2002Northwest Power Planning Council.pdf

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NORTHWEST POWER
PLANNING COUNCIL
ANNUAL REPORT
TO THE
, GOVERNOR OF IDAHO
AND THE
IDAHO LEGISLATURE
JANUARY 2003
TABLE OF CONTENTS
THE NORTHWEST POWER PLANNING COUNCIL
POWER PLANNING ISSUES
The Fifth Northwest Power Plan
......... ................................. ............... ...... .....
Incentives for Development of New Generation
Increasina the crice-Resconsiveness of Demand for Power
Sustainina an Economicallv Efficient Investment in Enerav Efficiency
Assessina Power Succly Adeauacy and market Performance
Hydroelectric System Ocerations and the Imcacts on Miaratina Fish
Transmission
The Value of. and Barriers to. Power Succly Diversity
Climate Chance RiSKS-lcrtne--Power5vstem
- ,,'
RTO West
... ...." ........................ ......................................................... ........
Energy Conservation
........................ ...... ........,............ ...... ............ ..............
Future of the Bonneville Power AdflJinistration
... ............ ...... ..."....... ..............
'Power System Analysis
......... .;.. "'"""""" ............................................. .....
!:Energy Legislation
........................ ..:... ...-...... '......... .~.......... ...,................ ...
:-Bonneville Financial Crisis (2002-2006)
............ .................. ........~ ........,... .......
FISH A;ND WilDLIFE ISSUES'
Fish and Wildlife Budget
...,..........................................................................
Recommendations of Projects to Implement the Program
..................."..........
Mainstem Amendments to the Fish and Wildlife Program
..............................
Subbasin Planning
...".... ,..........",....... '..... ...................................,............
Artificial Production of Fish
""""""""""""""""""""""""" ,.."................
Endangered Spec;ies, Act Issues
... ........................... ,........... ............". ..........
Data Management
:.. ,.. .~......,... ,................. ............ ...,..... '" ..................... .....
Other Fish and Wildlife Issues...
..................... .............................. ................
Fish Passaae Center Board of Directors
Creditina Wildlife Habitat Benefits Aaainst Estimated Losses
PUBLIC INVOLVEMENT
MORE'INFQRMA TION
2002 COUNCIL MEMBERS AND OFFICES
14,
20'
THE NORTHWEST POWER PLANNING COUNCIL
The Council is an agency of the states ofIdaho, Montana, Oregon and Washington and
was created as an interstate compact agency by the legislatures of the four states following
President Jimmy Carter s approval of the Pacific Northwest Electric Power Planning and
Conservation Act in December 1980. The Council's fast meeting was in April 1981.
Idaho statutes relevant to creation of the interstate compact arefound within Title
Chapter 12, Idaho Code.
Council membership is made up of two membersfrom each state; each having been
appointed by his or her governor. Idaho members are appointed by the Governor with the
advice and consent of the Idaho Senate. Idaho members are currently Jim Kempton (power)
and Judi Danielson if,sh and wildlife). Both Idaho members work cooperatively across all
facets of fISh and wildlife, and power.
The Idaho Council Office is directed under Idaho Code to u
...
make and submit... a(n)
(annual) report to the Governor and the legislature that describes the activities of the Council.
The annual reportfor calendar year 2002 incorporates text in the Council's draft
Fiscal Year 2002 Annual Report to Coneress and is organized around the Council's three key
responsibilities: 1) to assure the region an adequate, efficient, economical and reliable electric
power supply; 2) to prepare a program to protect, mitigate and enhance fish and wildlife of the
Columbia River Basin that have been affected by the construction and operation of hydropower
dams; and 3) to inform the Pacific Northwest public about energy and fish and wildlife issues
and involve the public in decision-making.
This report to the Governor of Idaho and the Idaho legislature addresses environmental,
natural resource, energy and water interests of the state of Idaho in accordance with *61-
1206, Idaho Code
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POWER PLANNING ISSUES
The Fifth Northwest Power Plan
The Northwest Power Act of 1980 requires the Council to prepare a 20-year plan to
assure the Pacific Northwest an adequate, efficient, economical and reliable power supply while
also protecting, mitigating and enhancing fish and wildlife of the Columbia River Basin that
have been affected by hydropower dams. The Act requires the Council to review the plan at
least every five years. The current power plan, the Council's fourth, dates to 1998. In fiscal year
2002, the Council began work on the Fifth Northwest Power Plan. The current schedule calls for
completing the plan in mid-2003.
After consultations with Bonneville, electric utilities in the region, state utility
commissions, environmental organizations and other interested parties, the Council identified
eight issues to address in the Fifth Northwest Power Plan. Many of these issues are in response
to the region s experience during the electricity crisis of 2000-200 1. They are:
Incentives for Development of New Generation:
How can adequate levels of new development be assured in a competitive wholesale
power marketplace, where wholesale prices -- and price signals to developers --
fluctuate?
Increasing the Price-Responsiveness of Demand for Power:
Demand for most commodities drops as the price of the commodity rises, limiting how
high prices rise. But retail electricity rates typically change relatively slowly in response
to changes in wholesale power prices. Consequently, demand does not respond quickly
to high wholesale prices and has little disciplining effect on market prices. Weare
investigating how retail demand could be made more responsive to wholesale prices in
ways that are both effective and acceptable to consumers.
