California panel opposes cost recovery to improve 161-MW Klamath

California Energy Commission staff is urging regulators in California, Oregon, and Washington to prohibit PacifiCorp from recovering costs for improvements proposed for the utility’s 161.338-MW Klamath hydroelectric project.

In its second attack on the seven-dam project this year, CEC staff recommends state utility regulators authorize cost recovery only for project decommissioning, which it calls the �least-cost, environmentally superior project option for the Klamath Hydro project� and for ratepayers.

CEC staff emphasized Federal Energy Regulatory Commission relicensing proceedings for the project present a �once-in-a-generation opportunity� to help restore historically significant runs of salmon and steelhead to the Klamath River Basin.

�Low power-high environmental impact power plants like those on the Klamath River require significant and unique energy benefits to justify their continued operations: Our analysis reveals no such unique benefits,� CEC staff said. �While the energy benefits from initial construction of the Klamath Hydro Project were apparent early in the 20th century, the environmental costs from the project nearly a century later overshadow the remaining nominal energy values.�

The agency noted the National Marine Fisheries Service proposed license provisions under Federal Power Act Section 10(a), saying that removing the Klamath’s four main dams would be the “biologically superior” approach to restore fisheries.

CEC staff added, �We question the wisdom of investing hundreds of millions in ratepayer money to sustain a nominal and environmentally damaging power plant when a lower cost, environmentally superior project alternative is available and feasible.�

The agency said lost generation could be replaced by renewable energy projects, energy efficiency, or construction of natural-gas-fired generation, adding any additional greenhouse gas emissions would be small compared to those in PacifiCorp’s existing plans to expand its generation portfolio.

Fish and Wildlife opinion due in December

PacifiCorp is operating the project (No. 2082) under annual license while pursuing relicensing. A final biological opinion for the proposed relicensing prepared by the U.S. Fish and Wildlife Service is due to FERC by Dec. 1.

Rejecting less costly mitigation proposals by PacifiCorp, fish agencies mandated in January construction of multi-million-dollar upstream and downstream fish passage at the project’s 18-MW Iron Gate, 20-MW Copco 1, 27-MW Copco 2, and 90.338-MW J.C. Boyle developments. The Klamath project also features three small powerhouses, 3.2-MW East Side, 600-kW West Side, and 2.2-MW Fall Creek. The fishway prescriptions, which FERC must include in a relicense without modification, are intended to restore hundreds of miles of historic salmon and steelhead habitat.

Earlier this year, PacifiCorp traded barbs with the CEC. (HNN 5/7/07) An independent analysis for PacifiCorp found a CEC study to be full of errors that skewed Klamath project cost estimates in favor of removing the dams. The CEC countered that additional data provided by PacifiCorp merely supported its contention that decommissioning the project would be less costly than relicensing it and installing fish ladders.

In the letters, CEC repeated its claim computer modeling determined the economic benefits to PacifiCorp ratepayers from decommissioning would range from $32 million to $286 million. It also said that under one scenario using PacifiCorp’s own replacement power forecast, it would be $114 million less costly to decommission the facilities, restore the fisheries, and procure replacement power for 30 years, rather than relicense the project and install an array of mitigation measures likely to be required.

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