Representat i ves by the Parties pri or to the Project Comp 1 et i on Date.
(b) The responsibilities of the Authorized Representatives after the Project
Completion Date shall be to:
(1) Consult with respect to and to establish and from time to time revise any
general policies to be followed in the administration of this Agreement
subsequent to the Project Comp 1 et i on Date, inc 1 udi ng maintenance of
insurance by the Parties on the respective portions of the Project
represented by thei r respective ownersh i p interests;
(2) Approve, and from time to time amend and revise as necessary, the Annual
Mitigation Expense Budget pursuant to Section 4.7 hereof;
(3) Review the Calculation of Net Benefits for purposes of Section 3.5 hereof
and of Sect ion 4.11 hereof, if app 1 i cab 1 e, under the opt ion selected by
the Canal Compani es;
(4) Review of the calculation of the amounts due under the Royalty under
Sect ion 5.1 hereof, and to the extent app 1 i cab 1 e under Section 5.2 hereof;
(5) Review the calculation of the Project generation of electric energy for
purposes of calculating the Incentive Royalty under Section 5.3 hereof;
(6) Approve the schedul e for the repayment of Pre- License Advances pursuant
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to Sect ion 5.4 hereof;
(7) Revi ew the procedures for use of the proceeds of the Royalty and the
Incentive Royalty or Net Benefits as credits against the obligations of
the Canal Companies to pay Pre-License Advances, Canal Companies
Capitalized Mitigation Cost Advances or Canal Company Annual Mitigation
Expenses, Leased Mit i gat i on Water Costs or any combi nat i on thereof,
pursuant to Section 5.11 hereof;
(8) Review the calculation of the interest due on Canal Company Capitalized
Mi t i gat i on Cost Advances and the schedul e of i nsta 11 ments of repayment
pursuant to Section 5.6 hereof;
(9) Estab 1 ish the date, or dates, for payments of the Canal Company Annual
Mitigation Expenses;
(10) Review the calculation of the obligation of Canal Companies to pay Leased
Mitigation Water Costs;
(11) Establish procedures for payments by Canal Companies of Leased Mitigation
Water Costs pursuant to Section 5.8 hereof;
(12) Establish procedures for crediting the Royalty and the Incentive Royalty
or Net Benefits for payment of any Post Project Completion Date Interest
and the Debt Servi ce Charge pursuant to Section 5.9 hereof;
(13) Establish procedures for determining Bypass Flows, Total Flows and Target
Flows pursuant to Section 4.9 hereof; and
(14) Do such other things as are specifically assigned to the Authorized
Representatives by the Parties after the Project Completion Date.
Section 6.3. Procedures of Authorized Representatives. The establishment of any
procedure or pract ice or any other act i on or determi nati on by the Authori zed
Representatives under this Article VI shall be made by unanimous agreement to become
effect i ve when signed by each of the Author; zed Representatives. The Authori zed
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Representatives shall have no authority to modify any of the provisions of this
Agreement, nor shall they establish policies, rules, or regulations which conflict
wi th the prov is ions of the License.
Section 6.4. Dispute Resolution. The Authorized Representatives shall exercise
their best efforts to arrive at an amicable settlement of any dispute (including any
deadlock) which may arise with respect to any matter contemplated by this Agreement.
If, however, no such settlement is reached in connection with any such dispute, then
upon written notice by any Party, a three member panel comprised of the President
of the Power Company and the Pres i dent of each Canal Company shall be formed and such
pane 1 shall exerci se its best efforts to arri ve at an ami cabl e settl ement of such
dispute. If, however, no such settlement is reached, then upon written notice by
any Party such dispute may be settled by arbitration in accordance with the
provisions of Section 12.1 hereof, or as otherwise provided in Article IX hereof.
ARTICLE VII
SPECIAL COVENATS
Section 7. i. Construction Records Required to be Maintained.
(a) The Power Company shall at all times maintain and appropriately preserve books
of account and appropri ate records contain i ng deta tl ed entri es of the Pre-
License Advances, the Costs of Construction and the Capitalized Mitigation
Costs. Accounting for all Pre- Li cense Advances, Costs of Construct i on and
Capi tal i zed Mi t i gat i on Costs shall be in accordance wi th the requi rements of
the Federal Power Act, if any, and the requirements of the Commission as such
requirements are modified by the Commission from time to time. The basic
records and documents re 1 at i ng to the construct i on of the Mi 1 ner Dam
Rehabil itation Project, the Costs of Construction and the Capital ized Mitigation
Costs shall be made avail ab 1 e to the Authori zed Representat i ves, to the Canal
Companies and to the Commission for inspection during regular business hours
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upon reasonable not ice and request therefor.
