[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
H.R. 4857, TO BETTER INFORM CONSUMERS REGARDING COSTS ASSOCIATED WITH 
COMPLIANCE FOR PROTECTING ENDANGERED AND THREATENED SPECIES UNDER THE 
                    ENDANGERED SPECIES ACT OF 1973.

=======================================================================

                          LEGISLATIVE HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                        Thursday, March 16, 2006

                               __________

                           Serial No. 109-44

                               __________

           Printed for the use of the Committee on Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
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         Committee address: http://resourcescommittee.house.gov

                                 ______

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                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Eni F.H. Faleomavaega, American 
Elton Gallegly, California               Samoa
John J. Duncan, Jr., Tennessee       Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming               Donna M. Christensen, Virgin 
  Vice Chair                             Islands
George P. Radanovich, California     Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Grace F. Napolitano, California
    Carolina                         Tom Udall, New Mexico
Chris Cannon, Utah                   Raul M. Grijalva, Arizona
John E. Peterson, Pennsylvania       Madeleine Z. Bordallo, Guam
Jim Gibbons, Nevada                  Jim Costa, California
Greg Walden, Oregon                  Charlie Melancon, Louisiana
Thomas G. Tancredo, Colorado         Dan Boren, Oklahoma
J.D. Hayworth, Arizona               George Miller, California
Jeff Flake, Arizona                  Edward J. Markey, Massachusetts
Rick Renzi, Arizona                  Peter A. DeFazio, Oregon
Stevan Pearce, New Mexico            Jay Inslee, Washington
Henry Brown, Jr., South Carolina     Mark Udall, Colorado
Thelma Drake, Virginia               Dennis Cardoza, California
Luis G. Fortuno, Puerto Rico         Stephanie Herseth, South Dakota
Cathy McMorris, Washington
Bobby Jindal, Louisiana
Louie Gohmert, Texas
Marilyn N. Musgrave, Colorado
Vacancy

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Thursday, March 16, 2006.........................     1

Statement of Members:
    Grijalva, Hon. Raul M., a Representative in Congress from the 
      State of Arizona, Prepared statement of....................    36
    McMorris, Hon. Cathy, a Representative in Congress from the 
      State of Washington........................................     1
        Prepared statement of....................................     3
    Otter, Hon. C.L. ``Butch,'' a Representative in Congress from 
      the State of Idaho.........................................    42
        Prepared statement of....................................    44

Statement of Witnesses:
    Corwin, R. Scott, Vice President of Marketing and Public 
      Affairs, Pacific Northwest Generating Cooperative, 
      Portland, Oregon...........................................    30
        Prepared statement of....................................    32
    Delwiche, Gregory K., Vice President for Environment, Fish 
      and Wildlife, Bonneville Power Administration, Portland, 
      Oregon.....................................................    13
        Prepared statement of....................................    15
    Hacskaylo, Michael S., Administrator, Western Area Power 
      Administration, Lakewood, Colorado.........................    20
        Prepared statement of....................................    20
    James, Leslie, Executive Director, Colorado River Energy 
      Distributors Association, Tempe, Arizona...................     8
        Prepared statement of....................................     9
    Mikkelsen, Kris, Chief Executive Officer, Inland Power and 
      Light, Spokane, Washington.................................     4
        Prepared statement of....................................     5
    Patton, Sara, Executive Director, NW Energy Coalition, 
      Seattle, Washington........................................    22
        Prepared statement of....................................    23


LEGISLATIVE HEARING ON H.R. 4857, TO BETTER INFORM CONSUMERS REGARDING 
    COSTS ASSOCIATED WITH COMPLIANCE FOR PROTECTING ENDANGERED AND 
      THREATENED SPECIES UNDER THE ENDANGERED SPECIES ACT OF 1973.

                              ----------                              


                        Thursday, March 16, 2006

                     U.S. House of Representatives

                         Committee on Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 9:00 a.m. in Room 
1324, Longworth House Office Building, Hon. Cathy McMorris 
[Chairwoman of the Committee] presiding.
    Present: Representatives Calvert, McMorris, Walden, 
Gibbons, Radanovich, Grijalva, Christensen, Otter, Fortuno, 
Pearce, Inslee.
    Mr. Calvert [presiding]. Good morning. I ask unanimous 
consent that the remainder of the hearing be chaired by the 
gentlewoman from Washington, Ms. McMorris. Hearing no 
objection, so ordered. Good morning and good-bye.

   STATEMENT OF THE HON. CATHY McMORRIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Ms. McMorris [presiding]. Good morning, everyone. Starting 
at 10:30 this morning, the Subcommittee on Energy and Mineral 
Resources will be holding a hearing in this room. We also have 
a series of 10 votes on the Floor starting at that time. 
Therefore, unlike the Rolling Stones song, time is not on our 
side.
    In order to ensure adequate time for the witness testimony 
and Member questions, the Chair will use her discretion, under 
Committee Rule 4[g], and limit opening statements to the 
Chairwoman and Ranking Member. Any other Members with opening 
statements may include them in the hearing record, and I ask 
unanimous consent to do so. Without objection, so ordered. We 
do expect more Members to arrive shortly.
    Today's hearing represents an important step in giving 
electricity consumers the right to know what they are paying 
for. It is about disclosure and transparency. As many of the 
citizens in eastern Washington know firsthand, the promise of 
low-cost hydropower is key to our economy, whether it is impact 
on agriculture, manufacturing, technology, or what is left of 
our aluminum industry, yet over the years we have seen 
significant increases in electricity cost for many reasons, 
including the California energy crisis and drought. Even today, 
the region's congressional delegation has banded together to 
fight the Administration's back-door proposal to increase BPA 
rates.
    The Endangered Species Act, or should I add, a Federal 
judge's ruling of the Act, has also increased Bonneville's 
costs. Under law, the agency passes all of these costs to its 
wholesale customers, including our neighborhood public utility 
districts and rural co-ops. These entities are then forced to 
pass these costs down to their 10 million retail customers. 
This is also occurring in other regions served by power 
marketing administrations.
    No one can deny that the Endangered Species Act has 
impacted recent Bonneville rates, yet many consumers do not 
know how much they pay for these fish protections or whether 
they are paying for them at all. In a May 2005 poll, Northwest 
River Partners found that 70 percent of the respondents either 
did not know how much they paid for salmon recovery or believed 
that less than 5 percent of their monthly bills go to salmon 
recovery, yet in 2004, the ESA components of BPA's fish and 
wildlife program comprised approximately 23 percent of the 
agency's wholesale rates. Clearly, this disparity shows that 
there is a disconnect of what consumers know or have access to 
versus what is real.
    I commend the EPA for publishing the general ESA cost, but 
as a witness recently told the Committee, ``We can do better 
when it comes to electricity cost transparency.'' That is what 
this legislation does. The Endangered Species Compliance and 
Transparency Act requires the power marketing administrations 
to estimate and report the direct and indirect ESA costs to 
each wholesale power customer on a monthly billing basis.
    Whether or not you agree with how the Endangered Species 
Act is being implemented is not the point here. This bill 
simply gives customers the right to know how much of the 
Federal government's ESA costs are being passed on at the 
wholesale level. This will empower consumers so that they make 
an informed decision on these expenditures. Some may feel the 
costs are excessive, fair, or inadequate, but they cannot make 
the decision until we have the information.
    My staff has worked with the representatives of the Power 
Marketing Administration to ensure that this bill would not be 
an overburdensome mandate on the agencies. This bill is a 
direct result of other right-to-know bills that have been 
introduced in the past. The legislation is also based upon 
input by many customers who believe this transparency is 
needed.
    That is why we have customers here to testify on behalf of 
the bill. I would especially like to welcome Kris Mikkelsen, 
the CEO of Inland Power and Light in Spokane, Washington. Kris 
is not only a constituent, but she is a respected leader in the 
community, and we are fortunate to have her as well as the rest 
of the witnesses here today.
    In conclusion, our nation's forefathers rightly demanded 
that our government be accountable and open to its people. This 
bill embodies that notion. I look forward to hearing from 
today's witnesses and working with my colleagues on this much-
needed legislation.
    At this time, I would like to introduce our panel of 
witnesses. I just mentioned Kris Mikkelsen, CEO of Inland Power 
and Light, Spokane, Washington; Leslie James, Executive 
Director, Colorado River Energy Distributors Association, 
Tempe, Arizona; Greg Delwiche, Vice President for Environment, 
Fish and Wildlife, Bonneville Power Administration, Portland, 
Oregon; Michael Hacskaylo, Administrator--I should know this 
one--Western Area Power Administration, Lakewood, Colorado; 
Sara Patton, Executive Director, NW Energy Coalition, Seattle, 
Washington; Scott Corwin, Vice President for Marketing and 
Public Affairs, Pacific Northwest Generating Cooperative, 
Portland, Oregon.
    I ask unanimous consent that the gentleman from Idaho, Mr. 
Otter, may join us on the dais and participate in today's 
hearing. Hearing no objection, so ordered. I welcome our 
colleague from Idaho.
    All witness written statements will be submitted for the 
hearing record, so please use the timer lights to limit your 
oral comments to five minutes. I think we are ready. OK.
    Kris, if you would start, please.
    [The prepared statement of Ms. McMorris follows:]

Statement of The Honorable Cathy McMorris, a Representative in Congress 
                      from the State of Washington

    Today's hearing represents a major step in giving electricity 
consumers the right to know what they're paying for.
    As many of the citizens of Eastern Washington know firsthand, the 
promise of low-cost hydropower is key to our economy whether the impact 
on agriculture, manufacturing, technology, or what is left of our 
aluminum industry. Yet, over the years, we have seen significant 
increases in electricity costs for many reasons, including the 
California energy crisis and drought. Even today, the region's 
congressional delegation has banded together to fight the 
Administration's back-door proposal to increase BPA's rates.
    The Endangered Species Act--or should I add, a federal judge's 
reading of the Act--has also increased Bonneville's costs. Under law, 
the agency passes all of these costs to its wholesale customers, 
including our neighborhood public utility districts and rural 
cooperatives. These entities are then forced to pass these costs down 
to their 10 million retail customers. This is also occurring in regions 
served by other Power Marketing Administrations.
    No one can deny that the ESA has impacted recent Bonneville rates. 
Yet, many consumers don't know how much they pay for these fish 
protections or whether they're paying for them at all. In a May 2005 
poll, Northwest River Partners found that 70 percent of respondents 
either didn't know how much they paid for salmon recovery or believe 
that less than 5 percent of their monthly bills go to salmon recovery. 
Yet, in 2004, the ESA components of BPA's fish and wildlife program 
comprised approximately 23 percent of the agency's wholesale rates. 
Clearly, this disparity show there's a disconnect of what consumers 
know--or have access to--versus what's real. I commend BPA for 
publishing the general ESA costs, but as a witness recently told the 
Committee, ``we can do better'' when it comes to electricity cost 
transparency.
    That's what my legislation does. The Endangered Species Compliance 
and Transparency Act requires the Power Marketing Administrations to 
estimate and report the direct and indirect ESA costs to each wholesale 
power customer on a monthly billing basis. Whether or not you agree 
with how the ESA is being implemented is not the point here. This bill 
simply gives customers the right to know how much of the federal 
government's ESA costs are being passed on at the wholesale level. This 
will empower consumers so they can make an informed decision on these 
expenditures. Some may feel that the costs are excessive, fair, or 
inadequate but they can't make that decision until they have the 
information.
    My staff have worked with representatives of the Power Marketing 
Administrations to ensure that this bill would not be over-burdensome 
on these agencies. This bill is a direct result of other right-to-know 
bills that have been introduced in the past. The legislation is also 
based upon input by the many customers who believe this transparency is 
needed.
    That's why we have customers here today to testify on behalf of the 
bill. I would especially like to welcome Kris Mikkelsen, the CEO of 
Inland Power and Light in Spokane, Washington. Kris is not only a 
constituent, but she's a proven leader in her community. We're 
fortunate to have her and other witnesses here today.
    In conclusion, our Nation's forefathers rightly demanded that our 
government be accountable and open to its people. This bill embodies 
that notion. I look forward to hearing from today's witnesses and 
working with my colleagues on this much needed legislation.
                                 ______
                                 

 STATEMENT OF KRIS MIKKELSEN, CHIEF EXECUTIVE OFFICER, INLAND 
              POWER AND LIGHT, SPOKANE, WASHINGTON

    Ms. Mikkelsen. Good morning. I appreciate the opportunity 
to appear before you today representing Inland Power and Light 
and to share our views on the importance of having timely, 
accurate, and easy-to-use information about ESA compliance 
costs.
    My name is Kris Mikkelsen, and I am the CEO of Inland Power 
and Light, a cooperative utility that provides electricity to 
35,000 consumers in 13 counties in eastern Washington and 
northern Idaho. Inland is a full-requirements customer of the 
Bonneville Power Administration, and BPA costs make up more 
than half of our operating expenses. Inland is located 
primarily in the Fifth Congressional District served by 
Representative McMorris, and we greatly appreciate her ongoing 
support of the issues facing our consumers.
    Over the course of the last several years, I have regularly 
participated in a variety of meetings that have been focused on 
the examination of the Bonneville Power Administration's costs. 
What became apparent almost immediately, and continues to this 
day, is the widespread lack of understanding and outright 
misconceptions associated with the costs of BPA's fish and 
wildlife programs. It is not surprising that confusion exists. 
More than 350 different programs are managed by a wide variety 
of different parties. Undoubtedly, the combined programs 
represent the most far-reaching and expensive environmental 
undertaking in U.S. history. Over just the last 10 years, costs 
for the fish program have totaled over $5 billion as expenses 
have continually ramped upward and become increasingly 
volatile.
    Eventually, all of these costs end up in the monthly 
electric bills of the ratepayers of 125 Northwest utilities. 
Today, costs for fish measures are the single largest component 
of BPA's costs and make up approximately 30 percent of the 
agency's total cost of producing electricity, and very few 
people in the Northwest understand that.
    One of the other things that I developed a deeper 
appreciation for during the Portland meetings is the constant 
push and pull that the agency deals with as the various parties 
in the Northwest advocate for their interests and agendas. 
Bonneville serves many masters, and there will probably always 
be differing opinions between the utilities, tribes, the 
environmental community, and a variety of other special 
interests. Providing clear direction to the agency about their 
role in reporting ESA costs would be beneficial to the region, 
and whatever a person's views, the public good will be best 
served by open and transparent disclosure of the facts.
    Several years ago, our utility decided that it was 
important for Inland Power and Light customers to have a better 
understanding of the impact of fish and wildlife programs and 
the role they play in escalating energy prices. About this same 
time, our utility hired a retired, high-level, BPA manager on a 
part-time basis. One of his first assignments was to gather 
information that would allow us to prepare individualized 
customer bills showing the estimated cost of the BPA fish and 
wildlife programs.
    Some information about total program costs has become more 
readily available in the last several years. However, making 
these numbers meaningful for the average ratepayer is another 
story. It is nearly impossible for an Inland Power and Light 
consumer to understand what 600 or $700 million in BPA fish 
expenditures might mean in terms of their own electric bill, 
and we felt strongly that the people who were paying the bills 
had a right to know what it was costing them.
    Unraveling the numbers to get the data we needed to print 
information on our bills was a challenge. To make a long story 
short, it took many months, and it helped a lot that we had 
someone working on the project that was familiar with the 
agency. Bonneville was supportive, but one of the challenges 
was that BPA itself did not always account for the costs in a 
way that made them easy to identify or calculate what portion 
of the wholesale power rate paid by utilities like Inland is 
attributable to fish programs. We finally got sufficient data 
on an informal basis and began including estimated fish cost 
information on our monthly bills.
    Court-ordered actions continue to create a significant 
amount of volatility in BPA's wholesale rates, and utilities 
are left with having to pass on costs with increasingly short 
notice. From experience, I can tell you that ratepayers expect 
clear answers about rising bills, and it is critical that 
utilities have the information they need to adequately explain 
increases. I might add that the Fiscal Year 2007 Federal budget 
proposal for BPA surplus revenues has created the prospect of 
yet even more uncertainty.
    Having good numbers and easy access to ESA costs will go a 
long way in helping the region's utilities, regardless of their 
size or level of sophistication, to provide good information to 
their consumers.
    In closing, I would like to thank you for holding this 
hearing today and providing Inland Power and Light with the 
opportunity to express our views on this significant issue 
affecting our utility and the consumers we serve. Thank you.
    [The prepared statement of Ms. Mikkelsen follows:]

