The California Energy Commission has counterattacked the operator of the 161.338-MW Klamath hydroelectric project, whose independent analysis found a CEC study to be full of errors that skewed cost estimates in favor of removing Klamath River dams.
In the midst of a controversial relicensing process for four dams in the Klamath project, CEC issued a report in December that said decommissioning the project would be less costly than relicensing the project and installing fish ladders.
Oregon utility PacifiCorp, operator of the Klamath project in Oregon and California, responded, saying the CEC report was �riddled with errors� and inconsistencies in pricing of replacement power, failure to include carbon emission taxes as part of replacement energy costs, and an inappropriate discount rate for financing. (HNN 3/14/07)
However, the CEC issued a supplemental report March 26, saying it used the additional figures provided by the rebuttal of PacifiCorp and its independent consultant, Christensen Associates Energy Consulting LLC, to find that dam removal is even more economic than fish passage construction.
�… Dismantling instead of upgrading the dams could actually save the company’s ratepayers up to $286 million — $13 million more than originally suggested,� the CEC said. �The range in benefits from removing the dams is from $32 million to $286 million, depending on the assumptions used.�
The CEC said its previous report found removing the dams could range from a cost of $14 million to a benefit of $285 million for the ratepayer.
The CEC’s news release said its staff found that Christensen Associates’ analysis provided important PacifiCorp data that had been denied to the state in earlier requests.
�The CAEC critique makes an even stronger case for decommissioning when their data is used,� CEC Commissioner John Geesman said. �More importantly, we now have an economic model that state and federal agencies can use to weigh the options of relicensing the dams versus removing the dams and restoring the habitat.�
In addition to lobbying the hydro licensing process, the CEC said it planned to use the study results to inform six state public utility commissions �on how to protect the ratepayers.�
Agencies maneuver PacifiCorp into dam removal scenario
The dueling cost analyses are being filed with the Federal Energy Regulatory Commission, which must decide whether to relicense the Klamath project (No. 2082) and what mitigation is required to bring the project up to modern standards for fish and wildlife protection.
In a scenario promoted by dam removal advocates, PacifiCorp is caught between expensive fish passage requirements, imposed by the fish agencies of the Interior and Commerce departments, and the economic study that says it would be cheaper to tear out dams than to comply with the costly fish agency mandates.
�Removal of a project the size of Klamath would be unprecedented in North America and, to our knowledge, in the world,� PacifiCorp Energy President Bill Fehrman said. �This is complex. It’s not a simple matter of removing some concrete slabs. This is low-cost power now used by our customers with virtually zero emissions. Taking the dams out will certainly cost money. Replacing the power will necessarily cost our customers more money, and potentially a lot more money.�
Rejecting less costly mitigation proposals by PacifiCorp, the fish agencies mandated in January the 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. (HNN 2/2/07) 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.
In October, FERC staff issued a draft environmental impact statement that rejected the resource agencies’ original proposals to mandate fishway construction at the four dams. Despite that opinion, FERC itself has no authority to reject Commerce and Interior’s final prescriptions.