(b) Within 120 days after each calendar year during the period of construction of
the Project and upon the Project Comp 1 et i on Date, the Power Company shall have
an audit made of the books of account relative to the Costs of Construction and
the Capitalized Mitigation Costs, the expense of which shall be included in the
Costs of Construction. Such audits shall be made by an independent certified
public accountant, licensed, registered or entitled to practice as such under
the 1 aws of Idaho. A copy of each such audi t shall be furni shed promptly to
the Canal Companies.
Section 7.2. Books and Records Related to Annual Mitigation Expenses and Leased
Mitigation Water Costs.
(a) The Power Company shall maintain books to record the Annual Mitigation Expenses
and Leased Mit i gat i on Water Costs in accordance with Commi ssi on Accounts, and
as reported in Commission Form I under "Hydroelectric Generating Plant
Statistics". The basic records and documents recording the Annual Mitigation
Expenses and the Leased Mitigation Water Costs shall be made available to the
Authorized Representatives, to the Canal Companies and to the Commission for
inspection during regular business hours upon reasonable notice and request
therefor.
(b) The Power Company shall have an audit of the books of account relative to the
Annual Mitigation Expenses and the Leased Mitigation Water Costs made within
120 days after each calendar year, the expense of which audits shall be included
as part of the Annual Mitigation Expenses and the Leased Mitigation Water Costs
to the extent app 1 i cab 1 e. Such audi ts shall be made by an independent cert i fi ed
publ ic accountant, 1 icensed, registered or entitled to practice as such under
the laws of Idaho. A copy of each such audit shall be furnished promptly to
the Canal Compani es.
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Sect ion 7.3. Comp 1 i ance wi th Laws, Rul es and Regul at ions. The Canal Compan i es and
the Power Company shall, in the performance of their respective obligations under
this Agreement and the License, comply fully with all laws, rules and regulations
perta in i ng to the construction, operation and maintenance of the Project and the
subject matter of this Agreement, including, particularly, the Federal Power Act,
the Federal Energy Regulatory Act, the Idaho Public Utilities Act, and the rules and
regulations of the Commission and the Idaho Public Utilities Commission, and, to the
extent that the operations of any of the Canal Companies or the Power Company may
be subject to the juri sdi ct i on of any state or federal regul atory agency, such other
terms of all valid and applicable orders, rules and regulations of any such agencies.
Thi s Agreement is subject to the 1 aws of the State of Idaho and is subject to the
approval, to the extent required by law, of any state or federal regulatory agency
having jurisdiction thereof. All costs and expenses of the Canal Companies and the
Power Company incurred prior to the Project Completion Date in effecting compliance
with any such laws, rules, regulations and orders which apply to the design or
construct i on of the Mi 1 ner Dam Rehabi 1 i tat i on Project shall be deemed to be a Cost
of Construction. All costs and expenses of the Canal Companies and the Power Company
in effect i ng comp 1 i ance wi th any such 1 aws, rul es, regul at ions and orders wh i ch apply
to construction, operation and maintenance of the Power Plant shall be deemed to be
an expense to be paid for by the Power Company, except to the extent allocable to
the Canal Companies as part of the Annual Mitigation Expenses or the Leased
Mi t i gat i on Water Costs. The Canal Compani es, before i ncurri ng any such costs or
expenses , shall consul t wi th the Power Company, and such costs and expenses must be
approved by the Authori zed Representat i ves .
Section 7.4. Corporate Existence of Power Company; Mergers and Consolidations.
During the Original Term and any Renewal Term of this Agreement, the Power Company
shall maintain its corporate existence, shall continue to be a corporation either
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organized under the laws of or duly qualified to do business as a foreign corporation
in the State of Idaho, and will not dispose of all or substantially all of its assets
nor consol idate with nor merge into another corporation unless the acquirer of its
assets or the corporation with which it shall consol idate or into which it shall
merge shall be a corporation organized and existing under the laws of one of the
States of the United States of America and shall be qualified and admitted to do
bus i ness in the State of Idaho , shall be, or as a resul t of the transaction shall
become, a public utility, shall have a net worth immediately subsequent to such
acquisition, consol idation or merger at least equal to that of the Power Company
immediately prior to such acquisition, consolidation or merger, and shall assume in
writing all of the obligations of the Power Company herein.