       Statement of Kris M. Mikkelsen, CEO, Inland Power & Light

    Chairman Pombo, Ranking Member Rahall, Representative McMorris and 
members of the House Committee on Resources, I appreciate the 
opportunity to appear before you today representing Inland Power & 
Light and to share our views on the importance of having timely, 
accurate and easy to use information about ESA compliance costs.
    My name is Kris Mikkelsen, and I am the CEO of Inland Power & 
Light, a cooperative utility that provides electricity to 35,000 
consumers in thirteen counties in eastern Washington and northern 
Idaho. Inland is a full requirements customer of the Bonneville Power 
Administration and spends approximately $20 million per year for power 
and transmission services. BPA related costs make up more than half of 
our total cost of doing business. Inland is located primarily in the 
5th congressional district served by Representative McMorris and we 
appreciate her ongoing support of the issues facing our consumers.
    Over the course of the last several years, I have regularly 
participated in a variety of meetings that have been focused on the 
examination of the Bonneville Power Administration's costs. The 
meetings have had a series of different names including, Power Function 
Review, Regional Dialogue, Customer Collaborative, but the purpose has 
been much the same over time; to create a better understanding of 
Bonneville's programs and related costs, and through that 
understanding, to allow the region's various constituencies an 
opportunity to provide informed recommendations and comments about 
Bonneville's operations.
    What became apparent almost immediately, and continues to this day, 
is the widespread lack of understanding and outright misconceptions 
associated with the costs of BPA's fish and wildlife programs. It's not 
surprising that confusion exists. More than 350 different programs are 
managed by a wide variety of different parties. Undoubtedly, the 
combined programs represent the most far reaching and expensive 
environmental undertaking in U.S. history. Over the last 10 years, 
costs for the fish program have totaled over $5 billion as expenses 
have continually ramped upward and become increasingly volatile.
    Eventually all of these costs end up in the monthly electric bills 
of the ratepayers of 125 Northwest utilities. Today, costs for fish 
measures are the single largest component of BPA's costs and make up 
approximately 30% of the Agency's total cost of producing electricity, 
and very few people in the Northwest understand that.
    One of the other things that I developed a deeper appreciation for 
during the Portland meetings is the constant push and pull that the 
Agency deals with as the various parties in the Northwest advocate for 
their interests and agendas. Bonneville serves many masters and there 
will probably always being differing opinions between the utilities, 
tribes, environmental community and a variety of other special 
interests. Providing clear direction to the agency about their role in 
reporting ESA costs would be beneficial to the region, and whatever a 
person's views, the public good will be best served by open and 
transparent disclosure of the facts.
    Several years ago, our utility decided that it was important for 
Inland Power & Light customers to have a fundamental understanding of 
the impact of fish and wildlife programs and the role they play in 
escalating energy prices. About this same time, our utility hired a 
retired high-level BPA manager on a part-time basis. One of his first 
assignments was to gather information that would allow us to prepare 
customer bills showing the estimated cost of the BPA's fish and 
wildlife programs, individualized for each customer. We had attempted 
to do this about a year earlier, but had not been successful.
    In the last couple of years, when the Northwest Power and 
Conservation Council started publishing a report on the cost of 
Bonneville's fish and wildlife programs, there has been some 
information about the total programs costs. However, making these 
numbers meaningful for the average rate payer is another story. It's 
nearly impossible for an Inland Power and Light consumer to understand 
what $600 or $700 million in BPA fish expenditures might mean in terms 
of their own electric bill. And we felt strongly that the people who 
were paying the bills had a right to know what it was costing them.
    Unraveling the numbers to get to the data we needed to print 
information on our bills was a challenge. To make a long story short, 
it took many months and it helped a lot that we had someone working on 
the project that was familiar with the Agency. Bonneville was 
supportive, but one of the challenges was that BPA itself didn't always 
account for the costs in way that made them easy to identify or 
calculate what portion of the wholesale power rate paid by utilities 
like Inland were attributable to fish programs. We finally got 
sufficient information on an informal basis and began including fish 
cost information on our monthly bills.
    Inland Power & Light has been very fortunate to have had a 
presubscription contract with BPA that has insulated us the last four 
plus years from the rising power costs most others in the region have 
experienced. However that contract ends this year, and we expect our 
cost of BPA wholesale power to increase by around 50%, but that is very 
much a moving target. The uncertainty around ESA costs has made it 
increasingly difficult to set rates.
    Court-ordered ESA actions continue to create a significant amount 
of volatility in BPA's wholesale rates, and utilities are left with 
having to pass on costs with increasingly short notice. From 
experience, I can tell you that ratepayers expect clear answers about 
rising bills and it is critical that utilities have the information 
they need to adequately explain increases. I might add that the FY 2007 
federal budget proposal for BPA surplus revenues has created the 
prospect of yet even more uncertainty.
    Having good numbers and easy access to ESA costs will go a long way 
in helping the region's utilities, regardless of their size, or level 
of sophistication, to provide good information to their consumers. Mr. 
Chairman, in closing, I would like to thank you for holding this 
hearing today and providing Inland Power & Light with the opportunity 
to express our views on this significant issue affecting our utility, 
and the consumers we serve.
                                 ______
                                 
    [An attachment to Ms. Mikkelsen's statement follows:]
    [GRAPHIC] [TIFF OMITTED] T6653.004
    
    Ms. McMorris. Thank you, Kris Mikkelsen.
    Now, I would like to recognize Leslie James for five 
minutes.

 STATEMENT OF LESLIE JAMES, EXECUTIVE DIRECTOR, COLORADO RIVER 
        ENERGY DISTRIBUTORS ASSOCIATION, TEMPE, ARIZONA

    Ms. James. Thank you, Madam Chairwoman and Members of the 
Committee. I am Leslie James, Executive Director of the 
Colorado River Energy Distributors Association [CREDA]. I am 
honored to have been asked to speak with you today regarding 
H.R. 4857 as it relates to the Federal Colorado River Storage 
Project [CRSP.] CREDA is a nonprofit organization representing 
consumer-owned electric systems that purchase Federal 
hydropower from this project. Established back in 1978, our 
members serve over 4 million consumers in six western states.
    Since 1992, CREDA has been a party to a collaborative work 
program process with the Federal agencies, Western Area Power 
Administration and the Bureau of Reclamation. This process has 
been a beneficial relationship and has provided transparency to 
customers of the agencies work program elements. H.R. 4857 is 
very consistent with that objective.
    The environmental costs incurred by Western and the Bureau 
of Reclamation in the CRSP are substantial, both in terms of 
direct program costs, as well as indirect costs, such as 
replacement power due to restricted generation. It is important 
that the customers who are paying the bill are apprised of an 
understand fully these costs. These costs should also include 
the cost of mitigation and reasonable and prudent alternative 
compliance. Cost transparency is a sound business practice, and 
CREDA supports passage of this legislation.
    CRSP customers have been ensuring repayment of the Federal 
investment for 35 years. They have all entered into long-term, 
cost-based contracts to ensure that all of the Federal 
investment plus interest, including generation, transmission, 
O&M, and environmental costs, are repaid. In addition, the CRSP 
customers are paying over 95 percent of the costs of the 
irrigation features of this project. There are no taxpayer 
subsidies to the project.
    Let me talk first about the largest generating feature in 
the CRSP, and that is the Glen Canyon Dam located near Page, 
Arizona. In 1996, after many years of study and about a $104 
million environmental impact statement, which was paid by power 
revenues, operations were changed at Glen Canyon Dam, and 
approximately one-third of the generating capacity has been 
lost.
    In 1991, the Department of the Interior estimated the 
annual cost of the foregone generation to be $44 million. That 
cost likely is much higher, though, given energy market 
conditions. To date, over $179 million has been spent on 
studies at Glen Canyon Dam and paid by CRSP power revenues.
    In 2001, due to the requirements of a 1994 Fish and 
Wildlife Service biological opinion, a low-flow experiment was 
undertaken during the summer months. The experiment included 
low, flat flows, which meant reduced generation during the 
high-energy months of the summer, and restricted the ability to 
follow load. The principal purpose of those flows was to gain 
information regarding the endangered humpback chub conditions. 
The low, flat flows and hydrology, along with the energy market 
crisis, had a severe impact on costs, requiring CRSP customers 
and Western to purchase replacement power. The cost incurred 
over those months was about $32 million. The cost of the 
experiment alone was over three and a half million dollars, 
also paid by CRSP power revenues.
    Since 2000, the expense from lost generation from Glen 
Canyon has exceeded $355 million, and the direct program costs 
of the adaptive management program have exceed $49 million, 
also paid by CRSP power revenues.
    Smaller generating features of the CRSP include the Flaming 
Gorge Dam on the Green River, which is a major tributary of the 
Colorado. Generation has been reduced from that facility due to 
a biological opinion of about 17 percent.
    The Aspinall Unit along the Gunnison River in Colorado is 
in the process of undergoing an EIS. We expect the EIS to last 
three to four years. Our concern there is the impact on 
generation out of that unit, as it is about the last peaking 
unit in the CRSP.
    In summary, we would like to reiterate our support for this 
legislation. With our work on the work program review process 
and program elements, this fits very well with that. It 
provides transparency, it provides information to the customers 
who are paying the bill, and we thank you for the opportunity 
of being here today.
    [The prepared statement of Ms. James follows:]

            Statement of Leslie James, Executive Director, 
         Colorado River Energy Distributors Association (CREDA)

    Madam Chairwoman, members of the Committee, I am Leslie James, 
Executive Director of the Colorado River Energy Distributors 
Association (CREDA). I am pleased to have been asked to talk with you 
today regarding H.R. 4857, the Endangered Species Compliance and 
Transparency Act of 2006.
    CREDA member utilities (contractors) have long-term, cost-based 
contracts with the Western Area Power Administration (WAPA), an agency 
within the Department of Energy, for purchase of federal hydropower 
generation of the Colorado River Storage Project (CRSP). My purpose 
today is to provide some background on the CRSP facilities, to describe 
environment-related impacts on the CRSP federal facilities, and to 
offer our support of H.R. 4857.
    CREDA is a non-profit organization representing consumer-owned 
electric systems that purchase federal hydropower generation of the 
CRSP. CREDA was established in 1978, and serves as the ``voice'' of 
CRSP contractors in dealing with resource availability and 
affordability issues. CREDA represents its members in working with the 
Bureau of Reclamation (Bureau), as the owner and operator of the CRSP, 
and WAPA, as the marketing agency of the CRSP. CREDA members are all 
non-profit organizations, serving over four million electric consumers 
in the six western states of Arizona, Colorado, Nevada, New Mexico, 
Utah and Wyoming. CREDA members purchase over 85% of the CRSP 
hydropower generation.
    Attached is a listing of current CREDA members. At the time CREDA 
was formed, the key issue for its members was the continuing increase 
in CRSP rates. CREDA members felt it would be more effective and 
efficient to have a single organizational ``voice'' for them on rate, 
federal legislative and environmental issues impacting the CRSP.
    CRSP contractors have been ensuring repayment of the federal 
investment for 35 years, by entering into long-term contracts to 
purchase the CRSP hydropower generation and by paying all of the 
federal investment in generation and transmission facilities (with 
interest), all power-related operation and maintenance costs, and 
associated environmental costs. In addition, the CRSP contractors are 
paying over 95% of the cost of the irrigation features of the CRSP--the 
costs that are determined to be beyond the irrigators' ``ability to 
pay''. In fact, in the current CRSP rate, 25% of the total annual 
revenue requirement is due to irrigation assistance!
    It is important to note that the CRSP rate includes costs other 
than those associated with generation of the hydropower. Specific 
examples of the environmental-related costs assessed to the CRSP are 
the program (i.e., ``direct'') costs of the Glen Canyon Adaptive 
Management Program (AMP) and the Upper Basin Endangered Fish Recovery 
Implementation Program (RIP). More detail on these costs and programs 
will be provided below.

I. H.R. 4857 AND THE CRSP
    The environment-related costs incurred by the Bureau and WAPA in 
the CRSP are significant. Those costs are borne almost exclusively by 
the power customers of the CRSP. By law, these customers are not-for-
profit entities; thus they have no option other than to pass those 
costs on to their consumers.
    H.R. 4857 provides a mechanism for the power customers to readily 
receive information regarding the direct and indirect costs associated 
with the federal agencies' compliance with the Endangered Species Act 
and other environmental requirements. These costs should also include 
those costs associated with mitigation and reasonable and prudent 
alternative compliance. Each power customer then has the ability to 
utilize that information in a manner that best fits its individual 
needs. It is our understanding that this information is readily 
available and can be provided at little or no incremental cost to the 
agencies. CREDA supports the additional transparency of these costs as 
a sound business practice.
    In 1992, CREDA, the Bureau and WAPA entered into a contractual 
arrangement that gives CREDA the ability to review agency work plans 
and, through a defined process, provide customer input and perspective 
to the agencies. This has been an invaluable partnership-type 
relationship and has encouraged transparency in agency cost reporting. 
H.R. 4857 is consistent with that objective; it provides more 
information to the customers who ultimately are responsible for 
``paying the bills''.

II. THE CRSP FACILITIES AND ENVIRONMENTAL IMPACTS
    The Colorado River Storage Project (CRSP) was authorized in the 
Colorado River Storage Project Act of 1956 (P.L. 485, 84th Cong., 70 
Stat. 50), as a multi-purpose federal project that provides flood 
control; water storage for irrigation, municipal and industrial 
purposes, in addition to the generation of electricity. This testimony 
will focus on the major generation features of the CRSP, although there 
are several irrigation projects included in the Project. The CRSP power 
features include five dams and associated generators, substations, and 
transmission lines.

GLEN CANYON DAM
    Glen Canyon Dam is located near Page, Arizona and is by far the 
largest of the CRSP projects. Glen Canyon Dam began operation in 1964. 
The water stored behind the dam is the key to full development by the 
Upper Colorado River Basin states of their Colorado River Compact share 
of Colorado River water. The Glen Canyon power plant consists of eight 
generators for a total of about 1300 MW, which is more than 76% of 
total CRSP generation. The ability of the Bureau to generate, and WAPA 
to market, the total generating capability of Glen Canyon Dam has been 
impacted over a period of many years, by various processes and laws. In 
1978 the Bureau began evaluating the possibility of upgrading the eight 
generating units at Glen Canyon. This was possible primarily due to 
design characteristics of the generators and improved insulating 
materials. This upgrade was completed, and the generation was increased 
from about 1000 MW to 1300 MW. To fully utilize the unit upgrades would 
require the maximum release of water from Glen Canyon to be increased 
from 31,500 cubic feet per second (cfs) to about 33,200 cfs. The Bureau 
also studied the possibility of adding new units on the outlet works to 
provide additional peaking capacity. The possibility of increasing 
maximum releases from Glen Canyon raised concerns with downstream 
users. After discussion with stakeholders, the Secretary of the 
Interior initiated the first phase of the Glen Canyon Environmental 
Studies.
    In 1982, the Bureau began Phase 1 of the Glen Canyon Environmental 
Studies. These studies were primarily to analyze the impacts of raising 
the maximum release from 31,500 cfs to 33,200 cfs on the transport of 
sediment downstream from the dam, recreation (including fishing and 
rafting), endangered species (including the humpback chub in the Lower 
Colorado River), and the riparian habitat along the river banks. The 
studies proceeded during the early 1980's and were concluded in 1987. 
The general conclusion of the Glen Canyon Environmental Studies Phase 1 
was that the dam had blocked much of the sediment coming down the 
Colorado River and therefore beaches were not being replenished with 
sand. However, the impact on power and water economics was not fully 
explored.
    After reviewing the Glen Canyon Environmental Studies Phase 1 and a 
review by the National Academy of Science, the Secretary of the 
Interior determined that the Glen Canyon Environmental Studies should 
be continued to address the economic impacts, particularly as they 
relate to power, and also to collect additional data to substantiate 
some of the conclusions in the Phase 1 report. The Glen Canyon 
Environmental Studies Phase 2 was initiated in 1989, which included a 
series of test flows to evaluate the impact of different operating 
conditions and to develop response curves for various conditions.
    In July 1989, the Secretary of the Interior announced the start of 
an environmental impact statement (EIS) on the operation of the Glen 
Canyon Dam. No specific Federal action was identified for study. 
Meetings were held during 1990 to seek input into alternatives that 
should be considered, and the Bureau determined the nine alternatives 
(including a ``no action'' alternative) to be studied. Meanwhile, in 
1992, the Grand Canyon Protection Act (GCPA) (106 Stat. 4672) was 
signed into law. Section 1804 of the Act required completion of the EIS 
within two years. The EIS was completed and the Record of Decision 
(ROD) signed in October 1996. The result was that Glen Canyon 
operations were changed to reflect a revised flow regime; approximately 
one-third of the generating capacity was lost (456 MW).
    The cost of the Glen Canyon EIS was approximately $104 million, and 
was funded by power revenues collected from the CRSP contractors. To 
date, over $179 million has been spent on Glen studies, and paid by 
CRSP power revenues. This figure does NOT include the nearly $10 
million per year spent for the Adaptive Management Program. The GCPA 
says that CRSP power revenues MAY be used to fund the Adaptive 
Management Program (emphasis supplied). It is not a mandate, but a 
permissive use of power revenues, which will be addressed in more 
detail below. In 1991, the Department of the Interior estimated the 
expense from lost generation due to the changes in Glen Canyon Dam 
operation to be $44.2 million annually (adjusted for inflation). Given 
what has occurred in the energy markets since that time, the cost is 
probably much higher. The cost of replacing that power is borne by the 
CRSP customers.
    In April of 2000, it was determined that due to hydrologic 
conditions and requirements of a 1994 USFWS biological opinion, a low 
flow summer experiment would be undertaken. The experiment included 
high spike flows in May and September, with low flat flows (8,000 cfs) 
all summer. The purpose was to gain information regarding endangered 
humpback chub conditions. The low, flat flows and hydrology, along with 
western energy market prices, had a severe impact on power generation, 
requiring CRSP customers and WAPA to purchase replacement power to meet 
their resource needs. The cost incurred by WAPA (and to be recovered 
from CRSP contractors) for this replacement power was $32 million, just 
for that summer. The cost of the experiment alone was over $3.5 
million, funded by CRSP power revenues. These figures do NOT include 
additional costs to CRSP contractors who had to purchase or supplement 
their CRSP resource with purchases from the energy market.

ASPINALL UNIT
    The Aspinall Unit includes three dams and generating plants along 
the Gunnison River near Gunnison, Colorado. Blue Mesa is the first dam 
on the river and has two units producing about 97 MW. Morrow Point is 
the second dam in the series and consists of two generators producing a 
total of 146 MW. Crystal is the final dam and has one 32 MW generator. 
Morrow Point and Crystal Reservoirs allow some regulation of the river 
flow so that releases from Crystal can be used to regulate downstream 
flows as necessary.
    Since the early 1990's as part of the Upper Colorado River 
Endangered Fish Recovery Implementation Program, or RIP, studies have 
been undertaken to determine fish needs in this region. In November 
2004, the Bureau held the first Cooperating Agency meeting, which they 
have opened to the public. One of CREDA's members, Platte River Power 
Authority (Colorado), is a cooperating agency in the process. It is 
anticipated this EIS process will take 3-4 years. CREDA's view is that, 
while maintaining authorized project purposes, the Bureau may operate 
the facilities to benefit fish and wildlife and recreation resources. 
Their obligation, however, is to avoid jeopardy to endangered species.

