PUDs favor adjusting or ending river treaty with Canada
Saturday, March 2, 2013
WENATCHEE — Chelan, Douglas and Grant County PUDs favor ending the landmark Columbia River Treaty between the U.S. and Canada if its now-reduced benefits and high costs can’t be modified, the utilities’ general managers say.
Bill Dobbins, general manager of the Douglas PUD, said treaty costs for the down-river utilities now outweigh benefits by 10-fold.
“All these costs are on the shoulders of the customers, and no one is really representing them,” said Dobbins, speaking for fellow managers John Janney of Chelan PUD and Tony Webb of Grant PUD.
All three recently met with The World’s editorial board to discuss the utilities’ position on the treaty.
The Columbia River Treaty dates to 1964. It governs how Canada operates its huge water-storage reservoirs for the down-river benefits of flood control and power generation. It also requires the U.S. to pay for these benefits by returning to Canada a portion of the power generated by U.S. dams.
These power deliveries are known as the “Canadian Entitlement.”
Canada has used proceeds from selling these energy deliveries, together with an initial U.S. payment of $64.4 million, to build its water-storage reservoirs. The last one was completed in the 1970s.
At a market price of about $50 per megawatt hour, the power benefit amounts to the energy equivalent of about $400 million a year that U.S. utilities that generate on the Columbia River collectively return to Canada, Dobbins said.
The treaty requires Canada to receive half the downstream benefits created by its water storage and timed water releases to maximize generation through down-river dams.
But over time, the power payment it receives from the U.S. has outpaced the benefit, the managers say, because:
The treaty overstates the down-river power-generation benefit derived from Canadian water storage.
The maximum water that Canada can supply on demand is not enough to produce the peak power generation originally thought possible at the dams.
The treaty requires utilities to deliver power when Canada asks for it. Canada asks during times of high energy demand, when the utilities could profit most from selling their surplus on the market.
U.S. federal requirements for fish survival reduce the utilities’ abilities to use the river to its maximum capacity for power generation, reducing revenues.
The treaty benefits don’t take into account that some of Canada’s water storage projects now have generation capacity, partly made possible by Canadian Entitlement payments.
The treaty expires in 2024. It requires the U.S. and Canada to give 10 years notice of their desire to terminate the treaty. The federal employees charged with analyzing and collecting feedback on the treaty are the top officials at the Bonneville Power Administration and U.S. Army Corps of Engineers. They must make a recommendation to the federal government by late this year.
Neither the PUDs nor other regional utilities can participate in treaty negotiations. To have a louder voice in the discussion, the three PUDs and 21 other Northwest utilities have joined together as the “Columbia River Power Group.”
The group, which altogether serves about 6.4 million electricity customers, share the opinion of the three local PUDs.
If the treaty ends, Canada would still be required to provide flood control benefits when the U.S. asks for them. The U.S. would pay for these services, as needed.
The end of the treaty wouldn’t necessarily change the way the river is currently operated, the managers say, since Canada also has hydroelectric dams that would benefit from current river management to boost power generation.
If the countries choose to renegotiate the treaty, the managers fear political interests could inject additional provisions, such as special projects or environmental requirements, that could increase costs for their already highly regulated industry.
“The politics of this are a totally different analysis than the power,” said Dobbins.
None of the utilities, he says, knows what will happen next. “We have no idea, because it’s politics. It’s international politics.”
Christine Pratt: 665-1173
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