Sect i on 7.5. Approva 1 s .
(a) Whenever, under the provisions of this Agreement, the approval of the Power
Company is required or the Canal Companies, or any of them are required to take
some action at the request of the Power Company, such approval or such request
sha 11 be made by the Authori zed Power Company Representative unless otherwi se
specified in this Agreement, and the Canal Companies, or any of them, or the
Lender shall be authori zed to act on any such approval or request, and the Power
Company shall have no complaint against the Canal Companies, or any of them,
or the Lender as the result of taking any such action.
(b) Whenever under the provi s ions of th is Agreement the approval of the Canal
Companies, or either of them, is requested or the Power Company is requested
to take some action at the request of the Canal Companies, or either of. them,
such approval or such request shall be made by the respect i ve Authori zed Canal
Company Representative or Representatives, unless otherwise specified in this
Agreement, and the Power Company or the Lender shall be authori zed to act on
any such approval or request, and the Canal Companies, or either of them, shall
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have no comp 1 a i nt against the Power Company or the Lender as a resul t of taki ng
any such act ion.
ARTICLE VIII
ASSIGNMENT
Sect ion 8. i . Cond it i on of As s i gnments by Power Company. Th is Agreement may be
ass i gned as a whole or in part, by the Power Company wi th the consent of the Canal
Companies, which consent shall not be unreasonably withheld, subject, however, to
each of the fo 11 owi ng cond it ions:
(1) The assignee of the Power Company shall expressly agree in writing to
perform all of the ob 1 i gat ions of the Power Company hereunder to the extent
of the interest assigned.
(2) The Power Company shall, within thirty (30) days after delivery of .each
such assignment, furnish or cause to be furnished to the Canal Companies
and to the Lender a true and correct and complete copy thereof.
Section 8.2. Assignments or Dissolution by Canal Companies.
(a) The Canal Companies may each assign their respective interests in, and pledge
any moneys receivable pursuant to this Agreement to, the Lender as security for
payment of the Debt Service Charge, but each such assignment or pledge shall
not affect or impair the rights of the Power Company under this Agreement.
(b) If duri ng the term of th is Agreement or any extens i on or renewal thereof, the
Canal Companies desire to assign or transfer their interest in this Agreement
or any Proj ect fac i 1 i ty, the Power Company shall have the ri ght, but not the
obl igation, to purchase said interest at the same price that the Canal Companies
could receive from a third party. The Power Company will have ninety (90) days
from the receipt of written notification of a third party offer in which to
exercise this right. If the Power Company does not exercise this right, then
the Canal Companies shall be free to transfer said interest to the third party
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subject to said third party's agreement to comply fully with all of the terms,
conditions and duties imposed by this Agreement.
(c) Each of the Canal Compan i es, to the extent that each may 1 ega 11 y so covenant,
covenants and agrees with the Power Company and with the other Canal Company
and the Lender that it will not dissolve or otherwise abandon its existence so
long as thi s Agreement is in exi stence wi thout the wri tten consent of the Power
Company, the other Canal Company, and so long as Construction Debt is
outstand i ng, wi thout the wri tten consent of the Lender.
ARTICLE ix
EVENTS OF DEFAULT AND REMEDIES
Secti on 9.1. Events of Defaul t Defined; Uncontroll abl e Forces.