FLAMING GORGE DAM
    Flaming Gorge Dam is on the Green River, a major tributary of the 
Colorado River, and is located near Vernal, Utah. Flaming Gorge has 
three units producing about 152 MW of generation. In 1992, the USFWS 
issued a Biological Opinion on the operation of Flaming Gorge Dam. 
Approximately 26 MW have been lost to date due to changed operations to 
benefit endangered fish, estimated at approximately $2 million per 
year. The Record of Decision on the operation of Flaming Gorge Dam was 
signed in February 2006. The cost of the EIS was approximately $4.3 
million. Two CREDA members from Utah were ``cooperating agencies'' 
through this process. We expect the same level of operational expense 
to be incurred following issuance of the ROD.

III. THE ENVIRONMENTAL PROGRAMS IN THE CRSP
GLEN CANYON DAM ADAPTIVE MANAGEMENT PROGRAM
    CREDA participates on the Federal Advisory Committee charged with 
making recommendations to the Secretary of the Interior as to 
operations of Glen Canyon Dam pursuant to the Record of Decision and 
underlying laws. Funding for the program (Adaptive Management Program) 
is provided through CRSP power revenues. Proposed funding for this 
year's program is over $10 million. On October 27, 2000, President 
Clinton signed the FY 2001 Energy and Water Development Appropriations 
Act, which includes language (Section 204) capping the amount of CRSP 
power revenues that can be used for the Adaptive Management Program at 
$7,850,000, subject to inflation. Without this cap, the annual program 
costs would have continued to increase more rapidly, with power 
revenues being the primary funding source.
    Science findings over the past 12 years indicate that some of the 
premises on which the EIS/ROD were based may be in error and that the 
current flow restrictions may not be beneficial to downstream resources 
(primarily humpback chub and sediment). It is imperative that these 
science findings be incorporated into recommendations to the Secretary 
of the Interior to implement flow changes and management actions to 
benefit the downstream resources and to maximize power production. On 
February 15, 2006, ESA-related litigation was filed in Arizona District 
Court by the Center for Biological Diversity, Sierra Club, Living 
Rivers and Arizona Wildlife Federation against the Department of the 
Interior and the Bureau. This litigation could have program and cost 
implications for the Adaptive Management Program.
    CRSP contractors have paid, and continue to pay, the majority of 
costs at Glen Canyon, even while the dam's generating capacity has been 
depleted by about one-third, and there are significant operating 
constraints on the remaining available capability, as required by the 
1996 ROD. Just since 2000, the replacement power cost (i.e., 
``indirect'' cost) incurred by WAPA (and borne by CRSP power customers) 
totals $355 million. This amount does not include costs borne by each 
CRSP power customer to ``make up'' any additional resource not provided 
by WAPA. Also since 2000, the program costs (i.e., ``direct'' costs) 
incurred by WAPA total $49 million. These costs are significant and 
H.R. 4857 enhances the ability of the power customers to be aware of 
the environmental costs associated with these programs.

UPPER COLORADO RIVER ENDANGERED FISH RECOVERY IMPLEMENTATION PROGRAM 
        (RIP)
    The RIP was established through cooperative agreements among States 
and federal agencies in 1988 for a 15-year period to help recover four 
endangered fish in the Upper Colorado Basin. Power revenues currently 
fund about 60% of the base research / study program. Federal 
legislation was passed in October 2000, which authorized a $100 million 
capital improvements program. CREDA testified in support of this 
legislation in both House and Senate hearings. The legislation provides 
matching funds for the capital program so that, in the event State 
funding for the program ceases, power revenue funding also ceases.
    The legislation requires CRSP power revenue funding for monitoring 
and research of up to $6 million per year. In addition, the Upper Basin 
States and CRSP power customers each contributed $17 million toward 
capital features. The legislation recognized that changes in operation 
of Flaming Gorge and Aspinall generation as a result of Biological 
Opinions cost CRSP contractors $2 to $5 million per year.

IV. RECOMMENDATION
    CREDA encourages passage of H.R. 4857 as a sound business practice 
and an important measure, which will provide transparency and cost 
information to the customers of the federal Power Marketing 
Administrations.
    Thank you for the opportunity of appearing today.
                                 ______
                                 
   COLORADO RIVER ENERGY DISTRIBUTORS ASSOCIATION (CREDA) MEMBERSHIP
ARIZONA
    Arizona Municipal Power Users Association
    Arizona Power Authority
    Arizona Power Pooling Association
    Irrigation and Electrical Districts Association of Arizona, Inc.
    Navajo Tribal Utility Authority (also New Mexico, Utah)
    Salt River Project
COLORADO
    Colorado Springs Utilities
    Intermountain Rural Electric Association
    Platte River Power Authority
    Tri-State Generation & Transmission Cooperative
        (also Nebraska, Wyoming and New Mexico)
    Yampa Valley Electric Association, Inc.
NEVADA
    Colorado River Commission of Nevada
    Silver State Power Association
NEW MEXICO
    Farmington Electric Utility System
    Los Alamos County
    Tri-State Generation & Transmission Cooperative
    City of Truth or Consequences
UTAH
    City of Provo
    City of St. George
    Strawberry Electric
    Utah Associated Municipal Power Systems
    Utah Municipal Power Agency
WYOMING
    Wyoming Municipal Power Agency
                                 ______
                                 
    Ms. McMorris. Thank you, Ms. James.
    I would like to now recognize Greg Delwiche for five 
minutes.

  STATEMENT OF GREG DELWICHE, VICE PRESIDENT FOR ENVIRONMENT, 
 FISH AND WILDLIFE, BONNEVILLE POWER ADMINISTRATION, PORTLAND, 
                             OREGON

    Mr. Delwiche. Good morning. Madam Chair and Members of the 
Committee, I appreciate the opportunity to be here today to I 
had House Bill 4857, which, if enacted, would direct the 
administrators of the Federal Power Marketing Agencies to 
include on customers' monthly bills information about the costs 
the PMAs are incurring to comply with the Endanger Species Act.
    My name is Greg Delwiche, and I am Bonneville's Vice 
President for Environment, Fish and Wildlife. The Endangered 
Species Act compliance costs incurred by Bonneville include the 
power share debt service and operations and maintenance 
expenses for fish passage facilities at Federal dams on the 
Columbia and Snake Rivers, the economic effects of operational 
changes at those dams to benefit fish, such as flow and spill; 
and offsite mitigation costs for both hatcheries and habitat 
restoration.
    In the proposed legislation, we would consider ``direct 
costs'' to have three components, those being debt service, 
operations and maintenance expenses, and offsite mitigation 
costs, and indirect costs to include the economic effects of 
flow and spill changes. Many of Bonneville's fish and wildlife 
mitigation costs relate to actions undertaken to comply with 
both the Endangered Species Act, as well as the Pacific 
Northwest Electric Power Planning and Conservation Act of 1980, 
otherwise known as ``Northwest Power Act.'' Because of this, it 
would be our preference to report the combined total of these 
costs rather than reporting on the ESA-only compliance costs, 
which only partially represent our fish and wildlife recovery 
and mitigation efforts. For Fiscal Year 2007, Bonneville 
estimates that these combined costs will total approximately 
$700 million.
    In my testimony today, I will discuss two approaches that 
Bonneville could employ for providing ESA and Power Act-related 
cost information.
    The first approach, which is our preference, would be to 
provide ESA and Power Act-related costs on customer bills as a 
percentage of customers' overall power costs. We believe this 
approach would be consistent with the bill's requirement that 
monthly customer billings include estimates and reports of the 
customers' share of direct and indirect costs for fish and 
wildlife mitigation. The information necessary to report these 
costs as a percentage is much more readily available and 
efficiently calculated than that needed to specify these costs 
in dollars and cents for each type of service and specific 
product or products purchased by a customer. Therefore, this 
would be the approach that Bonneville would propose to follow 
if this bill was enacted into law.
    The alternative approach would be for us to develop a 
specific calculation in dollars and cents for each power 
customer. This, however, would be extremely difficult and 
complicated to put into practical because unlike a retail 
utility bill, many of our customers' bills our based on 
services provided under more than one contract, and each 
contract often involves more than one rate schedule and applies 
to a variety of services. Consequently, calculating these costs 
for each customer, given their unique and individual mix of 
products, would require development of some very complicated 
algorithms.
    So our preferred approach would be to clearly show 
customers what percentage of their bill is attributed to direct 
and indirect costs for fish and wildlife recovery. This level 
of information would be system specific but not customer 
specific and could be shown on the summary page of each 
customer's bill, immediately under the line showing their total 
bill. Application of the percentage to the customers' monthly 
bill would tell the customer its estimated cost responsibility 
that month for fish and wildlife mitigation actions.
    As noted earlier, the reported costs would include both 
direct and indirect costs, the latter of which, per Section 
2[c] of the proposed legislation, include foregone generation 
and replacement power costs. In economic terms, these costs are 
often called ``opportunity'' costs. While these costs are real 
costs, in that they directly impact Bonneville's rates, we 
recognize there is substantial debate in the region as to how 
water in the system should be allocated between competing uses.
    In conclusion, the Administration shares the interest in 
accountability that prompts this legislation. Power bills 
result from complicated calculations, and the public debate 
about what affects power rates often strays from hard numbers. 
This bill would take a step toward clarifying the matter.
    There are many ideas in the legislation that are feasible 
and many concepts that are in line with the overall 
Administration policy in terms of properly reflecting the costs 
of regulation to ratepayers. The Administration has no position 
on this legislation at this time, but there are many concepts 
in the legislation which the Administration would not oppose. 
The Administration is still studying the legislation as a whole 
and looks forward to participating in the broader debate as it 
unfolds. Thank you very much.
    [The prepared statement of Mr. Delwiche follows:]

Statement of Gregory K. Delwiche, Vice President, Environment, Fish and 
Wildlife, Bonneville Power Administration, United States Department of 
                                 Energy

    Madam Chairwoman and Members of the Committee, I appreciate the 
opportunity to be here today to discuss H.R. 4857 which would, if 
enacted, direct the Administrators of the Federal Power Marketing 
Administrations (PMA) to include on customers' monthly bills 
information about the costs the PMAs are incurring to comply with the 
Endangered Species Act (ESA).
    ESA compliance costs incurred by Bonneville Power Administration 
(Bonneville) include the power share of debt service and operations and 
maintenance expense for fish passage facilities at Federal Columbia and 
Snake River Dams; the economic effects of operational changes at those 
dams to benefit fish, such as flow and spill; and off-site mitigation 
costs for hatcheries and habitat restoration. These costs are far 
easier to report as a percentage of BPA's total costs than as a 
specific amount borne by each customer; therefore, it would be BPA's 
preference to display that percentage on each power bill.
    In the proposed legislation, we would consider ``direct costs'' to 
include debt service and operations and maintenance costs for fish 
facilities and off-site mitigation costs; and ``indirect costs'' to 
include the economic effects of flow and spill changes. Many of 
Bonneville's fish and wildlife mitigation costs relate to actions 
undertaken for both ESA compliance and for fish and wildlife mitigation 
under the Pacific Northwest Electric Power Planning and Conservation 
Act of 1980 (NWPA). Because of this, it would be Bonneville's 
preference to report the combined total of these costs, rather than 
reporting on the ESA-only compliance costs, which only partially 
represent the fish and wildlife mitigation recovery efforts funded by 
Bonneville. For Fiscal Year 2007, Bonneville estimates that these costs 
will total approximately $700 million, or about 30 percent of 
Bonneville's power rates.
    In my testimony today, I will discuss the approach Bonneville would 
intend to use for providing ESA-related cost information.

APPROACH FOR PROVIDING COST INFORMATION
    Bonneville believes that providing ESA- and NWPA-related cost 
information on customer bills as a percentage of Bonneville's overall 
power service costs would be consistent with the bill's requirement 
that monthly customer billings include estimates and reports of the 
customer's share of the direct and indirect costs incurred by the 
Administrator related to fish and wildlife mitigation. The information 
necessary to report these costs as a percentage is much more readily 
available and efficiently calculated than that needed to specify costs 
applicable to each type of service and specific product(s) purchased by 
a customer. It is therefore the approach that Bonneville proposes to 
follow if the bill is enacted into law.
    An alternative approach of developing a specific calculation of 
mitigation costs for each power customer would be extremely complicated 
to put into practice. This is because, unlike a retail utility bill, 
many of Bonneville's customer bills are based on services provided 
under more than one contract, and each contract often involves more 
than one rate schedule and applies to a variety of services. Each 
service is billed on the basis of what is called a ``billing 
determinant.'' A billing determinant is a measure of electric power 
usage at a customer's metered point of delivery used in the computation 
of a customer's bill for the particular service for which they are 
being charged. Consequently, calculating these costs for each customer, 
given their unique and individual mix of products, would require 
development of very complicated algorithms. We do not believe this is 
intended by the bill.
    Therefore, in order to clearly show customers what percentage of 
their bill is attributable to direct and indirect ESA-related costs, 
Bonneville would calculate the percentage of its overall power costs 
attributable to ESA-and NWPA-related activities and investments, and 
specify that percentage on the customer's bill. This level of 
information would be system-specific, but not customer-specific, and 
could be shown on the summary page on each customer's bill, immediately 
under the line showing the total (see Attachment 1). Application of the 
percentage to the customer's monthly bill would tell the customer its 
estimated cost responsibility that month for fish and wildlife 
mitigation actions. As noted earlier, the reported costs would include 
both direct and indirect costs, the latter of which, per Section 2(c) 
of the proposed legislation, include foregone generation and 
replacement power costs and associated transmission costs. In economic 
terms, such costs are often called ``opportunity'' costs. While these 
are real costs, in that they impact Bonneville rates, we recognize 
there is substantial debate as to how water in the system should be 
allocated between competing uses.

CONCLUSION
    In conclusion, the Administration shares the interest in 
accountability that prompts this legislation. Power bills result from 
complicated calculations and the public debate about what affects power 
rates often strays from hard numbers. H.R. 4857 would take a step 
toward clarifying the matter. There are many ideas in the legislation 
that are feasible and many concepts that are in line with the overall 
Administration policy in terms of properly reflecting the costs of 
regulation to the ratepayers. The Administration has no position on the 
legislation at this time, but there are many concepts in the 
legislation which the Administration would not oppose. The 
Administration is still studying the legislation as a whole and looks 
forward to participating in the broader debate as it unfolds.
    Bonneville believes that the approach of specifying Bonneville's 
ESA-and NWPA-related costs as a percentage of Bonneville's overall 
power service costs in monthly customer billings would be consistent 
with the bill's requirement that those billings include estimates and 
reports of the customer's share of the direct and indirect costs 
incurred by the Administrator related to ESA compliance. It is an 
approach that is readily and efficiently calculated, and it is the 
approach that Bonneville proposes to follow if the bill is enacted into 
law. Bonneville recommends the approach of reporting its combined ESA-
related and NWPA fish and wildlife mitigation costs assigned to power 
as a percentage of total power costs. While this would be an 
approximation of the actual amount of cost recovered from each 
individual customer, it would seem to be consistent with the intent 
behind this proposed legislation and the information would be more 
readily available and efficiently calculated.
    I thank the members of the Committee for the opportunity to offer 
this testimony and welcome any questions you may have at this time.

                              ATTACHMENT 1

       SAMPLE BONNEVILLE POWER ADMINISTRATION CUSTOMER POWER BILL

[GRAPHIC] [TIFF OMITTED] T6653.005

[GRAPHIC] [TIFF OMITTED] T6653.006

[GRAPHIC] [TIFF OMITTED] T6653.007

[GRAPHIC] [TIFF OMITTED] T6653.008

[GRAPHIC] [TIFF OMITTED] T6653.009

                                 ______
                                 
    Ms. McMorris. Thank you, Mr. Delwiche.
    At this time, I will recognize Michael Hacskaylo for five 
minutes.

