Deal Will Clear River for Salmon
By Ted Sickinger and Michael Milstein, The Oregonian
November 12, 2008

Resurrection of one of the West Coast's great salmon rivers leapt ahead this week with a tentative deal to remove four Klamath River dams blocking fish from their richest habitat in southern Oregon.

Gov. Ted Kulongoski was the first to sign the agreement. Interior Secretary Dirk Kempthorne, the governor of California and the president of PacifiCorp's corporate parent are expected to sign the agreement this week.

It signals a potential resolution of the Klamath Basin's water struggles, which erupted in 2001 with a federal shutoff of water to farms to help imperiled salmon and other fish. The following year, with irrigation water restored, tens of thousands of salmon died in a warm, shrunken Klamath River downstream of the dams.

Several hurdles remain: Studies must show the benefits outweigh costs, and significant federal and state legislation are required.

Removing the dams and buying replacement power would put significant new costs on ratepayers of PacifiCorp, a unit of MidAmerican Energy Holdings Co., which is controlled by Warren Buffett's Berkshire Hathaway Inc. And some ratepayer advocates believe those costs will fall disproportionately on ratepayers in Oregon.

If the effort goes forward, it would mark the largest dam removal and salmon restoration effort ever undertaken, said Michael Carrier, natural resources adviser to Gov. Ted Kulongoski. He said it's a final piece of the solution to struggles over water, farms and wildlife in southern Oregon's Klamath Basin.

Under the new agreement, studies and analysis would run until 2020, when disassembly of the dams would begin.

Fishermen, biologists and others hope that reopening the river will help revive troubled West Coast salmon fisheries, which have collapsed twice since 2006.

"This is as big as anything we've ever seen in terms of restoring a wild salmon river," said Guido Rahr, president of Portland's Wild Salmon Center, which advocates salmon recovery around the world. "You really are giving a river the chance to come back."

Tumbling from Oregon's high desert to coastal redwoods, the Klamath is the third most important salmon river south of Canada, after the Columbia and Sacramento. But hydroelectric dams cut salmon off from vital habitat around Upper Klamath Lake in Oregon, and water behind the dams turned uncomfortably warm for fish.

To date, PacifiCorp has steadfastly pursued a new 30- to 50-year operating license for the dams and said any agreement to remove them must protect ratepayers. Presumably the company now believes the costs to remove the dams and replace the power will be less than any upgrades and environmental liabilities. Federal biologists mandated $300 million in fish ladders and other improvements if the dams remained.

A report for the California Energy Commission said PacifiCorp could save $101 million over the next 30 years by removing the dams and buying replacement power, rather than upgrading the dams and reducing power production to meet modern standards for fish protection.

The company said Wednesday, however, it had no cost-benefit analysis to share.

"If the company cut a bad deal, presumably the (Oregon Public Utility Commission) staff would rule that shareholders would have to eat some of those costs, not customers," said Bob Jenks, executive director of the Citizen's Utility Board of Oregon.

Neither ratepayer advocates nor environmentalists and tribes were party to the agreement worked out between the two states, federal authorities and PacifiCorp.

The cost benefit analysis is a sticky issue that has been debated for years.

Fishermen and environmentalists, for instance, want to go ahead with dam removal and worry that provisions in the new deal give the utility too many "off-ramps" that would allow it to avoid taking down the dams. Ratepayer advocates, meanwhile, argue that the costs and benefits of the deal are either impossible to accurately calculate or distributed unequally.

"There's nothing in this document that says this is a good deal for Oregon ratepayers," said Michael Early, executive director of the Industrial Customers of Northwest Utilities.

The deal does look attractive for PacifiCorp shareholders. The utility would receive immunity from the dams' environmental liabilities, continue to operate and earn profits on them until 2020, and potentially build a replacement power plant that would deliver larger profits.

Past estimates by outsiders have put the cost of dam removal at $180 million. Under the new agreement, PacifiCorp ratepayers in Oregon and California would shoulder the first $200 million, while voters in California would be asked to approve up to $250 million in general obligation bonds to pay any additional costs.

The ratepayer costs will be allocated between the two states using the same formula that PacifiCorp uses to apportion costs among customers across its six-state service territory. In this case, that means Oregon ratepayers will pay about $180 million of the initial $200 million in costs.

