The Bonneville Power Administration will favor its preferred customers over measures designed to help threatened and endangered salmon and steelhead when it distributes $500 million in surplus revenue.
On Friday, BPA administrator John L. Hairston announced the agency would devote $350 million of the unexpected revenue last year to reducing the cost that its contracted customers pay for wholesale power. The agency will use $100 million to pay down its debt and $50 million to supplement its fish and wildlife program. The spending formula is unchanged from one proposed in November.
During a comment period last fall, salmon advocates pressed the agency to devote more of the surplus to salmon and steelhead while public power customers like Clearwater Power Company praised the funding formula.
On Friday, the Idaho Conservation League criticized the agency, calling the final funding decision a failure.
“For years, regional fish recovery programs have gone underfunded because of BPA’s business struggles. Now, when the agency finally has one good financial year, salmon get shorted again,” Mitch Cutter, salmon and steelhead associate for the conservation group, said in a news release. “Under law, BPA must demonstrate ‘equitable treatment’ for fish and wildlife alongside power, transmission and other areas. This decision flies in the face of that mandate.”
The federal agency markets power produced at 31 federal hydroelectric dams in the Columbia River basin. It is tasked by federal law to work with the Northwest Power and Conservation Council to implement a fish and wildlife program aimed at mitigating the harm those dams cause to the basin’s fish and wildlife populations, and to balance the needs of fish and wildlife with its mission to provide reliable and affordable power to Northwest residents.
The fish and wildlife program distributes money to states and tribes in the basin for projects designed to help salmon and steelhead, other fish and wildlife. It has spent about $250 million annually on fish and wildlife over the past three years. That is down from about $275 million in 2017 and 2018.
The reductions were purposeful. In the past decade, BPA faced serious financial pressures. The cost it charged its contracted customers was rising steadily at the same time power on the open market was falling. Starting around 2018, it looked for ways to cut costs and to keep its wholesale prices from rising. Among the measures it adopted was an effort to hold its fish and wildlife spending below the cost of inflation.
Last year, conditions broke in favor of the agency. The cost of power on the open market soared and river flows in the Columbia Basin were ample. BPA was able to sell excess power at higher prices to noncontracted customers. The agency ended up taking in $950 million more than it had forecast when it set wholesale prices for its customers, known as a rate case.
“We had an absolute ideal shape and volume to the river and the market price for power was much higher than all of our indicators when we were doing the rate case. The conditions were much better than we calculated,” said Douglas Johnson, BPA spokesperson at Portland.
In such cases, the agency has the ability to return some of the surplus to customers who are under long-term purchase contracts. But the agency administrator has wide latitude on how the money is spent.
Fish and Wildlife advocates told Hairston he should spend more of the $500 million surplus to help imperiled salmon and steelhead. Nez Perce Tribal Chairperson Samuel N. Penney said in comments submitted to the agency last fall that the Biden Administration had recently committed to change course on salmon recovery in the Snake and Columbia rivers and federal officials said “business as usual” would not save the fish.
“Yet business as usual is exactly what is happening here,” Penney said of the proposal to spend 10% of the surplus on fish.
Kate Brown, former governor of Oregon, noted some of the surplus can be traced to the flexible spill strategy that allows BPA and its partner federal agencies to reduce spill at federal dams and increase power generation during times of high power demand and high prices.
“BPA’s significant excess revenues (i.e., $500 million) indicate much more could have been done for fish without risking cost-efficient power operations. Therefore, I strongly urge the BPA Administrator to significantly increase the proposed allocation for conservation programs. A 10 percent allocation is simply unacceptable,” she said in official written comments last fall.
But public utilities districts and nonprofit power companies said the funding formula was justified. Scott Simms, executive director of Public Power Council that represents companies like Clearwater Power and public utility districts that purchase most or all of their power from BPA, said the surplus was “accrued as a result of customers paying higher rates than necessary to recover BPA’s costs given hydrological and market conditions.”
He said when conditions are such that BPA’s revenues fall short of projections, the agency raises rates.
“This dynamic has played out many times over BPA’s history and customers must receive the benefits of rare good years in order to truly achieve BPA’s statutory construct of delivering power at cost for nonprofit preference customers.”
Barker may be contacted at ebarker@lmtribune.com or at (208) 848-2273. Follow him on Twitter @ezebarker.