Sustaining an Economically Efficient Investment in Energy Efficiency
In recent years, utility investments in conservation followed a roller-coaster pattern
investing at far lower than cost-effective levels when wholesale market prices were low
and then scrambling to catch up when market prices skyrocket. Does it make sense for
the region to sustain these investments at cost-effective levels, and if so, how can we
assure that the investment happens?
Assessing Power Supply Adequacy and Market Performance:
The energy crisis of2000-2001 demonstrated the value of having accurate, timely
information on power supply and market performance, yet much of this information is
considered proprietary in the competitive marketplace. How can this information be
provided in a sufficiently timely manner to help decisionmakers ensure the power supply
remains adequate, reliable and affordable?
Hydroelectric System Operations and the Impacts on Migrating Fish:
The drought of 2000-200 1 forced trade-offs that improved the power supply at the
expense of salmon and steelhead migrating between freshwater spawning areas and the
Pacific Ocean. Are there ways to ensure equitable treatment of fish and power interests
and are there system-operating strategies or incentives that would minimize unnecessary
impacts on fish?
Transmission:
High-voltage transmission policy and planning are critical to maintaining an adequate,
efficient, economical and reliable power supply. From the Council's perspective, it is
important that least-cost planning and implementation apply to transmission as well as to
generation of power.
The Value of. and Barriers to. Power Resource Diversity
One of the lessons of the electricity crisis of 2000/200 1 is the importance of managing
the risk associated with volatility of electricity prices and the underlying fuel prices. One
way of mitigating risk is through resource diversity. The Fifth Power Plan will assess the
value of resource diversity, identify barriers and ways in which they might be overcome.
Climate Change Risks to the Power System:
Climate change poses a risk to the power system both in terms of its potential effect on
hydroelectric generation and the possible effects of policies that might be put in place to
address the climate change issue. The Council,will assess these impacts and alternatives
for managing the inherent risk.
The Council invited public comments on these issues. Here is a synopsis of the advice
we received from the public about how to address the issues in developing the power plan:
1. Don t spend a lot of time on transmission, except for assessing energy conservation
demand management and distributed generation as alternatives to transmission
investments.
2. Don t try to solve global climate change issues, but consider climate change impacts as a
source of risk to the power supply.
3. Describe and make sense of the recent energy crisis -- what did we learn and how might
we avoid the same problems in the future?
4. Develop a vision for the future of the power industry in the region.
5. Address the future, of Bonneville, particularly with regard to energy conservation, fish
and wildlife mitigation and the federal power system.
As we developed the list of issues to address in the next power plan, we also made
progress on developing the tools we will use in developing the plan. In Fiscal Year 2002, the
Council completed two important tasks that will provide information necessary for the power
plan. One was a draft forecast of future fuel prices for power plants in the Northwest, and the
other was a draft forecast of future demand for electricity in the region. These forecasts will be
used in analyses for the power plan.
Fuel price forecasts affect the expected costs of future electricity generation. Through
their effects on generation costs, fuel price forecasts also largely determine the future expected
prices of electricity.
In the Pacific Northwest, hydropower, coal and natural gas are the three primary fuels for
generating electricity, accounting collectively for 93.7 percent of the generating capacity in the
region. Hydropower dams provide 70 percent of this capacity (33 473 megawatts), coal-fIred
power plants provide 14.6 percent (6 992 megawatts), and power plants fueled by natural gas
provide 9.1 percent (4 351 megawatts). The Council's fuel price forecasts for coal and natural
gas include a range of possible prices, ITom low to high. However, the portion of the resource
mix fueled by natural gas is increasing rapidly. Natural gas is expected to be the predominate
fuel for new generation in the years ahead.
For natural gas, the Council's medium forecast shows prices gradually increasing ITom
$2.70 per million Btu in 2002 (in 2000 dollars) to $3 by 2005 as new gas-fired plants come
online in the region, and then increasing at an average annual rate of 0.5 percent through 2025.
This is a slightly lower growth rate than the Council forecast in its 1998 Power Plan, but the base
gas price is considerably higher than earlier forecasts.
Growth in demand for power follows trends in population and employment, and both
increased during the past decade. Early in Fiscal Year 2002, the Council compared the demand
forecast in the 1998 Power Plan to actual figures for recent years and discovered that, with very
few exceptions, the Council's economic forecasts for demographics and employment are
adequately predicting actual figures. Electricity sales data appeared to be tracking the medium
forecast values in the 1998 Plan.
The Council released its demand forecast for the Fifth Power Plan for public comment in
August 2002.
RTO West
The Energy Policy Act of 1992 gave the Federal Energy Regulatory Commission
(FERC) authority to require open access transmission (deregulation). In 1996, FERC issued
Order 888 that required, among other things, open access transmission in an attempt to eliminate
monopoly transmission of market power. In 1999, FERC issued Order 2000 proposing that all
transmission-owning utilities voluntarily place their transmission facilities under the control of
appropriate Regional Transmission Organizations (RTO's). Currently there are three RTO'
being developed in the West: California ISO, RTO West and West Connect in Arizona and New
Mexico. RTO West includes eight IOU', Bonneville Power Administration (BPA) and British
Columbia Hydro.
