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Final Recommendations For Revising Columbia River Treaty With Canada Sent To State Department
Posted on Friday, December 20, 2013 (PST)

The “U.S. Entity” – comprised of top officials of the Bonneville Power Administration and U.S. Army Corps of Engineers officials – has sent a final regional recommendation concerning the future of the Columbia River Treaty to the U.S. Department of State.

The recommendation to strike up negotiations with Canada regarding a renewal of the treaty sets out numerous goals for such discussions, such as re-evaluation what monetary “entitlement” should be send north of the border to pay for benefits received south of the border, and whether ecosystem considerations, such as salmon restoration needs, should be part of any new agreement.

The treaty between the two countries was signed in 1961, with implementation beginning in 1964. The treaty primarily aimed at reducing flood risk downstream, through the construction of water storage facilities in Canada and northwest Montana, and supporting hydropower generation.

Four storage reservoirs on the Columbia River system were built as a result of the treaty -- Duncan, Mica and Keenleyside (also known as Arrow) in British Columbia and Libby in northwest Montana. They doubled the amount of water that could be stored, adding 15.5 million acre-feet of capacity. The treaty called for the United States to pre-pay Canada, a total of $64 million, as each Canadian treaty dam was put into operation.

Canada and the U.S. agreed that the increased annual power generation benefits created by the treaty at the downstream U.S. dams were to be shared equally.

“This benefit is determined using theoretical calculations agreed to by the original treaty authors, and the Canadian share of the power generation, known as the “Canadian Entitlement,” is delivered from the United States to Canada. Because the power was not immediately needed to serve its demand, Canada sold the first 30 years of the Canadian Entitlement to a U.S. consortium of utilities for $254 million in 1964,” according to background information posted on the U.S. Entities’ web site.

“The value of the Canadian Entitlement, combined with pre-payment for flood risk management, helped finance Duncan, Keenleyside and Mica dams. Now that the 30-year contracts have expired, the U.S. delivers the Canadian Entitlement energy to BC Hydro over Bonneville Power Administration transmission lines. BPA estimates that this energy entitlement is worth between $250 million and $350 million a year.”

The Department of State will use the final recommendation to begin a federal policy review process to determine whether to proceed with negotiations regarding changes to the 50-year-old treaty, or to terminate the agreement with Canada.

A recommendation from the Canadian Entity, led by BC Hydro, is expected before month’s end. But that advice will not be disclosed publicly until the British Columbia Cabinet decides how it would like to proceed – negotiate new terms for the treaty, or terminate, according to Kathy Eichenberger of the province’s Ministry of Energy and Mines. Eichenberger is executive director for the Columbia River Treaty Review for British Columbia.

“After three years of collaboration with a wide variety of interests in the region, we believe we are recommending a win-win approach to the future of the Columbia River Treaty that will be broadly supported by the people of the Pacific Northwest,” said Elliot Mainzer, acting BPA administrator and chair of the U.S. Entity.

The U.S. Entity, consisting of the BPA administrator and the U.S. Army Corps of Engineers Northwestern Division engineer, is charged with formulating and carrying out the operating arrangements necessary to implement the Columbia River Treaty.

The U.S. Entity “Regional Recommendation for the Future of the Columbia River Treaty After 2024” was developed by the U.S. Entity in collaboration and consultation with the region’s four states, federally recognized tribes and a variety of stakeholders through an extensive, multiyear process known as the Columbia River Treaty Review.

“We appreciate the extensive involvement and input of the region in developing a recommendation that reflects the region’s many important interests for consideration by the State Department and the Administration,” said Brig. Gen. John Kem, commander of the Corps’ Northwestern Division and U.S. Entity member.

The final recommendation submits that the Pacific Northwest and the nation would benefit from “modernization” of the treaty post-2024. It begins by identifying regional goals for the future of the Treaty post-2024. It includes general principles underlying this recommendation, followed by more specific recommendations related to several Treaty elements. It also identifies matters related to possible post-2024 Treaty implementation for consideration through domestic processes.

The final U.S. Entity recommendation supports a modernized treaty that would simultaneously:

-- better address the region’s interest in a reliable and economically sustainable hydropower system and reflect a more reasonable assessment of the value of coordinated power operations with Canada;

-- continue to provide a similar level of flood risk management to protect public safety and the region’s economy;

-- include ecosystem-based function as one of the primary purposes of the treaty; and

-- create flexibility within the treaty to respond to climate change, changing water supply needs and other potential future changes in system operations while continuing to meet authorized purposes such as navigation and irrigation.