(a) The following shall be "events of default" under this Agreement and the terms
"events of default" or "defaults" shall mean, whenever they are used in this
Agreement, anyone or more of the fo 11 owi ng events:
(1) Failure by a Party to pay all or any part of any amount required to be paid
by it under the provisions of Article V hereof at the times and places
specified therein and continuance of said failure with respect to any
default for a period of sixty (60) days after notice of such failure given
under the provisions of Section 9.2 hereof; or
(2) Failure by a Party to observe and perform any covenant, condition or
agreement on its part to be observed or performed hereunder for a peri od
of sixty (60) days after written notice, specifying such failure and
requesting that it be remedied, given pursuant to the provisions of S,ection
9.2 hereof to such Party by one or more of the Parties not in defaul t
unless the alleged default is cured or disputed as contemplated in Section
9.2 hereof; or
(3) The dissolution or liquidation of a Party; or the filing by a Party of a
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vo 1 untary petition in bankruptcy; or fail ure by a Party promptly to 1 i ft
or bond any execut ion, garn i shment or attachment of such consequence as
will impair its abil ity to make any payments under this Agreement; or the
fil ing of a petition or answer proposing the entry of an order for rel ief
by a court of competent jurisdiction against a Party under Title 11 of the
United States Code, as the same may from time to time be hereafter amended,
or proposing the reorganization, arrangement or debt readjustment of a
Party under the provisions of any bankruptcy act or under any similar act
which may be hereafter enacted and the failure of said petition or answer
to be discharged or denied within 90 days after the filing thereof; or the
entry of an order for re 1 i ef by a court of competent juri sdi ct ion in any
proceeding for its liquidation or reorganization under the provision of
any bankruptcy act or under any similar act which may be hereafter enacted;
or an ass i gnment by a Party for the benefi t of its cred i tors; or the entry
by a Party into an agreement of composition with its creditors (the term
"dissolution or liquidation of a Party," as used in this subsection (3),
shall not be construed to i ncl ude the cessat i on of the corporate exi stence
of a Party resulting either from a merger or consolidation of a Party into
or with another corporation or a dissolution or liquidation of a party
following a transfer of all or substantially all its assets as an entirety,
under the conditions permitting such actions contained in Article VIII
hereof); or
(4) A transfer of a Party's interest to any purchaser from a. mortgage or
secured party having realized upon its security or otherwise; or
(5) A purported termination, transfer, sale, assignment, pledge or encumbrance
of a Party's interest in this Agreement, except as permitted herein.
(b) The provisions of Section 9.1(a)(2) are subject to the limitations that if, by
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reason of Uncontrollable Forces, a Party is unable, in whole or in part, to
carry out its agreements on its part herei n contained, other than the
obligations of the Party to make the payments required in Article V hereof, the
Party shall not be deemed to be in defaul thereunder duri ng the conti nuati on
of such inability. Nothing herein contained shall be construed to require a
Party to settle on an unreasonable basis any strike or labor dispute in which
it may be involved which directly affects the Project. If a Party is rendered
unable to fulfill any obligation by reason of Uncontrollable Forces, it shall
exercise due diligence to remove such inability with all reasonable dispatch.
Sect ion 9.2. Remed i es for Defaul ts .
(a) If a Party bel ieves that another Party has committed an event of default, the
nondefaulting Party shall notify the other Party in writing, describing the
alleged default, and if the alleged default is not cured or disputed within
sixty (60) days from the date of such notice, it shall at the expiration of such
peri od constitute a defaul t under Section 9.1 hereof. I f a Party in good faith
disputes in wri t i ng to the nondefault i ng Party or Part i es the exi stence or
extent of an alleged default as to which a notice has been given as above
provi ded, that Party shall wi thi n the 60-day peri od from the date of the wri tten
disputation nevertheless make such payment or perform such obligation to cure
the all eged defaul t. Upon reso 1 ut i on of such di spute by the Parties, pursuant
to arbitration under Section 12.1, or by a court of competent jurisdiction, as
the case may be, then the payments, if any advanced or made among the Parties
as in this subsection (a) provided, shall be adjusted appropriately.
Notwithstanding the foregoing, the defaulting Party or Parties shall remain
liable to the Party or Parties not in default and to the creditors of the
Project for obl igations incurred prior to the cure of any such default.
Payments not made when due by either Party shall bear interest until paid at
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the highest lawful rate.
(b) Except as otherwise provided in subsection (a), the Parties shall have the right
from time to time to begin and maintain successive proceedings in law or equity
against the Party or Parties in default to enforce any of the provisions of this
Agreement to the extent permi tted by 1 aw, inc 1 ud i ng but not 1 i mi ted to,
injunctive relief in the case of the violation or threatened violation of this
Agreement, or a decree concerning performance of any of the provisions of this
Agreement, for a judgment in an amount equal to any payments to and owing under
Article V, or any other remedy.