The Council has invested a great deal of effort in understanding the issues confronting
transmission systems in the West, and in helping RTO West develop a proposal that can address
those issues while also accommodating the physical and legal differences that make the
Northwest unique. Resolving these issues is essential to the Council's statutory responsibility to
help assure the Northwest of an adequate, efficient, economical and reliable power supply.
Transmission in the West and the Northwest is being increasingly stressed by the
demands ofthe competitive, wholesale electricity market, notably through the increasing volume
of transactions and the dynamic, shifting patterns of generation and load. However, transmission
problems in the region are not so overwhelming at this time to preclude consideration of
improvements to RTO West or alternatives to it. The cost-benefit analysis for RTO West so far
only shows small quantified economic benefits when corrected for apparent errors, the Council
commented. For at least one state, Montana, the results ofthe analysis are negative.
In May 2002, the Council commented to the Federal Energy Regulatory Commission on
the RTO West Stage 2 compliance filing by the eight utilities and the Bonneville Power
Administration, which collectively propose to form RTO West. The Council commended the
filing parties for their efforts to develop a proposal for the Northwest that satisfies the
Commission s requirements for regional transmission organizations.
But the Council also commented that the very significant institutional and policy changes
necessary for the formation and operation of a regional transmission organization may carry
costs and risks that are not fully understood at the present time. Some Council members believe
that because of the magnitude of the changes involved, there is a strong likelihood that adverse
unintended consequences will occur as a result of implementing R TO West. At the same time
they believe that because of the Commission s push for the fonnation of regional transmission
organizations, more incremental approaches to solving the problems facing the region
transmission system have not received adequate attention. Other Council members believe that
the problems with the existing transmission system will not be solved in a timely or adequate
fashion for the long term without resort to a regional transmission organization along the lines of
RTO West.
Accordingly, the Council has not reached consensus on overall support for RTO West.
However, the Council did offer specific comments on the ~tage 2 filing, including:
The Commission needs to accommodate legitimate Northwest differences addressed in
the filing.
It is appropriate to protect existing rights holders for an extended period of time.
. Any RTO West planning backstop authorities should include the authority to implement
any least-cost action identified by the planning process, not just transmission expansion
as currently proposed for three of the four potential backstop areas.
Recent revelations of manipulation of the California power market underscore the
importance of an independent market monitoring function with timely access to all
relevant information as well as the importance of a rapid response by the Commission
and other appropriate agencies to evidence of market failure or abuse brought to their
attention by the market monitoring unit. The Council believes the Commission
proposed market monitoring unit would be overly restrictive regarding access to data by
agencies responsible for responding to allegations of market abuse.
The Council is continuing to participate in the development of R TO West.
Energy Conservation
The Northwest Power Act treats energy conservation as a resource in the region s power
supply. That is, a megawatt conserved through improved energy-use efficiency is the same as a
megawatt generated.
The Act requires the Council to give priority to cost-effective resources in developing
and periodically amending the Northwest Power Plan. Conservation is given highest priority in
the Act among resources to meet the region s future demand for power, and the Act also requires
the Council to set forth a general scheme in the power plan, for implementing conservation.
Conservation is so important, in fact, that the Act authorizes a 10 percent cost-effectiveness
bonus" for conservation in comparison to other resources.
According to the Council's current analyses , the potential for continued efficiency
improvements remains high in the three main sectors of electricity consumption -- residential
industrial and commercial.
In the residential sector, most of the conservation potential is in appliances such as water
heaters, improved building codes and in new home construction. Weare working to improve our
data bases on 1) the market penetration of increased-efficiency appliances; and 2) the market
penetration of energy-efficient building practices in new construction.
In the industrial sector, there is a great deal of potential in plant-specific process changes
such as improved-efficiency motors, lights and compressors. Weare working to estimate the
market penetration of premium motors and other improved-efficiency electrical devices.
In the commercial sector, we see continued potential in building climate controls, lighting
and plug-in devices -- all of which could be addressed through incentive programs by utilities.
Weare also working to improve our information about energy usage in existing commercial
buildings in the Northwest. The commercial sector represents some ofthe greatest opportunities
for improved efficiency in electricity use. Unfortunately, some of our most current information
on existing buildings dates to the late 1980s, although we have information on new construction
that is more current. The Council, working with Bonneville and the Northwest Energy
Efficiency Alliance, has initiated a survey of commercial buildings in the Northwest so as to
better capture the efficiency opportunities they contain.
The energy crisis of2000-2001 demonstrated the need for a regional comprehensive
energy efficiency strategy, and the Council and Bonneville are working together in the context of
the Fifth Power Plan to develop a regional strategy to capture all the cost-effective energy
efficiency in the region,
In a discussion paper released for public comment in December 2001 , the Council
referred to the 300 megawatts of conservation acquisition as "building an efficiency power
plant." Three hundred megawatts of conservation is the equivalent of300 megawatts of new
generation (the average new natural gas-fIred power plant is about 270 megawatts in size), and
the conservation and generation would take the same amount of time to construct -- about three
years.
Importantly, the interim conservation goal, which was adopted by the Council in January
2002, challenges the region s utilities to further diversify the Northwest power supply. The
Council recognizes that the region s utilities are stressed by the aftermath ef the 2000-2001
electricity crisis. But sustained commitment to conservation is an important goal in light of the
region s experience during the recent energy crisis, when the price of electricity rose to levels
never seen before in the Northwest.