STATEMENT OF MICHAEL S. HACSKAYLO, ADMINISTRATOR, WESTERN AREA 
            POWER ADMINISTRATION, LAKEWOOD, COLORADO

    Mr. Hacskaylo. Thank you very much, Madam Chair and Members 
of the Committee, for the opportunity to testify today on H.R. 
4857. I am Michael Hacskaylo, Administrator of the Western Area 
Power Administration, headquartered in Lakewood, Colorado.
    Western is one of four Federal Power Marketing Agencies 
under the Department of Energy. We market and transmit about 
10,000 megawatts of electricity generated from 56 federally 
owned, hydropower plants located primarily on the Missouri and 
Colorado Rivers and the Central Valley Project in California.
    In any given year, Western sells about 40 percent of the 
regional hydropower in our 1.3 million-square-mile service 
territory that spans 15 western and midwestern states. Western 
has allocated this Federal power to more than 750 customers, 
including cities and towns, rural electric cooperatives, public 
utility and irrigation districts, Native American tribes, and 
Federal and state agencies.
    The Western Area Power Administration and its generation 
partners, the Bureau of Reclamation and the Army Corps of 
Engineers, incur a variety of expenses related to complying 
with the Endangered Species Act. Some of these expenses are 
direct costs, such as personnel, operations and maintenance, 
and capital projects. Others are indirect costs, including 
replacement power purchases and lost sales revenues.
    Since Fiscal Year 2000, Western has incurred, on average, 
approximately $96 million per year in Endangered Species Act-
related expenses. Of this amount, approximately 85 percent goes 
to the Colorado River Storage Project because of the extensive 
remediation and compliance programs on that river.
    Western will be able to meet the requirements of this bill 
with no additional staff and with minimal effort in terms of 
providing more information on the bill to customers, and as Mr. 
Delwiche has testified, the Administration has taken no 
position on this legislation at this time, but there are many 
concepts in the legislation which the Administration would not 
oppose. The Administration is still studying the legislation as 
a whole and looks forward to participating in the broader 
debate as it unfolds.
    That concludes my testimony. Thank you.
    [The prepared statement of Mr. Hacskaylo follows:]

           Statement of Michael S. Hacskaylo, Administrator, 
 Western Area Power Administration, United States Department of Energy

    Thank you, Madam Chairwoman and other members for inviting me here 
today to speak on H.R. 4857 and more specifically about the costs 
Western and its power customers incur as part of our responsibilities 
to protect and recover plant and animal species covered under the 
Endangered Species Act of 1973 and Western's role in working with the 
Fish and Wildlife Service and the generating agencies to mitigate 
impacts to and restore habitat used by threatened and endangered 
species.
    Western is one of four Federal Power Marketing Agencies under the 
Department of Energy. We market and transmit about 10,000 megawatts of 
electricity generated from 56 Federally-owned hydropower plants located 
primarily on the Missouri and Colorado rivers and from the Central 
Valley Project in California. Western also markets the United States' 
entitlement from the coal-fired Navajo Generating Station near Page, 
Arizona. Western sells power from these 15 separately authorized and 
managed projects at cost-based rates and delivers it using our 17,000-
mile transmission system and the transmission systems of other 
utilities to consumers across the West.
    In any given year, Western sells about 40 percent of regional 
hydropower in our 1.3 million square mile service territory that spans 
15 western states. Western has allocated this Federal power to more 
than 750 customers including cities and towns, rural electric 
cooperatives, public utility and irrigation districts, Native American 
tribes and Federal and state agencies.
    The Western Area Power Administration, the Bureau of Reclamation, 
and the Army Corps of Engineers incur various expenses related to 
complying with the Endangered Species Act (ESA). Such expenses include 
direct expenditures for personnel, operations & maintenance, capital 
projects, and studies related to the preservation and restoration of 
threatened and endangered species. An example is the temperature 
control device at Shasta Dam. This device is used to regulate 
downstream water temperature for the benefit of salmon and steelhead in 
the Sacramento River.
    Western also incurs indirect costs attributable to the Endangered 
Species Act. Two types of indirect costs are: (1) replacement power 
purchases that Western buys to meet its contractual commitments when 
the Federal hydropower operations are constrained for ESA reasons, and 
(2) lost sales revenue when ESA operating constraints prevent the 
generation of hydropower when it is most valuable. For example, if on-
peak water releases are limited for ESA reasons, hydropower that could 
have sold for a higher price during on-peak hours must, instead, be 
shifted to off-peak hours when power prices are lower, reducing the 
project's revenue.
    Since FY 2000, Western has incurred on average approximately $96 
million per year in ESA-related expenses. Western's ESA costs, and the 
generating agencies' ESA costs related to power generation, are repaid 
by Western's customers through their power rates, unless Congress 
directs that such costs be nonreimbursable. The Colorado River Storage 
Project (CRSP) makes up roughly 85 percent of that estimate. In the 
case of the CRSP, which operates using a revolving fund, 
nonreimbursable costs affect the cash flow of the revolving fund even 
though such costs are not included in customers' power rates. This 
feature is unique to the CRSP; for other projects ESA costs assigned to 
power are fully reimbursable.
    Since 1983, the CRSP Basin Fund has provided nearly $275 million of 
non-reimbursable funding for environmental programs and compliance 
activities including increased purchase power to meet our contractual 
obligations. Non-reimbursable costs are funded from CRSP revolving fund 
cash flow. Since 1983, CRSP has also spent approximately $46 million on 
reimbursable compliance activities. In addition, CRSP power customers 
bear the burden of additional power purchases for lost generation due 
to environmental activities.
    Not all of the generating agency ESA compliance costs included in 
Western's rates are related to the Bureau of Reclamation and the 
Colorado River. For example, efforts to recover the pallid sturgeon, 
the least tern and the piping plover on the Missouri River are related 
to Corps of Engineers generation. Costs for ESA efforts on the Missouri 
River are in transition with the implementation of a new Master River 
Operations Manual and implementation of an adaptive management program 
for recovery of the species. Costs are expected to increase in the 
future. The EIS is not yet final on the Platte River which is facing 
similar recovery efforts on the same species and will see increased ESA 
costs in the future.
    Costs related to wildlife habitat restoration, outside the scope of 
the ESA, may also be paid by Western's customers. For example, since 
the passage of the Central Valley Project Improvement Act in 1992, 
power beneficiaries have contributed over $120 million to environmental 
habitat improvement. These costs are not always included in Western's 
power rates; they may be paid through direct assessments to customers. 
In the case of the Central Valley Project Improvement Act, 
environmental funding is accomplished through a monthly restoration 
fund bill.
    Western also incurs ESA-related costs through the construction of 
transmission lines and related power delivery infrastructure. These 
costs might be an obligation of transmission customers, in which case 
they would not be fully recovered through bills to power customers.
    It is my understanding that H.R. 4857 would require only 
reimbursable costs included in the monthly billing to the customers. 
Even though an ESA line item on our power customer's bill would not 
report the total cost of ESA compliance, our annual report to the 
Committee on Resources of the House of Representatives and the 
Committee on Environment and Public Works of the Senate, would include 
an estimate of all costs as described above for each of Western's 
projects.
    In conclusion, the Administration shares the interest in 
accountability that prompts this legislation. Power bills result from 
complicated calculations and the public debate about what affects power 
rates often strays from hard numbers. H.R. 4857 would take a step 
toward clarifying the matter. There are many ideas in the legislation 
that are feasible and many concepts that are in line with the overall 
Administration policy in terms of properly reflecting the costs of 
regulation to the ratepayers. The Administration has no position on the 
legislation at this time, but there are many concepts in the 
legislation which the Administration would not oppose. The 
Administration is still studying the legislation as a whole and looks 
forward to participating in the broader debate as it unfolds.
    Thank you, Madam Chairwoman. I would be pleased to answer any 
questions that you or the members may have.
                                 ______
                                 
    Ms. McMorris. Thank you very much.
    Ms. Patton?

         STATEMENT OF SARA PATTON, EXECUTIVE DIRECTOR, 
            NW ENERGY COALITION, SEATTLE, WASHINGTON

    Ms. Patton. Thank you, Ms. Chairwoman and Members of the 
Committee. I appreciate the opportunity to be here. My name is 
Sara Patton. I am the Executive Director of the NW Energy 
Coalition. We are a coalition of more than 100 consumer, 
environmental, faith-based, and low-income groups, unions, 
clean energy businesses, and progressive utilities in the four 
Northwest states and British Columbia working together for a 
clean and affordable energy future. I am testifying today to 
address concerns about H.R. 4857, and my remarks will focus on 
the Bonneville Power Administration because that is our area of 
expertise and concern. I have already submitted some written 
comments, so I will be brief, and I will be happy to answer 
questions.
    For the groups that I represent, H.R. 4857 raises a number 
of concerns, but first I would like to emphasize that the 
environmental and consumer public interest groups 
enthusiastically support transparency in economic analyses. I 
would be surprised to find anybody who did not support 
transparency, but we definitely strongly support it, and we 
would support H.R. 4857 if it mandated a full and thorough 
accounting of the costs and benefits of Federal dam operations 
on fish, anglers and fishing communities, irrigators, 
recreation businesses, and other users of the river along with 
power consumers. Only by looking at the whole picture can in 
any particular cost category be put into perspective. H.R. 4857 
looks at only a small part of how the Columbia River System is 
shared and paid for.
    My next concern is that the bill is unnecessary in the 
Northwest. Information on fish and wildlife restoration costs 
is already readily available from BPA and the Northwest Power 
and Conservation Council, and utilities such as Inland Power 
and Light and others are free to inform their customers of this 
service, and many of them already do. Further, it must be noted 
that BPA's fish and wildlife restoration is required by a 
number of Federal laws and treaties dating back to 1855, so 
separating ESA costs is fairly difficult. H.R. 4857 proposes no 
way to separate them, and that may not be possible.
    Fourth, H.R. 4857 should not count the cost of foregone 
revenue as an ESA-compliance cost. Including foregone revenues 
as a cost implies that BPA can claim savings for violating 
Federal laws or that BPA owns the river. BPA does not own the 
river. It shares the river with all of the other users, 
including fish and wildlife. BPA is not entitled to all of the 
possible revenue it can squeeze out of the river; only its 
share.
    An analogy will help. Trucking companies must obey a number 
of safety regulations. These include providing seat belts and 
equipment at inspections. Equipment costs should be counted as 
a cost of compliance with the regulations. However, we do not 
count as a cost the foregone revenue that the company could 
have utilized if its drivers could drive over the speed limits 
or ignore weight limits. Trucking companies do not own the 
highways, and the cost of sharing them with other users is not 
revenue somehow owed to them.
    Similarly, the various uses and users of the river do not 
owe each other money; they are all simply sharing this great 
resource. In fact, when the Northwest Power and Conservation 
Council recently reported that irrigation water withdrawals 
account for about $250 million per year in foregone revenues, 
does that mean that BPA ratepayers are subsidizing farmers? Of 
course, not. Farmers and power users are sharing the river with 
recreation, flood control, navigation, and, of course, fish and 
wildlife. However, if Congress believes it is important to 
report such costs, then it should require a calculation of all 
of the costs of the Federal river system and report all of them 
on a consistent basis.
    Furthermore, true transparency will look at both costs and 
benefits. A real examination of ESA impacts must include the 
economic benefits to the region of salmon restoration in terms 
of jobs and revenue. This legislation would only identify costs 
and, therefore, would not give the public or utilities a clear 
and complete picture of Federal and regional investments in 
salmon recovery unless it includes the enormous benefits these 
expenditures provide. In fact, we believe that a truly 
transparent economic analysis would show that removal of the 
four lower Snake dams is the lowest-cost and most effective way 
to recover these salmon.
    Finally, if we accept foregone revenues for ESA compliance 
as a cost, BPA rates will still be more than 40 percent below 
market prices, and we do not think it is a good idea to 
jeopardize the low-cost hydropower the Northwest depends on by 
failing to meet our legal and stewardship responsibilities for 
God's creation.
    In conclusion, the NW Energy Coalition supports objective 
and transparent accounting of BPA's fish and wildlife-related 
costs, but H.R. 4857 introduces a number of concerns and 
difficult issues which need to be resolved before we could 
support it. Thank you.
    [The prepared statement of Ms. Patton follows:]

             Statement of Sara Patton, Executive Director, 
                          NW Energy Coalition