(c) No right or remedy in this Section 9.2 herein conferred upon or reserved to the
Parties is intended to be exclusive of any other right or remedy, and each and
every right and remedy shall be cumulative and in addition to any other right
or remedy given hereunder, or now or hereafter legally existing, upon the
occurrence of any event of default to which this Section 9.2 applies. Failure
of a Party to insist at any time on the strict observance or performance by a
Party or Parties of any of the provi s ions of thi s Agreement, or to exerci se any
right or remedy provided for in this Agreement shall not impair any such right
or remedy nor be construed as a waiver or relinquishment thereof for the future.
Receipt by a Party of any payment required to be made under Article V hereof
with knowledge of the breach. of any provisions of this Agreement shall not be
deemed a wa i ver of such breach.
(d) If any proceedings shall be brought for the enforcement for any right or remedy
provided for in this Section 9.2 in which shall be determined that any. event
of default under Section 9.1 to which this Section 9.2 is applicable has
occurred and was continuing at the time of commencement thereof, the Party or
Part i es in defaul t shall pay to the other Part i es all expenses incurred in
connection therewith, including without limitation, reasonable attorney's fees
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and expenses.
Section 9.3. No Additional Waiver Implied by One Waiver. Any waiver by a Party of
its rights with respect to an event of default under this Agreement, or with respect
to any other matter arising in connection with this Agreement shall not be deemed
to be a waiver with respect to any other matter arising in connection with this
Agreement. No delay in asserting or enforcing any rights hereunder shall be deemed
a wa i ver of such ri ghts.
ARTICLE X
LIABILITIES AND DAMAGES
Section 10.1. Liabilities. Any loss, cost, liability, damage or expense incurred
by any Party result i ng from the maintenance, reconstruction or repair of any portion
of the Project because of injury to any individual, or because of damage to property
of one or more of the Part i es or of other persons, to the extent not covered by
co 11 ect i b 1 e insurance, shall be chargeable by the Authori zed Representat i ves to the
Party or Parties based solely upon the ownership interest in any Project facility
which is basis for any such loss, cost, liability, damage or expense.
Section 10.2. Damage to the Milner Dam. In the event that the Milner Dam or any
portion thereof suffers damage resulting from causes other than ordinary wear, tear
or deterioration to the extent that the estimated cost of repair as agreed to by the
Authorized Representatives exceeds the estimated available proceeds, if any, of
insurance, the Parties will proceed as follows:
(a) I f the Part i es agree to repa i r the Mi 1 ner Dam or the damaged port i on thereof,
the Authori zed Representatives shall proceed to repair the Mi 1 ner Dam, and each
Party shall pay its percentage share of the cost thereof based upon said Party's
ownership interest, if any, in the facil ity or facil ities which have been
damaged.
(b) I f the Parties do not agree that the Mi 1 ner Dam or the damage portion thereof
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shoul d be repaired any Party or Parties may proceed to repair the Mi 1 ner Dam
or the damaged port i on thereof, and thereafter submi t to arbi trat ion in
accordance with the provisidns of Section 12.1 hereof, the question of whether
pursuant to Prudent Ut i 1 i ty Practices the Mi 1 ner Dam or the damaged portion
thereof will be repaired. The Party or Parties failing to participate in the
cost of the repair of the Mi 1 ner Dam, or the damage porti on thereof, wi 11 be
obl igated to pay a percentage share of the cost thereof based upon the ownership
interest of such Party or Parties in the facil ity or facil ities which have been
repa ired, whereupon each such Party shall pay such amount as determi ned by
arbitration within thirty (30) days of the arbitration award or during such
other period as may be mutually agreed upon by the Parties.
Section 10.3. No Ownership Interest by Virtue of Article V Payments. For purposes
of this Article X, the Canal Companies shall not be deemed to have any ownership
interest in the Power Pl ant by vi rtue of thei r ob 1 i gat i on under Art i c 1 e V to repay
the Canal Company Capi ta 1 i zed Mi t i gat i on Cost Advances or to pay the Canal Company
Annual Mitigation Expenses. For purposes of this Article X, the Power Company shall
not be deemed to have any ownersh i p interest in the Mi 1 ner Dam or any appurtenant
canals of the Canal Companies by virtue of its obligation under Article V to make
the Canal Company Construction Advances or to pay the Debt Service Charge pursuant
to the Guaranty.