The Council believes that by stabilizing the region s investment in conservation and other
demand-side resources we can reduce our overall demand for power, and lessen the impact of
future periods of reduced supply and volatile prices.
Future of the Bonneville Power Administration
In 2002, the Council and Bonneville initiated a regional discussion to determine how
Bonneville might market and distribute federal hydropower after 2006, when most of its current
power sales contraCts expire. This effort was prompted by four key issues that need to be
resolved in the near future:
First, the direct-service industries (DSIs) in the region currently have a five-year
commitment for power from Bonneville. The industries see their access to cost-based federal
power as an important economic factor in operating their plants, and they have asked for
certainty regarding their sources of power after 2006 so that they can make investment decisions.
Second, a group of public and private utilities in the Northwest developed a document
they call the Joint Customer Proposal. It sets out a scheme for marketing the power from the
Federal Columbia River Power System and modifying Bonneville s regional role. The
customers propose that Bonneville transfer to the region s utilities much of the responsibility for
providing additional electricity needed to meet load growth in the future. Currently, Bonneville
supplies all of the power needed by its customers, even if that means buying power on the
wholesale market. The proposal is an attempt to settle a lawsuit that challenges the Residential
Exchange Settlement Agreement. That agreement provides benefits to residential and small farm
customers of the region s investor-owned utilities.
While the Council does not speculate here on the outcome of the lawsuit or the success of
the Joint Customer Proposal, the Council believes it is important that any resolution of the
lawsuit, particularly as it regards Bonneville s future role in the region, be consistent with the
region s long-term vision for Bonneville, whatever that may be. This is important to the utilities
that receive residential exchange benefits, too, because Bonneville will decide how much
electricity or financial benefits the utilities receive under their existing subscription settlement
agreements.
Third, some utilities and independent power producers wish to make decisions soon
regarding investments in existing and new power plants, which could require capital funding.
These investments are necessary to ensure that the region has the necessary power supply to
support a healthy economy. However, capital often can be difficult to secure without clear
evidence of future customers and the ability to serve them. These entities would like an
understanding of what power supply role Bonneville will play in the wholesale marketplace after
2006.
Fourth, if Bonneville continues to supply power for loads greater than the capability of
the existing federal system after 2006, it will need to begin making arrangements soon for
augmenting the federal system.
Bonneville and the Council conducted a series of public meetings around the Northwest
during September 2002 to seek advice on the development of a creative and sustainable approach
to the sale of power from the FCRPS , while ensuring that Bonneville continues to provide long-
term benefits to the region. The Council and Bonneville accepted written comments on the Joint
Customer Proposal and also encouraged others to submit their own proposals.
On December 17 2002, the Council published Recommendations on the Future Role of
Bonneville in Power Supply; Council Document 2002-19. The Council recommendations are
available at www.nwcouncil.org.
Bonneville anticipates a mere formal public process during the spring of 2003 to develop
and discuss its own draft proposal. This process is anticipated to be followed by a Bonneville
decision later in 2003. The Council also will develop recommendations for regional discussion.
Power System Analyses
During the energy crisis of2000-2001 , the Council periodically analyzed the reliability
and adequacy of the regional power supply. These reports helped distinguish the Council as the
region s objective source for timely, expert analysis of the evolving crisis and a credible source
to guide decisionmaking in the post-crisis energy world to help avoid, or at least soften, future
crises. Many of the issues that will be addressed in the Fifth Northwest Power Plan, which is
discussed earlier in this annual report, arose from the region s experiences during the energy
cnsls.
In October 2001 , as the crisis appeared to be waning and precipitation -- the source of
fuel" for most of the region s electricity generation -- appeared to be returning to normal levels
the Council issued its final analysis of the crisis and near-term forecast of power system
reliability. In short, the Council predicted the Northwest would have an adequate electricity
supply through the winter of2001-2002 thanks to actions taken in 2001 to increase the supply
and reduce demand for power.
The analysis noted that power plants capable of generating more than 900 megawatts --
nearly enough for the city of Seattle -- were added to the region s power supply in 2001 , demand
for power fell 20 percent during the year, and hydroelectric storage reservoirs had filled to
normal levels by the late fall. But the Council also noted that the improved outlook came at a
cost to the region s economy and environment. For example:
. A large portion of the demand reduction was in industries responding to high power
prices and the economic recession, and that translated to lost jobs.
Temporary power generators , most ofthem burning diesel, helped boost the energy
supply but also polluted the air more than other types of power plants.
Reduced water spills at Columbia and Snake River dams increased the amount of stored
hydropower, but also likely took a toll on migrating salmon and steelhead by forcing
those that could not be collected for barge transportation downriver to go through
turbines.
The October analysis concluded there was less than a 1 percent probability of power
deficits during the winter. That was a vast improvement over the 12 percent probability of
deficits the Council had predicted just six months earlier.
According to the analysis, the impact of drought reduced the region s hydropower supply
by about 4 000 megawatts - nearly enough power for four Seattles. During the winter of 2000-
2001 , the Council had warned that the region s deficit could worsen significantly by the end of
2001 unless emergency actions were taken.
Through the winter and into the spring of 200 1 , the region responded in many ways.