    The NW Energy Coalition is a coalition of more than one hundred 
consumer, environmental, faith-based and low-income groups, unions and 
progressive utilities from the four Northwest states and British 
Columbia, working toward a clean and affordable energy future. I am 
testifying today in opposition to H.R. 4857. Although H.R. 4857 applies 
equally to all Federal Power Marketing Agencies (PMAs), this testimony 
is focused mainly on the Bonneville Power Administration (BPA) because 
that is our area of expertise and concern. However, in most cases, we 
believe the intent of these comments is applicable to the other PMAs.
Summary
    The proposal in H.R. 4857 to require the Bonneville Power 
Administration (BPA) to report the costs of compliance with the 
Endangered Species Act (ESA) raises a number of concerns:
      Transparency of BPA's costs is a laudable goal, if there 
is full and honest accounting to inform the public of the whole story.
      This bill is unnecessary: the information is already 
readily available from BPA, and utilities are free to inform their 
customers if they wish.
      BPA's fish and wildlife funding is required by a number 
of federal laws and treaties; separating out ESA costs is difficult or 
impossible.
      Proposals to include foregone revenues in these costs 
imply that BPA can claim savings for violating federal laws, and that 
BPA owns the river.
      Meaningful economic transparency should address both 
costs and benefits.
      The definition of the firm customers' share of BPA's ESA 
costs can be interpreted in different ways, leading to starkly 
different conclusions. If not done correctly such accounting fosters 
more confusion than transparency.
      This issue is likely to focus national attention on the 
fact that BPA's rates are currently about 60 percent below market 
rates.
The NW Energy Coalition Supports Real Transparency
    Environmental and consumer public interest groups would 
enthusiastically support H.R. 4857 if it mandated honest accounting of 
the costs and benefits of federal dam operations on fish, anglers and 
fishing communities, irrigators, recreation businesses and other users 
of the river--along with power consumers. Only by looking at the whole 
picture can any particular cost category be put into perspective. H.R. 
4857 looks at only a small part of how the Columbia River system is 
shared and paid for. This issue will be addressed in detail later in 
this testimony.
H.R. 4857 is Unnecessary
    H.R. 4857 does not compel the production of any information that is 
not already available to the public, electricity utilities, or anyone 
else who seeks it. BPA currently provides information to the region 
regarding the costs of its fish and wildlife programs (including so-
called ``indirect costs''). \1\ Bonneville also provides a detailed 
walk through of all of its costs as part of its Power Function Review 
preparatory to its rate case. Any utility wishing to provide this 
information to its retail consumers may do so; some do this now. This 
bill is not needed and would not change current practice at all.
---------------------------------------------------------------------------
    \1\ See, e.g., Bonneville Power Administration, Financial Data for 
Fish and Wildlife Projects at http://www.efw.bpa.gov/Integrated--Fish--
and--Wildlife--Program/financialdata.aspx
---------------------------------------------------------------------------
Salmon Recovery Actions Meet a Myriad of Federal Responsibilities
    BPA's investments in rebuilding fish and wildlife populations are 
required by a number of federal laws and treaties, including the 
Endangered Species Act, the Northwest Power Act, the Fish and Wildlife 
Coordination Act, the Clean Water Act and United States treaties with 
Indian Tribes and Canada. It is not possible to categorize which of the 
costs are related solely to the ESA.
    Even without an ESA, Bonneville and the federal family have 
obligations to recover these valuable fish. H.R. 4857's mandate to 
isolate ESA costs is impossible, since most of the actions being taken 
for endangered and threatened fish and habitat overlap or are also 
required by these other laws and treaties.
    For example, The Pacific Northwest Electric Power Planning and 
Conservation Act (Northwest Power Act), Section 16 U.S.C. 
839b(h)(6)(E), requires the Northwest Power and Conservation Council 
(NPCC) to include measures in its Fish and Wildlife Program (Program) 
that:
    (i)  provide for improved survival of such fish at hydroelectric 
facilities located in the Columbia River system; and
    (ii)  provide flows of sufficient quality and quantity between such 
facilities To improve production, migration, and survival of such fish 
as necessary to meet sound biological objectives. (emphasis added)
    More generally, the Northwest Power Act requires the Administrator 
and other Federal agencies to exercise their responsibilities ``in a 
manner that provides equitable treatment for such fish and wildlife 
with the other purposes for which such system and facilities are 
managed and operated.'' (Section 16 U.S.C. 839b(h)(11)(A); emphasis 
added). BPA's obligation ``to adequately protect, mitigate, and enhance 
fish and wildlife...'' (ibid.) is not a secondary ``cost'' of the power 
system, it is a coequal purpose along with irrigation, navigation, 
recreation and flood control.
    Similarly, there are numerous treaty obligations to Native American 
Tribes that require BPA and the Federal agencies to restore and enhance 
their native fisheries. At the same time, the Federal Columbia River 
Power System (FCRPS) Biological Opinion requires specific flow and 
spill operations to ensure that the operation of the FCRPS does not 
jeopardize the continued existence of listed species under the ESA. \2\ 
It is evident that these various obligations overlap and cannot be 
separated into ESA and non-ESA obligations.
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    \2\ It is important to note that the flow targets in the Program 
and Biological Opinion are constrained by the current configuration of 
the hydroelectric system. Average spring flows in the Columbia before 
the dams were 450,000 cubic feet per second. The current target is 
200,000 cubic feet per second--less than half the historical average. 
Unfortunately, the federal agencies have not been successful in meeting 
the Columbia and Snake River flow targets 53 percent of the time 
between 1995 and 2005.
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Adding ``Indirect Costs'' is Improper and Obscures The Actual Monetary 
        Contribution BPA Makes to Salmon Recovery
    H.R. 4857 requires PMAs to include ``foregone generation and 
replacement power costs'' as indirect costs in their ESA-compliance 
calculations (Sec. 2 (c)). As explained below, it is false and highly 
misleading to include these items as ``costs.'' It also improperly 
distorts the actual monetary contribution BPA makes to salmon recovery. 
H.R. 4857 would set a dangerous precedent by codifying this type of 
accounting. BPA states that its combined net costs include more than 
$300 million for fish and wildlife related hydrosystem operations, 
which accounts for over 50% of BPA's total fish and wildlife 
``investments'' (if one assumes that such indirect costs can properly 
be deemed ``investments''). \3\ BPA counts the revenue foregone and the 
cost of replacement power from operating the FCRPS to meet the 
requirements of the Endangered Species Act, the Northwest Power Act, 
the Clean Water Act, and other laws and regulations as a part of these 
costs.
---------------------------------------------------------------------------
    \3\ See, for example the presentation from BPA's Power Function 
Review: http://www.bpa.gov/power/pl/review/meetings.shtml, slide 38, 
which estimates indirect costs averaging $356.9 million per year for 
the FY2007-09 period.
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Foregone Revenue
    ``Foregone revenue'' is the cost of foregone generation; that is, 
the money BPA speculates it could have made if it did not have to 
operate the river to assist salmon migration. It is the lost generation 
from water spilled over the dams plus the difference in prices BPA 
forecasts it might have received if it could shift timing of generation 
into higher priced periods rather than when salmon need a push out to 
sea. Considering as a ``cost'' the revenues or profits that a business 
or agency could have made if it had violated federal laws, regulations, 
or court orders is a curious accounting concept, to say the least.
    An example is illustrative. Trucking companies must obey a number 
of safety regulations. These include providing seat belts, equipment 
inspections and rest breaks for drivers. These are all proper costs of 
compliance with these regulations. However, we do not count as a cost 
\4\ or even ``indirect cost'' the foregone revenue that the company 
could have realized if it did not have to give its drivers rest breaks, 
or if those drivers could drive over the speed limits or ignore weight 
limits. On the contrary, it is understood that the trucking companies 
do not own the highways, and the ``cost'' of sharing it with other 
users is not revenue somehow owed to them.
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    \4\ No tax deduction is provided for these costs, for example.
---------------------------------------------------------------------------
    Given its practice of reporting foregone revenue for fish and 
wildlife protection, it is important to note that BPA does not report 
the foregone revenue associated with meeting other legal constraints on 
power generation such as providing irrigation water, flood control, 
maintaining minimum flow depths for river transportation, limiting 
rapid variations (``ramping''--which can damage streambeds and banks) 
in flow rates, or recreation. All of these other federally-mandated 
purposes limit the ability to generate electricity and reduce BPA's 
potential revenue. Hence, to be consistent, BPA would need to count 
them as ``costs'' as well.
    For example, the NPCC has calculated that the 14.4 million acre-
feet withdrawn for irrigation could generate an additional 625 average 
megawatts if the water remained in the river--about five percent of the 
total output of the BPA system. \5\ (For comparison, the same study 
estimated the impact of fish operations at 9% of the output of BPA's 
system.) Analysis by the NPCC calculated that at average market rates, 
the foregone revenue of this irrigation would be $250 million per year. 
\6\ At the market prices for the summer of 2005, \7\ the lost revenue 
associated with irrigation withdrawals was over $380 million. Neither 
BPA nor H.R. 4857 counts this ``cost.''
---------------------------------------------------------------------------
    \5\ ``Multiple Use Memorandum,'' NPCC, February 7, 2006, p.5 6
    \6\ Ibid.
    \7\ Averaging over $75/MWhr.
---------------------------------------------------------------------------
    All of this begs the important question of whose costs these are. 
Are irrigation foregone revenues a ``cost'' for BPA's ratepayers? Is a 
requirement to keep rivers flowing at minimum levels for navigation 
another ``cost''? If so, then one would conclude that the irrigators 
and barge and boat operators are being subsidized by Bonneville.
    This logic is absurd. Bonneville does not own the river, it shares 
the river with all the other uses, including fish and wildlife. BPA is 
not entitled to all of the possible revenue it can squeeze out of the 
river, only its share. NW Energy Coalition recommends that Sec. 2(c) be 
deleted from the bill. The various uses and users of the river do not 
owe each other money, they are all simply sharing in this great 
resource.
    However, if Congress believes it is important to report such costs, 
then it should require BPA to calculate the costs of each of the other 
purposes of the dams and report all of them on a consistent basis. 
After all, every use of the river, from navigation to flood control to 
irrigation, reduces BPA's revenues, and its ability to fund its 
obligations.
Foregone salmon
    We should also note, if the Committee wants to continue down the 
road of assigning indirect costs, that the NPCC found that 5 to 11 
million salmon lost each year (compared to the period prior to dam 
construction) were attributable to damage caused by the hydroelectric 
system. Based on this estimate, the Columbia River Indian tribes, 
anglers and fishing businesses have ``foregone'' 340 to 750 million 
salmon and steelhead since the dams were built.
    Salmon and steelhead are invaluable to tribal culture and 
religion--the tribes would not put a price on this loss. Non-tribal 
economists, on the other hand, would value the annual losses in the 
hundreds of millions of dollars.
Replacement Power Costs
    H.R. 4857 also requires that BPA include ``power purchases'' due to 
fish and wildlife operations in its estimate of indirect costs. These 
costs can vary dramatically depending on water availability, market 
energy prices, and load demand--none of which can be properly 
attributed to salmon recovery.
    This problem was made very clear in 2001 when BPA's power purchase 
costs alone exceeded $1 billion. \8\ But that was a year when the 
agency eliminated ``spill'' for salmon, so it would be fair to say that 
Bonneville's salmon restoration efforts were reduced because the impact 
of fish operations on generation was even less than in previous years. 
Instead, BPA counts that as a year when its indirect costs skyrocketed. 
It is bad public policy to pin power purchase costs that could arise 
for any number of non-salmon-related reasons on salmon recovery. In 
fact, the reason power purchase costs were so high that year had 
nothing to do with fish and everything to do with energy deregulation 
problems, BPA's failure to foresee or control its subscription process 
that resulted in having to serve about 3,000 MWs of unexpected load in 
a very short period of time, and a drought in the Columbia Basin. BPA's 
own studies estimate that its decision to serve more load than it had 
power to provide cost it $3.9 billion over the FY2002-06 period! \9\
---------------------------------------------------------------------------
    \8\ Bonneville Power Administration, Fact Sheet on Fish and 
Wildlife Investments (January 2006). Available at: http://
www.efw.bpa.gov/Integrated_Fish_and_Wildlife_Program/FWCosts primer.pdf 
(viewed on March 13, 2006).
    \9\ What led to the current BPA financial crisis? A BPA report to 
the region, April 2003, p. iii. ``The cost of augmenting the Federal 
Base System--including both power purchases and load reductions--makes 
up about three-fourths of the increase in costs over the last rate 
period. This increase in costs of $3.9 billion occurred because BPA 
assumed responsibility for serving about 3,300 average megawatts (aMW) 
of load beyond the firm generating capability of the Federal Base 
System.''
---------------------------------------------------------------------------
Costs Must be Balanced with Benefits
    Any meaningful effort to provide real transparency should include 
both the cost and the benefits of actions to recover salmon. H.R. 4857 
would require that only costs be reported, and therefore would fail to 
provide the public a complete picture. The economic benefits of salmon 
recovery efforts come in at least two forms: the economic benefit from 
increased fishing opportunities and the impact of actually implementing 
recovery measures.
Economic Impact of Implementing Salmon Recovery Measures
    BPA funds implementation of habitat improvements and other 
restoration measures through its ``Integrated Program.'' Most of these 
fish and wildlife activities are implemented in rural areas east of the 
Cascade Mountains (Figures 1). \10\
---------------------------------------------------------------------------
    \10\ APPENDIX 1: CBFWA Workgroup Analysis of Future Fish and 
Wildlife Budget Needs in Support of the BPA Rate Case for FY2007--
FY2009, April 25, 2005
---------------------------------------------------------------------------
    Figure 1 shows the geographic distribution of BPA average annual 
fish and wildlife spending from its Integrated Program budget for the 
Fiscal Years 2001 through 2004. These investments pay salaries and 
purchase materials creating additional jobs and economic activity. The 
effects of these investments over the next several years can be 
expected to ripple through tribal and rural economies, creating 
thousands of additional jobs and significant economic activity. If this 
work is implemented over the next ten years at the level recommended by 
state and tribal scientists, the annual funding would support more than 
5,000 jobs over the next ten years (assuming $40,000 per job). \11\
---------------------------------------------------------------------------
    \11\ Ibid, p.2.
    [GRAPHIC] [TIFF OMITTED] T6653.001
    

Economic Benefits of Commercial and Recreational Fishing Opportunities
    If fish and wildlife populations increase, the Pacific Northwest 
will experience increased spending by fishers, hunters, and 
recreationalists creating additional jobs and economic benefits. 
Increased fishing opportunities for the commercial fishing industry 
will also have a ripple effect on local coastal communities.
    To illustrate the economic benefit of increased fishing 
opportunities, one need not look further than 2001, when the region 
experienced better-than-average adult salmon returns due to improved 
ocean conditions. In that year, salmon runs increased sufficiently for 
Idaho to open a recreational fishing season on salmon. A report by 
credentialed independent economists examined the economic impact of the 
2001 salmon season and found that the increased fish opportunity was 
responsible for almost $90 million in angler expenditures. \12\ These 
expenditures were split evenly between the local river communities and 
the rest of the state. However, impacts were more significant in the 
smaller local economies. Angler expenditures in Riggins, Idaho (on the 
Salmon River) during the salmon fishing season stimulated 23 percent of 
the town's annual sales. \13\
---------------------------------------------------------------------------
    \12\ Ben Johnson Associates, Inc. The Economic Impact of the 2001 
Salmon Season in Idaho (Prepared for the Idaho Fish and Wildlife 
Foundation), April 2003.
    \13\ Id.
---------------------------------------------------------------------------
    Any presentation of economic costs must also provide the important 
benefits to local economies of investments in fish and wildlife while 
considering the costs of the actions.
BPA's Firm Customers' ``Share'' of Fish Costs is not Well-Defined.
    H.R. 4857 requires that PMAs report each firm power customer's 
``share'' of ESA compliance costs, but leaves the determination of what 
constitutes a share to the PMAs (in coordination with other Federal 
agencies). How shares are calculated, and what constitutes a firm 
customer, is left open in the legislation, but these issues are highly 
contentious. How shares are calculated can vary tremendously, depending 
on various assumptions. Statements we have seen in the press over the 
past year on the proportion of fish restoration costs in Bonneville's 
rates, for example, have ranged from less than 5% to 30%, using the 
same basic information!
    While this information is extremely important, we all know that 
statistics can be presented or ``spun'' in different ways depending on 
the desired outcome. It is important that this information be fair and 
objective.
    There are several reasons why this calculation is not 
straightforward and will most likely foster confusion rather than 
transparency. First, Bonneville cannot make a profit, being cost-based, 
so its total sales must equal its total costs. But that is in 
aggregate. To recover its costs, the agency sells to many different 
types of firm customers at different rates. Some of these rates are 
determined by BPA, some by the market. Some rates to firm customers are 
fixed for many years, while others can vary periodically. An important 
and large group of customers, the investor-owned utilities, receives 
monetary benefits linked to the price of preference power.
    This complicated web of arrangements can lead to confusion and 
misinterpretations of what, at first, seem easy questions. For example, 
BPA has stated that its power rates could go down 30% if it didn't have 
any fish costs. \14\ This was reported by the press and electricity 
utility representatives as a statement that 30% of electric bills go 
for fish costs. This deductive leap is incorrect and troubling for 
several reasons:
---------------------------------------------------------------------------
    \14\ Second Declaration of Paul, E. Norman, Sr. VP of BPA, in 
National Wildlife Fed'n, et al, v. NMFS, et al., p.6, Nov. 21, 2005,
---------------------------------------------------------------------------
    1.  All of BPA's sales help pay its fish costs, but many of BPA's 
firm customers' rates are fixed or set by the market. Therefore, if 
costs are reduced, only a subset of BPA's customers would get all the 
benefit of the reduction. How much those customers' rates would be 
reduced is not the same as how much of BPA's rates go to fish.
    2.  BPA was referring to its power rates only. But almost a quarter 
of BPA's budget is transmission, whose costs are recovered through a 
separate rate. Those rates were not included in the calculation, but 
all customers have to pay for transmission.
    3.  BPA was referring to its wholesale rate, but consumers pay 
retail bills. Retail bills contain all the other costs of delivering 
electricity, such as meter reading, distribution wires, billing, etc. 
Only about 50-60% of a homeowner's bill is due to the actual wholesale 
cost of power.
    4.  Finally most consumers in the region are served by utilities 
that buy only some of their power from BPA, if any. These consumers' 
bill-impacts would be proportionally less.
    The attached table shows that actual rate impacts are more like 3-
12% (Attachment A)
    The Congressional Research Service also looked at this question and 
calculated that on a per kilowatt-hour (kwhr) basis (assuming that each 
kwhr sale helps pay for fish equally--though one could argue that since 
some kwh sell for twice the price of others, a fairer calculation would 
be an equal contribution from each dollar of revenue,) BPA's fish costs 
are about 15-17% of BPA's total costs. \15\ But even this result is 
inflated, because the analysis failed to account for the fact that 
about 2,200 megawatts (MW) of power that BPA provides to investor-owned 
utility residential and small-farm customers is monetized instead of 
delivered as power. But those customers' monetary benefits are reduced 
or increased if fish costs are increased or decreased, as well, so they 
share in all of BPA's expenses. Adding them into the equation reduces 
the cost to closer to 12% on a per kwhr basis.
---------------------------------------------------------------------------
    \15\ Memorandum, April 29, 2005 from Pervaze Sheikh and Larry 
Parker to the House Committee on Resources. Endangered Species Costs 
for Power Marketing Agencies.
---------------------------------------------------------------------------
    This discussion is not meant to argue the ``correct'' number, but 
to emphasize how controversial and complicated this issue is--and how 
open to misinterpretation it will be.
There are less costly, and more effective ways to restore wild salmon 
        and steelhead.
    Public interest groups, fishing based businesses, taxpayer 
advocates and others support a full and honest accounting of BPA's 
fish-restoration costs. This is because we know that the public 
supports the goal of restoring wild salmon and steelhead to the 
Columbia Basin, but only if that effort is successful. That is why we 
believe that there is a better way: the removal of the four lower Snake 
River Dams; replacing their modest amount of power with energy 
efficiency and renewables; extending irrigation pumps to continue 
irrigation to the 13 or so affected farms; and refurbishing the rail 
and highway system to ensure farmers can economically ship their goods 
to market.
    As the true costs of the expensive and ineffective path we are 
currently on becomes clear, the region will realize that removing those 
four dams is a less-expensive option. Every day these dams continue to 
exist, the federal government is wasting money and holding back the 
quality of life for people in the region.
    The federal government can act responsibly by taking down these 
four dams. Eliminating them will be less costly than allowing them to 
exist, and will create a more reliable energy source in the Pacific 
Northwest that is paid for by people in the region. Taking down these 
dams will also reverse the decline of an important natural resource, 
Pacific salmon.
BPA Electricity Rates--Shining a Spotlight
    Bonneville's wholesale preference power rates are currently 59 
percent below the market rates that Bonneville has assumed for FY 2006 
in the current BPA rate case. On average, Bonneville would be 41 
percent below the lower market rates it projects during the rate 
period. (Figure 2) \16\
---------------------------------------------------------------------------
    \16\ Declaration of Roger Schiewe of BPA, in National Wildlife 
Fed'n, et al, v. NMFS, et al., spreadsheet entitled ``River Ops, 
Genesys'', November, 2005,
---------------------------------------------------------------------------
    These comparisons include all of the current fish and wildlife 
costs and impacts on BPA power operations. Even with those costs 
included, BPA power is significantly below market rates.
[GRAPHIC] [TIFF OMITTED] T6653.002

    While NW Energy Coalition supports full transparency, it is 
important to note that even with BPA's large fish obligations, BPA's 
rates are the envy of other regions. If BPA's customers want to avoid 
these fish costs, they are free to get their power elsewhere--at about 
twice the price! We are concerned that shining a spotlight on BPA's 
rates will only renew calls by some outside the region who believe our 
rates are heavily subsidized as it is.
Conclusion
    Although the NW Energy Coalition supports objective accounting of 
BPA's fish and wildlife-related costs, indirect costs are not 
appropriate to assign to one party in a shared system that is put to 
multiple uses. However, if Congress believes it is important to attempt 
to quantify these costs, it should insist that the impacts from other 
users such as irrigation and navigation are also accounted for. 
Unfortunately, H.R. 4857 introduces a number of difficult issues that 
need to be resolved before our Coalition could support it.
    Thank you for this opportunity to provide these comments.
    [GRAPHIC] [TIFF OMITTED] T6653.003
    
                                 ______
                                 
    Ms. McMorris. Thank you very much.
    Next, Mr. Corwin.