ARTICLE XI
TERM
Section 11.1. Original Term. This Agreement shall become effective up~n its
execut i on by the Canal Compan i es and the Power Company and, unless extended as
provided in Section 3.5 hereof, the Original Term of this Agreement shall terminate
on November 30, 2038, being fifty (50) years from the first day of the month in
wh i ch the License was issued.
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Section 11.2. Renewal Term. If, after the expiration of the initial term of the
License the License is continued or renewed, this Agreement shall thereupon be
cont i nued in effect duri ng such peri od of cont i nuance or for a Renewal Term or Terms
for a period or periods not exceeding such period of continuance or renewal of the
License.
Section 11.3. Payments during Renewal Terms. Subject to the provisions of Section
3.5 hereof the Canal Compan i es and the Power Company shall mutually agree to such
annual royalty payments to be made by the Power Company to the Canal Companies during
each Renewal Term as shall be embodied in one or more supplements to this Agreement.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Arbitration.
(a) Any dispute, controversy or claim arising among the Parties involving any of
the items, covenants and conditions of this Agreement may be submitted to
arbitration by the Parties in accordance with the rules then obtaining of the
American Arbitration Association, subject to the provisions of this Section
12.1, and judgment upon the award rendered by the arbi trators may be introduced
in any court havi ng juri sdi ction thereof.
(b) If the Parties agree to submit any dispute, controversy or claim to arbitration,
each Party or group of parties' representing one side of the dispute shall
des i gnate an arbi trator. The arbi trators selected by the Parties shall request
from the American Arbitration Association a list of arbitrators who are
qualified and eligible to serve as the third arbitrator. The arbitrators so
selected shall meet within twenty (20) days following their selection and shall
select an additional arbitrator from the list so obtained from the American
Arbitration Association. If the arbitrators selected by the Parties, as above
provided, shall fail to select an additional arbitrator from such list, then
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a judge of the Di stri ct Court of the Uni ted States for the State of Idaho or
such tribunal as may at the time be the successor of such Court, shall select
the third arbitrator. The judge shall select an arbitrator from the list
submitted. All arbitrators shall be persons skilled and an expert in the field
which gives rise to the dispute, and no person shall be eligible for appointment
as an arbitrator who is an officer or an employee of any of the Parties to the
dispute or who is otherwise interested in the matter to be arbitrated. If,
pending any arbitration under this Agreement, the arbitrator, or successor or
substitute arbitrator shall for any reason be unable or unwill ing to act, his
successor shall b'e appoi nted as he was appoi nted, and such successor or
substitute arbitrator as to all matters then pending shall act the same as if
he had been originally appointed as an arbitrator. The award of the arbitrator
so chosen shall be final and binding upon all Parties, and if necessary and
appropri ate in the premi ses, the arbi trator may make an order requi ri ng speci fi c
performance of any of the terms and conditions of said award. The award
rendered by the arbitrator shall be final, and judgment may be entered upon it
in any court havi ng juri sdi ct i on thereof. Each Party shall bear the expense
of preparing and presenting its own case, and the expense of the arbitrator
shall be equitably divided between the Parties by the arbitrator.
Section 12.2. Applicable Laws. The Parties in the performance of their obligations
hereunder shall conform to all applicable laws, rules, regulations and administrative
orders. Th is Agreement shall be construed under the 1 aws of the State of Idaho.
Thi s Agreement is subject to the approval of any state or federal regulatory ,agency
having jurisdiction thereof.
Section 12.3. Notices and Computation of Time. Any notice or demand by any Party
under this Agreement shall be deemed properly given if mailed postage prepaid and
addressed to each of the other Parties at the addresses indicated below for those
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Parties. In computing any period of time from such notice, such period shall
commence at 12:01 a.m. on the date mailed. The designations of the name and address
to wh i ch any such not ice or demand is directed may be changed at any time and from
time to time by any Party by giving notice as above provided. The following persons
are designated and appointed the representatives of the following Parties:
Party Addressee
Idaho Power Company Vi ce Pres i dent
of Power Supply
Address
1220 West State
Bo i se, Idaho 83702
North Side Canal Company President 921 North Lincoln
Jerome, Idaho 83338
163 Second West
Twi n Fall s, Idaho 83301
Twin Fall s Canal Company President
Any notice, demand or request provided for in this Agreement, or given or made in
connection with this Agreement to or upon the Lender snall be deemed to be properly
given or made if delivered or sent by registered mail to the principal corporate
offi ce of the Lender.