Construction of new power plants was accelerated, both in the Northwest and in California. That
boosted the Northwest power supply and also made more power available to the Northwest from
the Southwest. Water spills at Snake and Columbia river dams to assist fish migration were
reduced, and that had the effect of increasing water storage for hydropower. The region also,
significantly reduced its demand for power. Most of that reduction came from buybacks of load
from industrial customers, but some of the reduction was in industries that responded to high
power prices and the developing recession by cutting production and, in some cases, going out of
business. Citizens helped ease the energy crisis by increasing the efficiency of their power usage
through actions such as installing compact fluorescent light bulbs, turning down electric water
heaters and simply using less electricity in response to rate hikes imposed by their utilities.
was estimated that as much as 300 megawatts may have been saved through these actions alone.
The result was that the region reduced its demand for power by about 4 000 megawatts
compared to the previous year. That was a 20 percent reduction. The increased power supply,
coupled with reduced demand and relatively mild summer weather, allowed the region to avoid
brownouts and blackouts in 2001. In hindsight, the Council's prediction in June 2001 of a 12
percent probability of deficits by the winter might have been too conservative. But given the
inherent uncertainty of forecasting power supplies in a system dominated by hydropower, it is
the Council's preference to encourage cautious operations.
Today, demand for power remains below pre-energy crisis levels. It is important to note
that nearly three-quarters of the 4 000-megawatt reduction in regional power demand was
attributable to the idled Northwest aluminum industry and several other large industrial plants
according to the Council's October 2001 analysis. Since then, there has been some recovery.
Infonnation for May 2002, the latest date for which information was available at the time this
report was written, shows regional power loads are about 2 percent above May 2001 levels but
still 18 percent below the Council's forecast in the last power plan. The direct-service industries
have not recovered, generally speaking. Parts of two aluminum plants were operating in the
summer of 2002, accounting for about 550 average megawatts of demand. That compares to the
direct-service industry load of2 588 average megawatts in July 2000. The Council suspects that
other large industrial plants remain shut down in response to the lagging economy, but
corroborating information was not available.
The Council continues to monitor the reliability and adequacy of the regional power
supply.
Energy Legislation
The Council monitors energy legislation being developed in Congress and, from time to
time, comments to members of the Northwest congressional delegation. In Fiscal Year 2002, the
Council commented in support of extending and modifying the federal renewable energy
incentives. In January, the Council commented in support of a five-year extension of the
renewable energy production tax credit and reauthorization of the renewable energy production
incentive, also for five years. The Council commented that a five-year extension would be
sufficient to encourage sustained development of renewable resources, minimize rushed
planning, complete projects that are under construction, and allow resource development to be
better timed to need. The Council also said that limiting the extension to five years would
provide an opportunity to review the performance ofthe program and the need for continuation
in light of future technology, the power market and fiscal, regulatory and environmental
conditions.
Bonneville Financial Crisis (2002-2006)
In July, 2002, Bonneville emphasized earlier concerns that their financial outlook
throughout the 2002-2006 period was not good - and in fact, more recent analysis indicated
substantial losses through the remaining four years of the contract rate period absent the use of
rate adjustment clauses, cost cuts, increased efficiency and use of fmancial tools not previously
utilized. The situation had started developing as early as 2000.
As deregulated power prices escalated throughout the Northwest in 2000-2001, customer
utilities in the Northwest asserted their right to BPA power and were awarded contracts that
eventually contributed to a subscription level 3000 megawatts greater than the available BP
power base - a deficit level roughly equivalent to power generation required for three Seattles.
Bonneville costs associated with the power availability deficit were aggravated by high costs of
supplemental power purchases on the open market in 2001 , and a reversal of power prices in
2002 when BP A secondary power was availability for sale (relatively good water year). The
forecast of continued low open market power rates due to increased generation capacity, reduced
power loads in the Northwest resulting from the 2001 energy crisis, and a low water year
possibility in 2003 , and later, completed the dismal picture.
From July through the end of the year, Bonneville held regional meetings with ratepayers
to discuss fmancial options that included: a "Safety Net" rate increase to achieve an 80 percent
Treasury Payment Probability, additional internal cost cutting measures, assuming additional risk
in making Treasury payments, and use of fmancial tools to "push the fmancial problem into the
future
" .
The result of the regional dialog is presently on-going. Through the end of2002, BPA
has engaged in internal efficiencies and cost cutting efforts, to include cuts to the Council'
Congressionally mandated Fish and Wildlife Program. The announcement of any need for a
Safety Net rate increase can be expected in early 2003.
FISH AND WILDLIFE ISSUES
Fish and Wildlife Budget
At the beginning of fiscal year 20002, the Council adopted a provisional start-of-year
budget for Bonneville funding of projects in the Columbia River Basin Fish a Wildlife program
of $152.7 million. Since that time however, the financial situation at Bonneville has worsened.
At the end of December 2002, the Administrator of Bonneville, Steve Wright, requested a
reduction to a level not to exceed $139 million in the direct program ofFish and Wildlife. He
asked for the Councils assistance in reprioritizing projects. The Council agreed to make a
reduction in the program with reprioritizing. The Council requested short and long-term
changes to make the program more efficient as well as cost effective for the ratepayers.
Through FYI 2002 and into FYI 2003, obligations in the Fish and Wildlife program have
been consistent with planned levels (within budget), while expenditures have been lower than
expected.