The parties have agreed that the maximum increase in utility rates to cover dam removal would be 2 percent, a surcharge that would start when the deal is approved. For Oregon ratepayers, that could mean an increase in their monthly bills of less than $1.40.

That sounds minimal. But it doesn't count replacement power, a cost that could dwarf removal costs in the long run, as hydroelectric dams operate free of fuel costs and don't generate any carbon emissions.

In accordance with Title 17 U.S.C. Section 107, and as defined under the provisions of "fair use", any copyrighted material herein is distributed without profit or payment for non-profit research and for educational use by our membership.

Pact Unveiled To Remove Klamath Dams
By Jeff Barnard, Associated Press
November `13, 2008

GRANTS PASS, Ore. (AP) — The Bush administration has announced a nonbinding agreement for removing four dams along the Klamath River, a key to resolving the basin's long-standing trouble balancing the water needs of farms and fish.

While not a final answer, the deal represents a milestone toward what would become the biggest dam removal project in U.S. history.

It also would help resolve issues at the root of the 2001 shut-off of irrigation to thousands of acres of farmland under enforcement by U.S. marshals and the 2002 deaths of 70,000 adult salmon in the river after irrigation water was restored.

The agreement in principle reached in Sacramento, Calif., was to be signed Thursday by the U.S. Department of Interior, the utility PacifiCorp and the governors of Oregon and California.

According to a copy obtained by The Associated Press on Wednesday, the agreement is a roadmap for turning the dams over to a nonfederal entity and starting to remove them by 2020.

Though the Bush administration has opposed removing hydroelectric dams elsewhere, Interior Department Counselor Michael Bogert said it recognized that removing the four dams could help create "a comprehensive approach to deal with the issues and images we saw in the Klamath Basin."

Pressure has been building for years on the dam's owner, PacifiCorp, to make a deal. California and Oregon's governors pressed for dam removal after commercial salmon fisheries collapsed in 2006.

Federal biologists mandated that fish ladders and other improvements costing $300 million be added to the dams before a federal operating license could be renewed. California water authorities have been taking a hard look at the dams' role in toxic algae plaguing the river, and river advocates have sued PacifiCorp to fix the algae problem.

The deal embraces a $1 billion environmental restoration blueprint for the Klamath Basin that has been endorsed by farmers, Indian tribes, salmon fishermen and conservation groups. Besides restoring fish habitat, it guarantees water and cheap electricity for farmers, as well as continued access to federal wildlife refuges for farming.

Dean Brockbank, vice president and general council for PacifiCorp, said though the agreement was nonbinding, the utility was committed to seeing it through to removal of the dams.

He added the company's four key concerns were all met: PacifiCorp is protected from liability, there is a $200 million cap on removal costs to be born by ratepayers, dam removal is far enough in the future to avoid a scramble for replacement power, and PacifiCorp's capital expenditures were held to a minimum.

Deadline for a binding agreement is June 30, 2009, and farmers, Indian tribes and other parties that endorse the agreement in principle get a place at the table. Then the federal government undertakes studies to be sure dam removal is feasible and cost-effective.

Besides the $200 million in removal costs to be born by ratepayers, the state of California will ask voters to approve a $250 million bond. Surcharges would be about $15 to $20 a year to PacifiCorp's 500,000 customers in Oregon and 45,000 customers in California. Any dam removal costs over $450 million must be worked out later.

PacifiCorp also committed to paying California $500,000 a year for fish habitat improvements until the dams are removed.

"The health of the Klamath River is critical to the livelihood of numerous Northern California communities, and with this groundbreaking agreement we have established a framework for restoring an important natural resource for future generations," Calif. Gov. Arnold Schwarzenegger said in a statement.

The Karuk Tribe had led demonstrations at PacifiCorp stockholder meetings demanding dam removal, but spokesman Craig Tucker said the agreement represented a new working relationship with the utility, "and we are looking forward to working with them as partners in the future."

Glen Spain of the Pacific Coast Federation of Fishermen's Associations, which represents California commercial salmon fishermen, also voiced support.

"It is a break out of gridlock into a dam removal pathway that shows great promise."