STATEMENT OF R. SCOTT CORWIN, VICE PRESIDENT FOR MARKETING AND 
   PUBLIC AFFAIRS, PACIFIC NORTHWEST GENERATING COOPERATIVE, 
                        PORTLAND, OREGON

    Mr. Corwin. Good morning. On behalf of PNGC Power, my name 
is Scott Corwin. I thank you for the opportunity to be here 
today.
    PNGC Power is a cooperative of 15 consumer-owned utilities 
in the Northwest. They have a population base of those 
utilities of about 300,000 customers, and these are utilities 
that banded together to meet their power and transmission 
needs. It is Bonneville's fourth largest customer.
    H.R. 4857 is a bill that is short and to the point, and so 
I will attempt to do the same with my testimony. PNGC Power 
supports H.R. 4857. We appreciate the initiative of 
Representative McMorris and the co-sponsors in raising the 
issue before us. We support the bill because it offers an 
opportunity for ratepayers to be better-informed consumers. 
Consumers often ask about the nature of costs in their rates, 
but they know little about the level of fish and wildlife costs 
affecting those rates.
    In fact, we were surprised at the results of some research 
just last year conducted. Most respondents did not know there 
were any costs in their rates related to fish and wildlife. Of 
course, in the case of BPA, there are significant costs. You 
heard something about that already. Thirty percent of the rates 
are charged to cover fish and wildlife.
    But we are not just focused on costs. What we want to see 
is real success, and attention to costs can actually lead to 
benefits for fish as well as ratepayers in the case of salmon 
recovery in the Northwest. There are good examples and bad 
examples of the focus on costs in the Northwest right now.
    A good example is the focus on costs of spill which loses 
generation off the hydropower system which led to the 
development of something called a ``removal spillway,'' where, 
in tests, these devices actually passed fish with a 98 percent 
survival rate using about one-fifth of the water that would 
otherwise be used in a normal spill operation. The Army Corps 
of Engineers is to be commended for that one example.
    On the negative side, the Army Corps of Engineers is 
currently proposing to spend $30 million on a feasibility study 
regarding the effects of different flow regimes for fish. We do 
not think that is likely to lead to any useful results for the 
region, but it is likely to lead to a large cost for 
ratepayers.
    Regardless of what you think about the costs of particular 
efforts or the level of spending in general, the issue here is 
information, and I would like to take a minute to respond to a 
couple of the comments made. We think getting better 
information is useful on many levels.
    Some argue that utilities and ratepayers could gain this 
information without this bill. That is not the case. Some would 
argue that these particular costs should not be displayed or 
that other costs should be displayed instead. There are not 
other costs in Bonneville's rates that are of this magnitude or 
of this volatility. In addition, these are costs particularly 
driven by Federal laws that do not relate to the business of 
creating power, as most of the other costs do.
    Some argue about whether the number that the power market 
agency would come up with is the correct number. I think that 
debate is a reason to pass this bill. There are plenty of 
things in the region for all of us to voice our concerns about 
what the right number is, and we will argue that back and 
forth, but that discussion should not inhibit a power marketing 
administration from creating the final determination and 
getting that information to consumers.
    Also, on the issue of indirect costs, I think this bill 
correctly includes those costs, as well as direct costs, 
because, to a ratepayer, they are one and the same. Water 
spilled over a dam, rather than creating electricity, creates 
impacts on ratepayers just as much as direct projects or 
capital expenditures or operations and maintenance. The 
question is, without that set of actions, would the power rates 
be lower?
    Also, on defining ESA costs, particularly, versus other 
fish and wildlife costs, I was glad to hear Bonneville suggest 
that they would include all fish and wildlife costs in their 
calculations for purposes of this bill because the ESA does 
have such broad implications in the Northwest that most, if not 
all, fish and wildlife mitigation could be defined as related 
to implementation of that Act.
    To sum up, we support H.R. 4857 because it is a 
straightforward approach to providing more information about a 
major factor in our power rates of consumer-owned utilities. 
Timely release of useful information is a worthy goal in and of 
itself. But just as important is the potential that this 
information may create incentives for better management of our 
natural resources that would benefit endangered species and 
ratepayers alike. Thank you.
    [The prepared statement of Mr. Corwin follows:]

            Statement of R. Scott Corwin, Vice President of 
                Marketing and Public Affairs, PNGC Power

    Mr. Chairman, members of the committee, on behalf of PNGC Power, I 
thank you for the opportunity to testify today. PNGC Power is a 
cooperative of fifteen consumer-owned utilities who banded together to 
meet their power and transmission needs. Member utilities have service 
territory in portions of seven western states. We are committed not 
only to preserving the economic value of the Columbia River system, but 
also to ensuring effective recovery of salmon and steelhead listed 
under the Endangered Species Act.
Filling the Knowledge Gap
    PNGC Power supports H.R. 4857, the Endangered Species Compliance 
and Transparency Act of 2006. We appreciate the initiative of 
Representative McMorris and the cosponsors in raising the issue before 
us. H.R. 4857 is narrowly tailored to require the power marketing 
administrations to display these costs on the monthly wholesale power 
bill sent to utilities. It is then up to the local utility to decide 
what to do with that information. Local control over management of the 
utility is a fundamental priority of each consumer-owned utility in the 
Northwest.
    We support this bill because it offers the opportunity for 
ratepayers to be better informed consumers. PNGC Power provides 
electricity to retail utilities that have about 159,000 accounts 
serving a population of over 300,000 citizens of the Northwest. While 
these consumers often ask about the nature of the costs that make up 
their electricity rates, they have little knowledge about the level of 
fish and wildlife costs affecting those rates.
    In fact, we were surprised at the results of research that was 
conducted last year on behalf of Northwest RiverPartners 
(www.nwriverpartners.org), a consortium of river users and utilities 
who support a balanced approach to the multiple uses of the Columbia 
and Snake River system. The polling found that about 60% of respondents 
did not know there were any costs in their rates related to 
implementation of the Endangered Species Act.
Fish and Wildlife Costs
    Of course, in the case of the Bonneville Power Administration 
(BPA), there are significant fish and wildlife costs in the rates the 
agency charges for wholesale power. According to BPA, the fish and 
wildlife category will account for about 30 percent of the rates 
charged for the upcoming rate period. The total BPA ratepayer cost 
since 1980 is well over $7 billion. That does not count the amounts 
contributed through other federal, state, and local taxing entities.
    Are all of these costs warranted? Are they effective? Those are 
questions with which the region has struggled significantly over the 
last two decades as the underlying science slowly develops. We have 
offered our testimony on some of those issues before, and would be 
happy to do so again in depth. I will only touch upon a couple of 
points today.
    It is difficult to know the extent to which highlighting the costs 
on power bills will lead to more scrutiny over the effectiveness of 
salmon mitigation measures. If it does, then that would be a useful 
byproduct of H.R. 4857 that would benefit fish as well as ratepayers.
    We saw a good example of the ability to do things better for fish 
in a more efficient way earlier this month. Hatchery fish were passed 
by Bonneville Dam using a new method that avoided spilling water that 
would have lost $1.3 million worth of power generation. The so-called 
``corner collector'' device passed 7.6 million fish from the Spring 
Creek Hatchery at a fraction of the cost seen in prior years. Used in 
conjunction with the screened bypass system at the dam, this method 
passes fish with a survival rate of over 99 percent.
    Another new technology aimed at improving fish passage around the 
dams is called the removable spillway weir. This device enabled 
juvenile fish to pass with a 98% survival rate in tests at both Lower 
Granite Dam and Ice Harbor Dam. This creates better fish passage while 
only using one-fifth of the water used in normal spill operations. The 
Army Corps of Engineers (ACOE) is to be commended for these 
improvements to fish survival and cost effectiveness.
    On the negative side, the ACOE is currently proposing to spend $30 
million on a feasibility study regarding the effects of different flow 
regimes for fish. The faulty assumptions behind this effort lack any 
real scientific basis, and threaten a loss of focus from the ACOE's 
mission of preserving important flood control capability. If similar 
studies in the past are any guide, this ``Columbia River Fish 
Mitigation System Flood Control Review'' is likely to lead to very 
certain and large costs to ratepayers without any certainty that so-
called results will serve to inform important scientific and policy 
questions.
    Clearly, a survey of expenditures for salmon includes some good and 
some not so good models. More knowledge about fish and wildlife costs 
is not an impetus to do less for fish. Rather, it can create ownership 
in the efforts underway and serve as an inducement to create better, 
more effective means of assisting fish in the future. And, it should be 
noted that any approach to salmon recovery that will be successful 
long-term must take into account all aspects of the salmon lifecycle 
including impacts from hatcheries, harvest, and all areas of habitat 
whether inside the hydropower system or not.
Providing Valuable Information
    Support for this bill should not depend upon whether you believe 
these expenditures in the name of salmon should be lower, higher, or 
are just about right. The issue here is information. Certainly, it 
would make the understanding of these costs clearer if they were 
displayed directly on the power bill each month. What happens to the 
information after that, or to the opinions of consumers receiving that 
information, will vary greatly from utility to utility and from 
customer to customer.
    Some may argue that a utility and its ratepayers could gain this 
information without this bill. This is not necessarily the case. Only 
federal agencies are in a position to determine with accuracy the costs 
they expend on fish and wildlife. The processes in place to determine 
those costs and inform customers about them are lengthy and complex. 
Utilities would benefit from having one official estimate that is 
produced by the agency and disclosed on the actual power bill.
    Some might question why these particular costs should be displayed 
and not other costs. There are very few costs in BPA's power rates that 
are of this magnitude and this level of volatility. In addition, these 
costs are particularly driven by federal laws that do not directly 
relate to the business of producing power. This distinguishes them from 
many of the cost categories that flow into the rates of power marketing 
administrations.
Defining ESA Costs
    Under H.R. 4857, some may argue about whether the number that a 
power marketing agency displays is the correct reflection of fish and 
wildlife cost. Those arguments are inevitable, and there are plenty of 
venues in the region for all of us to voice our concerns to the agency. 
But, that discussion should not inhibit the agency from making a final 
determination and getting that information to customers.
    For example, H.R. 4857 correctly includes the indirect costs as 
well as the direct costs of ESA implementation. To a ratepayer they are 
one and the same. Water spilled over a dam rather than creating 
electricity impacts ratepayers just as much as direct projects, capital 
costs, or operations and maintenance. The pertinent question is: 
without the set of actions in question would the power rate be lower? 
Whether the action causes a loss of generation or whether it is a 
direct expenditure, the impact is pressure on rates to be higher than 
they otherwise would be.
    In addition, we would hope that BPA would administer this provision 
by including all fish and wildlife costs in its calculation of cost for 
purposes of this bill. While the bill refers specifically to costs 
incurred related to compliance with the Endangered Species Act (ESA), 
it also refers to ``activities related to such Act''. In the case of 
mitigation paid for by BPA and its ratepayers, the ESA has such broad 
impact on the region that most if not all fish and wildlife mitigation 
could be defined as related to that Act even if it is more formally 
associated with another law such as the Northwest Power Act. Also, from 
a practical standpoint, many projects may serve multiple purposes under 
multiple laws and are difficult to parse in a definitive way.
Conclusion
    We support H.R. 4857 because it is a straightforward approach to 
providing more information about a major factor in the power rates of 
consumer-owned utilities. Timely release of useful information is a 
worthy goal in and of itself. But, just as important is the potential 
that this information may create incentives for better management of 
our natural resources that would benefit endangered species and 
ratepayers alike.
                                 ______
                                 
    Ms. McMorris. Thank you very much, and thank you to 
everyone for being here today and offering your testimony. We 
really appreciate it.
    I wanted to start just with an open question to anyone who 
would like to answer, but just to speak to how informed you 
think people are of the endangered species costs and why you 
think it is the case.
    Mr. Corwin. I can take that one. You know, you mentioned a 
poll before that was done last year by a consortium of river 
users and other utilities, and it really was striking. 
Consumers are not well-informed at all, and I do not know why 
that is the case. In our world, we certainly talk about these 
issues a whole lot. Occasionally, they get some media 
attention, but I think folks in general know when their rates 
go up; they do not know why, and it is not displayed in a clear 
and easy-to-use manner on the power bills for utilities to use.
    Ms. McMorris. OK.
    Ms. Patton. I just wanted to say that I have not seen the 
results of the River Partners' poll, but there are many polls 
that have been done over the course of the last 10 years anyway 
asking customers what they really would be willing to pay in 
order to preserve salmon, and the numbers that come back from 
those polls ranged from up to $5 a month on bills, which is so 
much larger than any of the actual costs that it would be 
interesting to look at those polls together.
    Ms. McMorris. I might just ask Mr. Corwin and Ms. Mikkelsen 
just to comment, since you work for utilities, how accessible 
is this information, and then I know because I am a customer of 
Inland Power and Light--it is on our bill, but would you just 
comment as to what the customers' response has been to that 
line item on the bill?
    Ms. Mikkelsen. Certainly. I think that the customers' 
response to the line item has been largely related to the size 
of their electric bill, and so we would have a local grocery 
operation that pays in excess of $25,000 a year for the fish 
and wildlife component of the BPA program, the BPA power, and 
clearly that particular element of their bill has gotten more 
attention than with a residential consumer who is paying in the 
neighborhood of $10 a month.
    So my sense is that the response from the customers and the 
interest from the customers in terms of the total amount has at 
least in some measure been related to the actual dollar amount 
of the bill. I think that from our commercial sector customers 
especially this has been a very eye-opening exercise in terms 
of informing them about the nature of fish and wildlife 
programs in the Pacific Northwest.
    We also have had a number of residential consumers, 
especially those living on low and fixed incomes, that have 
been very concerned over the levels and have appreciated the 
information.
    Ms. McMorris. Can you speak to how difficult it was to get 
the information?
    Ms. Patton. Yes. Let me describe the process we used, and 
that may give you a sense of it. So we had a retired, high-
level, BPA manager that came to work for Inland Power and 
Light, and as I said, one of his first jobs was to try and get 
information about fish and wildlife costs. We knew at the get-
go that we would not have perfect information, but we felt that 
if we could get in the ball park and feel comfortable that 
generally that we were providing good information to the 
members, that good information was better than perfect 
information.
    It took many months to do that, and the process went 
something like this: We would ask some questions of a BPA 
person, and that person would kind of ask the next level up and 
the next level up and the next level up. It was a very 
iterative process in terms of trying to make sure that the 
agency was comfortable with releasing the information. Also, I 
think it is fair to say that had we not had somebody with a 
familiarity of the organization and a familiarity of the basic, 
underlying issues and the rocks to look under and those sorts 
of things, that it would have been extremely difficult to have 
done this.
    So I am not at all convinced that had we not had the person 
working on the project that we did that we would have ever 
gotten to the result that we did.
    Ms. McMorris. Very good. A quick question to BPA. The--of 
the spills has been in the forefront of our minds and the 
impact that it has had on electricity generation. It was due to 
Judge Redden's decision related to the Endangered Species Act. 
Do your agencies consider that cost one that should be passed 
on to the customer, the consumer?
    Mr. Delwiche. Thank you, Madam Chair. Your question is, 
does Bonneville believe that the costs associated with Judge 
Redden's orders should be passed on to the customer? Well, the 
costs associated with this order are real costs that affect 
Bonneville's financial bottom line, and being that we sell 
power at cost, and our costs are recovered fully through our 
power rates, we have no choice but to pass those costs on to 
our customers.
    I might also opine that in the Northwest the ratepayer 
burden associated with Endangered Species Act compliance 
relative to the taxpayer burden is probably different than 
other parts of the country where ESA activities in other parts 
of the country are more borne by the taxpayer and less by the 
ratepayer.
    Ms. McMorris. OK. Thank you.
    Mr. Grijalva?
    Mr. Grijalva. Thank you, Madam Chair. With your 
concurrence, if I may enter this statement into the record.
    Ms. McMorris. Yes.
    [The prepared statement of Mr. Grijalva follows:]

   Statement of The Honorable Raul M. Grijalva, a Representative in 
                   Congress from the State of Arizona

    Thank you Madame Chairwoman:
    I must voice my opposition to this bill. This bill is unnecessary 
and would create a cumbersome and expensive new procedure for Power 
Marketing Administrations in the West, while unfairly demonizing the 
Endangered Species Act in the process.
    This bill purports to require disclosure of the cost of compliance 
with the Endangered Species Act to power customers in Western states. 
However, to a great extent, the reason many species, particularly those 
in the Columbia River, are listed is because of dam operations and 
power generation. If the way in which hydropower was generated weren't 
so damaging to the environment and to wildlife and fish in particular, 
these costs would not be necessary.
    In addition, this bill seems designed to demonize the Endangered 
Species Act by singling out compliance with that law as a cost on its 
own. The fact is, you can't separate out costs to comply with that 
particular Act, because the PMAs are required under numerous laws and 
treaties to take certain actions with regard to fish and wildlife that 
overlap partly or completely with ESA compliance.
    For example, there is significant overlap between the requirements 
of the ESA and laws such as the Pacific Northwest Electric Power 
Planning and Conservation Act. In addition, the federal government must 
fulfill its trust responsibilities to Northwest tribes under various 
treaties by preserving aboriginal fishing rights on the Columbia river 
and its tributaries.
    So to single out the Endangered Species Act as the reason for all 
fish and wildlife costs related to dam operation is an 
oversimplification and is disingenuous considering all these other 
obligations.
    Moreover, despite there being these costs related to fish and 
wildlife, utility rates in the Pacific Northwest are among the lowest 
in the nation.
    This bill would add an unnecessary, burdensome and costly procedure 
to Power Marketing Administration's reporting duties. While I look 
forward to hearing testimony today, I believe there is absolutely no 
need for this legislation and I am firmly opposed to it.
                                 ______
                                 