Recommendations pf Projects to Implement the Program
In Fiscal Year 2002, the Council approved funding packages for projects to implement
the fish and wildlife program in the Mountain Snake Province. The Council recommended 38
ongoing projects and 21 new projects in the Mountain Snake totaling $23.9 million annually over
three years. Major tributaries in this province include the Clearwater and Salmon rivers.
Mainstem Amendments to the Fish and Wildlife Program
In October 2000, the Council adopted a set of amendments to the fish and wildlife
, program to begin what eventually will be complete revision of the program. In that first phase
the Council reorganized the program around a comprehensive framework of scientific and policy
principles. The program amendments in 2000 set the stage for subsequent phases of the program
revision when the Council will adopt more specific objectives and action measures that are
consistent with the framework elements already adopted.
An important part of the program is a coordinated plan for the mainstem Columbia and
Snake rivers. The mainstem plan will contain specific objectives and action measures for the
federal river and dam operating agencies and others to implement in the mainstem Columbia and
Snake rivers, including dam operations to protect, mitigate and enhance fish and wildlife affected
by the hydro system, as required by the Northwest Power Act. The plan may include, as
appropriate, objectives and measures for water management, flow regimes, spill, reservoir
elevations, water retention times, adult and juvenile passage modifications at mainstem dams
fish transportation, system wide coordination, protecting and enhancing mainstem spawning and
raring areas, and operational requirements to protect resident fish and wildlife. Like the 2000
Program, the mainstem amendments will include a vision, biological objectives and strategies to
achieve the objectives.
In March 2001 , the Council requested proposals for elements of the mainstem plan that
were accepted through late June, and posted on the Council's web site for public comment.
Fiscal year 2002, the Council has been working to prepare draft mainstem amendments that
address issues developed from the proposals and that are based on the recommendations and
public comments.
Mainstem operations are essentially directed by the hydro system biological opinions
issued by the National Marine Fisheries Service and the u.S. Fish and Wildlife Service.
The
Council's mainstem plan does not need to mirror the operations required by the biological
opinion, but to be relevant it should recommend river operations that meet bi-op requirements
while also protecting those fish and wildlife that are not listed species.
Currently, the Council plans to complete rulemaking by the end of March 2003.
Subbbasin Planning
For planning purposes, the Council divided the Columbia River Basin into 11 ecological
provinces, which are groups of geographically proximate subbasins with similar species, climate
and environmental conditions. Among the 11 provinces are a total of 62 subbasins. The Council
intends to develop plans for each of these subbasins and amend into the program.
Subbasin plans will be developed by the Council in collaboration with states, fish and
wildlife agencies, f~deral agencies, tribes, and utilizing the expertise of local citizens in the
subbasins. The Council will require that plans be consistent with visions, b~ological objectives
and strategies adopted by the Council at the broader ecological province and Columbia River
Basin levels. Subbasin plans will address all fish and wildlife in the Columbia River Basin
including ESA listed species, and will be the basis for review and funding of most fish and
wildlife projects to implement the program.
Subbasin plans are expected to include actions to implement the Biological Opinion
offsite mitigation actions in the Reasonable and Prudent Alternatives (RP A). Subbasin planning
should provide for RP A habitat actions 149 through 163; and harvest and hatchery RP A actions
164 through 178 that pertain to, and require, local planning and management.
The Biological Opinion requires recovery goals for all listed salmon populations in the
Columbia Basin by 2003 (Action 179). The Bi-Op also requires a fmding that the federal
agencies are on schedule to meet off site mitigation standards (Biological Opinion Section
2). In Fiscal Year 2002 the Council worked to develop a technical guide for subbasin
planning so that the finished plans could lend them~elves toward meeting Bi-Op requirements.
Artificial Production of Fish
The Council has continued to make progress in evaluating the purpose and goals of all
fish hatcheries in the Columbia River Basin. A committee of fish experts appointed by the
Council is carrying out the Artificial Production Program Review and Evaluation (APRE). The
goal of the APRE is to implement the policies and recommendations of the 1999 Artificial
Production Review, which Congress directed the Council to conduct with the assistance of the
Independent Scientific Advisory Board (this is a panel of 11 scientists who advise the Council).
Recommendations for new hatchery policies, goals and objectives that are developed through the
APRE process would be implemented through subbasin plans in the Council's fish and wildlife
program.
The APRE will supply artificial production data and information to subbasin planners and
assist with the completion of, coordination with, Endangered Species Act and Biological Opinion
activities related to fish production. The APRE will review more than 300 resident and
anadromous fish artificial production programs in the Columbia basin and also assist NOAA
Fisheries in developing its Hatchery Genetic Management Plans (HGMP), which are intended to
provide ESA coverage for hatchery programs.
The APRE work began in July 2002 and will proceed to an anticipated conclusion in June
2003.
As a first step toward developing a cost-effectiveness review process for proposals to
build new fish hatcheries in the Columbia River Basin, a panel of independent economists
reported to the Council on the costs of rearing and releasing fish, based on a review of eight
hatcheries in the Columbia River Basin. According to the report, the cost of rearing fish ranges
from a low of about eight cents per fish to a high of about $2.60 per fish, but the cost per
surviving adult fish, particularly those that are harvested, is vastly higher. That is largely
because many more fish are released from hatcheries than return as adults.
