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Northwest Power Council Analysis Suggests Electric Rates Could Rise Due To Salmon Lawsuit by Staff Medford News, November 19, 2005

The net cost of the operations, if they are ordered by the federal court, could range from $125 million to $560 million in 2006, according to the analysis.

The matter will be argued December 15 before U.S. District Judge James A. Redden in Portland, where plaintiffs led by the National Wildlife Federation successfully sued the federal government over its 2004 Biological Opinion on Snake and Columbia River hydropower operations to protect threatened and endangered species of salmon and steelhead.

In October, Judge Redden remanded the biological opinion to NOAA Fisheries, which wrote the opinion, with instructions to rewrite it within a year.

The plaintiffs subsequently filed their motion asking the judge to order the increased spills and flows while the biological opinion is being rewritten. The Power and Conservation Council is not a party to the lawsuit.

"The Council is not asserting a position on the plaintiff's proposal," Council Chair Melinda Eden said today in Coeur d'Alene, Idaho, where the Council reviewed the analysis. "This is a power system analysis, not a biological analysis. We intend it to assist the region. The Council is a regional planning agency -- neither a utility nor a fish and wildlife agency. We are in the best position to provide this analysis because we have expertise in modeling the Northwest power system and because we are neutral in this matter."

In order to provide the increased river flows and spills over dams next spring and summer, water storage would have to increase this winter. That would reduce hydropower generation in the winter but increase it in the spring and summer when the water is released. The primary storage dams are Grand Coulee on the Columbia River and Dworshak Dam on the North Fork Clearwater River, a Snake tributary. The additional water releases would mean that Lake Roosevelt behind Grand Coulee Dam would be 10 feet lower by the end of August and Dworshak would be six feet lower than under existing operating plans.

The analysis calculates a net cost for the proposed operations in 2006 that ranges from a low of $125 million to a high of $560 million depending on water conditions, demand for power and its price. The net cost is the result of two components:

1. the cost of power purchases and the value of foregone hydropower revenue during winter when water is stored instead of being run through turbines, offset by
2. income that would be derived from selling surplus hydropower in the spring and summer when the water is released. The costs are high because new power plants could not be built in time to make up the lost hydropower this winter, and so the region's utilities would have to rely on demand-reduction programs and power from temporary generators, which is more expensive than hydropower.

The analysis also assesses the impact of the proposed operations on power system reliability, expressed as "loss of load probability" -- the probability that the power system will be unable to meet demand for power. The Council designed its Fifth Northwest Power Plan, completed in December 2004, around a zero loss-of-load probability. Currently the region's loss-of-load probability is near zero.

According to the power plan, the power system is reliable when there is an acceptable risk of avoiding power price volatility up to 5 percent loss-of-load probability. Five percent is the accepted limit in the power industry.

The analysis accounts for the fact that while the Northwest currently has a surplus of electricity, the surplus is not the same in all months. The surplus is smallest in the winter and greatest in the summer. According to the analysis, implementing the proposed operations in 2006 would increase the loss-of-load probability to 7.5 percent if the operations could not be curtailed during power emergencies such as severe cold weather that sends demand for power soaring. However, if the operations could be curtailed in emergencies to a greater extent than the biological opinion currently allows, the loss-of-load probability could be maintained near the present level.

Average Change in Hydro Generation and Cost/Benefit

Period	Change in Generation (mw-months)	Cost (millions)	Average Cost (cents per kwh)
November	441	-$22	6.9
December	-486	$26	7.2
January	-4,638	$348	10.1
February	-355	$27	11.3
March	1,490	-$65
April 1-15	-900	$49	15.1
April 16-30	-527	$28	14.7
May	1,459	-$53	4.9
June	320	-$12	5.2
July	-868	$40	6.2
August 1-15	12	-$1	23.1
August 16-31	-523	%30
Total	-4,605	395

The Council is an agency of the states of Idaho, Montana, Oregon and Washington and is directed by the Northwest Power Act of 1980 to prepare a program to protect, mitigate and enhance fish and wildlife of the Columbia River Basin affected by hydropower dams while also assuring the region an adequate, efficient, economical and reliable power supply.