But Oregon Wild, a Portland-based conservation group kicked out of basin restoration talks, blasted the deal, saying the Bush administration was imposing a lot of conditions favorable to PacifiCorp and punting a problem it had failed to resolve in eight years.

Built between 1908 and 1962, the four dams block salmon from 300 miles of spawning habitat while producing enough electricity to power about 70,000 homes.

In accordance with Title 17 U.S.C. Section 107, and as defined under the provisions of "fair use", any copyrighted material herein is distributed without profit or payment for non-profit research and for educational use by our membership.

Reaction Mixed on Dam Agreement
By Heather Dodds, Siskiyou Daily News
November 14, 2008

Siskiyou County, Calif. - There were mixed emotions in Siskiyou County yesterday following the announcement that the first step has been made toward dam removal on the Klamath River.

Some local residents blasted the decision by states and PacifiCorp to move toward removing the dams, while environmentalists celebrated.

Secretary of the Interior Dirk Kempthorne, Oregon Gov. Ted Kulongoski, California Gov. Arnold Schwarzenegger, and PacifiCorp Chairman and CEO Greg Abel signed a non-binding agreement yesterday that would begin the removal process providing a four-year study finds the removal to be feasible.

Jim Burney, who owns an RV resort and restaurant near the base of Iron Gate Dam, said he is disappointed to learn the Klamath dams may be coming down.

“This is a very sad situation when you consider the fact the residents never get to be heard from,” Burney said. “We will be flooded in December, January and February. Then there will be no water in the river for salmon come August, September and October.” Burney, who owns the Fish Hook and is also building a new lodge beside the river, blasted the Siskiyou County Board of Supervisors for not doing enough to try to prevent dam removal. Although the board said it opposed removing the dams, Burney said it could have played a bigger role in fighting to keep them.

“We are the people who are going to be affected, not the people in Southern California, Phoenix, Ariz., or Ohio,” Burney said. “The state is overriding the local thoughts as far as the Klamath River is concerned.”

Montague rancher Leo T. Bergeron agreed, calling the agreement “absolutely ridiculous.”

“I can’t believe it is in the best interest of this county or even this state or the country to actively seek to eliminate clean power generation facilities,” he said. “We are suffering power outages on a regular basis and have been for a number of years, and predictions are it will get worse in the future.”

He added that the “only sensible thing about the agreement” is that it requires years of study before a final decision is made.

Anthony Intiso, secretary of the board of directors on the Upper Mid Klamath Watershed Council, said that several studies show that the problem in the river originates from Oregon.

“It’s not the dams,” he said.

Conservationist Felice Pace called dam removal “a necessary step to truly restoring the Klamath River,” at the same time warning that removing the dams “will not magically produce recovery.

“The devil is going to be in the details of what is in the agreement and the federal and state legislation that will be needed to implement it. Those who are negotiating on behalf of the river and the salmon should bear this in mind and should not agree to a deal which removes the dams but dooms the river and its salmon,” he added, urging Siskiyou County leaders to look out for what he says is the best interest of Siskiyou County.

A written statement released by numerous organizations including the Karuk Tribe, Klamath Tribes of Oregon and California Trout on Thursday asserted that the plan would “provide dependable irrigation deliveries to project farmers, a means to reconcile water rights disputes and ensure affordable renewable power for farm and ranching communities.”

CalTrout’s Mt. Shasta Program Manager Curtis Knight added that a lot of work remains to be done.

“We’re optimistic about this step – it’s a big one,” he said. “California Trout is very pleased to see that an Agreement In Principle has been reached between the governments and PacifiCorp, though there’s still a lot of work to do in the next six months to make this a binding agreement.”

Craig Tucker, spokesman for the Karuk Tribe and longtime proponent of the dam removal, added that among the concerns he’s heard, one that’s brought up most often by Siskiyou County residents is that PacifiCorp-owned land will become public in the case of dam removal. This is addressed in the 32-page agreement, which states that “PacifiCorp agrees that any disposition of lands it owns shall be (sold) at fair market value to an entity that is not exempt from payment of property or other taxes, or contributes equivalent revenues in lieu of taxes.”

In accordance with Title 17 U.S.C. Section 107, and as defined under the provisions of "fair use", any copyrighted material herein is distributed without profit or payment for non-profit research and for educational use by our membership.