Cost-effectiveness information could help decision makers analyze fish harvest
regulations as well as the cost-effectiveness of hatcheries and their specific purposes. The
economists believe that an analytical approach, if expanded with a broader hatchery cost
database than currently is available, could be used to screen new artificial production proposals
as long as the goals for each new facility are clear and quantifiable. Developing clear goals for
Columbia basin hatcheries is one task of the APRE.
While the decision to build a new hatchery does not rest solely on economics, a cost
effectiveness analysis of proposed new hatchery compared to existing facilities and their known
costs could help the Council and other decision makers select projects that provide biological
benefits at the lowest cost to the public. The hatchery program database that will be developed
through the APRE process will be useful in developing an analytical tool for evaluating the cost-
effectiveness of future hatchery proposals.
Endangered Species Act Issues
As noted in the section on subbasin planning, under its 2000 Biological Opinion on
hydropower operations, NOAA Fisheries expects the Bonneville Power Administration, the
Corps of Engineers and Bureau of reclamation to meet their ESA obligations in part through
offsite mitigation. NOAA Fisheries believes that the Council's subbasin plans will be a
substantial component of off site mitigation, as the 2000 Biological Opinion regarding operation
of the Federal Columbia River Power System relies on those plans to identify and prioritize
specific actions needed to recover listed salmon and steelhead in tributary and estuary habitats
and to provide context for determining how much benefit is likely from each action or set of
actions.
The federal agencies ' one-year plan for implementing the Biological Opinion embraces
projects developed through the Council's province review and project selection process as
meeting various requirements of the Biological Opinion. As subbasin plans are developed, they
will direct project selection and, therefore, implementation of the Council's program.
The Council has worked with Bonneville and NOAA Fisheries to ensure that the
Council's project review and selection process addresses the reasonable and prudent alternatives
(RPA's) in the Biological Opinion.
In fiscal year 2002 project reviews and recommendations were completed in the
Columbia Plateau, Blue Mountain and Mountain Snake provinces, and the Council
recommended that Bonneville fund a number of proposed projects to implement many of the off-
site RPA's of the Biological Opinions.
The Council sought guidance from the federal agencies about whether the recommended
projects are meeting the objectives of the Biological Opinion, and whether there are RPA's that
should be addressed through additional proposals or modifications to existing proposals: The
Council'recommended projects to provide riparian buffers, water leases, and protection of
currently productive habitat that should meet the goals of the Biological Opinions.
Like the federal agencies, the Council recognizes the importance of coordinating
Biological Opinion implementation with the ongoing programs of the states and tribes. This is
significant in implementing the research, monitoring and evaluation measures of the Biological
Opinion, but also is important in meeting its hatchery and habitat requirements.
Data Management
The Council continues to work with fish and wildlife agencies and tribes to improve fish
and wildlife data management. In fiscal year 2002, the Council approved a memorandum of
agreement with NOAA fisheries, then known as the National Marine Fisheries Service, that
committed the two agencies to a cooperative approach to plan and develop an information
system for the Columbia River Basin. The information system will help both agencies meet their
mandates in federal law.
The agreement committed the agencies to develop solutions to certain information system
problems within six months of signing the agreement, a blueprint for the new system within a
year, and implementation of the new system within three years. The project is using a
collaborative process involving entities with a broad array of science, management, decision-
making and public outreach interests in the region to evaluate current information management
approaches and identify future needs. From this research, a clear understanding of gaps in the
ability of current efforts to meet future needs will be gained and recommendations for
improvement developed.
Other Fish and Wildlife Issues
Fish Passage Center Board of Directors:
The Council's 2000 Fish and Wildlife Program calls for the continued operation of the
Portland-based Fish Passage Center, which was created through the Council's program and is
funded through the program by Bonneville. The Fish Passage Center provides technical support
for fish and wildlife agencies and tribes in planning and implementing operation of the Columbia
and Snake river hydroelectric system, specifically carrying out the flow and passage mitigation
measures of the fish and wildlife program and the 2000 Biological Opinion.
The 2000 Program states that the "Council will establish and appoint an oversight board
for the Fish Passage Center, with representation from the National Marine Fisheries Service, the
tribes, the Council and others, to provide policy guidance and assure regional accountability and
compatibility with the regional data management system." In Fiscal Year 2002, the Council
appointed a seven-member board with the following members:
1) One Council representative
2) One member representing the National Marine Fisheries Service
3) One member representing upper Columbia River Basin tribes
4) One member representing lower Columbia River Basin tribes
5) One non-tribal member representing fish and wildlife managers
6) One member from the independent scientific community
7) Two members from the public at large
The new oversight board replaced and assumed the duties of the previous board. The
Council directed the new board to help define a Fish Passage Center statement of work, which
will be presented to the Council for review and approval. The Council also asked the new board
to increase the transparency and public accountability ofFish Passage Center operations. The
Council anticipates that ultimately the Columbia Basin Fish and Wildlife Authority will assume
operation of, and provide staff support for, the Board.
Crediting wildlife habitat benefits against estimated losses:
Construction and operation of hydroelectric dams affected wildlife in the Columbia River
Basin as well as fish, Congress recognized this in the Northwest Power Act and directed the
Council to address wildlife as well as fish in the Columbia River Basin Fish and Wildlife
Program. The 2000 Fish and Wildlife Program treats habitat as an ecosystem that includes both
fish aild wildlife.