Section 12.4. Additional Documents. Each Party upon request by the other Parties
shall make, execute and deliver any and all documents reasonably required to
imp 1 ement the terms of th is Agreement, inc 1 ud i ng the Guaranty.
Section 12.5. Entire Agreement. This Agreement constitutes the entire agreement
between the Part i es re 1 at i ng to the subject matter hereof, and supersedes any
previ ous agreements or understandi ngs.
Sect ion 12.6. Supplements and Amendments. Pri or to the i ncurri ng of the
Construction Debt thi s Agreement may be suppl emented or amended by the Parties
hereto. Subsequent to the i ncurri ng of the Construction Debt and pri or to the
payment in full (or provision for the payment thereof having been made in accordance
with the provisions thereof) of the Construction Debt, this Agreement may not be
effectively amended, changed, modified, altered or terminated without the written
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consent of the Lender, which consent shall not be unreasonably withheld.
Section 12.7. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, such holding
sha'l not i nva' i date or render unenforceabl e any other provi sion hereof.
Section 12.8. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, and all of which shall constitute
and be one and the same instrument.
Section 12.9. Captions and Headings. The captions and headings appearing in this
Agreement are inserted merely to facilitate reference and shall have no bearing upon
the interpretation of the provisions of this Agreement.
IN WITNESS WHEREOF, the Canal Compan i es and the Power Company have caused
this Agreement to be executed in their respective names and their respective seals
to be hereunto affixed and attested by their duly authorized officers, all as of
the date fi rst above wri tten.
IDAHO POWER COMPANY
ATTEST:
~rs &:t~O-
~rs~~
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NORTH SIDE CANAL COMPANY, LIMITED
~rs~~
ATTEST:
~rs¥:?l
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TWIN FALLS CANAL COMPANY
ATTEST:
BY~~Its~' ~~
~rs~)cL
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.. '.
. .
Col umn 1
Col umn 2
Col umn 3
Col umn 4
Column 5
..
SCHEDULE I
Mi 1 ner Royal ty Computation
Notes
Present value factor for each year using the discount rate of
10% as fixed by the Contract for all present value computations.
A year-end payment is assumed in this example. The actual
present value factor wi 11 be adjusted if some other peri odi c
payment is used.
Actual Debt Service Charge (principal and interest) for the
Construction Debt and any Post Project Completion Date Interest.
The present value of Column 2. The sum of the individual year
present val ues of the Debt Servi ce Charges wi 11 be greater than
the Cost of Construct ion if the effect i ve interest rate of the
Construction Debt is greater than 10% annually and will be less
than the Cost of Construct ion if the effective interest rate of
Construction Debt is less than 10% annually.
The balance of the Royalty to be paid to the Canal Companies in
each year under Article 5.1
The present value of the Royalty in Column 4. The sum of the
total of Column 3 and Column 5 must be equal to the sum of
$5,638,000 plus one-half of the Cost of Construction (herein
assumed to be $9.0 million). Column 4 shall be adjusted to
produce this result.
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9
Month
1989
January
February
March
April
May
June
July
August
September
October
November
December
Total For the Year
..
Schedule II
Costs of Construction Advanced by Power
Company pri or to executi on of Agreemnt
Mem:Breakdown of Total Costs:Months Total For InterestChargesInterestThe Month Rate (%)Descri pti on Amunt
0.00 Land $5,025.270.00 Home Offi ce Engi neeri ng 28,901.59
$1.103.89 $4.54 $1.108.43 9.87 Home Office Other Dept 3.865.352.120.79 18.18 2,138.97 10.06 Field Office Cost 10,014.476,957.30 54.93 7,012.23 9.80 Contract Costs 397.198.5138,924.03 240.25 39.164.28 9.70 Receivables 0.0044,825.97 567.51 45,393.48 9.48 Admin, Legal, Interest 23,663.77174,692.46 1.385.96 176.078.42 9.1373.682.96 2,333.67 76,016.63 9.1051,636.94 2,817.22 54.454.16 9.07 $468! 668.9664.156.27 3.146.09 67.302.36 8.71
$458.100.61 $10.568.35 $468 ! 668 . 96
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EXHIBIT l
SUMMARY OF TERMS
MILNER DAM REHABILITATION PROJECT
Long- Term Debt Offering
The Parties:
Twin Falls Canal Company, a corporation domiciled in and authorized to
do business in the State of Idaho, with its principal business office
located in Twin Falls, Idaho.
