A Dam Fine Strategy

Pacificorps generated a lot of positive press on its agreement to consider dam removal in 11 years. Here's the inside scoop on how.

Oregon’s two biggest utilities are handling recent high-profile challenges in very different ways.

While Portland General Electric appeared flummoxed last week by a judge’s ruling casting a pall over its coal plant in Boardman, PacifiCorp took to the skies to sell its solution for longstanding problems in the Klamath Basin.

According to a document labeled “Klamath Draft Hydro Agreement Roll-out” (PDF online atwweek.com/Klamath_dams), Oregon’s second-largest utility pitched the latest version of a proposal to remove four dams on the Klamath River to no fewer than 12 media outlets in 26 hours.

And PacifiCorp took teammates aboard its leased seven-seat Commander plane as it hopscotched between Portland and Arcata, Calif., to roll out the agreement. On board were Gov. Ted Kulongoski’s natural-resources adviser, a friendly enviro and a supportive tribal rep.

In the plane trip’s wake were glowing headlines about the proposal, part of a long controversy pitting enviros against farmers in a bitter dispute over water so big that then-Vice President Dick Cheney intervened in 2002.

“A gush of possibilities opens on the Klamath,” gushed the Oregonianeditorial board on Sept. 30.

PacifiCorp’s news was that 28 groups had tentatively agreed to a deal first announced last November that could lead to dam removal starting in 2020. The plan’s genius is that removal 11 years from now is cheaper and more lucrative than renewing dam licenses that expired in 2006.

“We want customers who have paid for the dams to benefit from them as long as possible,” says PacifiCorp Vice President Dean Brockbank.

The biggest change is that the federal government has now shown willingness to be the “dam removal agent” rather than finding a third party to do the work. Major questions remain, including who will bear environmental liability for removal (PacifiCorp says it will not) and whether cash-strapped California will pony up the $250 million it has agreed to pay.

Some groups were both left out of the media hoopla and wondering if there was much worth crowing about.

“Nothing has really changed,” says Bob Jenks, executive director of the Citizens’ Utility Board, a customer group that supported legislation earlier this year to let PacifiCorp collect $200 million from its 550,000 Oregon customers to remove the dams. “This was all expected.”

A lawyer for Industrial Customers of Northwest Utilities, which represents the state’s largest electricity buyers, offers one reason for all the gloss. ICNU attorney Melinda Davison says PacifiCorp wants a positive vibe ahead of raising rates for its Oregon customers.

“We’re concerned PacifiCorp may be seeking to impose an immediate rate increase during the worst time since the Great Depression to collect money solely from Oregon ratepayers when California [is not paying] its share,” Davison says.

Brockbank says the company believes California will pass a water bond to pay its share. And he says PacifiCorp must begin collecting money now for removal to dampen future rate shock.

Although representatives from Trout Unlimited and California tribes joined the media tour last week, two prominent environmental groups, WaterWatch and Oregon Wild, weren’t included. They are unhappy that dam removal is linked to an agreement they say lets agricultural interests continue using water and tens of thousands of acres of the Klamath Basin and Tule Lake national wildlife refuges for 50 years.

Steve Pedery of Oregon Wild says his group wants the dams taken out but is frustrated that “PacifiCorp is not interested in taking out the dams quickly or at any cost to themselves and their shareholders.”

He also criticized Kulongoski’s resources adviser, Mike Carrier, for flying on PacifiCorp’s plane, saying it gives the appearance Kulongoski favors the utility over conservation.

Carrier strongly rejects that notion. He says commercial service could not accommodate his schedule, and he flew on the utility’s plane only after getting approval from the governor’s counsel and agreeing to reimburse the utility.

Carrier says last week’s announcement has broad-based support and is the result of difficult multiparty negotiations in which nobody—including PacifiCorp—got a sweetheart deal.

“In November we had four parties who agreed,” Carrier says. “Now we have 28 parties who have agreed to take this back to governing boards. And the federal government is more willing to take a significant role.”

PacifiCorp says it’s merely taking the lowest-risk and lowest-cost approach to a complex situation—and following politicians’ directives.

“The governors of Oregon and California and the federal government have made it clear,” Brockbank says, “that they want these dams out.”

FACT: If signed by all parties, the proposal proceeds in January to the state Public Utility Commission. The regulators will review whether to raise rates for PacifiCorp’s Oregon customers by up to 2 percent to generate $200 million to help pay for dam removal.

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Click here to read Oregon Wild's Op-Ed on the Klamath deal

Click here to read Oregon Wild's Press Release