The U.S. Entity recommendations note that, as a result of a three-year process involving discussions with stakeholders, that there is an “increasing awareness in the region that an imbalance has developed in the equitable sharing of the downstream power benefits resulting from the treaty.

“When the Treaty was ratified, the United States and Canada structured Canada’s share of these benefits as one-half of the downstream power benefits with the Canadian Treaty projects as compared to without those projects. An equitable sharing of these benefits should instead be based on the more realistic measure of the power value of coordinated operations as compared to non-coordinated operations,” the recommendations say.

“Based on the present formula developed in the 1960s, the estimated value of the Canadian share of the downstream benefits in 2024 is significantly greater than anticipated, and far exceeds the value of coordinated power operations under the Treaty.”

Under the original treaty, either Canada or the United States may unilaterally terminate most provisions of the treaty as early as September 2024, with a minimum of 10 years’ notice; hence the focus on 2014 and 2024.

Now that the final recommendation has been delivered to the U.S. Department of State, the U.S. government will formally take up the question of the Columbia River Treaty. That process will be a federal, interagency review under the general direction of the National Security Council on behalf of the president. The Department of State has been designated as the agency to coordinate and oversee this process on behalf of the National Security Council. 

To read the final recommendation, and for more information on the Columbia River Treaty Review, go to www.crt2014-2024review.gov.

Parties that have been engaged during those three years of discussions all agree that the treaty should be reworked, not terminated.

U.S. Rep Doc Hastings, R-Wash., has bird-dogged the process, including listening to testimony earlier this month at a House Natural Resources Committee field hearing in Pasco. Hastings is chairman of that committee.

“While I continue to have concerns about aspects of the recommendation related to ecosystem issues, I’m pleased that the U.S. Entity made significant improvements in the final draft by focusing on post-2024 flood control operations and the reduction of the Canadian entitlement and by reflecting greater input from irrigation and navigation interests,” Hastings said.

“As this process moves to the State Department, I will continue to work with my colleagues to ensure that addressing these issues with Canada is made a priority and that there is ongoing engagement from all regional stakeholders – not just governmental entities.”

Northwest tribes, conservation groups and the fishing community called on the U.S. State Department to move forward with modernizing the Columbia River Treaty.

“The modernization of the Columbia River Treaty is in the best interest of our region, the United States, and everyone who relies on the Columbia River,” according to Paul Lumley, executive director of the Columbia River Inter-Tribal Fish Commission. “There appears to be broad level support from the tribes for the recommendation. The tribes are committed to working with the U.S. Department of State to ensure that a modernized Columbia River Treaty is realized.

“We are pleased to see that the ecosystem is included in the recommendation as a new pillar to the Columbia River Treaty. The tribes also look forward to working with the First Nations of Canada to restore fish passage to all historic locations,” Lumley said.

The construction of dams in the United States and Canada have blocked access to historic habitats in the upper Columbia for salmon and steelhead and other species. The Columbia headwaters are in Canada. The river flows south into Washington and then west along the Oregon-Washington border to the Pacific Ocean.

“As written, the recommendation includes a public process to explore innovative ways to manage river flows and flood risk management. This promise of a public process is essential to maintaining the tribes’ broad level support for the current recommendation and is a critical next step for the citizens of the Columbia Basin,” Lumley said.

Lumley is a citizen of the Yakama Nation and a member of the Columbia River Treaty Sovereign Review Team.

U.S. power interests agree with the need to reassess the Canadian entitlement terms, but urge caution regarding suggested expansions of the treaty to include ecosystem considerations.

“The primary objective of engaging in any Treaty negotiations with Canada must be focused on correcting the current inequity of the U.S. obligation under the Canadian Entitlement, and providing a significant net benefit to the region’s consumers,” Public Power Council Executive Director Scott Corwin said during the recent congressional hearing on the topic. PPC represents consumer-owned electric utilities of the Pacific Northwest that purchase power and transmission marketed by BPA. Member utilities have service territories with consumers in portions of eight western states.

PPC is also a member of the Columbia River Treaty Power Group, consisting of over 80 electric utilities, industry associations and other entities that depend on power produced by the Columbia River hydropower generating plants.