    Mr. Grijalva. Thank you. Just a couple of questions, Madam 
Chair, and let me, if I may, begin with Mr. Hacskaylo. On page 
2 of your testimony, you say ESA operating constraints prevent 
the generation of hydropower when it is the most valuable, 
creating lost sales and revenue. If Western is required to 
abide by ESA--this is my question--how can ESA compliance be a 
cost? Does not Western also consider water delivered to meet 
irrigation contracts, flood control as lost revenues because 
water is not being used at that time to generate power?
    Mr. Hacskaylo. In response to your question, sir, that 
Western views the issue of lost revenues as a result of the 
timing of when water can be released through the generators in 
order to comply with Endangered Species Act requirements; that 
is where we see the lost revenue coming in.
    Mr. Grijalva. And with regard to irrigation contracts and 
flood control, that is not a lost-revenue question as well?
    Mr. Hacskaylo. We do not deal with irrigation or flood 
control. I will defer to the Bureau of Reclamation on those 
issues.
    Ms. McMorris. As used in Section 2[a], who would be the 
firm power customers to receive the monthly estimate of ESA 
costs incurred? Who would they be?
    Mr. Hacskaylo. The firm customers would be approximately 
the 750 customers we have, cities and counties----
    Mr. Grijalva. The utilities.
    Mr. Hacskaylo. Yes, sir, wholesale utilities.
    Mr. Grijalva. Will any residential customers receive these 
monthly billing revenues?
    Mr. Hacskaylo. Not for Western Area Power Administration, 
no, sir.
    Mr. Grijalva. And do you track ESA costs specifically at 
this point?
    Mr. Hacskaylo. We track ESA costs specifically with regard 
to the Colorado River Storage Project, which is where most of 
our costs are. On our other projects, as these costs and 
programs are developing, we will be tracking those costs, yes, 
sir.
    Mr. Grijalva. OK. The discussion was about objective 
accounting and uniform accounting. So all of the power 
marketing administrations track cost of revenues the same at 
this point?
    Mr. Hacskaylo. I do not know the answer to that, sir.
    Mr. Grijalva. I think, at some point, that is an important 
question because, if not, does it make sense to amend H.R. 4857 
to require this uniformity?
    Mr. Hacskaylo. I am not sure what additional burden that 
would require, to have a uniform system of accounts for all of 
the PMAs. I just do not know, sir.
    Mr. Grijalva. Let me ask Ms. Patton, if I may, right now, 
the discussion on 4857 focuses on the costs of ESA compliance, 
and maybe from your perspective and hearing some of it in your 
testimony, but maybe you can elaborate, what have been the 
economic benefits to restored fisheries, in your experience?
    Ms. Patton. Well, it does not even have to be my 
experience. The Army Corps of Engineers actually completed an 
economic analysis in 1999 that showed that some of the economic 
benefits of a restored river could be certainly as high as $300 
million a year. We have also seen studies in Idaho of the sort 
of surprise fishery that came out, and this is in my written 
testimony, that towns like Riggins and others that depend on 
tourist dollars saw several million dollars, in the tens of 
millions of dollars, of revenue just from that restored 
fishery. In Washington and Oregon, there are all kinds of 
communities that are facing now a huge economic disadvantage 
because of the impact on commercial fishing of loss of salmon.
    So benefits are very substantial, and we can direct you to 
a number of studies on the issue.
    Mr. Grijalva. I would appreciate that. I think it would be 
useful information for the Committee.
    Mr. Corwin, just a little follow-up on the question that I 
was asking previously. If PMAs are required to calculate the 
costs of revenues used for ESA, should they be uniform? Second 
of all, should they be required to calculate the value of water 
for other purposes such as irrigation?
    Mr. Corwin. As far as uniformity across PMAs, I cannot 
really speak to that. We specialize in BPA, and they have a 
pretty well-established way of accounting for total fish and 
wildlife costs.
    As far as lost revenues relating to other matters, like I 
said, there is nothing with this level of volatility and 
certainly nothing with this magnitude, irrigation included. The 
study that Ms. Patton referred to regarding the level of 
supposed value of water used for irrigation in the region was a 
study from one staffer at the Northwest Power and Conservation 
Council. It is a draft. It is out for comments, and it is going 
to receive several. As far as the assumptions used in that 
study, it was based on a lot of old studies on other topics, so 
I think there are a lot of questions. It is a tough thing to 
measure. The water returns to the river off of the land used 
for irrigation at certain points. You have to try to measure 
that evaporation.
    The ESA costs are unique in that, unlike other costs, there 
are many ways to achieve the objectives of ESA implementation, 
and we would say, in a lot of cases, more efficient ways to 
achieve those objectives. They are well defined. They are 
easily measured. Most of the large losses of generation from 
ESA implementation came into the Northwest starting in about 
1995 when the implementation kicked in.
    Mr. Grijalva. I think the Northwest Power Conservation 
Council recently, and I do not know how recent this might be, 
found $250 million is lost by using water to irrigate crops 
rather than leaving it in the river to generate electricity. 
Shouldn't that be part of the accountability?
    Mr. Corwin. That is a memo I was just referring to. The 
council did not find that; one staffer did, and it is out for 
comment, and it is in draft, and I think there are a lot of 
flaws in that. Whether there is some level of loss there that 
can be accurately measured and included is up for debate. It 
has not been measured previously, and it would be a difficult 
thing to do.
    Mr. Grijalva. The question is about the whole picture, not 
part of the picture.
    Mr. Corwin. Yes. Philosophically, perhaps, but Bonneville 
could answer that.
    Ms. McMorris. OK. Mr. Pearce has to leave, so we are going 
to go to him next. Thank you.
    Mr. Pearce. Thanks. Ms. Mikkelsen, you heard the comment 
that ratepayers would pay up to $5 to support the salmon. If 
you disaggregate and look at the senior citizens on fixed 
income, would they be willing, in your estimation, to add five 
bucks to their monthly fee?
    Ms. Mikkelsen. Thank you. I think that it is fair to say 
that many of the senior citizens and low-income consumers that 
we serve struggle mightily to pay their electric bills and that 
$5 represents a significantly higher proportion of their 
disposable income than for the rest of the population. My sense 
is that their willingness to have the costs be anything higher 
than $5 would be limited.
    Mr. Pearce. Thank you.
    Ms. Patton, there are some states that really try to 
mandate conversion to a certain amount of green electricity; 
that is, if a producer is using a coal-fired plant, they have 
to have a certain amount of green-generated power. Is that 
something your group supports or you personally support, that 
mandatory conversion?
    Ms. Patton. The NW Energy Coalition supported and worked 
with our members in Oregon to achieve what is called the 
``public benefits charge,'' which is providing both low-income 
weatherization and low-income energy assistance, as well as 
energy efficiency and renewable energy.
    Mr. Pearce. You would vote for mandatory conversion.
    Ms. Patton. There is a mandatory requirement that the 
utilities, and we are talking about industrial utilities here, 
would set aside----
    Mr. Pearce. I would ask that if you would not remind my 
reclaiming my time, so you would support this mandatory 
conversion, even though it is very difficult. In some places, 
there might not be enough green power to really fill the 
requirement, but you still think we should push the envelope 
just a little bit.
    Ms. Patton. We think that there is going to be green power, 
and we think it is the best thing for our country and for the 
ratepayers, yes. It is cleaner, affordable power, and we think 
it is a good idea.
    Mr. Pearce. So you would be in favor of mandating things 
that would be somewhat difficult to achieve in order to, even 
though it might be hard to get into the----
    Ms. Patton. We do not think that they are difficult to 
achieve. We think they are a little bit unfamiliar, and the 
main issue is that your costs are up front.
    Mr. Pearce. So whatever the objections, they should 
overcome the objections and try to get it done.
    Ms. Patton. We want them to look at the long range, yes.
    Mr. Pearce. When I look at your testimony, I find that you 
say that this bill is not possible because it would be 
difficult or impossible, and yet I find you having a different 
value set on one set of issues, that we should push the 
envelope just a little bit, even though it is difficult or 
impossible, but on this particular bill, you would not want to 
do that, and I find that curious.
    Ms. Patton. I think we were just talking about separating 
USA from Pacific Northwest electric power planning and treaty 
obligations. That is not the same thing----
    Mr. Pearce. One of your bullet points also says it is 
likely to focus national attention on the fact that rates are 
60 percent below. Isn't that part of transparency? Isn't it 
true for the part of transparency, even though it might bring 
attention? I find that very curious that you would not want the 
rest of the Nation to know the truth, that hydroelectric is a 
somewhat better, lower-priced energy source. Why is that a 
particular objection for you?
    Ms. Patton. I am fine with the transparency so long as we 
are meeting our responsibilities to salmon and to make 
available the cleanest and cheapest power to our customers.
    Mr. Pearce. But not to bring to the attention of the Nation 
that hydroelectric power is 60 percent less.
    Ms. Patton. There is always an interesting phenomenon 
attached to that, special attention, as opposed to transparency 
all by itself.
    Mr. Pearce. I think transparency myself is good in all 
regions.
    Now, if the Bonneville Power Administration is forced by 
environmental standards to convert from clean-burning or clean-
produced hydroelectric power to coal because of certain 
endangered species actions, isn't that part of transparency 
that would be good for the customers to know, that this law is 
being used to shut down hydroelectric power, and then, in the 
meantime, we want to convert to coal power, and we want to 
generate more coal power. That seems like that is very powerful 
and good information, and yet----
    Ms. Patton. It would be good if it were true, but, in fact, 
the Northwest Power and Conservation Council, which is the four 
Governors of the four Northwest states, has already done a 20-
year forecast that shows there is plenty of clean electricity 
from energy efficiency and renewables to meet all load growth 
and to cover those issues, so it is not an issue of needing the 
coal. If that were true, I would certainly want that to be 
transparent, but it is not the case.
    Mr. Pearce. So you are saying there is plenty of renewable 
power, so we could go ahead and just shut down the 
hydroelectric now.
    Ms. Patton. No, not the whole system. Of course, not.
    Mr. Pearce. Well, there are people who would do that.
    Ms. Patton. I do not know any of them.
    Mr. Pearce. I am sure you would not.
    Madam Chair, I have extended beyond my time, and I 
appreciate the consideration to let me go ahead of the rest of 
the group. Thanks.
    Ms. McMorris. Thank you. Mr. Inslee?
    Mr. Inslee. Thank you. Ms. James, do you support repeal of 
the Endangered Species Act?
    Ms. James. Mr. Inslee, thank you for the question. My 
organization supports reform of the Endangered Species Act.
    Mr. Inslee. Do you think that the ESA should be repealed if 
it ends up that consumers are paying $2.80 a month for 
household electricity due to efforts to keep salmon in the 
rivers for our grandchildren?
    Ms. James. As I stated, we support reform, not repeal.
    Mr. Inslee. Have you been advised that Mr. Sheets--all fish 
and wildlife costs would be about $2.80 a month for a household 
in the Pacific Northwest associated with fish and wildlife 
expenses?
    Ms. James. Mr. Inslee, I have no knowledge of that. My 
region is the Colorado River Basin, so maybe the question needs 
to go to another witness.
    Mr. Inslee. Well, I just want to read to you an e-mail from 
Ed Sheets that says these ESA cost estimates would translate 
into about $6.90 per month for a consumer that is served by a 
utility that buys 100 percent of its power from BPA. BPA serves 
40 percent of the Northwest. The average impact on consumers 
would be about $2.80 a month. So all of this hullabaloo is 
about trying to make sure that is on one piece of paper that 
goes to the utilities when this information is available to the 
public already.
    Ms. James. I would like to turn the response over to Ms. 
Mikkelsen. I do not even know who Mr. Sheets is, and I think he 
is probably referring to her region and not mine.
    Mr. Inslee. I have his official title. I want to make sure 
I get his official title right--former head of the Northwest 
Public Power Council for 15 years.
    The point I am making, this information is available. I am 
just asking a question, if I can. I assume the purpose of this 
bill is to share information for the public. Do you think 
should the public be told the cost of the nuclear experiment 
that did not work in the Northwest? Do you think they should be 
told the cost of that debacle on their bills once a month?
    Ms. James. In terms of consumer transparency, again, that 
is not my region, but I would think that would be an 
appropriate thing, If what we are looking for is disclosing 
true and actual costs to consumers, I think that is a good 
idea.
    Mr. Inslee. Well, now we are getting somewhere. So now you 
are going to put on the bills the cost of the nuclear debacle. 
How about the debacle of the Federal budget where we are paying 
over $100 billion a year for Federal interest payments because 
the deficit has ballooned in the last six years? Do you think 
we should give that information to consumers, too?
    Ms. James. I am not sure who would do that, but, you know, 
in theory, again, what we are supporting is increased 
understanding and education and transparency of the costs that 
the customers are paying. If the taxpayers are paying that 
cost, I think it would be appropriate to disclose it.
    Mr. Inslee. That would be interesting. I represent a 
district in western Washington, and we do not have huge 
irrigated agriculture. I used to represent a district that did 
have irrigated agriculture. They are both great districts. My 
concern is, in my particular region, the district that I now 
represent, they do not have a lot of irrigated agriculture. Do 
you think they should be told the cost of providing irrigated 
agriculture to the districts that do use irrigated agriculture 
so they can see how their money is being spent for a district 
that is not--do you think that is important for them to know?
    Ms. James. If they are paying those costs, yes, I do.
    Mr. Inslee. OK. How about the cost of the Iraq war? Do you 
think people ought to be told the cost of the Iraq war?
    Ms. James. I think, since the American taxpayers are paying 
the cost of the Iraq war that, yes, they should be able to know 
those costs.
    Mr. Inslee. Well, they do, and they can because it is 
publicly available information just like this is already, and 
my concern about this bill is to add unnecessary duplication, 
litigation, hassle, heartache, and confusion to something that 
is already publicly available, and if this bill is not required 
to go to the consumers, I am not sure what is going to be 
gained here. As I understand this bill--let me ask you, does 
this bill simply require this information to be given to 
utilities? Is that correct?
    Ms. James. Yes, it is, and I think there are some 
differences in our region versus what I have heard this morning 
on Bonneville and the Northwest. The Northwest appears to be a 
step ahead of our region in terms of that type of transparency. 
Certainly, the costs are available if we ask for them and seek 
them out. By having, at minimal, expense in time, the costs 
actually provided to the wholesale consumers, they can then 
each choose how they decide to share those with their retail 
consumers.
    Mr. Inslee. I want to make sure I understand. It is your 
position that if this bill advanced, you would support an 
amendment that would make available to the same people that 
this bill would the cost of the compliance with the nuclear 
debacle and irrigation costs to provide irrigation services to 
people in these affected areas. You would support that 
amendment. Is that correct?
    Ms. James. No, not without seeing the actual text, I could 
not.
    Mr. Inslee. OK. Well, we may provide that to you if this 
bill advances at all.
    Ms. Patton, I just wondered, do you think there should be 
any distinction? The motivation, I am sure, is sincere of those 
who proposed this legislation, and it is to share information 
with the public, which normally is a laudable goal. Sharing 
information with the public in a democracy is a laudable goal.
    I do have some concerns about this, though, of, first off, 
being able to actually segregate compliance with ESA costs 
compared to compliance 2[e] responsibilities, contractual 
obligations to the states, just basic good government decisions 
made by these appointed and elected officials. Trying to 
segregate these things; I think it would be very, very 
difficult, actually, to comply.
    My perspective on this, actually, I think consumers would 
be more interested in the sort of total cost we spend, 
investment we make, in trying to keep salmon in the rivers for 
our grandchildren. I think that is what people would be most 
interested in, and trying to segregate ESA from treaties and 
everything else is going to drive people nuts, frankly, and 
they will all end up in litigation and everything else, and it 
really will not achieve a purpose. Do you have any comments in 
that regard?
    Ms. Patton. Yes, definitely. And I think BPA also has said, 
and Mr. Delwiche has said, that it would be much easier to 
report, which they already do, the costs for the full program 
for fish and wildlife restoration, and we would strongly 
support that, obviously, along with the costs of the rest of 
the program, and we would like to see the benefits weighed as 
well when we do that kind of analysis. It is sort of like the 
question earlier that you pay up front for a wind turbine, and 
then you do not have any fuel costs. So you have to look at the 
long term in order to see what the costs and the benefits are.
    So, yes, we would like to see all of the fish and wildlife 
costs, as well as the irrigation withdrawal costs and as well 
as the nuclear debt costs as well as the benefits that we see 
on the other side because that is the only way we can make a 
fair determination of the wisdom of the decisions that are 
being made for us.
    Mr. Inslee. My reaction to this is if we head down this 
path, we are going to have this, you know, 50-page document 
with all of this information that is already pretty much 
publicly available and really no public benefit. I am over my 
time. Thank you.
    Ms. McMorris. Mr. Otter. Yes, Mr. Walden, I do know you are 
a Member, but Mr. Otter has been patiently waiting and also 
worked on this legislation in years past.

  STATEMENT OF HON. C.L. ``BUTCH'' OTTER, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF IDAHO

    Mr. Otter. Thank you, Madam Chairman. Thank you very much 
for your leadership on this. As I was just explaining to Mr. 
Walden, I had an amendment last year to the Endangered Species 
Act very much similar to this, and what I had envisioned, and 
all of the confusion that you could possibly add to this to try 
to mask the subject, I think, flies in the face of most of 
those advocates like the former questioner from this bench who 
constantly requires advocacy and transparency, I should say, of 
Enron, who we meet every day at the gas station, and the list 
goes on and on.
    If there were a question about how much information was 
available in the travel expenses or in the executive 
compensation or bonuses or anything else, I am quite confident 
that that information would not only be forthcoming from my 
colleagues but also in many other sectors.
    I would like to state for the record, Madam Chairman, that 
the study referred to by Ms. Patton was a study that was, 
indeed, put on in Idaho and that there was, indeed, some $300 
million that was felt that the state would benefit from the 
free-flowing river and the loss of the four dams, 3,000 
megawatts, the shipping, the siltations of the river on down, 
the total disruption of the flows for years to come. That was, 
indeed, a $300 million study benefit.
    However, an analysis by the University of Idaho, and, Madam 
Chairman, I would like to ask unanimous consent that both the 
study referred to by Ms. Patton and the analysis by the 
University of Idaho which indicated that the numbers were 
inflated, and if not, they were involved in some advocacy 
accounting, I would like to have both of those submitted to the 
record so that the statement made by Ms. Patton does not go 
unchallenged or at least unclarified.
    Ms. McMorris. Without objection.
    [NOTE: The study and analysis submitted for the record by 
Mr. Otter have been retained in the Committee's official 
files.]
    Mr. Otter. What we had envisioned is when I get my property 
tax in Idaho, I get a property tax, and it says, this is what 
schools are costing you, and this is what fire department and 
police department and the sheriff's department--it goes right 
on down the line. So I need a list of all of those who the 
government uses their authority to collect taxes from my 
property and the value of my property. I know exactly, if I 
look at this year's tax bill compared to last year's tax bill, 
I know exactly who is costing me more money, and if it is the 
schools, and if I am not getting the product out of the 
schools, then I have a legitimate complaint. That is the kind 
of transparency that I believe that I envisioned and I believe 
Ms. McMorris, in her leadership effort on this bill, also 
envisioned.
    If I am getting bit by mosquitoes in the summer months, and 
I look down, and mosquito abatement is part of that, and I am 
not getting my money's worth, I know who to complain to. So 
that is exactly what we were talking about. The community that 
has resisted this effort, my effort, for the last three years 
and is now resisting this effort, as far as I am concerned, do 
not want the ratepayers to know.
    Every month when I get my power bill, it always comes with 
how to protect yourself, do not lift your hand line and hit the 
power line because it could electrocute you. It comes with all 
kinds of information, including conservation information--turn 
the lights off, put a jacket around your hot water heater--all 
of these things, but it does not give you the information of 
how much I am paying per kilowatt hour for the power that I 
consume. That is exactly what I had envisioned, and I think 
that Ms. McMorris has envisioned, by this bill.
    I find it extremely curious, to use Mr. Pearce's word, that 
we would not be able to identify these costs. Mr. Delwiche, you 
said that the three primary categories were debt service, M&O, 
and what was the third one? I wrote them down here right quick.
    Mr. Delwiche. The revenue effect of flow and spill and 
operations changes at the dams.
    Mr. Otter. That is right. Last year during the spill 
period, we were spilling a million dollars a month worth of 
water, to what benefit we are still not sure, and we will not 
know for three years because we have not studied that two 
years. We have only studied 25 percent of the fish's life span. 
We did not study the 75 percent of the time that they spend out 
in the ocean, so we are just studying a very short period.
    My point is this: We are going to be voting this afternoon 
on a bill to add, I think, another $700 million to--heap while 
we are spending a million dollars a day with water in Idaho. 
Some of that money is obviously going to go to the Northeast, 
but it is going to go to the Northwest.
    Madam Chairman, I apologize for making a speech here 
instead of asking the questions, but I thank you all very much 
for your testimony. I have it. That will become, as you know, a 
matter of this record, and I appreciate you all being here 
today. Thank you, Madam Chair.
    [The prepared statement of Mr. Otter follows:]

