Addressing BPA Ratepayers' Concernsby BlueFish
Public Testimony at Idaho Falls, March 1, 2000
Tonight, I would like to address the concerns of BPA ratepayers who fear - that the removal of 4 Lower Snake River Dams will cause an increase in their electric power rates. This is of particular concern here in Southern Idaho, where a significant cost for farmers is pumping their irrigation water.
The ACOE has estimated that the one-time cost to decommision the Dams, Remove the Dam Embankments, Protect the Reservoir Embankments, and Channelize the River will cost about $470 million. Another $340 million is estimated for fixing railroads, roadways, bridges, recreation areas, culverts, cattle watering facilities, etc., money that would arguably come from the taxpayer rather than the BPA ratepayer.
So let's assume that BPA ratepayers are asked to pay $470 million of the total $810 million projected cost.
It turns out that turbines only last about 25-50 years and that upcoming turbine rewinds already scheduled are budgeted to cost $420 million. Without the dams, this expense won't be needed, so $420 of the $470 million is already in the rate structure, leaving $50 million.
Removing the dams would also free up a planned $21 million de-gasification construction project, that brings us to $29 million.
Additionally, property that could be salvaged from the decomissioned projects could be sold and re-used elsewhere, bringing in at least $15 million, leaving us with $14 million expense.
Considering that BPA cash reserves are currently $700 million and projected to be $1.2 billion by 2006, we see that the one-time cost of breaching can be readily paid for with existing BPA funds.
The lost hydropower revenue of these four decommissioned dams amounts to about $250 million per year. How will the BPA, ie. the federal government, make up for this lost revenue?
First consider the costs that will be avoided once these dams are decommisioned:
$25-35 million per year in Operations & Maintenance
$75-90 million per year in Fish Barging, and new Fish Screens that would be needed if the dams remain.
$30-50 million per year for flow augmentation from Idaho. Without the 4 Lower Snake River dams, this water will no longer be needed - 435,000 acrefeet from Idaho does not significantly speed the flow of the mighty Columbia River.
These avoided costs add up to $130 to $175 million per year. Subtract this from the $250 million hydropower revenue leaves the BPA with lost revenue of $75 to $120 million per year.
For the moment, consider that we are paying for $750 million of outstanding debt on these dams, their fish hatcheries and fish mitigation funds. An additional $135 million of work in progress will soon be added. To quote from the Financial Analysis of the ACOE draft report, "it is possible that Congress, will reduce some or all of this long-term debt...." If Congress does choose to write off all of this bad debt then the BPA will be left with a loss of revenue of no more than $32 million per year which would mean an increase of BPA rates of about 1.5% - worst case.
But let's assume that Congress does not write off this debt. How will the BPA come up with $75 to $120 million per year?
As luck would have it, BPA ratepayers are currently paying $550 million per year for a WPPSS debt that will begin to go down in the year 2013 and paid down completely in 2018. So what if the U.S. Treasury loans BPA the necessary funds until 2013. Then as the WPPSS debt begins to disappear, the debt for decommissioning the Lower Snake Dams kicks in. Level it all out so that BPA rates remain unaffected.
It is quite simple really, no change in BPA power rates is necessary.
So let's do the right thing: No economic effect to the shippers, the irrigators or the ratepayers.
Save Idaho's Wild Salmon and Steelhead.
Breach the Lower Snake River Dams: No economic effect need be felt.
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