“It’s evolved quite a bit in the past 50 years,” Corwin said. A lot of the assumptions on which the original treaty were built are outdated.

“In sum, the U.S. obligation under the Entitlement far exceeds the actual power benefit received,” Corwin said. “If the treaty continued using the current calculations for the Canadian Entitlement, by 2025 the U.S. would be returning to Canada about 450 average megawatts of clean hydropower and 1,300 megawatts of capacity each year, valued at approximately $250 to $350 million annually (not to mention its value for system operations and reliability).” Those costs are added to ratepayers’ bills.

“Northwest electric customers are likely to provide well over $2 billion in benefits to Canada over the next 10 years alone, despite the U.S. Entity’s own estimate that the actual annual value of this benefit to the U.S. is only in the range of $25 to $30 million (i.e., only one-tenth of the current Canadian Entitlement obligation).

“This inequity is unsustainable,” according to Corwin’s testimony.

Corwin said that PPC and other members of the Treaty Power Group have stated that, “to the extent a modernized Treaty is to address ecosystem matters, adequate recognition of and accounting for efforts already under way is critical.” Billions of dollars, mostly from BPA through revenues electricity ratepayers, has already been spent to improve fish and wildlife, particularly for salmon and steelheed listed under the Endangered Species Act.

Conservation groups have focused on the ecosystem options.

"There is solid, broad-based support among Northwest states, tribes, businesses and citizens to promptly begin formal talks with Canada to modernize the half-century-old Columbia River Treaty for tomorrow's Northwest,” said Pat Ford of Save Our Wild Salmon. “Conservationists and fishermen urge Secretary of State Kerry to take the next needed step.

“After assessing the regional recommendation, we urge him in turn to recommend to the White House that talks with our Canadian counterparts begin in 2014. At the same time, federal agencies, communities and people have work to do on our side of the border,” Ford said. “We need to initiate a thorough public review of how to modernize flood risk management in the Columbia Basin, and we should add a government or agency with natural resource and climate change expertise to the federal team that implements the Columbia River Treaty."

“The federal agencies have recommended that the State Department include restoring the ecosystem as a primary driver of an updated treaty, co-equal to hydropower and flood control, a feature that will make the Treaty a model of international water management,” Ford said. “All four Northwest states, 15 Columbia Basin tribes, fishermen and environmentalists support that recommendation. Opposing the federal agencies’ recommendations is the utility caucus, called the Treaty Power Group, which wants to offload costs relating to the treaty to decrease electricity rates – already some of the lowest rates in the United States.”

“We are excited to see the U.S. agencies recommend discussion of fish passage on the Columbia mainstem as part of a modernized treaty,” said Rachael Paschal Osborn of the Columbia Institute for Water Policy. “This will benefit citizens, recreation and commercial fishers, Tribes and First Nations to restore salmon to the Upper Columbia.”

For more information see:

-- CBB, Dec. 12, 2013, “House Natural Resources Committee Holds Pasco Field Hearing On Revising Columbia River Treaty” http://www.cbbulletin.com/429269.aspx

-- CBB, Nov. 27, 2013, “Columbia River Treaty Prompts Discussion Of Restoring Salmon Passage To Canadian Headwaters” http://www.cbbulletin.com/429144.aspx

-- CBB, Nov. 1, 2013, “Columbia River Treaty Negotiations Will Impact Libby Dam Operations, Reservoir Drafting/Refill” http://www.cbbulletin.com/428897.aspx

-- CBB, Oct. 18, 2013, “B.C. Releases Draft Columbia River Treaty Recommendations, Wants Full Accounting Of U.S. Benefits” http://www.cbbulletin.com/428719.aspx

-- CBB, Sept. 27, 2013, “U.S. Releases Draft Recommendations For ‘Modernizing’ Columbia River Treaty” http://www.cbbulletin.com/428444.aspx

-- CBB, Aug. 16, 2013, “Environmentalists Say Columbia River Treaty Needs To Expand To Include ‘Ecosystem-Based Functions”’ http://www.cbbulletin.com/427918.aspx

-- CBB, Aug. 9, 2013, “Utilities Group Expresses Concern With Columbia River Treaty Draft Recommendations, Process, Scope” http://www.cbbulletin.com/427854.aspx

 

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