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Energy Commission Analysis Says Klamath Dam Removal, not Upgrades, More Beneficial than Earlier Projected
Sacramento - The California Energy Commission said today that removing four PacifiCorp hydroelectric dams from the Klamath River would be more beneficial than originally projected.
After reviewing data from a 50-page filing submitted by PacifiCorp recently to the Federal Energy Regulatory Commission (FERC), the Energy Commission issued a supplemental report showing that it makes more economic sense than first thought to remove the dams and buy replacement power. Removing the dams would be about $114 million less costly than relicensing the project and installing expensive fish ladders, according to PacifiCorp data.
"PacifiCorp must choose the alternative that makes the most economic sense for its ratepayers," commented California Energy Commissioner John Geesman. "Using PacifiCorp's own numbers the new analysis clearly indicates that it is best for the ratepayer that these four dams be removed. The Energy Commission will work with the six state public utilities commissions to ensure that they are informed on how to protect the ratepayers."
The Klamath River is one of the most important rivers for imperiled populations of Chinook and Coho salmon and steelhead trout on the West Coast. PacifiCorp, which serves 1.6 million customers in six Western states, seeks relicensing to operate the dams on the Klamath for up to 50 years.
The company's four dams comprising the Klamath Hydroelectric Project produces 169 megawatts, but remains a major threat to salmon along nearly 300 miles of habitat in the upper Klamath Basin. FERC is reviewing the project's existing Federal Power Act license and will impose mitigation measures to reduce environmental impact if it issues a new license.
Recent determinations by the U.S. Fish and Wildlife Service and National Oceanic and Atmospheric Administration Fisheries show that an expensive network of fish ladders will be required to allow adult salmon to migrate up river to the 300 miles of historic spawning grounds.
In an addendum released today, to the December 2006 Klamath Project Alternatives Analysis Model (KPAAM) Consultant Report, the Energy Commission said dismantling instead of upgrading the dams could actually save the company's ratepayers up to $286 million -- $13 million more than originally suggested. The range in benefits from removing the dams is from $32 million to $286 million, depending on the assumptions used. The addendum used data provided by PacifiCorp in the recent FERC filing. (The Klamath Consultant report previously found that removing PacifiCorp's dams could range from a cost of $14 million to a benefit of $285 million for the ratepayer.) This new information makes the economics for dismantling the dams even more compelling.
Both the addendum and the original report are available on the Energy Commission's website:
In a filing with FERC, the Portland-based utility said it had commissioned a review of the Energy Commission report and had found problems with the economic model used to make the initial estimate, as well as the data fed into the model.
The report by Christensen Associates Energy Consulting, LLC, (CAEC) of Madison Wis., said the Energy Commission analysis did not reach a good estimate of the cost difference between removal and licensing of the dams. When data fed into the model was rectified, Christensen said it came up with a contrary result: that PacifiCorp would save $46 million by upgrading the dams and continuing to operate them.
"Their assertion that the model is not credible is not supported by the facts. The CAEC critique makes an even stronger case for decommissioning when their data is used," commented Geesman. "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."
The model, called the Klamath Project Alternatives Analysis Model (KPAAM) is a rigorous and transparent tool that provided the parties involved with a good faith analysis of the pros and cons of the proposed strategies for the dams, the Energy Commission said in the supplement.
As such, the Energy Commission expected a good faith scrutiny of the model from stakeholders who were welcomed to add their preferred assumptions to the data and the model. PacifiCorp's consultants did not disagree with the fundamental principles and structure of the KPAAM model. Energy Commission staff, according to the supplement found that some of Christensen's analysis provided important PacifiCorp data that had been denied the state in earlier requests.
The report addendum said after revising the model, using the appropriate corrections from the CAEC, Energy Commission consultants and staff had found that removal instead of upgrading the dams increases the economic benefits to ratepayers from a range of $32 million to $286 million.
Originally, KPAAM report forecast that the difference between the options ranged from a cost of $14 million to an economic benefit of $285 million. For the revised scenario using PacifiCorp's power cost forecast -- decommissioning would now be $114 million cheaper than relicensing - a savings of $13 million more than suggested in the original KPAAM report.
"Mitigated relicensing" remains the highest economic risk to PacifiCorp ratepayers, the Energy Commission said. Upgrades, such as building fish ladders and installing water quality improvement devices to meet modern, legal and scientific standards are "complex and expensive."
Dam improvements would cost from $223 million to $415 million. During improvements, the report said power production from the dams will be reduced by 23 percent and the project will be unable to provide quick supply during peak periods of electricity demand.
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