The program includes estimates of wildlife losses attributable to hydropower
construction, but there is no agreement on the full extent of wildlife losses due to the operation of
the hydro system, nor has there been agreement on how to credit wildlife benefits resulting from
habitat acquisitions and improvements through the Council's program. Despite this
disagreement, hundreds of thousands of acres of wildlife habitat have been acquired and
improved, and the Council estimates that about 40 percent of the estimated losses have been
mitigated.
The primary dispute regarding the full extent of losses and crediting for mitigation is
between the Council and Bonneville. To address the dispute, the Council created a
subcommittee of Council members to provide policy direction to the staff in discussing the
crediting dispute with Bonneville staff. Those discussions continued in Fiscal Year 2002.
PUBLIC INVOLVEMENT
One of the Council's primary tasks is to fulfill the directive pfthe Northwest Power Act
to inform and involve Northwest citizens regarding regional energy and fish and wildlife issues
and the Council's activities. Section 2(3) states a purpose ofthe Act is "to provide for the
participation and consultation of the Pacific Northwest states, local governments, consumers
customers, users of the Columbia River System (including federal and state fish and wildlife
agencies and appropriate Indian tribes) and the public at large within the region" in the
Northwest's planning for electrical power and protection offish and wildlife resources. Section
4(g)(1) of the Act requires the Council to develop "comprehensive programs" to ensure public
involvement and to "inform the Pacific Northwest public of major regional power issues.
To involve the public, the Council arranges consultations and public hearings to discuss
and explain key issues and also gathers public comments at these meetings and through mail, e-
mail and telephone contacts. To inform the public, the Council produces a newsletter as well as
special informational materials, media,briefings and several types of news releases. The Council
also regularly updates its website (www.nwcouncil.org) and uses other approaches to inform
interested citizens about fish, wildlife and energy issues. The Council conducts all its regular
meetings, committee meetings and working sessions in public.
In Fiscal Year 2002, the Council continued these activities. The Council produces a
newsletter, Council Quarterly, and a variety of special publications that are intended to support
CO1mcil activities or provide information about the energy and fish and wildlife issues. In 2002
one of the Council's special publications was the "Pocket Guide " which includes facts and
figures about the Columbia River. The Council also produced the "Columbia River Basin Field
Guide " which describes some of the key fish and wildlife projects that are funded through the
fish and wildlife program, and also includes a full-color map of the basin.
The Council also joined with Bonneville to conduct a series of public meetings on the
future of Bonneville after the current power sales contracts expire in 2006. The Council and
Bonneville believe that important questions about Bonneville s future should be addressed now
far in advance of the next five-year rate period, to seek regional opinions about the future of the
agency and, if Bonneville determines to change its current policies, to give surety to Bonneville
customers. Key issues for discussion are how Bonneville s power should be divided among the
region s electric utilities and whether Bonneville s direct-service industrial customers, primarily
Northwest aluminum smelters, should continue to have access to the federal power supply and
under what conditions.
The Council planned to develop its own proposal for Bonneville s future following the
public meetings.
MORE INFORMATION
For additional details about the Northwest Power Planning Council's activities , budget
meetings , comment deadlines, policies or bylaws, call (Portland) 1-800-452-5161
(Boise) 208-334-6970 or visit our web site at http://www.nwcouncil.org. Copies of our
publications are available at the web site or by calling the toll-free number above. All Council
publications are free.
2002 COUNCIL MEMBERS AND OFFICES
IDAHO
Judi Danielson, Chair of Council
Jim Kempton, Chair of Power 4
450 W. State (UPS and DHL only)
Box 83720
Boise, Idaho 83720-0062
Telephone: [phone]
Fax: 208-334~2112
OREGON
Eric Bloch
851 S.W. Sixth Avenue, Suite 1020
Portland, Oregon 97204
Telephone: [phone]
Fax: [phone]
John Brogoitti
Northwest Power Planning Council
11 S.W. Byers Avenue
Pendleton, Oregon 97801
Telephone: [phone]
Fax: [phone]
MONTANA
Ed Bartlett, Chair of Fish
John Hines
Capitol Station
Helena, Montana 59620-0805
Telephone: [phone]
Fax: [phone]
WASHINGTON
Frank L. "Larry" Cassidy, Jr.,
Vancouver:
c/o Flo-Rite Products
O. Box 2187
Vancouver, VVA 98668
Telephone: [phone]
Fax: [phone]
Tom Karier, Vice Chair of Council
W. 705 First Avenue, MS-
Spokane, W A 99201-3909
Telephone: [phone]
Fax: [phone]
Olympia office:
Telephone: [phone] or 2306
Fax: [phone]
1111 Washington St. Southeast
th Floor
Mail Stop 43200
Olympia, WA, 98501-1091
CENTRAL OFFICE
851 S. W. Sixth Avenue, Suite 1100
Portland, Oregon 97204
Telephone: [phone]
Fax: [phone]
Toll Free: 1-800-452-5161
Executive Director: Steve Crow
Power Division Director: Dick Watson
Fish and Wildlife Director: Doug Marker
Public Affairs Director: Mark Walker
General Counsel: John Shoos
Administrative Officer: Jim Tanner
",,-