Hurdles remain for dams

Those involved with a dam removal agreement admit there are hurdles to overcome before dam demolition begins, but say they are optimistic.

Securing a $250 million bond from California voters and a dam removal expert who would assume full liability for the project are just two potential stumbling blocks. A final agreement from the parties must be signed by June 30, 2009, for dam removal efforts to continue.

Federal, state and PacifiCorp officials signed the nonbinding agreement Thursday that would remove the power company’s four hydroelectric dams on the Klamath River beginning in the year 2020 at a cost of up to $450 million.

It would be paid for with a $250 million California bond and with up to $200 million in surcharges to PacifiCorp’s ratepayers in Oregon and California.

So, what stands between an agreement and actual dam removal?

Hurdle 1: The loan from the California state government would be a general obligation bond, requiring statewide voter approval.

The state is already facing financial strain with a gap of billions of dollars in the current fiscal year budget. Gov. Arnold Schwarzenegger is considering tax increases and budget cuts as a solution.

But Sandy Cooney, spokesman for the California Resources Agency, said it’s incorrect to consider the bond a risk or uncertainty.

There is no timetable for putting a bond on the ballot. Cooney pointed to the need for a final dam removal agreement and studies supporting that course of action before any steps are taken in that direction.

“No one’s even thinking about (the bond),” he said.

Hurdle 2: State legislation also would be needed to authorize surcharges on PacifiCorp’s Oregon and California customers.

Public utility commissions in both states would have to implement the surcharges, expected to cost the average ratepayer about $1.40 per month.

The nonbinding agreement says the surcharges would be collected over the estimated lives of the four dams.

There are about 500,000 PacifiCorp customers in Oregon and about 45,000 in California.

Jillian Schoene, spokeswoman for Gov. Ted Kulongoski, said the governor would propose legislation in January to show the state’s support for a dam removal agreement and encourage the Public Utility Commission to authorize the surcharge for PacifiCorp’s customers.

Schoene said she expected there to be a debate about the agreement in the state Legislature.

It is in the best interest of PacifiCorp’s customers to have a decision quickly as it would spread the cost of the $200 million needed over a longer period of time, she said.

Cooney said a timetable for California’s public utilities commission to consider rate increases isn’t available yet.

Hurdle 3: Federal legislation would be needed to pay for the studies to determine feasibility of dam removal and provide PacifiCorp immunity from any liabilities dam removal could incur.

Officials said Thursday environmental and economic impacts as well as a cost-benefit analysis regarding dam removal are a few of the studies that would be needed.

Only if those studies support dam removal as the best option would the decommissioning of the dams proceed.

Michael Bogert, counselor to Dirk Kempthorne, U.S. Secretary of the Interior, said those studies would cost an estimated $12 million.

Bogert said the federal officials are optimistic they can pass legislation paying for the studies and liability. That optimism is based on the powerful efforts and relationships of stakeholders who will continue to solicit support from Capitol Hill.

“I don’t have any reason to believe these relationships will falter,” he said.

Hurdle 4: Federal officials must find a nonfederal agency or company to remove the dams and assume all risk of doing so.

Details of what that entity will be and what its full role would be hasn’t been determined.

The nonbinding agreement calls for it to also be a party to the final dam removal agreement and approved by the states of California and Oregon.

Bogert said that while the federal government supports the agreement, it and the states wanted a level of certainty leading to the stipulation that they, along with PacifiCorp, not be held liable.

And if the studies conducted in the coming years support dam removal and have credibility, there should not be a problem finding an agency or company willing to take on the responsibility, Bogert said.