Huge power rate hike hits Klamath farms

Issue Date: April 26, 2006

By Christine Souza, Assistant Editor, California Farm Bureau Federation---Ag Alert

Klamath Water Project farmers and ranchers have experienced many challenges over the years, most notably the federal government's shut-off of water to their farms and ranches in 2001. Now they face another major challenge.

Farmers in the region are being hit with a ten-fold increase in the price they pay for electrical power following the expiration of a 50-year-old contract between the U.S. Department of the Interior and PacifiCorp, the utility company that provides power to the region.

"If they can do it here, they can do it anywhere," said Scott Seus, a diversified farmer in Tulelake who chairs the power committee for the Klamath Water Users Association. "What is happening here is a significant measurement tool of what could possibly happen in the rest of California."

For the past 50 years, irrigators had received a greatly discounted rate of half-a-cent per kilowatt hour in exchange for providing low-cost renewable energy (hydropower) by pumping water to the Klamath River through the Klamath Water Project.

"The contract signed 50 years ago was a credit-for-value transaction, which means we provide water to the Klamath River via the project operations," said Seus.

"We store the water behind Link River Dam, apply the water in a manner that makes our project one of the most efficient in the country, and any water that is not consumed by plants is returned to the Klamath River. This maintains a consistent flow that otherwise would not be the case in natural conditions.

"We have improved efficiency methods to ensure that there is more water for the river. PacifiCorp, as well as the other ratepayers within PacifiCorp's area, are the beneficiaries of that relationship because it provides low-cost, clean, renewable energy."

The irrigators' 1956 contract with PacifiCorp expired on April 16, therefore the power company no longer has a basis to continue providing fixed rates to Project customers.

As a result, Klamath Project irrigators negotiated a four-year transition plan with PacifiCorp that was adopted on April 13 by the California Public Utilities Commission.

Most Project customers experienced an immediate 333 percent rate increase to $0.26/kWh from $0.06/kWh that went into effect on April 17. Effective April 17, 2007, the fixed rate will be increased to $0.39/kWh plus a further adjustment by the same overall percentage impact when rates become effective from this proceeding, capped at $0.40/kWh. On or about Jan. 1, 2008 this rate will be further adjusted. By 2010, Project customers will move to full applicable tariff rates.

"This plan allows us to phase in the increased cost over four years at a reasonable rate so we can make adjustments to our irrigation practices," Seus said. "It also allows us the opportunity to arrive at something other than tariff to give us credit for the water that benefits PacifiCorp's hydroelectric project on the Klamath River."

The next phase of the negotiations for the rate case between Klamath Water Users and PacifiCorp begins in June. At that time, Klamath Water Project users will seek credit for water stored and water pumped to the Klamath River that benefits PacifiCorp's hydroelectric project.

"We have a 90-year relationship with PacifiCorp where we were given credit for value of the water we provide to the hydroelectric project. We anticipate that will continue in some form," Seus said.

"We paid for the infrastructure in this Basin. If it were not for the Link River Dam and the infrastructure of this Project that we paid for, there wouldn't be a consistent flow and there wouldn't be certainty for PacifiCorp or for salmon. It is because of Klamath Basin farmers and the Bureau of Reclamation that there are flows throughout the year that benefit both salmon and PacifiCorp and their ratepayers."

The transition plan recently adopted by the CPUC will raise irrigators' energy costs approximately 1,300 percent over the next four years. However, Seus said the actual cost to irrigators is much higher since their district costs are for pumping water to the farms and moving it through the Project on top of their own personal pumping needs.

"To the on-the-ground irrigator, the final price will be roughly 2,600 percent of what we are currently paying. We'll be looking at about $160 per acre for row crops," Seus said. "It is going to be a hard hit on agriculture. A lot of budgets cannot handle the kind of increase. There is just not enough gravy in agriculture to be able to support 20 cents per kilowatt hour."

Tulelake rancher Mike Byrne said he plans to do everything he can to minimize the additional energy costs. Byrne, whose family has been farming in Tulelake for the past 150 years, has made improvements at his ranch to increase water efficiency and save money.

"I'm having all of my pumps tested for efficiency," Byrne said. "I've already had a couple of my turbines redone to be more efficient and we are putting in pipes instead of open ditches to minimize the amount of water that we have to pump. Plus we are changing to low pressure on our pivots so we don't need as much horsepower."

With the Klamath Wildlife Refuge next in line for use of Project water, there is a concern that the increase in power rates will mean less water for wildlife. The Klamath Basin is home to more than 400 species of wildlife, including 250 waterfowl species.

"We are concerned over how the increase in power rates will affect wildlife," said Ron Cole, manager of the Klamath Basin Wildlife Refuge. "We are at this point, solely dependent upon how much water the farmers are using. It remains to be seen how this will play out, but we think less water will be coming through the hill, so that is a concern of ours."

According to Seus, Pumping Plant D, a Bureau of Reclamation facility operated by the Tulelake Irrigation District that puts water into the Lower Klamath Wildlife Refuge, puts an average of 89,000 acre-feet back into the Klamath River that otherwise would be trapped in a lower basin in Tulelake and never reach the river.

"The water provides for the habitat of all of the animals in the Lower Klamath National Wildlife Refuge, so it is a much more complicated situation than just saying, 'if we drive up their electric rates, they will stop irrigating and that will mean more water for salmon.' That is not the case," Seus said. "Driving up electric rates will not produce more water for the river; it will provide less. The public has made it clear that they value wildlife and conservation and green corridors, and without irrigated agriculture, that will cease to exist.

"It is just another battle over water, that's what it comes down to," he said.

(Christine Souza is a reporter for Ag Alert. She may be contacted at csouza@cfbf.com.)

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