North Side Canal Company, Limited, a corporation domiciled in and
authorized to do business in the State of Idaho, with its principal
office located in Jerome, Idaho.
Idaho Power Company, a corporation domi ci 1 ed in and authori zed to do
business in the State of Idaho, with its principal office in Boise,
Idaho.
The Project:
The Mil ner Dam Rehabil i tat i on Project is the program undertaken by the
parties to reconstruct, rehabil itate and improve the Milner Dam in
accordance with Federal Energy Regulatory Commission (FERC) License for
Project No. 2899 (attached). The Milner Dam includes tha diversion
structure located on the Snake River near Twin Falls, Idaho, together
wi th all appurtenant spi 11 ways , canal s, headworks and. fac; 1 it i es owned
and operated for irrigation purposes by the Twin Falls and North Side
Canal Companies and American Falls Reservoir District No.2 as
rehabi 1 i tated.
The Issue:
Term:Prcposals for long-term debt. are solicited for terms of
20 to 30 years. The parties prefer the longer term, but
are sensitive to any interest rate differ'entia1 whi.ch may
exist and will consider shorter term proposals with an
interest rate advantage.
A Sinking Fund structure with approximately equal annual
payments inc 1 ud i ng pri nc i pa 1 and interest.
Idaho Power Company will unconditionally guarantee
payment directly to the 1 ender /bondhol der of the
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Security:
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or-, .'.... ..
principal and interest on the Long-Term Debt to be issued
by the Twin Falls and North Side Canal Companies pursuant
to an Agreement Regarding the Ownership, Construction and
Operation of The Milner Hydroelectric Project (FERC
No. 2899) by and between the parties (attached) subject
to negotiation and acceptance of the loan docum;nts
descri bed under Loan Documentati on.
PrincipalAmount: Not to exceed the cost of the Milner Dam Rehabilitation
Project (including capitalized interest) estimated at
$
Date: Proposed date of issuance, estimated to be
Interest The parties desi re an interest rate (of 10% or lower)Rate: fixed for the term of the loan.
Closing: Proposed date of closing.
Redemption The parties will favor a proposal which contains one
Provisions: or more prepayment options during the term.
Loan
Documentation: The parties will include additional terms and conditions
in the solicitation which are considered important to the
Idaho Power Company's uncondi t ional guarantee of thedebt. The parties intend to jointly participate in
negotiating the loan documents with the selected lender
to assure approval by all part i es of the fi na 1 loan
package.
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BEFORE TH
IDAHO PUBLIC UTLITIES COMSION
CASE NO.IPC-E-9o-a
IDAH POWER COANY
ATTACHM 3
TO
APPLICATION
'-.IDAHO POWER COMPANY
.
MILNER HYDROELECTRIC PROJECT
POWERHOUSES
MAIN POWERHOUSE:
DIRECTS:
GENERAL CONSTRUCTION CONTRACTS
PROCUREMENT CONTRACTS
OTHER CONTRACTS & FACILITIES
TOTAL DIRECTS
INDIRECTS
OVERHEADS
AFUDC
TOTAL MAIN POWERHOUSE
POWERHOUSE AT DAM:
DIRECTS:
GENERAL CONSTRUCTION CONTRACTS
PROCUREMENT CONTRACTS
OTHER CONTRACTS & FACILITIES
TOTAL DIRECTS
INDIRECTS
OVERHEADS
AFUDC
TOTAL POWERHOUSE AT DAM
TOTAL MILNER POWERHOUSE COSTS
TOTAL COMMITMENT ESTIMATE
(1) ESTIMATE STATED IN COSTS AT COMPLETION.
FIGURES ARE NOT ROUNDED.
.
(1 )
PROJECT
ESTIMATE
(x 1,000)
$24,861. 7
$18,224.2
$ 1,414.3
$44,500.2
$ 293.6
$ 7,718.7
$ 5,804.8
$58,317.3
==========
$ 559.8
$ 786.7
$ 80.0
$ 1,426.5
$ 456.9
$ 133.2
$ 2,016.6
=========
$60,333.9
1.05
$63,350.6
==========