 Statement of The Honorable C.L. ``Butch'' Otter, a Representative in 
                    Congress from the State of Idaho

    Madam Chairman, thank you for allowing me to join you in this 
hearing today and I am proud to be a co-sponsor of your legislation. 
H.R. 4857 is similar to an amendment I offered last year to the 
Threatened and Endangered Species Recovery Act.
    By requiring Power Marketing Administrations, like Bonneville Power 
Administration, to include costs related to the Endangered Species Act 
in their customers' monthly billings, this is a common-sense bill aimed 
at empowering electricity consumers with the ``right to know'' what 
they're paying for. The bill simply provides ``sunshine'' and 
transparency to the way our federal government does business.
    In the Pacific Northwest alone, the Bonneville Power Administration 
accounts for 45 percent of the region's electricity sales and 75 
percent of its transmission lines.
    The regions hydropower is no longer cheap by today's standards due 
to a number of reasons. One of those is the Endangered Species Act. The 
ESA has a tremendous impact on the electricity backbone of the nation. 
In siting new transmission lines, in relicensing hydroelectric projects 
and in generating power, the ESA impacts almost every facet of how 
consumers receive electricity.
    Bonneville's rates have risen 46 percent since 2001, due in part to 
the ESA's impact on the Columbia/Snake hydropower system. The agency 
spends an average of $500 million per year on ESA compliance. Since 
these costs are passed directly to the regions consumers, it's safe to 
say that when many turn their light switches on; the ESA meter is 
literally running.
    When I get my bill for my property tax, I know exactly where all of 
my money is going. Everything is listed out from dog catcher to 
education to police department and so on. When my bill goes up I can 
compare it to last years bill and know who was responsible for my 
increase. We should have the same ability with our electricity bills.
    The point of all this is that few Pacific Northwest consumers have 
a notion of what amount of their monthly bills go towards ESA 
compliance. Nor do the other end-use customers of the other Power 
Marketing Administrations. It is estimated that as much as one-third of 
the power bill is devoted to salmon recovery--but no one knows for 
sure.
    I get a bill once a month from my power company and it includes all 
sorts of information about tips on conserving energy and warnings on 
how to keep from electrocuting myself, but nowhere does is detail what 
I am paying for. How much is for generating power, how much is for 
transmission costs and how much is ESA? All we're asking for is a 
little transparency and better government accounting, and that's what 
this bill does. So thank you, Madam Chairman, for having a hearing on 
this bill and for your leadership on this issue.
                                 ______
                                 
    Ms. McMorris. Very good. Mr. Walden?
    Mr. Walden. Thank you, Madam Chairman. I want to commend 
you for bringing this legislation forward and Mr. Otter for his 
work in this area as well. I think the consumers have a right 
to know, and that is what this really gets down to. As Mr. 
Otter and others have said, I get my property tax bill, and I 
know what the port district costs me and the school district 
costs me, and I know what bonded indebtedness, and all of those 
costs, and I do not have any problem trying to also know what 
the WHOOPS debt is and what we are paying on it and some of 
these other costs. Now, I am not sure we need to put the Iraq 
war cost on my electric bill, or maybe it goes on my phone 
bill, some bill, but it is publicly available----
    Mr. Otter. Would the gentleman yield?
    Mr. Walden.--put it on your credit card, Mr. Otter.
    Mr. Otter. Would the gentleman yield? I think you will find 
that out in about another 30 days. It is called April 15.
    Mr. Walden. Yes. It is on our tax bill. What a consequence. 
So I think people need to know the costs. I also serve on the 
Energy and Commerce Committee. We looked at the E-rate program. 
Pick up your phone bill, and there is how much we pay for the E 
rate, how much we pay for E-911. I do not see anything wrong 
with that unless you are on the side that is panicked that 
people might actually, once they know the costs, develop a 
different view of how we manage things and the process 
involved.
    I have spent a lot of time on these issues. I am a native 
Oregonian. I love getting out in the woods and everything else, 
and I think there is a lot we can change in the process without 
ever lowering environmental standards. Sometimes that change 
does not come about, frankly, until people understand there is 
a cost associated with it. I will keep myself under control 
here because I get tired of seeing my little rural 
communication have their economies shut down by people who only 
think they come through there to have a park, a place to play, 
and they do not mind the forest being burned to the ground and 
nothing happening afterward as long as they are not affected by 
it.
    In the Northwest, we are all affected by these issues. We 
just had a study come out somewhere that questions whether the 
spill being ordered by the Federal judge is actually having a 
positive effect. Now, it is heresy to even raise that as an 
issue in some quarters, that we would question what we are 
doing works. Congressman Norm Dixon and Brian Baird and I have 
been raising some questions about how our hatcheries operate, 
how our harvest is done.
    Why is it we allow as an incidental take 45 percent of the 
Wild Falls Chinook Run going up the Snake River that we are 
trying to save. Forty-five percent of that run, an endangered 
run, was allowed to be harvested as part of a bigger harvest, 
and then we call it incidental. For God sakes, if we cut 
100,000 trees out in the forest and happen to take 45 percent 
of the spotted owl nests, and I think somebody would chain 
themselves to a skidder, and yet we sort of ignore this when it 
comes to fish.
    So I think it is important to put these issues on the 
table. I think consumers have a right to know. I think public 
policy people have a right to know. I think there are limits, 
trying to calculate everything, but it sounds like this 
information is generally available, so what is wrong with 
sharing it in a more effective way? So I guess that is my 
question for Mr. Corwin, folks from the BPA. Is what we are 
proposing here something that is reasonable to get the 
information out?
    I do not want to burden our folks with new costs, new 
equipment needs to the point we are driving up electrical 
costs. We are fighting the Administration on a proposal to do 
that. Can you all respond? In what you see in this bill, are we 
doing it in a way that is not going to add costs to ratepayers 
but will just give the public the right to know what these ESA 
costs are? Greg, do you want?
    Mr. Delwiche. Mr. Walden, thank you. As I had indicated in 
my testimony, if we report these costs on a percentage basis, a 
percentage of the customer's total bill, that information is 
readily available, and it would be easy for us to provide.
    Mr. Walden. Mr. Corwin?
    Mr. Corwin. I think it is a very reasonable proposal, and 
it is not something that is easy to grab otherwise. One of the 
Members mentioned a consultant saying the cost was $2.80 a 
month. Well, not in our utilities area. It is much higher, and, 
in fact, if you are using $300,000 worth of electricity a year 
to run your agricultural operation, the costs would be 
enormous. This bill, I think, could clarify for people what the 
cost is.
    Mr. Walden. All right. Mr. Hacskaylo?
    Mr. Hacskaylo. Thank you. As with Bonneville, we can 
accomplish the goals of this bill with no additional staffing, 
with minimal cost, and provide the information to our wholesale 
firm power customers.
    Mr. Walden. So if it does not take more staff, it really 
takes no more cost, and you can acquire these data, then what 
is the harm with sharing it? And I am out of town. I will leave 
it as a rhetorical question. Thank you.
    Ms. McMorris. Thank you. I wanted to follow up. I am just 
not confident maybe that the information placed on the table 
earlier is accurate as far as what we are facing when we think 
of energy demand versus energy supply because over the next 20 
years there is a lot that can be done related to conservation, 
and I think we need to be promoting that and encouraging people 
and educating people as to how they can better use energy and 
conserve. There is a lot of potential there. We need to be 
promoting the alternatives, but there is still a lot of work 
that needs to be done.
    I wanted to ask whoever wants to respond what they see as 
the realities of demand versus supply, and maybe, Greg, if you 
would start with BPA, just what you know and some of the 
impacts on hydro, and then we will go from there.
    Mr. Delwiche. Thank you, Madam Chair. There was a question 
raised earlier about if we generate less electricity, what 
resource is used as a replacement resource, and on a forward-
looking basis, of course, the Northwest Power Planning and 
Conservation Council suggested that we use green power to meet 
the load growth needs of the Northwest. However, in real time, 
as we spill water instead of generating electricity, we have to 
use conventional resources, the existing resources, the 
constructed resources to generate electricity, and generally 
speaking, those are resources that combust fossil fuel, be it 
natural gas or coal or even, in some cases, oil if we are at 
the most expensive part of the resource stack.
    On a forward-looking basis, as I indicated, the council has 
suggested that the region can meet its load growth needs 
through construction of green resources such as wind farms. I 
should point out, though, that, of course, wind is an 
intermittent resource. It requires a farming resource to absorb 
the intermittent nature of wind and reshape it into a form that 
is consistent with demand, and the Federal Columbia River power 
system is unique in its ability to do that in a very efficient 
way. However, the more constraints that get placed on the 
system, the greater the risk will be in the future that we will 
be unable to use the system to farm wind, which is the very 
resource the council is suggesting that we place most of our 
eggs in the basket of for meeting the region's load growth 
needs.
    Ms. McMorris. Does anyone else wish to comment?
    Mr. Hacskaylo. Very briefly, Madam Chair, the Energy Policy 
Act of 2005 provides for a number of studies by the Department 
of Energy, the Department of the Interior, the secretary of 
Army looking at hydropower enhancement and improvements, as 
well as additional means to streamline rights-of-way so that we 
can build the appropriate transmission to move, for example, 
wind or other generation to load as the demand increases in the 
years ahead.
    Ms. Patton. I would just like to add that the BPA is really 
to be commended for the work it has done to use the hydro 
system to begin that process of farming wind and farming other 
kinds of intermittent resources. It has been a really huge 
contribution to figure it out. I think that the Northwest Power 
and Conservation Council did account for that aspect of farming 
wind with hydro and not having to put on fossil fuels to do 
that in their study for forward-looking.
    The other thing I would say is that these witnesses would 
agree that transparency is a good thing, and more of it is a 
good thing. I think we would also agree that certainty is a 
good thing, and more of it would be a good thing, and that is 
why I think that it is important to get some certainty into the 
fish and wildlife constraints on the river so that we know then 
and can start building the resources that are going to not have 
to rely on the spot market, as Mr. Delwiche is noting that the 
spot market can give you some pretty nasty stuff. So that is my 
position.
    Ms. McMorris. OK, OK. Just quickly, then, BPA and Western, 
are you currently using any fossil-based fuels to replace 
hydro?
    Mr. Hacskaylo. Western, I am sure that we are, yes, ma'am.
    Mr. Delwiche. Similarly, ma'am, as we need to enter the 
spot market to match gaps between supply and demand, as I 
pointed out earlier, oftentimes the resources that are 
generating energy that is sold into the spot market are 
resources that use fossil fuel as an energy source.
    Ms. McMorris. To Mr. Corwin, Ms. James, or Ms. Mikkelsen, 
do you think the PMAs currently have clear direction in 
reporting ESA costs to customers? Is there easy and uniform 
access to these numbers, and is the bill unnecessary, as has 
been stated?
    Mr. Corwin. Thank you. I would say no to all of the above.
    Ms. McMorris. OK. Ms. James?
    Ms. James. I would say the bill is necessary. The 
information is available on an as-request basis. So I think the 
bill takes that step forward in requiring the disclosure and 
transparency in our region.
    Ms. McMorris. OK.
    Ms. Mikkelsen. And I have spoken to this earlier, but I 
think that the bill is clearly needed. We would feel much more 
comfortable providing information to our consumers with 
information that came directly from Bonneville and was easily 
substantiated.
    Ms. McMorris. OK. Mr. Otter?
    Mr. Otter. I just have one more question, and that would be 
of everyone. Right now, the Elks Canyon complex in Idaho is 
going through relicensure, and the bill thus far we know is up 
around $600 million for relicensing, in mitigation and 
relicensing those dams.
    A couple of years ago, probably five years ago now, we had 
a similar on the middle Snake where we had to relicense several 
small dams on the middle Snake. Those costs were outrageous. 
Those dams have been in place obviously for 30 years; that is 
why they had to be relicensed.
    Those are costs that folks who receive their power bill 
feel like it is the BPA or it is Idaho Power or it is Seattle 
Power or whoever, but they are the ones that raise the rates. 
They do not know that the fish and wildlife has raised the 
rates. The state parks--these people who are unelected are 
actually setting the power rates to some extent, and that is 
the clarity that we are trying to bring here with the ESA and 
the cost to the ESA is who is setting your power rates? I can 
understand their objection to it because I agree with Mr. 
Walden.
    So the question that I would have is, on your relicensure 
cost, couldn't that also become an item on your power bill that 
says, this is what it is costing you every kilowatt hour to 
relicense these dams, for instance, up around the Box Canyon 
dam when they put a bicycle path--isn't that nice--all the way 
around there so that about maybe 2 or 3 percent of the power 
ratepayers could enjoy the bicycle path around the new 
reservoir and the dam? Couldn't we also include those costs in 
that? Whoever wants to yield to that.
    Ms. Patton. I think it is an interesting question. I was 
working for CLC Light when it went through relicensure for its 
three dams on the Skagit River, and ultimately the changes that 
they made because of that relicensing led the NW Energy 
Coalition and Save Our Wild Salmon and a number of other 
organizations to, in fact, endorse the power as green power, 
and now CLC is commanding a premium for 300 average megawatts 
of power because of what they did under relicensing.
    So that is the issue: Do you want to have just the costs, 
or do you want to have the benefits because their power costs 
now are going down because of the benefits of that relicensing?
    Mr. Otter. And that bicycle path that went around the Box 
Canyon dam; that added to the production of power?
    Ms. Patton. I am not familiar with the Box Canyon dam, but 
I am very familiar with the Skagit, and that was the 
relicensing changes that they made, made it premium power.
    Mr. Otter. BPA is going to be going through or has already 
gone through relicensure requirements. What about those costs?
    Mr. Delwiche. Mr. Otter, by relicensure, I assume you are 
referring to new costs associated with Endangered Species Act 
compliance, and those additional costs would be part of the 
costs that we would be reporting if this bill becomes 
legislation or is passed.
    Going to your example regarding Pend Oreille Public Utility 
District, they are what is called a ``partial-requirements 
customer,'' Bonneville, so they have their own resource, Box 
Canyon dam, and they also buy some energy from Bonneville. So 
under this proposed legislation, we would be reporting on a 
percentage basis the share of their costs that we bill them for 
that are attributed to our fish and wildlife recovery efforts. 
They could, as a utility, also choose to reflect on their 
customers' retail bills their relicensing costs associated with 
things like the bicycle path and show them both, but that would 
be their choice.
    Mr. Otter. I am going to go to the question on percentages, 
reported percentages. If you are producing, let us just say for 
round figures, if you are producing 1,000 kilowatts, and 20 
percent of the production of that 1,000 kilowatts is ESA costs, 
let us say, why couldn't you get that right down to the 
kilowatt hour and say, you used 100 kilowatt hours, and so 20 
percent of that 100 hours of kilowatts that you used is the 
cost of the Endangered Species Act? Now you know what the 
Endangered Species Act is costing you. Why do we have to do it 
just in percentages?
    Mr. Delwiche. Thank you, sir. In my written testimony, 
attached to it is a sample copy of one of our customer's bills, 
and as I noted, many of our customers buy a whole suite of 
products from us that, in aggregate, are used by them to meet 
their retail needs, and ESA-compliance costs hit each of those 
products--our rate design is intended to spread the cost in a 
proportional way, but we would have to develop some very 
complicated billing algorithms to actually attribute dollars 
and cents the ESA-compliance costs associated with each product 
that adds up to the whole. So the percentage approach would be 
just much easier from a manpower point of view.
    Mr. Otter. But then if I were a consumer, and let us say my 
power bill was $100, and you said the percentage of ESA cost to 
your power bill is 20 percent. It would not take a phi beta 
kappa in accounting to figure out that that is 20 bucks.
    Mr. Delwiche. Exactly. That is why we are proposing the 
percentage basis. It is simpler. It is easier for us on the 
billing side, and the consumer can do the calculation, like you 
described, or the retail utility could.
    Mr. Otter. I thank all of the witnesses once again and you, 
Madam Chairman, for your endurance.
    Ms. McMorris. Thank you for being here, and thank you to 
all of the witnesses. Again, I appreciate you taking the time 
to be here. I think we agree with the overall intent of 
information and transparency, and that is the intent of this 
bill. I look forward to working with all of you as we hopefully 
get ultimate passage of the legislation. Thanks again. The 
hearing is adjourned.
    [Whereupon, at 10:28 a.m., the Committee was adjourned.]

                                 
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