A draft report to northwest governors on Columbia
Basin Fish and Wildlife Program costs in 2017 was released last week for review
by the public, with the total program costs coming in at $450.4 million, about
18 percent of the Bonneville Power Administration’s power business line costs
of $2.465 billion, and accounting for about one-third of the agency’s wholesale
The Northwest Power and Conservation Council
at its meeting in Boise last week agreed to release the “2017 Columbia River
Basin Fish and Wildlife Program Costs Report” for public review. It is the 17th
such report released by the Council and covers the period Oct. 1, 2016 to Sept.
30, 2017, fiscal year 2017. Comments are due by June 29.
Of the total, the cost for the direct-funded
program was $254.7 million. That money pays for projects such as habitat
improvements, research, and some fish hatchery costs, the Council said in the
draft report (https://www.nwcouncil.org/media/7491668/2018-4.pdf).
Some $85.2 million were reimbursements to the
federal Treasury for expenditures of appropriated funds by the U.S. Army Corps
of Engineers, Bureau of Reclamation, and the U.S. Fish and Wildlife Service for
investments in fish passage and fish production, including direct funding of operations
and maintenance expenses of federal fish hatcheries. The cost of half of
Council expenses ($10.8 million) is also included in this category, the report
says. The other half of Council expenses is assigned to the Bonneville Power
Administration’s power business line.
Debt service (interest, amortization, and
depreciation) of capital investments for facilities was $121.4 million. This is
for facilities such as hatcheries, fish passage facilities at dams and some
land purchases for fish and wildlife habitat.
Foregone hydropower revenue – dam operations
that benefit fish but reduce power production and sales – was $9.6 million.
Bonneville’s Fish and Wildlife Division considers forgone revenue a result of
spill at dams to benefit fish passage, a cost attributable to fish and wildlife
mitigation. Without forgone revenue, fish and wildlife costs comprise 17.8
percent of Bonneville’s $2.465 billion in total power-related costs.
Not all numbers were additive. In 2017,
planned power purchases were down $20.5 million. According to the draft report,
BPA buys power in the wholesale market during periods when dam operations to
protect migrating fish reduce hydropower generation, such as by spilling water
over dams in the spring or storing it behind dams in winter months in
anticipation of required spring spill. The negative number for 2017 is an
anomaly, the report says.
“Power purchases and forgone revenue have a
wide variance from year to year which is caused, in part, by the fact that they
are estimated from a model,” the report says. “The 2017 Fiscal Year exhibited
an unusual and unintuitive result for both replacement power purchases (which
are a part of the 4h10C calculation) and forgone revenues. According to
Bonneville, one of the reasons these ‘cost of fish operations’ were lower in
2017 can be attributed to the modeled reservoir operations in the previous year
as well as an unusual runoff. Bonneville’s calculations show that operations
for fish pushed some generation into months with higher power prices, and the
value of that generation more than offset the fact that Bonneville lost
approximately 210 average megawatts of generation due to operations for fish in
The $450.4 million does not include the $65.6
million BPA borrowed from the U.S. Treasury in 2017. That includes $5.4 million
for program-related (capital) projects, $1.4 million for software development
costs, and the $58.9 million appropriated by Congress for associated federal
projects as part of the Columbia River Fish Mitigation Program. The costs are
all repaid by BPA, so including them in the total F&W costs would double
count some investments.
The total also does not reflect a credit of
$53.7 million from the federal Treasury related to fish and wildlife costs in
2017 that Bonneville is required to take under Section 4(h)(10)(C) of the
Northwest Power Act. The annual credit comprises the obligations of other
federal agencies for dam purposes other than hydropower, which Bonneville pays
in full. The credit is applied to Bonneville’s federal Treasury debt.
Subtracting the credit reduces the total FY2017 fish and wildlife costs to
Fish and wildlife costs account for a
significant portion of the rate Bonneville charges its wholesale power
customers, the report says. Approximately one third of Bonneville’s 2017-2019
wholesale rate of $35.57 per megawatt hour is estimated to be associated with
its fish and wildlife program. This includes the estimate of forgone revenue.
The Council is careful to say that BPA
provided the cost numbers for FY2017 and that the Council has not independently
verified the numbers.
In addition, looking forward to FY2019 and
FY2020, the Council said it has found cost savings in its own budget of
$206,000 and $428,000 respectively. It did this recognizing BPA’s difficult
financial situation, it said in a blog by the Council’s John Harrison (https://www.nwcouncil.org/news/blog/council-draft-budget-released-for-public-comment-may-2018/).
The current realities of the West Coast
electricity system with inexpensive natural gas, an abundance of renewable
power, low prices will challenge BPA in the future, perhaps as never before,
the agency’s administrator, Elliott Mainzer, told the Council in March. The
proliferation of surplus renewable energy, particularly solar power from
California, has pushed West Coast wholesale market prices down, often to below
the cost of power from Bonneville and many other power wholesalers in the
“The Bonneville budget over the next 10 years
is somewhat precarious,” said Tom Karier, Eastern Washington Council member, at
the Council’s May meeting in Boise. “We’ve heard there could be cuts of up to
10 percent in the fish and wildlife budget. So we should think about how we
might meet those cuts. If our budget was cut by 5 percent, for example, how
would we deal with that?”
Council Chair Jim Yost of Idaho said Council
members should examine their own state office budgets “and determine whether we
can do more or do better,” adding “it’s something we need to look at.”
The Council’s FY2019 revised budget is
$11,708,000 and the proposed FY2020 budget is $11,725,000. Both are below the
maximum set for the Council in the Northwest Power Act. In past years the
Council and Bonneville staff have entered into multi-year budget agreements in
order to better plan and stabilize funding levels needed to perform the
Council’s work. In January 2017, the Council entered into a three-year budget
agreement with Bonneville for FY2017-2019, Harrison’s blog says. See the FY2019
revised budget at https://www.nwcouncil.org/reports/financial-reports/2017-3/
The Council will take comments on the Fish and
Wildlife costs report through June 29. Email comments to email@example.com